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ANNUAL
R E P O R T
2014/15
TABLE OF CONTENTS
Corporate Information
Chairman’s Statement
Strategic Report
Governance
Independent Auditor’s Report
Consolidated Statement Of Comprehensive Income
Consolidated And Company Statements Of Financial Position
Consolidated And Company Statements Of Changes In Equity
Consolidated And Company Statements Of Cash Flows
Notes To The Financial Statements
02
03
04
42
49
50
51
52
54
55
1 SOLGOLD ANNUAL REPORT 2015
CORPORATE INFORMATION
DIRECTORS
Brian Moller (Non-Executive Chairman)
Nicholas Mather (Executive Director)
Dr Robert Weinberg (Non-Executive Director)
John Bovard (Non-Executive Director)
BROKER
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
United Kingdom
COMPANY SECRETARY
Karl Schlobohm
REGISTERED OFFICE
201 Bishopsgate,
London EC2M 3AB,
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
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
Locke Lord LLP
201 Bishopsgate,
London EC2M 3AB,
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
ANNUAL REPORT 2015 SOLGOLD 2
CHAIRMAN’S STATEMENT
Dear Shareholder,
On behalf of the Board of Directors of SolGold, I take pleasure in presenting the Annual Report for 2015.
It has been a busy year for the Company as it has continued to focus the majority of its efforts on the exploration of
Cascabel, its flagship copper gold porphyry project in Ecuador.
To date the Company has completed geological mapping, soil sampling, 14 km² and 9 km² Induced Polarisation and
Magnetotelluric “Orion” surveys at the Alpala and Aguinaga targets, respectively. At the time of writing, the Company
had completed approximately 25 km² of soil sampling and 14km² of electrical surveys, over 21,000 m of drilling and
expended approximately US$30 m. Diamond drilling continues with two drill rigs completing approximately 8,000 m
per rig each, per annum.
Cascabel is characterised by multiple targets, world class intersections rich in high grades of copper and
gold, logistic advantages in location, elevation, water supply, proximity to road, port and power services and a
progressive legislative approach to resource development.
SolGold is planning a resource statement at Alpala the most advanced target at Cascabel by mid-2016, in addition to
drill testing the other key targets at Aguinaga, Tandayama America and Chinambicito in the Cascabel concession. By
the end of 2016 the Company is planning further metallurgical testing, and completion of early stage mine and plant
design and a scoping study for an economic development at Cascabel. SolGold is investigating both high tonnage / low
grade open cut and high grade low tonnage underground developments as a block caving operation.
In Queensland, Australia the Company is evaluating the future exploration plans for the Mt Perry, Rannes and
Normanby projects. Joint venture agreements are still being investigated with the strategy for the joint venture
partner to commit funds and carry out exploration to earn an interest in the tenements.
In the Solomon Islands, the Company has streamlined its in-country presence after significant drill testing reduced
the prospectivity of Fauro, Koloula and Malakuna tenements.
The Company continues to receive proposals to participate in new projects, and a number are being considered. 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.
Yours faithfully,
Brian Moller
Chairman
3 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
CORPORATE STRUCTURE
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.
• Primarily focus on copper and gold, taking up the
growth potential and increasing global demands
• Target regions with world class deposits.
• Maximise shareholder funds on “in the ground”
exploration expenditure as a proportion of the total
budget in order 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.
• Undertake an on-going review of potentially ‘value
accretive’ opportunities that are presented to the
company from time to time.
• Target grass roots level exploration opportunities
to enable low cost entry into projects.
• Respect the Communities and Environment in
which we operate.
• Focus on disciplined and systematic approach
to exploration.
• Maintain a strong focus on Health and Safety for
our employees and contractors.
ANNUAL REPORT 2015 SOLGOLD 4
STRATEGIC REPORT
OPERATIONS REPORT
CORPORATE STRATEGY Continued
SolGold has a commitment Corporate Social
Responsibility and is passionate about the company’s
active health, safety, community and environment
programs in its areas of exploration. The company
has an outstanding safety record and ensures that its
people are properly trained and work in a planned and
controlled manner under procedures that ensure safe
operations. Environmental and social management
programs in 2013 and 2014 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 water
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 of the Company’s
presence and exploration activities. SolGold continues
to build strong community relations with the
communities at Cascabel. SolGold cares deeply about
community relations and sponsors many community
enterprises as well as engaging the community
in regular environmental monitoring studies and
rehabilitation programs (Figure 2).
Figure 2: SolGold is taking up the growth potential for copper as global urbanisation irrevocably drives copper demand higher (top), and
imagery from some of SolGold’s current health, safety, community and environment programs (above).
5 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
EXPLORATION STRATEGY
The company’s exploration strategy includes the following elements:
• Capitalisation of 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 generate exploration datasets that may include all or some
of the following exploration activities: geological mapping, stream, soil and rock chip geochemical sampling, and
geophysical surveying.
• Generation of drill targets to test ore deposit models based on exploration datasets.
• Drill testing targets to define potentially economic mineral resources that the company can take to feasibility
study stage.
SolGold has a track record of experience at both executive and operations management and board levels to define
and develop mineral resources from discovery through to feasibility and development. In line with its corporate
strategy, SolGold’s focus in 2016 continues towards a world class copper-gold development at Cascabel. The
team remains engaged upon project generation globally, targeting tectonically fertile areas and in countries set to
blossom in the next mining up turn, as well as streamlining assets in Australia and the Solomon Islands (Figure 3).
Figure 3: SolGold areas of interest.
ANNUAL REPORT 2015 SOLGOLD 6
STRATEGIC REPORT
OPERATIONS REPORT
EXPLORATION STRATEGY Continued
In Ecuador, the Company is advancing the Cascabel project as well as advancing the La Encrucijada access
agreement and is undertaking a country wide generative in order to acquire top quality projects in this emerging
mining country.
In the Solomon Islands, SolGold has streamlined its in-country presence after significant drill testing reduced the
prospectivity of Fauro, Koloula and Malakuna tenements. The exciting Kuma project in Guadalcanal has emerged
as a significant porphyry copper-gold target upgraded by recent geochemical and spectral work by Guadalcanal
Exploration Pty Ltd (GEX) in 2014-15.
In Australia, a reassessment of the range of projects held in Queensland has resulted in definition of detailed work
programs that will be put in place as exploration funds become available.
Project
Cascabel JV
Kuma
Rannes
Mt Perry
Normanby
Cracow West
Westwood
Lonesome
Location
Ecuador
Style
Ownership
Copper Gold Porphyry
JV, SolGold (85% interest)
Solomon Islands
Copper Gold Porphyry
Queensland, Australia
Epithermal Gold
Queensland, Australia
Porphyry and Vein Gold
Queensland, Australia
Gold Copper Porphyry
Queensland, Australia
Epithermal Gold
Queensland, Australia
PGE Layered Intrusion
Queensland, Australia
Epithermal Gold
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
Table 1: SolGold exploration projects
Figure 4: Some of SolGold’s experienced geoscientists at work.
7 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR
Cascabel Project (85% interest)
Location:
Ownership:
180 km north of the capital Quito, Ecuador
Exploraciones Novomining S.A (ENSA) holds 100% of Cascabel concession.
SolGold owns 85% of ENSA.
Tenement Area:
50 km2
Primary Target:
Porphyry copper-gold
The Cascabel project and its flagship discovery, the gold-rich, high grade Alpala porphyry copper-gold deposit
are located in the Imbabura province of northwest Ecuador. The Cascabel concession area lies 180 km by road
north of the capital city of Quito. The climate zone is tropical-savannah and vegetation is tropical forest with a
well-developed soil horizon. Topography rises from elevations of 750 m to 2,100 m and the moderate to steep
landscape is incised by four large drainage complexes. A first-order paved highway provides year round access
and crosses the north-east corner of the concession (Figure 5). A gravel road in good condition provides access to
the village of Santa Cecilia located in the centre of the concession. Ecuador is undergoing a transformation with
significant improvements to infrastructure, including five key sea ports, over 10,000 km of new highways, and 10
new hydroelectric projects.
Figure 5: Location of the Cascabel project in northwest Ecuador.
ANNUAL REPORT 2015 SOLGOLD 8
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Figure 6: Examples of the infrastructure advantages developed within the country.
Northern Ecuador lies within the under-explored northern section of the richly endowed Andean Copper Belt,
which extends from Chile in the south to Colombia in the north and then north-west into Panama. The tenement
lies on the margin of the Eocene and Miocene metallogenic belts which are renowned for hosting some of the
world’s largest porphyry copper and gold deposits (Figure 7).
A number of other globally significant deposits have been discovered in the region, some of which are becoming
mines. These include the Junin copper project (982 million tonnes at 0.89% Cu), located some 60 km to the
south-west of Cascabel, the La Colosa porphyry deposit (905 million tonnes at 0.92 g/t Au) located to the north in
Colombia and the massive Cobre Panama deposit (3.3 billion tonne at 0.36% Cu) located to the north in Panama
which contains over 26 million ounces of gold. The Fruta del Norte project in southern Ecuador is among the
largest and highest grade undeveloped gold projects in the world (23.5 million tonnes at 9.59 g/t Au) and highlights
the pedigree of potential within the country.
Figure 7: Tectonic (left) and geological (right) setting of the Cascabel property in northern Ecuador, showing nearby major porphyry deposits.
The Cascabel project area is located above the subducted extension of the Carnegie Ridge, where low angle subduction of buoyant slabs have
generated zones of high magma flux and an environment for outstanding porphyry copper and gold fertility.
9 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
The project is located in the Cordillera Occidental (or Western Cordillera) of the Ecuadorian Andes. Basement
rocks consist of ocean floor basalts and sediments of Cretaceous age. High-level Eocene (and possibly Late-
Miocene) batholiths and associated granite, granodiorite and diorite bodies intrude volcanic and sedimentary
rocks of Cretaceous to Tertiary age. The regional controls that localise gold and copper mineralisation at Cascabel
are intimately related with the three dimensional interaction of deep seated NE-trending 1st order structures,
with NW-trending 2nd order (arc-normal) faults, and NNW-trending 3rd order structures (Figure 8). Within
the Cascabel concession, volcanic and sedimentary rocks are intruded by a number of Quartz diorite, diorite and
horneblende diorite stocks and dykes. The SolGold field teams continue to perform 1:500 scale, “Anaconda” style
geological over the tenement area and updates to the local geology map remain ongoing.
Figure 8: Regional topographic imagery showing regional structural framework of the Cascabel project area (left), and local geology updated
from recent field mapping by SolGold geoscientists (right).
ANNUAL REPORT 2015 SOLGOLD 10
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Exploration Highlights
Exploration activities during 2015 included:
• Anaconda style geological mapping in key areas.
• Extension and infill soil sampling across the remaining
prospective portion of the tenement. Rock-saw
channel sampling at Alpala and Aguinaga, including
the discovery of porphyry stock-work copper-gold
mineralisation outcropping at surface at Aguinaga.
• Modelling of heli-magnetic, Orion 3DIP and magneto-
telluric (MT) surveys at Alpala and Aguinaga.
• Diamond drilling of drill holes 8 to 12 at Alpala, for
a total of 7,393.84 m, bringing the total for metres
drilled at Cascabel to 13,808.92 m.
• Upgrade of the Alpala field camp and the Rocafuerte
field office.
• Petrographic work on drill core from drill holes at
Alpala, confirming intrusive lithologies, mineralisation
styles, paragenesis, and alteration types.
• Preliminary metallurgical test work conducted, with
Rougher flotation recovery tests completed and
reported. Cleaner recovery tests ongoing.
• Ongoing environmental management over the
concession area in line with guidelines provided by the
Ministry of Environment.
• Submission of annual technical and environmental
management reports.
This work has generated seven key areas of interest:
(Figure 9):
1) Alpala (or Alpala Central)
2) Alpala Northwest
3) Alpala Southeast
4) Aguinaga
5) Chinamibcito
6) America-Tandayama
7) Cristal
11 SOLGOLD ANNUAL REPORT 2015
Figure 9: Key sites and prospect areas showing interpreted
porphyry centres over RTP magnetics background.
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
The completion of soil gridding and infill across the entire tenement area has produced coincident molybdenum, gold
and copper / zinc ratio in soil anomalies that suggest a inferred porphyry centre characterised by higher temperatures
of mineralisation. The low manganese in soil is inferred to be related to intense late-stage hydrothermal alteration,
whilst the presence of elevated zinc surrounding these areas of low manganese is a geochemical signature that is
typical of the metal zonation around porphyry copper-gold deposits (Figure 10).
Figure 10: Examples of soil geochemical anomalism (for molybdenum, manganese and copper-zinc ratio) over the Cascabel project area,
showing classical porphyry signatures at Alpala, Aguinaga, Chinambicito and America Tandayama.
Priority target areas at Alpala, Alpala Southest and
Aguinaga will be drill tested in the coming year, whilst field
programs continue to assess potential at Chinamibcito,
and America-Tandayama, as well as detailed follow up
field work at Alpala Northwest, Alpala Southeast and
Cristal targets. A number of other satellite targets are
being generated in the surrounding areas and exploration
over the tenement is expected to produce more valuable
targets that will be brought to drill ready status in the
coming year.
Alpala
Following the granting of the Environmental License on 27
August 2013, SolGold commenced diamond drilling on the
1st September 2013. Initial drilling focussed on intersecting
the down-dip extension of outcropping sheeted and stock-
work “B“ type quartz veins in Alpala Creek.
