REG - SolGold PLC - Final Results <Origin Href="QuoteRef">SOLG.L</Origin> - Part 2

SolGoldAnnouncement

14/09/2017 08:00

- Part 2: For the preceding part double click  ID:nRSN7272Qa 

                                                    
 
 
*Renewal applications have been lodged with the Queensland Department of Natural Resources and Mines and the Group has no
reason to believe the renewals will not be granted. 
 
  
 
**Represents tenements granted post 30 June 2017. 
 
RISKS AND UNCERTAINTIES 
 
The Directors consider that the factors and risks described below are the most significant. 
 
Funding Risks 
 
The Group's ability to effectively implement its business strategy over time may depend in part on its ability to raise
additional funds and/or its ability to generate revenue from its projects. The need for and amount of any additional funds
required is currently unknown and will depend on numerous factors related to the Group's current and future activities. 
 
If required, the Group would seek additional funds, through equity, debt or joint venture financing. There can be no
assurance that any such equity, debt or joint venture financing will be available to the Group in a timely manner, on
favourable terms, or at all. Any additional equity financing will dilute current shareholdings, and debt financing, if
available, and may involve restrictions on further financing and operating activities. 
 
If adequate funds are not available on acceptable terms, the Group may not be able to take advantage of opportunities or
otherwise respond to competitive pressures, as well as possibly resulting in the delay or indefinite postponement of the
Group's activities. 
 
General Exploration and Extraction Risks 
 
There is no certainty that the Group will identify commercially mineable reserves in the Tenements.  The exploration for,
and development of, mineral deposits involves significant uncertainties and the Group's operations will be subject to all
of the hazards and risks normally encountered in such activities, particularly given the terrain and nature of the
activities being undertaken.  Although precautions to minimise risks will be taken, even a combination of careful
evaluation, experience and knowledge may not eliminate all of the hazards and risks. 
 
The targets identified by the Group's personnel and consultants, are based on current experience and modelling and all
available data.  There is no guarantee that surface sample grades of any metal or mineral taken in the past will persist
below the surface of the ground.  Furthermore, there can be no guarantee that the estimates of quantities and grades of
gold and minerals disclosed will be available for extraction and sale. 
 
Reserve and resource estimates are expressions of judgement based on knowledge, experience and industry practice. 
Estimates which were valid when originally calculated may alter significantly when new information or techniques become
available.  In addition, by their very nature, resource estimates are imprecise and depend to some extent on
interpretations, which may prove to be inaccurate. 
 
Title Risk 
 
SolGold's tenements and interest in tenements are subject to the various conditions, obligations and regulations which
apply in the relevant jurisdictions including Ecuador in South America, Queensland, Australia and the Solomon Islands. If
applications for title or renewal are required this can be at the discretion of the relevant government minister or
officials. If approval is refused, SolGold will suffer a loss of the opportunity to undertake further exploration, or
development, of the tenement. SolGold currently knows of no reason to believe that current applications will not be
approved, granted or renewed. Some of the properties may be subject to prior unregistered agreements or transfers or native
or indigenous peoples' land claims and title may be affected by undetected defects or governmental actions. No assurance
can be given that title defects do not exist. If a title defect does exist, it is possible that SolGold may lose all or a
portion of the property to which the title defects relates. 
 
Permitting Risk in Ecuador 
 
As with all jurisdictions in which SolGold operates, a particular permitting regime exists in Ecuador with which SolGold
must comply.  Before commencing any exploration activity, SolGold may be required to negotiate access and compensation
arrangements with any interested land access groups and relevant authorities in Ecuador.  SolGold has engaged experienced
advisors and consultants to assist with negotiations, however, there is no guarantee that all necessary access and
compensation arrangements will be entered in a timely manner, on favourable terms, without onerous conditions or at all. 
Similarly, no guarantees can be made as to timeframes within which negotiations may be finalised or the reasonableness of
third parties.  Failure to obtain all necessary permits, licenses and access and compensations arrangements may have a
material adverse effect on SolGold. 
 
Australian Native Title Risk 
 
The effect of the Native Title Act 1993 (Cth) ("NTA") is that existing and new tenements held by SolGold in Australia may
be affected by native title claims and procedures.  SolGold has not undertaken the historical, legal or anthropological
research and investigations at the date of this report that would be required to form an opinion as to whether any existing
or future claim for native title could be upheld over a particular parcel of land covered by a tenement. 
 
There is a potential risk that a determination could be made that native title exists in relation to land the subject of a
tenement held or to be held by SolGold which may affect the operation of SolGold's business and development activities.  In
the event that it is determined that native title does exist or a native title claim is registered, SolGold may need to
comply with procedures under the NTA in order to carry out its operations or to be granted any additional rights such as a
Mining Lease.  Such procedures may take considerable time, involve the negotiation of significant agreements, involve a
requirement to negotiate for access rights, and require the payment of compensation to those persons holding or claiming
native title in the land which is the subject of a tenement.  The administration and determination of native title issues
may have a material adverse impact on the position of SolGold in terms of its cash flows, financial performance, business
development, ability to pay dividends and share price. 
 
