SOLGOLD PLC — Interim / Quarterly Report 2012

Mar 28, 2013

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RNS Number : 0963B

SolGold PLC

28 March 2013

HALF YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

(UNAUDITED)

Corporate Information

DIRECTORS

Nicholas Mather (Executive Director)

Brian Moller (Non-Executive Director)

Robert Weinberg (Non-Executive Director)

John Bovard (Non-Executive Director)

COMPANY SECRETARY

Karl Schlobohm

REGISTERED OFFICE

10 Dominion Street

London EC4V 6LB

United Kingdom

Registered Number 5449516

AUSTRALIAN OFFICE

Level 27, 111 Eagle St

Brisbane QLD 4000

Phone: + 61 7 3303 0660 

Fax: +61 7 3303 0681

Email: info@solgold.com

Web Site: www.solgold.com

AUDITORS

PKF (UK) LLP

Farringdon Place, 20 Farringdon Road

London EC1M 3AP

United Kingdom

AUSTRALIAN AUDITORS

BDO Audit Pty Ltd

Level 18, 300 Queen Street

Brisbane QLD 4000

NOMINATED ADVISOR

RFC Ambrian Limited

Level 14, 19-31 Pitt Street

Sydney NSW 2000

Australia

BROKER

SP Angel Corporate Finance LLP

35 Berkeley Square

Mayfair

London W1J 5BF

United Kingdom

UK SOLICITORS

Fox Williams LLP

10 Dominion Street

London EC4V 6LB

United Kingdom

AUSTRALIAN SOLICITORS

Hopgood Ganim

Level 8, Waterfront Place

1 Eagle Street

Brisbane QLD 4000

Australia

REGISTRARS

Computershare Investor Services plc

The Pavilions, Bridgwater Road

Bristol BS99 7NH

United Kingdom

DIRECTORS' REPORT

Your Directors present their report on the company and its controlled entities for the half year ended 31 December 2012.  SolGold plc is a public limited company incorporated in England and Wales.

DIRECTORS

The names of the Directors in office at any time during or since the end of the period are:

Cameron Wenck (Non-Executive Chairman) - resigned 28 February 2013

Malcolm Norris (Managing Director and Chief Executive Officer) - resigned 7 February 2013

Nicholas Mather (Executive Director)

Brian Moller (Non-Executive Director)

Robert Weinberg (Non-Executive Director)

John Bovard (Non-Executive Director)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

PRINCIPAL ACTIVITIES

The principal activities of SolGold plc (the "Company") and its subsidiaries (together "SolGold" or the "Group") are gold and mineral exploration in Ecuador, Solomon Islands and Queensland, Australia. 

Review and results of operations

The loss after income tax for the Company for the half-year ended 31 December 2012 was $1,346,461 (31 December 2011 loss of $2,243,992).

Exploration Strategy

During the reporting period SolGold and Cornerstone Capital Resources Inc. ("Cornerstone") announced the execution of a definitive option agreement finalizing the terms of an option/joint venture arrangement for Cornerstone's 100% owned 5,000 hectare Cascabel gold-copper-silver property in northern Ecuador and replacing the Letter of Intent announced on April 10, 2012. 

The Cascabel property is located in the same belt, and approximately 70km to the north of, the Junin porphyry copper deposit (982Mt @ 0.89% copper), and in the same belt, and 550km south of, the giant La Colosa gold porphyry system (24Mozs gold).

The initial stream sediment, rockchip, and channel sampling, together with geological mapping carried out on the Cascabel project during the half year, has identified three areas of outcropping porphyry gold-copper mineralisation.  Two main areas have been identified at Quebrada Moran ("Moran") and Quebrada Alpala ("Alpala").  These areas are 1.5km apart and are interpreted to represent portions of a single large porphyry gold-copper system.

Furthermore, exploration progressed towards the end of calendar year 2012 with the completion of a detailed helicopter-supported magnetic and radiometric survey.  The magnetic and radiometric survey has defined two clear gold-copper porphyry target domains:

·        Target T1 covers a 2km diameter feature partly coincident with outcropping porphyry mineralisation at Quebrada Moran and Alpala;

·        Target T2 covers a 2km diameter feature overlapping the edge of the soil survey with anomalous gold and copper.

