Annual Report
For the year ended 30 June 2013
CONTENTS
CORPORATE INFORMATION...............................................................................................3
CHAIRMAN’S STATEMENT .................................................................................................4
OPERATIONS REPORT ..........................................................................................................5
INTERESTS IN TENEMENTS ..............................................................................................27
RISKS AND UNCERTAINTIES ............................................................................................28
FINANCIAL REVIEW ...........................................................................................................32
DIRECTORS AND COMPANY SECRETARY ....................................................................35
DIRECTORS' REPORT ..........................................................................................................37
INDEPENDENT AUDITOR'S REPORT ...............................................................................42
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ................................44
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION .........45
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY..........46
CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS.........................48
NOTES TO THE FINANCIAL STATEMENTS ....................................................................49
CORPORATE INFORMATION
DIRECTORS
Brian Moller (Non-Executive Chairman) – appointed 28 February 2013
Cameron Wenck (Non-Executive Chairman) – resigned 28 February 2013
Malcolm Norris (CEO and Managing Director) – resigned 22 February 2013
Alan Martin (CEO and Managing Director) – appointed CEO 10 May 2013 and appointed Managing Director 8 October 2013
Nicholas Mather (Executive Director)
Dr Robert Weinberg (Non-Executive Director)
John Bovard (Non-Executive Director)
COMPANY SECRETARY
Karl Schlobohm
REGISTERED OFFICE
10 Dominion Street, London EC2M 2EE
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.au
Web Site: www.solgold.com.au
AUDITOR
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
NOMINATED ADVISOR
RFC Corporate Finance Ltd
Level 14, 19-31 Pitt Street
Sydney NSW 2000, Australia
BROKER
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
United Kingdom
BANKERS
Macquarie Bank Ltd (Brisbane Branch)
345 Queen Street, Brisbane QLD 4000
Australia
UK SOLICITORS
Fox Williams
10 Dominion Street
London EC2M 2EE
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
SolGold plc annual report for the year ended 30 June 2013
3
CHAIRMAN’S STATEMENT
Dear Fellow Shareholder,
On behalf of the Board of Directors of SolGold, I take pleasure in presenting the Annual Report for 2013.
During the year, the Company has continued to focus the majority of its efforts on the exploration of Cascabel, its 50% owned
flagship copper gold porphyry project in Ecuador, culminating in the First Phase drilling campaign that commenced in September
2013 following the tireless efforts of all involved in obtaining the necessary Governmental drilling clearances and permits. SolGold
holds a 50% interest, and can earn up to 85% interest, in Exploraciones Novomining S.A. (“ENSA”), an Ecuadorean registered
company, which holds 100% of the Cascabel concession in northern Ecuador. Cornerstone Capital Resources Inc. (“Cornerstone”)
currently holds the other 50% of ENSA. SolGold has recently exercised its rights to acquire a further 35% of ENSA to take its
interest to 85%.
The Cascabel project is located in north-western Ecuador in an under-explored northern section of the richly endowed Andean
Copper Belt. World class deposits located within this belt include the 982 million tonnes at 0.89% Cu Junin copper project located
some 60 km to the southwest of Cascabel, the 3.3 billion tonne at 0.36% Cu Cobre Panama deposit located to the north in Panama
and the 905 million tonnes at 0.92 g/t Au La Colosa porphyry deposit located to the north in Colombia, containing 26 million
ounces of gold. The Alpala Prospect exhibits surface mineralisation and alteration patterns indicative of a porphyry copper gold
system and has a similar footprint to large porphyry systems around the world.
As reported during the October to December quarter of 2013, drilling results from the Alpala Prospect to date have been highly
encouraging, and the First Phase drilling program is set to be expanded from the initial 5 holes (for 2,500 metres) to a total of 11
holes (for 6,600 metres). SolGold is working closely with its JV partner Cornerstone Capital Resources in managing the operational
and logistical aspects of the Cascabel Project.
In May 2013 we were extremely pleased to welcome Mr Alan Martin to SolGold as its CEO, and to the Board as Managing Director
in October 2013. Alan came to SolGold with more than 20 years of technical, commercial and financial investment experience in
the Australian resources industry. Alan was prior to the SolGold leadership role, Global Funder Manager for Colonial First State’s
Global Resources Fund. He has a strong passion for exploration and considerable financial experience which will continue to stand
the Company in good stead for the future.
SolGold has a number of other smaller projects in its portfolio, including in Australia and in the Solomon Islands, and these are
either being advanced or joint ventured. The Company continues to receive proposals to participate in new projects and a number
are actively being assessed.
If any of these proposals represent a high quality gold-copper opportunity, they will be pursued
vigorously.
SolGold’s continued aim is to advance a portfolio of exploration assets and deliver shareholder growth through the discovery of
gold and copper deposits. On behalf of the Board, I would like to thank you for your support of the Company and I look forward to
bringing you further news as our exploration efforts continue.
Brian Moller
SolGold plc annual report for the year ended 30 June 2013
4
OPERATIONS REPORT
* As at 30 June 2013 SolGold had a 30% interest in ENSA. On 28 August 2013 SolGold satisfied conditions to increase its interest
to 50% and on 16 December exercised its right to increase its interest to 85%
Figure 1 – SolGold Corporate Structure
Corporate Strategy
The Company’s corporate strategy is to:
Create substantial wealth for its shareholders by exploring, discovering and defining large inventories of, but not limited
to, copper and gold metal resources.
Target regions with world class deposits.
Target grass roots level exploration opportunities to enable low cost entry into projects.
Adopt a disciplined and systematic approach to exploration.
Primary focus on copper and gold.
Maximise shareholder funds on “in the ground” exploration expenditure as a proportion of the total budget to generate
high-quality results and provide shareholders with “bang for buck”.
Secure additional exploration projects by the application for new tenements and/or farm-in style agreements.
On-going review of potentially ‘value accretive’ opportunities that are presented to the company from time to time.
Respect for the Communities and Environment in which we operate.
Strong focus on Health and Safety for our employees and contractors.
SolGold has a commitment to Corporate Social Responsibility and has active community programs in its areas of exploration.
SolGold also has a commitment to environmental responsibility and undertakes, as appropriate, environmental baseline studies
and rehabilitation programs as part of its exploration programs.
SolGold plc annual report for the year ended 30 June 2013
5
Figure 2 - SolGold areas of interest.
Exploration Strategy
The company’s exploration strategy includes the following elements:
Capitalise on the company’s track record of success in the discovery of mineral resources.
Detailed due diligence of project opportunities.
A disciplined approach to the evaluation of projects to produce exploration datasets that may include all or some of the
following exploration activity: geological mapping, stream, soil and rock chip sampling geochemistry, geophysical
surveying (magnetics, radiometrics and Induced Polarisation techniques).
Generation of drill targets to test ore deposit models based on exploration datasets.
Drill testing targets to define economic mineral resources that the company can take to feasibility study stage.
SolGold has a track record of experience at both management and board levels to define and develop mineral resources from
discovery through to feasibility and development.
Table 1 – SolGold exploration projects
Project
Cascabel JV
Rannes
Mt Perry
Normanby
Cracow West
Westwood
Lonesome
Fauro
Kuma
Lower Koloula
Malakuna
Location
Ecuador
Queensland, Australia
Queensland, Australia
Queensland, Australia
Queensland, Australia
Queensland, Australia
Queensland, Australia
Solomon Islands
Solomon Islands
Solomon Islands
Solomon Islands
Style
Copper Gold Porphyry
Disseminated and Vein Gold
Porphyry and Vein Gold
Gold Copper Porphyry
Epithermal Gold
Gold Copper Porphyry and PGE Layered Gabbros
Epithermal Gold
Epithermal Gold and Gold Copper Porphyry
Copper Gold Porphyry
Copper Gold Porphyry
Copper Gold Porphyry
Ownership
JV, SolGold earning in
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
SolGold plc annual report for the year ended 30 June 2013
6
ECUADOR
Cascabel Project (Earning 85% interest)
Location:
Ownership:
SolGold owns 50% of ENSA and has exercised its right to increase its interest to 85%
Tenement Area:
Primary Targets:
180 km north of the capital Quito, Ecuador
100% Exploraciones Novomining S.A (ENSA).
50 km2
Porphyry copper-gold plus low- and high-sulphidation epithermal deposits
The Cascabel concession is geographically located in northwest Ecuador in the province of Imbabura, situated 180 km by road
north of the capital city of Quito and 24 km west-southwest of the city of Tulcan that is located on the border of Ecuador with
Colombia. Northern Ecuador lies within the relatively under-explored northern section of the richly endowed Andean Copper Belt,
which extends from Chile in the south to Colombia to the north and then north-west into Panama. In this northern-most sector of
the Andean trend, some of the major deposits include the 982 million tonnes at 0.89% Cu Junin copper project located some 60 km
to the south-west of Cascabel, the 905 million tonnes at 0.92 g/t Au La Colosa porphyry deposit located to the north in Colombia
and the 3.3 billion tonne at 0.36% Cu Cobre Panama deposit located to the north in Panama and containing 26 million ounces of
gold.
Figure 3: Tectonic setting of the Cascabel property in northern Ecuador, located above the eastward subducted extension of the
Carnegie Ridge. The location of major porphyry Cu-Au +/ Mo and epithermal Au deposits are shown in yellow.
The Cascabel concession area is rugged with steep-sided hills at elevations of 1,000 metres to 2,000 metres. Climate is tropical-
savannah and vegetation is tropical forest with a well-developed soil horizon. A first-order paved highway provides year round
access and crosses the north-east corner of the concession (Figure 4). A gravel road in good condition provides access to the village
of Santa Cecilia located in the centre of the concession.
SolGold plc annual report for the year ended 30 June 2013
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Figure 4: Location of the Cascabel concession, the nearby giant Junin porphyry deposit and infrastructure in the northwest part of
Ecuador.
At 30 June 2013 SolGold held a 30% interest in Exploraciones Novomining S.A. (“ENSA”), an Ecuadorean registered company, which
holds 100% of the Cascabel concession in northern Ecuador. On 28 August 2013 SolGold satisfied conditions and increased its
holding in ENSA to a 50% interest, and on 16 December 2013 exercised its right to increase its interest to an 85% interest.
Cornerstone Capital Resources Inc. (“Cornerstone”) will hold the other 15% of ENSA.
The Cascabel concession contains an early-stage exploration prospect that indicates the potential for a large tonnage copper-gold
porphyry system. The geology of the Cascabel region has similarities to the Maricunga Belt in Chile and to the recently recognised
gold porphyry belt in west-central Columbia that is centred on the recently discovered La Colosa gold porphyry. These porphyry
systems are Miocene age and are associated with diorite and quartz diorite stocks with porphyritic textures.
The project is located in the Cordillera Occidental of the Ecuadorian Andes, within a north northeast trending structural zone
parallel to the principal fault Pallatanga situated along the eastern margin. Basement rocks consist of ocean floor basalts and
sediments of Cretaceous age. High-level batholiths of Miocene age and associated granite, granodiorite and diorite bodies of Late
Miocene age intrude volcanic and sedimentary rocks of Cretaceous to Tertiary age. Upper Miocene age stocks are associated with
the principal porphyry and epithermal deposits located in the district (Figure 5).
SolGold plc annual report for the year ended 30 June 2013
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Figure 5: Regional geology of northern Ecuador, showing the north-east trending array of Miocene-age batholiths and intrusions
associated with mineralisation at Cascabel, Junin, Cuellaje, Buenos Aires and Chical.
Early regional mineral exploration surveys in Ecuador were funded by government agencies and consisted of geological mapping,
rock and silt sampling. The World Bank supported Prodeminca, a non-profit mineral exploration organisation setup by Ecuador in
1988 to attract foreign investment into the mining sector. The British Geological Survey funded regional surveys during the 1970’s
and 1980’s to provide the geological framework to identify potential areas of mineralisation worthy of more detailed evaluation.
The early survey work led to the discovery of several porphyry deposits, of which the most significant is the giant Junin copper-
molybdenum porphyry. Junin is located approximately 60 km SSW of Cascabel, and has a reported inferred tonnage of 982 Mt at a
grade of 0.89 % copper and 0.04 % molybdenum. It is hosted by quartz granodiorite porphyry of late Miocene age, which intrudes
the Apuela batholith. Mineralisation consists mainly of bornite, chalcopyrite and molybdenite as disseminations and associated
with quartz veins and quartz stockworks related to phyllic – potassic hydrothermal alteration.
The first documented report of work at Cascabel was carried out by Santa Barbara Copper and Gold SA during 2008. Stream silt
surveys and prospecting indicated the presence of a copper-gold porphyry system. Cornerstone Ecuador SA carried out
prospecting, regional geological mapping and a heavy mineral stream sediment survey during June and July 2011 with the
discovery of numerous gold mineralised zones. A 4 km by 5 km area was highlighted for follow-up work.
On the 24th July 2012, SolGold Plc entered into a definitive option agreement with Cornerstone Capital Resources Inc. to acquire
up to an 85% interest in the Cascabel copper-gold property in Ecuador. Exploration survey work was initiated by Cornerstone
during May 2012 under the proposed terms of the option agreement with SolGold and continued through 2012 and 2013 under
the technical guidance of SolGold.
Regional survey works in 2012 included:
Stream silt sampling.
Rock chip sampling.
Geological mapping to complete reconnaissance coverage throughout the concession.
Orientation soil sampling (3 lines).
Soil sampling over an approximate 20 km2 area at a sample spacing of 200m x 100m and 100m x 100m.
Regional TerraSpec spectral sampling program conducted on soil samples.
Channel sampling at Quebrada Moran, Quebrada Tandayama and Quebrada America.
A combined helimagnetic and radiometric survey over the concession area.
Aerial photographic data was acquired and a DEM (digital elevation model) generated over the concession area.
SolGold plc annual report for the year ended 30 June 2013
9
This work generated five key areas of interest (Figure 6):
1) Quebrada Alpala – Outcropping porphyry Cu-Au mineralisation.
2) Quebrada Moran - Outcropping porphyry Cu-Au mineralisation overprinted by polymetallic veins.
3) Quebrada Tandayama and Quebrada America - Outcropping porphyry Cu-Au mineralisation.
4) Aguinaga – Extensive soil Cu-Au-Mo anomalism (porphyry Cu-Au prospect).
5)
Rio Cachaco – Low- to intermediate sulphidation Au-Ag-basemetal veins systems.
Figure 6: RTP (Reduce-To-Pole) magnetic image over the Cascabel concession and showing five principal target areas at 1. Alpala, 2.
Quebrada Moran, 3. Quebradas Tandayama and America, 4. Aguinaga and 5. Rio Cachaco.
Regional exploration activity in 2013 focused in the southern part of the concession area in the vicinity of the Alpala porphyry
copper-gold prospect. Principal programs included:
Channel sampling at Quebrada Alpala (576 samples).
3D modelling of magnetic imagery.
Completion of an Environmental Impact Study and subsequent issuance of the environmental license on the 27th August
that allowed the central part of the concession area to progress from Early Stage to Advanced Stage Exploration status,
enabling diamond drilling to commence at the Alpala prospect.
Establishment of the Alpala field camp and the Rocafuerte field office.
Commencement of Stage 1 drill program at Alpala on 1st September, being 5 holes for 2500 metres.
Completion of diamond drill holes CSD-13-001, 002, 003 and 004 with drill hole CSD-13-005 in progress at Alpala (Stage 1
drill program).
On-going activities include planning for a Stage 2 drill program and planning for an electrical 3D IP (Induced Polarization)
survey covering an area of approximately 9 km2 over the Alpala region.
SolGold plc annual report for the year ended 30 June 2013
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Channel sampling at Alpala was conducted between December 2012 and April 2013. A total of 576 samples were collected along
linear channels cut into bedrock (using a rock saw) from along the sides of Alpala Creek and from adjacent tributaries that flow into
Alpala Creek. The trenching covered an area of approximately 0.3 km2 and was centred on outcrops of mineralised and sheeted
quartz veins that were assayed in 2012 at 4m grading 0.99 % Cu and 3.3 g/t Au. The follow-up channel sampling yielded a large
number of significant intersections at surface (Figure 7). These included:
45.64m @ 0.59 % Cu, 0.81 g/t Au
TR46
56.93m @ 0.34 % Cu, 1.16 g/t Au
TR56A
TR56B
34.35m @ 0.46 % Cu, 0.19 g/t Au
TR57 45.50m @ 0.25 % Cu, 0.46 g/t Au
TR64D 61.03m @ 0.19 % Cu, 0.18 g/t Au
6.97m @ 1.07 % Cu, 0.45 g/t Au
TR73D
Figure 7: Location of channel samples collected between December 2012 and April 2013, channel intersections, plus the location of
planned Stage 1 holes (black drill traces) and completed Stage 1 holes (red drill traces).
Four regions of the helimagnetic data acquired in late 2012 were modelled with 3D inversion methods by Chris Moore of Moore
Geophysics in January 2013. The models were created over the northern, central and southern parts of the concession.
Refinements to the southern (Alpala) magnetic model were made in May 2012. Magnetic data from the southern sectors (Alpala
region) were visualised with 3D imaging software. The models identified a magnetic complex below the mapped zone of argillic
alteration at Alpala (i.e. below the ‘lithocap’). The magnetic basement around this magnetic complex is at approximately 2
kilometres depth. The magnetic complex in detail comprises a series of convex-shaped areas that culminate in a magnetic
apophysis (Figures 8 and 9). Several of these magnetic protuberances may represent the cupola region of a larger batholith at
depth and are targets for porphyry copper-gold mineralisation.
SolGold plc annual report for the year ended 30 June 2013
11
Figure 10 shows a schematic NE-SW cross-section through the magnetic model while Figure 11 shows a NW-SE slice through the
magnetic model. Drill targets for porphyry copper-gold mineralisation have been developed around the interpreted cupola
positions around the carapace of an interpreted deep magnetic batholith.
Figure 8: Two surfaces of equal magnetic susceptibility in the Alpala 3D inversion model (view looking towards the north-east) and
location of completed, current and planned drill holes at Alpala.
Figure 9: Plan view of the Alpala 3D inversion magnetic model, showing completed, current and planned drill holes and cross-
sections A1-A2 (schematic section) and B1-B2 (to scale model slice) across the magnetic model (Figures 10 and 11 below).
SolGold plc annual report for the year ended 30 June 2013
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Figure 10: NE-SW cross-section through the Alpala magnetic complex, showing interpreted batholith and cupola positions that are
being targeted for porphyry copper-gold mineralisation (cross-section location is shown in Figure 9 above).
Figure 11: NW-SE long-section through the Alpala magnetic complex, showing interpreted batholith and cupola positions that are
being targeted for porphyry copper-gold mineralisation (cross-section location is shown in Figure 9 above).
