Interim Financial Results

RNS Number : 1596Y

Solomon Gold PLC

27 February 2012

 



SOLOMON GOLD PLC

HALF YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2011

Corporate Information

DIRECTORS

Cameron Wenck (Non-Executive Chairman)

Malcolm Norris (Managing Director and Chief Executive Officer)

Nicholas Mather (Executive Director)

Brian Moller (Non-Executive Director)

Robert Weinberg (Non-Executive Director)

John Bovard (Non-Executive Director)

COMPANY SECRETARY

Karl Schlobohm

REGISTERED OFFICE

Ten Dominion Street

London EC4V 6LB

United Kingdom

Registered Number 5449516

AUSTRALIAN OFFICE

Level 2, 169 Mary Street, Brisbane   QLD   4000

Phone: + 61 7 3303 0660   Fax: [phone]

Email: [e-mail]

Web Site: www.solomongold.com

AUDITORS

PKF (UK) LLP

Farringdon Place, 20 Farringdon Road

London EC1M 3AP

United Kingdom

NOMINATED ADVISOR

RFC Corporate Finance Ltd

Level 14, 19-31 Pitt Street

Sydney NSW 2000

Australia

BROKER

Fairfax IS Plc

46 Berkeley Square, Mayfair

London W1J 5AT

United Kingdom

BANKERS

Macquarie Bank Ltd (Brisbane Branch)

345 Queen Street

Brisbane QLD 4000

Australia

SOLICITORS

Fox Williams LLP

Ten Dominion Street London EC4V 6LB

United Kingdom

AUSTRALIAN SOLICITORS

Hopgood Ganim

1 Eagle Street

Brisbane QLD 4000

Australia

REGISTRARS

Computershare Investor Services plc

The Pavilions, Bridgwater Road

Bristol BS99 7NH

United Kingdom

DIRECTORS' REPORT

Your Directors present their report on the company and its controlled entities for the half year ended 31 December 2011.  Solomon Gold plc is a public limited company incorporated in England and Wales.

DIRECTORS

The names of the Directors in office at any time during or since the end of the period are:

Cameron Wenck (Non-Executive Chairman)

Malcolm Norris (Managing Director and Chief Executive Officer) - appointed 1 November 2011

Nicholas Mather (Executive Director)

Brian Moller (Non-Executive Director)

Robert Weinberg (Non-Executive Director)

John Bovard (Non-Executive Director)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

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. 

Review and results of operations

During the reporting period drilling continued at two prospects on the Fauro Island Project (100% owned by Solomon Gold). Ground based sampling was undertaken on nine prospects, including additional ground work at Ballyorlo and Meriguna prospects.  The best drilling results received to date are; 36m at 1.03g/t gold from hole FDDH001, and 31m at 2.28g/t gold and 3m at 14.9g/t gold from hole FDDH002, both located at Meriguna Prospect; and 157m at 0.42g/t gold from FDDH006 located at Ballyorlo Prospect.  Drilling was stopped in December 2011, and all data from the Fauro Project is currently being reviewed, prior to planning the next phase of work.

At the Guadalcanal Joint Venture Project, ground based exploration continued over the five Project areas.  Drilling was undertaken at Sutakiki and Mbetilonga Project areas, where 3 holes were completed for a total of 1,867.1m.

On the Rannes Project (100% owned by Solomon Gold), an Inferred resource upgrade was announced on 30 November 2011 of 812,307 ounces gold equivalent.  Resoruce definition drilling continues, with encouraging results.  An updated Inferred resource estimate is scheduled to be released at the end of Q1 2012.  At the Mt Perry Project (100% owned by Solomon Gold), exploration continued on known prospects.

The loss after income tax for the Company for the half-year ended 31 December 2011 was $2,243,992 (31 December 2010 loss of $1,077,650).

Matters subsequent to the half yearly financial period

On 16 February 2012, the Company acquired a 100% interest in the share capital of Honiara Holdings Pty Ltd for a total consideration of $50,000.  The consideration paid was made up of $1 cash component and $49,999 of the existing loan to that entity being converted to equity.

