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

SolGoldAnnouncement

15/11/2017 10:35

- Part 2: For the preceding part double click  ID:nRSO5505Wa 

      
 Other income                                  -            -            -            
 Expenses                                                                             
 Administration and consulting expenses        (1,498,446)  (457,669)    (1,040,777)  
 Borrowing costs and expenses                  (45)         (70,868)     70,823       
 Depreciation and amortisation expense         (12,027)     (2,045)      (9,982)      
 Employee benefit expenses                     (291,101)    (159,091)    (132,010)    
 Legal expenses                                (115,423)    (110,694)    (4,729)      
 Exploration written off                       (987)        (21,289)     20,302       
 Unrealised foreign exchange (gains) / losses  (1,672,810)  97,420       (1,770,230)  
 Share based payments expense                  (2,247,574)  (80,693)     (2,166,881)  
 Operating loss                                (5,838,413)  (804,929)    (5,033,484)  
 Loss before tax                               (5,838,413)  (804,929)    (5,033,484)  
 Tax expense (benefit)                         -            -            -            
 Loss for the year                             (5,838,413)  (804,929)    (5,033,484)  
 
 
Other Comprehensive Income (Loss) 
 
For the quarter ended 30 September 2017, the Company had a total comprehensive
loss of A$9,239,316 compared to a total comprehensive profit of A$51,209 for
the quarter ended 30 September 2016.  The increase in total comprehensive loss
was due to the following: 
 
Change in fair value of available for sale financial assets was a loss of
A$2,567,648 for the quarter ended 30 September 2017 compared to a gain of
A$2,415,087 for the quarter ended 30 September 2016.  The change year on year
represents the mark to market adjustments that the Company makes on its
investment in Cornerstone.  The share price of Cornerstone at 30 September
2017 was C$0.37 per share compared to C$0.46 per share at 30 June 2017 and
C$0.13 per share at 30 September 2016 compared to C$0.05 per share at 30 June
2016. 
 
Exchange differences on translation of foreign operations representing the
gain or loss recognised on translating the Company's subsidiary Exploraciones
Novomining S.A.'s ("ENSA") financial statements was a loss of A$833,255 for
the quarter ended 30 September 2017 compared to a loss of A$1,558,949 for the
quarter ended 30 September 2016.  The average exchange rate used to translate
ENSA's financial statements for the quarter ended 30 September 2017 from
United States dollars to Australian dollars was 1.25411 compared to 1.3207 for
the quarter ended 30 September 2016. 
 
Financial Position 
 
Total assets at 30 September 2017 were A$163,893,336 compared to A$166,713,608
at 30 June 2017 representing a decrease of A$2,820,272 from the previous
quarter as a result of increased cash due to the exercise of share options and
the issue of shares to Newcrest Mining Ltd pursuant to top-up rights during
the quarter, offset by the continued exploration at the Company's flagship
Cascabel project and initial exploration of the newly granted concessions in
Ecuador and payments of corporate administrative and overhead expenses. 
 
Current assets decreased by A$10,837,574 primarily as a result of funding the
exploration programs at the Company's flagship Cascabel project and the newly
granted exploration concessions in Ecuador. 
 
Non-current assets increased by A$7,608,984 mainly due to increases in
intangible assets and property, plant and equipment offset by the decrease in
available for sale securities. Deferred exploration assets increased by
A$9,631,906 due predominantly to the exploration expenditure incurred at the
Cascabel project during the quarter ended 30 September 2017.  Investment in
available for sale securities decreased by A$2,516,943 representing the mark
to market adjustments that the Company makes on its investment in
Cornerstone. 
 
Current and total liabilities at 30 September 2017 were A$5,559,253 compared
to A$2,741,175 at 30 June 2017 representing an increase of A$2,818,078 from
the previous quarter.  The change is due to the increased exploration activity
in Ecuador resulting in additional rigs and metres drilled compared to the
previous quarter. 
 
