Conroy Gold and Natural Resources plc
Annual Report 2007

Plain-text annual report

2007 Annual Report and Financial Statements 2007 Annual Report and Financial Statements Index 2 Chairman’s Statement 5 Company Information 7 Directors’ Report 10 Independent Auditors’ Report 12 Profit and Loss Account 13 Balance Sheet 14 Cash Flow Statement 15 Statement of Accounting Policies 17 Notes to the Financial Statements C h a i r m a n ’ s s t a t e m e n t Professor Richard Conroy Chairman Dear Shareholder I have great pleasure in presenting your Company’s Annual Report and Financial Statements for the twelve months ended 31 May 2007. Your Company’s gold assets in Ireland have never been more attractive, with the gold price rising significantly so far this year, and seemingly poised to go even higher in the not too distant future. So far we have outlined a substantial gold resource on a small part of one target, with gold mineralisation also identified in the remainder of this target. In addition, along a 50km trend of our licences, we have several other targets in which bedrock gold has been identified, and these offer similar, or greater, potential. Clearly, this brings your Company to meeting its objective of establishing a producing gold mine. A 500,000 oz JORC-compliant gold resource at an average depth of less than 150m, in a politically stable country, with a mining tradition, excellent infrastructure, a skilled workforce and only 90 minutes by road from a capital city: surprising as it might seem, this is what your Company has found in Ireland. The resource occupies only 0%. of the first target to be investigated in detail, namely Clontibret. Preliminary drilling over the remaining 80% shows clear evidence of gold mineralisation being present. The mineralisation also remains open at depth. Further work in this area will almost certainly increase this resource substantially, so the 500,000oz figure should be regarded a bare minimum. This point was emphasised in a mid-007 review commissioned from Objective Capital, a leading independent UK corporate research group, which stated that “The resource is sufficiently defined to support the modelling of a hypothetical mine plan.” It therefore represents a significant step both towards establishing a gold mine at Clontibret and a new gold province in the region. Your Company’s licences cover an area of 1,500km and form a continuous block of ground stretching from Co Down to Co Cavan, a distance of over 110km. Within a 50km area, centred on Clontibret and now defined as the Armagh-Monaghan Gold Belt, your Company has outlined several other similar targets on which gold-in-bedrock has been identified. Early stage exploration to the south-west of the Armagh-Monaghan Gold Belt has also identified two further areas, the Central Structural Zone and Slieve Glah, with potential for significant gold mineralisation. Your Company is also active in the Central Lapland Greenstone Belt in Finland. This belt hosts several gold mines including Agnico- Eagle’s .5 million oz Suurikuusikko mine and ScanMining’s Pahtavaara mine, an underground operation north of the Arctic Circle mining an average gold grade of .7grammes/tonne. In the Sodankyla area where your Company holds several licences two major fault systems converge and provide the structural controls needed to host mineralisation. Several gold-in- soil anomalies are present and your Company considers it to be an area of major potential. The strategy of your Company in Finland is to identify economic gold deposits and ultimately increase shareholder value.  An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . Financials The loss after taxation for the year ended 1 May 007 was €75,059 and the net assets as at 1 May 007 were €6,50,516. During the year your Company acquired the gold interests of Conroy Plc, which included a number of claims (licence areas) in Finland which have potential gold prospects and an extensive database. The purchase consideration of €1,000,000 was satisfied by the issue of 19,94,86 ordinary shares of €0.0 each. The Directors have not been taking their fees or other remuneration from the Company since 1 September 005 thus enabling the Company’s exploration work on the ground to progress on a greater scale and more rapidly. The Directors have agreed to waive their entitlement to all amounts due up to 0 November 007. The amount involved is €61,69 (£47,684). After careful consideration, and discussions with the Company’s advisors, the Board has decided, subject to ratification by the shareholders at the Annual General Meeting, to issue a total of 9,805,1 warrants to the individual Directors for nil consideration exercisable over 10 years at a subscription price of €0.04 (Stgp per share). A resolution to this effect has therefore been included in the agenda for the AGM. The number of warrants proposed to be issued to each Director is as follows: Name of Warrant Holder Number of Warrants R.T.W.L. Conroy M.T.A. Jones J.P. Jones L.J. Maguire M.E. Power H.H. Rennison C.D. Wathen S.P. FitzPatrick 1,119,845 8,667,170 5,10,91 1,006,861 1,006,861 1,006,861 507,641 59,59 I welcome this action by the Directors as it represents a strong vote of confidence in your Company and its prospects. In the light of the excellent exploration results achieved to date, your Directors are considering how best to fund your Company's activities going forward. Options being studied include joint venture and farm-out, as well as such other arrangements as may be appropriate for advancing the interests of your Company. Electronic Communication An amendment to the Articles of Association is proposed to enable electronic communication to become another method of communication for the Company in so far as the law permits. Shareholders will continue to be entitled to ask the Company to provide a paper copy of any information which has been provided electronically.  