Production Update

Mercator Gold PLC
26 February 2008


                               MERCATOR GOLD PLC
                       ('Mercator Gold' or the 'Company')

              Production and Financial Reviews & Exploration Update

London 26 February 2008 - Mercator Gold plc ('Mercator' or 'the Company') is
pleased to present a review of its operations covering the period from 1 July
2007 to 31 December 2007 and to comment on production through to the end of
January 2008.

PRODUCTION REVIEW

During the six month period until the end of December 2007, the Company:

   •re-established and refurbished all infrastructure necessary for the
    commencement of gold operations at Meekatharra;

   •commenced mining of the Surprise ore-body in September 2007;

   •commenced gold production in October from low grade ores left in ramps
    and access ways within the older Surprise pit;

   •mined approximately 350,000 tonnes of ore from the low grade material at
    Surprise at an average grade of 0.75g/tonne almost exactly in line with a
    modelled grade of 0.76g/tonne;

   •mined approximately 3.5 million tonnes of waste from the Surprise pit
    (representing 52% of the total waste to be mined from Surprise);

   •milled approximately 475,500 tonnes of low grade ores from Surprise and
    other stockpiled material, an increase of 8% from the forecast;

   •produced 9,479 ounces of gold - an increase of 12% from the forecast of
    8,456 ounces;

   •maintained mining costs of A$4.40 per Bank Cubic Metre (BCM) - equivalent
    to A$2/tonne;

   •achieved an average milling cost of A$14.80 per tonne which was A$2
    higher than forecast due to problems associated with the primary crusher;

   •maintained an LTI (Lost Time Injury) free record.


Towards the end of January 2008 the Company started mining the Surprise ore body
having completed the necessary cut-backs and waste haulage.


A total of 3,980 ounces of gold were produced against a forecast of 4,000
ounces. During the month an expected positive reconciliation of the grade of the
Surprise ore-body was recognised. The gold production forecast is based on a cut
Au grade model for the Surprise pit; reconciliation of previous mining based on
similar modelling produced higher grades than were anticipated.


After approximately five months of operations at Meekatharra, the Company
expects, during the period from 1 January 2008 to the end of September 2009, to
produce approximately 200,000 ounces of gold. This production will come from the
Surprise and Bluebird open-pits (together containing 196,000 ounces of
reserves).


Because of the variable grade of the Surprise ore-body, production is not
constant on a month to month basis but will vary as the Company mines higher and
lower grade material. The Company believes that the Surprise ore-body will
perform to expectations however production is still dependant on many
unpredictable factors; the most important of these are weather and plant
availability


FINANCIAL REVIEW


The mining industry is presently experiencing an upward pressure on costs.
Mercator's Meekatharra operations are no exception and during the six months to
31 December 2007 the cost of diesel, the single biggest cost in the operation,
rose by 20%.


Whilst to date the cost of production at Meekatharra is broadly in line with
forecasts the Company has responded to these cost pressures by revising its life
of mine cash costs for production from the Surprise and Bluebird pits. The new
forecast life of mine cost will be in the order of A$570 (US$518) per ounce.
Should there be increased production from the Surprise pit then the costs of
production will fall to approximately A$530 (US$481) per ounce.


It should be noted that the Company's non-cash costs are very low in comparison
to operations of a similar size. The Company's only debt is a working capital
line drawn down to A$6 million. The capitalised value of the Yaloginda Mill and
associated infrastructure is approximately A$14m and therefore non-cash costs
such as depreciation are very low.


The spot price for gold in Australian Dollars is A$991 (US$900) and has in
recent months been as high as A$1,050 (US$955). Mercator's aim is to maintain
production at approximately half the value of the metal contained in its ores.
This will be achieved over the medium term by the mixing of ores of varying
grades as the Company brings various deposits into production.


To guarantee its short term cash flow the Company decided to commit over a short
period of time a small proportion of its reserves. The Company sold calls over
35,000 ounces at A$906 per ounce for delivery between February and September
2008. The Company also bought puts at a similar price for a further 35,000
ounces. This strategy means that for 35,000 ounces of its near-term production
the Company will receive A$906 per ounce and will receive the higher of spot
price or A$906 per ounce for a further 35,000 ounces. Committed deliveries
therefore stand at 7% of the total of 504,000 ounces of probable reserves.



UNDERGROUND OPERATIONS AT PADDY'S FLAT


Underground reserves at Paddy's Flat stand at 2m tonnes @4.8g/t for 308,000
ounces:.

Underground Probable Reserves     Tonnes    Grade g/t  Ounces

Prohibition                       1,372,000 4.1g/t     179,000
Vivian-Consols                    256,000   10.1g/t    83,000
Fatts-Mudlode                     362,000   4.0g/t     46,000
TOTAL                             1,991,000 4.8g/t     308,000





These reserves are sufficient to support a further production over a two and a
half year period after the Surprise and Bluebird pits are finished.


