Final Results 2011 (Released in Text Form)

RNS Number : 7751T

Solomon Gold PLC

12 December 2011

Annual Report

For the year ended 30 June 2011

CORPORATE INFORMATION

DIRECTORS

Cameron Wenck (Non-Executive Chairman)

Nicholas Mather (Chief Executive Officer)

Brian Moller (Non-Executive Director)

Dr Robert Weinberg (Non-Executive Director)

John Bovard (Non-Executive Director)

COMPANY SECRETARY

Karl Schlobohm

REGISTERED OFFICE

10 Dominion Street, London EC2M2EE

United Kingdom

Registered Number 5449516

AUSTRALIAN OFFICE

Level 5, 60 Edward Street,

Brisbane QLD 4000

Phone: + 61 7 3303 0660

Fax: +61 7 3303 0681

Email: info@solomongold.com

Web Site: www.solomongold.com

AUDITOR

PKF (UK) LLP

Farringdon Place, 20 Farringdon Road

London EC1M 3AP

United Kingdom

NOMINATED ADVISOR

RFC Corporate Finance Ltd

Level 14, 19-31 Pitt Street

Sydney NSW 2000, Australia

BROKER

Fairfax IS

46 Berkeley Square

Mayfair

London W1J 5AT

United Kingdom

BANKERS

Macquarie Bank Ltd (Brisbane Branch)

300 Queen Street, Brisbane QLD 4000

Australia

SOLICITORS

Fox Williams

10 Dominion Street

London EC2M 2EE

United Kingdom

AUSTRALIAN SOLICITORS

HopgoodGanim

Level 8, Waterfront Place

1 Eagle Street,

Brisbane QLD 4000, Australia

REGISTRARS

Computershare Investor Services plc

The Pavilions, Bridgwater Road

BristolBS99 7NH

United Kingdom

CHAIRMAN'S STATEMENT

Dear Fellow Shareholder

Over the past 12 months, your company has continued to diligently progress each of its projects in Queensland (Rannes and Mt Perry, 100% owned) and the Solomon Islands (Fauro, 100% owned and the Guadalcanal Island Joint Venture, partly owned with Newmont Mining Corporation, our JV partner).

Importantly, as part of the Board's strategy to de-risk the company's overall exploration profile, the company has expanded its Inferred Mineral Resource at Mt Rannes in Queensland (first announced in June 2010) from an initial 201,648oz gold-equivalent to 543,858oz gold-equivalent as of 30 June 2011 and we expect further upgrades. Work continues apace at Rannes to expand the overall resource and to date 21 targets have been identified within the Rannes Project Area, of which eight Prospects have been subject to first pass drilling and have potential economic intersections.The Company continues to define new areas of mineralisation across the 30km long newly defined gold province.

Recent results from core samples drilled at greater depths have been very encouraging and the Board is now confident that the currently defined gold and silver system at Rannes gives way to deeper high grade epithermal gold mineralisation in the boiling zone of these epithermal gold-silver systems. As a result, the Company is expanding its drilling program and additional diamond drilling rigs are being engaged for this purpose. We are optimistic that further drilling will help us meet the Company's gold target of 2 million ounces at the Rannes Project.

At Mt Perry, the Company is investigating an area of approximately 1,500km² hosting over 50 historic mines and workings near Newcrest's Mt Rawdon Gold Mine. Mt Perry has yielded potentially economic drill intersections on nine of the ten prospects tested to date. At this early stage, your Company is targeting an initial 400,000oz gold equivalent and we envisage commencement of drilling, weather permitting (the wet season makes this more challenging), and once negotiations with landowners and drill agreements are finalised.

In addition, your Company has plans to drill at Normanby (North-West of Mackay in North Queensland), particularly at Mt Flat Top, whilst further sampling at Mount Crompton is envisaged. Further drilling is envisaged at Clermont (North-West of Rockhampton in Queensland), particularly Niagara along strike of previously identified economic intercepts. Other Queensland projects include Lone Hand and Cracow West where initial sampling is expected over the course of the next 12 months.

On Fauro Island in the Solomon Islands, the Company has identified nine intrusive systems and associated geochemical, magnetic and electromagnetic anomalies including; Ballyorlo, Kiovakase, Meriguna, Bataha and Ballteara. Surface rock sampling at the Meriguna Prospect so far has yielded up to 173g/t gold and 0.35% copper, defined over a 700m by 1,500m zone and trenching results include, 20m at 4.2g/t gold (incl. 6m at 11.63g/t gold and 2m at 5.04g/t gold). At the Kiovakase Prospect surface rock sampling results include up to 169g/t gold and 0.16% copper, now defined over a 700m by 1,500m zone, as well as trench results including 16m at 1.40g/t gold (incl. 4m at 1.14g/t gold, and 6m at 2.51g/t gold). The Ballyorlo prospect yields up to 0.43% molybdenum and 0.2% copper. Diamond drilling commenced late in December 2010 and has been on-going in 2011, with six-holes successfully completed by 30 June 2011. There were three holes drilled at Meriguna and three at Ballyorlo. The drilling in collaboration with the geophysical interpretation is giving us a better understanding of the geology, structures and mineralisation and is certainly assisting with better drill targeting. We continue to remain hopeful of finding a significant ore body at Fauro.

Our Joint Venture on the island of Guadalcanal in the Solomon Islands, continues with NVL Solomon Islands Limited, a subsidiary of Newmont Mining Corporation (NYSE:NEM) ("Newmont"), earning up to a 70% interest. The Guadalcanal Joint Venture had previously outlined high priority gold-copper porphyry targets at Sutakiki, Koloula, Mbetilonga, and Kuma Projects. Ground based work (including geophysics) and interpretation, over most of these project areas have been conducted throughout the year and continue with a view to identifying drill targets. During the year, work conducted at Chikora (Koloula Project) led to a reinterpretation of the geology, and drill testing. Surface sampling and drill testing at Mbetilonga provides encouraging results for a more extensive and deeper drilling program expected to continue into 2012. Your Company is particularly optimistic about drill targets identified in the western area of the Mbetilonga project. Further drilling is also expected at Sutakiki where your Company previously found significant and continuous mineralisation at depth, in a number of drill holes.

In summary, your Company continues to regularly expand its gold resource at Mt Rannes in Central Queensland whilst other identified targets in Queensland have sound exploration upside. The developments at Mt Rannes continue to support our previously stated view that the mineralisation here is similar in texture and chemistry as well as having similar structural settings to the Carlin Style deposits in Nevada, USA. Our recognition that large new zones of blind gold-silver mineralization occur at depth, give further support for this view. In the Solomon Islands, there is significant exploration upside at our Fauro and Guadalcanal project areas. Newmont Mining Corporation continues to strongly support the Guadalcanal Joint Venture with actual and budgeted expenditure well in advance of their obligation.

On behalf of the Board of Directors, I would like to take this opportunity to thank you for your support of the Company and I look forward to bringing you further good news as our exploration and development efforts continue.

Cameron Wenck

Chairman

4 November 2011

DIRECTORS' REPORT

The Directors present their annual report and audited financial statements for the year ended 30 June 2011.

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 the Solomon Islands and Queensland, Australia. Details of the Group's activities, together with a description of the principal risks and uncertainties facing the Group, and the development of the business, are given in the Chairman's Statement and Operations Report.

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

BUSINESS REVIEW

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

The principal risks and uncertainties facing the group at its present stage of development are given under Risks and Uncertainties.

LAND AND BUILDINGS

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

GOING CONCERN

In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. The Group and the Company has not generated revenues from operations. As such, the Group's and Company's ability to continue to adopt the going concern assumption will depend upon a number of matters including the successful capital raisings in the future of necessary funding and the successful exploration and subsequent exploitation of the Group's tenements. In the absence of these matters being successful, the current working capital levels will not be sufficient to bring the Company's projects into full development and production and, in due course further financing will be required. In the event that the Company is unable to secure further finance either through its current arrangements with Newmont, other third parties or capital raisings, it may not be able to fully develop its projects.

CURRENCY

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

RESULTS

The Group's consolidated loss for the period was $2,724,076 (2010:$2,192,989).

CHANGES IN SHARE CAPITAL DURING 2011

A statement of changes in the share capital of the Company is set out in Note 16 to the financial statements.

KEY PERFORMANCE INDICATORS

Given the stage of the Group's operations, the Board regards the maintenance of tenure and land access arrangements, maintenance of operation capabilities and the continued collection of exploration data in order to advance the prospectivity of the project areas to be the key performance indicators in measuring the Group's success. The review of the business with reference to key performance indicators is set out in the Operations Report and Financial Review.

DIVIDENDS PAID OR RECOMMENDED

The Directors do not recommend the payment of a dividend.

FINANCIAL INSTRUMENTS

The Company does not undertake financial instrument transactions that are speculative or unrelated to the Company's or Group's activities. The Company's financial instruments consist mainly of deposits with banks, accounts payable, and loans to subsidiaries. Further details of financial risk management objectives and policies, and exposure of the group to financial risks are provided in Note 20 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 17 days (2010: 71 days) worth of purchases in Group trade creditors and 17 days (2010: 24 days) worth of purchases in Company trade creditors.

SUBSEQUENT EVENTS

The Directors are not aware of any significant changes in the state of affairs of the Company after the balance date that is not covered in this report.

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
John Bovard	Non-Executive Director

The Company has a Directors' and Officers Liability insurance policy with AFM Insurance Brokers Pty Ltd for all its Directors.