Subsequent to the helicopter-supported magnetic and radiometric survey, channel sampling was undertaken across an outcropping window of the gold-copper porphyry system which is exposed along Alpala Creek. The mineralised dacite porphyry intrusive exhibits stockwork and sheeted quartz veins containing copper minerals chalcopyrite, bornite and chalcocite. The outcropping zone is covered by scree and vegetation at both ends and so mineralisation is open.

DIRECTORS' REPORT (CONTINUED)

Review and results of operations (Continued)

Key features of the sampling during the period were:

·        45.63m at 0.81g/t gold and 0.59% copper.

·        Last 2m sample at northern end contains 0.15g/t gold and 0.4% copper.

·        Last 2m sample at southern end contains 0.53g/t gold and 0.48% copper.

·        Peak 1m interval returned a gold assay of 6.89g/t, and a copper assay of 1.7%

·        Average grade of 0.56% copper and 0.66g/t gold with the peak intersection removed - this underscores the potential for a bulk mineralised porphyry system.

Alpala Prospect is located within the T1 target which has been identified on the basis of geological and alteration mapping, a compelling magnetic signature and coincidence with strong surface geochemistry (copper, gold and molybdenum), including the completion of a 200m x 100m grid-based soil sampling program.

At the Company's 100% owned Rannes gold-silver Project in Queensland, Australia ("Rannes Project"), further significant mineralization was discovered from the phase of drilling completed during the period.  The key points were:

·        Hole KAU147 intersected 38m at 1.1g/t gold and 7.0g/t silver, including 2m at 6.75g/t gold and 27.3g/t silver.

·        The intersection in hole KAU147 is located approximately 200m from previously reported intersections in hole KAU139 at Kauffmans which intersected 2.2m at 2.36g/t Au, 2m at 3.03g/t Au and 2m at 3.84g/t Au.

·        The intersections in KAU147 and KAU139 are interpreted to be from 2 parallel lodes, which combine into the main Central lode to the northwest.

·        As previously announced, the Rannes Project carries a currently Indicated and Inferred resource of 18.7 million tonnes at 0.9 g/t gold equivalent (gold + silver) for 550,146 ounces of gold equivalent (296,657 ounces of gold and 10,137,736 ounces of silver).

Equity

On 17 July 2012, the Company issued 33,333,333 shares at £0.04 to raise $2 million pursuant to a private placement to progress its exploration and project development efforts across its portfolio of projects in the Solomon Islands, Ecuador and Queensland, Australia.

On 23 July 2012, the Company issued a total of 10,700 Convertible Redeemable Preference Shares (CRPS) to certain executive employees subsequent to the approvals granted by shareholders at the Company's AGM on 28 June 2012.

On 9 October 2012, the Company issued 55,555,556 shares at £0.035 to raise $3 million pursuant to a private placement to progress its exploration and project development efforts across its portfolio of projects in the Solomon Islands, Ecuador and Queensland, Australia.

On 12 October 2012, the Company issued an additional 21,972,143 shares at £0.035 to raise $1.14 million pursuant to a broker-sponsored placement to progress its exploration and project development efforts across its portfolio of projects in the Solomon Islands, Ecuador and Queensland, Australia.

DIRECTORS' REPORT (CONTINUED)

Matters subsequent to the half yearly financial period

On 14 January 2013 the Guadalcanal Joint Venture (GJV) partners, NVL Solomon Islands Limited (a subsidiary of Newmont Mining Corporation) and SolGold plc entered into an agreement with Gold Ridge Mining Limited (a wholly owned subsidiary of St Barbara Limited). The agreement provides for the parties to co-operate in securing suitable tenure over an area covering 4 of the Prospecting Licences included in the GJV for the benefit of Gold Ridge Mining Limited, and for Gold Ridge Mining Limited to acquire relevant exploration data generated by the GJV. SolGold has secured 100% ownership of the remaining GJV Prospecting Licence, Kuma. This PL is currently undergoing a renewal process for a further 2 year extension of the prospecting licence. Completion of the agreement and cash consideration payable under it is subject to various conditions precedent related to the tenure outcome. The maximum amount payable to SolGold if all conditions are satisfied is US$494,000, which reflects SolGold's JV equity position in the GJV of 26%.