The completion of twelve diamond core holes over a
700 m by 250 m area has now defined a northwesterly-
trending, steeply northeast-dipping dike-stock complex
of diorite to quartz diorite that exceeds 1300 m in
height. This intrusive complex is hosted by a sequence of
andesitic volcanoclastic rocks and lavas. The host-rocks
are mapped as the Oligocene to Early Miocene San Juan
de Lachas Formation, however, age date constraints from
studies conducted by SolGold suggest that the lower
portion of this sequence was deposited in the Eocene.
The best drill intercept to date is 1312 m at 0.67 % Cu
and 0.63 g/t Au from 128 m depth in CSD-15-012, which
includes 576 m at 1.03 % Cu and 1.19 g/t Au. The deposit
remains open at depth, along- and across-strike like the
massive La Escondida and Chiquicamata deposits in Chile.
ANNUAL REPORT 2015 SOLGOLD 12
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
The geometry and nature of the mineralisation at Alpala is now quite well understood. A total of six phases of intrusion
are defined on the basis of composition and relative timing-relationships with porphyry-related vein-stages. The
equigranular to sub-porphyritic, hornblende-bearing intrusions are narrow, taper upwards and consist of pre- to
early-mineralization D10 diorite to microdiorite and QD10 quartz diorite; intra-mineralization D15 diorite and QD15
quartz diorite; and late-mineralization dikes of D20 diorite and QD20 quartz diorite (Figure 11). Age dating on zircons
in mineralised intrusions returned 38.7 + 0.6 Ma, which lies near the boundary of the Middle- to Late-Eocene. The
porphyry-related vein types and paragenesis at Alpala indicate a systematic progression in time and classical porphyry
B-type quartz veins contain the majority of the copper and gold in the deposit. Chalcopyrite-rich, C-type sulphide veins
containing accessory bornite also contain significant amounts of metal and are associated with elevated gold grades. The
B- and C-type veins are spatially associated with intrusions that show variable feldspar-destructive, sericite-chlorite+clay
overprinting of biotite-actinolite and chlorite-epidote alteration.
Figure 11: Section 82950 through the centre of the Alpala system showing the geometry of B-vein occurrence intimately associated with
the intrusion of early D10 diorite and QD10 quartz-diorite phases. Intramineral and late stage dykes and stocks intrude along contacts and
structures (left). Examples of “B-“ and “C-“ type veining at Alpala (right).
During the year, drilling focussed on expanding the known mineralisation at Alpala along strike, both towards the
northwest and southeast. The mineralised porphyry copper gold system at Alpala occurs around 150 m in length
and 50 m width as mapped at surface and drilling to date has identified an extent of 700 m in length and 250
m width at depth. All holes returned encouraging results with completion drill holes CSD-14-007 to CSD-15-
012 making valuable additions to the known geometry of the porphyry centre at Alpala. Anaconda style surface
mapping of geology, quartz veins, sulphides and alteration was completed and creation of level plans and cross
sections has led to production of geology models for copper (Figures 12 and 13).
13 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Figure 12: Drill hole locations at Alpala showing downhole copper results (left), and level plan and cross section interpretation examples,
showing B-vein abundance contours at >2% in yellow and >10% in red (right).
Drill hole CSD-14-007 was terminated at 1672.76
metres depth after encountering early D10 diorite
from 1251.26 m to 1298.30 m varying degrees of
potassic alteration. Visible copper sulphides continued
through the remainder of the hole but at progressively
diminishing intensities, in association with marginal
inner propylitic alteration types. From 1298.30 m
to 1672.76 m there was a progressive reduction in
quartz vein intensities indicating that the hole was
progressing beyond the western margin of the system.
Drill hole CSD-14-008 was drilled to 1310.4 m depth
and intersected the early D10 diorite from 902.0 m to
973.0 m and passed into the equally prospective early
QD10 quartz diorite intrusion from 973.0 m to the
end of the hole. Copper mineralisation hosted within
the early intrusions returned moderate to strong
copper and gold mineralisation in two zones from 904
m to 1186 m and 1264 m to 1310.5 m respectively.,
Drill hole CSD-14-009 was terminated at 1757.3 m
and returned very positive intersection comparable to
globally significant drill intersections at existing large
porphyry copper-gold deposits, with a total downhole
interval extending over 1 kilometre that remains open
at depth. Hole 9 intersected two distinct high grade
porphyry stockwork zones from 710 m to 820 m and
from 1062 m to 1482 m within early D10 and QD10
intrusives, intra-mineral QD15 dykes and a late QD20
dyke. The upper zone is interpreted to represent an
easterly repeat of the known main orebody that is
likely to form a zone of coalescence at depth where
future drill testing is planned.
Drill hole CSD-15-010 confirmed high grade copper and
gold mineralisation extends to the northwest, intersecting
the early D10 diorite from 562 m to the end of the hole.
Drilling encountered difficulties within a clay-rich zone of
broken ground and was abandoned at 974.8 m.
ANNUAL REPORT 2015 SOLGOLD 14
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Drill hole CSD-15-011 was drilled to a depth of 1668.2 m and returned results consistent with observations of
alteration assemblages in the drill core, which suggest the hole passed along the NW margin of the known high grade
Alpala Central zone. However, early D10 diorite host rocks along the lower zone of Hole 11 maintain 0.5-2% B-type
quartz veins, with significant copper and gold mineralization which yet remains open to the northwest.
Drill hole CSD-15-012 is the most recent hole drilled on the project and was completed at a depth of 1683.0 m.
Final assay results from high grade porphyry copper gold mineralisation returned world class intersection of over
a kilometre downhole. Copper-gold mineralisation was intersected in two distinct zones that SolGold geologists
expect will coalesce into a broader zone of high grade mineralisation at depth. The upper portion of the “Eastern
Limb” zone from 128 to 366 metres depth, is hosted within the San Juan de Lacas Volcanics and returned 238
m @ 0.47 % Cu and 0.15 g/t Au. The “Main Limb” zone (1002 m) from 438 to 1440 metres depth, hosted within
early D10 diorite and QD10 quartz-diorite porphyry, returned 1002 m @ 0.76 % Cu and 0.77 g/t Au. The
mineralised zones encountered in Hole 12 are shown along a southwest-northeast cross-section in Figure 3. The
238 m intersection over the upper portion of the “Eastern Limb” zone is associated with chalcopyrite and bornite
mineralisation. The occurrence of this strong mineralisation within the volcanic cover bodes well for stronger
intrusive hosted mineralisation at depth. Chalcopyrite is typically 35% copper and the bulk of the copper bearing
mineral in a copper porphyry system. Bornite is significantly richer in copper at approximately 63% copper and is a
sought after copper mineral species, for its contribution to high grade copper metal sulphide concentrate normally
sold from a mine. The 1002 m intersection through the “Main Limb” zone, reflects a broad zone of intense stock
work quartz - magnetite - chalcopyrite and bornite mineralisation hosted within early stage diorite and quartz diorite
intrusives. These characteristics are common in many major porphyry copper-gold deposits around the globe.
Figure 13: Surface interpretation of copper contours at 0.6% and 1% Cu showing preliminary copper models at 0.6% and 1% Cu (left). Cross
section looking east (right). Existing drill holes 1-12 shown in black with planned drill holes shown in red.
15 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Hole ID
CSD-13-001
CSD-13-002
CSD-13-003
CSD-13-004
CSD-13-005
CSD-14-006
CSD-14-007
CSD-14-008
CSD-14-009
CSD-15-010
CSD-15-011
CSD-15-012
From
16
16
222
226
126
184
4
54
584
160
24
24
778
1052
702
654
1056
1160
1200
396
396
862
904
1264
430
650
710
650
1062
1208
446
604
760
996
1110
1412
128
438
844
876
1002
To
318
120
322
284
418
226
751.3
156
712
318.3
1330
420
1310
1310
1038
1612
1294
1294
1294
1310.45
862
1310.45
1186
1310.45
1757.35
1738
1482
912
1482
1386
840
840
840
1632
1518
1518
1440
1440
1420
1344
1286
Int.
302
104
100
58
292
42
747.3
102
128
158.3
1306
396
532
258
336
958
238
134
94
914.45
466
448.45
282
46.45
1327.35
1088
772
262
420
178
394
236
80
636
408
106
1312
1002
576
468
284
Cu_%
0.39
0.37
0.65
0.96
0.37
0.50
0.11
0.16
0.23
0.11
0.62
0.32
1.05
1.27
0.18
0.40
0.65
0.75
0.84
0.41
0.25
0.56
0.60
0.71
0.57
0.66
0.80
0.69
1.00
1.60
0.38
0.51
0.86
0.58
0.56
0.73
0.67
0.76
1.03
1.14
1.33
Au_g/t
0.48
0.38
1.00
1.67
0.30
0.68
0.05
0.03
0.14
0.05
0.54
0.17
1.08
1.40
0.12
0.17
0.35
0.50
0.62
0.44
0.24
0.64
0.76
0.58
0.74
0.89
1.19
1.31
1.34
2.47
0.36
0.54
1.19
0.40
0.34
0.50
0.63
0.77
1.19
1.40
1.82
CuEq_%
0.68
0.60
1.25
1.96
0.54
0.91
0.14
0.18
0.31
0.14
0.95
0.43
1.70
2.12
0.25
0.51
0.87
1.05
1.2
0.67
0.39
0.95
1.06
1.05
1.02
1.2
1.51
1.48
1.81
3.08
0.6
0.84
1.57
0.82
0.76
1.03
1.05
1.22
1.75
1.98
2.43
* Data Aggregation Method
- Intercepts reported with up to 10m internal dilution. (Excluding bridging to a single sample)
- Intercepts selected at minimum length 30m, using Cu equivalent cutoff grades and a gold conversion factor of 0.6.
* Gold Conversion Factor calculated from Cu price US$3/lb and Au price US$40/g
Table 2: Selected drill hole intersections at Alpala to date.
ANNUAL REPORT 2015 SOLGOLD 16
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Aguinaga
Aguinaga prospect lies along a prominent topographic high (1615 m) about 3 km south of Rocafuerte site office and
1.3 km to the north-west of Alpala. The interpreted porphyry centre at Aguinaga occurs at the confluence of a deep
seated regional north-west trending structure with a major north-east trending lineament. This is the same structural
regime within the same host rocks that hold the recently discovered porphyry deposit at Alpala.
It is characterised by a classical 500 m x 500 m magnetic high surrounded by an annular magnetic-low which has
strong similarities with the enormous Alumbrera deposit in Chile, as well as the Grasberg and Batu Hijau magnetic
signatures. This geometry is consistent with a large porphyry system characterized by a central magnetic high related
to an intrusive centre and a magnetite-destructive halo caused by pyritic phyllic / argillic alteration. The presence of
a very strong annular chargeability high with a central tapering root at Aguinaga is consistent with sulphide-bearing,
disseminated and/or stock work style mineralisation peripheral to and above a porphyry stock. (Figure 14).
The textbook style combination of soil geochemical anomalies over the prospect is tremendously convincing. The
presence of coincident copper, gold, and molybdenum in soil anomalies supports the inferred porphyry centre at
Aguinaga. The low manganese in soil that flanks the central copper zone to the north and south is likely to be related
to intense late-stage hydrothermal alteration. The presence of an elevated zinc aureole surrounding this area of low
manganese is a geochemical signature that is typical of the metal zonation around porphyry copper-gold deposits.
Figure 14: Surface interpretation of copper contours at 0.6% and 1% Cu showing preliminary copper models at 0.6% and 1% Cu.
17 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Aguinaga
Reconnaissance field-work initially located mineralised porphyritic diorite along the northern slope of Aguinaga Hill,
subsequent detailed, 1:500 scale, “Anaconda” style geological and structural mapping has led to the discovery of
porphyry stock-work copper-gold mineralization outcropping at surface. Mineralisation is exposed along the upper
section of Aguinaga Creek, where classic porphyry style ‘B’-type quartz-magnetite-chalcopyrite-bornite stock-work
veining occurs within porphyritic diorite (Figure 15). The outcropping mineralisation is accompanied by potassic
(biotite) alteration and remains open to the north where creek sediments and jungle limit further surface exposure.
Rock-saw channel sampling results over the exposed outcrop returned an open ended intersection of 9.0 m @ 1.01 %
Cu, and 0.79 g/t Au (Table 3). Further rock saw channel sampling, and infill soil-sampling along with spectral analysis
of soils to determine hydrothermal alteration assemblages remain ongoing and SolGold expects to bring the prospect
to drill-ready status over the coming quarter.
Trench ID
Length (m)
Cu_%
Au_g/t
m x % Cu
m x g/t Au
AG001
AG001
AG001
AG001
AG001
AG001
AG001
Totals
1
1
1
1
1
2
2
9
0.84
1.59
0.8
0.47
0.7
0.26
2.07
1.01
0.57
0.93
0.42
0.24
0.33
0.196
2.11
0.79
0.84
1.59
0.8
0.47
0.7
0.52
4.14
0.57
0.93
0.42
0.24
0.33
0.392
4.22
Table 3: Rock-saw channel sample results from Trench AG001 at Aguinaga.
Figure 15: Recent discovery of mineralised porphyritic diorite hosting porphyry stock-work copper-gold mineralization outcropping at surface
along the northern slope of Aguinaga Hill.
ANNUAL REPORT 2015 SOLGOLD 18
STRATEGIC REPORT
OPERATIONS REPORT
ECUADOR Continued
Figure 16: SolGold’s team at the Rocafuerte field office.
19 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
SOLOMON ISLANDS
In the Solomon Islands, SolGold has streamlined its in-country presence after significant drill testing reduced the
prospectivity of the Fauro, Koloula and Malakuna tenements. No further exploration work was carried out on these
projects and they were subsequently relinquished. The exciting Kuma project in Guadalcanal has emerged as a
significant porphyry copper-gold target upgraded by recent geochemical and spectral work by GEX in 2014-15.