Volatility of Commodity Prices 
 
SolGold's possible future revenues will be derived mainly from Gold and Copper and/or from royalties gained from potential
joint ventures or from mineral projects sold. Also, during operations by SolGold, the revenues earned will be dependent on
the terms of any agreement for the activities. Consequently, SolGold's potential future earnings, profitability and growth
are likely to be closely related to the price of either of these commodities. 
 
Gold and Copper prices fluctuate and are affected by numerous industry factors, many of which are beyond the control of
SolGold. Such factors include, but are not limited to, demand for CDIs, technological advancements, forward selling by
producers, production cost levels in major producing regions, macroeconomic factors, inflation, interest rates, currency
exchange rates and global and regional demand for, and supply of, Gold and Copper. 
 
Any substantial and extended decline in the market price of Gold and Copper could have an adverse effect on SolGold's
future revenues, profitability, cash flows from operations, carrying value of capitalised assets and borrowing capacity
among other factors. 
 
Project Development Risks 
 
If the Group discovers a potentially economic resource or reserve, there is no assurance that the Group will be able to
develop a mine thereon, or otherwise commercially exploit such resource or reserve. Further, there can be no assurance that
the Group will be able to manage effectively the expansion of its operations or that the Group's current personnel,
systems, procedures and controls will be adequate to support the Group's operations as operations expand.  Any failure of
management to manage effectively the Group's growth and development could have a material adverse effect on the Group's
business, financial condition and results of operations.  There is no certainty that all or, indeed, any of the elements of
the Group's current strategy will develop as anticipated. 
 
Currency Fluctuations 
 
The Group's asset and liability values may fluctuate in accordance with movements in the foreign currency exchange rates. 
If SolGold achieves commercial production the revenue will most likely be denominated in USD, although most but not all of
the costs of exploration and production will be incurred in USD. Accordingly, foreign currency fluctuations may adversely
affect the Groups financial position and operating results. 
 
Land Access Risk 
 
Land access is critical for exploration and evaluation to succeed.  In all cases the acquisition of prospective tenements
is a competitive business, in which proprietary knowledge or information is critical and the ability to negotiate
satisfactory commercial arrangements with other parties is often essential. 
 
Access to land for exploration purposes can be affected by land ownership, including private (freehold) land, pastoral
lease and native title land or indigenous claims. Immediate access to land in the areas of activities cannot in all cases
be guaranteed. SolGold may be required to seek consent of land holders or other persons or groups with an interest in real
property encompassed by, or adjacent to, SolGold's tenements. Compensation may be required to be paid by SolGold to land
holders so that SolGold may carry out exploration and/or mining activities. Where applicable, agreements with indigenous
groups have to be in place before a mineral tenement can be granted. 
 
Rights to mineral tenements carry with them various obligations in regard to minimum expenditure levels and
responsibilities in respect of the environment and safety. Failure to observe these requirements could prejudice the right
to maintain title to a given area. 
 
Government policy, impassable or difficult access as a result of the terrain, seasonal climatic effects or inclement
weather can also adversely impact SolGold's activities. 
 
Environmental Risk 
 
SolGold's operations and projects are expected to have an impact on the environment, particularly if advanced exploration
or mine development proceeds. Its activities are or will be subject to in-country national and local laws and regulations
regarding environmental hazards. These laws and regulations set various standards regulating certain aspects of health and
environmental quality and provide for penalties and other liabilities for the violation of such standards. In certain
circumstances they establish obligations to remediate current and former facilities and locations where operations are or
were conducted. Significant liability could be imposed on SolGold for damages, clean-up costs, or penalties in the event of
certain discharges into the environment, environmental damage caused by previous owners of property acquired by SolGold or
its subsidiaries, or non-compliance with environmental laws or regulations. SolGold proposes to minimise these risks by
conducting its activities in an environmentally responsible manner, in accordance with applicable laws and regulations, and
where possible, by carrying appropriate insurance coverage. Nevertheless, there are certain risks inherent in SolGold's
activities which could subject it to extensive liability. 
 
Geopolitical, Regulatory and Sovereign Risk 
 
The availability and rights to explore and mine, as well as industry profitability generally, can be affected by changes in
government policy that are beyond the control of SolGold. 
 
SolGold's exploration tenements are located in Ecuador, the Solomon Islands and Australia and are subject to the risks
associated with operating both in domestic and foreign jurisdictions. As the Solomon Islands and Ecuador are developing
countries, their legal and political systems are emerging when compared to those in operation in Australia and the United
Kingdom. Such risks include, but are not limited to: 
 
·      economic, social or political instability or change; 
 
·      hyperinflation, currency non-convertibility or instability; 
 
·      changes of law affecting foreign ownership, government participation, taxation, working conditions, rates of
exchange, exchange control, exploration licensing, export duties, resource rent taxes, repatriation of capital,
environmental protection, mine safety, labour relations; 
 
·      government control over mineral properties or government regulations that require the employment of local staff or
contractors or require other benefits to be provided to local residents; 
 
·      delays and declines in the standard and effective operation of SolGold's activities, unforeseen and un-budgeted
costs, and/or threats to occupational health and safety as a consequence of geopolitical, regulatory and sovereign risk. 
 