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

Shares held	At 30 June 2011	At 30 June 2010
Cameron Wenck	3,360,937	1,095,477
Nicholas Mather	40,356,724	30,762,862
Brian Moller	2,038,017	924,925
Robert Weinberg	1,618,287	383,152
John Bovard	1,471,365	300,000

A total of 5,940,000 options were issued to Directors during the year (2010: nil).

Share options held	At 30 June 2011	At 30 June 2010	Option Price	Exercise Period
Cameron Wenck	-	25,000	75p	01/01/08 - 01/01/11
	-	25,000	100p	01/01/08 - 01/01/11
	-	100,000	25p	31/01/08 - 31/12/10
	-	50,000	50p	31/01/08 - 31/12/10
	-	50,000	75p	31/01/08 - 31/12/10
	1,100,000	-	50p	31/05/12 -31/05/14
Nicholas Mather	-	233,333	75p	01/01/08 - 01/01/11
	-	233,334	100p	01/01/08 - 01/01/11
	-	250,000	25p	31/01/08 - 31/12/10
	-	125,000	50p	31/01/08 - 31/12/10
	-	125,000	75p	31/01/08 - 31/12/10
	2,200,000	-	50p	31/05/12 -31/05/14
Brian Moller	-	25,000	75p	01/01/08 - 01/01/11
	-	25,000	100p	01/01/08 - 01/01/11
	-	75,000	25p	31/01/08 - 31/12/10
	-	37,500	50p	31/01/08 - 31/12/10
	-	37,500	75p	31/01/08 - 31/12/10
	880,000	-	50p	31/05/12 -31/05/14
Robert Weinberg	-	25,000	75p	01/01/08 - 01/01/11
	-	25,000	100p	01/01/08 - 01/01/11
	-	75,000	25p	31/01/08 - 31/12/10
	-	37,500	50p	31/01/08 - 31/12/10
	-	37,500	75p	31/01/08 - 31/12/10
	880,000	-	50p	31/05/12 -31/05/14
John Bovard	880,000	-	50p	31/05/12 -31/05/14

MAJOR SHAREHOLDERS

The following parties represented the top 10 shareholders in the Company as at 14 September 2011.

Major Shareholders	Number of Shares	% of Issued Capital
Tenstar Trading Limited	56,100,618	19.71
D'Aguilar Gold Limited	35,274,477	12.39
Samuel Holdings Pty Ltd	23,331,030	8.20
TD Waterhouse Nominees (Europe) Limited	17,995,624	6.32
Barclayshare Nominees Limited	13,337,809	4.69
The Bank of New York (Nominees) Limited	10,160,000	3.57
James Capel (Nominees) Limited	8,024,044	2.82
Pershing Nominees Limited	7,669,169	2.69
Forest Nominees Limited	7,532,572	2.65
Vidaco Nominees Limited	7,227,872	2.54

CORPORATE GOVERNANCE

In formulating the Company's corporate governance procedures the Board of Directors takes due regard of the principles of good governance set out in the UK Corporate Governance Code issued by the Financial Reporting Council in June 2010 (as appended to the Listing Rules of the Financial Services Authority) so far as is practicable for a company of Solomon Gold's size.

The Board of Solomon Gold plc is made up of one Executive Director and fourNon-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 material business or other relationship with the Group. The structure of the Board ensures that no one individual or group is able to dominate the decision making process.

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

All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that all Board procedures are followed. Any Director may take independent professional advice at the Company's expense in the furtherance of his duties.One third of the Directors retire from office at every Annual General Meeting of the Company. In general, those Directors who have held office the longest time since their election are required to retire. A retiring Director may be re-elected and a Director appointed by the Board may also be elected, though in the latter case the Director's period of prior appointment by the Board will not be taken into account for the purposes of rotation.

The Audit Committee, which meets not less than twice a year, is responsible for ensuring that the financial performance, position and prospects of the Group are properly monitored as well as liaising with the Company's auditor to discuss accounts and the Group's internal controls. The Committee is 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' and key management's remuneration packages, is chaired by Cameron Wenck. Brian Moller and Robert Weinberg are the other committee members.

The remuneration of the non-executive Directors is determined by the executive Directors who consider it essential, notwithstanding the small size of the Company and the fact that it is not yet revenue earning, to recruit and retain individuals of the highest calibre for that role. Consequently they believe that it is in the interests of shareholders that non-executive Directors should be provided with share options in addition to the level of fees considered affordable. The number of such options currently amounts to 3,740,000 in total, or just under1.31% of the current issued share capital, and in the opinion of the executive Directors is not of sufficient magnitude as to affect their independence.

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

The 2011 Annual General Meeting will provide an opportunity for the Chairman and/or Chief Executive Officer to present to the shareholders a report on current operations and developments and will enable the shareholders to question and express their views about the Company's business. A separate resolution will be proposed on each substantially separate issue, including the receipt of the financial statements and shareholders will be entitled to vote either in person or by proxy.

A Health, Safety, Environment and Community Committee (HSEC Committee) is responsible for the overall health, safety and environmental performance of the Company and its operations and its relationship with the local community in Solomon Islands and Queensland, and is chaired by John Bovard, the other members being Nicholas Mather and Robert Weinberg.

EXECUTIVE REMUNERATION STRATEGY

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

POLITICAL AND CHARITABLE CONTRIBUTIONS

The Group made no political or charitable donations in the year (2010: A$ nil).

AUDITOR

A resolution for the reappointment of PKF (UK) LLP will be proposed at the forthcoming Annual General Meeting.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have, as required by the AIM Rules of the London Stock Exchange, elected to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and have also elected to prepare the parent company financial statements in accordance with those standards.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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;

· state whether the financial statements have been prepared in accordance with IFRSs as adopted by the European Union;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company and the group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions, todisclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and 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.

DISCLOSURE OF AUDIT INFORMATION

In the case of each person who are Directors of the Company at the date when this report is approved:

· So far as they are individually aware, there is no relevant audit information of which the Company's auditor is unaware; and

· Each of the Directors has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of the information.

This report was approved by the board on 4 November 2011 and signed on its behalf.

Karl Schlobohm

Company Secretary

Level 5, 60 Edward Street

Brisbane QLD 4000

Australia

INDEPENDENT AUDITOR'S REPORT

To the members of Solomon Gold PLC

We have audited the financial statements of Solomon Gold Plc for the year ended 30 June 2011 which comprise the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion;

· the financial statements give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2011 and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter - availability of project finance

In forming our opinion, which is not modified, we have considered the adequacy of the disclosures made in note 1(b) to the financial statements concerning the requirement for the group to raise further funding if it is to bring its exploration projects into the development stage. If the group is unable to secure such additional funding to develop its projects further, this may have a consequential impact on the recoverability of the carrying value of the related exploration assets and the investment of the parent company in its subsidiaries. No adjustments have been made in the financial statements to reflect changes to asset carrying values that may be necessary should the company be unsuccessful in raising further finance.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

David Pomfret (Senior statutory auditor)

for and on behalf of PKF (UK) LLP, Statutory auditor

London, UK

4 November 2011

consolidated statement of comprehensive income

For the year ended 30 June 2011

		Group 2011	Group 2010
	Notes	$	$

Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Other income		841	159,364
Administrative expenses
Exploration costs written-off		(279,038)	(567,415)
Other		(2,909,930)	(1,817,187)
Operating loss		(3,188,127)	(2,225,238)
Finance income	6	502,638	68,662
Finance costs	6	(38,587)	(36,413)
Loss before income tax	3	(2,724,076)	(2,192,989)
Income tax expense	7	-	-
Loss for the year		(2,724,076)	(2,192,989)

Other comprehensive income		-	-
Total comprehensive income for the year		(2,724,076)	(2,192,989)
Loss for the year attributable to equity holders of the parent		(2,724,076)	(2,192,989)


Earnings per share		Cents per share	Cents per share
Basic earnings per share	8	(1.0)	(1.6)
Diluted earnings per share	8	(1.0)	(1.6)

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

consolidated and company statements of financial position

As at 30 June 2011

Registered Number 5449516

	Notes	Group 2011	Group 2010	Company 2011	Company 2010
		$	$	$	$
Assets
Property, plant and equipment	10	356,720	247,648	20,878	6,623
Intangible assets	11	44,720,340	33,406,506	-	-
Investment in subsidiaries	9	-	-	46,001,868	33,976,110
Loans receivable and other non-current assets	12	947,876	-	868,896	-
Total non-current assets		46,024,936	33,654,154	46,891,642	33,982,733
Other receivables and prepayments	14	556,335	386,890	419,480	214,477
Cash and cash equivalents	15	11,543,750	219,811	11,368,468	111,976
Total current assets		12,100,085	606,701	11,787,948	326,453
Total assets		58,125,021	34,260,855	58,679,590	34,309,186
Equity
Share capital	16	5,365,926	3,870,090	5,365,926	3,870,090
Share premium	16	58,402,290	33,263,679	58,402,290	33,263,679
Other reserves		1,116,380	1,070,805	1,116,380	1,070,805
Accumulated loss		(7,820,864)	(6,161,893)	(6,456,536)	(5,234,969)
Total equity		57,063,732	32,042,681	58,428,060	32,969,605
Liabilities
Finance lease liabilities	17	132,822	34,327	-	-
Total non-current liabilities		132,822	34,327	-	-
Finance lease liabilities	17	47,234	24,069	-	-
Trade and other payables	18	881,233	2,159,778	251,530	1,339,581
Total current liabilities		928,467	2,183,847	251,530	1,339,581
Total liabilities		1,061,289	2,218,174	251,530	1,339,581
Total equity and liabilities		58,125,021	34,260,855	58,679,590	34,309,186

The above consolidated and company statements of financial position should be read in conjunction with the accompanying notes.

