Annual Report and Accounts

Solomon Gold PLC
11 December 2007


Solomon Gold plc
11 December 2007


NEWS RELEASE


FOR IMMEDIATE RELEASE                       AIM Code - SOLG

                                                                       
ISSUE OF ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2007


Solomon Gold plc has today issued consolidated financial statements for the year
ended 30 June 2007.  The Chairmans' Statement, Operation Review, Directors'
Report, Consolidated Income Statement, Consolidated and Company Balance Sheets,
Statement of Changes of Equity and Consolidated and Company Statements of Cash
Flows are included below.

The full Annual Report is available on the Company's website 
www.solomongold.com.


For further information in respect of the Company's activities, please contact:


Nicholas Mather                                Duncan Cornish
CEO                                            Company Secretary and CFO
Tel: [phone]                            Tel: [phone]
Email:[e-mail]                  Email: [e-mail]


Nominated adviser for the purposes of AIM:
Contact:

Mr Stephen Weir
RFC Corporate Finance
Tel [phone]
Email: [e-mail]



CORPORATE INFORMATION


DIRECTORS

Nicholas Mather (Chief Executive Officer)
Cameron Wenck (Non-Executive Chairman)
Brian Moller (Non-Executive Director)
Dr Robert Weinberg (Non-Executive Director)


COMPANY SECRETARY

Duncan Cornish


REGISTERED OFFICE

7 Pilgrim Street, London EC4V 6LB
United Kingdom


Registered Number 5449516


AUSTRALIAN OFFICE

Level 5, 60 Edward Street,
Brisbane   QLD   4000
Phone: + 61 7 3303 0660
Fax: [phone]
Email: [e-mail]
Web Site: www.solomongold.com

AUDITORS

PKF (UK) LLP
Farringdon Place, 20 Farringdon Road
London EC1M 3AP


NOMINATED ADVISOR

RFC Corporate Finance Ltd
Level 14, 19-31 Pitt Street
Sydney NSW 2000, Australia


BROKER

Hanson Westhouse Ltd
One Angel Court, London EC2R 7H
United Kingdom


BANKERS

Macquarie Bank Ltd (Brisbane Branch)
300 Queen Street, Brisbane QLD 4000
Australia


SOLICITORS

Faegre & Benson LLP
7 Pilgrim Street, London EC4V 6LB
United Kingdom


AUSTRALIAN SOLICITORS

Hopgood Ganim
Level 8, Waterfront Place
1 Eagle Street, Brisbane QLD 4000


REGISTRARS

Computershare Investor Services plc
The Pavilions, Bridgwater Road
Bristol BS99 7NH


CHAIRMAN'S STATEMENT

Dear Shareholder,

The year to 30th June 2007 saw your company further intensify its mineral
exploration activities in Solomon Islands on the Country's main island of
Guadalcanal.  Our drilling program has experienced a strong turn around from the
initially slow start and frustrating delays experienced in the 2006 year. The
drilling program has been escalated such that we now have three fully
operational drilling rigs on Guadalcanal Island. Despite the inevitable
difficulties drilling in such perilous terrain, approximately 7,500 metres were
drilled in the 12 months ending November 2007, over the prospects at Sutakiki,
Koloula and more recently, Chikora.

In 2006, the Company identified a very extensive and intensely mineralised
copper gold porphyry system at Sutakiki. Results from extensive, deep drilling
of this system throughout the year have ratified our initial optimism around the
discovery. We were encouraged by the results of the first hole drilled at
Sutakiki, which intersected 309 metres grading  0.54 g/t gold. Although the
grade was low, the intersection was very large. Subsequent drilling was
encouraging enough to further intensify our drilling program at Sutakiki.

The company's exploration strategies will, we believe, be vindicated in the
coming year as a result of follow up drilling planned for the very encouraging
discovery, recently made at Sutakiki. Solomon Gold recently reported a
high-grade intersection of 32 metres grading 9.45 g/t gold from 108m depth, in
drill-hole SK11. Drilling around the discovery has commenced and we await the
results. This is undoubtedly a very significant find and has created some well
deserved attention and interest in the company.

Solomon Gold's exploration capabilities have been boosted by the recruitment of
additional geologists and the engagement of further drilling rigs over the past
year. Our increased scale should result in improved cost efficiencies going
forward. Your Board and Management are convinced that Solomon Gold's ambitious
programme, foreseen when the Company commenced operations there in September
2005, is likely to lead to a major gold discovery.

The Company and its wholly owned operating subsidiary, Australian Resource
Management (ARM) P/L, continues to enjoy a harmonious working relationship with
the landowners, local people and the Solomon Islands Government. We fully expect
this to continue into the future. Throughout this program, your company has
managed its activities in an environment of high competition for all services,
particularly assay laboratories, drilling rigs and geophysical survey crews.
These issues are regularly addressed and we look forward to further improvements
in turnaround times for assays.

Solomon Gold continually monitors field efficiency given the higher cost of
operating in the Guadalcanal environment. Higher operating costs result from the
degree of difficulty of access and slow drilling incurred due to constant
collaring  of drill holes through landslide scree. The company is targeting
significant improvements in operating efficiency and is now aiming to deliver
around 18,000 metres of drilling over the next 12 months of operations. This
will be achieved using three drilling rigs and double shifting as much as
possible.

In addition the Company has identified additional exploration techniques, which
we believe will rapidly uncover high priority targets. This has been achieved
with the benefit of reprocessed aeromagnetic information, originally collected
by ARM in 1997 and will be further augmented by an airborne electromagnetic
survey is planned for February 2008.  The mineralogical characteristics of the
discovery in SK11 suggest that areas of similar mineralisation will stand out in
this survey.

The Company has met the expenditure forecasts of the original programs and
budgets for the Solomon Gold project on Guadalcanal. In order to meet the future
costs of exploration and resource definition around the recent discovery, a
capital raising will be undertaken in the near future.

In November 2007, Solomon Gold appointed a new Broker and Nominated Advisor in
Hanson Westhouse plc and RFC Corporate Finance Limited respectively. The Company
looks forward to a successful relationship with both Hanson Westhouse and RFC.

On behalf of the Board, I wish to acknowledge the extraordinary commitment of
our managers and staff in the field. Their tireless work and never-ending faith
in the project has kept us focused and optimistic during otherwise difficult
times. Their efforts will surely be rewarded in the future.  During the year our
inaugural Operations Manager and Executive Director, David Jelley, resigned for
personal reasons and we thank him for his efforts on behalf of the Company and
wish him the best for his future.

Finally, I would like to take this opportunity to thank all shareholders for
their support and patience throughout the last two years and to commend to you
the Solomon Gold exploration program going forward. Your Board is confident that
the next 12 months will see substantial progress towards the definition of a
world-class gold mineral system, substantiating our original representations to
you.

