Final Results

Mercator Gold PLC 03 October 2005 Audited Results for the period ending 30th June 2005 LONDON - 3rd October 2005 - The Directors of Mercator Gold plc (AIM: MCR), the UK based gold exploration company, announces final results for the period ending 30th June 2005: Highlights • Admission to AIM on 8 October 2004 at 6 pence • Completed first resource assessments at Bluebird and Surprise outlining 467,000 ounces • Total company resources to date 690,100 ounces • Additional fund raising of £1.25 million at 8 pence • SpaDis technology successfully applied to historical data Post 30 June 2005 • Early exercise of warrants raised £1 million For more information www.mercatorgold.com Mercator Gold plc Patrick Harford, Managing Director Tel: +44 (0) 7786 486645 Terry Strapp, Chairman Tel : +61 (0) 8 9322 7422 Michael de Villiers, Finance Director Tel: +44 (0) 20 7929 1010 Julian Vearncombe, Exploration Director Tel: +61 (0) 8 9316 9400 Beaumont Cornish Limited Roland Cornish / Felicity Geidt Tel: +44 (0) 7628 3396 Ocean Equities Limited Tel: +44 (0) 20 7786 4375 Will Slack King & Shaxson Capital Ltd Nick Bealer Tel: +44 (0) 20 7426 5986 Parkgreen Communications Justine Howarth / Ana Ribeiro Tel: +44 (0) 20 7493 3713 CHAIRMAN'S STATEMENT It is with pleasure that I report on Mercator Gold plc's inaugural year as an AIM-listed company. Mercator was formed to take advantage of a substantial business opportunity (the Annean joint venture) in the gold-rich Meekatharra region of Western Australia. The company has completed its first resource assessments at Bluebird and Surprise where 467,000 ounces have been outlined. I am pleased to inform you that residual low-grade ounces which our exploration team used as pathfinders have now been substantially upgraded. Total resources of the company stand at 690,100 ounces. Mercator Gold plc aims to acquire quality ground holdings each of substantial size with potential to host more than two million ounces of gold. The Annean joint venture covers an exciting greenstone region that has historically produced more than 3.5 million ounces of gold, about half of which was produced from within the joint venture tenements, from relatively shallow depths. The company believes the success in our first year and its anticipated ongoing success stem from the conjunction of geological excellence, focus and commitment, maximising the value of the historic data base and the use of the SpaDIS(TM) technology developed by Vearncombe & Associates Pty Ltd. Target generation is followed by carefully planned drilling programs, results from which have already lead to the definition of new ore resources. Throughout, the company is geology-focused. Exploration activities to date have been very successful. In the first eleven months from listing, drill programmes totalling 31,000 metres have defined new and exciting resources at Bluebird and Surprise. These resources are 2 million tonnes@4.4 g/t Au for a total of 282,000 ounces. In addition, the company identified another 185,000 ounces of lower grade gold resources, surrounding and adjacent to the high-grade resources, at grades ranging 0.7 to 2 g/t. These finds were made at a cost of less than A$10 (US$7, £4.20) per ounce. The new resources are located within 1.5 kilometres of a major 3 million tonne per annum plant owned by our joint venture partner St. Barbara Mines Ltd. In terms of the Annean joint venture agreement the company has earned a 45% stake in the Meekatharra properties. This will increase to 51% in calendar 2005. The data verification and analysis programme has highlighted the area immediately south of Bluebird, at South Junction, and the Great Northern Highway area (also known as Bluebird East) as the more immediate targets for resource enlargement. In addition to the new resources, exploration continues at Meekatharra North (including Maid Marion and Nottingham with 7km of strike length), Hawk Hill and Stakewell, all of which are giving positive results at the time of writing. In the coming year the company intends to: • upgrade and enlarge resources • assess mining suitability at Bluebird and Surprise • focus exploration on the Great Northern Highway and South Junction pits • add to initial drilling successes at Stakewell and Hawk Hill • aggressively explore and define new and additional open pit resources at Meekatharra North • use SpaDIS(TM) technology to identify targets and define resources • continue the process of data validation, target generation and discovery in the Meekatharra area • review and assess new projects. Exploration activity and results are regularly reviewed by our independent geological director. The board of the company meets regularly by tele-conference, avoiding the need for expensive air travel. The company has fully functioning Audit and Remuneration committees. Executive and administrative staff, and their performance are carefully monitored. The company is fully cognizant of the corporate governance codes in the UK and Australia to which it strictly adheres. We look forward to the next year's activities with a sense of keen anticipation. Terrence Strapp Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT For the period from 22 March 2004 to 30 June 2005 £ Administrative expenses (926,654) Operating loss (926,654) Net interest receivable & similar items 59,335 Loss on ordinary activities before taxation (867,319) Taxation - Loss on ordinary activities after taxation (867,319) Loss per share (2.03)p All amounts relate to continuing activities The Group has no recognised gains or losses other than the loss of £867,319 for the period