Financings 
 
During the quarter ended 30 September 2017, the Company issued the following
equities: 
 
-       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 Director 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 Director options. 
 
-       On 9 August 2017, the Company issued a total of 46,762,000 unlisted
options to Directors, 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
£0.3816 to raise A$0.43 million (£0.26 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 (as varied). The allotment
price was based on the 10 day VWAP, in accordance with the terms of the
Newcrest Subscription Agreement. 
 
Selected Financial Data 
 
The following table provides selected annual financial information derived
from the most recently completed financial statements and should be read in
conjunction with the Company's audited consolidated financial statements for
the periods below: 
 
 Year ended 30 June                                                    2017A$              2016A$               2015                
                                                                                                                A$                  
 Operations                                                                                                                         
 Loss for the year after tax                                           (4,499,972)         (5,723,122)          (4,238,661)         
 Total comprehensive income (loss) for the year                        2,331,271           (4,483,698)          (5,125,505)         
 Total comprehensive income (loss) for the year attributable to:                                                                    
 -       Owners of the parent company-       Non-controlling interest  2,697,343(366,071)  (4,383,728)(99,970)  (5,258,040)132,535  
                                                                       2,331,271           (4,483,698)          (5,125,505)         
                                                                                                                                    
 Basic and diluted loss per share (cents per share)                    (0.3)/(0.3)         (0.7)/(0.7)          (0.6)/(0.6)         
                                                                                                                                    
 Balance Sheet                                                                                                                      
 Working capital (deficit)                                             87,878,912          (8,220,663)          (1,865,711)         
 Total assets                                                          166,713,608         43,500,102           32,696,986          
 Total liabilities                                                     2,741,175           8,518,765            2,338,446           
                                                                                                                                    
 Distributions or cash dividends declared per share                    Nil                 Nil                  Nil                 
 
 
The Company prepares its consolidated annual financial statements in
accordance with IFRS as issued by the IASB. 
 
SUMMARY OF QUARTERLY RESULTS 
 
The following table sets forth a comparison of revenues and earnings for the
previous eight quarters ending with 30 September 2017. Financial information
is prepared in accordance with IFRS as issued by the IASB and is reported in
Australian Dollars. 
 
 Quarter ended                         Sep 30, 2017A$  Jun 30, 2017A$  Mar 31, 2017A$  Dec 31, 2016A$  
                                                                                                       
 Revenue                               -               -               -               -               
 Loss for the quarter before tax       (5,838,413)     (2,791,189)     (4,575,517)     (151,547)       
 Net loss per share (cents per share)  (0.4)           (0.2)           (0.3)           (0.0)           
 
 
 Quarter ended                         Sep 30, 2016A$  Jun 30, 2016A$  Mar 31, 2016A$  Dec 31, 2015A$  
                                                                                                       
 Revenue                               -               -               -               -               
 Loss for the quarter before tax       (804,929)       (2,412,779)     (773,151)       (2,031,645)     
 Net loss per share (cents per share)  (0.1)           (0.3)           (0.1)           (0.3)           
 
 
Exploration and Evaluation Assets 
 
Total capitalised expenditures on exploration and evaluation assets as at 30
September 2017 were A$69,355,011 compared to A$59,723,105 at 30 June 2017. 
Exploration expenditure of A$9,632,893 was incurred during the quarter ended
30 September 2017 compared to A$559,255 during the quarter ended 30 September
2016.  An impairment charge of A$987 (2016: A$21,289) was recognised for
exploration expenditure associated with tenements that were surrendered or
lapsed in the quarter ended 30 September 2017. 
 
Cascabel Project (Ecuador) 
 
At Cascabel, the benefits of corporate deals with Newcrest Mining Ltd and
Maxit Capital were realised with exploration fully funded for the next 12
months as drilling continued to expand the growing world class deposit at
Alpala.  A review of drilling results has clarified world class intersections
at updated metal prices, and geology model is constantly improving drill
targeting capabilities. 
 