Cameron Wenck
Chairman

OPERATIONS REVIEW

About Solomon Gold plc

Solomon Gold holds five granted tenements on the main Island of Guadalcanal,
Solomon Islands, for minerals exploration focusing on copper and gold rich
porphyry systems and high grade epithermal gold mineralisation. The tenements
cover 468km2 and are current, including rights to renewal periods, until 10
November 2011. The company listed on AIM (London Stock Exchange) on 10 February
2006 after a £5m capital raising. The Company has expended those funds in
accordance with the proposed work program and budget and has now established the
necessary infrastructure and field support facilities and gathered sufficient
data from surface mapping, sampling and subsurface drilling programs to enable a
further program of exploration drilling to enable, with added efficiency, the
exploration for world class gold and copper orebodies.

The Company believes the area has the potential for the discovery of a world
class copper gold porphyry system similar to other large gold equivalent
orebodies in the region such as Ok Tedi (50m oz Au Eq), Grasberg (100m oz Au
Eq), Lihir (40m oz Au) and Bougainville (50m oz Au Eq). These orebodies are
located on the circum- Pacific zone of volcanoes and associated mineralisation
and Solomon Gold management have identified geological features which point to a
strong possibility of similar discoveries being made on the Solomon Gold
tenements.

Solomon Gold has identified approximately 30 km2 of mineralisation indicative of
significant porphyry copper gold and epithermal gold mineralisation systems and
is currently engaged in a three rig program, drilling key targets. Recently the
drilling program returned a spectacular intersection of 32 metres at a grade of
9.45 grams per tonne from 108m depth gold at the Sutakiki Prospect,
demonstrating the potential for discovery of a high grade gold resource. The
high grade gold mineralisation encountered in the recent drilling is
characteristic of high grade gold deposits related to mineralised transform
structures in Papua New Guinea such as Porgera and in the Indonesian archipelago
such as Halmahera.

Solomon Gold is staffed by an active team of expatriate and Solomon Island
geologists and field hands, supported by integrated logistics support services
including a helicopter contract.

Solomon Gold's key prospects are the Sutakiki, Mbina and Chikora gold and copper
prospects which all align on a key transform structure through Guadalcanal, and
the Mbetilonga Copper gold project, just 15 km south of Honiara, the national
capital.

The program is augmented by the services of two drilling contractors operating a
total of three rigs.

The past year has seen Solomon Gold focus its exploration efforts primarily on
the Sutakiki prospect in the Sutakiki Valley on the northern side of Guadalcanal
and the Mbina and Chikora prospects in the Koloula Valley on the southern side
of Guadalcanal. During the year the Company perfected access into the Kuma
Valley to the east of the Koloula Valley and conducted stream sediment and
mapping and sampling programs over areas of extensive mineralisation. No work
was conducted on the Mbetilonga prospect area and the Poleo application to the
west of Koloula was relinquished.

In addition the Company applied for several new tenement areas.  One of these
has been granted.

The Fauro Island area was applied for over an extinct volcanic caldera which has
yielded significant surface and drilling results for gold in the past, in
programs conducted by other explorers. Solomon Gold's relationships with local
landowners are expected to deliver access to the area in the near future. Fauro
is located in the Western Provinces immediately south of the Papua New Guinea
border and the giant Bougainville copper gold porphyry. The Fauro project has
potential for both epithermal gold and porphyry style copper gold deposits.

Three exploration licence areas prospective for Nickel laterites on east
Guadalcanal, and Makira and Ngella in the Floridas island group were applied
for.

It is the current intention of Solomon Gold to define a world class gold or
porphyry copper gold deposit and ultimately bring it to production. Solomon Gold
has access to the required exploration development and financing skills to
achieve this goal.

Drilling

To date Solomon Gold has completed a total of 8,701 metres of drilling on the
Guadalcanal field operations as follows:

                Mbetilonga                          909 metres (5 holes)

                Koloula (Mbina and Chikora )        1,754 metres (3 holes)

                Sutakiki                            6,038 metres (11 holes)

                Total                               8,701 metres


Of this, 4,480 metres were completed during the year under review and 3,156
metres were completed since the end of the financial year.

Solomon Gold expects to increase the drilling rate in the forthcoming year as a
result of application of improved drilling practices in unconsolidated surface
landslide material, increased frequency of double or extended drilling shifts
and enhanced operational standards from the drilling companies.

Mapping and sampling

87 stream sediment, 1,174 soil and 1,103 rock chip samples were collected during
the year. The bulk of this activity was centred on the Sutakiki Valley where the
Company made a significant gold discovery.

Logistics

The establishment of three field camps at Sutakiki, Mbina and Mbetilonga has
enabled the continuance of field operations on a full effort basis. The Company
maintains a full communications and accommodation service at the Sutakiki Camp,
which is also the geological base for the Sutakiki field program.

Personnel

During the year Solomon Gold employed a number of local Solomon Islands
personnel on the project in positions including field hands, cooks, logistics
officers , laboratory technicians, book keepers and clerks receptionists and
geologists. The integration of local communities and employees has been a key
element of Solomon Gold's uniquely constructive approach to community relations
on Guadalcanal.

The attention to local management issues by Mr Nicholas Biliki, a Solomon
Islander who is the Company's manager of administration and community affairs on
the island, has been key in the achievement of Solomon Gold's unprecedented
access to field areas on Guadalcanal.

Law and Order

Law and order has been maintained in Solomon Islands throughout the year. The
Regional Assistance Mission to Solomon Islands ('RAMSI') continued to provide
support to the Country in accordance with resolutions of the Solomon Islands
Government. Australia has indicated that it intends to provide an amount of some
AUD 800 million for the period 2004 to 2009 and there is no indication of any
reduction in the commitment to RAMSI or Solomon Islands in the near future.

Sutakiki

During the year under review Solomon Gold focused its efforts on the Sutakiki
Valley, 30 km south east of the capital of Solomon Islands, Honiara.

The Sutakiki Valley presented as one of the most important targets for Solomon
Gold, based on its presence on the Guadalcanal transform structure, and the
retrieval by Newmont, during a brief field visit in 1989, of stream sediment
samples up to 73 ppb gold and float samples in the river up to 1.8 g/t gold.
Final reports by Newmont rated the porphyry prospectivity of the headwaters
highly. After a period of establishment of Solomon Gold's credentials with the
local peoples of the Sutakiki Valley, Solomon Gold gained access to the area and
followed up the Newmont results. The source of the gold anomalism was located up
the River in an outcrop which returned 85 m @ 0.8 g/t gold in composite 5 metre
channel samples in a mineralised porphyry. Landslides further exposed the
mineralised porphyry, and rock chip sampling of a complex vein system exposed
returned up to 1000 g/t gold. Excluding this high sample the veins averaged 7 g/
t gold and the first drill hole was located underneath this discovery outcrop.
The drillhole SK01 returned 309 metres at a grade of 0.5g/t gold and 0.16%
copper. Further drilling in the Sutakiki Valley up to SK010 did not identify any
further significant gold mineralised zones. Mapping and sampling in the area
identified north westerly trending fault systems, with zones of intense shearing
and mineralisation grading up to 3.5 g/t gold in Valehailala Creek, just 500
metres north of the discovery zone in the Sutakiki River. The Company also
discovered open space veins with similar grades outcropping beside the fault,
with an east west or east south east orientation.