Ecuador 
 
Ecuador regulations have broad authority to shut down and/or levy fines against facilities that do not comply with
regulations or standards. SolGold's projects in Ecuador may be exposed to potentially adverse risks associated with the
evolving rules and laws governing mining expansion and development in that jurisdiction. Operations may be affected in
varying degrees by government regulations with respect to restrictions on production, price controls, export controls,
income taxes, expropriation of property, environmental legislation and mine safety. Additionally, SolGold's operations may
be detrimentally affected in the event that the Ecuadorian government were to default on its foreign debt obligations or
become subject to wider global economic and investment uncertainty. SolGold is not aware of any current material changes in
legislative, regulatory and public policy initiatives in Ecuador, however any future or proposed changes may adversely
affect the Cascabel project or SolGold's ability to operate successfully in Ecuador. 
 
Under the current legislative regime, a mining corporation and the Ecuadorian Government must enter into an exploitation
contract prior to exploitation of natural resources. There is no certainty that SolGold will be able to successfully enter
into an exploitation contract, or enter into one on commercially favourable terms, and such a scenario may adversely impact
on the Cascabel project or render it uneconomical. 
 
Queensland 
 
The Queensland Minister for Natural Resources, Mines and Energy conducts reviews from time to time of policies relating to
the granting and administration of mining tenements.  At present, SolGold is not aware of any proposed changes to policy
that would affect its tenements. 
 
In Queensland, the Aboriginal Cultural Heritage Act 2003 and the Torres Strait Islander Cultural Heritage Act 2003 (which
commenced on 16 April 2004) impose duties of care which require persons, including SolGold, to take all reasonable and
practical measures to avoid damaging or destroying Aboriginal cultural heritage.  This obligation applies across the State
and requires SolGold to develop suitable internal procedures to discharge its duty of care in order to avoid exposure to
substantial financial penalties if its activities damage items of cultural significance. Under this legislation, indigenous
people can exercise control over land with respect to cultural heritage without necessarily having established the
connection element (as required under native title law).  This creates a potential risk that the tenement holder may have
to deal with several indigenous individuals or corporations, where no native title has been established, to identify and
manage cultural heritage issues.  This could result in tenement holders requiring lengthy lead times to manage cultural
heritage for their projects. 
 
Changing attitudes to environmental, land care, cultural heritage and indigenous land rights' issues, together with the
nature of the political process, provide the possibility for future policy changes. There is a risk that such changes may
affect SolGold's exploration plans or, indeed, its rights and/or obligations with respect to the tenements. 
 
Solomon Islands 
 
The Solomon Islands Minerals Board may from time to time amend and review its policies on mining and exploration in the
Solomon Islands. Any such changes in Government policy may affect the ability of SolGold to conduct and undertake mining
and exploration in the Solomon Islands. 
 
The Group achieved several milestones during the financial year ended 30 June 2017.  These included: 
 
·      The completion of successful fund raisings (including exercise of share options) totalling approximately A$127.7
million from institutional and professional investors.  This has resulted in a cash balance of approximately A$89.3 million
at 30 June 2017. 
 
·      Exploration and evaluation expenditure of A$18.66 million incurred during the year representing predominantly the
diamond drilling of 10 holes at Alpala for a total of 14,884 metres at Cascabel. 
 
·      Operating loss of A$8.32 million representing an increase of A$2.6 million over the prior year.  The increase is
largely attributable to a share based payments expense of A$2.24 million recognised on the fair value of share options
granted to employee and contractors and an unrealised foreign exchange loss of A$1.03 million recognised on funds held in
U.S. dollars. 
 
·      A gain of $12.74 million recognised on the Company's mark to market adjustment on its investment in Cornerstone
Capital Resources Inc. 
 
Results 
 
The Group incurred a loss before tax of A$8,323,050 for the year (2016: A$5,723,122), inclusive of the decision to expense
A$17,310 (2016: A$1,555,004) for exploration expenditure associated with tenements that were surrendered or which had
expired during the year.  A detailed assessment of the carrying values of deferred exploration costs is provided in note
12. The increase in the loss before tax is due to A$2,239,533 (2016: A$nil) recognised as a share based payments expense
representing the fair value of share options granted to employees and contractors during the year and an unrealised foreign
exchange loss of A$1,032,010 (2016: gain of A$126,619) recognised on funds held in United States dollars. 
 
A gain of A$12,743,593 (2016: A$190,610) was recognised in comprehensive income representing the mark to market adjustment
on the Company's investment in Cornerstone Capital Resources Inc. 
 
Statement of Financial Position 
 
As at 30 June 2017, the Group had net assets of approximately A$164.0 million, an increase of approximately A$129.0 million
over the previous financial year.  This increase was largely associated with the completion of A$121.2 million in share
placements, net of costs, the increase in the value of available for sale financial assets of A$12.7 million, purchase of
property, plant and equipment of A$1.6 million, offset by the exploration write off of A$17k recognised in respect of the
Groups' exploration assets and annual corporate operating expenses (including finance costs) of approximately A$8.3
million. 
 
Cash Flow 
 
Cash expenditure (before financing activities) for the year ended 30 June 2017 was A$28.3 million (2016: A$9.9 million). 
During the financial year ended 30 June 2017, cash of A$117,862,952 (2016: A$908,329) was received from the issue of shares
via private placements and the exercise of share options, A$nil (2016: A$2,332,000) received from the issue of convertible
notes to DGR Global Ltd and Tenstar Trading Limited and A$852,736 (2016: A$6,535,205) received as unsecured short term
borrowings from DGR Global Ltd.  Accordingly, the net cash inflow of the Company for the year ended 30 June 2017 was
A$90,249,820 (2016: outflow of A$226,507). 
 