On 7 February 2013, Mr Malcolm Norris resigned as CEO and Managing Director of SolGold plc. Mr Nicholas Mather will continue as Executive Director and take on the duties of the CEO and Managing Director of the company during a transitionary period until a new CEO is appointed.

On 19 February 2013, the Company announced that it had renegotiated the Cascabel Copper Porphyry Earn-In Agreement with Cornerstone. 

The key highlights of the renegotiated agreements were:

·        SolGold acquires initial 20% holding in Exploraciones Novomining S.A ("ENSA"), a wholly-owned Ecuadorian subsidiary of Cornerstone Capital Resources Inc ("Cornerstone") which owns 100% of the Cascabel copper gold porphyry and the La Encrucijada porphyry and epithermal gold projects.

·        SolGold has the right to acquire up to 85% of ENSA by completing equity placements totalling C$1.2Million in Cornerstone and completing the phase 1, 2,500 metre drill program at Cascabel, planned to commence in or around May 2013.

·        SolGold's interest is a direct and immediate equity interest in ENSA as a registered shareholder.

·        Total expenditure commitment for the earn-in phase reduced from C$7.8Million to C$2.5Million.

·        Preparations well advanced for drilling on Cascabel subject to completion of permitting anticipated in mid-2013.

On 20 February 2013, the Company made a further C$200,000 private placement in Cornerstone Capital Resources Inc. at C$0.05 per share in accordance with the renegotiated Cascabel Earn-In Agreement with Cornerstone. 

Signed in accordance with a resolution of the board of Directors.

Nicholas Mather

Executive Director

Brisbane

28 March 2013

Qualified Person

Information in this report relating to the exploration results is based on data reviewed by Mr Nicholas Mather (B.Sc. Hon), the Executive Director of the Company.  Mr Mather is a Fellow of the Australasian Institute of Mining and Metallurgy who has in excess of 25 years' experience in mineral exploration and is a Qualified Person under the AIM Rules.  Mr Mather consents to the inclusion of the information in the form and context in which it appears.

Consolidated Statement of Profit or loss and other Comprehensive Income

for the half year ended 31 December 2012

		Half-Year
		2012	2011
	Notes	A$ (Unaudited)	A$ (Reviewed)
Revenue		6,634	182,717
Administration and consulting expenses		678,223	544,448
Borrowing cost expenses		76	920
Depreciation and amortisation expense		37,512	39,154
Employee benefit expenses		381,167	401,172
Exploration expenditure written-off		83,570	407,745
Legal expenses		45,050	85,073
Share based payments expense		86,464	948,197
Operating loss before income tax		(1,305,428)	(2,243,992)
Income tax expense		(41,033)	-
Loss for the period		(1,346,461)	(2,243,992)
Other comprehensive income
Items that may be reclassified to profit and loss
Change in fair value of available for sale financial assets		(136,775)	-
Income tax relating to other comprehensive income		41,033	-
Other Comprehensive income, net of tax		(95,742)	-
Total comprehensive income for the period		(1,442,203)	(2,243,992)
Loss for the half-year attributable to:
Owners of the parent company		(1,346,411)	(2,243,992)
Non-controlling interest		(50)	-
		(1,346,461)	(2,243,992)
Total comprehensive income for the half-year is attributable to:
Owners of the parent company		(1,442,153)	(2,724,076)
Non-controlling interest		(50)	-
		(1,442,203)	(2,724,076)