F i n L a n D Auditors Future Outlook I would like to take the opportunity of thanking the partners and staff of Deloitte & Touche for their services to your Company during the course of the year. Directors, Consultants and Staff. I would like to express my deep appreciation of the support and dedication of the Directors, consultants and staff, which has made possible the continued progress and success which your Company has achieved. I am very pleased to welcome Seamus FitzPatrick to our Board. His extensive financial experience will be a most valuable asset in helping your Company to advance and develop its gold projects in Ireland and Finland. I believe that your Company is about to open up an important new gold province in Ireland and that our exploration strategy which as the Objective Capital report states “has been highly effective” could yield several multi million ounce gold deposits. Professor Richard Conroy Chairman 4 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . C o m p a n y i n F o r m a t i o n Directors Registrars Professor Richard Conroy Chairman* Maureen T.A Jones Managing Director* James P. Jones FCA Finance Director*+ Louis J. Maguire Non-Executive Director*+§ Michael E. Power Non-Executive Director§ Seamus P. FitzPatrick Non-Executive Director+§ Henry H. Rennison Non-Executive Director* C. David Wathen Non-Executive Director+ * Member of the Executive Committee + Member of the Remuneration Committee Capita Registrars Unit 5 Manor Street Business Park Manor Street Dublin 7 www.capitacorporateregistrars.ie Nominated Adviser John East & Partners Limited 10 Finsbury Square London ECA 1AD Broker City Capital Corporation Limited Sion Hall 56 Victoria Embankment London EC4Y 0DZ Legal Advisers William Fry Solicitors Fitzwilton House Wilton Place Dublin  Roschier-Holmberg Keskuskatu 7A 00 100 Helsinki Finland Head Office Conroy Diamonds and Gold P.l.c 10 Upper Pembroke Street Dublin  Tel: +5-1-661 8958 Fax: +5-1-66 11 For further information visit the Company’s website at: www.conroydiamondsandgold.com § Member of the Audit Committee Dublin Stockbrokers or contact: Dolmen Butler Briscoe Dolmen House 4 Earlsfort Terrace Dublin  City of London PR Triton Court Finsbury Square London ECA 1BR Tel: +44-0-768-5518 Company Secretary and Registered Office James P. Jones FCA 10 Upper Pembroke Street Dublin  Ireland Auditors Deloitte & Touche Chartered Accountants Deloitte & Touche House Charlotte Quay Limerick Professor Richard Conroy Chairman Maureen Jones Managing Director James P. Jones Finance Director Louis Maguire Non-Executive Director Michael E. Power Non-Executive Director Seamus P. FitzPatrick Non-Executive Director Henry H. Rennison Non-Executive Director David Wathen Non-Executive Director Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 5  An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . D i r e C t o r s ’ r e p o r t for the Year Ended 1 May 007 The Directors present their annual report, together with the audited financial statements of Conroy Diamonds and Gold Plc for the year ended 1 May 007. Principal Activities and Business Review The current focus of the Company’s activities is gold exploration on a major geological structure in Ireland known as the Longford-Down Massif. The Company holds prospecting licences over an area of almost 1,500 square kilometres on this structure. Exploration within the Company’s licence area has demonstrated an extensive gold belt which extends over a distance of approximately 18km from County Armagh into County Monaghan. Future Development of the Business It is the intention of the Directors to continue to develop the activities of the Company, concentrating particularly on gold. Further strategic opportunities in mineral resources, both in Ireland and abroad, will be sought by the Company. Results for the Year and State of Affairs at 31 May 2007 The profit and loss account for the year ended 1 May 007 and the balance sheet at that date are set out on pages 1 and 1 respectively. The Company recorded a loss for the financial year of €75,059 (006 - Profit €54,15). Taking account of the loss and the effect of the acquisition of the gold interest in Finland for a consideration of €1,000,000 satisfied by the issue of shares, the shareholders' funds increased to €6,50,516 at 1 May 007 from €5,774,5 at 1 May 006. No dividends or transfers to reserves are recommended by the Directors. Important Events since the Year End Subsequent to the year-end the Directors considered the financial position of the Company and in particular the level of current liabilities which mainly arose from the accrual of unpaid Directors’ fees and remuneration since incorporation. The relevant individual Directors agreed to waive their entitlement to all amounts accruing up to 0 November 007, amounting to €61,69. Risks and Uncertainties Directors The Company’s activities are directed towards the discovery, evaluation and development of mineral deposits. Exploration for and development of mineral deposits is speculative. Whilst the rewards can be substantial, there is no guarantee that exploration on the Company’s properties will lead to the discovery of commercially extractable mineral deposits. The future net asset value is therefore, inter alia, dependent on the success or otherwise of the Company’s future exploration programmes. Whether a mineral deposit will be commercially viable in a mining operation depends on a number of factors, such as the grade of the deposit, prices of the commodities being exploited, currency fluctuations, proximity to infrastructure, financing costs and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, import and export regulations and environmental protection. The Directors who served during the year are as follows: R.T.W.L. Conroy J.P. Jones M.T.A. Jones H.H. Rennison S. P. FitzPatrick (appointed 1 Feb 007) L.J. Maguire M. E. Power C. D. Wathen In accordance with the Company’s Articles of Association, Miss Maureen Jones and Mr. Henry Rennison will retire by rotation and, being eligible, will offer themselves for re-election at the Annual General Meeting. Since the last Annual General Meeting, on 1 February 007, Mr Séamus FitzPatrick has been appointed Director. Mr Fitzpatrick now retires in accordance with the Company’s Articles of Association and, being eligible, offers himself for re-election. Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c .  Directors’ and Secretary’s Shareholdings and Other Interests The interests of the Directors and Secretary, all of which were beneficially held, in the ordinary share capital of the Company at 1 May 006 and 1 May 007 were as follows: At 31 May 2006 At 31 May 2007 Ordinary Shares of €0.03 Each Options Warrants Ordinary Shares of €0.03 Each Options Warrants R.T.W.L. Conroy 9,50,00 ,5,000 1,64,49 9,50,00 ,5,000 1,64,49 S.P. FitzPatrick - - - 4,000 - - M.T.A. Jones 755,010 1,150,000 1,89,858 880,010 1,150,000 1,89,858 J.P. Jones 50,010 85,000 8,058,19 475,010 85,000 8,058,19 L. J. Maguire 10,010 50,000 1,450,47 10,010 50,000 1,450,47 M.E. Power 175,000 - 01,0 175,000 - 01,0 H.H. Rennison 0,010 50,000 1,450,47 0,010 50,000 1,450,47 C.D. Wathen - - - 87,500 - - Details of the warrants, all of which were granted during the year and are exercisable currently, are as follows: Directors R.T.W.L. Conroy M.T.A. Jones J.P. Jones L.J. Maguire M.E. Power At 31 May 2007 1,64,49 Price € 0.07 Expiry Date 15 November 015 1,89,858 0.07 15 November 015 8,058,19 0.07 15 November 015 1,450,47 0.07 15 November 015 01,0 0.07 15 November 015 H.H. Rennison 1,450,47 0.07 15 November 015 Details of the options, all of which are exercisable currently, are as follows: Directors R.T.W.L. Conroy R.T.W.L. Conroy R.T.W.L. Conroy M.T.A. Jones M.T.A. Jones M.T.A. Jones J.P. Jones J.P. Jones J.P. Jones H.H. Rennison L.J. Maguire At 31 May 2007 Granted During Year 1,15,000 500,000 600,000 5,000 75,000 450,000 75,000 75,000 75,000 50,000 50,000 - - - - - - - - - - - At 31 May 2006 Price € Expiry Date 1,15,000 0.59 4 December 010 500,000 600,000 5,000 75,000 450,000 75,000 75,000 0.08 14 March 01 0.10 6 November 01 0.59 4 December 010 0.08 14 March 01 0.10 6 November 01 0.59 4 December 010 0.08 14 March 01 75,000 0.10 6 November 01 50,000 50,000 0.59 4 December 010 0.59 4 December 010 8 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . • made judgements and estimates that are reasonable and prudent; • prepared the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Acts, 196 to 006 and the European Communities (Companies: Group Accounts Regulations) 199. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. As explained in Note 1 to the financial statements, the Directors have reviewed cashflow projections and other relevant information and are satisfied that the Company will be able to continue in operation for the foreseeable future. Accordingly, the financial statements have been prepared on the going concern basis. Auditors The auditors, Deloitte & Touche, Chartered Accountants, continue in office in accordance with Section 160 () of the Companies Act, 196. On behalf of the Board R.T.W.L. Conroy Director 0 November 007 J.P. Jones Director Except as disclosed above, neither the Directors nor their families had any beneficial interest in the share capital of the Company. There have been no contracts or arrangements entered into during the financial year in which a Director of the Company had a material interest and which were significant in relation to the Company's business. Substantial Shareholdings So far as the Board is aware, no person or company, other than the Directors' interests disclosed above and the shareholders listed below, held % or more of the issued ordinary share capital of the Company at 1 May 007. Name Number of Shares % Conroy P.l.c.* 19,94,86 18.6 Gartmore Fund Managers Limited 14,07,185 1.7 Mr. Bruce Rowan 10,450,000 9.89 *Professor Conroy has a controlling interest in Conroy P.l.c. Political Donations There were no political donations during the year. Books of Account The measures which the Directors have taken to ensure that proper books of account are kept are the adoption of suitable policies for recording transactions, assets and liabilities, the employment of appropriately qualified staff and the use of computer and documentary systems. The Company's books of account are kept at 10 Upper Pembroke Street, Dublin . Directors’ Responsibility Statement Company law requires the Directors to prepare financial statements for each year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing the financial statements, the Directors have: • selected suitable accounting policies and then applied them consistently; Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 9 i n D e p e n D e n t a u D i t o r s ’ r e p o r t to the Shareholders of Conroy Diamonds and Gold P.l.c. We have audited the financial statements of Conroy Diamonds and Gold P.l.c. for the year ended 1 May 007 which comprise the profit and loss account, the balance sheet, the cash flow statement, the statement of accounting policies and the related notes 1 to 0. These financial statements have been prepared under the accounting policies set out in the Statement of Accounting Policies. This report is made solely to the Company's members, as a body, in accordance with Section 19 of the Companies Act 1990. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditors The Directors are responsible for preparing the Annual Report, including as set out in the Statement of Directors’ Responsibilities, the preparation of the financial statements in accordance with applicable law and accounting standards issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland). Our responsibilities, as independent auditors, are to audit the financial statements in accordance with relevant legal and regulatory requirements, the rules of the London Stock Exchange for the Alternative Investment Market and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, and are properly prepared in accordance with Irish statute comprising the Companies Acts, 196 to 006 and the European Communities (Companies: Group Accounts Regulations) 199. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation requiring the convening of an extraordinary general meeting of the Company; and whether the information given in the Directors' Report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the Company's balance sheet and its profit and loss account are in agreement with the books of account. We also report to you if, in our opinion, any information specified by law or the rules of the London Stock Exchange for the Alternative Investment Market regarding Directors' remuneration and Directors' transactions is not disclosed and, where practicable, include such information in our report. We read the other information contained in the Annual Report and considered whether it is consistent with the audited financial statements. The other information comprises only the Report of the Directors and the Chairman’s Statement. We consider the implications for our report if we become aware of any apparent misstatement or material inconsistency with the financial statements. Our responsibilities do not extend to other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements and of whether the accounting policies are appropriate to the circumstances of the company, and the group, consistently applied and adequately disclosed. 10 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements: • • give a true and fair view, in accordance with Generally Accepted Accounting Practice in Ireland, of the state of affairs of the company as at 1 May 007 and of the loss for the year then ended; and have been properly prepared in accordance with the Companies Acts, 196 to 006 and the European Communities (Companies: Group Accounts Regulations) 199. assets of €7,16,877 included in the balance sheet is dependent on the successful further development and ultimate production of the mineral resources. We have obtained all the information and explanations we considered necessary for the purposes of our audit. In our opinion proper books of account have been kept by the company. The Company’s balance sheet and its profit and loss account are in agreement with the books of account. In our opinion the information given in the Directors' Report is consistent with the financial statements. The net assets of the company, as stated in the balance sheet are more than half the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 1 May 007 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 198, would require the convening of an extraordinary general meeting of the Company. Mineral Interests – Emphasis of Matter Without qualifying our opinion we draw your attention to the disclosures made in Notes 1 and 6 in the financial statements which indicate that the realisation of tangible Deloitte & Touche Chartered Accountants and Registered Auditors Limerick 0 November 007 Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 11 p r o F i t a n D L o s s a C C o u n t For the Year Ended 1 May 007 Operating Expenses – recurring – non-recurring Other Income (Loss)/Profit on ordinary activities Tax on profit on ordinary activities (Loss)/Profit retained for the Year (Loss)/Earnings per ordinary share – Basic – Fully diluted Notes 2 3 4 5 5 2007 € (376,320) - 006 € (54,16) 607,197 1,261 1,7 (375,059) 54,15 - - (375,059) 54,15 (€0.0038) - €0.0048 €0.0044 All recognised gains and losses for both the current year and the previous year are included in the profit and loss account. The above all result from continuing operations. The accompanying notes form an integral part of this profit and loss account. R.T.W.L. Conroy Director J.P. Jones Director Approved by the Directors on 0 November 007 1 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . B a L a n C e s h e e t As at 1 May 007 Fixed Assets Mineral interests Financial assets Tangible assets Current Assets Debtors Cash at bank and in hand Notes 2007 € 2006 € 6 7 8 9 7,136,877 5,781,855 2 - 32,104 4,65 7,168,983 5,85,490 37,707 105,954 143,661 55,85 1,97 68, (11,15) 57,017 Creditors: Amounts falling due within one year 10 (104,960) Net Current Assets 38,701 Total Assets less Current Liabilities 7,207,684 5,88,507 Creditors: Amounts falling due after more than one year 11 (687,168) (108,18) Net Assets 6,520,516 5,774,5 Capital and Reserves Called up share capital Capital conversion reserve fund Share premium account Share based payments reserve Profit and loss account Shareholders’ Funds – all equity 12 12 12 15 14 15 3,170,649 ,591,80 30,617 0,617 5,491,037 5,069,866 121,250 - (2,293,037) (1,917,978) 6,520,516 5,774,5 The accompanying notes form an integral part of this balance sheet. R.T.W.L. Conroy Director J.P. Jones Director Approved by the Directors 0 November 007 Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 1 C a s h F L o w s t a t e m e n t For the Year Ended 1 May 007 Net Cash (Outflow) from Operating Activities Capital Expenditure and Financial Investments Net Cash Outflow before Financing Financing (Decrease)/Increase in Cash Notes 16A 16B 16B 16C 2007 € (385,743) 