Cash of approximately A$21.7 million (2016: A$6.4 million) was invested by the Group on exploration expenditure during the
year. 
 
Closing Cash 
 
As at 30 June 2017, the Group held cash balances of A$89.3 million (2016: A$0.09 million). 
 
Post Reporting Date Events 
 
On 7 July 2017, the Company issued an additional 1,300,000 shares at £0.14 to raise A$0.31 million (£0.18 million) in cash
as a result of the exercise of employment options. 
 
On 7 July 2017, the Company issued an additional 1,300,000 shares at £0.28 to raise A$0.62 million (£0.36 million) in cash
as a result of the exercise of employment options. 
 
On 9 August 2017, the Company issued a total of 46,762,000 unlisted options to Directors, employees and contractors. The
options have a strike price of £0.60 each and are exercisable through to 8 August 2020. 
 
On 11 August 2017, the Company issued an additional 690,000 shares at £0.38 to raise A$0.43 million (£0.26 million) to
Newcrest International pursuant to "top-up rights" held by Newcrest International pursuant to the Newcrest Subscription
Agreement. The allotment was price was based on a 10 day VWAP, in accordance with the terms of the Newcrest Subscription
Agreement. 
 
On 29 August 2017, the Company announced that it had been granted an additional 21 new concessions in Ecuador taking the
total number of tenements in Ecuador to 59 tenements in addition to Cascabel. 
 
The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the
reporting date that would have a material impact on the consolidated or Company financial statements. 
 
Outlook 
 
The focus of the Company during the financial year ending 30 June 2018 will be to continue exploration on its Cascabel
project in Ecuador and continue carrying out reconnaissance filed mapping and rock chip sampling programs as well as
evaluating several outcropping mineralised target over the 59 new tenements granted to SolGold's four Ecuadorian
subsidiaries. 
 
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 on pages 5
to 43. 
 
Financial Controls and Risk Management 
 
The Board regularly reviews the risks to which the Group is exposed and ensures through Board Committees and regular
reporting that these risks are managed and minimised as far as possible. The Audit Committee is responsible for the
implementation and review of the Group's internal financial controls and financial risk management systems. 
 
Equity 
 
Since the date of the last Annual Report, the Company has issued the following equities: 
 
On 26 August 2016, the Company issued an additional 268,819,004 shares at £0.06 to raise A$27.9 million (£16.1 million) in
a combination of cash and debt conversions pursuant to a private placement to progress its exploration and project
development efforts across its portfolio of projects in the Solomon Islands, Ecuador and Queensland, Australia. 
 
On 14 October 2016, the Company issued an additional 63,353,339 shares at £0.13 to raise A$13.4 million (£8.2 million) in
cash pursuant to a private placement to continue to fund the Group's exploration of its flagship Cascabel Copper Gold
Porphyry Project, for general working capital purposes and ongoing corporate costs. 
 
On 17 October 2016, the Company issued an additional 142,896,661 shares at £0.13 to raise A$30 million (£18.6 million) in
cash pursuant to a private placement to continue to fund the Group's exploration of its flagship Cascabel Copper Gold
Porphyry Project, for general working capital purposes and ongoing corporate costs. 
 
On 17 October 2016, the Company issued an additional 19,591,768 unlisted options to Maxit Capital LP. The options consist
of two tranches of 9,795,884 options, one tranche exercisable at £0.14 and one tranche at £0.28. 
 
On 28 October 2016, the Company issued a total of 22,000,000 unlisted options to employees and contractors. The options
have a strike price of £0.28 each and are exercisable through to 28 October 2018. 
 
On 17 January 2017, the Company issued an additional 900,000 shares at £0.14 to raise A$0.19 million (£0.13 million) in
cash as a result of the exercise of employment options. 
 
On 31 January 2017, the Company issued an additional 100,000 shares at £0.30 to raise A$0.05 million (£0.03 million) in
cash to Newcrest International Pty Ltd (Newcrest International), a wholly owned subsidiary of Newcrest Mining Ltd pursuant
to "top-up rights" held by Newcrest International pursuant to the Newcrest Subscription Agreement. The allotment price was
based on the 10 day VWAP, in accordance with the terms of the Newcrest Subscription Agreement. 
 
On 3 February 2017, the Company issued an additional 1,200,000 shares at £0.14 to raise A$0.28 million (£0.17 million) in
cash as a result of the exercise of employment options. 
 
On 21 February 2017, the Company issued an additional 900,000 shares at £0.14 to raise A$0.20 million (£0.13 million) in
cash as a result of the exercise of employment options. 
 
On 1 March 2017, the Company issued an additional 240,000 shares at £0.38 to raise A$0.15 million (£0.09 million) in cash
to Newcrest International pursuant to "top-up rights" held by Newcrest International pursuant to the Newcrest Subscription
Agreement. The allotment price was based on the 10 day VWAP, in accordance with the terms of the Newcrest Subscription
Agreement. 
 