Figure 17: Location of the Kuma exploration license held by SolGold in the Solomon Islands.
ANNUAL REPORT 2015 SOLGOLD 20
STRATEGIC REPORT
OPERATIONS REPORT
SOLOMON ISLANDS Continued
Kuma project (100% owned application)
Location:
37 km south-east of the capital Honiara, Solomon Islands
Ownership:
100% owned
Tenement Area:
43 km2
Primary Target:
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). The project area overlies a 3.5-kilometre wide, annular, caldera-
like topographic feature. Annular and nested topographic anomalies in the region suggest the presence of
extensive batholiths of the Koloula Diorite beneath the volcanic cover of the Suta Volcanics. The prospect 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 (Figure 18).
Figure 18: Section showing conceptual model over the Kuma prospect, showing geochemical zonation and an alteration lithocap overlying a
buried porphyry copper-gold system
21 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
SOLOMON ISLANDS Continued
The geochemically anomalous portion of the
Kuma lithocap (northwest end) lies within
the annular topographic anomaly. Kuma,
has a spectacular oxidized float boulder trail
along the Kuma River and was traced to
Alemba and Kolovelo creeks which lead to
discovery of broad hydrothermal alteration
zones and lithocap (Figure 19).
Figure 19: Geological setting of the Kuma lithocap along Tabala Ridge (top) and
the discovery of classical porphyry style leached cap and lithocap rocks at Kololevu
and Alemba creeks (above).
ANNUAL REPORT 2015 SOLGOLD 22
STRATEGIC REPORT
OPERATIONS REPORT
SOLOMON ISLANDS Continued
Figure 20: Soil geochemical zonation over the Kuma prospect showing a central
molybdenum high with coincident manganese depletion with an annular zinc halo
(top), and simplified geology showing extent of mapped silica-clay-pyrite (above).
23 SOLGOLD ANNUAL REPORT 2015
Previous exploration completed at Kuma
under the 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. Geochemical
results define a central zone of manganese
depletion (Mn < 200 ppm) inferred to
indicate the destruction of mafic minerals
by hydrothermal alteration. Zinc > 75
ppm forms an annulus to this zone, and
Molybdenum > 4 ppm lies along the margins
of the manganese low indicating potential
for porphyry Cu-Au mineralization at
depth. TerraSpec spectral analysis of sieved
coarse fraction soil samples covering the
Kuma lithocap area, was completed at a
commercial laboratory in Australia. The
results integrated with known geology in
the prospect area has highlighted a primary
porphyry target centre in the northern
portion of the lithocap. (Figures 20 and 21).
The prospecting licence (PL 08/06)
expired on 11 April 2015 and accordingly
the carrying value of $0.31 million
was considered to be impaired and an
impairment charge of $0.31 million (2014:
$nil) was recognised during the year.
Anaconda style geological mapping is
planned for the coming year so as to bring
the project to drill ready status in 2016.
Three steeply-inclined diamond core
drill-holes, each about 800 m deep, are
envisaged for an initial test of the target
area. Drill Sites will be located following
Anaconda style geological mapping within
and peripheral to the target area. Silica
ledges and dickite anomalies controlled
by high level structure can be tested to
provide vectors toward the centre of
the Kuma porphyry gold-copper system
and the identification and orientation of
dikes (porphyritic felsic), veins (quartz
and epidote) and fractures (containing
chalcopyrite or magnetite).
STRATEGIC REPORT
OPERATIONS REPORT
SOLOMON ISLANDS Continued
Figure 21: Combined imagery showing summary of interpreted hydrothermal alteration zones and
geochemical anomalies, over RTP magnetics.
ANNUAL REPORT 2015 SOLGOLD 24
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA
There was no exploration activity on the projects in Queensland during the period. Joint venture opportunities are
being sought for these projects and it is pleasing to note that there has been much interest by junior exploration
and mining companies. However, despite this interest, the continued challenging equities markets are making it
difficult for companies to raise the exploration funds to complete joint venture deals and commence exploration.
Figure 22: Location of tenements held by SolGold in Queensland, Australia.
25 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
Mount Perry (100% SolGold)
Location:
130 km north-west of Gympie, Queensland, Australia
Ownership:
100% owned
Tenement Area:
89 granted sub-blocks (circa 277 km²) and 103 application sub-blocks (circa 336 km²;
primarily tenement consolidation areas).
Primary Target:
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 23). The area lies
adjacent to Evolution’s 100,000 ounce
per annum 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.
Exploration at Mt Perry has focussed along
two mineralised structural zones (The
Augustine-New Moonta trend and the
Chinamans-Reagans trend (Figure 23). The
structural orientations of these are similar
to the major structures that host the Mt
Rawdon gold mine.
Figure 23: Mt Perry project showing the prospect areas, and the Mt Rawdon mine
and major regional structures.
ANNUAL REPORT 2015 SOLGOLD 26
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
The ‘Augustine-New Moonta trend’ extends over a 20 km long north-east trending corridor from Augustine in
the south-west to the New Moonta mines in the north-east. 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 7 km 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. Independent review of the geological resource potential of the area concluded that the prospects have a
combined potential to host between 200,000 ounces (base case) and 700,000 ounces (geological potential) of gold.
A significant amount of the tenement remains unexplored, leaving the potential for unrecognised prospects to be
discovered within the area. SolGold encourages interest in a JV partnership to continue exploration at Mt Perry.
Figure 24: Augustine North section displaying an interpreted high-grade
shoot dipping to the north-east (top), and long-section through the Bania Lode,
showing gram-metre values over the 400 m strike length of drill testing (above).
27 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
Figure 25: Chinamans Creek North section displaying interpreted Au and As lodes through the SW lode
(Caledonian Reef) and Middle lode
Figure 26: Spring Pig cross section, displaying interpreted Au and As lodes.
ANNUAL REPORT 2015 SOLGOLD 28
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
Normanby project (100% SolGold)
Location:
120 km north-west of Mackay, Queensland, Australia
Ownership:
100% owned
Tenement Area:
171 granted sub-blocks (circa 550 km²) and 100 application sub-blocks (circa 321 km² which
are primarily consolidation areas).
Primary Target:
Cu-Au porphyry deposits and batholith associated gold vein deposits
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 40 km to the northwest of Normanby.
SolGold’s exploration to date has 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 m in length. The most significant intersections were at the Mt Flat Top prospect and
included an intersection of 42 m grading 1.16 g/t gold and 34 m 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 2015 at Normanby as SolGold is seeking expressions of interest to joint
venture the Normanby project.
Figure 27: Mt Flat Top cross-section, displaying Au (colour histograms) and Cu (black line) assay grades.
29 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
Rannes project (100% SolGold)
Location:
140 km west of Gladstone, Queensland, Australia
Ownership:
100% owned
Tenement Area:
209 granted sub-blocks (circa 655 km²) and 203 application sub-blocks (circa 651.5 km²)
which are primarily consolidation areas).
Primary Target:
Disseminated and vein gold and silver deposits
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-northwest trending fault zones.
Exploration has included tenement wide
stream sediment, soil and rock chip sampling
surveys. A detailed airborne magnetic
survey was recently re-interpreted to
enhance the development of the structural
model of the belt. Exploration methods
have included a 3D IP (Induced Polarisation)
survey, geological mapping, and trenching all
contributing to definition of additional drill
targets at several prospects.
Figure 28: 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.
ANNUAL REPORT 2015 SOLGOLD 30
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
A total of 473 holes have been drilled at the Rannes project for a total of 58,887 m. Most of this drilling has
occurred at Kauffmans prospect (151 holes) and the Crunchie prospect (90 holes), while lower metreage drill
programs have been conducted at the Shilo, Cracklin Rosie, Porcupine, Brother, Spring Creek and Police Camp
Creek prospects. The geometry and nature of the Kauffmans and Crunchie systems are well understood (Figures
29 and 30).
Figure 29: Cross section trending north-south through the Crunchie Ag-Au deposit, showing drill hole results.
Figure 30: Cross section trending southwest-northeast through the Kauffmans Au-Ag deposit, showing
geology and alteration over the ore zone with key drill hole results.
31 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
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.
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 ounces Au and 9,105,072 ounces Ag. Table 4 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.
Project
CUT OFF
(Au.Eq)
Resource
category
M.Tonnes
Kauffmans
0.5
Crunchie
1.5
Cracklin’
Porcupine
Brother
0.5
0.5
0.5
TOTAL (All Prospects)
Indicated
Inferred
Indicated
Inferred
Inferred
Inferred
Inferred
1.58
3.49
2.40
3.20
0.43
0.57
0.57
12.24
Au
(g/t)
0.79
0.74
0.46
0.49
0.59
0.50
0.60
0.63
Ag
(g/t)
10.30
8.90
42.40
39.80
5.60
7.50
1.10
Ounces
(Au)
40,304
83,060
35,833
49,797
8,023
9,202
11,021
Ounces
(Ag)
522074
999278
Ounces
(Au.Eq)
50729
103092
3310000
102100
4040000
130676
76145
137085
204,90
9544
11941
11434
23.18
237,240
9105072
419516
Table 4: Resource estimates at Kauffmans, Crunchie, Cracklin, Porcupine and Brother as of 23 May 2012. The gold equivalent values are
based on a ratio of 1:50 (Au:Ag). The resource at 0.3 g/t Au cut-off was announced on 23 May 2012. SolGold welcomes expressions of interest
from potential JV partners to continue exploration at Rannes.
ANNUAL REPORT 2015 SOLGOLD 32
STRATEGIC REPORT
OPERATIONS REPORT
QUEENSLAND – AUSTRALIA Continued
Cracow West project (100% SolGold)
Location:
260 km west-north-west of Gympie, Queensland, Australia
Ownership:
100% owned
Tenement Area:
47 granted sub-blocks (circa 146 km²) and 30 application sub-blocks (circa 93.16 km²)
Primary Target:
Low-sulphidation epithermal Au-Ag deposits
Cracow West is located 15 km 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-northwest 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 31: 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.
Qualified Person:
Information in this report relating to the exploration results is based on data reviewed by Mr Nicholas Mather
(B.Sc. Hons Geol.), the Chief Executive Officer of the Company. Mr Mather is a Fellow of the Australasian
Institute of Mining and Metallurgy who has in excess of 25 years’ experience in mineral exploration and is a
Qualified Person under the AIM Rules. Mr Mather consents to the inclusion of the information in the form
and context in which it appears.
33 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
INTERESTS IN TENEMENTS
EPM
EPM name
Principal holder
Project
Expiry
Queensland
25245
17354
19410
16420
18760
19243
19639
25300
18032
18035
Ecuador
402288
601147
601256
601168
Mount Perry Consolidated
Acapulco Mining Pty Ltd
Clarke Range
Acapulco Mining Pty Ltd
Normanby Consolidated
Acapulco Mining Pty Ltd
Dee Valley
Westwood
Lonesome
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Goovigen Consolidated
Central Minerals Pty Ltd
Cooper Consolidated
Central Minerals Pty Ltd
Mt Perry
Normanby
Normanby
Rannes
Rannes
Rannes
Rannes
Rannes
Cracow West
Tim Shay
Central Minerals Pty Ltd
Central Minerals Pty Ltd
Cracow West
Cracow West
Cascabel
La Encrucijada
La Encrucijada 1
Alumbre
Exploraciones Novomining S.A.
Cascabel
Exploraciones Novomining S.A.
La Encrucijada
Exploraciones Novomining S.A.
La Encrucijada
Exploraciones Novomining S.A.
La Encrucijada
21/Jan/18
27/Feb/16
16/Jun/17
20/Sep/16
22/Jan/17
22/Jan/17
19/Oct/17
04/Mar/18
11/Oct/16
03/Nov/15
26/Apr/35
19/May/35
19/May/35
19/May/35
ANNUAL REPORT 2015 SOLGOLD 34
STRATEGIC REPORT
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, and 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.
35 SOLGOLD ANNUAL REPORT 2015
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 and interest in tenements are
subject to the various conditions, obligations and
regulations which apply in the relevant jurisdictions
including Ecuador in South America, Queensland,
Australia and the Solomon Islands. 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.
PERMITTING RISK IN ECUADOR
As with all jurisdictions in which SolGold operates, a
particular permitting regime exists in Ecuador with
which SolGold must comply. Before commencing
any exploration activity, SolGold may be required to
negotiate access and compensation arrangements
with any interested land access groups and relevant
authorities in Ecuador. SolGold has engaged
experienced advisors and consultants to assist with
negotiations, however, there is no guarantee that all
necessary access and compensation arrangements will
be entered in a timely manner, on favourable terms,
without onerous conditions or at all. Similarly, no
guarantees can be made as to timeframes within which
negotiations may be finalised or the reasonableness of
third parties. Failure to obtain all necessary permits,
licenses and access and compensations arrangements
may have a material adverse effect on SolGold.
STRATEGIC REPORT
RISKS AND UNCERTAINTIES
AUSTRALIAN 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.
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 earned 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 of the ordinary shares and the Company’s
asset and liability values 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.
ANNUAL REPORT 2015 SOLGOLD 36
STRATEGIC REPORT
RISKS AND UNCERTAINTIES
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
the 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.
37 SOLGOLD ANNUAL REPORT 2015
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.
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.
ENVIRONMENTAL RISK
SolGold’s operations and projects are expected to
have an impact on the environment, particularly if
advanced exploration or mine development proceeds.