Drilling to date has not yet constrained the rich Alpala copper-gold deposit,
and the deposit continues to grow with each drill hole.  Alpala alone is
emerging as a Tier 1 copper project with high average grades in both copper
and gold. The project will also enjoy the support of the surrounding 15
identified targets, with drill testing at Aguinaga and other high priority
targets planned for the coming year. 
 
The Company is currently directing drilling capability and operations
currently to the collection of drill data to be used in the delivery of a
Maiden Inferred Resource Estimate late December 2017.  SolGold is also
commencing planning for the collection of necessary data to complete a
preliminary economic assessment by end 2018. 
 
Exploration activities during the quarter ended 30 September 2017 included: 
 
·      Diamond drilling of holes 26 to 31 at Alpala, for a total of
approximately 7500m 
 
·      Geological modelling in preparation for upcoming Mineral Resource
Estimate 
 
·      Petrography and Mineragraphy. 
 
·      Spectral alteration interpretation and analysis. 
 
·      Ongoing environmental management with strict adherence to guidelines
provided by the Ministry of Environment. 
 
·      Submission of annual technical and environmental management reports. 
 
·      A hybrid "Spartan-Orion" 3D MV IP survey is currently underway 
 
·      3D geochemical modelling 
 
·      Lidar topographic control survey planned for fourth quarter 2017. 
 
·      Upgrade and expansion of the Alpala field camp and the Rocafuerte field
office and core handling and storage facilities. 
 
New Concessions for 100% SolGold Subsidiaries (Ecuador) 
 
During the September quarter all four subsidiary companies have had technical
teams working on the ground.  By the end of September 2017, seven project
areas will have had initial evaluation completed or nearing completion. 
Security and social teams have been in the field ahead of the technical staff
ensuring access to all project areas and maintaining good relationships with
local landowners. 
 
Of the 6 projects where evaluation work is being conducted, the most promising
projects identified are Machos - Florida Santa Cruz - La Hueca Project (La
Hueca Project), Sharug, Porvenir and Rio Armarillo projects.  These 4 projects
all have Cu +- Au mineralization identified with associated strong
hydrothermal alteration.  Technical field teams during the quarter have been
conducting reconnaissance sampling, mapping and prospecting as detailed in the
table below. 
 
New Concessions for 100% SolGold Subsidiaries (Ecuador) 
 
 COMPANY                        ROCK CHIPS #  STREAM SEDIMENTS #  PANNED MINERAL CONCENTRATE #  TOTAL  
 Carnegie ridge resources s.a.  126           83                  0                             209    
 Cruz del sol cssa s.a.         271           180                 180                           631    
 Green rock resources grr s.a.  275           549                 14                            838    
 Valle rico resources vrr s.a.  19            32                  22                            73     
 Total                          691           844                 216                                  
 
 
Table: Summary of regional sampling. 
 
Queensland Projects (Australia) 
 
In Australia, drill testing of porphyry style copper-gold mineralisation at
the Normanby Project, in northern Queensland commenced in early July.  A total
of 518m of RC drilling from 7 RC drill holes and 89.2m of diamond coring from
1 drill holes was completed at the time of writing.  A significant vertical
mineralised structure was intersected in holes MFT19, and MFT17, and a
separate shallow dipping zone of mineralisation was also discovered in holes
MFT24 and MFT014.  Assay results remain pending. 
 
A reassessment of the range of other projects held in Queensland resulted in
definition of detailed work programs that will be put in place as exploration
funds become available. 
 
Solomon Islands Projects 
 
In the Solomon Islands, SolGold has streamlined its in-country presence after
significant drill testing reduced the prospectivity of Fauro, Koloula and
Malakuna tenements.  The Kuma project in Guadalcanal has never been drilled
and is considered by SolGold to be a significant porphyry copper-gold target
upgraded by recent geochemical and spectral work by SolGold subsidiary
Guadalcanal Exploration Pty Ltd (GEX). 
 