The financial statements were approved and authorised for issue by the Board and were signed in its behalf on 4 November 2011.

Nicholas Mather

Director

consolidated and company statements of changes in equity

For the year ended 30 June 2011

Consolidated statement of changes in equity

	Notes	Share capital $	Share premium $	Share option reserve $	Accumulated loss $	Total $
Balance at 30 June 2009	16	1,736,803	20,215,990	1,411,570	(4,396,801)	18,967,562
Loss and total comprehensive loss for the period		-	-	-	(2,192,989)	(2,192,989)
New share capital subscribed		2,123,508	13,054,479	-	-	15,177,987
Share issue costs		-	(80,826)	-	-	(80,826)
Value of shares and options issued to Directors, employees and consultants		9,779	74,036	87,132	-	170,947
Reserve transfers on expiration		-	-	(427,897)	427,897	-
Balance at 30 June 2010	16	3,870,090	33,263,679	1,070,805	(6,161,893)	32,042,681
Loss and total comprehensive loss for the period		-	-	-	(2,724,076)	(2,724,076)
New share capital subscribed		1,481,888	26,360,097	-	-	27,841,985
Share issue costs		-	(1,221,486)	-	-	(1,221,486)
Value of shares and options issued to Directors, employees and consultants		13,948	-	688,988	421,692	1,124,628
Reserve transfers on expiration of share options		-	-	(643,413)	643,413	-
Balance at 30 June 2011	16	5,365,926	58,402,290	1,116,380	(7,820,864)	57,063,732

Company statement of changes in equity

	Notes	Share capital $	Share premium $	Share option reserve $	Accumulated loss $	Total $
Balance at 30 June 2009	16	1,736,803	20,215,990	1,411,570	(4,129,247)	19,235,116
Loss and total comprehensive loss for the period		-	-	-	(1,533,619)	(1,533,619)
New share capital subscribed		2,123,508	13,054,479	-	-	15,177,987
Share issue costs		-	(80,826)	-	-	(80,826)
Value of shares and options issued to Directors, employees and consultants		9,779	74,036	87,132	-	170,947
Reserve transfers on expiration of share options		-	-	(427,897)	427,897	-
Balance at 30 June 2010	16	3,870,090	33,263,679	1,070,805	(5,234,969)	32,969,605
Loss and total comprehensive loss for the period		-	-	-	(2,286,672)	(2,286,672)
New share capital subscribed		1,481,888	26,360,097	-	-	27,841,985
Share issue costs		-	(1,221,486)	-	-	(1,221,486)
Value of shares and options issued to Directors, employees and consultants		13,948	-	688,988	421,692	1,124,628
Reserve transfers on expiration		-	-	(643,413)	643,413	-
Balance at 30 June 2011	16	5,365,926	58,402,290	1,116,380	(6,456,536)	58,428,060

The above statements of changes in equity should be read in conjunction with the accompanying notes.

consolidated and company statements of cash flows

For the year ended 30 June 2011

	Notes	Group 2011	Group 2010	Company 2011	Company 2010
		$	$	$	$
Cash flows from operating activities
Operating loss		(3,188,127)	(2,225,238)	(2,285,849)	(1,544,615)
Depreciation		70,167	57,661	4,126	2,368
Share based payment expense		457,020	170,947	457,020	170,947
Write-off of exploration expenditure		279,038	567,415	-	-
Increase in other receivables and prepayments		(178,450)	(139,993)	(361,987)	(144,785)
Decrease in trade and other payables		(188,052)	(128,567)	(162,017)	(69,336)
Net cash outflow from operating activities		(2,748,404)	(1,697,775)	(2,348,707)	(1,585,421)
Cash flows from investing activities
Interest received		502,638	68,662	501,334	47,409
Interest paid		(38,587)	(36,413)	(38,587)	(36,413)
Acquisition of property, plant and equipment		(28,785)	(23,330)	(18,381)	(3,249)
Acquisition of exploration and evaluation assets		(11,288,752)	(2,609,189)	-	-
Acquisition of subsidiaries (net of cash)	23	-	18,631	-	-
Loans advanced to third parties		(665,875)	-	(665,875)	-
Loans advanced to subsidiaries		-	-	(11,793,790)	(3,786,332)
Net cash outflow from investing activities		(11,519,361)	(2,581,639)	(12,015,299)	(3,778,585)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital		27,841,984	4,362,902	27,841,984	4,362,902
Payment of issue costs		(1,221,486)	(80,826)	(1,221,486)	(80,826)
Loan from Director related entity		-	(200,000)	-	(200,000)
Repayment of borrowings		(1,028,794)	(1,032,548)	(1,000,000)	-
Net cash inflow from financing activities		25,591,704	3,049,528	25,620,498	4,082,076
Net increase/(decrease) in cash and cash equivalents		11,323,939	(1,229,886)	11,256,492	(1,281,930)
Cash and cash equivalents at the beginning of period		219,811	1,449,697	111,976	1,393,906
Cash and cash equivalents at end of period	15	11,543,750	219,811	11,368,468	111,976

Non cash transactions

During the prior year, the group acquired Acapulco Mining Pty Ltd and Central Minerals Pty Ltd. The consideration was satisfied by issue of shares. Further details have been provided in Note 23.

The above statements of cash flows should be read in conjunction with the accompanying notes.

notes to the financial statements

For the year ended 30 June 2011

NOTE 1 ACCOUNTING POLICIES

The Company is a public limited company incorporated in England and Wales and is listed on the AIM market of the London Stock Exchange.

(a) Statement of compliance

The consolidated financial statements and company financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and their interpretations adopted by the International Accounting Standards Board (IASB), as adopted by the European Union. They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The accounting policies set out below have been applied consistently throughout these consolidated financial statements.

(b) Basis of preparation of financial statements, going concern and availability of project finance

The consolidated financial statements are presented in Australian dollars ("A$").

The Company was incorporated on 11 May 2005. The Group has elected, from incorporation, to prepare annual consolidated financial statement in accordance with IFRS.A separate statement of comprehensive income for the parent company has not been presented as permitted by section 408 of the Companies Act 2006.

The financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The Company has not generated revenues from operations. In common with many exploration companies, the company raises finance for its exploration and appraisal activities in discrete tranches. At the reporting date, the group had a net current asset position of $11,171,618, compared with a net liability position in 2010 of $1,577,146. Additionally Newmont has agreed to fund the exploration work being undertaken on the Guadalcanal projects under the terms of the Venture Agreement executed between the two parties. Together this means that the company has sufficient capital to fund its own operations, including the exploration of those Solomon Island tenement areas held outside of the Newmont Guadalcanal Venture, along with its tenements in Queensland, Australia for the next twelve months. It should be noted that the current working capital levels will not be sufficient to bring the Company's projects into full development and production and, in due course, further funding will be required. In the event that the Company is unable to secure further finance either through its current arrangements with Newmont, other third parties or capital raising, it may not be able to fully develop its projects.

(i) Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is recognised where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those used by the Group.

(ii) Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(d) Foreign currency

The Company's functional and presentation currency is Australian dollars (A$). The exchange rates at 30 June 2011 were £0.66135/A$1.0 and SBD$7.30697/A$1.0 (30 June 2010: £0.56860/A$1.0 and SBD$7.10920/A$1.0).

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year-end are translated into Australian dollars at the foreign exchange rate ruling at that date. Any resultant foreign exchange currency translation amount is taken to the profit and loss.

The functional currency of the subsidiaries in Australia is considered to be Australian Dollars (A$). The functional currency of the subsidiary in Solomon Islands is considered to be Solomon Islands Dollars (SBD$). The assets and liabilities of the entities are translated to the group presentation currency at rates of exchange ruling at the balance sheet date. Income and expense items are translated at average rates for the period. Any exchange differences are taken directly to reserves. On disposal of an entity, cumulative deferred exchange differences are recognised in the income statement as part of the profit or loss on sale.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 1 ACCOUNTING POLICIES (Continued)

(e) Property, plant and equipment

(i) Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see accounting policy i below).

(ii) Subsequent costs

The Group recognises in the carrying amount of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense as incurred.

(iii) Depreciation

Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of each item of property, plant and equipment. The estimated useful lives of all categories of assets are:

Office Equipment 3 years

Furniture and Fittings 5 years

Motor Vehicles 5 years

Plant and Equipment 5 years

Land and Buildings 12 years

The residual values and useful lives are assessed annually. Gains and losses on disposal are determined by comparing proceeds with carrying amounts and are included in the statement of comprehensive income.

(f) Intangible assets

Deferred exploration and evaluation costs

Costs incurred in relation to the acquisition of, or application for, a tenement area are capitalised where there is a reasonable expectation that the tenement will be acquired or granted. Where the Company is unsuccessful in acquiring or being granted a tenement area, any such costs are immediately expensed.

All other costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written-off as incurred.

Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses recognised.

If an exploration project is successful, the related expenditures will be transferred to mining assets and amortised over the estimated life of the ore reserves on a unit of production basis.

The recoverability of deferred exploration and evaluation costs is dependent upon the discovery of economically recoverable ore reserves, the ability of the Group to obtain the necessary financing to complete the development of ore reserves and future profitable production or proceeds from the disposal thereof.

(g) Loans receivables, other receivables and prepayments

Loans receivables, other receivables and prepayments are not interest bearing and are stated at their nominal amount less provision for impairment.

(h) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 1 ACCOUNTING POLICIES (Continued)

(i) Impairment

Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable the asset is reviewed for impairment. An asset's carrying value is written down to its estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if that is less than the asset's carrying amount.