SolGold commenced a Stage 1 diamond drill program on the 1st September 2013. The first five drill holes were all collared within
the confines of the area of channel sampling at Alpala. To date four holes were completed and a fifth drill hole is underway (Figure
7).
Drill hole CSD-13-001, the first hole to test the Alpala Prospect at the Cascabel Project, intersected coherent porphyry copper
mineralisation across two zones, a stockwork zone in the upper part of the hole and a strongly sheeted quartz vein zone in the
lower part of the hole. A bulked intersection of 302m grading 0.39% Cu and 0.48 g/t Au (Table 2) was obtained from CSD-13-001,
and contained higher grade intervals including 100m grading 0.65 % Cu and 1.00 g/t Au (Figure 11).
Drill hole CSD-13-002 was centred in the area of mineralised channel samples at Alpala and drilled to test the extension of porphyry
stockwork mineralisation at depth to the east of hole CSD-13-001. The hole intersected a number of zones of visible copper-
sulphide minerals within diorite intrusives and volcanic country-rock, extending from near surface to near the bottom of the hole.
Visible fine-grained and coarse-grained bornite and/or chalcopyrite were observed in these intervals. The hole yielded a shallow
intersection of 18m length grading 0.33% Cu, 0.41 g/t Au (from 6m depth) and a long and deeper intersection of 292m length
grading 0.37% Cu, 0.30 g/t Au (from 126m depth) (see Figure 12).
The Company’s current interpretation is that the northwest-striking zone of porphyry copper-gold mineralisation encountered in
Alpala Creek is structurally-controlled and may be rooted at depth - either directly below or along structural strike - to the margin
of a larger body of mineralisation which is the principal conceptual target in the Alpala region.
SolGold plc annual report for the year ended 30 June 2013
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Figure 12: Cross section showing copper and gold grades for entire drill hole CSD-13-001 and CSD-13-002. The interpreted
northwest-trending zone of structurally-controlled mineralisation (dashed black lines) is being targeted at depth with current drill-
hole CSD-13-005.
HoleID
CSD-13-001
DepthFrom
16
DepthTo
318
Interval (m)
302
Cu_%
0.39
Au_g/t
0.48
CSD-13-001
Includes
Includes
CSD-13-001
CSD-13-001
CSD-13-001
Includes
Includes
CSD-13-002
CSD-13-002
Includes
Includes
16
50
100
128
188
222
226
232
6
126
130
184
120
84
118
160
212
322
284
248
24
418
140
226
104
34
18
32
24
100
58
16
18
292
10
42
0.37
0.46
0.38
0.17
0.32
0.65
0.96
1.87
0.33
0.37
0.91
0.5
0.38
0.50
0.73
0.09
0.06
1.00
1.67
3.25
0.41
0.30
0.44
0.68
Table 2: Significant intersection encountered in drill holes CSD-13-001 and CSD-13-002 at the Alpala prospect.
SolGold plc annual report for the year ended 30 June 2013
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Drill hole CSD-13-003 was collared south of holes CSD-13-001 and CSD-13-002 (Figure 7) and drilled at 60 degrees inclination
towards 110 degrees azimuth to test a broad and variable magnetic anomaly that lies east of the area of trenching at Alpala. The
hole was terminated at 751.33m depth near the margins of this modelled magnetic body.
Hole CSD-13-003 intersected long runs of variably weak but very persistent chalcopyrite and molybdenite mineralisation, with
minor visible chalcopyrite encountered from 76 metres to 751.33 metres (end-of-hole). Visible chalcopyrite was more pronounced
at 590 metres to 690 metres down hole. Visible molybdenite was most apparent from 283 metres to 635 metres. An eastward
trend of slowly increasing stockwork veining in hole CSD-13-003 is consistent with the hole drilling obliquely through the marginal
halo of a porphyry system whose centre may be located to the northwest or southeast.
Following completion of the Stage 1 drill program at Alpala, SolGold plans to transition to a Stage 2 drill program which will
comprise an additional seven deep diamond drill holes to test a range of high quality magnetic, geochemical and conceptual
regional targets around Alpala in an attempt to quantify the potential scale of the Alpala mineralising system in as short a time
frame as possible.
Figure 13: Plan view of RTP (Reduced-To-Pole) magnetics, showing the extent of Stage 1 drill program holes (black hole traces) and
Stage 2 drill program holes (yellow hole traces).
Environmental and social management programs in 2013 have expanded and built on the programs initially established in 2012.
Local concerns regarding mining and exploration relate primarily to issues of water use and management. The Cascabel property is
situated within the boundaries of three communities. The main community of Santa Cecilia located in the central part of the
concession is very supportive. SolGold and partner Cornerstone are continuing to build strong community relations with the three
main communities at Cascabel.
SolGold plc annual report for the year ended 30 June 2013
15
QUEENSLAND - AUSTRALIA
Figure 14: Location of tenements held by SolGold in Queensland, Australia.
Mount Perry (100% SolGold)
Location:
Ownership:
Tenement Area:
tenement consolidation areas).
Primary Targets:
130km north-west of Gympie, Queensland, Australia
100% owned
89 granted sub-blocks (circa 277km2) and 103 application sub-blocks (circa 336km2; primarily
High grade, lode gold deposits and possible gold porphyry deposits
The Mt Perry Goldfield is located four hours by road from Brisbane and is host to more than 60 named and numerous other
unnamed historical mines and workings (see Figure 15). The area lies adjacent to Evolution’s 100kozpa Mt Rawdon Gold Mine
which lies at the intersection of two major geological fault structures; the Mt Bania and Darling Lineaments. Current published
resources at Mt Rawdon stand at 36.7 million tonnes at 0.87g/t gold for 1 million ounces, and historical production has been
approximately 1 million ounces.
SolGold plc annual report for the year ended 30 June 2013
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Figure 15 – An Overview of the Mt Perry project highlighting the prospects (defined by Au soil anomalies), the Mt Rawdon mine (a
2 million ounce Au deposit) and the major regional structures. SolGold’s exploration has focussed along the Augustine-New
Moonta trend (which is a similar orientation to the Darling lineament) and the Chinamans-Reagans trend, which has a similar
orientation as the Mt Bania and Mt Perry fault.
SolGold’s exploration at Mt Perry has focussed along two mineralised structural zones (The Augustine-New Moonta trend and the
Chinamans-Reagans trend (see Figure 15). The structural orientations of these are similar to the major structures that host the Mt
Rawdon gold mine.
The ‘Augustine-New Moonta trend’ extends over a 20km long north-east trending corridor from Augustine in the south-west to the
New Moonta mines in the north-east (see Figure 15). Sulphide-mineralised breccia bodies with variable gold, silver, base metals
and with occurrences of uranium characterise the Augustine- New Moonta trend. The second target zone is the ‘Chinamans-
Reagans trend’. This target zone is characterised by copper-molybdenum porphyries with gold and zinc anomalous halos in the
south of the project area, and it merges with the 7km long and strongly mineralised Chinaman’s Creek – Reid’s Creek – Spring
Creek – Reagan’s target immediately to the north.
Extensive airborne magnetic and electromagnetic surveys have been conducted over the Mt Perry Project area, together with
detailed soil sampling, rock chip sampling and geological mapping surveys. This has been followed by drilling programs that
conducted first pass reconnaissance drilling on numerous targets. Exploration at Mt Perry has identified several high grade vein-
style targets and lower grade, high-tonnage porphyry-style gold targets.
SolGold plc annual report for the year ended 30 June 2013
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During 2013 a detailed review of the Mt Perry project was carried out. The aim of the review was to evaluate the geological
potential of the seven main prospects to establish the geological resource potential for the region. The report concluded that the
prospects have a combined potential to host between 200,000 ozs (base case) and 700,000 ozs (geological potential) of gold. A
significant amount of the tenement remains unexplored, leaving the potential for unrecognised prospects to be discovered within
the area. Currently SolGold is seeking a JV partner to continue exploration at Mt Perry.
Figure 16 – Augustine North long-section displaying an interpreted high-grade shoot dipping to the north-east.
Figure 17 – Chinamans Creek North cross-section displaying interpreted Au and As lodes through the SW lode (Caledonian Reef)
and Middle lode.
SolGold plc annual report for the year ended 30 June 2013
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Figure 18 – Spring Pig cross section, displaying interpreted Au and As lodes.
Figure 19– Bania lode long-section, showing gram-metre values over the approximate 400m strike length of drill testing.
SolGold plc annual report for the year ended 30 June 2013
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Normanby Project (100% SolGold)
Location:
Ownership:
Tenement Area:
120km north-west of Mackay, Queensland, Australia
100% owned
171 granted sub-blocks (circa 550 km2) and 100 application sub-blocks (circa 321 km2 which are
Primary Targets:
Cu-Au porphyry deposits and batholith associated gold vein deposits
primarily consolidation areas).
The Normanby Project is located at the southern margin of eastern Australia’s densest cluster of million ounce gold deposits, the
nearest of which is the Mt. Carlton Au-Ag mine, located 40km to the northwest of Normanby.
SolGold’s exploration to date has primarily focussed around the Normanby Goldfield, a collection of 70 historical workings. Work
programs have included extensive stream sediment, soil and rock chip sampling, an airborne magnetic survey and 50 drill holes
totalling 1523 metres in length. The most significant intersections were at the Mt Flat Top prospect and included an intersection of
42m grading 1.16 g/t gold and 34m grading 1.22 g/t gold. The mineralisation has the geological features of a porphyry copper
system with a high gold to copper ratio. A second phase of drilling may be carried out to test the lateral and vertical extension of
this potential porphyry target. Regional-scale stream sediment and rock chip sampling has identified numerous anomalous areas,
including the Mt Crompton breccia pipe.
No field exploration was conducted in 2013 at Normanby as SolGold is seeking expressions of interest to joint venture the
Normanby project.
Figure 20: Mt Flat Top cross-section, displaying Au (colour histograms) and Cu (black line) assay grades.
Rannes Project (100% SolGold)
Location:
Ownership:
Tenement:
140km west of Gladstone, Queensland, Australia
100% owned
209 granted sub-blocks (circa 655km
2) and 203 application sub-blocks (circa 651.5 km2) which are
Primary Targets: Disseminated and vein gold and silver deposits
primarily consolidation areas).
SolGold’s principal targets at the Rannes project are structurally-controlled, low-sulphidation epithermal gold-silver deposits.
Thirteen prospects have been identified within the Permian-aged Camboon Volcanics, with the majority lying along north-north-
west trending fault zones.
Exploration by SolGold has included tenement wide stream sediment, soil and rock chip sampling surveys. A detailed airborne
magnetic survey has also been flown and recently re-interpreted to enhance the structural model development of the belt. At a
prospect scale, exploration methods have included a 3-D IP (Induced Polarisation) survey, geological mapping, and trenching all
contributing to additional drill targets being defined at several prospects.
SolGold plc annual report for the year ended 30 June 2013
20
A total of 473 holes have been drilled at the Rannes project for a total of 58,887m. The majority of this drilling has been focussed at
the Kauffmans prospect (151 holes) and the Crunchie prospect (90 holes), while lower metreage drill programs have occurred at
the Shilo, Cracklin Rosie, Porcupine, Brother, Spring Creek and Police Camp Creek prospects.
Based on these drilling programs, the current combined indicated and inferred resource estimate stands at 12.23 million tonnes at
0.6 g/t gold and 23.18 g/t silver; for 237,240 ozs Au and 9,105,072ozs Ag (23rd May 2012). Table 3 lists the current resource
estimates at the five main prospects. These estimates are based on gold to silver ratio of 1:50 and a 0.5 g/t Au equivalent cut-off.
Mineral resources estimates were completed by Hellman & Schofield Pty Ltd, and by H&S Consulting Pty. Ltd., independent
geological consultancies. The most recent resource estimate includes resources in both Indicated and Inferred categories for
reporting under the JORC Code for Reporting of Mineral Resources and Ore Reserves.
Figure 21: An overview of the Rannes project displaying the main prospects, soil gold anomalies and a simplified geology map.
Indicated and inferred gold resources exist at Kauffmans and Crunchie, while untested prospect targets exist at Woolein, Bojangles
and Longfellow.
AuEq Cut off
Category M Tonnes
Au g/t
Ag g/t
Au ozs
Ag ozs
Kauffmans
Crunchie
Cracklin'
Porcupine
Brother
0.5
0.5
0.5
0.5
0.5
Indicated
Inferred
Indicated
Inferred
Inferred
Inferred
Inferred
TOTAL (All Prospects)
1.58
3.49
2.4
3.2
0.43
0.57
0.57
12.24
0.79
0.74
0.46
0.49
0.59
0.5
0.6
0.63
10.3
8.9
42.4
39.8
5.6
7.5
1.1
34.80
40,304
83,060
35,833
49,797
8,023
9,202
11,021
237,240
522,074
999,278
3,310,000
4,040,000
76,145
137,085
204,90
9,105,072
AuEq ozs
1:50 Au:Ag
50,729
103,092
102,100
130,676
9,544
11,941
11,434
419,516
Table 3 – Resource estimates at Kauffmans, Crunchie, Cracklin, Porcupine and Brother as of the 23rd May 2012. Note the gold
equivalent values are based on a ratio of 1:50 (Au:Ag).
SolGold plc annual report for the year ended 30 June 2013
21
During 2013 a detailed review of the Rannes prospects was carried out. The aim of this review was to evaluate the geological
potential of the project. The report concluded the following:
1.
The resources at Kauffmans and Crunchie, at the current gold price, will require further higher grade zones to enhance
the prospects economic viability.
2. Numerous untested prospects exist within the project (Longfellow, Woolein and Bojangles). The geological potential of
3.
these prospects has been estimated to be 50,000 ozs of gold.
Potentially deeper targets exist at Rannes but no geophysical technique, to date, has effectively identified target
mineralisation.
Currently SolGold is seeking a JV partner to continue exploration at Rannes.
Cracow West Project (100% SolGold)
Location:
Ownership:
Tenement:
Primary Targets:
260km west-north-west of Gympie, Queensland, Australia
100% owned
47 granted sub-blocks (circa 146 km2) and 30 application sub-blocks (circa 93.16 km2)
Low-sulphidation epithermal Au-Ag deposits
Cracow West is located 15km to the north-west of Evolution Mining’s Cracow gold mine (approximately 1.5 million ounces of gold).
Gold mineralisation at the mine is associated with Permian-aged, low-sulphidation, epithermal quartz veins which have been
emplaced along north-west and north-north-west trending fault zones. SolGold’s initial exploration concept was to explore for a
similar deposit to Cracow gold mine but a recent review of the regional geology suggests that the anomalism seen at Cracow West
may be associated with a later phase of Triassic intrusions, suggesting a later mineralisation event.
SolGold’s exploration at Cracow West has included stream sediment, soil and rock chip sampling. This has identified three
significant prospects; Dawson Park, Kambrook and Theodore Bends. A ‘SAM’ survey (sub-audio magnetotellurics) has also been
completed over the Kambrook and Dawson Park prospect. This has identified a potential buried target at Dawson Park, which
coincides with a distinct soil tellurium anomaly at surface.
Figure 22: A conceptual geological cross-section through the Cracow West project and the surrounding area. The age of the
intrusions interpreted below Dawson Park and Theodore has been interpreted to be Late Permian to Early Triassic.
Westwood Project (100% SolGold)
Location:
Ownership:
Tenement:
Primary Targets: Au porphyry and disseminated PGE (platinum group elements) in layered gabbro intrusions
50km south-west of Rockhampton, Queensland, Australia
100% owned
63 granted sub-blocks (circa 198 km2)
SolGold are currently reviewing two prospects at Westwood. These include:
The Westwood prospect, which is a layered gabbro intrusion enriched in PGE’s, Cu and Au. The area has had some
historic exploration by BHP and Glengarry Resources that was focussed in a small proportion of the intrusion. SolGold’s
exploration concept is to screen the rest of the intrusion with soil sampling to locate untested PGE-bearing horizons
within the layered gabbro.
The Fred Creek prospect is located in the north of the tenement. SolGold has carried out a small soil sampling program
and a brief field investigation. Historic drilling by BHP included assay results of 33m grading 0.97 g/t Au from 12m depth
(the hole ended in mineralisation) and 43m grading 0.52 g/t Au from 2m depth. The principal target is a gold porphyry
system.
SolGold plc annual report for the year ended 30 June 2013
22
Lonesome Project (100% SolGold)
Location:
Ownership:
Tenement:
Primary Targets:
200km west of Bundaberg, Queensland, Australia
100% owned
43 granted sub-blocks (circa 134 km2)
Epithermal Au-Ag and Cu-Au porphyry deposits
The tenement is situated 61km north of the Cracow Au-Ag mine. The geological setting of Lonesome is similar to that of the Cracow
gold mine, with the principal target being a low-sulphidation epithermal system. SolGold have yet to carry out work at the
Lonesome project.
SOLOMON ISLANDS
Figure 23: Location of exploration licenses held by SolGold in the Solomon Islands.
Fauro Island Project (100% SolGold)
Location:
Ownership:
Tenement Area:
Primary Targets:
380km northwest of the capital Honiara, Solomon Islands
100% owned
30 km2
Epithermal gold and copper-gold Porphyry deposits
The Fauro Prospecting Licence (PL 12/09) was granted to Australian Resource Management (ARM, a 100% owned subsidiary
company) on 20th November 2009. The project lies 82km south-east of the giant ‘Panguna’ copper gold porphyry deposit on
Bougainville Island in neighbouring Papua New Guinea. SolGold interprets the geology of the Fauro Project to be favourable for the
discovery of epithermal gold and porphyry copper gold deposits similar to those within other parts of the belt. The Fauro property
was acquired following concept development in 2007-2008 that targeted environments with demonstrated gold mineralisation
within a Lihir-style volcanic caldera setting.
The key prospects are Ballyorlo, Kiovakase, Meriguna and Ballteara (see Figure 24). Available datasets across the project include
airborne magnetics, airborne EM, electrical IP, surface geochemistry (BLEGS, soils, rock chips), geological mapping, trenching and
diamond drilling. Geochemical highlights include rock chips with assays up to 169 g/t Au at Kiovakase (with visible free gold) and up
to 173 g/t Au from Meriguna. Trench results and drilling results are summarised in Figure 24.
SolGold plc annual report for the year ended 30 June 2013
23
No field exploration was conducted during 2013 at Fauro as SolGold is seeking expressions of interest to joint venture the project.
Figure 24: An overview of the Fauro prospects and the significant intersects to data. The base map comprises RTP (Reduced-To-
Pole) magnetic imagery.
Guadalcanal Joint Venture
The Guadalcanal Joint Venture between SolGold and Newmont was terminated as of 5th May 2013. SolGold has entered into an
agreement with Gold Ridge Mining Limited, who may secure suitable tenure over the Sutakiki, Central, Koloula and Mbetilonga
tenements. SolGold have retained the Kuma project from the joint venture area.