Its activities are or will be subject to in-country
national and local laws and regulations regarding
environmental hazards. These laws and regulations
set various standards regulating certain aspects
of health and environmental quality and provide
for penalties and other liabilities for the violation
of such standards. In certain circumstances they
STRATEGIC REPORT
RISKS AND UNCERTAINTIES
establish obligations to remediate current and former
facilities and locations where operations are or were
conducted. Significant liability could be imposed on
SolGold for damages, clean-up costs, or penalties in
the event of certain discharges into the environment,
environmental damage caused by previous owners
of property acquired by SolGold or its subsidiaries,
or non-compliance with environmental laws or
regulations. SolGold proposes to minimise these risks
by conducting its activities in an environmentally
responsible manner, in accordance with applicable
laws and regulations, and where possible, by carrying
appropriate insurance coverage. Nevertheless, there
are certain risks inherent in SolGold’s activities which
could subject it to extensive liability.
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.
ANNUAL REPORT 2015 SOLGOLD 38
STRATEGIC REPORT
RISKS AND UNCERTAINTIES
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.
39 SOLGOLD ANNUAL REPORT 2015
STRATEGIC REPORT
FINANCIAL REVIEW
The Company achieved several milestones during the
financial year ended 30 June 2015. These included:
• Drilling of five holes at the Cascabel project,
intersecting long runs of copper and gold
mineralisation and the team gaining a better
understanding of the geology and mineralisation of
the potential prospects.
• Second drill rig mobilised to the Cascabel project to
test additional targets at Alpala.
• The completion of successful raisings totalling
approximately $6.23 million during the year from
institutional and professional investors.
RESULTS
The Group incurred a loss before tax of $4,238,216
for the year (2014: $4,831,343), inclusive of the
decision to expense $1,175,172 (2014: $2,246,491) for
exploration expenditure associated with tenements that
were surrendered or which had expired during the year.
A detailed assessment of the carrying values of deferred
exploration costs is provided in Note 24.
CLOSING CASH
As at 30 June 2015, the Group held cash balances of
$0.32 million (2014: $4.55 million).
POST REPORTING DATE EVENT
On 2 October 2015, the Company executed
Convertible Note Deeds with substantial shareholders,
DGR Global Limited and Tenstar Trading Limited for a
total funding of $2,332,000.
On 19 November 2015, the Company issued an
additional 62,263,534 shares at £0.015 to raise the
equivalent of $2 million in a combination of cash and
debt conversions 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 reporting date that would have a material
impact on the consolidated financial statements.
STATEMENT OF FINANCIAL POSITION
OUTLOOK
As at 30 June 2015, the Group had net assets
of approximately $30.4 million, an increase of
approximately $0.8 million over the previous financial
year. This increase was largely associated with the
completion of $5.9 million in share placements and the
open offer, net of costs, offset by the decrease in the
value of available for sale financial assets of $2 million
and the exploration write off of $1.2 million recognised
in respect of the Groups’ exploration assets and annual
operating expenses of approximately $3.1 million.
CASH FLOW
Our cash expenditure for the year was approximately
$11.1 million. Cash of approximately $6.9 million was
received from the issue of shares. Accordingly, the
net cash outflow of the Company for the year was
approximately $4.2 million.
Cash of approximately $8.5 million was invested by the
Group on exploration expenditure during the year.
The exploration programs for 2016 will focus on
Cascabel along with finding joint venture partners for
the Group’s, Rannes, Normanby, and Mt Perry projects.
Discussions on the future exploration programs at each
of the projects are detailed in the Operations Report.
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.
ANNUAL REPORT 2015 SOLGOLD 40
STRATEGIC REPORT
FINANCIAL REVIEW
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
SP Angel Corporate Finance LLP acts as Nominated Advisor and Broker to the Company.
EQUITY
Since the date of the last Annual Report, the Company has issued the following equities:
On 8 July 2014, the Company issued 4,360,000 options to its Board of Directors. The options consist of two tranches
with varying exercise prices and vesting conditions which are dependent on the Company’s share price. The options
expire on 8 July 2017.
On 19 December 2014, the Company issued an additional 33,591,828 shares at £0.03 to raise $1.9 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 9 April 2015, the Company issued an additional 74,708,041 shares at £0.03 to raise $4.3 million pursuant to an
open offer to progress its exploration and project development efforts across its portfolio of projects in the Solomon
Islands, Ecuador and Queensland, Australia.
On 19 November 2015, the Company issued an additional 62,263,534 shares at £0.015 to raise the equivalent of
$2 million in a combination of cash and debt conversions 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 760,453,071 shares and 21,380,000 options on issue. As at the date of
this report, the Company had a total of 822,716,605 shares and 21,380,000 options on issue.
The strategic report was authorised for issue and signed on behalf of the directors by,
Nicholas Mather
Executive Director
8 December 2015
41 SOLGOLD ANNUAL REPORT 2015
GOVERNANCE
DIRECTORS AND COMPANY SECRETARY
The Board consists of one Executive Director and three Non-Executive Directors.
Nicholas Mather
(Executive Director)
Nicholas Mather (58), 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 Managing Director and Chief Executive of DGR Global Limited and non-executive Director of
ASX-listed companies Armour Energy Limited, Aus Tin Mining Limited, Navaho Gold Limited, and Lakes Oil NL and
LSE AIM-listed company IronRidge Resources Limited.
Brian Moller
(Non-Executive Chairman)
Brian Moller (56), 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, Aguia Resources Limited and Platina Resources Limited, and
the non-executive Chairman of ASX-listed Aus Tin Mining Limited.
Dr Robert Weinberg
(Non-Executive Director)
Rob Weinberg (68), appointed 22 November 2005, gained his doctorate in geology from Oxford University in 1973.
He has more than 40 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.
ANNUAL REPORT 2015 SOLGOLD 42
GOVERNANCE
DIRECTORS AND COMPANY SECRETARY
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.
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 Bachelor’s
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 Aus Tin Mining Ltd. Other roles within the past
five years have included Non-Executive Chairman of Orbis Gold Limited (resigned 17 February 2015), Non-Executive
Director of Australian Pacific Coal Limited (resigned 29 November 2012), acting as the interim CEO of Australian
Solomons Gold Ltd (April 2007 to January 2008) and the Non-Executive Chairman of Axiom Mining Ltd (June 2006
to April 2007). From March 2002 to June 2006, Mr Bovard acted as the CEO of Asia Pacific Resources Ltd (listed
on the TSX) developing a large potash resource in Thailand. Other Directorships have included Danae Resources NL
(Managing Director) and Greenwich Resources Plc, both through to early 2006.
He was also Project Manager for the $A800 million Phosphate Hill Fertiliser Project for Western Mining Corporation
(WMC) situated south of Mount Isa in Queensland, Australia. Other previous project experience includes managing
the construction of the Porgera Mine in Papua New Guinea, the Super Pit expansion at Kalgoorlie, and the
development of the Bronzewing Gold Mine in Western Australia. He was previously the General Manager of the
giant OK Tedi porphyry Copper Gold Mine. John Bovard’s corporate profile, together with his extensive experience in
south west Pacific mining operations and construction is considered to be of great value to SolGold Plc.
COMPANY SECRETARY
Karl Schlobohm
(Company Secretary)
Karl Schlobohm (46) has over twenty 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
Master’s Degree in Taxation.
Mr Schlobohm is also contracted to act as the Company Secretary of the AIM listed IronRidge Resources Limited and
ASX-listed DGR Global Limited, Navaho Gold Limited, Aus Tin Mining Limited and Armour Energy Limited.
43 SOLGOLD ANNUAL REPORT 2015
GOVERNANCE
DIRECTORS’ REPORT
The Directors present their annual report and audited
financial statements for the year ended 30 June 2015.
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
Strategic Report.
CURRENCY
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$). The functional currency of the subsidiaries
in Ecuador in considered to be United States Dollars
(US$). The presentational currency of the Group is
Australian dollars (“A$”) and all amounts presented
in the Directors’ Report and financial statements
are presented in Australian dollars unless otherwise
indicated.
The principal activity of the Company is that of a holding
company.
RESULTS
BUSINESS REVIEW
The Group’s consolidated loss for the year was
$4,238,661 (2014: $4,831,216).
A detailed review of the Group’s business and future
developments is set out in the Operations Report and
Financial Review.
CHANGES IN SHARE CAPITAL
DURING 2015
The principal risks and uncertainties facing the Group at
its present stage of development are given under Risks
and Uncertainties.
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 have 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 future
successful capital raisings for necessary funding and the
successful exploration and subsequent exploitation of
the Group’s tenements.
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.
A statement of changes in the share capital of the
Company is set out in Note 17 to the financial
statements.
DIVIDENDS PAID OR RECOMMENDED
The Directors do not recommend the payment of a
dividend (2014: nil).
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 20 to the financial statements.
ANNUAL REPORT 2015 SOLGOLD 44
GOVERNANCE
DIRECTORS’ REPORT
The Directors who held office during the period were as follows:
Alan Martin
CEO & Managing Director (resigned as CEO and Managing Director 17 May 2015)
Nicholas Mather
Executive Director
Brian Moller
Non-Executive Chairman
Robert Weinberg
Non-Executive Director
John Bovard
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 2015
At 30 June 2014
85,519,570
3,086,942
3,118,484
3,858,812
65,519,569
2,393,972
2,304,971
3,307,553
There were 4,360,000 options issued to Directors during the year (2014: 16,000,000).
Share options held
At 30 June 2015
At 30 June 2014
Option price
Exercise period
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
1,500,000
1,100,000
880,000
880,000
3,000,000
14p-28p
08/07/15 -08/07/17
-
-
-
14p-28p
08/07/15 -08/07/17
14p-28p
08/07/15 -08/07/17
14p-28p
08/07/15 -08/07/17
CORPORATE GOVERNANCE
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 to the extent they
consider appropriate in light of the Company’s size,
stage of development and resources. However, given
the size of the Company, at present the Board of
Directors do not consider it necessary to adopt the
Code in its entirety.
The Board of SolGold plc is made up of one Executive
Director and three Non-executive Directors. Nicholas
Mather is an Executive Director. 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.
45 SOLGOLD ANNUAL REPORT 2015
GOVERNANCE
DIRECTORS’ REPORT
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 the 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.
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. On 8 July 2014,
4,360,000 options were issued or just under 0.57% of
the current issued share capital, and in the opinion of
the executive Director this is not of sufficient magnitude
as to affect their independence.
Company’s principal communication with its investors is
through the Annual General Meeting, the annual report
and accounts, the interim statement and its website.
The 2015 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 the Executive Director 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.
RELATED PARTY TRANSACTIONS
Details of related party transactions for the Group
and Company are given in note 22. Key management
personnel remuneration disclosures are given in note 5.
DIRECTORS’ INDEMNITY
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 the
AIM rules of the London Stock Exchange rules. The
The Company has arranged appropriate directors’ and
officers’ insurance to indemnify the directors against
liability in respect of proceedings brought by third
parties. Such provisions remain in force at the date of
this report.
ANNUAL REPORT 2015 SOLGOLD 46
GOVERNANCE
DIRECTORS’ REPORT
AUDITOR
A resolution for the appointment of the Company’s
auditor will be proposed at the forthcoming Annual
General Meeting.
SUBSEQUENT EVENTS
On 2 October 2015, the Company executed
Convertible Note Deeds with substantial shareholders,
DGR Global Limited and Tenstar Trading Limited for a
total funding of $2,332,000.
On 19 November 2015, the Company issued an
additional 62,263,534 shares at £0.015 to raise the
equivalent of $2.39 million in a combination of cash
and debt conversions 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 Company after the
reporting date that is not covered in this report.
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.
47 SOLGOLD ANNUAL REPORT 2015
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.
GOVERNANCE
DIRECTORS’ REPORT
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 8 December 2015 and signed on its behalf.
Karl Schlobohm
Company Secretary
Lvl 27, 111 Eagle St
Brisbane QLD 4000
Australia
ANNUAL REPORT 2015 SOLGOLD 48
INDEPENDENT AUDITOR’S REPORT
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 2015 which comprise
the group statement of financial position and company
statement of financial position, the group statement of
comprehensive income, the group statement of cash flows,
the group statement of changes in equity and the company
statement of changes in equity 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 the scope of an audit of financial statements
is provided on the FRC’s website at
www.frc.org.uk/auditscopeukprivate.
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 2015 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
In forming our opinion on the financial statements, which
is not modified, we have considered the adequacy of the
disclosures made in note 1 to the financial statements
concerning the Group’s and-the Company’s ability to
continue as a going concerns. The Directors acknowledge
that additional funds need to be raised either through other
finance arrangements or capital raisings. This cannot be
guaranteed and there are no legally binding agreements
in place relating to the raising of additional funds. These
circumstances indicate the existence of a material
uncertainty, which may cast significant doubt on the Group
and Company’s ability to continue as a going concern. The
financial statements do not include the adjustments that
would result if the company were unable to continue as a
going concern.
Opinion on other matters prescribed by the Companies
Act 2006
In our opinion the information given in the strategic report
and 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 beenreceived 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.