Impairment reviews for deferred exploration and evaluation costs are carried out on a project-by-project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise, typically when one of the following circumstances apply:

§ Unexpected geological occurrences that render the resource uneconomic;

§ Title to the asset is compromised;

§ Variations in metal prices that render the project uneconomic; and

§ Variations in the currency of operation.

(j) Share capital

The Company's ordinary shares are classified as equity.

(k) Employee benefits

(i) Share based payment transactions

Certain Group employees are rewarded with share based instruments. Shares may also be issued to third parties as consideration for goods or services. Shares are recorded at their market value at the time of their issue. Option instruments are stated at fair value at the date of grant and this is expensed on a straight line basis over the estimated vesting period. The latter is based on the Group's estimate of shares that will eventually vest. The fair value of an option instrument is estimated using the Black-Scholes valuation model. The estimated life used in the model represents management's best estimate of the effects of non-transferability, exercise restrictions and behavioural considerations.

(ii) Retirement benefits

The Group operates a defined contribution pension scheme. Contributions payable for the year are charged to the statement of comprehensive income.

(l) Provisions

Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

(m) Trade and other payables

Trade and other payables are not interest bearing and are stated at their nominal value. The effect of discounting is immaterial.

(n) Revenue

During the exploration phase, any revenue generated from incidental sales is treated as a contribution towards previously incurred costs and offset accordingly.

(o) Other income

Other income is recognised in the statement of comprehensive income as it accrues.

(p) Financing costs and income

(i) Financing costs

Financing costs comprise interest payable on borrowings calculated using the effective interest rate method.

(ii) Finance income

Interest income is recognised in the statement of comprehensive income as it accrues, using the effective interest method.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 1 ACCOUNTING POLICIES (Continued)

(q) Taxation

The charge for taxation is based on the profit or loss for the year and takes into account deferred tax. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss, and is accounted for using the liability method.

Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available in the foreseeable future against which the temporary differences can be utilised.

(r) Segment reporting

The Group determines and presents operating segments based on information that is internally provided to the Board of Directors, who are the Group's chief operating decision makers.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results and asset position are reviewed regularly by the Board to make decisions about resources to be allocated to the segment and assess its performance, for which discrete financial information is available.

Segment results that are reported to the Board include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate office assets, head office expenses, and income tax assets and liabilities.

(s) Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities.

Business combinations are accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (i.e. parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured.

The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

Fair value uplifts in the value of pre-existing equity holdings on acquisition are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.

Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of comprehensive income unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 1 ACCOUNTING POLICIES (Continued)

(t) Project Financing / Farm-outs

The Group, from time to time, enters into funding arrangements with third parties in order to progress specific projects. The Group accounts for the related exploration costs in line with the terms of the specific agreement.

(u) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership are transferred to entities in the Economic Entity, are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the period of the lease.

(v) Accounting policies for the Company

The accounting policies applied to the Company are consistent with those adopted by the Group with the exception of the following:

(i) Company statement of comprehensive income

As permitted by Section 408 of the Companies Act 2006, the statement of comprehensive income of the Company has not been separately presented in these financial statements. The Company's loss for the year was $2,286,672 (2010:$1,533,619).

(ii) Subsidiary investments

Investments in subsidiary undertakings are stated at cost less impairment losses.

(w) Changes in accounting policies

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the accounting periods commencing 1 July 2010 but are not applicable to the group and had no impact on these financial statements.

The Group has not adopted any standards or interpretations in advance of the required implementation dates. It is not expected that adoption of standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 2 SEGMENT REPORTING

The group determines and separately reports operating segments based on information that is internally provided to the Board of Directors, who are the Group's chief operating decision makers.

The Group has outlined below the separately reportable operating segments, having regard to the quantitative threshold tests provided in IFRS 8, namely that the relative revenue, asset or profit / (loss) position of the operating segment equates to 10% or more of the Group's respective total. The Group reports information to the Board of Directors along company lines. That is, the financial position of Solomon Gold and each of its subsidiary companies is reported discreetly, together with an aggregated Group total. Accordingly, each company within the Group that meets or exceeds the threshold tests outlined above is separately disclosed below. The financial information of the subsidiaries that do not exceed the thresholds outlined above, and are therefore not reported separately, are aggregated as Other Subsidiaries.

30 June 2011	Finance Income	Total Income	Result	Assets	Liabilities	Share Based Payments	Depreciation
30 June 2011	$	$	$	$	$	$	$
Solomon Gold	501,334	501,580	(2,286,672)	58,679,590	251,530	457,020	4,126
ARM	312	312	(73,474)	26,730,258	26,816,152	-	35,460
Central Minerals	62	62	(253,083)	5,632,580	6,056,935	-	21,454
Acapulco Mining	930	1,525	(110,847)	5,099,538	2,781,376	-	9,127
Solomon Operations	-	-	-	542	52,251	-	-
Consolidation / Elimination	-	-	-	(38,017,487)	(34,896,955)	-	-
Total	502,638	503,479	(2,724,076)	58,125,021	1,061,289	457,020	70,167

30 June 2010	Finance Income	Total Income	Result	Assets	Liabilities	Share Based Payments	Depreciation
30 June 2010	$	$	$	$	$	$	$
Solomon Gold	47,409	206,773	(1,533,619)	34,309,186	1,339,581	170,947	2,368
ARM	20,712	20,712	(44,379)	19,699,749	19,712,168	-	45,117
Central Minerals	1	1,	(2,130)	2,854,790	3,026,062	-	4,954
Acapulco Mining	540	540	(590,094)	3,412,204	983,195	-	5,222
Solomon Operations	-	-	(22,767)	34,071	85,781	-	-
Consolidation / Elimination	-	-	-	(26,049,145)	(22,928,613)	-	-
Total	68,662	228,026	(2,192,989)	34,260,855	2,218,174	170,947	57,661

Acapulco Mining Pty Limited and Central Minerals Pty Limited joined the Group on 21 December 2009 and 19 February 2010 respectively.

Geographical information

Non-current assets	2011 $	2010 $
UK	-	-
Australia	19,321,490	14,065,500
Solomon Islands	26,703,446	19,588,654

The Group had no revenue during the year.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 3 LOSS BEFORE TAX

	Group 2011 $	Group 2010 $
Loss is stated after charging (crediting)
Auditors' remuneration:
Fees payable to the company's auditor for the audit of the company's annual accounts	52,150	63,000
Fees payable to the company's auditor and its associates for other services:
- Other assurance related services	24,500	-
- Tax services	9,920	30,542
Depreciation	70,167	57,661
Acquisition related costs	-	337,570
Foreign exchange gains	-	-
Foreign exchange losses	-	41,398
Share based payments	457,020	170,947

NOTE 4 STAFF NUMBERS AND COSTS

	Group 2011	Group 2010	Company 2011	Company 2010
Corporate finance and administration	13	11	8	7
Technical	17	30	-	-
	30	41	8	7

The aggregate payroll costs of these persons were as follows:

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Wages and salaries	2,181,171	1,032,824	658,217	133,172
Contributions to defined contribution plans	20,502	3,366	18,239	3,366
Share based payments	894,646	158,446	385,406	158,446
	3,096,319	1,194,636	1,061,862	294,984

Included within staff costs is $2,034,458 (2010: $576,366) which has been capitalised as part of deferred exploration costs.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 5 REMUNERATION OF KEY MANAGEMENT PERSONNEL

	Basic Annual Salary $	Other Benefits¹ $	Pensions $	Total Remuneration $
2011
Directors
Cameron Wenck	49,627	55,526	-	105,153
Nicholas Mather	318,309	208,443	-	526,752
Brian Moller	45,906	44,421	-	90,327
Robert Weinberg	42,656	44,421	-	87,077
John Bovard	42,958	58,021	-	100,979
	499,456	410,832	-	910,288
Non-Directors	324,990	119,214	17,277	461,481
TOTAL	824,446	530,046	17,277	1,371,769

	Basic Annual Salary $	Other Benefits¹ $	Pensions $	Total Remuneration $
2010
Directors
Cameron Wenck	53,679	-	-	53,679
Nicholas Mather	161,000	-	-	161,000
Brian Moller	39,533	-	-	39,533
Robert Weinberg	43,516	-	-	43,516
John Bovard	34,558	-	-	34,558
	332,286	-	-	332,286
Non-Directors	304,206	87,132	3,366	394,704
TOTAL	636,492	87,132	3,366	726,990

¹Share based payments issued.

During the year three directors exercised options granted under the employee share option plan. The aggregate of the gains made on these exercises, calculated as the difference between the option exercise price and the mid-market price on the date of exercise was $85,717 (2010: $nil), of which $23,810 (2010: $nil) related to the gain attributable to the highest paid director.

NOTE 6 FINANCE INCOME AND COSTS

	Group 2011 $	Group 2010 $
Interest income	502,638	68,662
Finance income	502,638	68,662
Interest cost - convertible note	38,587	36,413
Finance costs	38,587	36,413

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 7 INCOME TAX EXPENSE

Factors affecting the tax charge for the current period

The tax credit for the period is lower than the credit resulting from the application of the standard rate of corporation tax in Australia of 30% (2010: 30%) being applied to the loss before tax arising during the year. The differences are explained below.

	Group 2011 $	Group 2010 $
Tax reconciliation
Loss before tax	(2,724,076)	(2,192,989)
Tax at 30% (2010: 30%)	(817,223)	(657,897)
Effects at 30% (2010: 30%) of:
Short term timing differences	(1,317,302)	1,675
Non-deductible expenses	76,302	117,044
Tax losses carried forward	2,058,223	539,178
Tax on loss	-	-

Factors that may affect future tax charges

The Group has carried forward tax losses of approximately $10.7 million (2010 $1.1million). These losses may be deductible against future taxable income dependent upon the on-going satisfaction by the relevant Group company of various tax integrity measures applicable in the jurisdiction where tax the loss has been incurred. The jurisdictions in which tax losses have been incurred include the United Kingdom, Australia and the Solomon Islands.