Auditors independence declaration

The Auditor's Independence Declaration forms part of the Directors' Report and can be found on page 15.

Signed in accordance with a resolution of the board of Directors.

Malcolm Norris

Managing Director and Chief Executive Officer

Brisbane                               

27 February 2012

Notes:

The resource estimates for the Rannes Project were compiled by Neil Schofield of FSSI Consultants (Australia) Pty Ltd, an independent geological consultancy, and have been classified as Inferred for reporting under the JORC Code for Reporting of Mineral Resources and Ore Reserves, widely accepted as a standard for professional reporting purposes.

Qualified Person

Information in this report relating to exploration results is based on data reviewed by Mr Malcolm Norris (B.Sc. Hons, MSc), the Chief Executive Officer of the Company.  Mr Norris is a fellow of the Australasian Institute of Mining and Metallurgy who has in excess of 25 years experience in mineral exploration and is a Qualified Person under the AIM Rules.  Mr Norris consents to the inclusion of the information in the form and context in which it appears.

Consolidated Statement of Comprehensive Income

for the half year ended 31 December 2011

		2011	2010
	Notes	A$	A$
Revenue		182,717	54,193
Administration and consulting expenses		544,448	603,253
Borrowing cost expenses		920	39,285
Depreciation and amortisation expense		39,154	34,007
Employee benefit expenses		401,172	325,336
Exploration expenditure written-off		407,745	85,379
Legal expenses		85,073	44,583
Share based payments expense		948,197	-
Operating loss before income tax		(2,243,992)	(1,077,650)
Income tax expense		-	-
Loss for the period		(2,243,992)	(1,077,650)
Other comprehensive income		-	-
Total comprehensive loss for the period		(2,243,992)	(1,077,650)

		2011	2010
	Notes	cents	cents
Basic and diluted loss per ordinary share
- basic and diluted	4	(0.8)	(0.4)

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

Consolidated Statement of Financial Position

at 31 December 2011

		31 December	30 June
		2011	2011
	Notes	A$	A$
Assets
Current assets
Cash and cash equivalents	5	2,490,054	11,543,750
Other receivables and prepayments		579,310	556,335
Total current assets		3,069,364	12,100,085
Non-current assets
Other financial assets		81,049	78,549
Receivables		1,749,923	861,327
Investments in available-for-sale securities		8,000	8,000
Property, plant and equipment		330,262	356,720
Intangible assets	6	52,559,843	44,720,340
Total non-current assets		54,729,077	46,024,936
Total assets		57,798,441	58,125,021
Current liabilities
Trade and other payables		1,359,321	881,233
Lease liabilities		49,696	47,234
Total current liabilities		1,409,017	928,467
Non-current liabilities
Lease liabilities		107,244	132,822
Total non-current liabilities		107,244	132,822
Total liabilities		1,516,261	1,061,289
Net assets		56,282,180	57,063,732
Equity
Issued capital	7	63,768,216	63,768,216
Reserves		2,578,820	1,116,380
Accumulated losses		(10,064,856)	(7,820,864)
Total equity		56,282,180	57,063,732

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

Consolidated Statement of Changes in Equity

for the half year ended 31 December 2011

	Notes	Share capital A$	Share option reserve A$	Accumulated losses A$	Total A$
Balance at 1 July 2010		37,133,769	1,070,805	(6,161,893)	32,042,681
Total comprehensive loss for the period		-	-	(1,077,650)	(1,077,650)
Transactions with owners in their capacity as owners
New share capital subscribed		27,038,829	-	-	27,038,829
Share Issue costs		(1,221,487)	-	-	(1,221,487)
Exercise of share options		508,133	-	-	508,133
Reserve transfers on expiration		-	(643,412)	643,412	-
Balance 31 Dec 2010		63,459,244	427,393	(6,596,131)	57,290,506
Total comprehensive loss for the period				(1,646,426)	(1,646,426)
Transactions with owners in their capacity as owners
Value of shares and options issued to Directors, employees and consultants		13,948	688,987	421,693	1,124,628
Exercise of share options		295,024	-	-	295,024
Balance 30 June 2011		63,768,216	1,116,380	(7,820,864)	57,063,732
Total comprehensive loss for the period		-	-	(2,243,992)	(2,243,992)
Transactions with owners in their capacity as owners
Share options issued to employees and consultants		-	1,462,440	-	1,462,440
Balance 31 December 2011		63,768,216	2,578,820	(10,064,856)	56,282,180