Drillhole SK 011 was drilled underneath these occurrences and resulted in the
discovery of intense sulphide mineralisation in the Sutakiki fault zone,
returning 32 metres @ 9.45 g/t gold from 108m depth including 10 metres @ 21 g/
t, including 1 metre @ 74 g/t gold. Subsequent inspection and reinterpretation
of airborne magnetic data collected in 1997 resulted in the identification of
structures evident in the magnetic data with the same orientation and position
as those observed in the field.

Solomon Gold has resolved a structural key for the mineralisation which
demonstrates that there are a number of locations nearby with similar potential
for high grade gold mineralisation.

At the time of this report the company was awaiting the receipt of assay results
from sampling programs along the strike extent of the Suta Fault. Rock chip
sampling from Vurakindi Creek, 1 km to the west returned 3.5 g/t from breccias
exhibiting similar characteristics to the mineralisation in SK11.



In the next 8 months Solomon Gold intends to drill nine holes from each of 4
drill pads along an 800 metre extension of the Suta Fault, to a depth of 300
metres in order to test the resource potential of the recent discovery. The
Company intends after completion of the current program in the Koloula Valley at
the Mbina and Chikora prospects, to place an additional drilling rig on the
Sutakiki Prospect.

Mbina

The Mbina Prospect is located in the Koloula River Valley 4 km to the south west
of Sutakiki. At Mbina, complex porphyry intrusions are mineralised with copper
and gold over long distances. Channel sampling of exposures in the Koloula River
have previously returned up to 125 metres @ 0.23 % copper and 0.5 g/t gold. The
mineralisation occurs in a 2km by 300m wide zone on the east side of the Mbina
copper porphyry system. During the year drilling at Mbina in KL01 intersected
numerous narrow veins trending east south east which returned grades up to 6.7 g
/t over 1 metre sections. Drillhole KL02 has been drilled from the same pad as
KL01 and assays are awaited. KL03 is at the time of this report being drilled
from the same pad to the north west to test western extensions of the vein
system encountered in KL01 and a magnetic zone interpreted to be a mineralised
porphyry. Additional mapping and sampling has outlined several other drill
targets which the Company plans to drill over the next six months.

Chikora - Vurakave.

The Chikora copper molybdenum porphyry prospect is located 2 km south west of
Mbina in the Koloula valley and 6 km south west of Sutakiki.

At Chikora, copper and molybdenum mineralisation is evident over a 2.5 x 1.5 km
zone in which soil sampling by Utah International  in the 1970s and Solomon
Gold's subsidiary ARM in the late 1990s and augmented by recent sampling, has
returned values over 3000 ppm copper. Molybdenum is also present and has been
assayed up to 0.17% in rock chip samples at the Vurakave prospect on the north
east of the Chikora grid. Mapping and rock chip sampling at Vurakave has
identified intermittent zones of quartz veining containing visible molybdenite
over a 600m x 200m zone of interest.

Utah drilled 13 short vertical holes into Chikora in the 1970s. The best hole
was CH08 returning 115m @ 0.34% Copper and 142 ppm Molybdenum from 152m to 266m
and showing mineralisation strengthening with depth, Maximum values of 0.76% Cu
and 820ppm Molybdenum (0.082%) were intersected in the zone near the end of the
hole. The hole was drilled vertically and is believed to have missed the
sub-vertical quartz copper molybdenum sulphide veins outcropping in the Chikora
prospect area. The current Solomon Gold hole CK01 is inclined so as to better
test the steeply dipping veins in the area.

Solomon Gold has reinterpreted all the existing data and designed and commenced
a two hole drilling program to test the area of high copper anomalies in soils
and a drill intersection by Utah Mining in 1974. The first hole, CK01,
penetrated 44 m of loose surface material before entering disseminated 1%
bornite (copper sulphide) mineralisation in a porphyry intrusive. CK01 at the
time of this report was at a depth of 361 metres and drilling to 600 metres. The
hole was in a mineralised biotite porphyry containing frequent copper sulphide
veins.

The Chikora prospect is situated at a vertical elevation of between 650 and
1,000 metres above sea level, and only 6 km from the south coast of Guadalcanal.
The Chikora prospect is believed by Solomon Gold geologists to represent a
deeper, copper and molybdenum phase of the gold mineralisation evident at higher
elevations at the Mbina  (850 to 1,100 m asl ) and Sutakiki gold and copper
prospects (950 to 1,300 m asl).

Kuma

During the year, the Company gained access to the Kuma River Valley to the east
of the Koloula Valley where reconnaissance had showed extensive alteration of
the regionally dominant Suta Volcanics. The Company conducted a regional
sampling and mapping program which did not identify any significant mineralised
zones in outcrop. A stream sediment maximum of 0.43 g/t was encountered which is
considered to be highly anomalous, however the source of that gold has not yet
been identified. The area is still considered to offer considerable
prospectivity and will be reassessed in the forthcoming year.

Mbetilonga

During the year, the Company conducted further mapping sampling and drilling
programs at Mbetilonga, 15 kms south of Honiara. Extensive surface
mineralisation has not yet led to a significant drilling intersection. The
Company has tested several target areas at Mbetilonga, with five drill holes of
which two, MB-04 at Hambusimaloso and MB05, at Hahala were drilled in the
current year. Neither hole intersected significant mineralisation.

The Mbetilonga tenement area covers more than 50 km2 of prospective volcanic,
intrusive and altered sedimentary rocks, widely anomalous in copper. At
Hambusimaloso, copper anomalism over 0.1% copper in soil samples extends over
2km2 and peaks at over 13.5% copper in rock chip samples. Magnetic anomalies
coincident with porphyry intrusions at Hahala, 2 km north of Hambusimaloso, did
not yield significant gold mineralisation.