On 21 June 2017, the Company issued 78,889,080 ordinary shares at £0.41 to raise A$54.5 million in cash pursuant to a
private placement to continue to fund the continued exploration of the Cascabel Project, general working capital and
SolGold's pan Ecuadorean exploration strategy. 
 
On 26 June 2017, the Company issued an additional 880,000 shares at £0.14 to raise A$0.20 million (£0.12 million) in cash
as a result of the exercise of employment options. 
 
On 26 June 2017, the Company issued an additional 880,000 shares at £0.28 to raise A$0.41 million (£0.25 million) in cash
as a result of the exercise of employment options. 
 
At year end the Company had a total of 1,512,955,685 shares and 44,191,768 options on issue. 
 
Post year end equities issued 
 
On 7 July 2017, the Company issued an additional 1,300,000 shares at £0.14 to raise A$0.31 million (£0.18 million) as a
result of the exercise of employment options. 
 
On 7 July 2017, the Company issued an additional 1,300,000 shares at £0.28 to raise A$0.62 million (£0.36 million) as a
result of the exercise of employment options. 
 
On 9 August 2017, the Company issued a total of 46,762,000 unlisted options to Directors and certain employees and
contractors. The options have a strike price of £0.60 each and are exercisable through to 8 August 2020. 
 
On 11 August 2017, the Company issued an additional 690,000 shares at £0.38 to raise A$0.43 million (£0.26 million) to
Newcrest International pursuant to "top-up rights" held by Newcrest International pursuant to the Newcrest Subscription
Agreement. The allotment was price was based on a 10 day VWAP, in accordance with the terms of the Newcrest Subscription
Agreement. 
 
As at the date of this report, the Company had a total of 1,516,245,686 shares and 88,353,768 options on issue. 
 
The strategic report was authorised for issue and signed on behalf of the directors by, 
 
Nicholas Mather 
 
Executive Director 
 
14 September 2017 
 
DIRECTORS' REPORT 
 
DIRECTORS and company secretary 
 
The Board consists of one Executive Director and four Non-Executive Directors. 
 
Nicholas Mather 
 
(Executive Director) 
 
Nicholas Mather (60), appointed 11 May 2005, graduated in 1979 from the University of Queensland with a B.Sc. (Hons,
Geology). He has over 25 years' experience in exploration and resource company management in a variety of countries. His
career has taken him to numerous countries exploring for precious and base metals and fossil fuels. Nicholas Mather has
focused his attention on the identification of and investment in large resource exploration projects. 
 
He was Managing Director of BeMaX Resources NL (an ASX-listed company) from 1997 until 2000 and instrumental in the
discovery of the world class Ginkgo mineral sand deposit in the Murray Basin in 1998. As an executive Director of Arrow
Energy NL (also ASX-listed) until his resignation in 2004, Nicholas Mather drove the acquisition and business development
of Arrow's large Surat Basin Coal Bed Methane project in south-east Queensland. He was managing Director of Auralia
Resources NL, a junior gold explorer, before its USD23 million merger with Ross Mining NL in 1995. He was a non-executive
Director of Ballarat Goldfields NL until 2004, having assisted that company in its recapitalisation and re-quotation on the
ASX in 2003. 
 
Nicholas Mather is Managing Director and Chief Executive of DGR Global Limited and non-executive Director of ASX-listed
Companies Armour Energy Limited, Aus Tin Mining Limited, Dark Horse Limited, and Lakes Oil NL and LSE AIM-listed Company
IronRidge Resources Limited. 
 
Brian Moller 
 
(Non-Executive Chairman) 
 
Brian Moller (58), appointed 11 May 2005, is a corporate partner in the Brisbane-based law firm Hopgood Ganim Lawyers, the
Australian solicitors to the Company. He was admitted as a solicitor in 1981 and has been a partner at Hopgood Ganim since
1983. He practices almost exclusively in the corporate area with an emphasis on capital raising, mergers and acquisitions. 
 
Brian Moller holds an LLB Hons from the University of Queensland and is a member of the Australian Mining and Petroleum Law
Association. 
 
Brian Moller acts for many publicly-listed resource and industrial companies and brings a wealth of experience and
expertise to the board, particularly in the corporate regulatory and governance areas. He is a non-executive Director of
ASX listed DGR Global Limited, Dark Horse Resources Limited, Lithium Consolidate Mineral Exploration Ltd, ASX and TSX-V
listed, Aguia Resources Limited and the non-executive Chairman of ASX-listed Aus Tin Mining Limited and Platina Resources
Limited. 
 
Dr Robert Weinberg 
 
(Non-Executive Director) 
 
Rob Weinberg (69), appointed 22 November 2005, gained his doctorate in geology from Oxford University in 1973. He has more
than 40 years' experience of the international mining industry and is an independent mining research analyst and
consultant.  He is a Fellow of the Geological Society of London and also a Fellow of the Institute of Materials, Minerals
and Mining.  He has been an independent non-executive director of a number of minerals exploration, development and mining
companies. 
 
Prior to his current activities he was Managing Director, Institutional Investment at the World Gold Council. Previously he
was a Director of the investment banking division at Deutsche Bank in London after having been head of the global mining
research team at SG Warburg Securities. He has also held senior positions within Société Générale and was head of the
mining team at James Capel & Co. He was formerly marketing manager of the gold and uranium division of Anglo American
Corporation of South Africa Ltd. 
 