Exploration 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 mineralised outcropping targets over the 59 new
tenements granted to SolGold's four Ecuadorian subsidiaries. 
 
Cascabel Project (Ecuador) 
 
The Cascabel Project is a porphyry copper- gold deposit located in the
Imbabura province of northwest Ecuador. It lies just off the main road, a
3-hour drive north of Ecuador's capital city, Quito.  The climate zone is
tropical-savannah and vegetation is tropical forest with a well-developed soil
horizon.  Topography rises from elevations of 900 metres to 2,200 metres and
the moderate to steep landscape is incised by four large drainage complexes. 
A first-order paved highway provides year-round access and crosses the
north-east corner of the concession. 
 
Cascabel is SolGold's flagship project and shows significant promise of
hosting a tier 1 resource.  SolGold has completed over 53,500m of drilling and
expended over USD50M on the program, which includes corporate costs and
investments.  This has been accomplished with a workforce of up to 260
Ecuadorean workers and geoscientists, and 6 expatriate Australian
geoscientists. 
 
SolGold's exploration program will focus on expanding the mineralisation being
defined along the greater Alpala trend.  Over 23,000m of drilling is planned
for the last calendar quarter of 2017, and over 106,000 metres of drilling is
planned over the 2018 year. To date, SolGold has drill tested 4 of the 15
targets, being Alpala Northwest, Alpala Central, Hematite Hill, and Alpala
Southeast.  Currently drill testing of Alpala Northwest, Alpala Central and
Alpala Southeast targets is underway, with drill testing of the Aguinaga
target and other high priority targets to commence in the coming year. 
 
Cascabel Project (Ecuador) (continued) 
 
Ecuador is undergoing a transformation with significant improvements to
infrastructure, including five key sea ports, over 10,000km of new highways,
and 10 new hydroelectric projects. These infrastructure improvements are sure
to afford the project enormous capital advantages as it moves toward
feasibility over the coming years.  Completion of a new access road to Alpala
Camp via the village of Santa Cecilia in co-operation between the provincial
government and the local community is providing vital operational advantages
to the project. 
 
Northern Ecuador lies within the under-explored northern section of the richly
endowed Andean Copper Belt, which extends from Chile in the south to Colombia
in the north and then north-west into Panama.  The tenement lies on the margin
of the Eocene and Miocene metallogenic belts which are renowned for hosting
some of the world's largest porphyry copper and gold deposits, like the giant
La Escondida Copper Mine in Chile, which is the world's largest producer of
copper and hosted within the same age host rocks as Cascabel. 
 
A number of globally significant deposits have been discovered in the region,
some of which are becoming mines.  These include the Junin copper project (982
million tonnes at 0.89% Cu), located some 60 km to the south-west of Cascabel,
the La Colosa porphyry deposit (905 million tonnes at 0.92 g/t Au) located to
the north in Colombia and the massive Cobre Panama deposit (3.3 billion tonne
at 0.36% Cu) located to the north in Panama which contains over 26 million
ounces of gold.  The Fruta del Norte project in southern Ecuador is among the
largest and highest grade undeveloped gold projects in the world (23.5 million
tonnes at 9.59 g/t Au) and highlights the pedigree of potential within the
country. 
 
The Cascabel project area is located above the subducted extension of the
Carnegie Ridge, where low angle subduction of buoyant slabs generated zones of
high magma flux and an environment for outstanding porphyry copper and gold
fertility. 
 
The project is located within the Cordillera Occidental (or Western
Cordillera) of the Ecuadorian Andes. Basement rocks consist of ocean floor
basalts and sediments of Cretaceous age. High-level Eocene (and possibly
Late-Miocene) batholiths and associated granite, granodiorite and diorite
bodies intrude volcanic and sedimentary rocks of Cretaceous to Tertiary age. 
The regional controls that localise gold and copper mineralisation at Cascabel
are intimately related with the three-dimensional interaction of deep seated
NE-trending 1st order (arc-parallel) structures, with NW-trending 2nd order
(arc-normal) faults, and NNW-trending 3rd order structures. 
 