NOTE 8 LOSS PER SHARE

The calculation of basic loss per ordinary share on total operations is based on losses $2,724,076(2010: $2,192,989) and the weighted average number of ordinary shares outstanding of 260,796,495 (2010: 137,514,144).

There is no difference between the diluted loss per share and the basic loss per share presented as the share options and the convertible loan notes on issue during the period were not considered dilutive. At 30 June 2011 there were11, 264,000share options on issue(2010:6,376,670 share options and 1,000,000 convertible loan notes).

NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

	Country of incorporation and operation	Principal activity	Solomon Gold plc's effective interest
			2011	2010
Australian Resources Management (ARM) Pty Ltd	Australia	Exploration	100%	100%
Acapulco Mining Pty Ltd	Australia	Exploration	100%	100%
Central Minerals Pty Ltd	Australia	Exploration	100%	100%
Solomon Operations Ltd	Solomon Islands	Exploration	100%	100%

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)

	Investment in subsidiary undertakings
	Shares $	Loans $	Total $
Cost
Balance at 30 June 2009	270,571	18,104,122	18,374,693
Acquisitions and advances in the year	10,815,085	4,786,332	15,601,417
Balance at 30 June 2010	11,085,656	22,890,454	33,976,110
Advances in the year	-	12,025,758	12,025,758
Balance at 30 June 2011	11,085,656	34,916,212	46,001,868

Amortisation and impairment losses
Balance at 30 June 2009	-	-	-
Balance at 30 June 2010	-	-	-
Balance at 30 June 2011	-	-	-

Carrying amounts
Balance at 30 June 2009	270,571	18,104,122	18,374,693
Balance at 30 June 2010	11,085,656	22,890,454	33,976,110
Balance at 30 June 2011	11,085,656	34,916,212	46,001,868

Details of all loans within the group made during the year are set out below:

	Shares $	Loans $	Total $
Cost
Balance at 30 June 2009	270,571	18,104,122	18,374,693
Advances in the period from Solomon Gold plc to ARM Pty Ltd	-	1,346,486	1,346,486
Acquisition and advances during the period of Acapulco Mining Pty Ltd	6,118,708	751,747	6,870,455
Acquisition and advances during the period of Central Minerals Pty Ltd	4,696,377	2,688,099	7,384,476
Total investment in subsidiaries by the Company at 30 June 2010	11,085,656	22,890,454	33,976,110
Advances in the period from Solomon Gold plc to ARM Pty Ltd	-	6,998,517	6,998,517
Advances in the period from Solomon Gold plc to Acapulco Mining Pty Ltd	-	1,904,623	1,904,623
Advances in the period from Solomon Gold plc to Central Minerals Pty Ltd	-	3,122,618	3,122,618
Total investment in subsidiaries by the Company at 30 June 2011	11,085,656	34,916,212	46,001,868

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 10 PROPERTY, PLANT AND EQUIPMENT

	Group						Company
	Land and Buildings	Plant and Equipment	Motor Vehicles	Office Equipment	Furniture & Fittings	Total	Company
	$	$	$	$	$	$	$
Cost
Balance 30 June 2009	194,000	56,154	30,092	54,694	14,711	349,651	8,557
Additions - business combinations	-	9,235	85,485	896	-	95,616	-
Additions - other	14,144	5,937	-	3,249	-	23,330	3,249
Balance 30 June 2010	208,144	71,326	115,577	58,839	14,711	468,597	11,806
Additions	-	24,663	152,145	2,431	-	179,239	18,381
Balance 30 June 2011	208,144	95,989	267,722	61,270	14,711	647,836	30,187

Depreciation and impairment losses
Balance 30 June 2009	(42,034)	(32,888)	(21,327)	(38,748)	(6,927)	(141,924)	(2,815)
Depreciation - business combinations	-	(2,577)	(18,231)	(556)	-	(21,364)	-
Depreciation charge for the year	(16,952)	(12,391)	(15,110)	(10,266)	(2,942)	(57,661)	(2,368)
Balance 30 June 2010	(58,986)	(47,856)	(54,668)	(49,570)	(9,869)	(220,949)	(5,183)
Depreciation charge for the year	(17,274)	(12,723)	(33,976)	(3,263)	(2,931)	(70,167)	(4,126)
Balance 30 June 2011	(76,260)	(60,579)	(88,644)	(52,833)	(12,800)	(291,116)	(9,309)

Carrying amounts
At 30 June 2009	151,966	23,266	8,765	15,946	7,783	207,726	5,742
At 30 June 2010	149,158	23,470	60,910	9,269	4,841	247,648	6,623
At 30 June 2011	131,884	35,410	179,078	8,437	1,910	356,720	20,878

The net book value of assets pledged as security for lease finance is $179,078 (2010: $54,667).

NOTE 11 INTANGIBLE ASSETS

	Deferred exploration costs $
Cost
Balance 30 June 2009	18,021,422
Additions - business combinations	13,343,310
Additions - expenditure	2,609,189
Disposals	-
Balance 30 June 2010	33,973,921
Additions - expenditure	11,592,872
Disposals	-
Balance 30 June 2011	45,566,793

Impairment losses
Balance at 30 June 2009	-
Impairment charge	(567,415)
Balance 30 June 2010	(567,415)
Impairment charge	(279,038)
Balance 30 June 2011	(846,453)

Carrying amounts
At 30 June 2009	18,021,422
At 30 June 2010	33,406,506
At 30 June 2011	44,720,340

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 11 INTANGIBLE ASSETS (continued)

Newmont Guadalcanal Venture

On 5th March 2009, the Company announced its definitive Venture Agreement with Newmont, under which Newmont can earn 51% of the defined project area by expending US$6 million within three (3) years, and may elect to expend a further US$6 million within a further two (2) years to earn a further 19% to reach 70%. The defined project area comprises five (5) adjoining tenement areas on Guadalcanal, Solomon Islands. The carrying value of the Capitalised Exploration of these 5 tenement areas as at 30 June 2011 is $17,895,107 (2010: $17,587,281).

The expenditure undertaken by Newmont under the terms of the Venture Agreement has not been booked by the Company.

Should Newmont meet the terms of its initial earn-in entitlement by expending US$6 million within three (3) years, the Company will grant Newmont a 51% equitable interest in the tenements at that point.

Impairment loss

During the year the Group has not considered it necessary to make a provision for impairment against any of its deferred exploration assets (2010: nil). A decision was made to expense $279,038 (2010: $567,415) for exploration expenditure associated with tenements that were dropped during the year. A detailed assessment of the carrying values of deferred exploration costs is provided in Note 24.

NOTE 12 LOANS RECEIVABLES AND OTHER NONCURRENT ASSETS

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Loans receivables	861,327	-	861,327	-
Security bonds	86,549	-	7,569	-
	947,876	-	868,896	-

NOTE 13 DEFERRED TAXATION

Recognised deferred tax assets

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Deferred tax assets: Tax losses	896,996	1,011,014	-	-
Deferred tax liabilities: Temporary timing differences arising on intangible assets	(896,996)	(1,011,014)	-	-
Net deferred taxes	-	-	-	-

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following amounts. Deferred tax has been calculated at the expected future rate of corporation tax of 30%.

Group

2011

Group

2010

Company

2011

Company

2010

Tax losses

3,225,208

332,157

1,912,787

1,235,186

3,225,208

332,157

1,912,787

1,235,186

The deferred tax asset in respect of these items has not been recognised as future taxable profit is not anticipated within the foreseeable future.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 14 OTHER RECEIVABLES AND PREPAYMENTS

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Other receivables	428,642	377,885	291,787	214,477
Prepayments	127,693	9,005	127,693	-
	556,335	386,890	419,480	214,477

NOTE 15 CASH AND CASH EQUIVALENTS

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Cash at bank	1,235,531	219,811	1,060,249	111,976
Call deposits	10,308,219	-	10,308,219	-
Cash and cash equivalents in the statement of cash flows	11,543,750	219,811	11,368,468	111,976

NOTE 16 CAPITAL AND RESERVES

(a) Authorised Share Capital

	2010 No. of Shares	2010 Nominal Value £
On incorporation - ordinary shares of £0.0001 each	1,000,000,000	100,000
Consolidated into ordinary shares of £0.01 each on 27 October 2005	10,000,000	100,000
Creation of additional shares of £0.01 each on 27 October 2005	40,000,000	400,000
Creation of additional shares of £0.01 each on 11 December 2007	50,000,000	500,000
Creation of additional shares of £0.01 each on 1 December 2008	100,000,000	1,000,000
Creation of additional shares of £0.01 each on 12 February 2010	200,000,000	2,000,000
At 30 June 2010 - Ordinary shares	400,000,000	4,000,000

	2011 No. of Shares	2011 Nominal Value £
At 1 July 2010 - Ordinary shares	400,000,000	4,000,000
Creation of additional shares of £0.01 each on 8 November 2010	100,000,000	1,000,000
At 30 June 2011 - Ordinary shares	500,000,000	5,000,000