Kuma Project (100% SolGold)
Location:
Ownership:
Tenement Area:
Primary Targets:
37km south-east of the capital Honiara, Solomon Islands
100% owned
43 km2
Copper gold porphyry deposits
The Kuma project lies just to the south-west of a series of major NW-SE-trending arc-parallel faults. These faults are associated
with numerous Cu and Au anomalies, including the Sutakiki prospect and the Mbetilonga prospect (formerly part of the
Guadalcanal Joint Venture). At Kuma, the surface geology is dominated by a 4km by 1km lithocap. This extensive zone of argillic
and advanced argillic alteration is caused by hydrothermal fluids that emanate from the top of porphyry copper-gold mineralising
systems, and thus provides a buried porphyry copper (gold) target for SolGold.
Exploration completed at Kuma under the previous Guadalcanal Joint Venture between SolGold and Newmont included extensive
geochemical sampling (BLEG, rock chip and channel samples), geological mapping, a magnetic survey and an electromagnetic
survey.
Figure 25 shows the outline of the mapped lithocap and also highlights magnetic highs which may represent the apex of porphyry
stocks.
SolGold plc annual report for the year ended 30 June 2013
24
Figure 25: An overview of the Kuma tenement. The principal target is a ‘lithocap’ 4km by 1km in area. The outlines define the
mapped alteration as follows: yellow=argillic, orange=advanced argillic and red=silica. The magnetic high anomalies that are
labelled A, B, C and D are additional targets on the prospecting licence area.
Lower Koloula Project (100% SolGold)
Location:
Ownership:
Tenement Area:
Primary Targets:
20km south-east of the capital Honiara, Solomon Islands
100% owned
20 km2
Copper-gold porphyry
The Lower Koloula tenement (PL 01/10) lies along the southern ‘weather coast’ of Guadalcanal. The Lower Koloula area has
geology dominated by intrusions of the Koloula Igneous Complex, with over eight phases of intrusions mapped at surface.
Exploration to date has included geochemical surveys (BLEG, soil and rock chip sampling), an airborne magnetic survey and
geological mapping. These work programs have identified two main areas of interest; the Big Frog prospect and the Pepechichi
prospect.
The most significant prospect is Big Frog, an area of multiple intrusive rock types that include five phases of tonalite and three
phases of diorite and quartz diorite. This intrusive complex is defined by coincident Cu, Au and Mo soil anomalies that collectively
span an area approaching a square kilometre. These soil anomalies are open to the west and southwest beneath alluvial deposits
of the Koloula River. Outcrops of porphyry stockwork veins (predominantly B-veins) at surface occur near central to the Big Frog
prospect, confirm the presence of a porphyry system at Big Frog, and corroborate the Cu-Au-Mo association in soil samples from
the region. Also extensively observed at Big Frog are north-west-trending zones of argillic and advanced argillic alteration. Other
highlights at Big Frog include a rock chip sample grading 2.47 g/t Au, 100 g/t Ag and >0.1 % Cu. Pepechichi is currently defined by a
Cu-Au soil anomaly.
SolGold plc annual report for the year ended 30 June 2013
25
Figure 26: RTP magnetic image over the Lower Koloula license area. Besides the Big Frog prospect and the area adjoining the
southwest margin of Big Frog, other areas of interest are labelled 1-8. The three extensive and strong magnetic high anomalies are
likely to be shallow outcropping areas of the Koloula Diorite. Areas of anomalous Cu and Au soil geochemistry at Big Frog lie south-
west of the magnetic high labelled ‘1’. Magnetic lows appear to lie along structures, the clearest example being the northeast-
trending series of magnetic lows that encapsulate the magnetic low feature labelled ‘6’.
Malukuna Project (100% SolGold)
The Malukuna project is located 23km south-east of the capital Honiara, Solomon Islands and comprises of one tenement that
covers an area of 36 km2. The project is relatively new to the SolGold portfolio and has yet to have systematic exploration work
carried out on it.
SolGold is completing a detailed review of its tenements in the Solomon Islands with a view of recommending exploration
activities in 2014.
Qualified Person:
Information in this report relating to the exploration results is based on data reviewed by Dr Bruce Rohrlach (BSc (Hons), PhD), the
GM Exploration of the Company. Dr Rohrlach is a Member 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. Dr Rohrlach consents to the inclusion
of the information in the form and context in which it appears.
The data in this report that relates to Mineral Resources using the Ordinary Kriging (OK) method is based on information evaluated
by Mr Simon Tear who is a Member of The Australasian Institute of Mining and Metallurgy (MAusIMM) and who has sufficient
experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the “JORC Code and guidelines”). Mr Tear is a full-time employee of H&S
Consultants Pty Ltd and he consents to the inclusion in the report of the Mineral Resource in the form and context in which they
appear.
SolGold plc annual report for the year ended 30 June 2013
26
INTERESTS IN TENEMENTS
EPM
EPM Name
Principal Holder
Project
Expiry
Queensland
14279
14280
14283
17362
18494
11343
16456
17354
18280
18032
18035
15779
15803
16420
17079
17937
18743
18744
18760
19243
19348
19349
19639
19466
19467
19469
25245
25300
19410
Mount Perry North
Mount Perry South
Mount Perry
Reid Creek
Spring Creek
Normanby Gold
Acapulco Mining Pty Ltd
Acapulco Mining Pty Ltd
Acapulco Mining Pty Ltd
Acapulco Mining Pty Ltd
Acapulco Mining Pty Ltd
Acapulco Mining Pty Ltd
Normanby extended
Acapulco Mining Pty Ltd
Clarke Range
Normanby South
Cracow West
Tim Shay
Cooper
Cooper Extended
Dee Valley
Banana North
Goovigen
Woolein
Pinnacles West
Westwood
Lonesome
Black Plains
Mt Cooper
Acapulco Mining Pty Ltd
Acapulco Mining Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Goovigen Consolidated
Central Minerals Pty Ltd
Cattle Creek North
Cattle Creek South
Dawson Gap
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Mt Perry Consolidated
Central Minerals Pty Ltd
Cooper Consolidated
Central Minerals Pty Ltd
Normanby Consolidated
Acapulco Mining Pty Ltd
Mt Perry
Mt Perry
Mt Perry
Mt Perry
Mt Perry
Normanby
Normanby
Normanby
Normanby
Cracow West
Cracow West
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Rannes
Cracow West
Cracow West
Cracow West
Mt Perry
Rannes
Normanby
Kuma
Fauro
Malukuna
Lower Koloula
24/Jan/14
**
03/Mar/15
23/May/15
16/Sep/15
23/Jan/14
12/Sep/15
23/Aug/12
27/Feb/16
18/Apr/14
11/Oct/14
03/Nov/15
20/Dec/11
28/Jan/14
20/Sep/12
19/Jan/14
20/Oct/12
11/Oct/13
11/Oct/15
22/Jan/15
22/Jan/15
02/Aug/15
20/Nov/15
n/a
n/a
n/a
n/a
n/a
n/a
n/a
**
**
**
**
**
**
**
**
*
*
*
*
*
*
*
11/Apr/15
04/Feb/15
14/Jul/13
14/Jul/13
26/Apr/35
***
***
Solomon Islands
PL 08/06
Kuma
PL 12/09
Fauro
PL 02/01
Malukuna
Lower Koloula
PL 01/10
Ecuador
402288
Australian Resources Management Pty Ltd
Australian Resources Management Pty Ltd
Guadalcanal Exploration Pty Ltd
Guadalcanal Exploration Pty Ltd
Cascabel
Cornerstone (through subsidiaries CESA and ENSA)
Cascabel
* EPM Applications have been lodged. Expiry dates determined at time of EPM grant.
** Renewal Applications have been lodged, the Company sees no reason as to why these tenements will not be renewed in the near future.
*** Application for renewal of the PL, for a period of 2 years, has been lodged, the Company sees no reason as to why these tenements will not be
renewed in the near future.
.
SolGold plc annual report for the year ended 30 June 2013
27
RISKS AND UNCERTAINTIES
The Directors consider that the factors and risks described below are the most significant.
Funding Risks
The Group’s ability to effectively implement its business strategy over time may depend in part on its ability to raise additional
funds and/or its ability to generate revenue from its projects. The need for and amount of any additional funds required is
currently unknown and will depend on numerous factors related to the Group’s current and future activities.
If required, the Group would seek additional funds, through equity, debt or joint venture financing. There can be no assurance that
any such equity, debt or joint venture financing will be available to the Group in a timely manner, on favourable terms, or at all.
Any additional equity financing will dilute current shareholdings, and debt financing, if available, may involve restrictions on further
financing and operating activities.
If adequate funds are not available on acceptable terms, the Group may not be able to take advantage of opportunities or
otherwise respond to competitive pressures, as well as possibly resulting in the delay or indefinite postponement of the Group’s
activities.
General Exploration and Extraction risks
There is no certainty that the Company will identify commercially mineable reserves in the Tenements. The exploration for, and
development of, mineral deposits involves significant uncertainties and the Company’s operations will be subject to all of the
hazards and risks normally encountered in such activities, particularly given the terrain and nature of the activities being
undertaken. Although precautions to minimise risks will be taken, even a combination of careful evaluation, experience and
knowledge may not eliminate all of the hazards and risks.
The targets identified by the Company’s personnel and consultants, are based on current experience and modelling and all
available data. There is no guarantee that surface sample grades of any metal or mineral taken in the past will persist below the
surface of the ground. Furthermore, there can be no guarantee that the estimates of quantities and grades of gold and minerals
disclosed will be available for extraction and sale.
Reserve and resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates
which were valid when originally calculated may alter significantly when new information or techniques become available. In
addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove
to be inaccurate.
Title Risk
SolGold’s tenements are subject to various conditions, obligations and regulations. If applications for title or renewal are required
this can be at the discretion of the relevant government minister or officials. If approval is refused, SolGold will suffer a loss of the
opportunity to undertake further exploration, or development, of the tenement. SolGold currently knows of no reason to believe
that current applications will not be approved, granted or renewed. Some of the properties may be subject to prior unregistered
agreements or transfers or native or indigenous peoples’ land claims and title may be affected by undetected defects. No
assurance can be given that title defects do not exist. If a title defect does exist, it is possible that SolGold may lose all or a portion
of the property to which the title defects relates.
Native Title Risk
The effect of the Native Title Act 1993 (Cth) (“NTA”) is that existing and new tenements held by SolGold in Australia may be
affected by native title claims and procedures. SolGold has not undertaken the historical, legal or anthropological research and
investigations at the date of this report that would be required to form an opinion as to whether any existing or future claim for
native title could be upheld over a particular parcel of land covered by a tenement.
There is a potential risk that a determination could be made that native title exists in relation to land the subject of a tenement
held or to be held by SolGold which may affect the operation of SolGold’s business and development activities. In the event that it
is determined that native title does exist or a native title claim is registered, SolGold may need to comply with procedures under
the NTA in order to carry out its operations or to be granted any additional rights such as a Mining Lease. Such procedures may
take considerable time, involve the negotiation of significant agreements, involve a requirement to negotiate for access rights, and
require the payment of compensation to those persons holding or claiming native title in the land which is the subject of a
tenement. The administration and determination of native title issues may have a material adverse impact on the position of
SolGold in terms of its cash flows, financial performance, business development, ability to pay dividends and share price.
SolGold plc annual report for the year ended 30 June 2013
28
Volatility of Commodity Prices
SolGold’s possible future revenues will probably be derived mainly from Gold and Copper and/or from royalties gained from
potential joint ventures or from mineral projects sold. Also, during operations by SolGold, the revenues used will be dependent on
the terms of any agreement for the activities. Consequently, SolGold’s potential future earnings could be closely related to the
price of either of these commodities.
Gold and Copper prices fluctuate and are affected by numerous industry factors, many of which are beyond the control of SolGold.
Such factors include, but are not limited to, demand for CDIs, technological advancements, forward selling by producers,
production cost levels in major producing regions, macroeconomic factors, inflation, interest rates, currency exchange rates and
global and regional demand for, and supply of, Gold and Copper.
If the market price of Gold and Copper sold by SolGold were to fall below the costs of production and remain at such a level for any
sustained period, SolGold would experience losses and could have to curtail or suspend some or all of its proposed mining
activities. In such circumstances, SolGold would also have to assess the economic impact of any sustained lower commodity prices
on recoverability.
Project Development Risks
If the Company discovers a potentially economic resource or reserve, there is no assurance that the Company will be able to
develop a mine thereon, or otherwise commercially exploit such resource or reserve. Further, there can be no assurance that the
Company will be able to manage effectively the expansion of its operations or that the Company’s current personnel, systems,
procedures and controls will be adequate to support the Company’s operations as operations expand. Any failure of management
to manage effectively the Company’s growth and development could have a material adverse effect on the Company’s business,
financial condition and results of operations. There is no certainty that all or, indeed, any of the elements of the Company’s
current strategy will develop as anticipated.
Currency Fluctuations
The future value of the Ordinary Shares may fluctuate in accordance with movements in the foreign currency exchange rates. For
example, it is common practice in the mining industry for mineral production revenue to be denominated in USD, although some
but not all of the costs of exploration production will be incurred in USD and not all of the ore or metal obtained from the
Tenements will be sold in USD denominated transactions.
Land Access Risk
Land access is critical for exploration and evaluation to succeed. In all cases the acquisition of prospective tenements is a
competitive business, in which propriety knowledge or information is critical and the ability to negotiate satisfactory commercial
arrangements with other parties is often essential.
Access to land for exploration purposes can be affected by land ownership, including private (freehold) land, pastoral lease and
native title land or claims under the Native Title Act 1993 (Cth). Immediate access to land in the areas of activities cannot in all
cases be guaranteed. SolGold may be required to seek consent of land holders or other persons or groups with an interest in real
property encompassed by, or adjacent to, SolGold’s tenements. Compensation may be required to be paid by SolGold to land
holders so that SolGold may carry out exploration and/or mining activities. Where applicable, agreements with indigenous groups
have to be in place before a mineral tenement can be granted.
Rights to mineral tenements carry with them various obligations in regard to minimum expenditure levels and responsibilities in
respect of the environment and safety. Failure to observe these requirements could prejudice the right to maintain title to a given
area.
In the case of mining and exploration operations in Solomon Islands, there is a complex land tenure structure and while the
Tenements and those Access Agreements entered into between Australian Resource Management (ARM) Pty Ltd (“ARM”) and
Honiara Holdings Pty. Ltd. and various landowners entitle it to explore for the duration of the term of each PL, the existing
legislative framework only provides for limited forms of negotiation between the landowners/community leaders on the one hand
and mining companies on the other. It is also incumbent on the Director of Mines and the mining tenement holder to identify
which landowners and community leaders they need to negotiate with. SolGold does not guarantee that the identifications made
to date and upon which the Access Agreements are currently based may not be contested. As a consequence there may be
unexpected difficulties experienced in progressing a promising resource into a commercial mining operation.
SolGold has also procured Access Agreements for areas within the Tenements. Whilst SolGold believes that it is entitled to rely
upon the same to conduct exploration within these areas, no assurance can be given that there may not be some future challenge
to SolGold’s ability to do so.
SolGold plc annual report for the year ended 30 June 2013
29
Land Access Risk (continued)
Whilst SolGold has the Access Agreements with landowners covering the majority of the prospective areas identified by SolGold
within the Tenements, its ability to carry out exploration in the residual areas will require additional access agreements to be
entered into. The ability of SolGold to secure the benefits of all the Access Agreements is dependent upon, inter alia, the
contracting parties’ willingness to perform and discharge their obligations thereunder. There may be legal and commercial
limitations in respect of enforcement of contractual rights. Additionally, SolGold will not be permitted to explore in areas
nominated by the landowners as reserved or protected areas in the Solomon Islands under section 4(2) of the Mining Act. Whilst
SolGold is actively seeking to liaise with landowners to identify relevant reserved or protected areas, some considerable
uncertainty exists as to the precise location of these areas, the identification of which requires the input of the indigenous
population. The inability of SolGold to identify these areas, or a claim by landowners that reserved or protected areas exist over
areas identified by SolGold as prospective, may have a material adverse effect on the ability of SolGold to conduct its exploration
programme in the manner identified in this document.
Government policy, impassable or difficult access as a result of the terrain, seasonal climatic effects or inclement weather can also
adversely impact SolGold’s activities.
Geopolitical, regulatory and sovereign risk
The availability and rights to explore and mine, as well as industry profitability generally, can be affected by changes in government
policy that are beyond the control of SolGold.
SolGold’s exploration tenements are located in Ecuador, the Solomon Islands and Australia and are subject to the risks associated
with operating both in domestic and foreign jurisdictions. As the Solomon Islands and Ecuador are developing countries, their legal
and political systems are emerging when compared to those in operation in Australia and the United Kingdom. Such risks include,
but are not limited to:
economic, social or political instability or change;
hyperinflation, currency non-convertibility or instability;
changes of law affecting foreign ownership, government participation, taxation, working conditions, rates of exchange,
exchange control, exploration licensing, export duties, resource rent taxes, repatriation of capital, environmental
protection, mine safety, labour relations;
government control over mineral properties or government regulations that require the employment of local staff or
contractors or require other benefits to be provided to local residents;
delays and declines in the standard and effective operation of SolGold’s activities, unforeseen and un-budgeted costs,
and/or threats to occupational health and safety as a consequence of geopolitical, regulatory and sovereign risk.
Queensland
The Queensland Minister for Natural Resources, Mines and Energy conducts reviews from time to time of policies relating to the
granting and administration of mining tenements. At present, SolGold is not aware of any proposed changes to policy that would
affect its tenements.
In Queensland, the Aboriginal Cultural Heritage Act 2003 and the Torres Strait Islander Cultural Heritage Act 2003 (which
commenced on 16 April 2004) impose duties of care which require persons, including SolGold, to take all reasonable and practical
measures to avoid damaging or destroying Aboriginal cultural heritage. This obligation applies across the State and requires
SolGold to develop suitable internal procedures to discharge its duty of care in order to avoid exposure to substantial financial
penalties if its activities damage items of cultural significance. Under this legislation, indigenous people can exercise control over
land with respect to cultural heritage without necessarily having established the connection element (as required under native title
law). This creates a potential risk that the tenement holder may have to deal with several indigenous individuals or corporations,
where no native title has been established, to identify and manage cultural heritage issues. This could result in tenement holders
requiring lengthy lead times to manage cultural heritage for their projects.
Changing attitudes to environmental, land care, cultural heritage and indigenous land rights’ issues, together with the nature of the
political process, provide the possibility for future policy changes. There is a risk that such changes may affect SolGold’s exploration
plans or, indeed, its rights and/or obligations with respect to the tenements.
Solomon Islands
The Solomon Islands minerals board may from time to time amend and review its policies on mining and exploration in the
Solomon Islands. Any such changes in Government policy may affect the ability of SolGold to conduct and undertake mining and
exploration in the Solomon Islands.