Additional important targets at Mbetilonga are at Vuralanggoma on the eastern
side of the tenement and at Vatuchichi in the northern section of the
mineralised area. Solomon Gold intends to conduct further drilling at
Vuralanggoma and Vatuchichi in the forthcoming year.  At Vatuchichi drilling is
planned to test magnetic anomalies underneath a limestone cover and at the
outcropping mineralisation, where epithermal gold mineralisation is recorded up
to 51 g/t gold in rock chip samples. At Vuralanggoma a hole drilled by Utah in
the 1970s intersected a 38 metre thick zone at a grade of 0.34% copper and
Solomon Gold plans to confirm and extend the previous results.

Corporate

Since the end of the year, Solomon Gold has appointed Hanson Westhouse plc as
Broker and RFC Corporate Finance as Nominated Advisor to the Company.

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.

Risks and Uncertainties

The Directors consider that the factors and risks described below are the most
significant.

Use of Funds

The Company has prepared detailed budgets setting out the way in which it
proposes its funds from time to time. However, the quantum and timing of
expenditure will necessarily be dependent upon the continued positive results
from the Company's ongoing exploration activities on the Tenements and an
ongoing acceptable state of law and order. As the Company conducts its drilling
and exploration programs, it is possible that results and circumstances may
dictate a departure from the existing budget at the time. Further, the Company
may, from time to time as opportunities arise, utilise part of its financial
resources (including the funds raised as part of the Placing) to participate in
additional opportunities that arise and fit within the Company's broader
objectives, as a means of advancing shareholder value.

No production history

The Group currently has no producing properties and its ultimate success may
depend on its operating ability to generate cashflow from producing properties
in the future. The Group has not generated any revenue to date and there is no
assurance that it will do so in the future.

General exploration and extraction risks

There is no certainty that the Company will identify commercially mineable
reserves in the Tenements. The Company is currently in the early stages of
exploration. The exploration for and development of mineral deposits involves
significant uncertainties and the Group's operations will be subject to all of
the hazards and risks normally encountered in such activities and in addition,
several unusual risks. These hazards and risks include unusual and unexpected
geological formations, rock falls, landslides, flooding and other climatic
conditions, aircraft or boat accidents and injury or death in civil unrest any
one of which could result in damage to, or destruction of, the Company's
facilities, damage to life or property, environmental damage or pollution and
legal liability which could have a material adverse impact on the business,
operations and financial performance of the Company. Although precautions to
minimise risk will be taken, even a combination of careful evaluation,
experience and knowledge may not eliminate all of the hazards and risks. There
are no key man insurance policies taken out on any of the Company's personnel.

The Company's exploration models and the bases for its search for potential
resources are subject to variation or alternate interpretation from time to time
as a result of the receipt of new exploration data and interpretation thereon
which may not be evident to the Company or the Directors at the date of this
document.

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.

As is common with all exploration ventures, there is also uncertainty and
therefore risk associated with the Company's operating parameters and costs
which can be difficult to predict and are often affected by factors outside the
Company's control. Few properties which are explored are ultimately developed
into producing assets. There can be no guarantee that the estimates of
quantities and grades of gold and minerals disclosed will be available for
extraction and sale. With all natural resources operations there is uncertainty
and, therefore, risk associated with operating parameters and costs resulting
from the scaling up of other extraction methods tested in pilot conditions.
Natural resources exploration is speculative in nature and there can be no
assurance that any potential mineral deposits will be discovered.

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.

Operational considerations

The Company's operational targets are subject to the completion of planned
operational goals on time and according to budget and are dependent on the
effective support of the Company's personnel, systems, procedures and controls.
Any failure of these may result in delays in the achievement of operational
targets with a consequent material adverse impact on the business, operations
and financial performance of the Company.

The locations of all of the Company's current exploration activities dictate
that climatic conditions have an impact on operations and, in particular, severe
weather, including cyclones, could prevent access to the Tenements and disrupt
the delivery of supplies, equipment and fuel. It is therefore possible that
exploration and extraction activity levels might fluctuate. Unscheduled
interruptions to the Company's operations due to mechanical or other failures,
or industrial relations-related issues, or problems with the supply of goods or
services could have a serious impact on the financial performance of those
operations.  Being located on the Pacific ''Rim of Fire'', Solomon Islands are
exposed to the risk of damage from earthquakes and tsunami.

Operations in Solomon Islands will expose the Company's staff, contractors and
consultants to a variety of tropical diseases and related risks. These include
but are not limited to malaria and other numerous skin diseases. The Company may
be exposed to liabilities as a result of this.

To mitigate potential access and related issues, the Company has entered into a
helicopter services agreement.

There are also operational risks associated with frequent power outages that
occur in Solomon Islands' capital, Honiara. These regular outages make the
transacting of business in Solomon Islands difficult, and may have an adverse
impact on the ability of the Company to achieve its objectives in a timely
manner.

Personnel

The Company has a small management team and the loss of any key individual could
affect the Group's business. Additionally, the Company will be required to
secure other personnel to facilitate its exploration programme on each of the
Tenements. Any inability to secure appropriate or retain current personnel may
have a materially adverse impact on the business and operations of the Company.

Economic, political, judicial, administrative, taxation or other regulatory
factors

The Company may be adversely affected by changes in economic, political,
judicial, administrative, taxation or other regulatory factors, in the areas in
which the Company (through its subsidiary ARM) operates and holds its major
assets.

No assurance can be given as to the future policies of any new Government that
might be elected. Any policy changes of any new Government may have a material
adverse impact on the business, operations and financial performance of the 
Company.

Tenements and regulatory environment

There is no guarantee that if ARM applies for a mining lease in respect of
minerals it has discovered within the Tenements that it will be granted one. The
grant of a mining lease is subject to the exercise of ministerial discretion and
no guarantee can be given as to the favourable exercise of any such discretion.
There is no guarantee of the terms of any mining lease. The exploration and
extraction activities of ARM are subject to various laws governing prospecting,
development, production, taxes, labour standards and occupational health, site
safety, toxic substances, environmental and other matters. Although the
Directors believe that ARM's exploration activities are currently carried out in
accordance with all applicable rules and regulations, no assurance can be given
that new rules and regulations will not be enacted or that existing or future
rules and regulations will not be applied in a manner which could limit or
curtail exploration, production or development. Amendments to current laws and
regulations governing operations and activities of exploration and extraction,
or more stringent implementation thereof, could have a material adverse impact
on the business, operations and financial performance of the Company.

Title matters

Whilst the Company has the benefit of granted PLs and has diligently
investigated its title to, and rights and interests in, the Tenements, there is
no absolute guarantee that such title, rights and interests will be held valid
in the event of any undetected defects. If a defect does exist it is possible
that ARM may lose all or part of its interest in those Tenements to which the
defect relates.

The grant and future renewals of PLs, as the case may be, are governed by the
requirements and restrictions set out in the Mining Act. Whilst the Company
believes it is entitled to rely upon all the actions of the Minerals Board and
the Minister as being valid, compliance with the requirements and restrictions
under the Mining Act may be open to differing interpretations which, in the case
of an adverse interpretation, may have a material adverse effect on the
Company's title.

