Final Results

Mercator Gold PLC
22 November 2007


                     
                                Mercator Gold plc
                                        
 PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
              JUNE 2007 & ANNOUNCEMENT OF AGM ON 21 DECEMBER 2007


London: 22 November 2007 - Mercator Gold plc ('Mercator' or 'the Company')
announces its preliminary results for the year ended 30 June 2007.

Highlights

Commencement of production, post year-end, at the Meekatharra Gold
Project with annualised target of 120,000 ounces of gold

Successful commissioning of Bluebird processing plant

New significant exploration target identified at Euro Project

Substantial increase to reserves and resources


Chairman's report

It is with great pleasure I present the third Annual Report to Shareholders of
Mercator Gold plc in what has been a truly landmark year for your Company.

Firstly, and most importantly, I am pleased to report the numerous milestones
achieved during the 2006/7 financial year were free of lost time injuries and
environmentally negative incidents. This highlights the commitment and
dedication of all staff and employees of Mercator Gold in maintaining the
highest levels of safety and environmental practices and is something we will
continue to strive for at all times.

On completion of the acquisition of the Meekatharra assets in early 2006 your
Company set itself the task of bringing the mines of Meekatharra back into
production on a profitable and sustainable basis.

To achieve this objective the Company realised it needed to establish a reserve
base sufficient to support production for at least four years at 120,000 ounces
per year. The Company's minimum requirement for the recommencement of production
was therefore in the order of 500,000 ounces of reserves.
The Company's successful exploration at Surprise and Bluebird at Yaloginda in
2005 and 2006 formed the basis of a prolonged campaign of drilling, whilst the
recognition of the potential of the Prohibition-Vivian-Consols area within the
Paddy's Flat field became a focus of a second area of successful exploration.
Our resources at the beginning of the year were 2,160,000 ounces of gold and
have now grown to a total of 2,443,000 ounces of gold.
I am pleased to say the mining studies associated with reserve definition were
commenced and largely completed during the year under review and now stand at
504,000 ounces of gold.

Immediately following on from the reserve definition studies the Company moved
on its commitment to recommence production at Meekatharra. With reserves
sufficient to sustain production for at least four years the Company undertook a
thorough refurbishment of the Bluebird mill at a cost of £3 million.

First production is being sourced from the Surprise deposit, which is situated
approximately 800 metres from the Bluebird Mill. Surprise contains a number of
high grade lenses within a porphyry of generally lower grades, and will be mined
over a nine month period. Pre-stripping of the larger and somewhat deeper
Bluebird deposit - which lies approximately one kilometre from the Mill - will
commence shortly, with ore from Bluebird to be blended with Surprise in the New
Year. These deposits will supply approximately 200,000 ounces of production over
a 20-22 month period.

Coinciding with the production from the Surprise and Bluebird pits, the Company
intends to begin underground development of the highly regarded Paddy's Flat
deposits. These deposits will be the source of production for at least two years
after the depletion of the Surprise/Bluebird reserves and in our view, have the
potential to provide further reserves over many more years. This view is based
on the important fact that the Paddy's Flat deposits are open both along strike
and at depth.

Our reserves represent only a small portion of the known mineralisation at
Paddy's Flat, which has to date produced over 2 million ounces of gold to an
average depth of less than 250 metres.

The financial results for the year reflect the ongoing costs associated with
putting in place the financing and resources that will allow your Company to
take advantage of the current upswing in the international gold market. Your
Board remains cautiously optimistic that there is a longer term overall
improvement in the West Australian gold mining industry and Mercator has the
appropriate asset base to take advantage of this. It is with this opportunity in
mind a full listing of Mercator on the Australian Stock Exchange is being
considered.


Our objectives are:

1. To maintain our exemplary record in the areas of safety and environmental
management;

2. To engage with our employees and the local community to the benefit of all
stakeholders;

3. To produce 120,000 ounces of gold in the first full year of production by
September 2008;

4. To grow our resources by a further one million ounces;

5. To grow our reserves by a minimum of 220,000 ounces.

In conclusion, I would like to extend a special thanks to our operational staff
for the way they have carried out their tasks during the year - bringing a mine
into production is never easy. In particular I would like to thank Denis
Geldard, Alan Coles, Laurie Mann and Clarrie Lauritsen for their tireless
pursuit of the Company's objectives.