John Bovard 
 
(Non-Executive Director) 
 
John Bovard (71), appointed 2 November 2009, is a civil engineer with over 40 years' experience in mining, heavy
construction, project development and corporate management throughout Australia.  His career to date has included roles as
CEO of public companies and both Executive and Non-Executive Directorships.  He holds a Bachelor's Degree in Civil
Engineering, is a Fellow of the Australasian Institute of Mining and Metallurgy, and a Fellow of the Australian Institute
of Company Directors. 
 
Mr Bovard is currently a Non-Executive Director of the ASX-listed Aus Tin Mining Ltd.  Other roles within the past five
years have included Non-Executive Chairman of Orbis Gold Limited (resigned 17 February 2015) and Non-Executive Director of
Australian Pacific Coal Limited (resigned 29 November 2012). 
 
He was also Project Manager for the A$800 million Phosphate Hill Fertiliser Project for Western Mining Corporation (WMC)
situated south of Mount Isa in Queensland, Australia.  Other previous project experience includes managing the construction
of the Porgera Mine in Papua New Guinea, the Super Pit expansion at Kalgoorlie, and the development of the Bronzewing Gold
Mine in Western Australia.  He was previously the General Manager of the giant OK Tedi porphyry Copper Gold Mine.  John
Bovard's corporate profile, together with his extensive experience in south west Pacific mining operations and construction
is considered to be of great value to SolGold Plc. 
 
Craig Jones 
 
(Non-Executive Director) 
 
Mr Jones (45), appointed 3 March 2017, joined Newcrest Mining in 2008 and has held various senior management and executive
roles within the Newcrest group, including General Manager Projects, General Manager Cadia Valley Operations, Executive
General Manager Projects and Asset Management, Executive General Manager Australian and Indonesian Operations, Executive
General Manager Australian Operations and Projects, and Executive General Manager Cadia and Morobe Mining Joint Venture. Mr
Jones is currently the Executive General Manager Wafi-Golpu (Newcrest / Harmony). Prior to joining Newcrest, Mr Jones
worked for Rio Tinto. 
 
Mr Jones holds a Bachelor of Mechanical Engineering from the University of Newcastle, Australia. 
 
COMPANY SECRETARY 
 
Karl Schlobohm 
 
(Company Secretary) 
 
Karl Schlobohm (49) has over twenty years' experience in the accounting profession across a wide range of businesses and
industries.  He has previously been contracted into CFO roles with ASX-listed resource companies Discovery Metals Limited
and Meridian Minerals Limited, and as Company Secretary of ASX-listed Linc Energy Limited, Agenix Limited, Discovery Metals
Limited and Global Seafood Australia Limited. 
 
Mr Schlobohm is a Chartered Accountant and holds Bachelor Degrees in Commerce and in Economics, and a Master's Degree in
Taxation. 
 
Mr Schlobohm is also contracted to act as the Company Secretary of the AIM listed IronRidge Resources Limited and
ASX-listed DGR Global Limited, Dark Horse Resources Limited, Aus Tin Mining Limited and Armour Energy Limited. 
 
The Directors present their annual report and audited financial statements for the year ended 30 June 2017. 
 
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 have 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 future
successful capital raisings for necessary funding and the successful exploration and subsequent exploitation of the Group's
tenements. 
 
It should be noted that the current working capital levels will not be sufficient to bring the Group'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 third parties or capital raising, it may not be able to fully develop its
projects. 
 
CURRENCY 
 
The functional currency of SolGold Plc and its subsidiaries in Australia is considered to be Australian Dollars (A$). The
functional currency of the subsidiaries in Solomon Islands is considered to be Solomon Islands Dollars (SBD$). The
functional currency of the subsidiaries in Ecuador is considered to be United States Dollars (US$).  The presentational
currency of the Group is Australian dollars ("A$") 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 year was A$4,499,972 (2016: A$5,723,122). 
 
CHANGES IN SHARE CAPITAL DURING 2017 
 
A statement of changes in the share capital of the Company is set out in Note 17 to the financial statements. 
 
DIVIDENDS PAID OR RECOMMENDED 
 
The Directors do not recommend the payment of a dividend (2016: nil). 
 
FINANCIAL INSTRUMENTS 
 
The Company does not undertake financial instrument transactions that are speculative or unrelated to the Company's or
Group's activities. The Group's financial instruments consist mainly of deposits with banks, accounts payable and loans
payable to related parties (including conversion options). In addition to Group's financial instruments, the Company's
financial instruments also include its loans to subsidiaries.  Further details of financial risk management objectives and
policies, and exposure of the Group and Company to financial risks are provided in note 20 to the financial statements. 
 
DIRECTORS AND DIRECTORS' INTERESTS 
 
The Directors who held office during the year were as follows: 
 
 Nicholas Mather   Executive Director                                                          
 Brian Moller      Non-Executive Chairman                                                      
 Robert Weinberg   Non-Executive Director                                                      
 John Bovard       Non-Executive Director                                                      
 Scott A Caldwell  Non-Executive Director - appointed 9 September 2016, resigned 19 June 2017  
 Craig Jones       Non-Executive Director -appointed 3 March 2017                              
 
 
The Company has a Directors' and Officers' Liability insurance policy for all its Directors. 
 