Volatility of prices of gold and copper

The market prices of gold and copper are volatile and are affected by numerous
factors which are beyond the Company's control. These include international
supply and demand, the level of consumer product demand, international economic
trends, currency exchange rate fluctuations, interest rates, inflation, global
or regional political events and international events as well as a range of
other market forces.  Sustained downward movements in gold or copper prices
could render less economic, or uneconomic, some or all of the exploration
activities to be undertaken by the Group.

Currency fluctuations

The future value of the Ordinary Shares may fluctuate in accordance with
movements in the foreign currency exchange rates. For example, it is common
practice in the mining industry for mineral production revenue to be denominated
in USD, although some but not all of the costs of exploration production will be
incurred in USD and not all of the ore or metal obtained from the Tenements will
be sold in USD denominated transactions.

Uninsured risks

The Company, as a participant in exploration and potential extraction
activities, may become subject to liability for hazards that cannot be insured
against or against which it may elect not to be so insured because of high
premium costs. Furthermore, the Company may incur a liability to third parties
(in excess of any insurance cover) arising from negative environmental impact or
other damage or injury.

Additional requirements for capital

Substantial additional financing may be required if the Company is to be
successful pursuing its ultimate strategy. No assurances can be given that the
Company will be able to raise the additional finance that it may require for its
anticipated future operations. Copper and gold prices, environmental
rehabilitation or restitution, revenues, taxes, transportation costs, capital
expenditures, operating expenses and geological results and the political
environment are all factors which will have an impact on the amount of
additional capital that may be required. Any additional equity financing may be
dilutive to investors and debt financing, if available, may involve restrictions
on financing and operating activities. There is no assurance that additional
financing will be available on terms acceptable to the Company or at all. If the
Company is unable to obtain additional financing as needed, it may be required
to reduce the scope of its operations or anticipated expansion, forfeit its
interest in some or all of the Tenements, incur financial penalties or reduce or
terminate its operations.

Landowner issues

In the case of mining and exploration operations in Solomon Islands, there is a
complex land tenure structure and while ARM's PLs and Access Agreements 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. The Company
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.

The Company has also procured Access Agreements for areas within the Tenements
after the grant of the Tenement. Whilst the Company 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 the Company's
ability to do so.

Whilst the Company has the Access Agreements with landowners covering the
majority of the prospective areas identified by the Company 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 the
Company to secure the benefits of all of 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, the Company will not
be permitted to explore in areas nominated by the landowners as reserved or
protected areas under section 4(2) of the Mining Act. Whilst the Company 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 the Company to identify these areas, or a claim by
landowners that reserved or protected areas exist over areas identified by the
Company as prospective, may have a material adverse effect on the ability of the
Company to conduct its exploration programme in the manner identified in this
document.

Sovereign risk and civil disobedience

The Company intends to make significant investment of capital in Solomon
Islands. The conduct of exploration and mining-related activities and the
investment of capital and placement of personnel in Solomon Islands are
potentially subject to a degree of sovereign risk and civil disobedience
generally. A decay in law and order in Solomon Islands may expose the Company to
un-budgeted costs delays and other potential damage and loss.

Environmental risks

Inherent with mining operations is an environmental risk. The legal framework
governing this area is constantly developing. Thus the Company is unable to
fully ascertain any future liability that might arise from new law or regulation
although such regulation is typically strict and may impose severe penalties.

The proposed activities of the Company, as with any exploration, may have
environmental impact which may result in unbudgeted delays, damage, loss and
other costs and obligations including, without limitation, rehabilitation and/or
compensation. Additionally, there is a risk that the Company's operations and
financial position may be adversely affected by the actions of environmental
groups or any other group or person opposed in general to the Company's
activities and in particular the proposed exploration and mining by the Company
within Solomon Islands.

Taxation

In addition to the normal level of corporation tax imposed on all companies,
mining companies are required to pay government royalties, indirect taxes and
other imposts which generally relate to revenue or cash flows. Industry
profitability can be affected by changes in government taxation policies.

ARM carries on business in Solomon Islands and will be subject to income and
other taxes in that country. The rates of taxation that may apply to ARM on
income and other profits may be higher than the rates that apply in the United
Kingdom or Australia. No guarantee can be given that these rates will not vary.

FINANCIAL REVIEW

Equity

During the 2007 accounting year there was no change to the Company's issued
share capital.

On 12 September 2006 the Company issued 650,000 unlisted share options to
directors, employees and consultants of the Company. The options were issued
free of charge and are exercisable at prices between 50 pence and 100 pence per
ordinary share. The period during which these share options can be exercised is
between 1 January 2007 and 1 January 2011.

At 30 June 2007 the Company had 26,825,001 ordinary shares, 2,389,997 unlisted
options and 326,400 unlisted warrants on issue.  A further 500,000 unlisted
options (£0.20 expiring 8 November 2010) are being issued to the Company's
NOMAD.

At the date of this report, the Company had 26,825,001 ordinary shares,
1,689,997 unlisted options and 326,400 unlisted warrants on issue.

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.

DIRECTORS

The Board consists of one Executive Director and three Non-Executive Directors.

Cameron Wenck
(Non-Executive Chairman)

Cameron Wenck (46), appointed 22 November 2005, is a financial adviser and
company director with 18 years' experience in the financial services industry.
Earlier in his career he worked for the London stockbrokers Scrimgeour Vickers
and chartered accountants PricewaterhouseCoopers. He has a Bachelor of Commerce,
a Diploma of Financial Planning, is a Fellow of the Australian Society of
Accountants and a Certified Financial Planner.

Nicholas Mather
(Chief Executive Officer)

Nicholas Mather (50), appointed 11 May 2005, graduated in 1979 from the
University of Queensland with a B.Sc. (Hons, Geology). He has 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 recapitalization and requotation
on the ASX in 2003.

Nicholas Mather is Chief Executive of D'Aguilar Gold Ltd, a non-executive
director of ASX-listed Bow Energy Limited and TSX-V listed Waratah Coal Inc.

Brian Moller
(Non-Executive Director)

Brian Moller (49), 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 D'Aguilar Gold Ltd and Platina Resources Ltd and TSX-V listed WCB Capital
Ltd.

Dr Robert Weinberg
(Non-Executive Director)

Rob Weinberg (60), appointed 22 November 2005, gained his doctorate in geology
from Oxford University in 1973. He has more than 30 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.

Prior to his current activities he was Managing Director, Institutional
Investment at the World Gold Council, and a Director of Gold Bullion Securities.
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 Societe Generale
and was head of the mining team at James Capel & Co. He was formerly marketing
manager of the gold and uranium division of Anglo American Corporation of South
Africa Ltd.