		2012	2011
	Notes	Cents (Unaudited)	Cents (Reviewed)
Basic and diluted loss per ordinary share
- basic and diluted	4	(0.4)	(0.8)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

at 31 December 2012

			31 December	30 June
			2012	2012
	Notes		A$ (Unaudited)	A$ (Audited)
Assets
Current assets
Cash and cash equivalents			1,755,358	440,623
Other receivables and prepayments			556,032	469,062
Total current assets			2,311,390	909,685
Non-current assets
Other financial assets			89,893	90,413
Investments in available-for-sale securities			66,912	8,000
Property, plant and equipment			260,846	297,677
Exploration and Evaluation Assets		5	42,361,833	40,255,104
Total non-current assets			42,779,484	40,651,194
Total assets			45,090,874	41,560,879
Current liabilities
Trade and other payables			677,974	1,647,159
Lease liabilities			43,374	52,362
Total current liabilities			721,348	1,699,521
Non-current liabilities
Lease liabilities			63,869	80,498
Total non-current liabilities			63,869	80,498
Total liabilities			785,217	1,780,019
Net assets			44,305,657	39,780,860
Equity
Issued capital		6	72,888,202	67,007,667
Reserves			3,136,020	3,145,297
Accumulated losses			(31,672,332)	(30,325,921)
Non-controlling interest			(46,233)	(46,183)
Total equity			44,305,657	39,780,860

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity

for the half year ended 31 December 2012

	Notes	Share capital A$ (Unaudited)	Available for Sale Financial Asset Reserve A$ (Unaudited)	Share option reserve A$ (Unaudited)	Convertible Redeemable Preference Share reserve A$ (Unaudited)	Accumulated losses A$ (Unaudited)	Non-controlling interests A$ (Unaudited)	Total A$ (Unaudited)
Balance at 1 July 2011		63,768,216	-	1,116,380	-	(7,820,864)	-	57,063,732
Loss for the period		-	-	-	-	(2,243,992)	-	(2,243,992)
Other comprehensive income for the period		-	-	-	-	-	-	-
Total comprehensive income for the period		-	-	-	-	(2,243,992)	-	(2,243,992)
Transactions with owners  in their capacity as owners
Value of shares and options issued to Directors, employees and consultants		-	-	1,462,440	-	-	-	1,462,440
Balance 31 Dec 2011		63,768,216	-	2,578,820	-	(10,064,856)	-	56,282,180
Loss for the period		-	-	-	-	(20,261,065)	-	(20,261,065)
Other comprehensive income for the period		-	-	-	-	-	-	-
Total comprehensive income for the period		-	-	-	-	(20,261,065)	(151)	(20,261,216)
Transactions with owners  in their capacity as owners
New share capital subscribed		3,429,022	-	-	-	-	-	3,429,022
Share issue costs		(189,571)	-	-	-	-	-	(189,571)
Value of shares and options issued to Directors, employees and consultants		-	-	566,477	-	-	-	566,477
Non-controlling interest in subsidiary acquired		-	-	-	-	-	(46,032)	(46,032)
Balance 30 June 2012		67,007,667	-	3,145,297	-	(30,325,921)	(46,183)	39,780,860
Loss for the period		-	-	-	-	(1,346,411)	(50)	(1,346,461)
Other comprehensive income for the period		-	(95,742)	-	-	-	-	(95,742)
Total comprehensive income for the period		-	(95,742)	-	-	(1,346,411)	(50)	(1,442,203)
Transactions with owners  in their capacity as owners
New share capital subscribed		6,144,282	-	-	-	-	-	6,144,282
Share issue costs		(263,747)	-	-	-	-	-	(263,747)
Share options issued to employees and consultants		-	-	21,085	-	-	-	21,085
Convertible Redeemable Preference Shares issued to employees		-	-	-	65,380	-	-	65,380
Balance 31 December 2012		72,888,202	(95,742)	3,166,382	65,380	(31,672,332)	(46,233)	44,305,657

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

for the half year ended 31 December 2012

		Half-Year
		2012	2011
	Notes	A$ (Unaudited)	A$ (Reviewed)
Cash flows from operating activities
Receipts from customers		1,497	-
Payments to suppliers and employees		(971,849)	(1,148,473)
Interest received		5,137	182,717
Interest paid		(76)	(880)
Net cash outflow from operating activities		(965,291)	(966,636)
Cash flows from investing activities
Acquisition of property, plant and equipment		(681)	(12,696)
Investments in available-for-sale securities		(193,686)	-
Refund of (payment for) security deposits		(1,480)	(2,500)
Acquisition of exploration and evaluation assets		(3,125,902)	(7,160,152)
Net cash (outflow)/inflow from investing activities		(3,321,749)	(7,175,348)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital		5,891,139	-
Payment of issue costs		(263,747)	-
Loans to third parties		-	(888,595)
Net repayment of finance leases		(25,617)	(23,117)
Net cash inflow from financing activities		5,601,775	(911,712)
Net (decrease)/increase in cash and cash equivalents		1,314,735	(9,053,696)
Cash and cash equivalents at beginning of period		440,623	11,543,750
Cash and cash equivalents at end of period		1,755,358	2,490,054