Within the Cascabel concession, volcanic and sedimentary rocks are intruded by
a number of Quartz diorite, diorite and hornblende diorite stocks and dykes. 
The SolGold field teams completed 1:500 scale, "Anaconda" style geological
mapping over the tenement area and all high priority porphyry target centres
have been elevated to drill ready status. 
 
Several types of mineralisation comprise the deposit, including but not
limited to: 
 
•              disseminated mineralisation occurring within early quartz
diorite (QD10) source intrusions; 
 
•              intense quartz-copper sulphide rich zones occurring at the
carapace and edges of QD10 intrusions; 
 
•              multidirectional quartz-magnetite-chalcopyrite stock work veins
that extend several hundreds of metres beyond the QD10 intrusive margins; 
 
•              moderate quartz-magnetite-chalcopyrite stock work veins and
lesser sheeted veins that characterize the more distal setting to the source
intrusions. 
 
Cascabel Project (Ecuador) (continued) 
 
Generally speaking, porphyry deposits are characteristically continuous. At
Alpala, on the basis of drill hole evidence and geology, the mineralisation is
robust and remains continuous over the area drilled to date (from Hole 13 and
26 in the northwest to Hole 21 and 28 in the southeast) at cut-off grades as
high as 0.9% copper equivalent.  At lower cut-off grades (>0.5% copper
equivalent) the entire area drilled to data is continuous over 2200m length,
and up to 700m width, over a total vertical column of 1800m. 
 
Drilling indicates a true width of the mineralised envelope of up to 700
metres, a length in excess of 1300 metres and over 1800m vertical extent from
surface.  The highest-grade drill intervals occur within and adjacent to a
swarm of intrusions of early-stage, quartz diorite porphyry bodies (QD10),
which have been further enriched with bornite mineralisation in a later stage
phyllic mineralisation event. 
 
Mineralisation is controlled by a series of parent or source quartz diorite
("QD10") intrusions, that have intruded the country rock as a "swarm" of dykes
and stocks, which have been enriched with bornite mineralisation in a later
stage phyllic mineralisation event.  The deposit that formed around the main
mineralising QD10 source intrusions is up to 700 m thick in a SW-NE direction
and slowly tapers off towards surface, where the deposit outcrops in Alpala
Creek (where rock-saw channel sampling in trenches confirms outcropping
mineralisation over a combined zone of more than 87m grading over 1% copper
equivalent). 
 
Each of the QD10 apophyses evident in the greater Alpala cluster has
mineralised a vertical extent of up to 1800 m of surrounding host rock,
forming tapering columns of multi-directional quartz stock work veining that
reach surface at locations like Alpala Creek.  To date, QD10 source intrusions
have been intersected by drilling over a strike length of more than 850 m from
Hole 13 in the northwest to Hole 25 in the southeast; drilling indicates a
vertical distribution of QD10 intrusions over more than 700 m from 950 m RL in
Hole 25 to 250 m RL in Hole 12. 
 
Grades that occur within the surrounding mineralised envelopes in fact make up
the bulk of the deposit at Alpala.  The zones contain classical porphyry style
stock-work quartz - magnetite - copper sulphide veining that is both extensive
and intense and includes sub-horizontal or low angle copper mineralised veins.
 These zones are reasonably interpreted by management and SolGold expert
consultants to be continuous. This mineralisation forming the bulk of the
Alpala deposit extends for hundreds of metres laterally and many hundreds of
metres vertically (over 1000m in parts) above the source intrusions. 
 