SolGold plc annual report for the year ended 30 June 2013
30
Geopolitical, regulatory and sovereign risk (continued)
Ecuador
SolGold’s Cascabel project in Ecuador may be exposed to potentially adverse risks associated with the evolving rules and laws
governing mining expansion and development in that jurisdiction. Additionally, SolGold’s operations may be detrimentally affected
in the event that the Ecuadorian government were to default on its foreign debt obligations or become subject to wider global
economic and investment uncertainty. SolGold is not aware of any current material changes in legislative, regulatory and public
policy initiatives in Ecuador however any future or proposed changes may adversely affect the Cascabel project or SolGold’s ability
to operate successfully in Ecuador.
Under the current legislative regime, a mining corporation and the Ecuadorian Government must enter into an exploitation
contract prior to exploitation of natural resources. There is no certainty that SolGold will be able to successfully enter into an
exploitation contract, or enter into one on commercially favourable terms, and such a scenario may adversely impact on the
Cascabel project or render it uneconomical.
SolGold plc annual report for the year ended 30 June 2013
31
FINANCIAL REVIEW
The Company achieved several milestones during the financial year ended 30 June 2013. These included:
The appointment of Alan Martin as Chief Executive Officer of SolGold and its subsidiaries effective 10 May 2013;
Earning a 30% interest in Exploraciones Novomining S.A. and completing a successful exploration program in the
southern part of the Cascabel concession. Subsequent to year end, on 28 August 2013 SolGold satisfied conditions to
increase its interest in ENSA to 50% and on 16 December exercised its right to increase its interest to 85%; and
The completion of successful raisings totalling approximately $9.15 million during the year from institutional and
professional investors.
Results
The Group incurred a loss of $29,895,902 for the year, including the impairment and write off of exploration expenses during the
year of $27.3 million. The Group considered it necessary to make a provision for impairment of $24,734,063 as it relates to the
deferred exploration assets of the Rannes and Fauro projects. A decision was also made to expense $2,566,578 for exploration
expenditure associated with other tenements that were dropped during the year. A detailed assessment of the carrying values of
deferred exploration costs is provided in Note 25.
Statement of Financial Position
As at 30 June 2013, the Group had net assets of approximately $18.8 million, a decrease of approximately $21 million over the
previous financial year. This decrease was largely associated with the exploration write off and impairment charge of $27.3 million
recognised over the Groups’ exploration assets, and annual operating expenses of approximately $2.6 million, offset by the
completion of $8.8 million in placements net of costs.
The only interest-bearing debt incurred by the Group includes minor leasing facilities totalling $23,576 secured over the leased
assets.
Cash Flow
Our cash expenditure for the year was approximately $8.1 million, including the repayment of borrowings. Cash of approximately
$8.6 million was received from the issue of securities. Accordingly, the net cash inflow of the Company for the year was
approximately $0.4 million.
Cash of approximately $5.2 million was invested by the Group on exploration expenditure during the year.
Post Balance Sheet Events
On 15 July 2013, the Company issued 7,500,000 options to its Chief Geologist. The options consist of three tranches with varying
exercise prices and vesting conditions which are dependent on the Company’s share price. The options expire on 15 July 2016.
On 15 July 2013, a total of 1,584,000 employee options exercisable at 50p were forfeited due to employees ceasing employment
with the Company.
On 6 September 2013, the Company issued an additional 700,000 shares at £0.13 pursuant to the achievement of certain
employment related milestones on the conversion of the Convertible Redeemable Preference Shares.
On 24 September 2013, the Company issued 7,320,000 options to contractors and staff. The options consist of three tranches with
varying exercise prices and vesting conditions which are dependent on the Company’s share price. The options expire on 24
September 2016.
On 25 September 2013, the Company issued an additional 49,840,967 shares at £0.075 to raise $6.4 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.
The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the balance date
that would have a material impact on the consolidated financial statements.
SolGold plc annual report for the year ended 30 June 2013
32
Outlook
The exploration programs for 2014 will focus on Cascabel along with finding joint venture partners for the Group’s Fauro, Rannes,
Normanby, and Mt Perry projects. Discussions on the future exploration program at each of the projects is detailed in the
Operations Report.
Financial Controls and Risk Management
The Board regularly reviews the risks to which the Group is exposed and ensures through Board Committees and regular reporting
that these risks are managed and minimised as far as possible. The Audit Committee is responsible for the implementation and
review of the Group’s internal financial controls and financial risk management systems.
Nominated Advisors and Brokers
RFC Corporate Finance Limited (“RFC”) and SP Angel Corporate Finance LLP act as Nominated Advisor and Broker to the Company
respectively.
Equity
Since the date of the last Annual Report, the Company has issued the following equities:
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 28 September 2012, the Company issued 3,000,000 options to the underwriter of the private placement raising $3 million on 9
October 2012. For accounting purposes the options were issued on 28 September 2012 and following approval at the Annual
General Meeting held on 19 August 2013 and formally allotted on 6 September 2013. The options vested on 19 August 2013, are
exercisable at 6 pence each, and expire 19 August 2014.
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 private
placement to progress its exploration and project development efforts across its portfolio of projects in the Solomon Islands,
Ecuador and Queensland, Australia.
On 8 April 2013, the Company issued an additional 119,801,376 shares at £0.015 to raise $2.6 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 10 May 2013, the Company issued 16,000,000 options to the Chief Executive Officer as part of his remuneration arrangements.
For accounting purposes the options were issued on 28 September 2012 and following approval at the Annual General Meeting
held on 19 August 2013 and formally allotted on 6 September 2013. The options consist of three tranches with varying exercise
prices and vesting conditions which are dependent on the Company’s share price. The options expire on 6 September 2017.
On 14 June 2013, the Company issued an additional 8,200,000 shares at £0.03 to raise $0.4 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 28 June 2013, the Company issued an additional 1,110,000 shares at £0.038 as a result of the conversion of Convertible
Redeemable Preference Shares (CRPS) to ordinary shares.
On 15 July 2013, the Company issued 7,500,000 options to its Chief Geologist. The options consist of three tranches with varying
exercise prices and vesting conditions which are dependent on the Company’s share price. The options expire on 15 July 2016.
SolGold plc annual report for the year ended 30 June 2013
33
On 6 September 2013, the Company issued an additional 700,000 shares at £0.13 pursuant to the achievement of certain
employment related milestones, including under the CRPS.
On 24 September 2013, the Company issued 7,320,000 options to contractors and staff. The options consist of three tranches with
varying exercise prices and vesting conditions which are dependent on the Company’s share price. The options expire on 24
September 2016.
On 25 September 2013, the Company issued an additional 49,840,967 shares at £0.075 to raise $6.4 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.
At year end the Company had a total of 553,354,342 shares and 28,372,000 options on issue. As at the date of this report, the
Company had a total of 603,895,309 shares and 41,608,000 options on issue.
SolGold plc annual report for the year ended 30 June 2013
34
DIRECTORS AND COMPANY SECRETARY
The Board consists of two Executive Directors and three Non-Executive Directors.
Alan Martin
(Managing Director and Chief Executive Officer)
Alan Martin (52), appointed Chief Executive Officer 10 May 2013 and appointed Managing Director 8 October 2013, brings to
SolGold more than 20 years of technical, commercial and financial investment experience in the Australian resources industry. He
has a strong passion for exploration and considerable financial experience.
Alan graduated from Lakehead University, in Ontario, Canada. After completing an Honours Bachelor of Science Degree (Geology
major) in 1985, he moved to Australia and joined Delta Gold NL as an exploration geologist with a focus on gold and base metal
projects. In 1992, he entered the Australian investment industry as a mining analyst at Westpac Investment Management and has
worked with major Australian financial institutions over the last 20 years. Alan was particularly successful during his tenure at IAG
Asset Management from 2005 to 2008, delivering outstanding
investment
recommendations of major and junior mining stocks. Over the last 3 years at Colonial First State Global Asset Management, he has
specialised in junior mining and exploration companies with particular focus on identifying the exploration projects that enable
junior companies to create exceptional shareholder value.
investment returns from his successful
Alan also has direct corporate experience in leading exploration ventures. In 1995, he was a founding director of Austminex NL, a
private exploration company which raised $8 million in an IPO in 2000.
Nicholas Mather
(Executive Director)
Nicholas Mather (56), appointed 11 May 2005, graduated in 1979 from the University of Queensland with a B.Sc. (Hons, Geology).
He has over 25 years’ experience in exploration and resource company management in a variety of countries. His career has taken
him to numerous countries exploring for precious and base metals and fossil fuels. Nicholas Mather has focused his attention on
the identification of and investment in large resource exploration projects.
He was Managing Director of BeMaX Resources NL (an ASX-listed company) from 1997 until 2000 and instrumental in the discovery
of the world class Ginkgo mineral sand deposit in the Murray Basin in 1998. As an executive Director of Arrow Energy NL (also ASX-
listed) until his resignation in 2004, Nicholas Mather drove the acquisition and business development of Arrow’s large Surat Basin
Coal Bed Methane project in south-east Queensland. He was managing Director of Auralia Resources NL, a junior gold explorer,
before its USD23 million merger with Ross Mining NL in 1995. He was a non-executive Director of Ballarat Goldfields NL until 2004,
having assisted that company in its recapitalisation and re-quotation on the ASX in 2003.
Nicholas Mather is Chief Executive of DGR Global Limited and non-executive Director of ASX-listed companies Armour Energy
Limited, AusNiCo Limited, Navaho Gold Limited, Orbis Gold Limited and Lakes Oil NL.
Brian Moller
(Non-Executive Chairman)
Brian Moller (54), appointed 11 May 2005, is a corporate partner in the Brisbane-based law firm Hopgood Ganim Lawyers, the
Australian solicitors to the Company. He was admitted as a solicitor in 1981 and has been a partner at Hopgood Ganim since 1983.
He practices almost exclusively in the corporate area with an emphasis on capital raising, mergers and acquisitions.
Brian Moller holds an LLB Hons from the University of Queensland and is a member of the Australian Mining and Petroleum Law
Association.
Brian Moller acts for many publicly-listed resource and industrial companies and brings a wealth of experience and expertise to the
board, particularly in the corporate regulatory and governance areas. He is a non-executive Director of ASX listed DGR Global
Limited, Navaho Gold Limited and Platina Resources Limited, and the non-executive Chairman of ASX-listed AusNiCo Limited.
SolGold plc annual report for the year ended 30 June 2013
35
Dr Robert Weinberg
(Non-Executive Director)
Rob Weinberg (66), appointed 22 November 2005, gained his doctorate in geology from Oxford University in 1973. He has more
than 35 years’ experience of the international mining industry and is an independent mining research analyst and consultant. He is
a Fellow of the Geological Society of London and also a Fellow of the Institute of Materials, Minerals and Mining.
Prior to his current activities he was Managing Director, Institutional Investment at the World Gold Council. Previously he was a
Director of the investment banking division at Deutsche Bank in London after having been head of the global mining research team
at SG Warburg Securities. He has also held senior positions within Société Générale and was head of the mining team at James
Capel & Co. He was formerly marketing manager of the gold and uranium division of Anglo American Corporation of South Africa
Ltd.
Dr Weinberg is a non-executive Director of the ASX listed Kasbah Resources Limited, Medusa Mining Limited, which is a company
listed on the ASX and LSE and of Chaarat Gold Holdings Limited, a company listed on AIM.
John Bovard
(Non-Executive Director)
John Bovard (68), appointed 2 November 2009, is a civil engineer with over 40 years’ experience in mining, heavy construction,
project development and corporate management throughout Australia. His career to date has included roles as CEO of public
companies and both Executive and Non-Executive Directorships. He holds a Bachelors Degree in Civil Engineering, is a Fellow of the
Australasian Institute of Mining and Metallurgy, and a Fellow of the Australian Institute of Company Directors.
Mr Bovard is currently the Non-Executive Chairman of the ASX-listed Mt Isa Metals Limited and Australian Pacific Coal Limited Mr
Bovard is currently the Non-Executive Chairman of ASX listed Orbis Gold Ltd and a Non-Executive Director of Austin Mining Ltd
(ASX). Other recent board roles board have included Non-Executive Director and interim CEO of Australian Solomons Gold (ASX),
Non-Executive Chairman of Axiom Mining (ASX), Managing Director of Danae Resources (ASX) and Greenwich Resources (LSE). He
was President and CEO of Asia Pacific Resources Ltd (TSX) for four years developing a large potash resource in Thailand
He was Project Manager for the $800 million Phosphate Hill fertiliser project in Qld for WMC. Other previous project experience
includes Project Manager of the Porgera mine in PNG, CEO of the SuperPit expansion of Kalgoorlie and General Manager of the Ok
Tedi mine in PNG.
Mr Bovard currently also provides corporate advisory and management advice as a consultant to limited range of selected client
companies in the resources sector.
COMPANY SECRETARY
Karl Schlobohm
(Company Secretary)
Karl Schlobohm (45) has over twenty (20) years’ experience in the accounting profession across a wide range of businesses and
industries. He has previously been contracted into CFO roles with ASX-listed resource companies Discovery Metals Limited and
Meridian Minerals Limited, and as Company Secretary of ASX-listed Linc Energy Limited, Agenix Limited, Discovery Metals Limited
and Global Seafood Australia Limited.
Mr Schlobohm is a Chartered Accountant and holds Bachelor Degrees in Commerce and in Economics, and a Masters Degree in
Taxation.
Mr Schlobohm is also contracted to act as the Company Secretary of the ASX-listed DGR Global Limited, Navaho Gold Limited,
AusNiCo Limited and Armour Energy Limited.
SolGold plc annual report for the year ended 30 June 2013
36
DIRECTORS' REPORT
The Directors present their annual report and audited financial statements for the year ended 30 June 2013.
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, the Solomon Islands, and Queensland, Australia. Details of the Group’s activities, together with a
description of the principal risks and uncertainties facing the Group, and the development of the business, are given in the
Operations Report. Effective 14 May 2012 the Company changed its name from Solomon Gold plc to SolGold plc.
The principal activity of the Company is that of a holding company.
BUSINESS REVIEW
A detailed review of the Group’s business and future developments is set out in the Operations Report and Financial Review.
The principal risks and uncertainties facing the Group at its present stage of development are given under Risks and Uncertainties.
LAND AND BUILDINGS
The Directors are of the view that the book value and market value of land and buildings are not materially different. The land and
buildings were acquired during 2007 and no independent valuation has been obtained since its acquisition.
GOING CONCERN
In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete
tranches. The Group and the Company has not generated revenues from operations. As such, the Group’s and Company’s ability
to continue to adopt the going concern assumption will depend upon a number of matters including the successful capital raisings
in the future of necessary funding and the successful exploration and subsequent exploitation of the Group’s tenements. In the
absence of these matters being successful, the current working capital levels will not be sufficient to bring the Company’s projects
into full development and production and, in due course further financing will be required.
Subsequent to the year end, the Company successfully completed a placement on 25 September 2013 raising a total of $6.4
million. This means that the company should have sufficient capital to fund and progress its exploration and project development
efforts across its portfolio of projects in the Solomon Islands, Ecuador and Queensland, Australia.
It should be noted that the
current working capital levels will not be sufficient to bring the Company’s projects into full development and production and, in
due course, further funding will be required. In the event that the Company is unable to secure further finance either through
third parties or capital raising, it may not be able to fully develop its projects.
CURRENCY
The functional and presentational currency is Australian dollars (“A$”) and all amounts presented in the Directors’ Report and
financial statements are presented in Australian dollars unless otherwise indicated.
RESULTS
The Group’s consolidated loss for the period was $29,895,902 (2012: $22,505,208).
CHANGES IN SHARE CAPITAL DURING 2013
A statement of changes in the share capital of the Company is set out in Note 17 to the financial statements.
SolGold plc annual report for the year ended 30 June 2013
37
KEY PERFORMANCE INDICATORS
Given the stage of the Group's operations, the Board regards the maintenance of tenure and land access arrangements,
maintenance of operation capabilities and the continued collection of exploration data in order to advance the prospectivity of the
project areas to be the key performance indicators in measuring the Group's success. The review of the business with reference to
key performance indicators is set out in the Operations Report and Financial Review.
DIVIDENDS PAID OR RECOMMENDED
The Directors do not recommend the payment of a dividend.
FINANCIAL INSTRUMENTS
The Company does not undertake financial instrument transactions that are speculative or unrelated to the Company’s or Group's
activities. The Company’s financial instruments consist mainly of deposits with banks, accounts payable, and loans to subsidiaries.
Further details of financial risk management objectives and policies, and exposure of the group to financial risks are provided in
Note 21 to the financial statements.
POLICY AND PRACTICE ON PAYMENT OF CREDITORS
The Group policy on the payment of creditors is to settle bills in accordance with the terms agreed with suppliers.
At the year-end there were 29 days (2012: 27 days) worth of purchases in Group trade creditors and 25 days (2012: 41 days) worth
of purchases in Company trade creditors.
DIRECTORS AND DIRECTORS’ INTERESTS
The Directors who held office during the period were as follows:
Malcolm Norris
Alan Martin
Cameron Wenck
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
CEO & Managing Director (resigned 7 February 2013)
CEO & Managing Director (appointed CEO 10 May 2013
and appointed Managing Director 8 October 2013)
Non-Executive Chairman (resigned 28 February 2013)
Executive Director
Non-Executive Chairman (appointed Chairman 28
February 2013)
Non-Executive Director
Non-Executive Director
The Company has a Directors’ and Officers’ Liability insurance policy with Chartis Australia Insurance Limited for all its Directors.
The Directors who held office at the end of the financial year held direct and indirect interests in the ordinary shares and unlisted
options of the Company as shown in the tables below.
Shares held
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
At 30 June 2013
62,521,748
1,811,720
2,055,530
3,103,958
At 30 June 2012
39,001,319
1,158,017
738,287
591,365
No options were issued to Directors during the year (2012: 1,200,000).
SolGold plc annual report for the year ended 30 June 2013
38
Share options held
Cameron Wenck
Malcolm Norris
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
MAJOR SHAREHOLDERS
At 30 June 2013
At 30 June 2012
Option Price
-
-
4,200,000
880,000
880,000
880,000
1,100,000
1,200,000
1,200,000
880,000
880,000
880,000
50p
14p - 28p
6p - 50p
50p
50p
50p
Exercise Period
31/05/12 -31/05/14
28/06/13 – 28/06/15
31/05/12 -31/05/14
31/05/12 -31/05/14
31/05/12 -31/05/14
31/05/12 -31/05/14
The following parties represented the top 10 shareholders visible on the Company’s Register in the Company as at 3 December
2013.