2006 € (1,951) (1,520,936) (556,100) (1,906,679) (558,051) 1,700,236 807,759 (206,443) 49,708 The accompanying notes form an integral part of this statement. R.T.W.L. Conroy Director J.P. Jones Director Approved by the Directors on 0 November 007 14 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . s t a t e m e n t o F a C C o u n t i n g p o L i C i e s The financial statements have been prepared under the historical cost convention in accordance with applicable accounting standards generally accepted in Ireland and Irish statute comprising the Companies Acts, 196 to 006 and the European Communities (Companies: Group Accounts Regulations) 199. The Company's principal accounting policies are set out below. All of these policies have been applied consistently throughout the year and the previous year. A. Mineral Interests (i) Exploration, appraisal and development expenditure The Company accounts for mineral expenditure under the 'full cost' method of accounting. Exploration, appraisal and development expenditure is incurred on acquiring, exploring or testing exploration prospects. All lease, licence and property acquisition costs, geological and geophysical costs and other direct costs of exploration, appraisal and development are capitalised. The amount capitalised includes other operating expenses directly related to these activities. (ii) Cost Pools Costs relating to the exploration and appraisal of mineral interests which the Directors consider to be unevaluated are initially held outside the cost pool. Costs held outside the cost pool are reassessed at each year end. When a decision to develop these interests is taken, or if there is evidence of impairment, the related costs will be transferred to the cost pool or amortised to the profit and loss account as necessary. Costs will be capitalised within geographic cost pools which initially comprise Ireland and the rest of the world. Proceeds from any disposal of part or all of an interest which is outside the cost pool will be credited to that interest with any excess being credited to the cost pool. (iii) Ceiling Test When a decision to develop mineral interests is taken, and the related costs are transferred to the cost pool, a ceiling test will be carried out at each balance sheet date to assess whether the net book value of capitalised costs in the pool, together with the future costs of development of undeveloped reserves, is covered by the discounted future net revenues from the reserves within the pool, calculated at prices prevailing at the year end. Any deficiency arising will be provided for to the extent that, in the opinion of the Directors, it is considered to represent a permanent diminution in the value of the related asset, and where arising, will be dealt within the profit and loss account as additional depreciation. (iv) Depreciation Expenditure within the cost pool will be depreciated using the unit of production method based on commercial reserves. Costs used in the unit of production calculation will comprise the net book value of capitalised costs plus the anticipated future costs of development of the undeveloped reserves at current year end unescalated prices. Changes in cost and reserve estimates are dealt with prospectively. Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 15 B. Issue Expenses and Share Premium Account Issue expenses arising on the issue of equity securities are written off, in the first instance, against the share premium account, with any issue expenses in excess of the balance on the share premium account being written off to the profit and loss account. C. Tangible Fixed Assets Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight line basis to write off the cost less estimated residual value of the assets over their estimated useful lives as follows: Motor vehicles Office equipment D. Taxation 5 years 8 years The charge for taxation is based on the result for the year. Deferred taxation is calculated on the differences between the company’s taxable profits and the results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those that are recognised in the financial statements. E. Share Based Payments For equity-settled share based payment transactions (i.e. the granting of share options and share warrants), the Company measures the services and the corresponding increase in equity at fair value at the measurement date (which is the grant date) using a recognised valuation methodology for the pricing of financial instruments (Binomial Lattice Model). Given that the share options and warrants granted do not vest until the completion of a specified period of service the fair value is determined on the basis that the services to be rendered by employees as consideration for the granting of share options and warrants will be received over the vesting period, which is assessed as the grant date. The expense in the income statement in relation to the share options and warrants represents the product of the total number of options and warrants expected to vest and the fair value of those options and warrants. The resulting amount is allocated to accounting periods over the vesting period. 16 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . n o t e s t o t h e F i n a n C i a L s t a t e m e n t s for the year ended 1 May 007 1. Operations and Going Concern The Company is an exploration company and is currently involved in the development of mineral exploration opportunities, principally in the Longford-Down Massif. On the basis of the capital funding achieved to date and existing commitments to further capital funding together with the very encouraging results obtained from the exploration programme and their review of projected cash flow information, the Directors consider it appropriate to prepare the financial statements on a going concern basis. 