At Cascabel, all drill holes have been assayed over their entire length,
including unmineralised rock, and the average of all drill core at Alpala to
date is 0.31% Cu and 0.26 g/t Au. 
 
Initial 3D modelling based on existing drill data and grade shell interpolants
based on 3D LeapfrogTM modelling have outlined an approximate Exploration
Target at Alpala that ranges from 729Mt at 1.06% copper equivalent, using a
cut-off grade of 0.4% copper equivalent, to 969Mt at 0.92% copper equivalent,
using a cut-off grade of 0.3% copper equivalent. These estimates compare
favourably in both grade and tonnage to existing block cave mineral resources,
and equate to an endowment of between 7.7-8.9Mt of contained copper
equivalents. 
 
New Concessions for 100% SolGold Subsidiaries (Ecuador) 
 
Outstanding results have been returned from first pass prospecting subsequent
to the end of the September as announced to the market on 31 October 2017: 
 
Ø Rock chip samples collected from SolGold's 100% owned La Hueca Project have
returned high grade copper and gold mineralisation from extensive outcropping
porphyry copper gold mineralisation over a broad 5 km x 1 km zone.  Best
Results include; 
 
o  13.82% Cu             in sample R02000263 
 
o  8.37% Cu               in sample R02000310 
 
o  4.08% Cu               in sample R02000259 
 
o  2.50% Cu               in sample R02000307 
 
o  1.80% Cu               in sample R02000305 
 
Ø 25 km long porphyry trend 
 
Ø Jurassic in age similar to  Fruta del Norte, Mirador and the giant La
Alumbrera mine in Argentina (Glencore). 
 
Ø Samples were taken from an extensive zone of complex multiphase copper
sulphide and magnetite mineralised quartz veining and hydrothermal alteration
extending over an unclosed 5km long zone 
 
Ø Stream Sediment and panned concentrate sampling results have highlighted
additional areas of strongly anomalous copper and gold mineralisation outside
of the mineralised quartz vein zone, to be followed up with detailed
prospecting and field mapping. 
 
In addition to the recent results returned from La Hueca, highly anomalous Cu
and Au results have been returned from stream sampling programs at other
project areas such as Porvenir and Sharug and Rio Armarillo. These areas will
require detailed follow up mapping and rock chip sampling by SolGold's field
teams to locate the source of the stream sediment anomalism. 
 
Queensland Projects (Australia) 
 
The Company will commence a drill program to test porphyry style gold
mineralisation at the Normanby project.  A reassessment of the range of other
projects held in Queensland resulted in the definition of detailed work
programs that will be put in place as exploration funds become available. 
Joint venture opportunities are being sought for these projects. The continued
challenging equities markets are making it difficult for companies to raise
the exploration funds to complete joint venture deals and commence
exploration. 
 
Kuma Project (Solomon Islands) 
 
The Kuma project is defined by a porphyry copper-gold target, characterised by
a widespread lithocap draping the steeply incised terrain.  Work to date has
defined a number of porphyry style geochemical anomalies centred on the upper
portions of the Kuma lithocap. Access agreements are being negotiated ahead of
a field program of Anaconda style geological mapping which is planned for the
coming year and reprocessing of existing airborne magnetic data in 3D. 
 
Kuma project exhibits silica ledges and dickite anomalies which are controlled
by high level structures which, along with the identification and orientation
of dikes (porphyritic felsic), veins (quartz and epidote) and fractures
(containing chalcopyrite or magnetite) can provide vectors toward the centre
of the Kuma porphyry gold-copper system. 
 
Drill Sites will be located following both magnetic interpretation and
correlation with geological mapping within and peripheral to the target area.
The project will be drill ready in early 2019.  Three steeply-inclined diamond
core drill-holes, each about 800 m deep, are envisaged for an initial test of
the target area. 
 
Liquidity and Capital Resources 
 
At 30 September 2017 the Company had cash and cash deposits of A$78,475,169, a
decrease of A$10,837,574 from A$89,312,743 as at 30 June 2017. 
 