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

NOTE 1  summary of significant accounting policies

Basis of preparation

This general purpose consolidated half year financial report for the half year ended 31 December 2012 has been prepared in accordance with IAS 34 Interim Financial Reporting and International Financial Reporting Standards ('IFRSs').

The consolidated financial statements are presented in Australian dollars ("A$") and have been prepared on the historical cost basis.

The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing activities of the consolidated entity as the full financial report.

It is recommended that the half year financial report be read in conjunction with the annual report for the year ended 30 June 2012 and considered together with any public announcements made by SolGold plc and its controlled entities during the half year ended 31 December 2012.

The same accounting policies and methods of computation have generally been followed in this half-year financial report as compared with the most recent annual financial report.

Material Uncertainty Regarding Going concern

The half year financial report has been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business.  The Group has not generated revenues from operations.  As such, the Group's ability to continue to adopt the going concern assumption will depend upon a number of matters including subsequent successful raisings in the future of necessary funding and the successful exploration and subsequent exploitation of the Company's tenements.  In the absence of these matters being successful, there exists a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the ordinary course of business.

Comparatives

When required by Accounting Standards, comparatives have been adjusted to conform to changes in presentation for the current financial year.

Basis of consolidation

The half year consolidated financial statements comprise the financial statements of SolGold plc and its controlled entities as at 31 December 2012.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

NOTE 2  OPERATING SEGMENTS

The Group determines and separately reports operating segments based on information that is internally provided to the Board of Directors, who are the Group's chief operating decision makers.

The Group has outlined below the separately reportable operating segments, having regard to the quantitative threshold tests provided in IFRS 8 Operating Segments, namely that the relative revenue, asset or profit / (loss) position of the operating segment equates to 10% or more of the Group's respective total.  The Group reports information to the Board of Directors along company lines.  That is, the financial position of SolGold and each of its subsidiary companies is reported discreetly, together with an aggregated Group total.  Accordingly, each company within the Group that meets or exceeds the threshold tests outlined above is separately disclosed below. 

31 December 2012 (Unaudited)
	Finance Income $	Other Income $	Result $	Share Based Payments $	Depreciation $	Assets $	Liabilities $
Solomon Gold	4,811	1,497	(1,223,518)	86,464	4,769	46,836,882	527,860
Australian Resource Management	184	-	(16,211)	-	10,960	14,199,634	32,526,913
Central Minerals	46	-	(100,521)	-	16,300	11,975,536	12,981,762
Acapulco Mining	96	-	(5,648)	-	5,483	5,770,812	3,534,554
Solomon Operations	-	-	-	-	-	29,770	81,457
Honiara Holdings	-		(513)	-	-	916,677	871,731
Guadalcanal Exploration	-		(50)	-	-	1,055,266	1,101,651
Consolidation/Elimination	-	-	-	-	-	(35,693,703)	(50,840,711)
Total	5,137	1,497	(1,346,461)	86,464	37,512	45,090,874	785,217

	31 December 2011 (Reviewed)						30 June 2012 (Audited)
	Finance Income $	Other Income $	Result $	Share Based Payments $	Depreciation $	Assets $	Liabilities $
Solomon Gold	182,417	-	(1,731,356)	948,197	4,005	42,682,244	916,335
Australian Resource Management	179	-	(79,279)	-	13,490	13,901,046	32,316,738
Central Minerals	90	-	(362,049)	-	16,134	11,321,143	12,224,848
Acapulco Mining	30	-	(71,335)	-	5,525	5,616,786	3,374,880
Solomon Operations	1	-	27	-	-	29,770	81,457
Honiara Holdings	-	-	-	-	-	854,030	804,099
Guadalcanal Exploration	-	-	-	-	-	989,209	1,035,544
Consolidation/Elimination	-	-	-	-	-	(33,833,349)	(48,973,883)
Total	182,717	-	(2,243,992)	948,197	39,154	41,560,879	1,780,018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