Major Shareholders
Tenstar Trading Limited
Pershing Nominees Limited
Barclayshare Nominees Limited
TD Direct Investing Nominees
(Europe) Limited
HSDL Nominees Limited
Samuel Holdings Pty Ltd
Pershing Nominees Limited
HSBC Client Holdings Nominee (UK)
Limited <731504>
Hargreaves Lansdown (Nominees)
Limited
W B Nominees Limited
CORPORATE GOVERNANCE
Number of Shares
85,308,855
61,105,731
49,675,448
45,213,851
30,864,088
24,951,225
19,976,409
19,085,952
18,204,368
15,013,385
% of Issued Capital
14.13
10.12
8.23
7.49
5.11
4.13
3.31
3.16
3.01
2.49
In formulating the Company’s corporate governance procedures the Board of Directors takes due regard of the principles of good
governance set out in the UK Corporate Governance Code issued by the Financial Reporting Council in June 2010 (as appended to
the Listing Rules of the Financial Services Authority) so far as is practicable for a company of SolGold’s size.
The Board of SolGold plc is made up of two Executive Directors and three Non-executive Directors. Up until his resignation,
Cameron Wenck chaired the Board and subsequently by Brian Moller. Nicholas Mather is an Executive Director and Alan Martin is
the Company’s Chief Executive Officer. Alan Martin was appointed as Managing Director on 8 October 2013.
It is the Board’s
policy to maintain independence by having at least half of the Board comprising Non-executive Directors who are free from any
material business or other relationship with the Group. The structure of the Board ensures that no one individual or group is able
to dominate the decision making process.
The Board ordinarily meets on a monthly basis providing effective leadership and overall control and direction of the Group’s
affairs through the schedule of matters reserved for its decision. This includes the approval of the budget and business plan, major
capital expenditure, acquisitions and disposals, risk management policies and the approval of the financial statements. Formal
agendas, papers and reports are sent to the Directors in a timely manner, prior to Board meetings. The Board also receives
summary financial and operational reports before each Board meeting. The Board delegates certain of its responsibilities to
management, who have clearly defined terms of reference.
All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that all Board
procedures are followed. Any Director may take independent professional advice at the Company’s expense in the furtherance of
his duties. One third of the Directors retire from office at every Annual General Meeting of the Company. In general, those
Directors who have held office the longest time since their election are required to retire. A retiring Director may be re-elected
and a Director appointed by the Board may also be elected, though in the latter case the Director’s period of prior appointment by
the Board will not be taken into account for the purposes of rotation.
The Audit Committee, which meets not less than twice a year, is responsible for ensuring that the financial performance, position
and prospects of the Group are properly monitored as well as liaising with the Company’s auditor to discuss accounts and the
Group’s internal controls. The Committee is comprised of the entire Board of Directors. The Audit Committee has reviewed the
systems in place and considers these to be appropriate.
SolGold plc annual report for the year ended 30 June 2013
39
The Remuneration Committee meets at least once a year and is responsible for making decisions on Directors’ and key
management’s remuneration packages. The Committee is comprised of the entire Board of Directors.
The remuneration of the non-executive Directors is determined by the executive Directors who consider it essential,
notwithstanding the small size of the Company and the fact that it is not yet revenue earning, to recruit and retain individuals of
the highest calibre for that role. Consequently they believe that it is in the interests of shareholders that non-executive Directors
should be provided with share options in addition to the level of fees considered affordable. The number of such options currently
amounts to 2,640,000 in total, or just under 0.44% of the current issued share capital, and in the opinion of the executive Directors
is not of sufficient magnitude as to affect their independence.
The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all price sensitive
information is released to all shareholders at the same time, in accordance with London Stock Exchange rules. The Company’s
principal communication with its investors is through the Annual General Meeting and through the annual report and accounts and
the interim statement.
The 2013 Annual General Meeting will provide an opportunity for the Chairman and/or Chief Executive Officer to present to the
shareholders a report on current operations and developments and will enable the shareholders to question and express their
views about the Company’s business. A separate resolution will be proposed on each substantially separate issue, including the
receipt of the financial statements and shareholders will be entitled to vote either in person or by proxy.
A Health, Safety, Environment and Community Committee (HSEC Committee) is responsible for the overall health, safety and
environmental performance of the Company and its operations and its relationship with the local community in Ecuador, Solomon
Islands and Queensland, the Committee is comprised of the entire Board of Directors.
EXECUTIVE REMUNERATION STRATEGY
Remuneration of Executive Directors is established by reference to the remuneration of executives of equivalent status both in
terms of the level of responsibility of the position and by reference to their job qualifications and skills. The Remuneration
Committee will also have regard to the terms which may be required to attract an executive of equivalent experience to join the
Board from another company. Such packages include performance related bonuses and the grant of share options.
POLITICAL AND CHARITABLE CONTRIBUTIONS
The Group made no political or charitable donations in the year (2012: A$ nil).
AUDITOR
A resolution for the appointment of the Company’s auditor will be proposed at the forthcoming Annual General Meeting.
SUBSEQUENT EVENTS
The Directors are not aware of any significant changes in the state of affairs of the Company after the balance date that is not
covered in this report.
SolGold plc annual report for the year ended 30 June 2013
40
DIRECTORS’ RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the
group for that period. The directors are also required to prepare financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure
that the financial statements comply with the requirements of the Companies Act 2006. 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.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website.
Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance
and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the
ongoing integrity of the financial statements contained therein.
DISCLOSURE OF AUDIT INFORMATION
In the case of each person who are Directors of the Company at the date when this report is approved:
So far as they are individually aware, there is no relevant audit information of which the Company’s auditor is unaware;
and
Each of the Directors has taken all the steps that they ought to have taken as a Director to make themselves aware of any
relevant audit information and to establish that the Company’s auditor is aware of the information.
This report was approved by the board on 18 December 2013 and signed on its behalf.
Karl Schlobohm
Company Secretary
Lvl 27, 111 Eagle St
Brisbane QLD 4000
Australia
SolGold plc annual report for the year ended 30 June 2013
41
INDEPENDENT AUDITOR'S REPORT
To the members of SolGold PLC
We have audited the financial statements of SolGold Plc for the year ended 30 June 2013 which comprise the consolidated
statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and
company statements of changes in equity, the consolidated and company statements of cash flows and the related notes. The
financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. 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 auditor’s 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
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion
on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of
www.frc.org.uk/auditscopeukprivate.
scope
the
of an audit of
financial
statements
is provided on
the FRC’s website at
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 30 June
2013 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - going concern and availability of project finance
In forming our opinion, which is not modified, we have considered the adequacy of the disclosures made in note 1(b) to the
financial statements concerning the group’s and the company’s ability to continue as a going concern and the requirement for the
group to raise further funding if it is to bring its exploration projects into the development stage. As explained in note 1(b), the
company raises finance for the group’s exploration and appraisal activities in discrete tranches, and will need to raise further funds
to continue with its planned exploration programme and subsequent exploitation of its tenements and to provide working capital.
The future of the group depends on the ability of the company to raise such finance. This indicates the existence of a material
uncertainty which may cast significant doubt about the company’s and the group’s ability to continue as a going concern. If the
company is unable to secure such additional funding to develop its projects further, this may have a consequential impact on the
carrying value of the related exploration assets and the investment of the parent company in its subsidiaries. The financial
statements do not include the adjustments that would result if the group and company were unable to continue as a going
concern.
SolGold plc annual report for the year ended 30 June 2013
42
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
David Pomfret (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
Date: 18 December 2013
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
SolGold plc annual report for the year ended 30 June 2013
43
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2013
Revenue
Cost of sales
Gross profit
Other income
Expenses
Exploration costs written-off
Administrative
Operating loss
Share of associate profits
Finance income
Finance costs
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income
Change in fair value of available-for-sale financial
assets
Total comprehensive income for the year
Loss for the year attributable to:
Owners of the parent company
Non-controlling interest
Total comprehensive income for the year
attributable to:
Owners of the parent company
Non-controlling interest
Notes
Group
2013
$
-
-
-
-
(27,300,641)
(2,631,766)
(29,932,407)
29,775
7,448
(718)
(29,895,902)
-
(29,895,902)
12
6
6
3
7
10b
Group
2012
$
-
-
-
468
(18,606,445)
(4,122,328)
(22,728,305)
-
223,097
-
(22,505,208)
-
(22,505,208)
10,390
(29,885,512)
-
(22,505,208)
(29,895,902)
-
(29,895,902)
(22,505,057)
(151)
(22,505,208)
(29,885,512)
-
(29,885,512)
(22,505,057)
(151)
(22,505,208)
Earnings per share
Basic earnings per share
Diluted earnings per share
8
8
Cents per share
Cents per share
(6.9)
(6.9)
(7.7)
(7.7)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
SolGold plc annual report for the year ended 30 June 2013
44
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
As at 30 June 2013
Registered Number 5449516
Assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
Investment in associates
Investment in available for sale securities
Loans receivable and other non-current assets
Total non-current assets
Other receivables and prepayments
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Other reserves
Accumulated loss
Non-controlling interest
Total equity
Liabilities
Finance lease liabilities
Total non-current liabilities
Finance lease liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
11
12
9
10(a)
10(b)
13
15
16
17
17
18
18
19
Group
2013
$
167,130
14,578,178
-
2,769,647
458,510
92,893
18,066,358
311,088
880,424
1,191,512
19,257,870
Group
2012
$
297,677
40,255,104
-
-
-
98,413
40,651,194
469,062
440,623
909,685
41,560,879
Company
2013
$
22,700
29,209
15,361,177
2,769,647
458,510
5,569
18,646,812
272,745
826,768
1,099,513
19,746,325
Company
2012
$
27,065
222,208
41,726,237
-
-
7,569
41,983,079
250,803
343,736
594,539
42,577,618
9,361,755
66,418,526
3,233,263
(60,209,103)
-
18,804,441
5,791,534
61,216,133
3,145,297
(30,325,921)
(46,183)
39,780,860
9,361,755
66,418,526
3,233,263
(59,610,996)
-
19,402,548
5,791,534
61,216,133
3,145,297
(28,491,681)
-
41,661,283
14,428
14,428
9,148
429,853
439,001
453,429
19,257,870
80,498
80,498
52,362
1,647,159
1,699,521
1,780,019
41,560,879
-
-
-
343,777
343,777
343,777
19,746,325
-
-
-
916,335
916,335
916,335
42,577,618
The above consolidated and company statements of financial position should be read in conjunction with the accompanying
notes.
The financial statements were approved and authorised for issue by the Board and were signed in its behalf on 18 December 2013.
Alan Martin
Director
SolGold plc annual report for the year ended 30 June 2013
45
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
For the year ended 30 June 2013
Consolidated statement of changes in equity
Notes
Share
capital
Share
premium
17
17
$
$
5,365,926
-
-
-
425,608
-
-
-
5,791,534
-
-
-
3,551,968
-
-
-
-
18,253
58,402,290
-
-
-
3,003,414
(189,571)
-
-
61,216,133
-
-
-
5,596,692
(394,299)
-
-
-
-
Available-
for-sale
financial
assets
reserve
$
-
-
-
-
-
-
-
-
-
-
10,390
10,390
-
-
-
-
-
-
-
Share
option
reserve
$
1,116,380
-
-
-
-
-
2,028,917
-
3,145,297
-
-
-
-
74,461
30,477
(27,362)
-
-
Convertible
Redeemable
Preference
Share
reserve
Accumulated
loss
Non-
controlling
interests
Total
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77,156
(77,156)
-
(7,820,864)
(22,505,057)
-
(22,505,057)
-
-
-
-
(30,325,921)
(29,895,902)
-
(29,895,902)
-
-
-
-
-
58,903
-
(151)
-
(151)
-
-
-
(46,032)
(46,183)
-
-
-
-
-
57,063,732
(22,505,208)
-
(22,505,208)
3,429,022
(189,571)
2,028,917
(46,032)
39,780,860
(29,895,902)
10,390
(29,885,512)
9,148,660
(319,838)
-
-
-
-
30,477
(27,362)
77,156
-
-
9,361,755
-
66,418,526
17
10,390
-
3,222,873
(46,183)
(60,209,103)
-
46,183
-
-
18,804,441
Balance at 30 June 2011
Loss for the year
Other comprehensive income
Total comprehensive income for the year
New share capital subscribed
Share issue costs
Value of shares and options issued to Directors,
employees and consultants
Non-controlling interest in subsidiary acquired
Balance at 30 June 2012
Loss for the year
Other comprehensive income
Total comprehensive income for the year
New share capital subscribed
Share issue costs
Value of share options issued to Directors,
employees and consultants
Value of share options forfeited during the year
Value of performance shares issued to employees
Conversion of preference shares to ordinary
shares
Disposal of non-controlling interest in subsidiary
acquired
Balance at 30 June 2013
The above statement of changes in equity should be read in conjunction with the accompanying notes.
SolGold plc annual report for the year ended 30 June 2013
46
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
For the year ended 30 June 2013
Company statement of changes in equity
Notes
Share
capital
$
Share
premium
$
Available-
for-sale
financial
assets
$
17
17
5,365,926
-
-
-
425,608
-
-
5,791,534
-
-
-
3,551,968
-
58,402,290
-
-
-
3,003,414
(189,571)
-
61,216,133
-
-
-
5,596,692
(394,299)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,390
10,390
-
-
-
-
-
Share
option
reserve
$
1,116,380
-
-
-
-
-
2,028,917
3,145,297
-
-
-
-
74,461
30,477
(27,362)
Accumulated
loss
$
Total
$
Convertible
Redeemable
Preference
Share
reserve
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,456,536)
(22,035,145)
-
(22,035,145)
-
-
-
(28,491,681)
(31,178,218)
-
(31,178,218)
-
-
58,428,060
(22,035,145)
-
(22,035,145)
3,429,022
(189,571)
2,028,917
41,661,283
(31,178,218)
10,390
(31,167,828)
9,148,660
(319,838)
-
-
-
30,477
(27,362)
77,156
18,253
9,361,755
-
66,418,526
17
-
10,390
-
3,222,873
(77,156)
-
58,903
(59,610,996)
-
19,402,548
-
77,156
Balance at 30 June 2011
Loss for the year
Other comprehensive income
Total comprehensive income for the year
New share capital subscribed
Share issue costs
Value of shares and options issued to Directors,
employees and consultants
Balance at 30 June 2012
Loss for the year
Other comprehensive income
Total comprehensive income for the year
New share capital subscribed
Share issue costs
Value of shares and options issued to Directors,
employees and consultants
Value of share options forfeited during the year
Value of performance shares issued to
employees
Conversion of performance shares to ordinary
shares
Balance at 30 June 2013
The above statement of changes in equity should be read in conjunction with the accompanying notes.
SolGold plc annual report for the year ended 30 June 2013
47
CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS
For the year ended 30 June 2013
Cash flows from operating activities
Operating loss
Depreciation
Share based payment expense
Write-off of exploration expenditure
Loss on sale of property, plant and equipment
Impairment of investments in subsidiaries
(Increase) decrease in other receivables and
prepayments
Increase (decrease) in trade and other
payables
Net cash outflow from operating activities
Cash flows from investing activities
Interest received
Interest paid
Security deposit (payments)/refunds
(Acquisition)/Disposal of property, plant and
equipment
Proceeds from the sale of property, plant and
equipment
Acquisition of exploration and evaluation
assets
Acquisition of subsidiaries (net of cash)
Investment in available for sale securities
Investment in associates
Loans advanced to third parties
Loans advanced to subsidiaries
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary share
capital
Payment of issue costs
Repayment of borrowings
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at the beginning of
period
Cash and cash equivalents at end of period
Notes
Group
2013
$
Group
2012
$
Company
2013
$
Company
2012
$
(29,932,407)
62,550
80,271
27,300,641
2,244
-
(22,728,305)
77,457
1,345,410
18,606,445
-
-
(31,178,218)
9,075
80,271
-
-
28,651,475
(22,233,466)
8,850
1,345,410
-
-
18,311,066
157,974
(102,555)
(21,942)
115,255
402,284
(2,006,714)
544,842
(2,256,706)
(84,196)
(2,543,545)
292,170
(2,183,692)
7,448
(718)
5,520
223,097
-
-
5,988
(690)
2,000
221,297
-
(4,710)
(18,413)
(4,710)
(15,037)
72,707
-
-
-
24
(2,822,260)
1
(448,120)
(2,517,664)
-
-
(5,707,797)
(12,249,212)
5,853
-
-
-
-
(12,038,675)
(29,209)
-
(448,120)
(2,517,664)
-
(2,254,043)
(5,237,029)
(222,208)
-
-
(211,256)
(11,853,287)
(12,080,491)
8,575,084
(311,488)
(109,284)
8,154,312
3,429,022
(189,571)
(47,197)
3,192,254
8,575,084
(311,488)
-
8,263,596
3,429,022
(189,571)
-
3,239,451
439,801
(11,103,127)
483,032
(11,024,732)
16
440,623
880,424
11,543,750
440,623
343,736
826,768
11,368,468
343,736
The above statements of cash flows should be read in conjunction with the accompanying notes.
SolGold plc annual report for the year ended 30 June 2013
48
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 1 ACCOUNTING POLICIES
The Company is a public limited company incorporated in England and Wales and is listed on the AIM market of the London Stock
Exchange.
(a) Statement of compliance
The consolidated financial statements and company financial statements have been prepared in accordance with International
Financial Reporting Standards (‘IFRS’) and their interpretations issued by the International Accounting Standards Board (IASB), as
adopted by the European Union. They have also been prepared in accordance with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The accounting policies set out below have been applied consistently throughout these consolidated financial statements.
(b) Basis of preparation of financial statements, going concern and availability of project finance
The consolidated financial statements are presented in Australian dollars (“A$”), rounded to the nearest dollar.
The Company was incorporated on 11 May 2005. The Group has elected, from incorporation, to prepare annual consolidated
financial statements in accordance with IFRS. A separate statement of comprehensive income for the parent company has not
been presented as permitted by section 408 of the Companies Act 2006.
The financial statements have 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 Company has not
generated revenues from operations. In common with many exploration companies, the Company raises finance for its
exploration and appraisal activities in discrete tranches. At the reporting date, the Group had a net current asset position of
$752,511, compared with a net current liability position in 2012 of $789,836. As such, the Company’s ability to continue to adopt
the going concern assumption will depend upon a number of matters including the successful raising in the future of necessary
funding for the successful exploration and subsequent exploitation of the Company’s tenements and to provide working capital.
Subsequent to year end, the Company successfully completed a placement on 25 September 2013, raising a total of $6.4 million.
This means that the Company should have sufficient capital to fund and progress its exploration and project development efforts
across its portfolio of projects in the Solomon Islands, Ecuador and Queensland, Australia. It should be noted that the current
working capital levels will not be sufficient to bring the Company’s projects into full development and production and, in due
course, further funding will be required. In the event that the Company is unable to secure further finance either through third
parties or capital raisings, it may not be able to fully develop its projects and this may have a consequential impact on the carrying
value of the related exploration assets and the investment of the parent company in its subsidiaries. In the absence of these
matters being successful, there exists a material uncertainty that may cast significant doubt on the entity’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.