2. Operating Expenses Operating expenses (a) 2007 € 2006 € 513,164 599,005 Transfer to Mineral Interests (Note 6) (136,844) (44,689) 376,320 54,16 (a) The Company had nine employees during the period (006 - nine). The remuneration charged during the period comprised salaries of e176,90, social welfare costs of e17,906, pension costs of eNil, and share options costs of e11,50 (006 - e66,996, e1,74, e4,875 and eNil respectively). (b) Subsequent to the year end, the directors agreed that remuneration up to 1 May 007, amounting to e486,06 of which e07,89 had been accrued in the previous year be waived. The waiver is reflected in the operating expenses charge for the year. 3. Loss on Ordinary Activities before Taxation The loss on ordinary activities before taxation is arrived at after charging/(crediting) the following items, which are stated at amounts prior to the re-allocation to mineral interests: Auditors’ remuneration Directors’ emoluments • fees • other remuneration Depreciation 2007 € 15,500 (56,265) (41,175) 11,531 2006 € 15,500 56,65 151,15 11,766 The director’s remuneration charged during the year included stock option costs of e109,950. Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 17 4. Tax on loss on Ordinary Activities No taxation charge arises in the financial year due to utilisation of losses incurred in previous years. There was no unprovided deferred taxation at 1 May 007 (005 – eNil). 5. Earnings per Ordinary Share The calculation of the loss per ordinary share of e0.008 (006 - earnings e0.0048) is based on the loss for the financial year of e75,059 (006 – Profit e54,15) and the weighted average number of ordinary shares in issue during the year of 97,64,184 (006 – 7,57,47). Since the Company incurred a loss the effect of share options and warrants would be anti- dilutive. 6. Mineral Interests Costs held outside cost pool: Cost At 1 May 006 Expenditure during the period - Acquisition of gold interests in Finland - licence and appraisal costs - other operating costs (Note ) - write back of Directors remuneration (Note 10) At 31 May 2007: Total Gold € 5,781,855 999,998 84,09 16,844 (165,91) 7,136,877 The Directors have considered the proposed work programmes for these mineral interests, presently held outside the cost pools. They are satisfied that there are no indications of impairment, but recognise that future realisation of the mineral interests, held outside the cost pools, is dependent on further successful exploration and appraisal activities and the subsequent economic production of the mineral reserves. 7. Financial Assets Investment in subsidiaries 2007 € 2 2006 € - 18 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . 8. Tangible Assets Cost Office Equipment € Motor Vehicles € Total € 31 May 2006 and 31 May 2007 89,713 12,800 102,513 Accumulated Depreciation 1 May 006 Depreciation 31 May 2007 Net Book Value 1 May 007 31 May 2006 9. Debtors Amounts falling due within one year VAT receivable Other debtors 51,198 8,971 7,680 ,560 60,169 10,240 9,544 38,515 ,560 5,120 2007 € 2,433 35,274 37,707 58,878 11,51 70,409 ,104 43,635 2006 € 9,15 46,60 55,85 Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 19 10. Creditors: Amounts falling due within one year Accrued Directors’ remuneration - fees and salaries - pension contributions Other accruals Due to related undertaking (Note 18) 2007 € - - 104,960 - 104,960 2006 € 17,515 4,875 88,47 15,578 11,15 Subsequent to the year-end the Directors considered the financial position of the Company and in particular the level of current liabilities which mainly arose from the accrual of unpaid Directors’ fees and remuneration since incorporation. The relevant individual Directors agreed to waive their entitlement to all amounts accruing up to 0 November 007, amounting to €61,69, of which €486,06 was outstanding at 1 May 007. The amount that had been allocated to the gold exploration programme, €165,91 was credited to mineral interests (Note 6) and the balance was credited to the profit and loss account. 11. Creditors: Amounts falling due after more than one year Shareholder’s loans 2007 € 687,168 687,168 2006 € 108,18 108,18 The immediate funding requirements of the Company have been financed by advances from the principal shareholder. 12. Called up Share Capital and Premium Authorised: 400,000,000 ordinary shares of €0.0 each 12,000,000 1,000,000 2007 € 2006 € 0 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . Issued and Fully Paid: Number Share Capital € Capital Conversion Reserve Fund € Share Premium € Start of year 86,94,011 ,591,80 0,617 5,069,866 Share issues (a) 19,94,86 578,89 Issue expenses - - - - 41,171 - End of year 105,688,297 3,170,649 30,617 5,491,037 (a) On 1 November 006 the Company acquired the gold interests of Conroy Plc, which included a number of claims (licence areas) in Finland which have potential gold prospects and an extensive database. The purchase consideration of e1,000,000 was satisfied by the issue of 19,94,86 ordinary shares of e0.0 each. (b) At 1 May 006 and 1 May 007 warrants over 0,000,000 shares exercisable at .75p sterling at any time up to 0 January 009 and warrants over 49,064,190 shares exercisable at e0.07 per share at any time up to 15 November 015 were outstanding. (c) At 1 May 007, options had been issued over 5,795,000 shares (006 – 5,95,000) These options are exercisable at prices ranging from e0.06 to e0.59 and expire between 4 December 010 and 16 November 017. (d) The share price at 1 May 007 was 4.5p sterling. During the year the price ranged from .75p to 4.75 p sterling. 