(b) Changes in Issued Share Capital and Share Premium

	No. of Shares	Nominal Value $	Share Premium $	Total $
Ordinary shares of 1p each at 30 June 2009	76,231,126	1,736,803	20,215,990	21,952,793
Shares issued at $0.16 - placement 8 July 2009	8,310,378	170,363	1,192,539	1,362,902
Share issue costs charged to share premium account	-	-	(75,816)	(75,816)
Shares issued at $0.18 - remuneration 17 July 2009	400,000	8,197	63,118	71,315
Shares issued at $0.14 - placement 13 November 2009	21,428,571	387,686	2,612,314	3,000,000
Share issue costs charged to share premium account	-	-	(5,010)	(5,010)
Shares issued at $0.12- consideration 21 December 2009	49,600,000	894,548	5,224,160	6,118,708
Shares issued at $0.13 - consideration 19 February 2010	37,200,000	670,911	4,025,466	4,696,377
Shares issued at $0.13 -consideration 27 April 2010	96,197	1,582	10,918	12,500
Ordinary shares of 1p at 30 June 2010	193,266,272	3,870,090	33,263,679	37,133,769

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 16 CAPITAL AND RESERVES (continued)

(b) Changes in Issued Share Capital and Share Premium (continued)

	No. of Shares	Nominal Value $	Share Premium $	Total $
Ordinary shares of 1p each at 30 June 2010	193,266,272	3,870,090	33,263,679	37,133,769
Shares issued at $0.09 - placement 12 July 2010	33,089,099	567,372	2,271,773	2,839,145
Share issue costs charged to share premium account	-	-	(67,786)	(67,786)
Shares issued at $0.32 - consideration 8 November 2010	500,000	7,959	152,843	160,802
Shares issued at $0.45 - placement 11 November 2010	54,017,153	863,135	23,336,549	24,199,684
Share issue costs charged to share premium account	-	-	(1,153,700)	(1,153,700)
Shares issued at $0.38 - consideration 24 December 2010	900,000	13,832	333,499	347,331
Shares issued at $0.46 - remuneration 28 April 2011	913,287	13,948	-	13,948
Shares issued at $0.15 - consideration 30 April 2011	1,222,222	18,628	167,612	186,240
Shares issued at $0.15 - consideration 24 June 2011	715,681	10,962	97,821	108,783
Ordinary shares of 1p at 30 June 2011	284,623,714	5,365,926	58,402,090	63,768,216

Potential issues of ordinary shares

At 30 June 2011 the Company had 11,264,000 options outstanding for the issue of ordinary shares, as follows:

Options

Date of grant	Exercisable from	Exercisable to	Exercise prices	Number granted	Number at 30 June 2011
29 April 2011	Longer of 12 months from grant or when the 30 day volume weighted average price ("VWAP") of the company share price reaches £0.50.	28 April 2014	£0.50	5,324,000	5,324,000
31 May 2011	Longer of 12 months from grant or when the 30 day VWAP of the company share price reaches £0.50.	30 May 2014	£0.50	5,940,000	5,940,000
				11,264,000	11,264,000

Warrants

There were no warrants outstanding as at 30 June 2011.

Share options issued

During the year, 3,038,767 unlisted share options in Solomon Gold plc expired out of the money.

On 29 April 2011and 31 May 2011, the Company issued 5,324,000and 5,940,000 unlisted share options to certain employees and directors, respectively, under its employee share option plan. The options were issued free of charge and are exercisable at 50 pence per ordinary share. The period during which these share options can be exercised is between the longer of 12 months from grant or when the 30 day VWAP of the company share prices reaches £0.50 and 30 May 2014.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 16 CAPITAL AND RESERVES (continued)

Dividends

The Directors do not recommend the payment of a dividend.

Capital Management

Given the nature of the group's current activities the entity will remain dependant on equity funding in the short to medium term until such time as the group becomes self-financing from the commercial production of mineral resources.

NOTE 17 FINANCE LEASE LIABILITIES

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Minimum lease payments
- Due within one year	63,552	22,756	-	-
- Between one and two years	63,516	22,756	-	-
- Between two and five	90,482	22,787
- Later than five years	-	-	-	-
Total minimum lease payments	217,550	68,299	-	-
- Future finance charges	(37,494)	(9,903)	-	-
Lease liability	180,056	58,396	-	-
- Current Liability due within one year	47,234	24,069	-	-
- Non-current liability due between one and five years	132,822	34,327	-	-

Lease liabilities are secured over the assets to which they relate.

NOTE 18 TRADE AND OTHER CURRENT PAYABLES

	Group 2011 $	Group 2010 $	Company 2011 $	Company 2010 $
Current
Trade payables	617,106	829,572	94,897	96,947
Convertible note (see Note 22)	-	1,000,000	-	1,000,000
Other payables	148,163	74,148	46,069	16,586
Accrued expenses	115,964	256,058	110,564	226,048
	881,233	2,159,778	251,530	1,339,581

NOTE 19 EMPLOYEE BENEFITS

Share-based payments

The number and weighted average exercise price of share options are as follows:

	Weighted average exercise price 2011	Number of options 2011	Weighted average exercise price 2010	Number of options 2010
Outstanding at the beginning of the period	£0.37	6,376,670	£0.43	5,615,000
Lapsed during the period	£0.57	(3,038,767)	£0.50	(538,330)
Granted during the period	£0.50	11,264,000	£0.10	1,300,000
Exercised during the period	£0.16	(3,337,903)	-	-
Outstanding at the end of the period	£0.50	11,264,000	£0.37	6,376,670
Exercisable at the end of the period	-	-	£0.37	5,076,670

The options outstanding at 30 June 2011 have an exercise price of £0.50 (2010: £0.10-1.00) and a weighted average contractual life of 2.88 years (2010: 0.77 years).

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 19 EMPLOYEE BENEFITS (continued)

Share-based payments (continued)

Share options held by Directors are as follows:

Share options held	At 30 June 2011	At 30 June 2010	Option Price	Exercise Period
Nicholas Mather	-	233,333	75p	01/01/08 - 01/01/11
	-	233,334	100p	01/01/08 - 01/01/11
	-	250,000	25p	31/01/08 - 31/12/10
	-	125,000	50p	31/01/08 - 31/12/10
	-	125,000	75p	31/01/08 - 31/12/10
	2,200,000	-	50p	31/05/12 - 30/05/14
Cameron Wenck	-	25,000	75p	01/01/08 - 01/01/11
	-	25,000	100p	01/01/08 - 01/01/11
	-	100,000	25p	31/01/08 - 31/12/10
	-	50,000	50p	31/01/08 - 31/12/10
	-	50,000	75p	31/01/08 - 31/12/10
	1,100,000	-	50p	31/05/12 - 30/05/14
Brian Moller	-	25,000	75p	01/01/08 - 01/01/11
	-	25,000	100p	01/01/08 - 01/01/11
	-	75,000	25p	31/01/08 - 31/12/10
	-	37,500	50p	31/01/08 - 31/12/10
	-	37,500	75p	31/01/08 - 31/12/10
	880,000	-	50p	31/05/12 - 30/05/14
Robert Weinberg	-	25,000	75p	01/01/08 - 01/01/11
	-	25,000	100p	01/01/08 - 01/01/11
	-	75,000	25p	31/01/08 - 31/12/10
	-	37,500	50p	31/01/08 - 31/12/10
	-	37,500	75p	31/01/08 - 31/12/10
	880,000	-	50p	31/05/12 - 30/05/14
John Bovard	880,000	-	50p	31/05/12 - 30/05/14

The total number of options outstanding at year end is as follows:

Share options held at 30 June 2011	Share options held at 30 June 2010	Option price	Exercise periods
-	1,300,000	£0.10	14/10/09 - 30/04/11
-	1,300,000	£0.10	27/10/10- 30/06/11
-	500,000	£0.20	31/12/07 - 08/11/10
-	1,100,000	£0.25	31/12/07 - 31/12/10
-	550,000	£0.50	01/01/07 - 31/12/10
-	1,088,334	£0.75	31/12/07 - 01/01/11
-	538,335	£1.00	01/01/08 - 01/01/11
5,324,000	-	£0.50	29/04/12 - 28/04/14
5,940,000	-	£0.50	31/05/12 - 30/05/14
11,264,000	6,376,670

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. This estimate is based on a Black-Scholes model which is considered most appropriate considering the effects of the vesting conditions, expected exercise period and the dividend policy of the Company.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 19 EMPLOYEE BENEFITS (continued)

Share-based payments (continued)

Fair value of share options and assumptions	2011		2010
Fair value of share options and assumptions	Director £0.50 Options 31 May 2011	Employee £0.50 Options 29 April 2011	£0.10 options 27 April 2010
Fair value at issue date	£0.1441	£0.1906	£0.0203
Exercise price	£0.50	£0.50	£0.10
Expected volatility	151.4%	151.4%	106.6%
Option life	3.00 years	3.00 years	1.17 years
Expected dividends	0.00%	0.00%	0.00%
Risk-free interest rate (short-term)	2.74%	2.88%	3.96%

The calculation of the volatility of the share price was based on the Company's daily closing share price over the two-year period prior to the date the options were issued.

NOTE 20 FINANCIAL INSTRUMENTS (GROUP AND COMPANY)

If required, the Board of Directors determines the degree to which it is appropriate to use financial instruments, commodity contracts or other hedging contracts or techniques to mitigate risks. The main risks for which such instruments may be appropriate are foreign currency risk and liquidity risk, each of which is discussed below. The main credit risk is the non-collection of loans and other receivables which include tax (VAT, withholding tax), refunds and tenement security deposits. There were no overdue receivables at year end.

There have been no changes in financial risks from the previous year.

During the year ended 30 June 2011 no trading in commodity contracts was undertaken.