Anne Sayers (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
8 December 2015
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
49 SOLGOLD ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2015
Revenue
Cost of sales
Gross profit
Other income
Expenses
Exploration costs written-off
Administrative
Operating loss
Finance income
Finance costs
Loss before tax
Tax expense
Loss for the year
Notes
12
6
6
3
7
Other comprehensive income
Items that may be reclassified into profit or loss
Change in fair value of available-for-sale financial assets
10b
Exchange differences on translation of foreign operations
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
Group
2015
$
-
-
-
-
(1,175,172)
(3,066,982)
(4,242,154)
10,570
(7,077)
Group
2014
$
-
-
50,504
(2,246,491)
(2,652,356)
(4,848,343)
18,185
(1,058)
(4,238,661)
(4,831,216)
-
-
(4,238,661)
(4,831,216)
(2,045,919)
1,159,075
(5,125,505)
(4,197,335)
(41,326)
(4,238,661)
(5,258,040)
132,535
(5,125,505)
1,703,620
72,158
(3,055,438)
(4,831,216)
-
(4,831,216)
(3,055,438)
-
(3,055,438)
Loss per share
Basic loss per share
Diluted loss per share
8
8
Cents per share
Cents per share
(0.6)
(0.6)
(0.8)
(0.8)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2015 SOLGOLD 50
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
As at 30 June 2015
Assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
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
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
11
12
9
10(b)
13
15
16
17
17
18
Group
2015
$
Group
2014
$
Company
Company
2015
$
2014
$
419,898
133,742
11,118
16,801
30,748,723
21,451,449
-
640,855
-
896,197
159,433
-
30,379,601
21,941,839
2,942,116
894,192
2,942,116
169,353
7,169
7,169
32,224,251
24,696,660
31,292,080
25,548,780
151,295
321,440
472,735
1,112,340
4,547,229
5,659,569
136,872
1,015,123
215,312
4,159,071
352,184
5,174,194
32,696,986
30,356,229
31,644,264
30,722,974
13,184,721
11,106,524
13,184,721
11,106,524
82,212,310
78,434,985
82,212,310
78,434,985
1,761,936
2,763,046
772,428
2,758,752
(67,023,534)
(62,826,199)
(65,874,946)
(62,005,995)
223,107
90,572
-
-
30,358,540
29,568,928
30,294,513
30,294,266
2,338,446
2,338,446
2,338,446
787,301
1,349,751
787,301
1,349,751
787,301
1,349,751
428,708
428,708
428,708
32,696,986
30,356,229
31,644,264
30,722,974
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 on its behalf on 8
December 2015.
Nicholas Mather
Director
51 SOLGOLD ANNUAL REPORT 2015
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
For the year ended 30 June 2015
Notes
Share capital
Share
premium
Available-
for-sale
financial
assets
reserve
Share
option
reserve
Foreign
currency
translation
reserve
Change in
proportionate
interest reserve
Accumulated
loss
Non-
controlling
interests
Total
$
$
$
$
$
$
$
$
Balance at
30 June 2013
Loss for the year
Other
comprehensive
income
Total
comprehensive
income for
the year
New share capital
subscribed
Share issue costs
Value of share
and options
issued to
Directors,
employees and
consultants
Value of share
options forfeited
during the year
Value of bonus
shares issued to
employees
Non-controlling
interest in
subsidiary
acquired
Balance at
30 June 2014
Loss for the year
Other
comprehensive
income
Total
comprehensive
income for
the year
New share capital
subscribed
Share issue costs
Value of share
and options
issued to
Directors,
employees and
consultants
Balance at
30 June 2015
17
9,361,755
66,418,526
10,390
3,222,873
-
-
-
-
-
-
1,703,620
-
1,703,620
1,732,825
12,595,988
-
(722,860)
-
-
-
-
11,944
143,331
-
-
-
-
-
-
-
-
-
-
-
-
-
35,989
(2,214,120)
-
-
-
-
72,158
72,158
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(67,864)
(60,209,103)
(4,831,216)
-
(4,831,216)
-
-
-
2,214,120
-
-
-
-
-
-
-
-
-
-
-
18,804,441
(4,831,216)
1,775,778
(3,055,438)
14,328,813
(722,860)
35,989
-
155,275
90,572
22,708
17
11,106,524
78,434,985
1,714,010
1,044,742
72,158
(67,864)
(62,826,199)
90,572
29,568,928
-
-
-
-
-
-
(2,045,919)
-
(2,045,919)
2,078,197
4,156,344
-
(379,019)
-
-
-
-
-
-
-
-
-
-
59,595
-
985,214
985,214
-
-
-
-
-
-
-
-
-
(4,197,335)
(41,326)
(4,238,661)
173,861
(886,844)
(4,197,335)
132,535
(5,125,505)
-
-
-
-
-
-
6,234,541
(379,019)
59,595
13,184,721
82,212,310
(331,909)
1,104,337
1,057,372
(67,864)
(67,023,534)
223,107
30,358,540
The above statement of changes in equity should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2015 SOLGOLD 52
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
For the year ended 30 June 2015 Continued
Notes
Share capital
Share
premium
Available-for-
sale financial
assets
Share option
reserve
Accumulated
loss
Total
$
$
$
$
$
$
Balance at 30 June 2013
17
9,361,755
66,418,526
10,390
3,222,873
(59,610,996)
19,402,548
Loss for the year
Other comprehensive income
Total comprehensive income for the year
-
-
-
-
-
-
-
1,703,620
1,703,620
New share capital subscribed
1,732,825
12,595,988
Share issue costs
Value of shares and options issued to Directors,
employees and consultants
Value of share options forfeited during the year
-
-
-
(722,860)
-
-
-
-
-
-
-
-
-
-
-
35,989
(4,609,119)
(4,609,119)
-
1,703,620
(4,609,119)
(2,905,499)
-
-
-
14,328,813
(722,860)
35,989
-
(2,214,120)
2,214,120
Value of bonus shares issued to employees
11,944
143,331
-
155,275
Balance at 30 June 2014
17
11,106,524
78,434,985
1,714,010
1,044,742
(62,005,995)
30,294,266
Loss for the year
Other comprehensive income
Total comprehensive income for the year
-
-
-
New share capital subscribed
2,078,197
4,156,344
Share issue costs
Value of shares and options issued to Directors,
employees and consultants
-
-
(379,019)
-
-
(2,045,919)
(2,045,919)
-
-
-
-
-
-
-
-
59,595
(3,868,951)
(3,868,951)
(2,045,919)
(3,868,951)
(5,914,870)
-
-
-
6,234,541
(379,019)
59,595
Balance at 30 June 2015
13,184,721
82,212,310
(331,909)
1,104,337
(65,874,946)
30,294,513
The above statement of changes in equity should be read in conjunction with the accompanying notes.
53 SOLGOLD ANNUAL REPORT 2015
CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS
For the year ended 30 June 2015
Cash flows from operating activities
Operating loss
Depreciation
Share based payment expense
Write-off of exploration expenditure
Notes
Group
2015
$
Group
Company
Company
2014
$
2015
$
2014
$
(4,242,154)
(4,848,343)
(3,871,748)
(4,625,649)
18,378
59,595
35,025
191,264
9,573
59,595
10,254
191,264
1,175,172
2,246,491
674,815
-
-
(Profit) loss on sale of property, plant and equipment
(888)
(50,504)
-
Impairment of investments in subsidiaries
-
-
349,581
2,045,216
(Increase) decrease in other receivables and prepayments
961,045
(801,252)
878,250
(742,377)
Increase (decrease) in trade and other payables
80,792
803,470
(284,748)
741,150
Net cash outflow from operating activities
(1,948,060)
(2,423,849)
(2,184,682)
(2,380,142)
Cash flows from investing activities
Interest received
Interest paid
Security deposit (payments)/refunds
10,570
(7,077)
4,346
18,185
(1,058)
(4,622)
9,873
(7,076)
-
Acquisition of property, plant and equipment
(439,333)
(102,575)
(3,890)
Proceeds from the sale of property, plant and equipment
134,801
157,863
-
16,531
(1,052)
(1,600)
(4,355)
-
Acquisition of exploration and evaluation assets
(8,485,005)
(5,825,393)
(19,496)
(398,347)
Acquisition of subsidiaries (net of cash)
23
Investment in available for sale securities
Investment in associates
Loans advanced to third parties
Loans advanced to subsidiaries
-
-
-
-
13,901
(779,982)
-
-
-
-
-
-
-
-
(779,982)
-
-
(8,242,457)
(5,756,661)
Net cash outflow from investing activities
(8,781,698)
(6,523,681)
(8,263,046)
(6,925,466)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital
6,877,414
13,360,770
6,877,414
13,360,770
Payment of issue costs
Repayment of borrowings
(373,445)
(722,859)
(373,445)
(722,859)
-
(23,576)
-
-
Net cash inflow from financing activities
6,503,969
12,614,335
6,503,969
12,637,911
Net (decrease) in cash and cash equivalents
(4,225,789)
3,666,805
(3,943,759)
3,332,303
Cash and cash equivalents at the beginning of year
4,547,229
880,424
4,159,071
826,768
Cash and cash equivalents at end of year
16
321,440
4,547,229
215,312
4,159,071
The above statements of cash flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2015 SOLGOLD 54
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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
and going concern
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 from incorporation has prepared
the 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 working capital
deficit position of $1,865,711, compared with a net
current asset position in 2014 of $4,872,268. As
such, the Company’s ability to continue to adopt
55 SOLGOLD ANNUAL REPORT 2015
the going concern assumption will depend upon
a number of matters including future successful
capital raisings for necessary funding and the
successful exploration and subsequent exploitation
of the Group’s tenements.
Subsequent to the end of the year, the Company
has continued its drilling operations at its Cascabel
project and has incurred approximately $1.2 million
in exploration and evaluation expenditure to 31
October 2015. In order to fund this exploration
and evaluation expenditure along with the net
current asset deficit, the Company raised $2.33
million through the execution of convertible note
deeds and a further $2.39 million through the
issue of 62,263,534 shares at £0.015 which was a
combination of cash and debt conversions.
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 other finance
arrangements 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.
Where the company has control over an
investee, it is classified as a subsidiary. The
company controls an investee if all three of the
following elements are present: power over
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
the investee, exposure to variable returns from
the investee, and the ability of the investor to
use its power to affect those variable returns.
Control is reassessed whenever facts and
circumstances indicate that there may be a
change in any of these elements of control.
De-facto control exists in situations where
the company has the practical ability to direct
the relevant activities of the investee without
holding the majority of the voting rights. In
determining whether de-facto control exists
the company considers all relevant facts and
circumstances, Including:
• The size of the company’s voting rights
•
relative to both the size and dispersion of
other parties who hold voting rights
Substantive potential voting rights held by
the company and by other parties
• Other contractual arrangements
• Historic patterns in voting attendance.
The consolidated financial statements present
the results of the company and its subsidiaries
(“the Group”) as if they formed a single entity.
Intercompany transactions and balances
between group companies are therefore
eliminated in full.
The consolidated financial statements
incorporate the results of business
combinations using the acquisition method.
In the statement of financial position, the
acquiree’s identifiable assets, liabilities and
contingent liabilities are initially recognised
at their fair values at the acquisition date. The
results of acquired operations are included in
the consolidated statement of comprehensive
income from the date on which control is
obtained. They are deconsolidated from the
date on which control ceases.
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.
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.
(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.
ANNUAL REPORT 2015 SOLGOLD 56
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
(d) Foreign currency
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
the Solomon Islands is considered to be Solomon
Islands Dollars (SBD$). The functional currency
of the subsidiaries in Ecuador is considered to
be United States Dollars (US$). The assets and
liabilities of the entities are translated to the group
presentation currency at rates of exchange ruling
at the reporting 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.
The Company’s functional and presentation
currency is Australian dollars (A$). The exchange
rates applied in preparation of these financial
statements at 30 June 2015 were £0.4872/A$1.0,
US$0.76575/A$1.0 and SBD$6.0205/A$1.0 (30
June 2014: £0.5544/A$1.0, US$0.9439/A$1.0
and SBD$6.9001/A$1.0). The average exchange
rates applied for the year ended 30 June 2015 was
US$0.84034/A$1.0 (2014: US$0.9143/A$1.0).
(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
57 SOLGOLD ANNUAL REPORT 2015
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.
(f)
Intangible assets
Deferred exploration 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
Group 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.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
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
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
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:
• The period for which the entity has the right to
explore in the specific area has expired during
•
the period or will expire in the near future, and
is not expected to be renewed;
Substantive expenditure on further
exploration for and evaluation of mineral
resources in the specific area is neither
budgeted nor planned;
• Exploration for and evaluation of mineral
resources in the specific area have not led
to the discovery of commercially viable
quantities of mineral resources and the entity
has decided to discontinue such activities in
the specific area; and
Sufficient data exist to indicate that, although
a development in the specific area is likely
to proceed, the carrying amount of the
exploration and evaluation asset is unlikely
to be recovered in full from successful
development or by sale.
•
(j)
Share capital
The Company’s ordinary shares are classified as
equity.
(k) Employee benefits
(i) Share based payment transactions
The Group measures the cost of equity-settled
transactions with employees by reference to
the fair value of the equity instruments at the
date at which they are granted. Estimating fair
value for share based payment transactions
requires determining the most appropriate
valuation model, which is dependent on the
terms and conditions of the grant. This estimate
also requires determining the most appropriate
inputs to the valuation model including the
expected life of the share option, volatility and
dividend yield and making assumptions about
them. The assumptions and model used for
estimating fair value for share based payment
transactions are disclosed in Note 19.
(ii) Retirement benefits
The Group operates a defined contribution
pension scheme. Contributions payable for
the year are charged to the statement of
comprehensive income.
ANNUAL REPORT 2015 SOLGOLD 58
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
(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.
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 reporting
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.
(n) Revenue
(r) Segment reporting
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
59 SOLGOLD ANNUAL REPORT 2015
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
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
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.
(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.
ANNUAL REPORT 2015 SOLGOLD 60
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
(v) Financial instruments
(iv) Financial liabilities
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.