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

Consolidated Statement of Cash Flows

for the half year ended 31 December 2011

		2011	2010
	Notes	A$	A$
Cash flows from operating activities
Receipts from customers		-	-
Payments to suppliers and employees		(1,148,473)	(1,163,156)
Interest received		182,717	54,193
Interest paid		(880)	(39,285)
Net cash outflow from operating activities		(966,636)	(1,148,248)
Cash flows from investing activities
Acquisition of property, plant and equipment		(12,696)	(10,297)
Investments in available-for-sale securities		-	(8,000)
Refund of (payment for) security deposits		(2,500)	(10,702)
Acquisition of intangible assets		(7,160,152)	(4,357,160)
Net cash (outflow)/inflow from investing activities		(7,175,348)	(4,386,159)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital		-	27,038,829
Payment of issue costs		-	(1,221,487)
Proceeds from the exercise of share options		-	508,133
Loans to third parties		(888,595)	(117,405)
Repayment of convertible notes		-	(1,000,000)
Net repayment of finance leases		(23,117)	(10,121)
Net cash inflow from financing activities		(911,712)	(25,197,949)
Net (decrease)/increase in cash and cash equivalents		(9,053,696)	19,663,542
Cash and cash equivalents at beginning of period		11,543,750	219,811
Cash and cash equivalents at end of period		2,490,054	19,883,353

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

NOTE 1  summary of significant accounting policies

Basis of preparation

This general purpose condensed financial report for the half year ended 31 December 2011 has been prepared in accordance with IAS 34 Interim Financial Reporting and International Financial Reporting Standards.

The consolidated financial statements are presented in Australian dollars ("A$") and have been prepared on the historical cost basis.

The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing activities of the consolidated entity as the full financial report.

It is recommended that the half year financial report be read in conjunction with the annual report for the year ended 30 June 2011 and considered together with any public announcements made by Solomon Gold plc and its controlled entities during the half year ended 31 December 2011.

The same accounting policies and methods of computation have generally been followed in this half-year financial report as compared with the most recent annual financial report.

Going concern

The half year financial report has 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.  As such, the Company's ability to continue to adopt the going concern assumption will depend upon a number of matters including subsequent successful raisings in the future of necessary funding and the successful exploration and subsequent exploitation of the Company's tenements.  In the absence of these matters being successful, there exists a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the ordinary course of business.

Comparatives

When required by Accounting Standards, comparatives have been adjusted to conform to changes in presentation for the current financial year.

Basis of consolidation

The half year consolidated financial statements comprise the financial statements of Solomon Gold plc and its controlled entities as at 31 December 2011.

NOTE 2  OPERATING SEGMENTS

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 Operating Segments, 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. 

31 December 2011
	Finance Income $	Other Income $	Result $	Share Based Payments $	Depreciation $	Assets $	Liabilities $
Solomon Gold	182,417	-	(1,731,356)	948,197	4,005	59,000,517	841,374
Australian Resource Management	179	-	(79,279)	-	13,490	30,983,842	31,149,014
Central Minerals	90	-	(362,049)	-	16,134	9,106,914	9,893,318
Acapulco Mining	30	-	(71,335)	-	5,525	5,274,386	3,027,558
Solomon Operations	1	-	27	-	-	29,775	81,457
Consolidation/Elimination	-	-	-	-	-	(46,596,993)	(43,476,460)
Total	182,717	-	(2,243,992)	948,197	39,154	57,798,441	1,516,261