13. Subsequent Event The Board has decided, subject to ratification by the shareholders at the Annual General Meeting, to issue a total of 8,188,41 warrants to the individual Directors for nil consideration exercisable over 10 years at a subscription price of e0.04 (Stgp per share). 14. Profit and Loss Account At 1 June 006 2007 € 2006 € (1,917,978) (,7,11) (Loss)/Profit for the financial year (375,059) 54,15 At 1 May 007 (2,293,037) (1,917,978) Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 1 15. Reconciliation of Movement in Shareholders’ Funds At 1 June 006 (Loss)/Profit for the financial year Share based payment reserve Share issues, net At 1 May 007 2007 € 2006 € 5,774,325 4,61,41 (375,059) 54,15 121,250 - 1,000,000 807,759 6,520,516 5,774,5 16. Notes to the Cash Flow Statement A. Reconciliation of operating (Loss)/Profit to Net Cash (Outflow) from Operating Activities Operating Expenses Depreciation Loss on disposal of fixed assets Write back of Directors’ remuneration accrual – credited to Profit and Loss – credited to Mineral Interests (Decrease) in Creditors Decrease/(Increase) in Debtors Net Cash (Outflow) from Operating Activities B. Analysis of Cash Flows Capital Expenditure and Financial Investment 2007 € 2006 € (375,059) (5,044) 11,531 - 11,766 74 - 165,912 607,197 815,585 (206,255) (1,166,640) 18,128 (385,743) (16,815) (1,951) 2007 € 2006 € Investment in mineral interests (1,520,934) (55,714) Investment in subsidiary Purchase of tangible fixed assets Financing Issue of share capital, net Share based payment reserve Shareholder’s loan (2) - - (,86) (1,520,936) (556,100) 1,000,000 807,759 121,250 578,986 - - 1,700,236 807,759  An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . C. Analysis and Reconciliation of Net Funds 1 June 2006 Cash Outflow 31 May 2007 Cash at bank and in hand 1,97 (06,44) 105,954 17. Commitments and Contingencies Obligations under Mineral Interests The Company has received prospecting licences under the Republic of Ireland Mineral Development Acts 1940 to 1995 for areas in Monaghan and Cavan. It has also received licences in Northern Ireland for areas in Armagh and Down in accordance with the Mineral Development Act (Northern Ireland) 1969. The Company has certain obligations in respect of these licences at year end which comprise total expenditure commitments as follows: Commitments for expenditure: • due within one year 2007 € 2006 € 150,000 15,000 • due between two and five years 500,000 60,000 650,000 945,000 18. Related Party Transactions The Company shares accommodation with Conroy Plc and Karelian Diamond Resources Plc. The Company bears its appropriate share of the related costs directly. There were no amounts outstanding at 1 May 007 (Note 10) 19. Share Based Payments The Company elected to estimate the fair value of employee stock options and warrants awards using the Binomial Lattice Model. The determination of the fair value of share based payment awards on the date of grant using the Binomial Lattice Model is affected by Conroy Diamonds and Gold P.l.c. stock price as well as assumptions regarding a number of subjective variables. These variables include the expected term of the awards, the expected stock price volatility over the term of the awards, the risk free interest rate associated with the expected term of the awards and the expected dividends. In 007, the Company’s Binomial Lattice option model included the following weighted average assumptions for the Company’s employee stock option and warrants. Dividend yield Expected volatility Risk free interest rate Expected life (in years) Stock options Stock warrants 0% 90% 4.0% 10 0% 90% .% 10 20. Approval of Financial Statements. These financial statements were approved by the board on 0 November 007. Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c .  n o t i C e o F a n n u a L g e n e r a L m e e t i n g Notice is hereby given that the Annual General Meeting of Conroy Diamonds and Gold P.l.c (the “Company”) will be held at The Westbury Hotel, Grafton Street, Dublin  on Monday 17th December 007, at .15 p.m. for the purposes of transacting the following business: 1. To receive and consider the Financial Statements for the year ended 1st May 007 together with the Directors’ and Auditors’ Reports thereon (Resolution No.1) 2. To re-elect as Directors the following persons: Miss Maureen Jones (Resolution No. (a)) Mr. Henry Rennison (Resolution No.(b)) Mr. Séamus FitzPatrick (Resolution No  (c)) 3. To authorise the Directors to fix the remuneration of the Auditors (Resolution No. ) 4. To consider and, if thought fit, pass the following resolution as an Ordinary Resolution (Resolution No.4) “That the grant of the following warrants to subscribe for Ordinary Shares of €0.0 each in the capital of the Company at a subscription price of €0.04 (Stg. p) per share effected by the Directors on 16 November 007 be and are hereby confirmed and ratified.” Name of Warrant Holder Number of Warrants R.T.W.L. Conroy M.T.A. Jones J.P. Jones L.J. Maguire H.H. Rennison M.E. Power C.D. Wathen S.P. FitzPatrick 1,119,845 8,667,170 5,10,91 1,006,861 1,006,861 1,006,861 570,641 59,59 5. To consider and, if thought fit, pass the following resolution as an Ordinary Resolution (Resolution No.5): “That, in accordance with the provisions of Section 0 of the Companies (Amendment) Act, 198, the Directors of the Company be generally and unconditionally authorised to allot 'relevant securities' (as defined by Section 0(10) of the Companies (Amendment) Act, 198) up to the amount of the authorised but unissued share capital of the Company at the date of this resolution and to allot and issue any shares purchased by the Company pursuant to the provisions of the Companies Act, 1990 and held as treasury shares and that the authority hereby granted shall, subject to Section 0() of the said Act, expire on the 16 December, 01 unless previously renewed, varied or revoked by the Company.” 