(c) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 30 June each year. Control is recognised where the Company has the power to govern the
financial and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments
are made to the financial statements of subsidiaries to bring the accounting policies into line with those used by the Group.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and presented
within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.
(ii) Associates
Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the consolidated
financial statements using the equity method of accounting, after initially being recognised at cost. The Group’s investment in
associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.
SolGold plc annual report for the year ended 30 June 2013
49
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 1 ACCOUNTING POLICIES (continued)
(c) Basis of consolidation (continued)
The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss and its share of post-acquisition
movements in other comprehensive income is recognised in other comprehensive income where applicable. The cumulative post-
acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates reduce
the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf
of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the
associates.
(iii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
(d) Foreign currency
The Company’s functional and presentation currency is Australian dollars (A$). The exchange rates at 30 June 2013 were
£0.6002/A$1.0, US$0.9218/A$1.0
and
SBD$6.8688/A$1.0).
June 2012: £0.6505/A$1.0, US$1.0159/A$1.0
SBD$6.6372/A$1.0
(30
and
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the year-end are translated into Australian dollars at the foreign
exchange rate ruling at that date. Any resultant foreign exchange currency translation amount is taken to the profit and loss.
The functional currency of the subsidiaries in Australia is considered to be Australian Dollars (A$). The functional currency of the
subsidiaries in Solomon Islands is considered to be Solomon Islands Dollars (SBD$). The assets and liabilities of the entities are
translated to the group presentation currency at rates of exchange ruling at the balance sheet date. Income and expense items are
translated at average rates for the period. Any exchange differences are taken directly to reserves. On disposal of an entity,
cumulative deferred exchange differences are recognised in the income statement as part of the profit or loss on sale.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see
accounting policy i below).
(ii) Subsequent costs
The Group recognises in the carrying amount of property, plant and equipment the cost of replacing part of such an item when
that cost is incurred if it is probable that the future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense as
incurred.
(iii) Depreciation
Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of each
item of property, plant and equipment. The estimated useful lives of all categories of assets are:
Office Equipment
Furniture and Fittings
Motor Vehicles
Plant and Equipment
Land and Buildings
3 years
5 years
5 years
5 years
12 years
The residual values and useful lives are assessed annually. Gains and losses on disposal are determined by comparing proceeds
with carrying amounts and are included in the statement of comprehensive income.
SolGold plc annual report for the year ended 30 June 2013
50
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 1 ACCOUNTING POLICIES (Continued)
(f) Intangible assets
Deferred exploration and evaluation costs
Costs incurred in relation to the acquisition of, or application for, a tenement area are capitalised where there is a reasonable
expectation that the tenement will be acquired or granted. Where the Company is unsuccessful in acquiring or being granted a
tenement area, any such costs are immediately expensed.
All other costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written-
off as incurred.
Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project-by-project
basis, pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate
technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses
recognised.
If an exploration project is successful, the related expenditures will be transferred to mining assets and amortised over the
estimated life of the ore reserves on a unit of production basis.
The recoverability of deferred exploration and evaluation costs is dependent upon the discovery of economically recoverable ore
reserves, the ability of the Group to obtain the necessary financing to complete the development of ore reserves and future
profitable production or proceeds from the disposal thereof.
(g) Loans receivables, other receivables and prepayments
Loans receivables, other receivables and prepayments are not interest bearing and are stated at their nominal amount less
provision for impairment.
(h) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities
on the statement of financial position.
(i) Impairment
Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable the asset is
reviewed for impairment. An asset’s carrying value is written down to its estimated recoverable amount (being the higher of the
fair value less costs to sell and value in use) if that is less than the asset’s carrying amount.
Impairment reviews for deferred exploration and evaluation costs are carried out on a project-by-project basis, with each project
representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise,
typically when one of the following circumstances apply:
Unexpected geological occurrences that render the resource uneconomic;
Title to the asset is compromised;
Variations in metal prices that render the project uneconomic; and
Variations in the currency of operation.
(j) Share capital
The Company’s ordinary shares are classified as equity.
SolGold plc annual report for the year ended 30 June 2013
51
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 1 ACCOUNTING POLICIES (Continued)
(k) Employee benefits
(i) Share based payment transactions
Certain Group employees are rewarded with share based instruments. Shares may also be issued to third parties as consideration
for goods or services. Shares are recorded at their market value at the time of their issue. Option instruments are stated at fair
value at the date of grant and this is expensed on a straight line basis over the estimated vesting period. The latter is based on the
Group’s estimate of shares that will eventually vest. The fair value of an option instrument is estimated using the Black-Scholes
valuation model.
The estimated life used in the model represents management’s best estimate of the effects of non-
transferability, exercise restrictions and behavioural considerations.
(ii) Retirement benefits
The Group operates a defined contribution pension scheme. Contributions payable for the year are charged to the statement of
comprehensive income.
(l) Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, it is more likely than not
that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
(m) Trade and other payables
Trade and other payables are not interest bearing and are stated at their nominal value. The effect of discounting is immaterial.
(n) Revenue
During the exploration phase, any revenue generated from incidental sales is treated as a contribution towards previously incurred
costs and offset accordingly.
(o) Other income
Other income is recognised in the statement of comprehensive income as it accrues.
(p) Financing costs and income
(i) Financing costs
Financing costs comprise interest payable on borrowings calculated using the effective interest rate method.
(ii) Finance income
Interest income is recognised in the statement of comprehensive income as it accrues, using the effective interest method.
(q) Taxation
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
SolGold plc annual report for the year ended 30 June 2013
52
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 1 ACCOUNTING POLICIES (Continued)
(r) Segment reporting
The Group determines and presents operating segments based on information that is internally provided to the Board of Directors,
who are the Group’s chief operating decision makers.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating
segment’s operating results and asset position are reviewed regularly by the Board to make decisions about resources to be
allocated to the segment and assess its performance, for which discrete financial information is available.
Segment results that are reported to the Board include items directly attributable to a segment, as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate office assets, head office expenses, and income tax
assets and liabilities.
(s) Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its
assets and liabilities.
Business combinations are accounted for by applying the acquisition method, unless it is a combination involving entities or
businesses under common control. The acquisition method requires that for each business combination one of the combining
entities must be identified as the acquirer (i.e. parent entity). The business combination will be accounted for as at the acquisition
date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in
the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities
assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its
fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the
measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where
less than 100% ownership interest is held in the acquiree.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of
any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may
comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree
and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings on acquisition are taken to the statement of comprehensive income.
Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts
are recycled to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration
arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity
instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a
receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured at each
reporting period to fair value through the statement of comprehensive income unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income.
(t) Project Financing / Farm-outs
The Group, from time to time, enters into funding arrangements with third parties in order to progress specific projects. The
Group accounts for the related exploration costs in line with the terms of the specific agreement. Costs incurred by SolGold plc are
recognised as intangible assets within the financial statements. Costs incurred by third parties are not recognised by SolGold plc.
SolGold plc annual report for the year ended 30 June 2013
53
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 1 ACCOUNTING POLICIES (Continued)
(u) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal
ownership are transferred to entities in the Group, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased
property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are
allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses
on a straight-line basis over the period of the lease.
(v) Financial Instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the
contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes
established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair
value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to
profit or loss immediately. Financial instruments are classified and measured as set out below.
Classification and Subsequent Measurement
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost using the effective interest rate method.
(ii)
(iii)
(iv)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading
unless they are designated as hedges. Assets in this category are classified as current assets. These assets are measured
at fair value with gains or losses recognised in the profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets comprise investments in listed and unlisted entities and non-derivatives that are either
designated in this category or not classified in any other categories. After initial recognition, these investments are
measured at fair value with gains or losses recognised in other comprehensive income.
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the
effective interest rate method.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the
fair value of all other financial assets and liabilities, where appropriate, including recent arm’s length transactions, reference to
similar instruments and option pricing models.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognized where the related obligations are either discharged, cancelled or expire. The difference
between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration
paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit of loss.
SolGold plc annual report for the year ended 30 June 2013
54
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2013
Note 1: Summary of Significant Accounting Policies (continued)
Accounting Policies (continued)
(v) Financial Instruments (continued)
Impairment of financial assets
An assessment is made at each balance date to determine whether there is objective evidence that a specific financial asset or a
group of financial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined
from available information such as quoted market prices or by calculating the net present value of future anticipated cash flows. In
estimating these cash flows, management makes judgements about a counter-party's financial situation and the net realisable
value of any underlying collateral. Impairment losses are recognised in the profit or loss.
Impairment losses on assets measured at amortised cost using the effective interest rate method are calculated by comparing the
carrying value of the asset with the present value of estimated future cash flows at the original effective interest rate.
Where there is objective evidence that an available for sale financial asset is impaired (such as a significant or prolonged decline in
the fair value of an available for sale financial asset) the cumulative loss that has been recognised in other comprehensive income
is reclassified from equity to profit or loss as a reclassification adjustment. When a subsequent event reduces the impairment of
an available for sale debt security the impairment loss is reversed through profit or loss. When a subsequent event reduces the
impairment of an available for sale equity instrument the fair value increased is recognised in other comprehensive income.
(w) Accounting policies for the Company
The accounting policies applied to the Company are consistent with those adopted by the Group with the exception of the
following:
(i) Company statement of comprehensive income
As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the Company has not been
separately presented in these financial statements. The Company’s loss for the year was $31,178,218 (2012: $22,035,145).
(ii) Subsidiary investments
Investments in subsidiary undertakings are stated at cost less impairment losses.
(x) Changes in accounting policies
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the
accounting periods commencing 1 July 2012 but are not applicable to the group and had no impact on these financial statements.
The Group has not adopted any standards or interpretations in advance of the required implementation dates. It is not expected
that adoption of standards or interpretations which have been issued by the International Accounting Standards Board but have
not been adopted will have a material impact on the financial statements.
SolGold plc annual report for the year ended 30 June 2013
55
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 2 SEGMENT REPORTING
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, 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. The financial information of the subsidiaries that do not exceed the thresholds outlined above, and are therefore not
reported separately, are aggregated as Other Subsidiaries.
30 June 2013
SolGold
ARM
Central Minerals
Acapulco Mining
Solomon
Operations
Honiara Holdings
Guadalcanal
Exploration
Consolidation /
Elimination
Total
30 June 2012
SolGold
ARM
Central Minerals
Acapulco Mining
Solomon
Operations
Honiara Holdings
Guadalcanal
Exploration
Consolidation /
Elimination
Total
Finance
Income
$
5,988
507
118
835
Total
Income
$
5,988
507
118
835
-
-
-
-
-
-
-
-
Loss for the
year
$
(31,178,218)
(12,893,152)
(8,582,984)
(16,750)
(12)
(998,381)
Assets
Liabilities
$
37,993,519
1,485,034
3,582,305
5,837,534
29,758
3,122
$
318,681
32,689,251
13,068,993
3,612,378
81,457
956,044
(12,363)
1,127,428
1,186,126
23,785,958
(40,834,726)
(51,459,501)
Share Based
Payments
$
80,271
-
-
-
Depreciation
$
9,522
21,073
23,382
8,573
-
-
-
-
-
-
-
-
7,448
7,448
(29,895,902)
19,257,870
453,429
80,271
62,550
Finance
Income
$
221,297
381
302
1,116
Total
Income
$
221,765
381
302
1,116
Loss for the
year
$
(22,035,145)
(18,225,172)
(479,350)
(76,256)
1
-
-
-
1
-
-
-
(131)
(69)
(151)
Assets
Liabilities
$
42,682,244
13,901,046
11,321,143
5,616,786
29,770
854,030
989,209
$
916,335
32,316,738
12,224,848
3,374,880
81,457
804,099
1,035,544
Share Based
Payments
$
1,345,410
-
-
-
Depreciation
$
8,850
25,445
32,187
10,975
-
-
-
-
-
-
-
-
18,311,066
(33,833,349)
(48,973,882)
223,097
223,565
(22,505,208)
41,560,879
1,780,019
1,345,410
77,457
Honiara Holdings Pty Ltd and Guadalcanal Exploration Pty Ltd joined the Group on 17 February 2012 and 18 April 2012 respectively.
Geographical information
Non-current assets
UK
Australia
Solomon Islands
Ecuador
The Group had no revenue during the year.
2013
$
-
12,860,582
2,611,879
2,593,897
2012
$
-
26,526,703
13,902,283
222,208
SolGold plc annual report for the year ended 30 June 2013
56
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 3 LOSS BEFORE TAX
Loss is stated after charging (crediting)
Auditors’ remuneration:
Fees payable to the company’s auditor for the audit of the company’s annual
accounts
Fees payable to the company’s auditor and its associates for other services:
Other assurance related services
Tax services
Depreciation
Foreign exchange losses
Share based payments
NOTE 4 STAFF NUMBERS AND COSTS
Corporate finance and administration
Technical
Group
2013
$
Group
2012
$
55,000
37,000
-
62,550
9,205
80,271
40,500
4,944
-
77,457
28,983
1,345,410
Group
2013
Group
2012
Company
2013
Company
2012
7
4
11
9
8
17
7
4
11
9
3
12
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Contributions to defined contribution plans
Share based payments
Total staff costs
Group
2013
$
1,218,074
93,532
80,271
1,391,877
Group
2012
$
1,651,378
61,346
1,345,410
3,058,134
Company
2013
$
1,218,074
93,532
80,271
1,391,877
Company
2012
$
787,584
61,346
1,345,410
2,194,340
Included within total staff costs is $648,712 (2012: $1,893,719) which has been capitalised as part of deferred exploration costs.
SolGold plc annual report for the year ended 30 June 2013
57
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 5 REMUNERATION OF KEY MANAGEMENT PERSONNEL
2013
Directors
Malcolm Norris
Cameron Wenck
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
Non-Directors
TOTAL
2012
Directors
Malcolm Norris
Cameron Wenck
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
Non-Directors
TOTAL
1 Share based payments issued.
Basic Annual
Salary
$
Other Benefits1
$
Pensions
$
Total
Remuneration
$
291,288
52,883
146,250
47,917
47,917
47,917
526,746
1,160,918
Basic Annual
Salary
$
219,760
70,000
183,333
50,000
50,000
50,000
281,684
904,777
12,508
-
-
-
-
-
18,717
31,225
25,380
-
-
-
-
-
42,337
67,717
329,176
52,883
146,250
47,917
47,917
47,917
587,800
1,259,860
Other Benefits1
$
Pensions
$
Total
Remuneration
$
12,508
-
-
-
-
-
7,342
19,850
19,778
-
-
-
-
-
15,777
35,555
252,046
70,000
183,333
50,000
50,000
50,000
304,803
960,182
During the year no directors exercised options granted under the employee share option plan (2012: nil)
During the year, employer’s social security costs of $67,717 (2012: $35,555) were paid in respect of remuneration for key
management personnel.
NOTE 6 FINANCE INCOME AND COSTS
Interest income
Finance income
Interest cost – convertible note
Finance costs
Group
2013
$
7,448
7,448
-
(718)
Group
2012
$
223,097
223,097
-
-
SolGold plc annual report for the year ended 30 June 2013
58
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 7 INCOME TAX EXPENSE
Factors affecting the tax charge for the current period
The tax credit for the period is lower than the credit resulting from the application of the standard rate of corporation tax in
Australia of 30% (2012: 30%) being applied to the loss before tax arising during the year. The differences are explained below.
Tax reconciliation
Loss before tax
Tax at 30% (2012: 30%)
Effects at 30% (2012: 30%) of:
Short term temporary differences
Non-deductible expenses
Tax losses carried forward
Tax on loss
Factors that may affect future tax charges
Group
2013
$
Group
2012
$
(29,895,902)
(8,968,771)
(22,505,208)
(6,751,562)
7,740,809
21,505
1,206,457
-
3,492,330
480,116
2,779,116
-
The Group has carried forward tax losses of approximately $39.0 million (2012: $35.0 million). These losses may be deductible
against future taxable income dependent upon the on-going satisfaction by the relevant Group company of various tax integrity
measures applicable in the jurisdiction where the tax loss has been incurred. The jurisdictions in which tax losses have been
incurred include Australia and the Solomon Islands.
NOTE 8 LOSS PER SHARE
The calculation of basic loss per ordinary share on total operations is based on losses $29,895,902 (2012: $22,505,208) and the
weighted average number of ordinary shares outstanding of 430,235,731 (2012: 293,763,384).
There is no difference between the diluted loss per share and the basic loss per share presented as the share options in issue
during the period and prior period were not considered dilutive. At 30 June 2013 there were 28,372,000 share options in issue
(2012: 12,972,000).
NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Country of
incorporation
and operation
Principal
activity
SolGold plc’s
effective interest
2013
2012
Australian Resources Management (ARM) Pty
Ltd
Acapulco Mining Pty Ltd
Central Minerals Pty Ltd
Solomon Operations Ltd
Honiara Holdings Pty Ltd
Guadalcanal Exploration Pty Ltd
Australia
Australia
Australia
Solomon
Islands
Australia
Australia
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
SolGold plc annual report for the year ended 30 June 2013
59
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)
Cost
Balance at 30 June 2011
Acquisitions and advances in the year
Balance at 30 June 2012
Acquisitions and advances in the year
Balance at 30 June 2013
Amortisation and impairment losses
Balance at 30 June 2011
Provision for impairment
Balance at 30 June 2012
Provision for impairment
Balance at 30 June 2013
Carrying amounts
Balance at 30 June 2011
Balance at 30 June 2012
Balance at 30 June 2013
Shares
$
Investment in subsidiary undertakings
Loans
$
Total
$
11,085,656
50,000
11,135,656
1
11,135,657
-
-
-
(5,016,948)
(5,016,948)
11,085,656
11,135,656
6,118,709
34,916,212
13,985,435
48,901,647
2,286,414
51,188,061
-
(18,311,066)
(18,311,066)
(23,634,527)
(41,945,593)
34,916,212
30,590,581
9,242,468
46,001,868
14,035,435
60,037,303
2,286,415
62,323,718
-
(18,311,066)
(18,311,066)
(28,651,475)
(46,962,541)
46,001,868
41,726,237
15,361,177
The write-down of the deferred exploration and evaluation costs associated with certain projects in Queensland and the Solomon
Islands lead to the Company recording a provision for impairment of $23,634,527 on the loans receivable from Australian Resource
Management (ARM) Pty Ltd, Central Minerals Pty Ltd and Honiara Holdings Pty Ltd.