	31 December 2010						30 June 2011
	Finance Income $	Other Income $	Result $	Share Based Payments $	Depreciation $	Assets $	Liabilities $
Solomon Gold	53,974	-	(846,428)	-	1,474	58,679,590	251,530
Australian Resource Management	170	-	(170,094)	-	23,415	26,730,258	26,816,152
Central Minerals	10	-	(2,266)	-	6,062	5,632,580	6,056,935
Acapulco Mining	30	-	(56,977)	-	3,056	5,099,538	2,781,376
Solomon Operations	9	-	(1,885)	-	-	542	52,251
Consolidation/Elimination	-	-	-	-	-	(38,017,487)	(34,896,955)
Total	54,193	-	(1,077,650)	-	34,007	58,125,021	1,061,289

	31 December 2011	31 December 2010
	A$	A$

NOTE 3  Expenses

Administration and consulting expenses include
Foreign exchange losses	-	1,858

Note 4  Loss per share

Calculation of basic and diluted loss per share is in accordance with IAS 33 Earnings per Share.

Loss per ordinary share
Basic loss per share (cents per share)	(0.8)	(0.4)
Diluted loss per share (cents per share)	(0.8)	(0.4)
Net loss used in calculating basic and diluted loss per share	(2,243,992)	(1,077,650)
	Number	Number
Weighted average number of ordinary share used in the calculation of basic loss per share	284,623,714	245,201,112
The options are non-dilutive as the company is incurring losses.

Note 5  cash and cash equivalents

	31 December 2011	30 June 2011
	A$	A$
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following:
Cash at bank and on hand	2,490,054	11,543,750

Note 6  intangible assets

Intangible assets represent deferred exploration and evaluation costs.

Carrying amount at the beginning of the period	44,720,340	33,406,506
Additions	8,247,248	11,592,872
Exploration expenditure written off	(407,745)	(279,038)
Carrying amount at the end of the period	52,559,843	44,720,340

Note 7  issued capital

	31 December 2011	30 June 2011
	A$	A$
a) Issued capital
Ordinary shares fully paid up	63,768,216	63,768,216
b) Movement in ordinary shares
At the beginning of the reporting period	63,768,216	37,133,769
Shares issued during the period	-	27,213,579
Transaction costs on share issue	-	(1,221,486)
Exercise of share options	-	642,354
At reporting date	63,768,216	63,768,216
c) Movement in number of ordinary shares on issue
Shares at the beginning of the reporting period	284,623,489	193,266,272
-     12 July 2010 (1)	-	33,089,099
-     22 October 2010 (2)	-	54,017,153
-     8 November 2010 (3)	-	500,000
-     23 December 2010 (4)	-	250,000
-     24 December 2010 (5)	-	650,000
-     28 April 2011 (6)	-	913,287
-     30 April 2011 (7)	-	1,221,997
-     24 June 2011 (8)	-	715,681
Shares at the reporting date	284,623,489	284,623,489

(1)   On 12 July 2010, 33,089,099 $0.086 ordinary shares were issued for cash pursuant to a share placement.

(2)   On 22 October 2010, 54,017,153 $0.448 ordinary shares were issued for cash pursuant to a share placement.

(3)   On 8 November 2010, 500,000 $0.322 options expiring on 8/11/10 were exercised into ordinary shares for cash.

(4)   On 23 December 2010, 250,000 $0.384 options expiring on 31/12/10 were exercised into ordinary shares for cash.

(5)   On 24 December 2010, 650,000 $0.389 options expiring on 31/12/10 were exercised into ordinary shares for cash.

(6)   On 28 April 2011, 913,287 $0.46 ordinary shares issued to Directors, employees and consultants as a bonus.

(7)   On 30 April 2011, 1,221,997 $0.15 options expiring on 30/4/11 were exercised into ordinary shares for cash.

(8)   On 24 June 2011, 715,681 $0.15 options expiring on 30/6/11 were exercised into ordinary shares for cash.