CONSOLIDATED BALANCE SHEET At 30 June 2005 2005 £ Fixed assets Intangible 1,453,885 Tangible 65,934 Total fixed assets 1,519,819 Current assets Debtors 194,972 Cash at bank and in hand 954,467 Total current assets 1,149,439 Creditors - amounts falling due within one year 572,611 Net current assets 576,828 Total assets less current liabilities 2,096,647 Capital and reserves Called-up share capital 871,198 Share premium account 2,492,599 Merger Reserve (399,831) Profit and loss account (867,319) Equity shareholders' funds 2,096,647 COMPANY BALANCE SHEET At 30 June 2005 2005 £ Tangible 5,622 Investment 450,000 Long term loan - subsidiary 1,720,442 Total fixed assets 2,176,064 Current assets Debtors 60,539 Cash at bank and in hand 681,246 Total current assets 741,785 Creditors - amounts falling due within one year 125,216 Net current assets 616,569 Total assets less current liabilities 2,792,633 Capital and reserves Called-up share capital 871,198 Share premium account 2,492,599 Profit and loss account (571,164) Equity shareholders' funds 2,792,633 CONSOLIDATED CASH FLOW STATEMENT For the period from 22 March 2004 to 30 June 2005 2005 £ Net cash outflow from operating activities (526,834) Returns on investments and servicing of finance 29,718 Capital expenditure and financial investment (1,541,831) Net cash outflow before management of liquid resources and financing: (2,038,947) Management of liquid resources (647,000) Financing: Issue of ordinary shares 2,963,797 Increase in cash in the period 277,850 Reconciliation of net cash flow to movement in net funds Increase in cash in the period 277,850 Change in net funds resulting from cash flows 277,850 Exchange differences 29,617 Movement in short term deposits 647,000 Movement in net funds in the period 954,467 Net funds at 22 March 2004 - Net funds at 30 June 2005 954,467 SHAREHOLDERS' FUNDS For the period from 22 March 2004 to 30 June 2005 2005 £ Loss for the period (867,319) Merger reserve arising on consolidation (399,831) New share capital issued 3,363,797 Net addition to shareholders' funds 2,096,647 Opening shareholders' funds - Closing shareholders' funds 2,096,647 Notes The above financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information has been extracted from the Group's Annual Report for the period ended 30 June 2005 on which the auditors have given an unqualified opinion. The Annual Report will be posted to shareholders on 3rd October 2005 and the Reconvened Annual General meeting will be held on 26 October 2005. Statutory accounts for the period will be delivered to the Registrar of Companies following the Company's Annual General Meeting. Accounting policies Accounting convention and basis of preparation of financial statements and going concern The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The principal accounting policies of the Group are set out below. These financial statements are prepared on a going concern basis, notwithstanding the loss for the period to 30 June 2005 of £867,319, which the Directors believe to be appropriate for the following reasons: In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches to finance its activities for limited periods only. Further funding is raised as and when required, the most recent being in September 2005. The Directors are of the opinion that the Company will need to raise additional financial resources to enable the Group to undertake an optimal programme of exploration and appraisal activity over the next twelve months. Accordingly, the Directors intend to raise further funds during the course of the next twelve months. Whilst the Directors are confident that the Group will be able to secure additional funding to enable it to continue to meet its debts as they fall due and to undertake the programme described above for at least the next twelve months from the date of approval of these financial statements, there can be no guarantee that this will be the case. The financial statements do not include any adjustments, particularly in respect of fixed assets, investments, loans and provisions for winding up which would be necessary if the Company and Group ceased to be a going concern. Basis of consolidation The Group accounts consolidate the accounts of Mercator Gold plc and its subsidiary undertakings. The acquisition by the Company of Mercator Gold Australia Pty Ltd in August 2004 was accounted for in accordance with the principals of Merger accounting set out in Financial Reporting Standards 6 on ' acquisitions and mergers'. Accordingly, the consolidated financial statements are presented as if Mercator Gold Australia Pty Ltd has been controlled by the Company throughout the period from its incorporation on 19 January 2004. Exploration and development costs All costs associated with mineral exploration and investments are capitalised on a project-by-project basis, pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If an exploration project is successful, the related expenditures will be transferred to mining assets and amortised over the estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished or a project abandoned, the related costs are written off. Where the Group maintains an interest in a project, but the value of the project is considered to be impaired, a provision against the relevant capitalised costs will be raised. The recoverability of all exploration and development costs is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition thereof. This information is provided by RNS The company news service from the London Stock Exchange

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