Julian and Sue Vearncombe left the Company as full-time consultants during the
course of the year. I thank them for their efforts and wish them well.

Finally, I would like to thank you, our shareholders, for your continuing
support in what promises to be another active and exciting year ahead.

Terry Strapp
Chairman


For further information please contact:

Mercator Gold plc
Terry Strapp
Chairman 
Tel:      [phone]


Patrick Harford
Managing Director
Tel:     [phone]
Mob:     [phone]

Email: [e-mail]
Website: www.mercatorgold.com


Bankside Consultants Ltd 
Simon Rothschild
Keith Irons
Oliver Winters
Tel:     [phone]


Consolidated Profit and Loss Account
For the year ended 30 June 2007
                                                     2007           2006
                                                      £              £
Administrative expenses                           (3,344,664)     (2,127,615)
Other income                                          179,530         233,469
Operating loss                                    (3,165,134)     (1,894,146)
Interest payable and similar items                  (199,747)        (94,682)
Interest receivable and similar items                 549,112         152,203
Loss on ordinary activities before taxation       (2,815,769)      (1,836,62)
Taxation                                             (60,116)              -
Loss on ordinary activities after taxation        (2,875,885)     (1,836,625)
Basic and diluted loss per share                      (5.18)p          (7.47)p
All amounts relate to continuing activities

       

Consolidated Statement of Total Recognised Gains and Losses
For the year ended 30 June 2007
                                                       2007         2006
                                                        £            £
Loss for the financial year                         (2,875,885)  (1,836,625)
Exchange adjustments on foreign currency net          1,270,907    (929,394)
investments
Total recognised gains and losses for the           (1,604,978)  (2,766,019)
financial year

       
Consolidated Balance Sheet
At 30 June 2007
                                                        2007         2006
                                                         £            £
Fixed assets
Intangible                                           16,016,099   10,529,014
Tangible                                              6,798,177    2,859,412
Total fixed assets                                   22,814,276   13,388,426
Current assets
Stocks                                                  163,766       91,687
Debtors                                                 437,237      403,524
Cash at bank and in hand                              6,647,665   13,297,216
Total current assets                                  7,248,668   13,792,427
Creditors - amounts falling due within one          (1,242,737)  (1,140,995)
year
Net current assets                                    6,005,931   12,651,432
Total assets less current liabilities                28,820,207   26,039,858
Creditors - amounts falling due after more                    -    (854,784)
than one year
Provisions for liabilities                          (1,270,380)  (1,205,594)
Net assets                                           27,549,827   23,979,480


Capital and reserves
Called -up share capital                              6,224,491    5,355,215
Share premium account                                26,963,483   22,528,660
Merger reserve                                        (399,831)     (399,831)
Other reserves                                                -       128,774
Profit and loss account                               (5,238,316)  (3,633,338)
Equity shareholders' funds                             27,549,827   23,979,480

     

Consolidated Shareholders' Funds
For the year ended 30 June 2007

                                                          2007         2006
                                                           £            £
Loss for the financial year                           (2,875,885)  (1,836,625)
Exchange adjustments on foreign currency net            1,270,907    (929,394)
investments
Equity reserve (transferred)/ arising on conversion/    (128,774)      128,774
issue of convertible loan notes
New share capital issued                                5,304,099   24,520,078
Net addition to shareholders' funds                     3,570,347   21,882,833
Opening shareholders' funds                            23,979,480    2,096,647
Closing shareholders' funds                            27,549,827   23,979,480

     

Consolidated Cash Flow statement
For the year ended 30 June 2007
                                                          2007         2006
                                                            £            £
Net cash outflow from operating activities            (3,024,909)    (376,588)
Returns on investments and servicing of finance           507,690      138,752
Capital expenditure and financial investment          (8,916,356) (11,988,877)
Net cash outflow before management of liquid         (11,433,575) (12,226,713)
resources and financing:
Management of liquid resources                          7,007,533 (12,939,994)
Financing                                               4,162,217   25,426,774
(Decrease)/increase in cash in the period               (263,825)      260,067