NOTE 8    RELATED PARTIES

Transactions with Directors and Director-Related Entities

(i)         Solomon Gold Plc has a standing Administration and Services Agreement with DGR Global Ltd, an entity associated with Nicholas Mather (a Director) and Brian Moller (a Director) whereby DGR Global Ltd has agreed to provide certain services including the provision by DGR Global Ltd of 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 DGR Global Ltd for any expenses incurred by it in providing the Services.  The Administration Services Agreement may be terminated upon the occurrence of an insolvency event of the other party, a failure to remedy a material breach of the Administration Services Agreement by the other party or upon three months written notice to the other party. DGR Global Ltd was paid $189,000 (2010: $119,861) for the provision of administration, management and office facilities to the Company during the half year.  The total amount outstanding at half year end is $15,159 (2010: $33,195)

(ii)        Mr Brian Moller (a Director), is a partner in the Australian firm Hopgood Ganim Lawyers. Hopgood Ganim were paid $67,687 (2010: $106,769) for the provision of legal services to the Company during the half year.  These services were based on normal commercial terms and conditions.  The total amount outstanding at half year end is $31,520 (2010: $72,796).

NOTE 9    COMMITMENTS AND CONTINGENT LIABILITIES

There are no significant changes to commitments and contingencies disclosed in the most recent annual financial report.

NOTE 10  SUBSEQUENT EVENTS

On 16 February 2011, the Company acquired a 100% interest in the share capital of Honiara Holdings Pty Ltd for a total consideration of $50,000. The consideration paid was made up of $1 cash component and $49,999 of the existing loan to that entity being converted to equity.

The acquisition provides the Company with additional prospective tenements in the Solomon Islands.  Early stage exploration completed by Honiara Holdings Pty Ltd has returned encouraging gold geochemical and geological results.

Additional information in relation to the business combination has not been disclosed as the Company has not completed the initial accounting for the business combination at the date of this report.

There have been no other material events after 31 December 2011 to the date of this report.

In the directors' opinion:

·      the attached financial statements and notes thereto comply with IAS 34 'Interim Financial Reporting' and other mandatory professional reporting requirements;

·      the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the financial half-year ended on that date; and

·      there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors.

On behalf of the directors

Malcolm Norris

Managing Director

Brisbane

27 February 2012

Lead auditor's independence declaration

To: the directors of Solomon Gold Plc

I declare to the best of my knowledge and belief, in relation to the review of the financial half-year ended 31 December 2011 there have been no contraventions of the auditor independence requirements as set out in APES 110: Code of Ethics for Professional Accountants.

Albert Loots

Partner - PKF

Dated at Brisbane this 27^th day of February 2012

Tel: [phone]  |  Fax: [phone] n>

PKF  ; Brisbane  HTMLPIPESYMBOL  Queensland 4001

The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

INDEPENDENT ASSURANCE PRACTITIONER'S REVIEW REPORT

TO THE MEMBERS OF SOLOMON GOLD PLC

Report on the Half-Year Financial Report

We have reviewed the accompanying consolidated half-year financial report of Solomon Gold plc which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity. The consolidated entity comprises Solomon Gold plc (the company) and the entities it controlled at 31 December 2011 or from time to time during the half-year ended on that date.

Directors' Responsibility for the Half-Year Financial Report

The Directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance International Financial Reporting Standards. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Assurance Practitioner's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review.  We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2400 Review of a Financial Report Performed by an Assurance Practitioner Who is Not the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report does not give a true and fair view of the consolidated entity's financial position as at 31 December 2011 and its performance for the half-year ended on that date, and that the financial report complies with Accounting Standard IAS 34 Interim Financial Reporting.  ASRE 2400 requires us to comply with the requirements of APES 110: Code of Ethics for Professional Accountants.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Tel: [phone]  HTMLPIPESYMBOL  Fax: [phone]  Brisbane  HTMLPIPESYMBOL  Queensland 4000  work of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

Independence

In conducting our review, we have complied with the independence requirements of APES 110 Code of Ethics for Professional Accountants. 

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the consolidated entity does not:

(a)      give a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and

(b)      comply with Accounting Standard IAS 34 Interim Financial Reporting.

Emphasis of matter

Without qualifying our conclusion, we draw attention to Note 1 in the financial report, which indicates that the consolidated entity's ability to continue as a going concern is dependent on successfully raising capital in the near future. This condition, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity's ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

PKF

Albert Loots

Partner

Dated at Brisbane this 27^th day of February 2012

 

END

 

 

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