Foreign currency risk

The Group has potential currency exposures in respect of items denominated in foreign currencies comprising:

§ Transactional exposure in respect of operating costs, capital expenditures and, to a lesser extent, sales incurred in currencies other than the functional currency of operations which require funds to be maintained in currencies other than the functional currency of operation; and

§ Translational exposures in respect of investments in overseas operations which have functional currencies other than Australian dollars.

Currency risk in respect of non-functional currency expenditure is reviewed by the Board.

The table below shows the extent to which Group companies have monetary assets and liabilities in currencies other than the Group functional currency. Foreign exchange differences on retranslation of such assets and liabilities are taken to the statement of comprehensive income.

Group

2011

Group

2010

Solomon Island dollar (SBD)

(13,917)

34,071

The main currency exposure relates to the effect of re-translation of the Group's assets and liabilities in Solomon Island dollar (SBD). A 1% change in the SBD/A$ exchange rate would give rise to a change of approximately $139 (2010 $341) in the Group net assets and reported earnings.In respect of other monetary assets and liabilities held in currencies other than Australian dollars, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.

The company did not have any monetary assets and liabilities in currencies other than the company functional currency.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 20 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) (continued)

Credit Risk

The Group is exposed to credit risk primarily on the financial institutions with which it holds cash and cash deposits. At 30 June 2011, the Group had $11,516,938 in cash accounts with Macquarie Bank Limited in Australia and $26,812 in cash accounts with the ANZ Bank in Honiara, Solomon Islands. Including other receivables, the maximum exposure to credit risk at the reporting date was $12,920,268 (2010: $597,696).

The group has very low credit risk other than the loans receivable of $861,327 whose recoverability is underpinned by the success of the exploration activities undertaken by the entities.

Liquidity risks

The Group and Company raises funds as required on the basis of budgeted expenditure for the next 12to 24 months, dependent on a number of prevailing factors. Funds are generally raised in capital markets from a variety of eligible private, corporate and fund investors, or from interested third parties (including other exploration and mining companies) which may be interested in earning an interest in the project. The success or otherwise of such capital raisings is dependent upon a variety of factors including general equities and metals market sentiment, macro-economic outlook, project prospectivity, operational risks and other factors from time to time. When funds are sought, the Group balances the costs and benefits of equity financing. When funds are received they are deposited with banks of high standing in order to obtain market interest rates. The Group deals with banks with high credit ratings assigned by international credit rating agencies.Funds are provided to local sites weekly, based on the sites' forecast expenditure. The maturity profile of the Group's non-current financial liabilities is disclosed in note 17.

The Company had a $1,000,000 liability to D'Aguilar Gold in the form of a Convertible Note. The Convertible Note accrued interest at the rate of 10% per annum and was repaid on 19 November 2010.

Interest rate risks

The group's and company's policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve month's maximum duration. The increase/decrease of 2% in interest rates will impact the group's income statement by a gain/loss of $230,875 and the company's income statement by $227,369. The group considers that a 2% +/- movement interest rates represent reasonable possible changes.

Fair values

In the Directors' opinion there is no material difference between the book value and fair value of any of the Group's and Company's financial instruments.The classes of financial instruments are the same as the line items included on the face of the statement of financial position and have been analysed in more details in notes to the accounts.

All the group's financial assets are categorised as loans and receivables and all financial liabilities are measured at amortised cost.

NOTE 21 COMMITMENTS

The Company has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Company.

The combined commitments of the Group related to its granted tenement interests are as follows:

Location	Up to 12 Months	13 Months to 5 Years	Later than 5 Years
Solomon Islands	2,936,346	1,401,655	-
Queensland	1,626,263	1,412,948	-
	4,562,609	2,814,603	-

To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Company has the option to negotiate new terms or relinquish the tenements. The Company also has the ability to meet expenditure requirements by joint venture or farm in agreements.

It should be noted that the expenditure undertaken by the Guadalcanal Venture, which Newmont is committed to fund, qualifies towards the above-mentioned commitments. The Board fully expects Newmont to continue to participate in the funding of the GJV for the next twelve months.

Pursuant to a contract for the provision of a helicopter to assist with exploration, as at 30 June 2011 the Group has a commitment to pay $170,000 (in equal monthly payments) between 1 July 2011 and 31 December 2011. The commitment relates to a minimum usage (flying hours) of the helicopter over the commitment period. The Group expects to utilise the minimum flying hours over the commitment period.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 22 RELATED PARTIES

(a) Group

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

a) Transactions with Directors and Director-Related Entities

(i) On 21 December 2009, the Company settled on the acquisition of Acapulco Mining Pty Ltd via a scrip-for-scrip transaction, under which the Company issued 49.6 million shares to the vendors of Acapulco Mining, one of which included interests associated with Nicholas Mather. Furthermore, Messrs Mather and Wenck were Directors of Acapulco. Given the conflict of interest, the due diligence and valuation work was undertaken by the non-conflicted Directors of the Company, assisted by an independent geologist and the Company's NOMAD.

(ii) On 19 February 2010, the Company settled on the acquisition of Central Minerals Pty Ltd via a scrip-for-scrip transaction, under which the Company issued 37.2 million shares to the vendors of Central Minerals, the major shareholder in which was D'Aguilar Gold Limited, in which interests associated with Nicholas Mather hold a substantial interest. Furthermore, Messrs Mather and Moller were Directors of Central Minerals, and are Directors of D'Aguilar Gold. Given the conflict of interest, the due diligence and valuation work was undertaken by the non-conflicted Directors of the Company, assisted by an independent geologist and the Company's NOMAD.

(iii) The Company has a commercial agreement with Samuel Capital Ltd ("Samuel") for the engagement of Nicholas Mather as CEO of the Company. For the year ended 30 June 2011 $318,309 was paid or payable to Samuel (2010: $161,000). These amounts are included in Note 5 (Remuneration of Key Management Personnel). The total amount outstanding at year end is $20,866 (2010: $44,275).

(iv) The Company has a long-standing commercial arrangement with D'Aguilar Gold, an entity associated with Nicholas Mather (Director) and Brian Moller (Director), for the provision of various services, whereby D'Aguilar Gold provides resources and services including the provision of its administration and exploration staff, its premises (for the purposes of conducting the Company's business operations), use of existing office furniture, equipment and certain stationery, together with general telephone, reception and other office facilities (''Services''). In consideration for the provision of the Services, the Company shall reimburse D'Aguilar Gold for any expenses incurred by it in providing the Services. For the year ended 30 June 2011 $313,965 was paid or payable to D'Aguilar Gold (2010: $262,929) for the provision of administration, management and office facilities to the Company during the year. The total amount outstanding at year end was $nil (2010: $102,098).

(v) Mr Brian Moller (a Director), is a partner in the Australian firm HopgoodGanimlawyers. For the year ended 30 June 2011, HopgoodGanimwere paid $188,079 (2010: $228,931) for the provision of legal services to the Company. The services were based on normal commercial terms and conditions. The total amount outstanding at year end was $6,861 (2010: $66,281).

(vi) As part of the commercial agreements for the acquisition of Central Minerals Pty Ltd, the Company acquired a loan repayable to D'Aguilar Gold, an entity associated with Nicholas Mather (Director) and Brian Moller (Director). $1 million was repaid on the date of the acquisition, and $1 million remained payable under a Convertible Note instrument. The Convertible Note bears interest at a rate of 10% p.a. and was repaid on 19 November 2010. For the year ended 30 June 2011, $38,587 (2010: $36,413) in interest was payable to D'Aguilar Gold.

(vii) Sterling Mining Group, an entity associated with Mr John Bovard (a Director), for the year ended 30 June 2011, was paid $38,080(2010: $6,000) for Mr Bovard's consultancy services to the company. The services were based on normal commercial terms and conditions.

(viii) The company is owed $246,716 at year end by Honiara Holdings Pty Ltd, an entity associated with an employee of the Group. The loan is not due for repayment within one year.

b) Share and Option transactions of Directors are shown under Notes 5 and 19.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 22 RELATED PARTIES (continued)

(b) Company

The Company has a related party relationship with its subsidiaries (see note 9), Directors and other key personnel (see Note 19).

Subsidiaries

The Company has an investment in subsidiaries balance of $46,001,868 (2010: $33,976,110). The transactions during the year have been included in Note 9.As the Company does not expect repayment of this amount and will not call payment until the subsidiary can adequately pay it out of working capital, this amount has been included in the carrying amount of the investment in the Parent Entity's statement of financial position.

In the Directors' opinion there is no ultimate controlling party.

NOTE 23 BUSINESS COMBINATIONS

In the prior year, Solomon Gold made the following acquisitions as part of its well publicized corporate strategy to become a major gold explorer, developer and miner within the south west pacific Region.

Acapulco Mining Pty Ltd

On 21 December 2009, Solomon Gold Plc acquired 100% of the capital of Acapulco Mining Pty Ltd, an Australian company with exploration assets in Queensland. Under the transaction, Solomon Gold issued 49.6 million fully paid shares as consideration to the vendors of Acapulco Mining.

Due to certain relationships, the acquisition was considered to be a related party transaction (refer Note 22) and was accordingly governed by the Company's non-conflicted Directors, with assistance from the Company's NOMAD.The consideration shares were issued at the prevailing LSE (AIM) price for Solomon Gold at the time of gaining control of the target company. Accordingly, the consideration for the acquisition has been valued at $6,118,708.

In accordance with the new revisions to IFRS 3 effective from 1 July 2009, the acquisition-related costs of $228,034 were expensed. These are included under administrative expenses.

Central Minerals Pty Ltd

On 19 February 2010, following D'Aguilar Gold Ltd shareholder approval granted at an Extraordinary General Meeting, Solomon Gold plc acquired 100% of the shares in Central Minerals Pty Ltd for 37.2 million Solomon Gold shares under a scrip-for-scrip acquisition.