Cash expenditure (before financing activities) for the quarter ended 30
September 2017 was A$10,518,157 million (2016: A$3,057,789).  During the
quarter ended 30 September 2017, cash of A$1,353,393 (2016: A$20,401,794) was
received from the issue of shares via "top-up" rights and the exercise of
share options and A$nil (2016: A$852,727) received as unsecured short term
borrowings.  Accordingly, the net cash outflow of the Company for the quarter
ended 30 September 2017 was A$9,164,764 (2016: inflow of A$18,169,317). 
 
Cash of A$7,859,236 (2016: A$1,591,318) was invested by the Company on
exploration expenditure during the quarter ended 30 September 2017. 
 
The Company has no history of revenues from its operating activities and the
Company has financed its activities by raising capital through equity
issuances or debt.  Given the nature of the Company's current activities, it
will remain dependent on equity and/or debt funding in the short to medium
term until such time as the Company becomes self-financing from the commercial
production of mineral resources. 
 
Outstanding Share Data 
 
The Company was authorised to issue 2,020,000,000 ordinary shares at 30
September 2017 of which 1,516,245,686 were outstanding at 30 June 2017 and at
the date of the report, 14 November 2017.  At 30 September 2017 and at the
date of the report, the Company had outstanding options to purchase an
aggregate of 88,353,768 ordinary shares with exercise prices ranging from
£0.14 to £0.60 per share and expiry dates ranging from 17 October 2018 and 8
August 2020. 
 
Contingencies 
 
A 2% net smelter royalty is payable to Santa Barbara Resources Limited, which
was the previous owner of the Cascabel tenements.  These royalties can be
bought out by paying a total of US$4 million. Fifty percent (50%) of the
royalty can be purchased for US$1 million 90 days following the completion of
a feasibility study and the remaining 50% of the royalty can be purchased for
US$3 million 90 days following a production decision. 
 
In the event Cornerstone's equity interest in ENSA is diluted below 10%,
Cornerstone's equity interest will be converted to a half of one percent
(0.5%) interest in a Net Smelter Return and SolGold will have right to
purchase the Net Smelter Return for US$3.5 million at any time. 
 
Transactions with Related Parties 
 
Transactions with related parties are disclosed in Note 8 to the 30 September
2017 unaudited interim condensed consolidated financial statements. 
Transactions between related parties are on normal commercial terms and
conditions no more favourable than those available to other parties unless
otherwise stated. 
 
The figures noted below are for the quarter ended 30 September 2017 with
comparative figures for the quarter ended 30 September 2016. 
 
Transactions with Related Parties (continued) 
 
The Company has a commercial agreement with Samuel Capital Ltd ("Samuel") for
the engagement of Nicholas Mather as Chief Executive Officer and Executive
Director of the Company.  For the quarter ended 30 September 2017 A$100,000
was paid or payable to Samuel (2016: A$50,000).  The total amount outstanding
at the end of the quarter was A$nil (2016: A$9,435). 
 
The Company has a long-standing commercial arrangement with DGR Global, an
entity associated with Nicholas Mather (Director) and Brian Moller (Director),
for the provision of various services, whereby DGR Global provides resources
and services including the provision of its administration and exploration
staff, its premises (for the purposes of conducting the Company's business
operations), use of existing office furniture, equipment and certain
stationery, together with general telephone, reception and other office
facilities (''Services'').  In consideration for the provision of the
Services, the Company shall reimburse DGR Global for any expenses incurred by
it in providing the Services.  For the quarter ended 30 September 2017
A$90,000 was paid or payable to DGR Global (2016: A$90,000) for the provision
of administration, management and office facilities to the Company during the
quarter.  The total amount outstanding at quarter end was A$33,000 (2016:
A$33,000).  The administration services agreement expires on 21 March 2019. 
 