Mine planning and costing for the commencement of underground operations are
underway and will be reported on separately over the ensuing months. Mr Stephen
Miller of Red Rock Consulting has been appointed Project Manager for this
Project. Based in Western Australia, Mr Miller is a highly respected underground
mining consultant who carried out the mine design on which the Company's
underground reserves are based.


The Company intends to conduct an aggressive exploration programme from
underground stations to expand its resources and reserves in known areas of high
grade mineralisation. The Company will lodge its Project Management Plan (PMP)
to commence operations at Paddy's Flat with the Department of Industry &
Resources by the end of April 2008.



EXPLORATION UPDATE


During the establishment of mining operations the Company has maintained a
vigorous exploration programme covering a number of its advanced stage
prospects.**


Euro

The Euro Project continues to provide the Company with promising results. The
project, only 6km from the Yaloginda Mill, is in deeply-weathered terrain.


An eight-hole diamond drilling programme to confirm the geological
interpretation has been successfully completed.


The more notable intersections were:

Hole ID        Interval    Intersection
               Depth (m)   (m @ g/t Au)

07EURD003      205.9-206.3 0.4m @ 22.7g/t
07EURD006      177-187     10m @ 6.6g/t
                           (including 0.35m @ 57g/t
                           and 0.4m @ 43.4g/t)
07EURD011      96-102*     6m @ 3.0g/t
               116-126*    10m @ 5.0g/t
07EURD011A     65-79       14m @ 1.6g/t
07EURD012      86-91.2     5.2m @ 8.6g/t
                           (including 0.35m @ 85.1g/t)
               140-142     2m @ 87g/t
                           (including 0.3m @153.8g/t)
07EURD020      110-115*    5m @ 3.8g/t
07EURD021      79-80*      1m @ 94.0g/t
               102-105*    3m @23.8g/t


*these holes were previously reported.



RC grid drilling has commenced and results from ten holes have been received to
date. The better intersections include:

Hole ID      Interval    Intersection
             Depth (m)   (m @ g/t Au)

07EURC002    100-105     5m @ 3.1g/t
             149-156     7m @ 2.1g/t
07EURC007    97-108      11m @ 18.6g/t
             135-143     8m @ 3.1g/t
07EURC016    104-124     20m @ 4.1g/t
             126-132     6m @ 3.0g/t
             135-139     4m @ 3.8g/t


Fenian West


A programme to delineate mineralisation at Fenian West is in progress. The
prospect lies immediately along strike of the historic Prohibition pit and a
successful exploration programme may lead to a potential open-cut option for the
upper portions of the Prohibition deposit as well as adding to the Mercator
resource base.


Results to date indicate continuity of mineralisation along predicted faults and
confirm the geological model. Best results include:



Hole ID        Interval   Intersection
               Depth (m)  (m @ g/t Au)

07FWRC026      58-65      7m @ 4.0g/t
07FWRC042      78-95      17m @ 1.6g/t



Macquarie


One hole for metallurgical testing has been drilled at the Macquarie prospect
within the Paddy's Flat project area. The hole confirmed the existing drill
intercepts and the geological model.


The intersections were:

Hole ID         Interval   Intersection
                Depth (m)  (m @ g/t Au)
                          
07MQRD001       97-107     10m @2 .9g/t
                111-117    6m @ 1.7g/t
                120-126    6m @ 6.4g/t



Managing Director, Patrick Harford, said: 'Our Meekatharra operation is up and
running. We look forward to strong production from our open cut operations and
will soon start the development of our underground reserves.


Exploration at the very soft oxide Euro Project continues to be promising.
Further work there and on the deeper high grade zones at Paddy's Flat should
strengthen the Company's resource base over the coming months.'



**Full details of the exploration results can be found at Mercator's website:
www.mercatorgold.com



Competent Persons Report - Consent for release


The information in this report, which relates to the Surprise, Bluebird,
Prohibition, and Vivian-Consols Ore Reserves, is based on information compiled
by Alan Coles and Denis Geldard. Exploration results and resource information
were based on information compiled by Mark Csar. A complete set of exploration
results will be posted to the website.


Alan Coles, Denis Geldard and Mark Csar are full time employees of Mercator Gold
Australia Pty Ltd and are Members of the Australasian Institute of Mining and
Metallurgy.


Alan Coles, Denis Geldard and Mark Csar have sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration
and to the activity which they are undertaking to qualify as Competent Persons
as defined in the 2004 Edition of the 'Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves'.


Alan Coles, Denis Geldard and Mark Csar consent to the inclusion in the report
of the matters based on this information in the form and context in which it
appears.



For further information please contact:


Mercator Gold plc
Terry Strapp, Chairman             Tel: [phone]
Patrick Harford, Managing Director Tel: [phone]
Email: [e-mail]
Website: www.mercatorgold.com

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


AIM: MCR



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