Reconciliation of net cash flow to movement in net
funds
(Decrease)/increase in cash in the period               (263,825)      260,067
Movement in short term deposits                       (7,007,533)   12,939,994
Exchange differences                                      621,807    (857,312)
(Decrease)/Increase in cash and short term deposits   (6,649,551)   12,342,749
Decrease/(Increase) in debt due after more than one       854,784    (854,784)
year
Movement in net funds in the period                   (5,794,767)   11,487,965
Net funds at 30 June 2006                              12,442,432      954,467
Net funds at 30 June 2007                               6,647,665   12,442,432

Reconciliation of Operating Loss to Operating Cash
Flows
Operating loss                                        (3,165,134)  (1,894,146)
Depreciation and amortisation charges                     202,434       48,187
Increase in debtors                                      (33,713)    (208,552)
Increase in inventories                                  (72,079)     (91,687)
Increase in creditors                                      41,625    1,769,610
Loss on disposal of fixed assets                            1,958            -
Net cash outflow from operating activities            (3,024,909)    (376,588)


Notes:

   1     The financial information set out above does not constitute
         statutory accounts as defined in section 240 of the Companies Act
         1985.  The consolidated profit and loss account, consolidated
         statement of total recognised gains and losses, consolidated balance
         sheet, reconciliation of shareholders' funds and consolidated cash
         flow statement have been extracted from the Group's 2007 statutory
         financial statements upon which the auditors' opinion is unqualified
         and contained no statements under s237 of the Companies Act 1985.

   2     The loss per share is calculated by reference to the loss for the
         year of £2,875,885 (2006: £1,836,625) and the weighted average
         number of Shares in issue during the year of 55,547,888 (2006:
         24,583,888. There is no dilutive effect of share options or
         warrants.

   3     No dividend is proposed in respect of the period.

   4     Selected accounting policies
         Basis of preparation of financial statements
         The financial statements have been prepared under the historical
         cost convention and in accordance with applicable accounting
         standards.


         Application of going concern basis and availability of finance

         These financial statements are prepared on a going concern basis,
         notwithstanding the loss for the period to 30 June 2007 of
         £2,875,885 (2006: £1,836,625), which the Directors believe to be
         appropriate for the following reasons:
         In common with many mining and exploration companies, the Company
         has raised finance for its exploration and development activities in
         discrete tranches to finance its activities for limited periods only
         and further funding has been raised as and when required. Since the
         year end the Company has raised £2.5m by issue of a convertible loan
         note and has arranged a bank loan facility for A$12m (£5m). The
         Directors are of the opinion that the Company will be able to reach
         profitable production of gold with these facilities and It is their
         expectation that such future needs will be met from the profitable
         mining of gold. The Company commenced gold production in September
         2007.
         Accordingly, 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 undertaking. The acquisition by the Company of
         Mercator Gold Australia Pty Ltd in August 2004 was accounted for in
         accordance with the principles 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.

         Deferred exploration and evaluation costs
         All costs incurred prior to obtaining the legal right to undertake
         exploration and evaluation activities on a project are written off
         as incurred. Subsequent to obtaining the legal rights, 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.
         Mine development costs
         Exploration costs are capitalised as intangible fixed assets until a
         decision is made to proceed to development. Related costs are then
         transferred to mining assets. Before reclassification, exploration
         costs are assessed for impairment and any impairment loss recognised
         in the profit and loss account. Subsequent development costs are
         capitalised under mining assets, together with any amounts
         transferred from intangible exploration assets. Mining assets are
         amortised over the estimated life of the commercial ore reserves on
         a unit of production basis.

   5     Copies of the Annual Report and Accounts for the year ended 30 June
         2007 will be posted to shareholders by 28 November 2007 and will be
         available, free of charge, from the Company's registered office at
         Peek House, 3rd Floor, 20 Eastcheap, London, EC3M 1EB, for a period
         of 14 days from the date of their posting. The financial statements
         will be delivered to the Registrar of Companies following the
         conclusion of the annual general meeting.




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