	31 December 2012	31 December 2011
	A$ (Unaudited)	A$ (Reviewed)

NOTE 3  Revenues and Expenses

Included in the profit / (loss) are the following revenues and expenses:
Interest revenue - external parties	5,137	182,717
Other income	1,497	-
	6,634	182,717
Depreciation	37,512	39,154
Defined contribution superannuation expense	21,562	14,661

Note 4  Loss per share

Calculation of basic and diluted loss per share is in accordance with IAS 33 Earnings per Share.

Loss per ordinary share
Basic loss per share (cents per share)	(0.4)	(0.8)
Diluted loss per share (cents per share)	(0.4)	(0.8)
Net loss used in calculating basic and diluted loss per share	(1,346,461)	(2,243,992)
	Number	Number
Weighted average number of ordinary share used in the calculation of basic loss per share	380,425,233	284,623,714
The options are non-dilutive as the company is incurring losses.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Note 5  Exploration and Evalutation Assets

	Half Year Ended  31 December     2012	Full Year Ended  30 June   2012
	A$ (Unaudited)	A$   (Audited)
Carrying amount at the beginning of the period	40,255,104	44,720,340
Additions - expenditure	2,190,299	12,422,506
Additions - business combinations	-	1,718,703
Exploration expenditure written off	(83,570)	(18,606,445)
Carrying amount at the end of the period	42,361,833	40,255,104

Recoverability of the carrying amount of exploration assets is dependent on the successful development and commercial exploitation of areas of interest, and the sale of minerals or the sale of the respective areas of interest.

Note 6  issued capital

	Half Year Ended 31 December 2012	Full Year Ended 30 June 2012
	A$ (Unaudited)	A$ (Audited)
a) Issued capital
Ordinary shares fully paid up	72,888,202	67,007,667
b) Movement in ordinary shares
At the beginning of the reporting period	67,007,667	63,768,216
Shares issued during the period	6,144,282	3,429,022
Transaction costs on share issue	(263,747)	(189,571)
At reporting date	72,888,202	67,007,667
c) Movement in number of ordinary shares on issue
Shares at the beginning of the reporting period	313,381,934	284,623,489
-     6 March 2012 (1)	-	28,758,445
-     17 July 2012 (2)	33,333,333	-
-     9  October 2012 (3)	55,555,556	-
-     12 October 2012 (4)	21,972,143	-
Shares at the reporting date	424,242,966	313,381,934

(1)    On 6 March 2012, 28,758,445 $0.12 ordinary shares were issued for cash pursuant to a share placement.

(2)    On 17 July 2012, 33,333,333 $0.06 ordinary shares were issued for cash pursuant to a share placement.

(3)    On 9 October 2012, 55,555,556 $0.054 ordinary shares were issued. 4,687,829 shares were issued for services provided to the company in lieu of cash and 50,867,727 shares were issued  for cash pursuant to a share placement.

(4)    On 12 October 2012, 21,972,143 $0.055 ordinary shares were issued for cash pursuant to a share placement

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

NOTE 7    RELATED PARTIES

Transactions with Directors and Director-Related Entities

(i)         SolGold plc has a standing Administration and Services Agreement with DGR Global Ltd, an entity associated with Nicholas Mather (a Director) and Brian Moller (a Director) whereby DGR Global Ltd has agreed to provide certain services including the provision by DGR Global Ltd of its premises (for the purposes of conducting the Company's business operations), use of existing office furniture, equipment and certain stationery, together with general telephone, reception and other office facilities (''Services'').  In consideration for the provision of the Services, the Company shall reimburse DGR Global Ltd for any expenses incurred by it in providing the Services.  DGR Global Ltd was paid $189,000 (2011: $189,000) for the provision of administration, management and office facilities to the Company during the half year.  The total amount outstanding at half year end is nil (2011: $15,159).