Details of all loans within the group made during the year are set out below:
Cost
Total investment in subsidiaries by the Company at 30 June
2011
Advances in the period from SolGold plc to ARM Pty Ltd
Advances in the period from SolGold plc to Acapulco Mining Pty
Ltd
Advances in the period from SolGold plc to Central Minerals Pty
Ltd
Acquisition and advances during the period to Honiara Holdings
Pty Ltd
Acquisition and advances during the period to Guadalcanal
Exploration Pty Ltd
Total investment in subsidiaries by the Company at 30 June
2012
Advances in the period from SolGold plc to ARM Pty Ltd
Advances in the period from SolGold plc to Acapulco Mining Pty
Ltd
Advances in the period from SolGold plc to Central Minerals Pty
Ltd
Advances during the period to Honiara Holdings Pty Ltd
Acquisition and advances during the period to Guadalcanal
Exploration Pty Ltd
Total investment in subsidiaries by the Company at 30 June
2013
Shares
$
Loans
$
Total
$
11,085,656
-
34,916,212
5,724,967
46,001,868
5,724,967
-
-
648,151
648,151
5,919,046
5,919,046
50,000
650,556
700,556
-
1,042,715
1,042,715
11,135,656
-
48,901,647
509,183
60,037,303
509,183
-
-
-
1
308,334
308,334
1,311,769
79,394
1,311,769
79,394
77,734
77,735
11,135,657
51,188,061
62,323,718
SolGold plc annual report for the year ended 30 June 2013
60
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 10 INVESTMENTS
(a)
Investments accounted for using the equity method
Name
Country of
incorporation
Principle
Activity
Shares
Ownership Interest
Carrying Amount
Exploraciones
Novomining
S.A.
Ecuador
Mineral
Exploration
ORD
(i) Movements during the year in equity accounted investments
Balance at beginning of year
Carrying value of investment on transfer of intangible assets
Fair value of investment on initial recognition
Share of associates profits after income tax
Balance at end of year
(ii) Summarised financial information of associates
2013
%
30%
2012
%
-%
2013
$
2012
$
2,769,647
2,769,647
2012
$
2013
$
-
222,208
2,517,664
29,775
2,769,647
-
-
-
-
-
-
The Group's share of the results of its associates and its aggregated assets (including goodwill) and liabilities are as follows:
Ownership
interest
%
Assets
$
Liabilities
Revenues
$
$
Profit
$
2013
Exploraciones
Novomining S.A.
2012
Exploraciones
Novomining S.A.
30%
-%
77,114
69,785
39,938
29,775
-
-
-
-
(b)
Investments accounted for as available for sale assets
Movements in available for sale financial assets
Opening balance at 1 July
Additions
Fair Value adjustment through other comprehensive income
2013
$
2012
$
-
448,120
10,390
458,510
-
-
-
-
Available for sale financial assets comprise an investment in the ordinary issued capital of Cornerstone Capital Resources
Inc, listed on the Toronto Stock Exchange (“TSX”) and an investment in the ordinary issued capital of AusNiCo Ltd, a
company listed on the Australian Securities Exchange.
SolGold plc annual report for the year ended 30 June 2013
61
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 11 PROPERTY, PLANT AND EQUIPMENT
Group
Land and
Buildings
$
Plant and
Equipment
$
Cost
Balance 30 June 2011
Additions
Balance 30 June 2012
Additions
Disposals
Balance 30 June 2013
Depreciation and impairment
losses
Balance 30 June 2011
Depreciation charge for the year
Balance 30 June 2012
Depreciation charge for the year
Disposals
Balance 30 June 2013
Carrying amounts
At 30 June 2011
At 30 June 2012
At 30 June 2013
208,144
-
208,144
-
-
208,144
(76,260)
(17,322)
(93,582)
(17,321)
-
(110,903)
131,884
114,562
97,241
Motor
Vehicles
$
267,722
-
267,722
-
(147,207)
120,515
95,989
2,500
98,489
-
-
98,489
(60,579)
(11,141)
(71,720)
(8,276)
-
(79,996)
(88,644)
(41,348)
(129,992)
(28,302)
74,499
(83,795)
35,410
26,769
18,493
179,078
137,730
36,720
Office
Equipment
$
Furniture
& Fittings
$
Total
Company
$
$
61,270
11,132
72,402
3,030
-
75,432
(52,833)
(5,161)
(57,994)
(7,696)
-
(65,690)
8,437
14,408
9,742
14,711
4,782
19,493
1,680
-
21,173
647,836
18,414
666,250
4,710
(147,207)
523,753
(12,800)
(2,485)
(15,285)
(955)
-
(16,240)
(291,116)
(77,457)
(368,573)
(62,550)
74,500
(356,623)
30,187
15,037
45,224
4,710
-
49,934
(9,309)
(8,850)
(18,159)
(9,075)
-
(27,234)
1,910
4,206
4,933
356,720
297,677
167,130
20,878
27,065
22,700
The net book value of assets pledged as security for lease finance is $21,073 (2012: $137,730).
SolGold plc annual report for the year ended 30 June 2013
62
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 12 INTANGIBLE ASSETS
Cost
Balance 30 June 2011
Additions – expenditure
Additions – business combinations
Disposals
Balance 30 June 2012
Additions – expenditure
Transfer to equity accounted investments
Disposals
Balance 30 June 2013
Impairment losses
Balance at 30 June 2011
Impairment charge
Balance 30 June 2012
Impairment charge
Balance 30 June 2013
Carrying amounts
At 30 June 2011
At 30 June 2012
At 30 June 2013
Impairment loss
Deferred Group
exploration costs
$
Deferred Company
exploration costs
$
45,566,793
12,422,506
1,718,703
-
59,708,002
1,623,715
-
61,331,717
(846,453)
(18,606,445)
(19,452,898)
(27,300,641)
(46,753,539)
44,720,340
40,255,104
14,578,178
-
222,208
-
-
222,208
29,209
(222,208)
-
29,209
-
-
-
-
-
-
222,208
29,209
The Group considered it necessary to make a provision for impairment of $24,734,063 as it relates to the deferred exploration
assets of the Rannes and Fauro projects. A decision was made to expense $2,566,578 (2012: $653,721) for exploration expenditure
associated with other tenements that were dropped during the year. A detailed assessment of the carrying values of deferred
exploration costs is provided in Note 25.
NOTE 13 LOAN RECEIVABLES AND OTHER NONCURRENT ASSETS
Loans receivables
Security bonds
Group
2013
$
-
92,893
92,893
Group
2012
$
-
98,413
98,413
Company
2013
$
-
5,569
5,569
Company
2012
$
-
7,569
7,569
Security bonds relate to cash security held against office premises, Lvl 27, 111 Eagle St, Brisbane, Queensland Australia and cash
security held by Queensland Department of Natural Resources and Mines against Queensland exploration tenements held by the
Group.
SolGold plc annual report for the year ended 30 June 2013
63
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 14 DEFERRED TAXATION
Recognised deferred tax assets
Deferred tax assets:
Tax losses
Deferred tax liabilities:
Temporary timing differences arising on
intangible assets
Net deferred taxes
Unrecognised deferred tax assets
Group
2013
$
Group
2012
$
Company
2013
$
Company
2012
$
3,724,771
5,021,142
(3,724,771
-
(5,021,142)
-
-
-
-
-
-
-
Deferred tax assets have not been recognised in respect of the following amounts. Deferred tax has been calculated at the
expected future rate of corporation tax of 30%.
Temporary differences
Tax losses
Group
2013
$
7,796,272
11,699,667
19,495,939
Group
2012
$
1,693,992
10,505,233
12,199,225
Company
2013
$
326,481
11,699,667
12,026,148
Company
2012
$
267,017
2,406,783
2,673,800
The deferred tax asset in respect of these items has not been recognised as future taxable profit is not anticipated within the
foreseeable future.
NOTE 15 OTHER RECEIVABLES AND PREPAYMENTS
Other receivables
Prepayments
NOTE 16 CASH AND CASH EQUIVALENTS
Cash at bank
Call deposits
Cash and cash equivalents in the statement of
cash flows
Group
2013
$
289,088
22,000
311,088
Group
2013
$
880,424
-
Group
2012
$
285,484
183,578
469,062
Company
2013
$
250,745
22,000
272,745
Company
2012
$
67,225
183,578
250,803
Group
2012
$
440,623
-
Company
2013
$
826,768
-
Company
2012
$
343,736
-
880,424
440,623
826,768
343,736
SolGold plc annual report for the year ended 30 June 2013
64
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 17 CAPITAL AND RESERVES
(a) Authorised Share Capital
At 1 July 2011 – Ordinary shares
Creation of additional shares of £0.01 each on 28 June 2012
At 30 June 2012 – Ordinary shares
At 1 July 2012 – Ordinary shares
Creation of additional shares
At 30 June 2013 – Ordinary shares
(b) Changes in Issued Share Capital and Share Premium
Ordinary shares of 1p each at 30 June 2011
Shares issued at $0.12 – placement 6 March 2012
Share issue costs charged to share premium account
Ordinary shares of 1p at 30 June 2012
Ordinary shares of 1p each at 30 June 2012
Shares issued at £0.04 – placement 17 July 2012
Share issue costs charged to share premium account
Shares issued at £0.035 – placement 3 October 2012
Share issue costs charged to share premium account
Shares issued at £0.035 – placement 12 October 2012
Share issue costs charged to share premium account
Shares issued at £0.015 – placement 8 April 2013
Share issue costs charged to share premium account
Shares issued at £0.03 – placement 14 June 2013
Shares issued at £0.038 – Conversion of convertible redeemable
preference shares 28 June 2013
Ordinary shares of 1p at 30 June 2013
Potential issues of ordinary shares
2012
No. of Shares
500,000,000
120,000,000
620,000,000
2013
No. of Shares
620,000,000
-
620,000,000
2012
Nominal Value £
5,000,000
1,200,000
6,200,000
2013
Nominal Value £
6,200,000
-
6,200,000
No. of
Shares
284,623,489
28,758,445
-
313,381,934
No. of
Shares
313,381,934
33,333,333
-
55,555,556
-
21,972,143
-
119,801,376
-
8,200,000
1,110,000
553,354,342
Nominal
Value
$
5,365,926
425,608
-
5,791,534
Nominal
Value
$
5,791,534
500,000
-
857,167
-
325,188
-
1,736,281
-
133,332
18,253
9,361,755
Share
Premium
$
58,402,290
3,003,414
(189,571)
61,216,133
Share
Premium
$
61,216,133
1,500,000
(24,128)
2,142,833
(302,465)
819,094
(1,175)
868,097
(66,531)
266,668
Total
$
63,768,216
3,429,022
(189,571)
67,007,667
Total
$
67,007,667
2,000,000
(24,128)
3,000,000
(302,465)
1,144,282
(1,175)
2,604,378
(66,531)
400,000
-
66,418,526
18,253
75,780,281
At 30 June 2013 the Company had 28,372,000 options outstanding for the issue of ordinary shares, as follows:
Options
Share options are granted to employees under the company’s Employee Share Option Plan (“ESOP”). The employee share option
plan is designed to align participants’ interests with those of shareholders..
When a participant ceases employment prior to the vesting of their share options, the share options are forfeited after 90 days
unless cessation of employment is due to termination for cause, whereupon they are forfeited immediately. The Company
prohibits key management personnel from entering into arrangements to protect the value of unvested ESOP awards.
The contractual life of each option granted is generally three (3) years. There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date for one share with the exercise price payable in cash.
SolGold plc annual report for the year ended 30 June 2013
65
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 17 CAPITAL AND RESERVES (continued)
Options (continued)
Date of grant
Exercisable from
Exercisable to
Exercise prices
Number granted
28 April 2014
£0.50
5,324,000
Number at 30
June 2013
4,532,000
29 April 2011
31 May 2011
28 June 2012*
28 June 2012*
28 September 2012**
10 May 2013***
10 May 2013***
10 May 2013***
Longer of 12
months from
grant or when the
30 day volume
weighted average
price (“VWAP”) of
the company
share price
reaches £0.50.
Longer of 12
months from
grant or when the
30 day VWAP of
the company
share price
reaches £0.50.
12 months from
date of grant
12 months from
date of grant
Exercisable
immediately and
will expire 12
months from
allotment date
When the
Company’s share
price has traded
at a minimum of
£0.20 on a 30 day
VWAP basis
When the
Company’s share
price has traded
at a minimum of
£0.40 on a 30 day
VWAP basis
When the
Company’s share
price has traded
at a minimum of
£0.80 on a 30 day
VWAP basis
30 May 2014
£0.50
5,940,000
3,840,000
23 July 2015
23 July 2015
19 August 2014
£0.14
£0.28
£0.06
1,250,000
1,250,000
500,000
500,000
3,000,000
3,000,000
6 September 2017
£0.14
3,000,000
3,000,000
6 September 2017
£0.28
5,000,000
5,000,000
6 September 2017
£0.50
8,000,000
8,000,000
* The options were granted for accounting purposes on 28 June 2012, following approval at the AGM and formally issued on 23
July 2012.
** The options were granted for accounting purposes 28 September 2012, following approval at the Annual General Meeting held
on 19 August 2013 and formally allotted on 6 September 2013.
***The options were granted for accounting purposes on 10 May 2013, following approval at the Annual General Meeting held on
19 August 2013 and formally allotted on 6 September 2013.
32,764,000
28,372,000
SolGold plc annual report for the year ended 30 June 2013
66
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 17 CAPITAL AND RESERVES (continued)
Convertible Redeemable Preference Shares
Convertible redeemable preference shares are granted under the Company’s Employee Share Plan, which is designed to enable the
Company to secure and retain skilled and experienced personnel on appropriately incentivised terms.
A convertible redeemable preference share (“CRPS”) will be issued at 1p each. Each CRPS will entitle the identified employees upon
achievement of certain performance criteria, to convert the CRPS into one ordinary share, and such employees will in addition be
entitled to subscribe for further ordinary shares, granting the employees, in total (following conversion and exercise of the
subscription rights), 1000 ordinary shares per converted CRPS. The performance criteria in each instance have been structured to
focus on performance in areas including project operational deliverable, share price and corporate performance, and are aligned
with delivering shareholder growth.
A total of 10,700 CRPS were granted following approval at the AGM on 28 June 2012 and formally issued on 23 July 2012. The
CRPS have an issue price of 1p each and the underlying ordinary shares had a price of 3.30p each, calculated as the volume
weighted average trade price of each ordinary share for the 5 trading days immediately prior to the day upon which the CRPS were
issued.
The issue of CRPS has been treated as an option grant in accordance with IFRS 2, Share Based Payments. In line with IFRS 2, Share
Based Payments, the related expense for the CRPS is recorded from the date of grant through to when the performance criteria
have been met.
Convertible Redeemable Preference Shares
Opening balance
Granted during the year
Converted to ordinary shares during the year
Cancelled during the period
Closing balance
2013
Number of CRPS
2012
Number of CRPS
-
10,700
(1,410)
(9,290)
-
-
-
-
-
-
During the year, 1,410 CRPS' were issued on meeting certain performance milestones and subsequently, the remaining CRPS’ were
cancelled.
Warrants
There were no warrants outstanding as at 30 June 2013.
Share options issued
On 28 September 2012, the company entered into an agreement to grant 3,000,000 unlisted options to Mather Investments (Qld)
Pty Ltd (as Trustee), an entity associated with Nicholas Mather, a director of SolGold, pursuant to an Underwriting Agreement in
connection with the Company’s successful placement of AUD$3,000,000. The Options are exercisable at £0.06 each, and will
expire 12 months from their allotment date. The allotment date was 19 August 2013, the date at which approval was obtained by
shareholders at the AGM.
On 10 May 2013, the company entered into an agreement to grant 16,000,000 unlisted options to Alan Martin on his appointment
as Chief Executive Officer. The share options were approved at the Annual General Meeting held on 19 August 2013 and formally
allotted on 6 September 2013. The terms of the share options are as follows:
3 million Options exercisable at £0.14, vesting once the Company’s share price has traded at a minimum of £0.20 on a 30
day VWAP basis;
5 million Options exercisable at £0.28, vesting once the Company’s share price has traded at a minimum of £0.40 on a 30
day VWAP basis; and
8 million Options exercisable at £0.50, vesting once the Company’s share price has traded at a minimum of £0.80 on a 30
day VWAP basis.
SolGold plc annual report for the year ended 30 June 2013
67
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 17 CAPITAL AND RESERVES (continued)
Dividends
The Directors do not recommend the payment of a dividend.
Capital Management
Given the nature of the group’s current activities the entity will remain dependant on equity funding in the short to medium term
until such time as the group becomes self-financing from the commercial production of mineral resources.
NOTE 18 FINANCE LEASE LIABILITIES
Group
2013
$
Group
2012
$
Company
2013
$
Company
2012
$
Minimum lease payments
-
-
-
-
Due within one year
Between one and two years
Between two and five
Later than five years
Total minimum lease payments
Future finance charges
-
Lease liability
-
-
Current Liability due within one year
Non-current liability due between one
and five years
11,084
11,084
4,619
-
26,787
(3,211)
23,576
9,148
14,428
63,552
40,759
49,723
-
154,034
(21,174)
132,860
52,362
80,498
Lease liabilities are secured over the assets to which they relate.
NOTE 19 TRADE AND OTHER CURRENT PAYABLES
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Group
2013
$
158,107
160,941
110,805
429,853
Group
2012
$
1,290,584
220,342
136,233
1,647,159
Company
2013
$
Company
2012
$
149,013
89,359
105,405
343,777
725,160
60,342
130,833
916,335
Current
Trade payables
Other payables
Accrued expenses
NOTE 20 EMPLOYEE BENEFITS
Share-based payments
The number and weighted average exercise price of share options are as follows:
Outstanding at the beginning of the period
Lapsed during the period
Granted during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted
average
exercise price
2013
£0.45
£0.38
£0.36
-
£0.37
£0.21
Number of
options
2013
12,972,000
(3,600,000)
16,000,000
-
25,372,000
1,000,000
Weighted
average
exercise price
2012
£0.50
£0.50
£0.21
-
£0.45
-
Number of
options
2012
11,264,000
(792,000)
2,500,000
-
12,972,000
-
The options outstanding at 30 June 2013 have an exercise price of £0.14 - £0.50 (2012: £0.14 - £0.50) and a weighted average
contractual life of 2.81 years (2012: 2.08 years).
