Operational Update

Falkland Gold and Minerals Ltd
18 October 2005



            Falkland Gold and Minerals Ltd ('FGML' or 'the Company')

                    Strategic Review and Operational Update



•        Concept of an economically viable gold deposit in the Falkland Islands
         remains strong

•        Strategy, as communicated at the time of the Company's flotation on AIM
         in December 2004, remains in place

•        Current and planned expenditure is on target - FGML expects to complete
         its two year, initial exploration, programme on budget



Overview



Having completed approximately 25% of the planned drilling programme the Board
of FGML has carried out a strategic review of the Company's original exploration
programme set out in its November 2004 prospectus.  The Board has concluded that
this original strategy, and the timetable of planned activity within it, remains
the optimum work programme to identify gold and minerals in the Falkland
Islands.



To enhance the exploration work FGML is appointing independent consultants to
review the selection and siting of new drill holes and ensure that no
opportunity has been overlooked. In addition, a series of extensions to ground
geophysics and ground geochemistry on sub peat soil sampling has been approved
by the Board. This is intended to define further anomalies for drilling.



 The Board is pleased to note that  drilling continued  throughout the Austral
winter.



Drilling Operations



Drilling activity began in March 2005 and by 30 September 2005 a total of 6,000
 metres of core had been drilled, testing seven of the originally identified
nine priority targets. FGML remains on target to complete Stage 2 of its
programme on schedule and to drill approximately another 18,000m, by Q4 2006, on
the other fourteen of the twenty three identified targets, and any other targets
subsequently identified.



Initial broad scale geochemistry has indicated promising new targets in the
Glorious Hill region. These targets will be followed up with further soil
sampling and drilling.



Drilling results have, to a large extent, confirmed prior geological
interpretation and are being used to further refine target selection. The
results to date, and the knowledge

derived from them, have allowed the original model to be refined and improved
and will focus future drilling activity. Progress to date has covered more of
the identified targets than was originally planned and the improved model will
continue this trend.



Financial



The total cash outflow is expected to be of the order of  £100,000 per month
until the conclusion of the exploration phase of the drilling at which time
there will be in the region of £5.5million available for the definition drilling
programme, which if required, could commence by Q4 2006.



Richard Linnell, Executive Chairman of FGML, commented:



'Our strategic review has confirmed my original confidence that the Falkland
Islands represents an exploration target with real potential for a gold deposit.
I am satisfied that we have sufficient financial resources to complete our
preliminary exploration activity and define any discoveries'



                                     


Enquiries

Falkland Gold & Minerals Limited
Richard Linnell, Chairman                        [phone]


Bell Pottinger Corporate & Financial
Nick Lambert                                     [phone]


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