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) 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.
(iii) 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.
61 SOLGOLD ANNUAL REPORT 2015
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 derecognised 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 or loss.
Impairment of financial assets
An assessment is made at each reporting 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
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
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.
equity. Amounts are reclassified to profit or
loss when the associated assets are sold or
impaired.
(ii) Share option reserve
The share based payments reserve is used to
recognise:
•
•
the grant date fair value of options issued
to employees but not exercised.
the grant date fair value of shares issued to
employees.
(iii) Change in proportionate interest reserve
This reserve is used to record the differences
which may arise as a result of transactions with
non controlling interests that do not result in a
loss of control.
(w) Accounting policies for the Company
(iv) Foreign currency translation reserve
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 $3,868,951 (2014: $4,609,119).
(ii) Subsidiary investments
Investments in subsidiary undertakings
are stated at cost less impairment losses.
Expenditure incurred by plc on behalf of a
subsidiary, for assets that could be capitalised
in accordance with IFRS 6, is recorded within
investments in subsidiary undertakings.
(x) Nature and purpose of reserves
(i) Available for sale financial assets reserve
Changes in the fair value and exchange
differences arising on translation of
investments, such as equities, classified
as available for sale financial assets, are
recognised in other comprehensive income
and accumulated in a separate reserve within
Exchange differences arising on translation of
foreign controlled entities are recognised in
other comprehensive income and accumulated
in a separate reserve within equity. The
cumulative amount is reclassified to profit or
loss when the net investment is disposed of.
ANNUAL REPORT 2015 SOLGOLD 62
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
(y) Changes in accounting policies
The Group has applied all of the new standards and amendments applicable for the annual reporting period
commencing 1 July 2014:
Standards and interpretations effective and adopted in the current year
The following standards, interpretations and amendments became effective during the year and were adopted
by the Group and Company. These have no material effect on the Group or Company.
Standards
Details of amendment
Annual periods beginning on or after
IFRS 10 Consolidated
Financial Statements
IFRS 11 Joint
Arrangements
IFRS 12 Disclosure
of Interests in Other
Entities
IAS 27 Separate
Financial Statements
IAS 28 Investments in
Associates and Joint
Ventures
IAS 32 Offsetting
Financial Assets and
Financial liabilities
IAS 36 Recoverable
Amounts (amendments)
IFRS 10 introduces a single control model to determine whether
an investee should be consolidated. The IFRS supersedes IAS
27 Consolidated and Separate Financial Statements and SIC-12
Consolidation—Special Purpose Entities.
The IFRS supersedes IAS 31 Interests in Joint Ventures
and SIC-13 Jointly Controlled Entities—Non- Monetary
Contributions by Venturers. Under IFRS 11, the structure of
the joint arrangement, although still an important consideration,
is no longer the major factor in determining the type of joint
arrangement and therefore the subsequent accounting
IFRS 12 Disclosure of Interests in Other Entities applies to
entities that have an interest in a subsidiary, a joint arrangement,
an associate or an unconsolidated structured entity. IFRS 12
requires the disclosure of information about the nature, risks and
financial effects of these interests.
IAS 27 (2011) supersedes IAS 27 (2008). IAS 27 (2011) carries
forward the existing accounting and disclosure requirements for
separate financial statements, with some minor clarifications.
IFRS 10 Consolidated Financial Statements addresses the
principle of control and the requirements relating to the
preparation of consolidated financial statements.
IAS 28 (2011) supersedes IAS 28 (2008) and carries forward
the existing accounting and disclosure requirements with
limited amendments. On cessation of significant influence or
joint control, even if an investment in an associate becomes an
investment in a joint venture or vice versa, the company does not
re-measure the retained interest.
The amendments clarify when an entity can offset financial assets
and financial liabilities.
The amendments reverse the unintended requirement in IFRS
13 Fair Value Measurement to disclose the recoverable amount
of every cash-generating unit to which significant goodwill or
indefinite-lived intangible assets have been allocated. Under the
amendments, the recoverable amount is required to be disclosed
only when an impairment loss has been recognised or reversed.
Annual improvements to
IFRS 1 (2010 -2012 and
2011 – 2013 cycles)
Clarifications as provided on various standards within the cycles
have been considered in preparation of the current year financial
statements.
IFRIC 21 Levies
IFRIC 21 provides guidance on accounting for levies in
accordance with IAS 37 Provisions, Contingent Liabilities and
Assets for the entity that is paying the levy.
63 SOLGOLD ANNUAL REPORT 2015
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 July 2014
1 January 2014
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 1: ACCOUNTING POLICIES Continued
International Accounting Standards and Interpretations that have been recently issued or amended but are not yet
effective have not been adopted by the Group for the annual reporting period ending 30 June 2015. The impact of
the adoption of these new standards and interpretations is yet to be assessed by the Group.
The Company anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting
policies for the first period beginning after the effective date of the pronouncement. Information of new standards,
amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided
below.
• IFRS 9 ‘Financial Instruments’; and
• IFRS 15 ‘Revenue from contracts with customers’.
The directors do not expect that the adoption of the standards listed above will have a material impact on the financial
statements of the Group in future periods, except that IFRS 9 will impact both the measurement and disclosures of
financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures.
ANNUAL REPORT 2015 SOLGOLD 64
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
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 is therefore not reported separately, is aggregated as Other Subsidiaries.
30 June 2015
SolGold
ARM
Central Minerals
Acapulco Mining
Solomon Operations
Honiara Holdings
Guadalcanal Exploration
ENSA
Consolidation / Elimination
Finance
income
$
Total income
$
Loss for the
year
$
Assets
Liabilities
$
$
Share based
payments
$
Depreciation
$
9,873
9,873
(3,868,951)
31,993,846
1,349,750
59,595
186
10
500
-
-
-
-
-
186
10
500
-
-
-
-
-
(389,634)
320,139
32,904,421
12,077
3,670,423
13,186,119
(130,957)
5,812,595
3,767,823
71,510
(2,337)
(4,442)
4
-
9,948
957,562
2,338
1,217,372
(275,500)
15,975,498
10,431,634
349,573
(25,077,858)
(61,486,183)
-
-
-
-
-
-
-
-
9,573
2,455
1,166
5,185
-
-
-
-
-
Total
10,570
10,570
(4,238,661)
32,696,985
2,338,446
59,595
18,378
30 June 2014
SolGold
ARM
Central Minerals
Acapulco Mining
Solomon Operations
Honiara Holdings
Guadalcanal Exploration
Consolidation / Elimination
Total
Finance
income
$
16,531
206
8
636
-
-
-
803
-
Total income
$
16,531
50,710
8
636
-
-
-
803
-
Loss for the
year
$
Assets
Liabilities
$
$
Share based
payments
$
Depreciation
$
(4,609,118)
30,722,975
428,708
191,264
(990,430)
527,746
32,722,393
(41,084)
3,676,099
13,203,872
(49,427)
5,934,325
3,758,596
(29,746)
(2,141)
(1,151,902)
12
2,051
5,294
(2,215)
3,536,328
81,457
957,276
1,215,894
2,751,652
2,044,846
(14,048,601)
(54,332,547)
-
-
-
-
-
-
-
-
18,185
68,689
(4,831,216)
30,356,229
787,301
191,264
Geographical information
Non-current assets
UK
Australia
Solomon Islands
Ecuador
2015
$
-
16,318,251
-
15,905,748
The Group had no revenue during the current and prior year.
65 SOLGOLD ANNUAL REPORT 2015
10,254
13,064
2,262
5,183
-
-
-
4,261
-
35,025
2014
$
-
18,170,684
506,145
6,019,831
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 3: LOSS BEFORE TAX
Loss is stated after charging (crediting)
Auditors’ remuneration:
Amounts received or due and receivable by BDO (UK) for:
The audit of the company’s annual accounts
Group
2015
$
Group
2014
$
36,900
30,325
Amounts received or due and receivable by related practices of BDO (UK) for:
The audit of the company’s annual accounts
34,910
24,675
Depreciation
Foreign exchange (gains)/losses
Share based payments
NOTE 4: STAFF NUMBERS AND COSTS
Corporate finance and administration
Technical
Group
2015
11
100
111
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Contributions to superannuation
Share based payments
Total staff costs
Group
2015
2,763,284
215,228
17,534
2,996,046
Group
2014
10
120
130
Group
2014
1,767,688
173,094
191,264
2,132,046
18,378
(122,623)
59,595
35,025
29,764
191,264
Company
2015
Company
2014
7
2
9
7
4
11
Company
2015
765,229
58,171
17,534
840,934
Company
2014
1,166,680
62,804
191,264
1,420,748
Included within total staff costs is $1,977,592 (2014: $1,442,712) which has been capitalised as part of deferred
exploration costs.
ANNUAL REPORT 2015 SOLGOLD 66
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 5: REMUNERATION OF KEY MANAGEMENT PERSONNEL
2015
Directors
Alan Martin
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
Staff and contractors
TOTAL
Basic annual salary
Other benefits¹
Pensions
Total remuneration
$
444,849¹
150,000
50,000
50,000
50,000
2,318,435
3,063,284
$
-
18,423
13,526
10,542
10,542
-
53,033
$
$
28,011
-
-
-
-
157,057
185,068
472,860
168,423
63,526
60,542
60,542
2,475,492
3,301,385
¹Includes the following payments: Termination payment - $150,000, annual leave payout - $2,228, bonus - $50,000, superannuation - $27,274
Basic annual salary
Other benefits¹
Pensions
Total remuneration
$
$
$
$
2014
Directors
Alan Martin
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
Staff and contractors
TOTAL
¹Share based payments issued.
289,808
153,750
47,083
47,083
47,083
680,138
1,264,946
24,434
81,486
-
-
-
75,689
181,609
25,778
-
-
-
-
340,020
235,236
47,083
47,083
47,083
24,476
50,255
780,303
1,496,810
During the year no directors exercised options granted under the employee share option plan (2014: nil).
During the year, employer’s social security costs of $28,011 (2014: $25,778) were paid in respect of remuneration for
key management personnel. Alan Martin (CEO and Managing Director - resigned 17 May 2015) and Nicholas Mather
(Executive Director) are considered to be key management personnel.
NOTE 6: FINANCE INCOME AND COSTS
Interest income
Finance income
Interest cost
Finance costs
67 SOLGOLD ANNUAL REPORT 2015
Group
2015
$
10,570
10,570
(7,077)
(7,077)
Group
2014
$
18,185
18,185
(1,058)
(1,058)
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 7: TAX EXPENSE
Factors affecting the tax charge for the current year
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% (2014: 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% (2014: 30%)
Effects at 30% (2014: 30%) of:
Short term temporary differences
Non-deductible expenses
Tax losses carried forward
Tax on loss
Group
2015
$
Group
2014
$
(4,238,661)
(1,271,598)
(4,831,216)
(1,449,365)
179,781
135,986
955,831
-
437,746
70,371
941,248
-
Factors that may affect future tax charges
The Group has carried forward tax losses of approximately $45 million (2014: $42 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, Ecuador and the Solomon Islands.
NOTE 8: LOSS PER SHARE
The calculation of basic loss per ordinary share on total operations is based on losses of $4,238,661 (2014:
$4,831,216) and the weighted average number of ordinary shares outstanding of 686,978,658 (2014: 605,395,853).
There is no difference between the diluted loss per share and the basic loss per share presented as the share options
on issue during the period and prior period were not considered dilutive. At 30 June 2015 there were 21,380,000
share options on issue (2014: 33,920,000).
ANNUAL REPORT 2015 SOLGOLD 68
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 9: INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
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
Exploraciones Novomining S.A.
Cost
Balance at 30 June 2013
Acquisitions and advances in the year
Balance at 30 June 2014
Acquisitions and advances in the year
Balance at 30 June 2015
Amortisation and impairment losses
Balance at 30 June 2013
Provision for impairment
Balance at 30 June 2014
Provision for impairment
Balance at 30 June 2015
Carrying amounts
Balance at 30 June 2013
Balance at 30 June 2014
Balance at 30 June 2015
Country of
incorporation and
operation
Principal
activity
SolGold plc’s
effective interest
Australia
Australia
Australia
Solomon Islands
Australia
Australia
Ecuador
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
2015
100%
100%
100%
100%
100%
100%
85%
2014
100%
100%
100%
100%
100%
100%
85%
Investment in subsidiary undertakings
Shares
$
11,135,657
2,869,222
14,004,879
-
14,004,879
(5,016,948)
-
(5,016,948)
-
Loans
$
51,188,061
5,756,660
56,944,721
8,787,343
65,732,064
(41,945,593)
(2,045,220)
(43,990,813)
-
Total
$
62,323,718
8,625,882
70,949,600
8,787,343
79,736,943
(46,962,541)
(2,045,220)
(49,007,761)
-
(5,016,948)
(43,990,813)
(49,007,761)
6,118,709
8,987,931
8,987,931
9,242,468
12,953,908
21,741,251
15,361,177
21,941,839
30,729,182
The write-down of the deferred exploration costs during the prior year associated with certain projects in Queensland
and the Solomon Islands lead to the Company recording a provision for impairment of $2,045,220 on the loans
receivable from Australian Resource Management (ARM) Pty Ltd, Central Minerals Pty Ltd and Guadalcanal
Exploration Pty Ltd.