6. To consider and, if thought fit, pass the following resolution as a Special Resolution (Resolution No.5) “That, for the purposes of Section 4 of the Company’s (Amendment) Act, 198 and subject to the Directors being authorised pursuant to Article 10 of the Article of Association of the Company, the Directors be empowered to allot equity securities for cash pursuant to and in accordance with Article 11 of the Articles of Association of the Company. The authority hereby conferred shall expire at the close of business on the date of the next Annual General Meeting of the Company unless previously revoked or renewed in accordance with the provisions of the Companies (Amendment) Act, 198.” 7. To consider and, if thought fit, pass the following Resolution as a Special Resolution: “That the Articles of Association of the Company be altered in the manner set out below: (i) By the insertion of “Electronic Communication”, the meaning given to such expression in section  of the Electronic Commerce Act, 000.” after the definition of “Directors” in Article 1(b); (ii) by the insertion of the words “Electronic Communication,” after the word “lithography” in Article 1(d). (iii) by the insertion of the following paragraph into Article 15 as Article 15 (e): “The Company may, if and to the extent the law for the time being so permits, send or supply share certificates to members of the Company by means of Electronic Communication.” 4 An nual Repo r t and Fin ancial Stat ements 20 07 Conroy D iam ond s and Gold P.l. c . (iv) by the insertion of the words “Electronic Communication” after the words “by post” in Article 69(b). (v) by the insertion of the words “Electronic Communication” after the word “telefax” to replace the words “electronic mail” in Article 9(b). (vi) by the insertion of the words “Electronic Communication” after the word “telefax” to replace the words “electronic mail” in Article 94(b). (vii) by the insertion of the words “or by way of Electronic Communication” after the words “in writing” in Article 118. (viii) By the insertion of the following as an additional paragraph in Article 118: “The Company may, if and to the extent the law for the time being so permits, send or convey or supply all types of notices, documents, share certificates or information to the members by means of electronic equipment for the processing (including digital compression), storage and transmission of data, employing wires, radio optical technologies or any other electromagnetic means including without limitation, by sending such notice, documents or information by Electronic Communication or by making such notices, documents or information available on a website.” (ix) by the insertion of the following as new sub paragraph (iv) of Article 119(a) of the Articles of Association: “(iv) by sending the same by Electronic Communication in the manner or form approved by the Directors to the address of the member notified to the Company by the member for such purpose (or if not so notified to the address of the member last known to the Company).” (x) by the insertion of the following as new Article 119(d) and the subsequent redesignation of the existing Articles 119(d), (e), (f), (g) and (h) as Articles 119 (e), (f), (g) (h) and (i) respectively: “(d) Where a notice or document is given, served or delivered pursuant to sub-paragraph (a)(iv) of this Article, the giving, serving or delivery thereof shall be deemed to have been affected at the expiration of twelve hours after its despatch. In proving such delivery or service, it shall be sufficient to prove that such Electronic Communication was sent to the address notified by the member to the Company for such purpose.” (xi) by the inclusion of the words “and (iv)” after the word “(ii)” in the newly numbered Article 119(f). (xii) by the deletion of the words “electronic mail” after the word “telefax” in the newly numbered Article 119(g). (xiii) by the insertion of the words “(in electronic form or otherwise)” before the words “or printed” in Article 1. (xiv) by the insertion of the words “or notification” after the word “document” and the insertion of the words “thereof in any manner or, in the case of Electronic Communication, the deletion” after the word “disposal” in Article 17(c). 8. To transact any other business. By Order of the Board Dated this 0 day of November 007 James P. Jones FCA Secretary Registered Office 10 Upper Pembroke Street, Dublin . Notes 1. The holders of the Ordinary Shares are entitled to attend and vote at the above General Meeting of the Company. A holder of Ordinary Shares may appoint a proxy or proxies to attend, speak and vote instead of him/her. A proxy need not be a member of the Company. 2. A Form of Proxy is enclosed for use by Shareholders unable to attend the meeting. Proxies to be valid must be lodged with the Company’s Registrars, Capita Registrars, Unit 5, Manor Street Business Park, Manor Street, Dublin 7 not less than 48 hours before the time appointed for the holding of the meeting. 3. Pursuant to Regulation 14 of the Companies Act 1990 (Uncertificated Securities) Regulations 1996, the Company specifies that only those holders of Ordinary Shares registered in the register of members of the Company as at 6:00 p.m. on 15 December 2007 shall be entitled to attend and vote at the Annual General Meeting in respect of the number of Ordinary Shares registered in their name at that time. Changes to entries on that register after that time and date shall be disregarded in determining the rights of any person to attend and vote at the meeting. Annual Repor t and Financial Statements 2007 Conroy Dia monds and Gold P.l.c . 5 

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