Dr Weinberg is a non-executive Director of AIM listed Falkland Gold and Minerals
Ltd, ASX listed Kasbah Resources Ltd and Medusa Mining Ltd, a company listed on
the ASX, AIM and the Frankfurt Stock Exchange

SECRETARY

Mr Duncan Cornish was the Secretary of the Company during the period and until
the date of this report.

Duncan Cornish
(Company Secretary and Chief Financial Officer)

Duncan Cornish (40) has more than ten years experience in the accountancy
profession both in England and Australia, mainly with the accountancy firms
Ernst and Young and PricewaterhouseCoopers. He has extensive experience in all
aspects of company financial reporting, corporate regulatory and governance
areas, business acquisition and disposal due diligence, capital raising and
company listings and company secretarial responsibilities.

Mr Cornish is a Chartered Accountant. He holds a Bachelor of Business
(Accounting) and is a member of the Australian Institute of Chartered
Accountants.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the annual 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
financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union. The financial statements are
required to give a true and fair view of the state of affairs of the company and
the group and of the profit or loss of the group for that period. In preparing
these financial statements the directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgments and estimates that are reasonable and prudent;
  • prepare the financial statements on the going concern basis unless it is
    inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
company and the group and enable them to ensure that the financial statements
comply with the Companies Act 1985. They are also responsible for safeguarding
the assets of the group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate
and financial information included on the company's website. Legislation in the
United Kingdom governing the preparation and dissemination of the financial
statements and other information included in annual reports may differ from
legislation in other jurisdictions.

DIRECTORS' REPORT

The directors present their annual report and audited financial statements for
the year ended 30 June 2007.

PRINCIPAL ACTIVITIES

The principal activities of Solomon Gold plc (the 'Company') and its
subsidiaries (together 'Solomon Gold' or the 'Group') are gold and mineral
exploration in Solomon Islands. 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 Chairman's Statement and
Operations Review.

The principal activity of the Company is that of a holding company.

BUSINESS REVIEW

A review of the Group's business and future developments is set out in the
Operations review and Financial review.

LAND AND BUILDINGS

The directors are of the view that the book value and market value of land and
buildings are not materially different.  The land and buildings were acquired
during 2007 and no independent valuation has been obtained since its
acquisition.

GOING CONCERN

In common with many exploration companies, the Company raises finance for its
exploration and appraisal activities in discrete tranches.  Further funding is
raised as and when required.  When any of the Group's projects move to the
development state, specific financing will be required.

CURRENCY

The functional and presentational currency is Australian dollars ('A$') and all
amounts presented in the Directors' Report and financial statements are
presented in Australian dollars unless otherwise indicated.

RESULTS

The Group's consolidated loss for the period was A$1,201,646 (2006: A$652,322).

CHANGES IN SHARE CAPITAL DURING 2007

A statement of changes in the share capital of the Company is set out in note 15
to the financial statements.

DIVIDENDS PAID OR RECOMMENDED

The directors do not recommend the payment of a dividend.

FINANCIAL INSTRUMENTS

The Company does not undertake financial instrument transactions that are
speculative or unrelated to the Company's or Group's activities. The Company's
financial instruments consist mainly of deposits with banks, accounts payable,
and loans to subsidiaries. Further details are provided in note 18 to the
financial statements.

POLICY AND PRACTICE ON PAYMENT OF CREDITORS

The Group policy on the payment of creditors is to settle bills in accordance
with the terms agreed with suppliers.

At the year end there were 7 days (2006: 32 days) worth of purchases in Group
trade creditors and 14 days (2006: 21 days) worth of purchases in Company trade
creditors.

SUBSEQUENT EVENTS

On 23 August 2007, 700,000 unlisted share options in Solomon Gold plc expired as
a result of employee resignations.

On 8 November 2007, Hanson Westhouse Limited was appointed as Broker to the
Company.

On 8 November 2007, RFC Corporate Finance Ltd was appointed as Nominated Advisor
to the Company.  As part of its appointment, RFC will be issued 500,000 unlisted
options at an exercise price of £0.20 expiring on 8 November 2010.

DIRECTORS AND DIRECTORS' INTERESTS

The directors who held office during the period were as follows:


Cameron Wenck                Non-Executive Chairman
Nicholas Mather              Chief Executive Officer
Brian Moller                 Non-Executive Director
Robert Weinberg              Non-Executive Director
David Jelley                 Executive Director - Operations
                             (resigned 23 May 2007)

The Company has a Directors' and Officers Liability insurance policy with AFM
Insurance Brokers Pty Ltd for all its directors. The policy indemnifies
directors up to a level of A$5 million.

The directors who held office at the end of the financial year held interests in
the ordinary shares and unlisted options of the Company as shown in the tables
below.

On 12 September 2006, the Company issued share options exercisable at prices
between 50 pence and 100 pence per ordinary share to the following directors:
Cameron Wenck 75,000, Brian Moller 75,000 and Robert Weinberg 75,000. The period
during which these share options can be exercised is between 1 January 2007 and
1 January 2011.


Shares held                       At 30 June 2007          At 30 June 2006
Nicholas Mather                       565,159                  565,159
Brian Moller                            92,535                   92,535
Cameron Wenck                         212,045                  212,045
Robert Weinberg                        27,000                     -


Share options held             At 30 June 2007     At 30 June 2006     Option Price      Exercise Period
Nicholas Mather                    233,333             233,333              50p        01/01/07 - 01/01/10
                                   233,333             233,333              75p        01/01/08 - 01/01/11
                                   233,334             233,334             100p        01/01/08 - 01/01/11
Cameron Wenck                      25,000                 -                 50p        01/01/07 - 01/01/10
                                   25,000                 -                 75p        01/01/08 - 01/01/11
                                   25,000                 -                100p        01/01/08 - 01/01/11
Brian Moller                       25,000                 -                 50p        01/01/07 - 01/01/10
                                   25,000                 -                 75p        01/01/08 - 01/01/11
                                   25,000                 -                100p        01/01/08 - 01/01/11
Robert Weinberg                    25,000                 -                 50p        01/01/07 - 01/01/10
                                   25,000                 -                 75p        01/01/08 - 01/01/11
                                   25,000                 -                100p        01/01/08 - 01/01/11


MAJOR SHAREHOLDERS

The Company had been notified of the following interests in shares held as at 30
November 2007:


Major Shareholders                                  Number of Shares         % of Issued Capital
Credit Suisse Client Nominees (UK) Ltd                 5,761,171                    21.48
Tenstar Trading Limited                                2,225,766                     8.30
Pershing Keen Nominees Limited                         1,228,000                     4.58
Pershing Keen Nominees Limited                         1,110,959                     4.14
RAB Special Situations (Master) Fund Limited            852,103                      3.18



In addition, the Company had been notified (in accordance with the Disclosure
and Transparency Rules, 'DTR') of the following interests in Shares held as at
10 December 2007:


Major Shareholders                                     Number of Shares       % of Issued Capital
Universities Superannuation Scheme Limited                1,000,000                  3.73
Fidelity International Limited                            2,000,000                  7.45


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
Revised Combined Code issued by the Financial Reporting Council in July 2003 (as
appended to the Listing Rules of the Financial Services Authority) so far as is
practicable for a company of Solomon Gold's size.