Details of all loans within the group made during the year are set out below:
69 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 9: INVESTMENTS IN SUBSIDIARY UNDERTAKINGS Continued
Shares
$
Loans
$
Total
$
Cost
Total investment in subsidiaries by the Company at 30 June 2013
11,135,657
51,188,061
62,323,718
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
Advances during the period to Guadalcanal Exploration Pty Ltd
-
-
-
-
-
Transfer from investments accounted for using the equity method
2,769,647
26,346
138,861
160,718
471
31,108
-
Acquisition and advances during the period to Exploraciones Novomining S.A.
99,575
5,399,156
26,346
138,861
160,718
471
31,108
2,769,647
5,498,731
Total investment in subsidiaries by the Company at 30 June 2014
14,004,879
56,944,721
70,949,600
Advances in the period to ARM Pty Ltd
Advances in the period to Acapulco Mining Pty Ltd
Repayments in the period from Central Minerals Pty Ltd
Advances during the period to Honiara Holdings Pty Ltd
Advances during the period to Guadalcanal Exploration Pty Ltd
Advances during the period to Exploraciones Novomining S.A.
-
-
-
-
-
-
194,967
12,085
(18,389)
1,048
1,863
194,967
12,085
(18,389)
1,048
1,863
8,595,769
8,595,769
Total investment in subsidiaries by the Company at 30 June 2015
14,004,879
65,732,064
79,736,943
NOTE 10: INVESTMENTS
(a) Investments accounted for using the equity method
Name
Country of
incorporation
Principal activity
Shares
Ownership interest
Carrying amount
Exploraciones
Novomining S.A.
Ecuador
Mineral Exploration
ORD
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
Carrying value of investment transferred to investments in subsidiaries
Balance at end of year
2015
%
85%
2014
%
85%
2015
$
-
-
-
-
-
-
2015
2014
$
-
$
-
-
2014
$
2,769,647
-
-
-
(2,769,647)
-
ANNUAL REPORT 2015 SOLGOLD 70
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 10: INVESTMENTS Continued
On 26 August 2013, SolGold plc increased its interest in Exploraciones Novomining S.A. from 30% to 50% and
subsequently to 85% and as a result changed its accounting treatment from an investment accounted for using the
equity method to an investment in a subsidiary (see Note 24).
On 24 February 2014, SolGold further increased its interest in Exploraciones Novomining S.A. from 50% to 85%.
(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
2015
$
2,942,116
-
(2,045,919)
896,197
2014
$
458,510
779,986
1,703,620
2,942,116
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 Aus
Tin Mining Ltd, a company listed on the Australian Securities Exchange.
(c) Fair value
Fair value hierarchy
The following table details the consolidated entity’s assets and liabilities, measured or disclosed at fair value,
using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
The fair values of financial assets and financial liabilities approximate their carrying amounts principally due to
their short-term nature or the fact that they are measured and recognised at fair value.
The following table represents the Group’s financial assets and liabilities measured and recognised at fair value.
2015
Available for sale financial assets
2014
$
Level 1
896,197
Available for sale financial assets
2,942,116
$
Level 2
$
Level 3
-
-
-
-
$
Total
896,197
2,942,116
The available for sale financial assets are measured based on the quoted market prices at 30 June.
71 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
$
Plant and
equipment
$
Motor
vehicles
$
Office
equipment
Furniture &
fittings
Total
Company
$
$
$
$
Group
Cost
Balance 30 June 2013
208,144
98,489
120,515
-
-
1,710
50,653
24,444
-
(208,144)
-
(43,406)
75,432
3,977
35,809
-
21,173
523,753
49,934
1,371
16,110
31,502
102,572
-
(251,550)
-
4,355
-
-
-
-
-
-
150,852
101,553
115,218
38,654
406,276
54,289
12,047
5,624
119,708
294,470
-
(134,802)
8,618
28,139
-
282,607
266,845
151,975
3,556
20,474
(2,338)
60,346
29,845
462,791
(137,140)
-
3,890
-
761,772
58,179
Balance 30 June 2013
(110,903)
(79,996)
(83,795)
(65,690)
(16,240)
(356,624)
(27,234)
Depreciation – business combinations
-
(253)
(24,444)
(10,217)
121,120
(10,014)
-
(5,818)
23,071
(312)
(7,659)
-
(68)
(25,077)
-
(1,317)
(35,025)
(10,254)
-
144,191
-
Additions – business combinations
Additions – other
Disposals
Balance 30 June 2014
Effect of foreign exchange on opening balance
Additions
Disposals
Balance 30 June 2015
Depreciation and impairment losses
Depreciation charge for the year
Disposals
Balance 30 June 2014
Effect of foreign exchange on opening balance
Depreciation charge for the year
Depreciation capitalised to exploration
Disposals
Balance 30 June 2015
Carrying amounts
At 30 June 2013
At 30 June 2014
At 30 June 2015
-
-
-
-
-
-
(90,263)
(90,986)
(73,661)
(17,625)
(272,535)
(37,488)
(706)
(6,696)
(5,624)
(5,082)
(444)
(4,686)
(28,940)
(29,854)
(22,140)
-
40,541
-
(16)
(1,697)
(4,093)
97
(6,790)
(18,161)
(85,026)
40,639
-
(9,573)
-
-
(126,605)
(91,005)
(100,931)
(23,334)
(341,873)
(47,061)
97,241
-
-
18,493
60,589
36,720
10,567
156,002
175,840
9,742
41,557
51,044
4,933
21,029
37,012
167,130
133,742
419,898
22,700
16,801
11,118
ANNUAL REPORT 2015 SOLGOLD 72
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 12: INTANGIBLE ASSETS
Cost
Balance 30 June 2013
Additions – expenditure
Additions – business combinations
Balance 30 June 2014
Additions – expenditure
Balance 30 June 2015
Impairment losses
Balance 30 June 2013
Impairment charge
Balance 30 June 2014
Impairment charge
Balance 30 June 2015
Carrying amounts
At 30 June 2013
At 30 June 2014
At 30 June 2015
Deferred Group
exploration costs
Deferred Company
exploration costs
$
$
61,331,717
6,022,676
3,097,086
70,451,479
10,472,446
80,923,925
(46,753,539)
(2,246,491)
(49,000,030)
(1,175,172)
(50,175,202)
14,578,178
21,451,449
30,748,723
29,209
611,648
-
640,857
33,533
674,390
-
-
-
(674,390)
-
29,209
640 857
-
Impairment loss
The Group did not consider it necessary to make a provision for impairment during the year (2014: $2,177,290).
A decision was made to expense $1,175,172 (2014: $69,201) 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 24.
73 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 13: LOAN RECEIVABLES AND OTHER NONCURRENT ASSETS
Security bonds
Group
2015
$
159,433
159,433
Group
2014
$
169,353
169,353
Company
Company
2015
$
7,169
7,169
2014
$
7,169
7,169
Security bonds relate to cash security held against office premises, Lvl 27, 111 Eagle St, Brisbane, Queensland
Australia, cash security held by Queensland Department of Natural Resources and Mines against Queensland
exploration tenements held by the Group and on cash backed bank guarantees held by the Ecuadorian Ministry of
Environment against Ecuadorian exploration tenements held by the Group.
NOTE 14: DEFERRED TAXATION
Recognised deferred tax assets
Deferred tax assets:
Tax losses
Deferred tax liabilities:
Group
2015
$
Group
2014
$
3,753,665
3,773,166
Temporary timing differences arising on
intangible assets
Net deferred taxes
(3,753,665)
(3,773,166)
-
-
Unrecognised deferred tax assets
Company
2015
Company
2014
$
-
-
-
$
-
-
-
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
2015
$
12,712,206
10,175,920
22,888,126
Group
2014
$
11,967,721
9,829,794
21,797,515
Company
2015
$
-
9,934,125
9,934,125
Company
2014
$
-
9,200,901
9,200,901
The deferred tax asset in respect of these items has not been recognised as future taxable profit is not anticipated
within the foreseeable future.
ANNUAL REPORT 2015 SOLGOLD 74
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 15: OTHER RECEIVABLES AND PREPAYMENTS
Other receivables
Prepayments
Group
2015
$
151,295
-
151,295
Group
2014
$
1,099,840
12,500
1,112,340
Company
Company
2015
$
136,873
-
136,873
2014
$
1,002,623
12,500
1,015,123
NOTE 16: CASH AND CASH EQUIVALENTS
Group
2015
$
Group
2014
$
Company
Company
2015
$
2014
$
Cash at bank
321,440
4,547,229
215,312
4,159,071
Cash and cash equivalents in the
statement of cash flows
321,440
4,547,229
215,312
4,159,071
NOTE 17: CAPITAL AND RESERVES
(a) Authorised share capital
At 1 July 2013 – Ordinary shares
Increase in authorised share capital of £0.01 each on 8 July 2014
At 30 June 2014 – Ordinary shares
At 1 July 2014 – Ordinary shares
Increase in authorised share capital of £0.01 each on 23 January 2015
At 30 June 2015 – Ordinary shares
2014
No. of shares
620,000,000
200,000,000
820,000,000
2015
No. of shares
820,000,000
200,000,000
1,020,000,000
2014
Nominal value £
6,200,000
2,000,000
8,200,000
2015
Nominal value £
8,200,000
2,000,000
10,200,000
75 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 17: CAPITAL AND RESERVES Continued
(b) Changes in issued share capital and share premium
No. of
shares
Nominal
value
Share
premium
Total
$
$
$
Ordinary shares of 1p each at 30 June 2013
553,354,342
9,361,755
66,418,526
75,780,281
Shares issued at £0.13 – bonus shares issued 6 September 2013
700,000
11,944
143,331
155,275
Shares issued at £0.075 – placement 24 September 2013
49,840,967
856,815
5,569,301
6,426,116
Shares issue costs charged to share premium account
-
-
(322,506)
(322,506)
Shares issued at £0.11 –Cornerstone Capital Resources Inc. shares
as part consideration for SolGold moving to 85% ownership of
Exploraciones Novomining S.A.
488,560
8,996
90,579
99,575
Shares issued at £0.09 – placement 24 March 2014
47,769,333
867,014
6,936,107
7,803,121
Shares issue costs charged to share premium account
-
-
(400,353)
(400,353)
Ordinary shares of 1p at 30 June 2014
652,153,202
11,106,524
78,434,985 89,541,509
No. of
shares
Nominal
value
Share
premium
Total
$
$
$
Ordinary shares of 1p each at 30 June 14
652,153,202
11,106,524
78,434,985
89,541,509
Shares issued at £0.03 – Placement 17 December 2014
33,591,828
633,842
1,267,633
1,901,475
Share issue costs charged to share premium account
-
-
(85,191)
(85,191)
Shares issued at £0.03 – Open offer 9 April 2015
74,708,041
1,444,355
2,888,711
4,333,066
Share issue costs charged to share premium account
-
-
(293,828)
(293,828)
Ordinary shares of 1p at 30 June 2015
760,453,071
13,184,721
82,212,310 95,397,031
Potential issues of ordinary shares
At 30 June 2015 the Company had 21,380,000 options outstanding for the issue of ordinary shares (2014:
33,920,000), 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.
Unless otherwise documented with the Company, 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
ANNUAL REPORT 2015 SOLGOLD 76
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 17: CAPITAL AND RESERVES Continued
Date of grant
Exercisable from
Exercisable to
Exercise
prices
Number
granted
Number at 30
June 2015
10 May 2013*
15 July 2013
15 July 2013
15 July 2013
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 £0.20 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
24 September 2013 When the Company’s share price has
traded at a minimum of £0.20 on a 30
day VWAP basis
24 September 2013 When the Company’s share price has
traded at a minimum of £0.40 on a 30
day VWAP basis
24 September 2013 When the Company’s share price has
traded at a minimum of £0.80 on a 30
day VWAP basis
8 July 2014
8 July 2014
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
6 September 2017
£0.14
3,000,000
3,000,000
15 July 2016
£0.14
1,250,000
1,250,000
15 July 2016
£0.28
2,250,000
2,250,000
15 July 2016
£0.50
4,000,000
4,000,000
24 September 2016
£0.14
3,250,000
2,850,000
24 September 2016
£0.28
3,250,000
2,850,000
24 September 2016
£0.50
820,000
820,000
8 July 2017
£0.14
2,180,000
2,180,000
8 July 2017
£0.28
2,180,000
2,180,000
22,180,000
21,380,000
*The options were granted for accounting purposes on 10 May 2013, approved at the Annual General Meeting held on 19 August 2013 and formally allotted on 6 September 2013.
Warrants
There were no warrants outstanding as at 30 June 2015.
Share options issued
On 15 July 2013, the company entered into an agreement to grant 7,500,000 unlisted options to Chief Geologist,
Bruce Rohrlach. The options have a life of 3 years. The terms of the share options are as follows:
• 1.25 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;
• 2.25 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
• 4 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.
77 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 17: CAPITAL AND RESERVES Continued
On 24 September 2013, the company entered into an agreement to grant 7,320,000 unlisted options to certain
employees, under its employee share option plan. The options have a life of 3 years. The terms of the share options
are as follows:
• 3.25 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;
• 3.25 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
• 0.82 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.
On 8 July 2014, the company entered into an agreement to grant 4,360,000 unlisted options to the Board of
Directors. The options have a life of 3 years. The terms of the share options are as follows:
• 2.18 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;
• 2.18 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
Refer to note 19 for further details.
Dividends
The Directors do not recommend the payment of a dividend (2014: nil).