(ii)        Mr Brian Moller (a Director), is a partner in the Australian firm Hopgood Ganim Lawyers. Hopgood Ganim were paid $257,165 (2011: $67,687) for the provision of legal services to the Company during the half year.  These services were based on normal commercial terms and conditions.  The total amount outstanding at half year end is $207,077 (2011: $31,520).

(iii)        Mather Investments (Qld) Pty Ltd, an entity associated with Nicholas Mather (a Director) underwrote the share placement that occurred in October 2012. Under the terms of the Underwriting Agreement, Mather Investments (Qld) Pty Ltd was entitled to a fee of 7% of the underwritten amount of $3,000,000 ($210,000) together with 3,000,000 options to subscribe for shares each exercisable on or before the 3rd October 2013 at an exercise price of 6 pence per share.

NOTE 8    COMMITMENTS AND CONTINGENT ASSET AND LIABILITIES

There are no significant changes to commitments and contingencies disclosed in the most recent annual financial report.

NOTE 9  SUBSEQUENT EVENTS

On 14 January 2013 the Guadalcanal Joint Venture (GJV) partners, NVL Solomon Islands Limited (a subsidiary of Newmont Mining Corporation) and SolGold plc entered into an agreement with Gold Ridge Mining Limited (a wholly owned subsidiary of St Barbara Limited). The agreement provides for the parties, to co-operate in securing suitable tenure over an area covering 4 of the Prospecting Licences included in the GJV for the benefit of Gold Ridge Mining Limited, and for Gold Ridge Mining Limited to acquire relevant exploration data generated by the GJV. SolGold has secured 100% ownership of the remaining GJV Prospecting Licence, Kuma. This PL is currently undergoing a renewal process for a further 2 year extension of the prospecting licence. Completion of the agreement and cash consideration payable under it is subject to various conditions precedent related to the tenure outcome. The maximum amount payable to SolGold if all conditions are satisfied is US$494,000, which reflects SolGold's JV equity position in the GJV of 26%.

On 7 February 2013, Mr Malcolm Norris resigned as CEO and Managing Director of SolGold plc. Mr Nicholas Mather will continue as Executive Director and take on the duties of the CEO and Managing Director of the company during a transitionary period until a new CEO is appointed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

NOTE 9  SUBSEQUENT EVENTS (CONTINUED)

On 19 February 2013, the Company announced that it had renegotiated the Cascabel Copper Porphyry Earn-In Agreement with Cornerstone. 

The key highlights of the renegotiated agreements were:

·        SolGold acquires initial 20% holding in Exploraciones Novomining S.A ("ENSA"), a wholly-owned Ecuadorian subsidiary of Cornerstone Capital Resources Inc ("Cornerstone") which owns 100% of the Cascabel copper gold porphyry and the La Encrucijada porphyry and epithermal gold projects.

·        SolGold has the right to acquire up to 85% of ENSA by completing equity placements totalling C$1.2Million in Cornerstone and completing the phase 1, 2,500 metre drill program at Cascabel, planned to commence in or around May 2013.

·        SolGold's interest is a direct and immediate equity interest in ENSA as a registered shareholder.

·        Total expenditure commitment for the earn-in phase reduced from C$7.8Million to C$2.5Million.

·        Preparations well advanced for drilling on Cascabel subject to completion of permitting anticipated in mid-2013.

On 20 February 2013, the Company made a further C$200,000 private placement in Cornerstone Capital Resources Inc. at C$0.05 per share in accordance with the renegotiated Cascabel Earn-In Agreement with Cornerstone. 

There have been no other material events after 31 December 2012 to the date of this report.

DIRECTORS' DECLARATION

In the directors' opinion:

·      the attached financial statements and notes thereto comply with IAS 34 'Interim Financial Reporting' and other mandatory professional reporting requirements;

·      the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December 2012 and of its performance for the financial half-year ended on that date; and

·      there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors.

On behalf of the directors

Nicholas Mather

Executive Director

Brisbane

28 March 2013

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR EASDPAEXDEEF