CORPORATE GOVERNANCE 
 
In formulating the Group's corporate governance procedures the Board takes due regard of the principles of good governance
set out in the UK Corporate Governance Code (the "Code") to the extent they consider appropriate in light of the Group's
size, stage of development and resources. However, given the size of the Company, at present the Board does not consider it
necessary to adopt the Code in its entirety and, as a company with an AIM Listing, the Company is not required to comply
with the provisions of the Code. 
 
Nevertheless, the Directors are committed to maintaining high standards of corporate governance as detailed in the
Company's corporate governance charter and propose, so far as is practicable given the Company's size and nature, to
voluntarily adopt and comply with the QCA Code. At present, the Directors acknowledge that adherence to certain other
provisions of the QCA Code may be delayed until such time as the Directors are able to fully adopt them. In particular,
action will be required in the following areas: 
 
·      In keeping with the QCA Code provisions on board composition, the Company has separated the roles of chairman and
chief executive. However, the Company does not currently have a senior independent director. Accordingly, the Company does
not comply with the QCA recommendations regarding board composition. Craig Jones, John Bovard and Robert Weinberg are
considered by the Board to be independent. As the Company grows, the Board will seek to appoint additional independent
directors, one of whom will be appointed as senior independent director. 
 
·      The Directors have established an audit and risk management committee and a remuneration committee with formally
delegated duties and responsibilities. The Company has not, however, established a nomination committee, as it is
considered not necessary at this stage of the Company's development. The Board as a whole will consider appointments on a
case by case basis. 
 
The Board of the Company is made up of one Executive Director and four Non-executive Directors. Nicholas Mather is the
Executive Director. 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 Group'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 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. The Group's principal communication with its
investors is through the Annual General Meeting, the annual report and accounts, the interim statement and its website. 
 
Audit and Risk Management Committee 
 
The Audit and Risk Management Committee, meets not less than twice a year and is responsible for ensuring that the
financial performance, position and prospects of the Group are properly monitored as well as being jointly responsible with
the Board for appointing the external auditor of the Company and liaising with the Company's auditors to discuss accounts
and the Group's internal controls and reporting procedures. 
 
The members of the Audit and Risk Management Committee consists of a minimum of 3 members who are Brian Moller (as Chair),
John Bovard and Robert Weinberg. The Executive Directors attend meetings by invitation, if appropriate. 
 
Remuneration Committee 
 
The Remuneration Committee meets at least once a year and is responsible for making decisions on Directors' and key
management's remuneration packages. 
 
Remuneration of any Executive Directors is established by reference to the remuneration of Executives of equivalent status
both in terms of the level of responsibility of the position and by reference to their job qualifications and skills. The
Remuneration Committee will also have regard to the terms which may be required to attract an executive of equivalent
experience to join the Board from another company. Such packages include performance related bonuses and the grant of share
options. 
 
The members of the Remuneration Committee are John Bovard (as Chair), Nick Mather, Robert Weinberg and Brian Moller. 
 
Health, Safety, Environment and Community Committee ("HSEC Committee") 
 
The HSEC Committee is responsible for the overall health, safety and environmental performance of the Group and its
operations and its relationship with the local community in Ecuador and Queensland. The Committee is comprised of the
entire Board of Directors. 
 
Nomination of Directors 
 
The Board does not currently have a formal nominating committee. The Board as a whole is responsible for identifying and
recommending candidates for the Board. The Board reviews and makes determinations with respect to: 
 
(i)            the size and composition of the Board; 
 
(ii)           the organization and responsibilities of the appropriate committees of the Board; 
 
(iii)         the evaluation process for the Board and committees of the Board and the chairpersons of the Board and such
committees; and 
 
(iv)          creating a desirable balance of expertise and qualifications among members of the Board. 
 
The Board does not take any formal steps to ensure that objectivity in the nomination process. In the nomination process,
the Board assesses its current composition and requirements going forward in light of the stage of the Company and the
skills required to ensure proper oversight of the Company and its operations. 
 
The Board has recently amended its corporate governance charter to include a nominee director policy setting out the
principles to be followed by the Board, in respect of those Directors that are nominated by a Shareholder and the
nominating shareholders. 
 
Compensation 
 
The Board with the assistance of the Remuneration Committee, is responsible for approving compensation objectives and the
specific compensation programs for policies and practices of the Company. 
 
The 2017 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 Group'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. 
 
RELATED PARTY TRANSACTIONS 
 
Details of related party transactions for the Group and Company are given in note 22. Key management personnel remuneration
disclosures are given in note 5. 
 
DIRECTORS' INDEMNITY 
 
The Company has arranged appropriate directors' and officers' insurance to indemnify the directors against liability in
respect of proceedings brought by third parties. Such provisions remain in force at the date of this report. 
 
AUDITOR 
 
A resolution for the re-appointment of the Company's auditor will be proposed at the forthcoming Annual General Meeting. 
 
SUBSEQUENT EVENTS 
 
The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the
reporting date that is not covered in this report and would have a material impact on the consolidated or Company financial
statements. 
 
DIRECTORS' RESPONSIBILITIES STATEMENT 
 
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 elected to prepare the Group and Company financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.  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 Group and Company
and of the profit or loss of the Group for that period.  The directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment
Market. 
 