SolGold plc annual report for the year ended 30 June 2013
68
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 20 EMPLOYEE BENEFITS (continued)
Share-based payments (continued)
Share options held by Directors are as follows:
Share options held
Malcolm Norris
At 30 June 2013
-
At 30 June 2012
600,000
Option Price
14p
Nicholas Mather
Cameron Wenck
Brian Moller
Robert Weinberg
John Bovard
-
1,200,000
-
880,000
880,000
880,000
600,000
1,200,000
1,100,000
880,000
880,000
880,000
28p
50p
50p
50p
50p
50p
Exercise Period
28/06/13 – 28/06/15
28/06/13 – 28/06/15
31/05/12 – 30/05/14
31/05/12 – 30/05/14
31/05/12 – 30/05/14
31/05/12 – 30/05/14
31/05/12 – 30/05/14
The total number of options outstanding at year end is as follows:
Share options held
at 30 June 2013
Share options held
at 30 June 2012
Option price
Exercise periods
4,532,000
3,840,000
500,000
500,000
3,000,000
3,000,000
5,000,000
8,000,000
5,324,000
5,148,000
1,250,000
1,250,000
-
-
-
-
£0.50
£0.50
£0.14
£0.28
£0.06
£0.14
£0.28
£0.50
29/04/12 – 28/04/14
31/05/12 – 30/05/14
28/06/13 – 28/06/15
28/06/13 – 28/06/15
6/09/13 – 19/08/14
Vesting from 30 day VWAP of 20p to
06/09/2017
Vesting from 30 day VWAP of 40p to
06/09/2017
Vesting from 30 day VWAP of 80p to
6/09/2017
28,372,000
12,972,000
The fair value of services received in return for share options granted is measured by reference to the fair value of share options
granted. This estimate is based on either a Black-Scholes model or Monte Carlo Simulation considering the effects of the vesting
conditions, expected exercise period and the dividend policy of the Company.
SolGold plc annual report for the year ended 30 June 2013
69
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 20 EMPLOYEE BENEFITS (continued)
Share-based payments (continued)
Fair value of share options and
assumptions
2012
Fair value at issue date
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate (short-term)
£0.28 Options
28 June 2012
£0.14 Options
28 June 2012
£0.0137
£0.28
102.9%
£0.0199
£0.14
102.9%
3.00 years
3.00 years
0.00%
0.79%
0.00%
0.79%
Valuation methodology
Black Scholes
Black Scholes
Fair value of share
options and assumptions
2013
Fair value at issue date
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate
(short-term)
Valuation methodology
£0.50 Options
10 May 2013
£0.28 Options
10 May 2013
£0.14 Options
10 May 2013
£0.06 Options
28 September 2013
£0.00000
£0.50
127.46%
4.00 years
0.00%
0.91%
£0.00003
$0.28
127.46%
4.00 years
0.00%
0.91%
£0.00014
£0.14
127.46%
4.00 years
0.00%
0.91%
£0.022
£0.06
127.46%
1.00 years
0.00%
0.68%
Monte Carlo
Monte Carlo
Monte Carlo
Black Scholes
The calculation of the volatility of the share price was based on the Company’s daily closing share price over the two-year period
prior to the date the options were issued.
NOTE 21 FINANCIAL INSTRUMENTS (GROUP AND COMPANY)
If required, the Board of Directors determines the degree to which it is appropriate to use financial instruments, commodity
contracts or other hedging contracts or techniques to mitigate risks. The main risks for which such instruments may be appropriate
are foreign currency risk and liquidity risk, each of which is discussed below. The main credit risk is the non-collection of loans and
other receivables which include, refunds and tenement security deposits. There were no overdue receivables at year end.
There have been no changes in financial risks from the previous year.
During the year ended 30 June 2013 no trading in commodity contracts was undertaken.
Foreign currency risk
The Group has potential currency exposures in respect of items denominated in foreign currencies comprising:
Transactional exposure in respect of operating costs, capital expenditures and, to a lesser extent, sales incurred in
currencies other than the functional currency of operations which require funds to be maintained in currencies other than
the functional currency of operation; and
Translational exposures in respect of investments in overseas operations which have functional currencies other than
Australian dollars.
SolGold plc annual report for the year ended 30 June 2013
70
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 21 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) (continued)
Currency risk in respect of non-functional currency expenditure is reviewed by the Board.
The table below shows the extent to which Group companies have monetary assets and liabilities in currencies other than the
Group functional currency. Foreign exchange differences on retranslation of such assets and liabilities are taken to the statement
of comprehensive income.
Solomon Island dollar (SBD)
Group
2013
$
13,366
Group
2012
$
(25,463)
The main currency exposure relates to the effect of re-translation of the Group’s assets and liabilities in Solomon Island dollar
(SBD). A 10% change in the SBD/A$ exchange rate would give rise to a change of approximately $1,337 (2012: $2,546) in the Group
net assets and reported earnings. In respect of other monetary assets and liabilities held in currencies other than Australian dollars,
the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where
necessary to address short-term imbalances.
The company did not have any monetary assets and liabilities in currencies other than the company functional currency.
Credit Risk
The Group is exposed to credit risk primarily on the financial institutions with which it holds cash and cash deposits. At 30 June
2013, the Group had $844,939 in cash accounts with Macquarie Bank Limited in Australia, $21,680 in cash accounts with the ANZ
Bank in Australia, $438 in cash accounts with Westpac Bank in Australia, $11,556 in cash accounts with the ANZ Bank in Honiara,
Solomon Islands, and $1,810 in cash accounts with Westpac Banking Corporation in Honiara, Solomon Islands. Including other
receivables, the maximum exposure to credit risk at the reporting date was $1,191,512 (2012: $909,685).
Liquidity risks
The Group and Company raises funds as required on the basis of budgeted expenditure for the next 12 to 24 months, dependent
on a number of prevailing factors. Funds are generally raised in capital markets from a variety of eligible private, corporate and
fund investors, or from interested third parties (including other exploration and mining companies) which may be interested in
earning an interest in the project. The success or otherwise of such capital raisings is dependent upon a variety of factors including
general equities and metals market sentiment, macro-economic outlook, project prospectivity, operational risks and other factors
from time to time. When funds are sought, the Group balances the costs and benefits of equity financing. When funds are
received they are deposited with banks of high standing in order to obtain market interest rates. The Group deals with banks with
high credit ratings assigned by international credit rating agencies. Funds are provided to local sites weekly, based on the sites’
forecast expenditure. The maturity profile of the Group’s non-current financial liabilities is disclosed in note 18.
Interest rate risks
The group’s and company’s policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve
month’s maximum duration. The increase/decrease of 2% in interest rates will impact the group’s income statement by a gain/loss
of $17,608 and the company’s income statement by $16,535. The group considers that a 2% +/- movement interest rates represent
reasonable possible changes.
Fair values
In the Directors’ opinion there is no material difference between the book value and fair value of any of the Group’s and
Company’s financial instruments. The classes of financial instruments are the same as the line items included on the face of the
statement of financial position and have been analysed in more detail in notes to the accounts.
All the group’s financial assets are categorised as loans and receivables and all financial liabilities are measured at amortised cost.
SolGold plc annual report for the year ended 30 June 2013
71
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 22 COMMITMENTS
The Company also has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may
be varied from time to time and are expected to be fulfilled in the normal course of operations of the Company.
The combined commitments of the Group related to its granted tenement interests are as follows:
Location
Ecuador
Solomon Islands
Queensland
Up to 12 Months
13 Months to 5 Years
Later than 5 Years
410,000
1,141,250
1,455,917
3,007,167
-
853,819
973,083
1,826,902
-
-
-
-
To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum
expenditure requirements are not met, the Company has the option to negotiate new terms or relinquish the tenements. The
Company also has the ability to meet expenditure requirements by joint venture or farm in agreements.
NOTE 23 RELATED PARTIES
(a) Group
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated.
a)
Transactions with Directors and Director-Related Entities
(i)
(ii)
(iii)
(iv)
The Company had a commercial agreement with Samuel Capital Ltd (“Samuel”) for the engagement of Nicholas
Mather as directorof the Company. For the year ended 30 June 2013 $143,750 was paid or payable to Samuel
(2012: $183,333). These amounts are included in Note 5 (Remuneration of Key Management Personnel). The
total amount outstanding at year end is $11,250 (2012: $37,500).
The Company has a long-standing commercial arrangement with DGR Global Ltd, an entity associated with
Nicholas Mather (Director) and Brian Moller (Director), for the provision of various services, whereby DGR
Global provides resources and services including the provision of its administration and exploration staff, 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 for
any expenses incurred by it in providing the Services. For the year ended 30 June 2013 $330,000 was paid or
payable to DGR Global (2012: $378,000) for the provision of administration, management and office facilities to
the Company during the year. The total amount outstanding at year end was $nil (2012: $nil).
Mr Brian Moller (a Director), is a partner in the Australian firm Hopgood Ganim lawyers. For the year ended 30
June 2013, Hopgood Ganim were paid $362,086 (2012: $208,016) for the provision of legal services to the
Company. The services were based on normal commercial terms and conditions. The total amount
outstanding at year end was $18,988 (2012: $81,968).
Sterling Mining Group, an entity associated with Mr John Bovard (a Director), for the prior year ended 30 June
2012, was paid $11,900 (2013: $nil) for Mr Bovard’s consultancy services to the company. The services were
based on normal commercial terms and conditions.
b)
Share and Option transactions of Directors are shown under Notes 5 and 20.
(b) Company
The Company has related party relationships with its subsidiaries (see note 9), Directors and other key personnel (see Note 20).
SolGold plc annual report for the year ended 30 June 2013
72
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 23 RELATED PARTIES (continued)
Subsidiaries
The Company has an investment in subsidiaries balance of $20,378,125 (2012: $41,726,237). The transactions during the year have
been included in Note 9. As the Company does not expect repayment of this amount and will not call payment until the subsidiary
can adequately pay it out of working capital, this amount has been included in the carrying amount of the investment in the Parent
Entity’s statement of financial position.
(c) Controlling party
In the Directors’ opinion there is no ultimate controlling party.
NOTE 24 ACQUISITIONS
Honiara Holdings Pty Ltd
On 17 February 2012, SolGold plc acquired 100% of the capital of Honiara Holdings Pty Ltd, an Australian company with exploration
assets in the Solomon Islands for cash consideration of $1. The Company has also converted debt to equity of $49,999. In
accordance with IFRS 3, this transaction has been treated as an asset acquisition. The following table shows the assets acquired,
liabilities assumed and the purchase consideration at acquisition date.
Identifiable assets and liabilities
Cash
Intangible Assets - exploration expenditure
Trade creditors
Unsecured loans
Less: Non-controlling interest
Identifiable assets acquired and liabilities assumed
Guadalcanal Exploration Pty Ltd
Acquiree’s
carrying
amount
$
1,071
750,346
(4,860)
(751,029)
(4,472)
Fair Value
$
1,071
754,818
(4,860)
(751,029)
-
-
-
On 18 April 2012, SolGold plc entered into a “Put and Call Option Agreement” with Guadalcanal Exploration Pty Ltd. Under the
“Put and Call Option Agreement”, SolGold can elect to purchase the shares of Guadalcanal Exploration Pty Ltd at any time during
the option period, resulting in SolGold having the potential to govern the financial and operating policies of Guadalcanal
Exploration Pty Ltd. The following table shows the assets acquired and liabilities assumed at acquisition date.
Identifiable assets and liabilities
Cash
Intangible assets - exploration expenditure
Other assets
Trade creditors
Unsecured loans
Less: Non-controlling interest
Identifiable assets acquired and liabilities assumed
Acquiree’s
carrying
amount
$
4,782
963,885
2,000
(5,760)
(1,010,939)
(46,032)
Fair Value
$
4,782
963,885
2,000
(5,760)
(1,010,939)
(46,032)
46,032
-
On 30 June 2013, SolGold exercised its rights under the “Put and Call Option Agreement” and acquired the shares of Guadalcanal
Exploration Pty Ltd..
SolGold plc annual report for the year ended 30 June 2013
73
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 25 ACCOUNTING ESTIMATES AND JUDGEMENTS
Key sources of estimation uncertainty
The key elements of the Statement of Financial Position that rely on the business judgment of the Directors as related to their
carrying value include the capitalised exploration expenditure, and the business combination (also largely reflected in the
consolidated carrying value of exploration expenditure).
The Directors have carried out an assessment of the carrying values of deferred exploration costs and any required impairment.
Cascabel Joint Venture
Under the terms of the JV venture agreement, SolGold has met the agreed expenditure commitments and has earned a 50%
participating interest in Exploraciones Novomining S.A. (“ENSA”) at the date of this report (30% at 30 June 2013), and has exercised
its right to increase its interest to 85%. Cornerstone Capital Resources Inc. will hold the other 15% of ENSA. ENSA is an Ecuadorean
registered company which holds 100% of the Cascabel concession.
Exploration on the Cascabel concession has included: geological mapping, stream silt sampling, soil sampling, orientation soil
sampling, rock chip sampling, channel sampling, Terraspec spectral sampling, a helimagnetic survey (which has been modelled in
3D), a radiometric survey, petrography and drilling. The regional exploration has identified five main prospects: Quebrada Alpala,
Quebrada Moran, Quebrada’s Tandayama and America, Rio Cachaco and Aguinaga. The most significant of these is the Alpala
prospect where five drill holes, totalling 2500m in length, have been drilled to date.
There has also been significant work in relationship to fulfil SolGold’s social and environmental commitments. This has included, an
Environmental Impact Study required for advanced stage exploration (drilling), a community relations program, the construction of
a nursery (for rehabilitation), construction of the Alpala field camp to provided suitable living conditions for field staff and the
establishment of the Rocafuerte field office.
The aggregate carrying value of $2.59 million is considered to be unimpaired.
Guadalcanal Joint Venture
In 2012, Newmont Ventures Limited informed SolGold that it is resigning as manager and ceased funding the JV. Consequently, this
resulted in an impairment assessment over all the tenement areas comprising the JV and an impairment charge of $17.95 million
being recognised during the year ended 30 June 2012.
On 5 June 2013, the Guadalcanal Joint Venture between SolGold and Newmont was terminated by mutual consent. A termination
agreement has been executed by both parties, formally bringing the relationship to an end.
SolGold 100% owned Projects
Kuma PL 08/06
SolGold has retained the Kuma PL 08/06 prospect and has a 100% ownership. The project is at an early stage of exploration, which
has included: geological mapping, rock chip sampling, stream sediment sampling and an airborne magnetic. This has identified a
lithocap, which are often found above mineralised porphyry complexes. This buried target has the potential to deliver exploration
success. There is currently insufficient exploration data to estimate the potential prospectivity of the tenement. The prospecting
licence (PL 08-06) was renewed for a further term of two years commencing from 11th April 2013. The carrying value of $0.1 million
is considered to be unimpaired.
Florida PL 57/07
Exploration on Florida was at an early stage and work had identified prospective rocks hosting significant nickel anomalies. During
the year a decision was made to relinquish the tenement. Accordingly, the carrying value of $0.63 million is considered to be
impaired and an impairment charge of $0.63 million was recognised during the year ended 30 June 2013.
SolGold plc annual report for the year ended 30 June 2013
74
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 25 ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Fauro PL 12/09
Exploration on the island of Fauro is at an early stage and the airborne surveying, mapping and sampling phase of the program of
testing of the key targets has resulted in the identification of extensive mineralised complexes which show potential to yield
significant gold and copper occurrences. Initial drilling commenced and has defined several gold-copper targets. The company is
actively seeking a JV partner to pursue drilling of gold-copper targets defined in the 2011/12 exploration program. As no JV partner
has been found to date, the carrying value of $12.82 million is considered to be impaired and an impairment charge of $11.82
million was recognised during the year ended 30 June 2013.
Lower Koloula PL 01/10
Exploration on the Lower Koloula tenement is at a very early stage. Work has included stream sediment sampling, rock chip
sampling, soil sampling, an airborne magnetic survey and geological mapping. Two anomalous prospects: Big Frog and Pepechichi
have been identified from the geochemical surveys, while further potential targets have been interpreted from the magnetic data.
The carrying value of $0.63 million is considered to be unimpaired.
Malakuna PL 02/10
Exploration on the Malakuna tenement is at a very early stage. An interpretation of the magnetic data has identified numerous
potential targets and is waiting to be followed up with geochemical surveys and geological mapping. The carrying value of $0.19
million is considered to be unimpaired.
Acapulco Mining Projects
Acapulco has nine granted tenements and two applications across Queensland. The granted tenements comprise of 260 sub-
blocks (circa 826km2) and 203 sub-block (circa 657km2) applications.
Extensive airborne magnetic and electromagnetic surveys have been conducted over some of the tenements, together with
detailed stream sediment sampling, soil sampling, rock chip sampling and geological mapping programs. Furthermore, since May
2006 a total of 283 holes, equivalent to 24,377.8m have been drilled on the tenements.
The objective is to step-out from areas of known gold mineralisation so that resources can be defined and enlarged, with the
objective of defining a maiden resource. The Company is seeking a joint venture partner to further progress these projects.
The aggregated carrying value of $8.88 million is considered to be unimpaired.
Central Minerals Projects
Central Minerals comprises of twelve granted tenements and five applications. The granted tenements comprise of 337 sub-blocks
(circa 1055km2) and 233 sub-block applications (circa 745km2).
Extensive airborne magnetic surveys have been conducted over the area, together with detailed soil and rock chip sampling,
trenching, mapping programs and an induced polarisation geophysical survey. Since October 2007, a total of 473 holes, equivalent
to 58,886.62m, have been drilled on the tenements.
On 23 May 2012, SolGold announced an updated Indicated and Inferred resource estimate at Rannes of 12.23 million tonnes at
0.6g/t gold and 23.18g/t silver; for 237,240ozs Au and 9,105,072ozs Ag (using a gold to silver ratio of 1:50 and a 0.5g/t Au
equivalent cut-off) Several other prospects exist that contain known gold mineralisation that has not yet been included in the
resource estimate. Drilling of these prospects maybe followed-up.
The Central Minerals projects have a carrying value of $16.81 million at 30 June 2013. Substantive expenditure on further
exploration for and evaluation of mineral resources at the Central Minerals projects is neither budgeted nor planned and
accordingly, the tenements were assessed for impairment, resulting in an impairment charge of $13.11 million being recognised
during the year ended 30 June 2013.
SolGold plc annual report for the year ended 30 June 2013
75
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2013
NOTE 26 CONTINGENT ASSETS AND LIABILITIES
There are no contingent assets and liabilities at 30 June 2013 (2012: none).
NOTE 27 SUBSEQUENT EVENTS
On 15 July 2013, the Company issued 7,500,000 options to its Chief Geologist. The options consist of three tranches with varying
exercise prices and vesting conditions which are dependent on the Company’s share price. The options expire on 15 July 2016.
On 15 July 2013, a total of 1,584,000 employee options exercisable at 50p were forfeited due to employees ceasing employment
with the Company.
On 6 September 2013, the Company issued an additional 700,000 shares at £0.13 pursuant to the achievement of certain
employment related milestones, including under the CPRS.
On 24 September 2013, the Company issued 7,320,000 options to contractors and staff. The options consist of three tranches with
varying exercise prices and vesting conditions which are dependent on the Company’s share price. The options expire on 24
September 2016.
On 25 September 2013, the Company issued an additional 49,840,967 shares at £0.075 to raise $6.4 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.
The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the balance date
that would have a material impact on the consolidated financial statements.
SolGold plc annual report for the year ended 30 June 2013
76
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