The board of Solomon Gold plc is made up of one executive director and three
non-executive directors.  Cameron Wenck chairs the Board and Nicholas Mather is
the Company's Chief Executive.  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 business or other relationship with the Group.
The structure of the Board ensures that no one individual or group is able to
dominate the decision making process.

The Board ordinarily meets on a monthly basis providing effective leadership and
overall control and direction of the Group's affairs through the schedule of
matters reserved for its decision.  This includes the approval of the budget and
business plan, major capital expenditure, acquisitions and disposals, risk
management policies and the approval of the financial statements.  Formal
agendas, papers and reports are sent to the directors in a timely manner, prior
to Board meetings.  The Board also receives summary financial and operational
reports before each Board meeting.  The Board delegates certain of its
responsibilities to management, who have clearly defined terms of reference.

All directors have access to the advice and services of the Company Secretary,
who is responsible for ensuring that all Board procedures are followed.  Any
director may take independent professional advice at the Company's expense in
the furtherance of his duties.

One third of the directors retire from office at every Annual General Meeting of
the Company.  In general, those directors who have held office the longest time
since their election are required to retire.  A retiring director may be
re-elected and a director appointed by the Board may also be elected, though in
the latter case the director's period of prior appointment by the Board will not
be taken into account for the purposes of rotation.

The Audit Committee, which meets not less than twice a year and 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 auditors to
discuss accounts and the Group's internal controls.  The Committee is chaired by
Brian Moller, the other members being Cameron Wenck and Robert Weinberg.  The
Audit committee has reviewed the systems in place and considers these to be
appropriate.

The Remuneration Committee, which meets at least once a year and is responsible
for making decisions on directors' remuneration packages, is chaired by Cameron
Wenck.  Brian Moller and Robert Weinberg are the other committee members.

Remuneration of executive directors is established by reference to the
remuneration of executives of equivalent status both in terms of the level of
responsibility of the position and by reference to their job qualifications and
skills.  The Remuneration Committee will also have regard to the terms which may
be required to attract an executive of equivalent experience to join the Board
from another company.  Such packages include performance related bonuses and the
grant of share options.

The Board attaches importance to maintaining good relationships with all its
shareholders and ensures that all price sensitive information is released to all
shareholders at the same time, in accordance with London Stock Exchange rules.
The Company's principal communication with its investors is through the Annual
General Meeting and through the annual report and accounts and the interim
statement.

The 2007 Annual General Meeting will provide an opportunity for the Chairman 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 and is
chaired by Brian Moller, the other members being Nicholas Mather and Robert
Weinberg.


POLITICAL AND CHARITABLE CONTRIBUTIONS

The Group made no political or charitable donations in the year.
                                                  
AUDITORS

A resolution for the reappointment of PKF (UK) LLP will be proposed at the
forthcoming annual general meeting.

Provision of information to auditors

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 auditors are 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 auditors are aware of the
    information.


This report was approved by the board on 10 December 2007 and signed on its
behalf.

Duncan Cornish
Company Secretary
Level 5, 60 Edward Street
Brisbane QLD 4000
Australia


INDEPENDENT AUDITORS' REPORT

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOLOMON GOLD PLC

We have audited the group and parent company financial statements ('the
financial statements') of Solomon Gold plc for the year ended 30 June 2007 which
comprise the consolidated income statement and the consolidated and company
balance sheets, cash flow statements and statements of changes in shareholders'
equity and the related notes. The financial statements have been prepared under
the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the annual report and the
financial statements in accordance with applicable law and International
Financial Reporting Standards ('IFRSs') as adopted by the European Union are set
out in the statement of directors' responsibilities.

Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true
and fair view and have been properly prepared in accordance with the Companies
Act 1985. We also report to you if, in our opinion, the information given in the
directors' report is consistent with the financial statements.   The information
in the directors' report includes that specific information presented in the
chairman's statement, operations review and financial review that is cross
referenced from the principal activities and business review section of the
directors' report.

In addition we report to if, in our opinion, the company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and other transactions is not disclosed.

We read other information contained in the annual report and consider whether it
is consistent with the audited financial statements. The other information
comprises only the directors' report, the chairman's statement, the operations
review and financial review. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend to any other
information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the group's and company's circumstances, consistently applied and adequately
disclosed.

We planned and performed our audit so as to obtain all the information and
explanations we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.

Opinion

In our opinion:

  • the group financial statements give a true and fair view, in accordance
    with IFRSs as adopted by the European Union, of the state of the group's
    affairs as at 30 June 2007 and of its loss for the period then ended;

  • the parent company financial statements give a true and fair view, in
    accordance with IFRSs as adopted by the European Union as applied in
    accordance with the provisions of the Companies Act 1985, of the state of
    the parent company's affairs as at 30 June 2007;

  • the financial statements have been properly prepared in accordance with
    the Companies Act 1985; and

  • the information given in the directors' report is consistent with the
    financial statements.

Emphasis of matter - going concern

In forming our opinion, which is not qualified, 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 concern.  As explained
in note 1 to the financial statements, the company raises finance for the
group's exploration and appraisal activities in discrete tranches, and will need
to raise further funds in the near future to continue with its planned
exploration programme and to provide working capital.  The future of the group
depends on the ability of the company to raise such finance.  This indicates the
existence of a material uncertainty which may cast significant doubt about the
company and the group's ability to continue as a going concern. If the company
is unable to secure such additional funding, this may have a consequential
impact on the carrying value of the related exploration assets and the
investment of the parent company.  The financial statements do not include the
adjustments that would result if the group was unable to continue as a going
concern.