In preparing these financial statements, the directors are required to: 
 
·      select suitable accounting policies and then apply them consistently; 
 
·      make judgements and accounting estimates that are reasonable and prudent; 
 
·      state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial statements; and 
 
·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
the Company will continue in business. 
 
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to
ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities. 
 
Website publication 
 
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. 
Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The
maintenance and integrity of the Company's website is the responsibility of the Directors.  The Directors' responsibility
also extends to the ongoing integrity of the financial statements contained therein. 
 
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 14 September 2017 and signed on its behalf. 
 
Karl Schlobohm 
 
Company Secretary 
 
Lvl 27, 111 Eagle St 
 
Brisbane QLD 4000 
 
Australia 
 
INDEPENDENT AUDITOR'S REPORT 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SOLGOLD PLC 
 
OPINION 
 
We have audited the financial statements of SolGold Plc (the 'Parent Company') and its subsidiaries (the 'Group') for the
year ended 30 June 2017 which comprise the consolidated statement comprehensive income, the consolidated and company
statements of financial position, the consolidated and company's statements of changes in equity, the consolidated and
company's statements of cash flows and notes to the financial statements, including a summary of significant accounting
policies. 
 
The financial reporting framework that has been applied in the preparation of the group and parent company financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. 
 
In our opinion: 
 
•       the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs
as at 30 June 2017 and of the Group's loss for the year then ended; 
 
•       the Group and Parent Company 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 IFRS as adopted by the
European Union and 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. 
 
SEPARATE OPINION IN RELATION TO IFRSS AS ISSUED BY THE IASB 
 
As explained in note 1 to the Group financial statements, the Group in addition applying IFRSs as adopted by the European
Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).  Our opinion is extended to
this financial framework. 
 
BASIS FOR OPINION 
 
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. In
addition for the purposes of the Group's regulatory filing requirements as a reporting issuer in Canada we have also
conducted our audit in accordance with International Standards on Auditing as issued by the International Auditing and
Assurance Standards Board (ISA IAASB). Our responsibilities under those standards are further described in the Auditor's
responsibilities for the audit of the financial statements section of our report. We are independent of the Group in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion. 
 
CONCLUSIONS RELATING TO GOING CONCERN 
 
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to
you where: 
 
•       the Directors' use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or 
 
•       the Directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group's or the Parent Company's ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. 
 
KEY AUDIT MATTERS 
 
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. 
 
 RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
 CARRYING VALUE OF INTANGIBLE EXPLORATION AND EVALUATION ASSETS The Group's intangible exploration and evaluation assets ('E&E assets') represent the most significant asset on its statement of financial position totalling AU$59.7m as at 30 June 2017.  Management and the Board are required to ensure that only costs which meet the IFRS criteria of an asset and accord with the Group's accounting policy are capitalised within the E&E asset. In addition in accordance with the requirements of IFRS 6 'Exploration  
 for and Evaluation of Mineral Resources' ('IFRS 6') Management and the Board are required to assess whether there is any indication whether there are any indicators of impairment of the E&E assets.  Given the significance of the E&E assets on the Group's statement of financial position and the significant management judgement involved in the determination of the capitalisation of costs and the assessment of the carrying values of the E&E asset there is an increased risk of material misstatement.            
 OUR RESPONSE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 We performed substantive testing on samples of the expenses capitalised in the year in order to assess whether the expenses had been appropriately capitalised and the accounting treatment was in line with the Group's accounting policy. In addition we also substantively tested costs which had been expensed to the income statement to ensure that they had been correctly reflected as operating expenses. We evaluated Management's and the Board's impairment review which assessed each asset held by the Group. We  
 critically challenged the considerations made of whether or not there were any indicators of impairment identified in accordance with IFRS 6.  Our specific audit testing in this regard included: ·      the verification of licence status in order to confirm legal title, ·      reviewing exploration activity to assess whether there was evidence from  exploration results to date which would indicate a possible impairment, ·      reviewing approved budget forecasts and minutes of Management and Board meetings  
 to confirm the Group's intention to continue to explore the licence areas, and·      in order to obtain an understanding of management's expectation of commercial viability reviewed available technical documentation, discussed results and operations with the operational site teams and conducted a site visit to the Cascabel licence area.   We also assessed the disclosures included in the financial statements.                                                                                                     
 
 
OUR APPLICATION OF MATERIALITY 
 
 GROUP MATERIALITY 30 JUNE  2017  GROUP MATERIALITY 30 JUNE 2016  BASIS FOR MATERIALITY                            
 AU$2.5m                          AU$0.87m                        1.5% of total assets (2016: 2% of total assets)  
 
 
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the financial statements.  Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole. 
 
The basis of our determination of materiality has remained unchanged. However, as there has been a significant movement in
the total assets in the year this has impacted the final materiality figure applied. When setting our materiality we have
taken this into consideration and reduced the percentage applied to total assets in the determination of materiality. We
consider total assets to be the most relevant consideration of the Group's financial performance as the Group continues to
focus on and develop its E&E assets. 
 
Whilst materiality for the financial statements as a whole was AU$2.5m, each significant component of the Group was audited
to a lower level of materiality ranging from AU$0.0.25m to  AU$0.61m. Such materialities are used to determine the
financial statement areas that are included within the scope of our audit and 

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