Under the transaction, Solomon Gold also agreed to the repayment of a $2,228,873 inter-company loan between D'Aguilar Gold Ltd and Central Minerals for the payment of $2,000,000 as follows:

· $1,000,000 was paid on 19 February 2010;

· $1,000,000 was paid on 19 November 2010.

The consideration shares were issued at the prevailing LSE(AIM) price for Solomon Gold at the time of gaining control of the target company. Accordingly, the consideration for the acquisition has been valued at $4,696,377.

In accordance with the new revisions to IFRS 3 effective from 1 July 2009, the acquisition-related costs of $109,536 incurred in connection with the Central Minerals Pty Ltd transaction were expensed.These are included under administrative expenses.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 23 BUSINESS COMBINATIONS (Continued)

The net assets and liabilities of each of the acquisitions were recognised and measured as set out below:

	Acapulco Mining	Central Minerals	Recognised on acquisition
	$	$	$
Cash & cash equivalents	12,166	6,465	18,631
Receivables	41,680	4,483	46,163
Other financial assets	5,880	45,000	50,880
Fixed assets	35,870	38,382	74,252
Exploration assets	6,543,921	6,799,389	13,343,310
Trade and other payables	(486,795)	(2,164,794)	(2,651,589)
Other financial liabilities	(34,014)	(32,548)	(66,562)

Fair Value of Assets / Consideration	$6,118,708	$4,696,377	$10,815,085

Cash Inflows / Outflows

The business combination resulted in net cash acquired of $18,631 to the Company, with an immediate payment of $1,000,000 in loan funds owed to D'Aguilar Gold by Central Minerals under the terms of the transaction.

Revenue and Profit Combination

From the date of acquisition, Acapulco Mining has contributed no revenue, and a loss of $590,094 in 2010. If Acapulco Mining was owned for the full year, the company would have contributed a loss of $609,103 to the Group.

From the date of acquisition, Central Minerals has contributed no revenue, and a loss of $2,130 in 2010. If Central Minerals was owned for the full year, the company would have contributed a loss of $161,115 to the Group.

Acquisition Related Costs

In accordance with the new revisions to IFRS 3 effective from 1 July 2009, the acquisition-related costs of $337,570 incurred in connection with the acquisition transactions have been expensed under 'Administrative expenses' in the Statement of Comprehensive Income in 2010.

NOTE 24 ACCOUNTING ESTIMATES AND JUDGEMENTS

Key sources of estimation uncertainty

The key elements of the Statement of Financial Position that rely on the business judgment of the Directors as related to their carrying value include the capitalised exploration expenditure, and the business combination (also largely reflected in the consolidated carrying value of exploration expenditure).

The Directors have carried out an assessment of the carrying values of deferred exploration costs and any required impairment.

Guadalcanal Joint Venture

In March 2009 Solomon Gold and Australian Resource Management (ARM) entered into a joint venture agreement with Newmont Ventures Limited, a subsidiary of Newmont (NYE: NEM), one of the world's largest gold companies ("JV Agreement"). Under the terms of the JV Agreement Newmont may earn a 51% interest by expending US$6million within three years, and may elect to expend a further US$6 million (total US$12million) to earn a further 19% to a total 70% over a further two year period in the Guadalcanal Joint Venture. The JV Agreement is in the third year, and Newmont must spend US$6 million by 31 March 2012 to obtain a 51% legal and beneficial interest in the Guadalcanal Tenements. The Guadalcanal Tenements comprise of; Koloula (PL 02/05), Central Guadalcanal (PL 03/05), Mbetilonga (PL 04/05), Sutakiki (PL 05/05) and Kuma (PL 08/06). Newmont currently manage the Guadalcanal Joint Venture.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 24 ACCOUNTING ESTIMATES AND JUDGEMENTS

Koloula PL 02/05

Exploration on Koloula PL 02/05 is still at an early stage and the drill testing of the key targets commenced in the current year. Further drilling targets are likely to be identified for several localities in the tenement based on data collected by the Company and its subsidiaries in 1996 and 1997, and by the Guadalcanal Joint Venture. Previously tested drill locations have intersected mineralised zones which provide encouragement in support of the presence of a significant minerals system. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of $4.03 million is considered to be unimpaired.

Central Guadalcanal PL 03/05

Exploration on Central Guadalcanal PL 02/05 is still at an early stage and the drill testing of the key targets is not yet complete. Previous rock chip channel sampling of anomalies in the tenement by previous workers and Solomon Gold's wholly owned subsidiary ARM and by the Guadalcanal Joint Venture, demonstrates potential for the presence of significant gold resources. Recent work has highlighted potential for significant copper porphyry systems. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of $0.42 million is considered to be unimpaired.

Mbetilonga PL 04/05

Exploration on Mbetilonga PL 04/05 is still at an early stage and the drill testing of the key targets has not yet been completed. Five holes were previously drilled into two prospects in the tenement, with inconclusive results by Solomon Gold's wholly owned subsidiary ARM and five holes have been drilled by the Guadalcanal Joint Venture, with encouraging results. Several historical and newly defined targets are yet to be tested. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of $4.21 million is considered to be unimpaired.

Sutakiki PL 05/05

Exploration on Sutakiki PL 02/05 is still at an early stage however previous drill testing of the key targets to date has indicated that there are both high tonnage low grade and high grade low tonnage prospects in the tenement. The results of mapping sampling and drilling programs in the tenement to date are consistent with the discovery of a significant gold and copper mineral system which may ultimately yield resources. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of $8.93 million is considered to be unimpaired.

Kuma PL 08/06

Exploration on Kuma PL 08/06 is at an early stage and the mapping and sampling phase of the program of testing of the key targets has resulted in the identification of extensive mineralised complexes which show potential to yield resources. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of $0.30 million is considered to be unimpaired.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 24 ACCOUNTING ESTIMATES AND JUDGEMENTS

Solomon Gold 100% owned Projects

Florida PL 57/07

Exploration on Florida is at an early stage and work has identified prospective rocks hosting significant nickel anomalies. The carrying value of $0.62 million is considered to be unimpaired.

East Guadalcanal PL 02/08

Exploration on East Guadalcanal is at an early stage and work has commenced. The carrying value of $0.09 million is considered to be unimpaired.

Fauro PL 12/09

Exploration on the island of Fauro is at an early stage and the airborne surveying, mapping and sampling phase of the program of testing of the key targets has resulted in the identification of extensive mineralised complexes which show potential to yield significant gold and copper resources. Initial drilling has commenced on priority targets. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of $7.96 million is considered to be unimpaired.

Acapulco Mining Projects

Acapulco comprises eleven granted tenements. The granted tenements comprise 324 sub-blocks (circa 972km²).

Extensive airborne magnetic and electromagnetic surveys have been conducted over the area, together with detailed soil and rock chip sampling and mapping programs. Between August 2010 and September 2011 a total of 90 holes, equivalent to 8,561m have been drilled on the Acapulco Tenements. Since May 2006 a total of 296 holes, equivalent to 22,841m have been drilled on the Tenements.

The objective is to step-out from areas of known gold mineralisation so that resources can be defined and enlarged, with the objective of defining a maiden resource. The Company intends to continue its aggressive program on the project.

The aggregated carrying value of $8.83 million is considered to be unimpaired.

Central Minerals Projects

Central comprises 18 granted tenements and four applications. The granted tenements comprise 834 sub-blocks (circa 2,502km²) and 118 sub-block (circa 354km2) applications.

Extensive airborne magnetic and electromagnetic surveys have been conducted over the area, together with detailed soil and rock chip sampling and mapping programs. Between August 2010 and September 2011 a total of 233 holes, equivalent to 25,206m have been drilled on the Central Tenements. Since October 2007, a total of 415 holes, equivalent to 42,166m have been drilled on the Tenements.

On 21 June 2011, Solomon Gold announced an updated Inferred Resource estimate of 14.81Mt at 1.14g/t gold equivalent for 543,858oz of contained equivalent gold (273,199oz gold and 10.67Moz silver). At the Kauffmans-Homestead Prospect, the Inferred Mineral Resource estimate is 9.04Mt at 0.85g/t gold equivalent for 247,044oz of contained equivalent gold (186,010oz gold and 2.33Moz silver). The Inferred Mineral Resource estimate at the Crunchie Prospect is 5.77Mt at 1.60g/t gold equivalent for 296,813oz of contained equivalent gold (87,189oz gold and 8.35Moz silver). These estimates are based on a gold to silver ratio of 1: 40 and a 0.35g/t gold equivalent cut‐off grade.

The objective is to step-out from areas of known gold mineralisation so that resources can be defined, or enlarged which will complement the already defined Crunchie and Kauffmans-Homestead Resource. Five known and closely clustered prospects (see Figure 9); Crunchie (including El-Dente & Mushy), Kauffmans-Homestead, Shilo, Cracklin Rosie, and Porcupine, as well as Brother, Spring Creek, Police Camp Creek, also within the Central Rannes area have been drilled to date, with results which show long intersections of potentially economic gold mineralisation. The Company intends to continue its aggressive program on the project. Further opportunities have been identified within the project area and these will be followed-up.

The aggregated carrying value of $9.33 million is considered to be unimpaired.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2011

NOTE 25 CONTINGENT ASSETS AND LIABILITIES

There are no contingent assets and liabilities at 30 June 2011 (2010: none).

NOTE 26 SUBSEQUENT EVENTS

The Directors are not aware of any significant changes in the state of affairs of the Group or the Company or events after the balance date that would have a material impact on the financial statements.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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