PKF (UK) LLP
Registered Auditors
London, UK


10 December 2007

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

                                                                                     Group        Group
                                                                         Notes       2007          2006
                                                                                      A$            A$
Revenue                                                                                      -            -
Cost of sales                                                                                -            -
Gross profit                                                                                 -            -
Other income                                                                             3,302       72,924
Administrative expenses                                                            (1,552,102)    (908,064)
Exploration costs written off                                                                -     (10,000)
Operating loss                                                                     (1,548,800)    (845,140)
Finance income                                                             6           347,154      192,818
Loss before and after tax                                                  3       (1,201,646)    (652,322)
Loss for the period                                                                (1,201,646)    (652,322)


Basic and diluted loss per ordinary share
- Basic and diluted                                                        8          (0.0448)     (0.0431)



CONSOLIDATED AND COMPANY BALANCE SHEETS AS AT 30 JUNE 2007


                                                        Group         Group       Company       Company
                                      Notes              2007          2006          2007          2006
                                                           A$            A$            A$            A$
Assets
Property, plant and equipment          10             273,969        71,189         1,414         2,173
Intangible assets                      11           6,799,726     2,201,948             -             -
Investment in subsidiary                9                   -             -    10,516,194     2,248,885
Total non-current assets                            7,073,695     2,273,137    10,517,608     2,251,058
Other receivables and prepayments      13             381,724       257,677       243,997       220,228
Cash and cash equivalents              14           3,450,530     9,077,456           937     9,055,488
Total current assets                                3,832,254     9,335,133       244,934     9,275,716
Total assets                                       10,905,949    11,608,270    10,762,542    11,526,774

Equity
Share capital                          15             631,679       631,679       631,679       631,679
Share premium                          15          10,752,408    10,752,408    10,752,408    10,752,408
Other reserves                                        849,251       389,874       849,251       389,874
Retained loss                                     (1,853,968)     (652,322)   (1,857,699)     (553,631)
Total equity                                       10,379,370    11,121,639    10,375,639    11,220,330

Liabilities
Trade and other payables               16             526,579       486,631       386,903       306,444
Total current liabilities                             526,579       486,631       386,903       306,444
Total liabilities                                     526,579       486,631       386,903       306,444
Total equity and liabilities                       10,905,949    11,608,270    10,762,542    11,526,774


The financial statements were approved and authorised for issue by the Board and
were signed in its behalf on 10 December 2007.


Nicholas Mather
Director                                                                             


STATEMENT OF CHANGES IN EQUITY


Group Statement of changes in shareholders' equity
                                                                                          
                                                                  Share 
                                       Share         Share       option    Warrants      Retained        
                                     capital       premium      reserve     reserve          loss         Total 
                           Note           A$            A$           A$          A$            A$            A$

Balance at 11 May 2005*                    -             -            -           -             -             -
Loss for the period                        -             -            -           -     (652,322)     (652,322)
New share capital                    631,679    12,879,279            -           -             -    13,510,958
subscribed
Share issue costs                          -   (2,126,871)            -           -             -   (2,126,871)
Value of options issued                    -             -      217,071           -             -       217,071        
to directors, employees
and consultants                                         
Value of warrants issued                   -             -            -     172,803             -       172,803
Balance at 30 June 2006              631,679    10,752,408      217,071     172,803     (652,322)    11,121,639
Loss for the period                        -             -            -           -   (1,201,646)   (1,201,646)
New share capital                          -             -            -           -             -             -
subscribed
Share issue costs                          -             -            -           -             -             -
Value of options issued                    -             -      459,377           -             -       459,377       
to directors, employees
and consultants                                          
Value of warrants issued                   -             -            -           -             -             -
Balance 30 June 2007         15      631,679    10,752,408      676,448     172,803   (1,853,968)    10,379,370


Company Statement of changes in shareholders' equity


                                                                  Share 
                                       Share         Share       option    Warrants      Retained        
                                     capital       premium      reserve     reserve          loss         Total 
                           Note           A$            A$           A$          A$            A$            A$

Balance at 11 May 2005*                    -             -            -           -             -             -
Loss for the period                        -             -            -           -     (553,631)     (553,631)
New share capital                    631,679    12,879,279            -           -             -    13,510,958
subscribed
Share issue costs                          -   (2,126,871)            -           -             -   (2,126,871)
Value of options issued                    -             -      217,071           -             -       217,071        
to directors, employees
and consultants                                         
Value of warrants issued                   -             -            -     172,803             -       172,803
Balance at 30 June 2006              631,679    10,752,408      217,071     172,803     (553,631)    11,220,330
Loss for the period                        -             -            -           -   (1,304,068)   (1,304,068)
New share capital                          -             -            -           -             -             -
subscribed
Share issue costs                          -             -            -           -             -             -
Value of options issued                    -             -      459,377           -             -       459,377       
to directors, employees
and consultants                                          
Value of warrants issued                   -             -            -           -             -             -
Balance 30 June 2007         15      631,679    10,752,408      676,448     172,803   (1,857,699)    10,375,639



* The Company was incorporated on 11 May 2005 with one subscriber share of
£0.0001.

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2007




                                                         Group         Group             Company         Company
                                            Note          2007          2006                2007            2006
                                                            A$            A$                  A$              A$
Cash flows from operating activities
Operating loss                                     (1,201,646)     (652,322)         (1,304,068)       (553,631)
Depreciation                                            28,955        12,290                 759             117
Share based payment expense                            459,377       217,071             459,377         217,071
Increase in other receivables and                    (124,046)     (253,587)            (23,793)       (220,228)
prepayments
Increase/(decrease) in trade and other                  39,947      (23,608)              80,483         145,865
payables
Forgiveness of loan liability                3               -      (72,924)                   -               -
Cash used in operations                              (797,413)     (773,080)           (787,242)       (410,806)
Net cash outflow from operating activities           (797,413)     (773,080)           (787,242)       (410,806)
Cash flows from investing activities
Acquisition of property, plant and                   (231,735)      (72,147)                   -         (2,290)
equipment
Acquisition of intangible assets                   (4,597,778)   (1,541,712)                   -               -
(exploration expenditure)
Loans advanced to subsidiary                                 -             -         (8,267,309)     (1,978,314)
Payment for subsidiaries net of cash                         -        17,497                   -               -
acquired
Net cash outflow from investing activities         (4,829,513)   (1,596,362)         (8,267,309)     (1,980,604)
Cash flows from financing activities
Proceeds from the issue of ordinary share                    -    13,240,362                   -      13,240,362
capital
Payment of issue costs                                       -   (1,793,464)                   -     (1,793,464)
Net cash inflow from financing activities                    -    11,446,898                   -      11,446,898
Net increase in cash and cash equivalents          (5,626,926)     9,077,456         (9,054,551)       9,055,488
Cash and cash equivalents at beginning of            9,077,456             -           9,055,488               -
period
Cash and cash equivalents at end of period           3,450,530     9,077,456                 937       9,055,488


To view the complete 2007 Annual Report, please visit the Company's website:
www.solomongold.com



Contacts:

Mr Duncan Cornish
Secretary
Tel:      [phone]
Email:  [e-mail]

Mr Stephen Weir
RFC Corporate Finance
Tel:      [phone]
Email:  [e-mail]


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