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: TRADE AND OTHER CURRENT PAYABLES
Current
Trade payables
Other payables
Accrued expenses
Group
2015
$
1,065,617
326,689
946,140
2,338,446
Group
2014
$
291,409
413,434
82,458
787,301
Company
Company
2015
$
1,000,066
68,019
281,666
1,349,751
2014
$
260,817
85,433
82,458
428,708
ANNUAL REPORT 2015 SOLGOLD 78
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 19: EMPLOYEE BENEFITS
Share-based payments
The number and weighted average exercise price of share options are as follows:
Outstanding at the beginning of the year
Lapsed during the year
Granted during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average
exercise price
Number of
options
Weighted average
exercise price
2015
£0.34
£0.41
£0.21
-
£0.27
-
2015
30,920,000
(13,900,000)
4,360,000
-
21,380,000
-
2015
£0.37
£0.47
£0.31
-
£0.34
-
Number of
options
2015
25,372,000
(9,272,000)
14,820,000
-
30,920,000
-
The options outstanding at 30 June 2015 have an exercise price of £0.14 - £0.50 (2014: £0.14 - £0.50) and a
weighted average contractual life of 1.46 years (2014: 2.42 years).
Share options held by Directors are as follows:
Share options held
Alan Martin¹
Nicholas Mather
Brian Moller
Robert Weinberg
John Bovard
At 30 June 2015
At 30 June 2014
Option price
Exercise period
-
-
-
-
750,000
750,000
550,000
550,000
440,000
440,000
440,000
440,000
3,000,000
5,000,000
8,000,000
3,000,000
-
-
-
-
-
-
-
-
14p
28p
50p
6p
14p
28p
14p
28p
14p
28p
14p
28p
19/08/13 – 19/08/17
19/08/13 – 19/08/17
19/08/13 – 19/08/17
19/08/13 – 19/08/14
08/07/14 – 08/07/17
08/07/14 – 08/07/17
08/07/14 – 08/07/17
08/07/14 – 08/07/17
08/07/14 – 08/07/17
08/07/14 – 08/07/17
08/07/14 – 08/07/17
08/07/14 – 08/07/17
¹ Alan Martin resigned as CEO and Managing Director 17 May 2015.
79 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 19: EMPLOYEE BENEFITS Continued
The total number of options outstanding at year end is as follows:
Share options held
at 30 June 2015
Share options held
at 30 June 2014
Option price
-
-
-
3,000,000
-
-
1,250,000
2,250,000
4,000,000
2,850,000
2,850,000
820,000
2,180,000
2,180,000
250,000
250,000
3,000,000
3,000,000
5,000,000
8,000,000
1,250,000
2,250,000
4,000,000
3,050,000
3,050,000
820,000
-
-
£0.14
£0.28
£0.06
£0.14
£0.28
£0.50
£0.14
£0.28
£0.50
£0.14
£0.28
£0.50
£0.14
£0.28
21,380,000
33,920,000
Exercise period
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
Vesting from 30 day VWAP of 20p to 15/07/2016
Vesting from 30 Day VWAP of 40p to 15/07/2016
Vesting from 30 Day VWAP of 80p to 15/07/2016
Vesting from 30 Day VWAP of 20p to 24/09/2016
Vesting from 30 Day VWAP of 40p to 24/09/2016
Vesting from 30 Day VWAP of 80p to 24/09/2016
Vesting from 30 Day VWAP of 20p to 08/07/2017
Vesting from 30 Day VWAP of 40p to 24/09/2016
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.
Fair value of share
options and assumptions
£0.50 Options
£0.28 Options £0.14 Options £0.50 Options
£0.28 Options
£0.14 Options
15 July 2013
15 July 2013
15 July 2013
24 Sept 2013
24 Sept 2013
24 Sept 2013
2014
Number of options
4,000,000
2,250,000
1,250,000
820,000
3,250,000
3,250,000
Fair value at issue date
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate
(short-term)
£0.0001
£0.50
£0.0012
£0.0043
£0.28
£0.14
£0.001
£0.50
£0.003
£0.28
£0.011
£0.14
127.46%
127.46%
127.46%
113.24%
113.24%
113.24%
3.00 years
3.00 years
3.00 years
3.00 years
3.00 years
3.00 years
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1.28%
1.28%
1.28%
1.62%
1.62%
1.62%
Valuation methodology
Monte Carlo
Monte Carlo Monte Carlo Monte Carlo
Monte Carlo
Monte Carlo
ANNUAL REPORT 2015 SOLGOLD 80
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 19: EMPLOYEE BENEFITS Continued
Fair value of share options and assumptions
2015
Number of options
Fair value at issue date
Exercise price
Expected volatility
Option life
Expected dividends
Risk-free interest rate (short-term)
Valuation methodology
£0.14 Options
£0.28 Options
8 July 2014
2,180,000
£0.010
£0.140
115.31%
3.00 years
0.00%
2.48%
8 July 2014
2,180,000
£0.003
£0.280
115.31%
3.00 years
0.00%
2.48%
Monte Carlo
Monte Carlo
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 20: 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 2015 or 2014 no trading in commodity contracts was undertaken.
Market risk
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 $6,429 and the company’s income statement by $4,306. The group considers that a 2% +/-
movement interest rates represent reasonable possible changes.
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.
81 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 20: 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)
United States dollar (USD)
Great British Pound (GBP)
Group
2015
$
7,071
61,859
1,800
70,730
Group
2014
$
9,226
323,621
-
332,847
The main currency exposure relates to the effect of re-translation of the Group’s assets and liabilities in Solomon
Island dollar (SBD) and United States dollar (USD). A 10% change in the SBD/A$ and USD/A$ exchange rates would
give rise to a change of approximately $7,073 (2014: $33,285) 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 from the financial institutions with which it holds cash and cash deposits.
At 30 June 2015, the Group had $220,189 in cash accounts with Macquarie Bank Limited in Australia, $22,467 in
cash accounts with the ANZ Bank in Australia, $14,417 in cash accounts with Westpac Bank in Australia, $4,219 in
cash accounts with the ANZ Bank in Honiara, Solomon Islands, $55,790 in cash accounts with Banco Guayaquil in
Ecuador and $4,358 in petty cash. Including other receivables, the maximum exposure to credit risk at the reporting
date was $472,735 (2014: $5,647,069).
The company is also exposed to credit risk due to the cash balances it holds directly. It is also exposed to credit risk
on the loan balances it holds with its subsidiaries. At 30 June 2015, the company had $215,312 in cash and cash
equivalents and $21,741,251 of intercompany loan balances receivable. The maximum exposure to credit risk at the
reporting date was $21,956,563.
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.
All liabilities held by the Group are contractually due and payable within 1 year.
ANNUAL REPORT 2015 SOLGOLD 82
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 20: FINANCIAL INSTRUMENTS (GROUP AND COMPANY) Continued
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.
NOTE 21: 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 Group.
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
3,804,472
-
792,500
4,596,972
-
-
819,000
819,000
-
-
-
-
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 22: 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.
Transactions with directors and director-related entities
(i)
(ii)
The Company had a commercial agreement with Samuel Capital Ltd (“Samuel”) for the engagement of
Nicholas Mather as director of the Company. For the year ended 30 June 2015 $150,000 was paid
or payable to Samuel (2014: $153,750). These amounts are included in Note 5 (Remuneration of Key
Management Personnel). The total amount outstanding at year end is $58,358 (2014: $nil).
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
83 SOLGOLD ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 22: RELATED PARTIES Continued
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 2015 $360,000 was paid or payable to DGR Global (2014: $264,000) for the provision
of administration, management and office facilities to the Company during the year. The total amount
outstanding at year end was $310,690 (2014: $nil).
(iii) Mr Brian Moller (a Director), is a partner in the Australian firm Hopgood Ganim lawyers. For the year
ended 30 June 2015, Hopgood Ganim were paid $128,681 (2014: $89,039) 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 $74,704 (2014: $16,730).
Share and Option transactions of Directors are shown under Notes 5 and 19.
(b) Company
The Company has related party relationships with its subsidiaries (see note 9), Directors and other key
personnel (see Note 19).
All related party transactions are conducted at arm’s length.
Subsidiaries
The Company has an investment in subsidiaries balance of $30,729,182 (2014: $21,941,839). 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.
ANNUAL REPORT 2015 SOLGOLD 84
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 23: ACQUISITIONS
Exploraciones Novomining S.A.
On 26 August 2013, SolGold plc increased its interest in Exploraciones Novomining S.A. from 30% to 50% and
effectively was able to govern the financial and operating policies of Exploraciones Novomining S.A. on that date.
SolGold plc had previously treated its investment in Exploraciones Novomining S.A. as an investment accounted for
using the equity method. The following table shows the assets acquired and liabilities assumed at acquisition date.
Identifiable assets and liabilities
Cash
Other receivables and prepayments
Intangible assets - exploration expenditure
Property, plant and equipment
Other noncurrent assets
Trade and other payables
Less: Non-controlling interest
Identifiable assets acquired and liabilities assumed
Acquiree’s carrying amount
$
13,901
25,835
917,676
6,425
74,263
(323,159)
714,941
Fair value
$
13,901
25,835
3,097,086
6,425
74,263
(323,159)
2,894,351
(357,471)
2,536,880
NOTE 24: 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 85% participating interest in Exploraciones
Novomining S.A. (“ENSA”). Cornerstone Capital
Resources Inc. holds the other 15% of ENSA. ENSA is
an Ecuadorean registered company which holds 100%
of the Cascabel concession.
85 SOLGOLD ANNUAL REPORT 2015
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, gridding in preparation for a
3D Induced Polarisation (IP) and magnetotelluric
(MT) survey, diamond drilling and preparation for
initial metallurgical testing. The regional exploration
activity to date has identified seven main prospects:
Alpala, Alpala Northwest, Alpala Southwest, Aguinaga,
Chinambicito, America-Tandayama and Cristal.
The most significant of these is the Alpala prospect
where twelve drill holes have been completed and a
thirteenth partial drill hole have been drilled for a total
combined meterage of 13,809 m.
The completion of soil gridding and infill across
the entire tenement area has produced coincident
molybdenum, gold and copper / zinc ratio in soil
anomalies that suggest an inferred porphyry
centre characterised by higher temperatures of
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 24: ACCOUNTING ESTIMATES AND JUDGEMENTS Continued
mineralisation. The low manganese in soil is inferred
to be related to intense late-stage hydrothermal
alteration, whilst the presence of elevated zinc
surrounding these areas of low manganese is a
geochemical signature that is typical of the metal
zonation around porphyry copper-gold deposits.
The aggregate carrying value of $16.90 million is
considered to be unimpaired.
SolGold 100% owned Projects
Kuma PL 08/06
SolGold had a 100% ownership. The project was at
an early stage of exploration, which had included:
geological mapping, rock chip sampling, stream
sediment sampling, an airborne magnetic survey
and initiation of both soil sampling and TerraSpec
mineralogical mapping. This work identified a lithocap,
which are often found above mineralised porphyry
complexes. The prospecting licence (PL 08/06) expired
on 11 April 2015 and accordingly the carrying value
of $0.31 million was considered to be impaired and an
impairment charge of $0.31 million (2014: $nil) was
recognised during the year.
Fauro PL 12/09
The company could not find a JV partner to pursue
drilling of gold-copper targets defined in the
2011/2012 exploration program. As no JV partner
has been found to date, the tenement was relinquished
and the carrying value of $4,534 (2014: $1.03 million)
is considered to be impaired and an impairment charge
of $4,534 (2014: $1.03 million) was recognised during
the year ended 30 June 2015.
Acapulco mining projects
Acapulco has three granted tenements across
Queensland. The granted tenements comprise of 232
sub-blocks (circa 718 km²).
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 24,377.8 m
have been drilled on the tenements.
The objective has been 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 $8.87 million is
considered to be unimpaired.
Central minerals projects
Central Minerals comprises of seven granted
tenements which is comprised of 280 sub-blocks (circa
886 km²).
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 combined resource at Rannes
at an 0.3 g/t Au cut-off of 18.7 million tonnes at
0.92 g/t gold equivalent (gold + silver) for 550,000
ounces of gold equivalent (296,700 ounces of gold
and 10,139,000 ounces of silver; values rounded;
see announcement dated 23 May 2012 for details of
the resource statement and gold equivalent ratios).
The resource at an 0.5 g/t Au cut-off is 12.23 million
tonnes at 0.60g/t gold and 23.18g/t silver; for 237,240
ounces Au and 9,105,072 ounces Ag (using a gold to
silver ratio of 1:50). Several other prospects exist that
contain known gold mineralisation that has not yet
been included in the resource estimate. The Company
is seeking a JV partner to progress drilling on the
Rannes project tenements.
The Central Minerals projects have a carrying value of
$3.63 million at 30 June 2015 and are considered to
be unimpaired.
ANNUAL REPORT 2015 SOLGOLD 86
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
NOTE 25: CONTINGENT ASSETS AND LIABILITIES
A 2% net smelter royalty is payable to Santa Barbara Resources Limited, who were the previous owners of the
Cascabel tenements. These royalties can be bought out by paying a total of US$4 million. Fifty percent (50%) of the
royalty can be purchased for US$1 million 90 days following the completion of a feasibility study and the remaining
50% of the royalty can be purchased for US$3 million 90 days following a production decision.
There are no contingent assets and liabilities at 30 June 2015 (2014: nil).
NOTE 26: SUBSEQUENT EVENTS
On 2 October 2015, the Company executed Convertible Note Deeds with substantial shareholders, DGR Global
Limited and Tenstar Trading Limited for a total funding of $2,332,000.
On 19 November 2015, the Company issued an additional 62,263,534 shares at £0.015 to raise the equivalent
of $2.39 million in a combination of cash and debt conversions 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
reporting date that would have a material impact on the consolidated or Company financial statements.
87 SOLGOLD ANNUAL REPORT 2015
ANNUAL REPORT 2015 SOLGOLD 88