Mr Brian Moller (a Director), is a partner in the Australian firm HopgoodGanim
lawyers.  For the quarter ended 30 September 2017, HopgoodGanim were paid
A$95,787 (2016: A$102,836) for the provision of legal services to the Company.
 The services were based on normal commercial terms and conditions.  The total
amount outstanding at the end of the quarter was A$18,558 (2016: A$25,276). 
 
On 20 November 2015, DGR Global agreed to provide short term funding to
SolGold to provide working capital. Interest on the facility was charged at
the rate of 9.5% per annum. The loan was repayable by SolGold plc on the
earlier of any capital raising event, or 31 December 2016. DGR Global could,
at its sole election, convert all or part of the loan, including accrued
interest, into further equity as part of a SolGold capital raising, and at the
same price as third party participants, subject to DGR Global and SolGold plc
obtaining all necessary regulatory approvals. A new loan agreement was signed
on 30 June 2016 revising the limit on the facility to A$7 million, all other
conditions remained the same. On 29 August 2016, DGR Global converted
A$5,700,000 of the debt funding provided to SolGold into SolGold shares in
accordance with the terms of the loan arrangements announced to the market on
1 July 2016. 
 
The key management personnel of the Company are the directors and officers of
the Company. Compensation awarded to key management relating to consulting
fees and share-based payments for the quarters ended 30 September 2017 and
2016 are as follows: 
 
                                         SalaryA$  Other Benefits1A$  PensionsA$  Total RemunerationA$  
 Three months ended 30 September 2017                                                                   
 Directors                                                                                              
 Nicholas Mather                         100,000   837,731            -           937,731               
 Brian Moller                            27,500    119,676            -           147,176               
 Robert Weinberg                         17,500    71,805             -           89,305                
 John Bovard                             17,500    71,805             -           89,305                
 Craig Jones                             17,500    71,805             -           89,305                
 Other Key Management Personnel2         262,022   783,968            15,062      1,061,051             
 Total paid to Key Management Personnel  442,022   1,956,791          15,062      2,413,874             
 
 
1 Other Benefits represents the fair value of the share options granted during
the period based on either the Black-Scholes model or Monte Carlo Simulation
considering the effects of the vesting conditions. 
 
2 Other Key Management Personnel consist of the aggregated remuneration of
Karl Schlobohm (Company Secretary), Priy Jayasuriya (Chief Financial Officer),
Jason Ward (Chief Geologist), Benn Whistler (Technical Geologist) and Lazaro
Roque-Albelo (Latin Affairs Manager). 
 
Transactions with Related Parties (continued) 
 
                                         Basic Annual SalaryA$  Other BenefitsA$  PensionsA$  Total RemunerationA$  
 Three months ended 30 September 2016                                                                               
 Directors                                                                                                          
 Nicholas Mather                         37,500                 -                 -           37,500                
 Brian Moller                            12,500                 -                 -           12,500                
 Robert Weinberg                         12,500                 -                 -           12,500                
 John Bovard                             12,500                 -                 -           12,500                
 Scott Caldwell                          3,056                  -                 -           3,056                 
 Craig Jones                             -                      -                 -           -                     
 Other Key Management Personnel1         314,266                -                 12,900      327,166               
 Total paid to Key Management Personnel  392,322                -                 12,900      405,222               
 
 
1 Other Key Management Personnel consist of the aggregated remuneration of
Karl Schlobohm (Company Secretary), Priy Jayasuriya (Chief Financial Officer),
Jason Ward (Chief Geologist), Benn Whistler (Technical Geologist) and Lazaro
Roque-Albelo (Latin Affairs Manager). 
 
During the quarter, A$15,062 employer's social security costs (2016: A$12,900)
were paid in respect of remuneration for key management personnel. 
 
Financial Instruments and Related Risks 
 
The Company's financial assets and financial liabilities are exposed to
various risk factors that may affect the fair value presentation or the amount
ultimately received or paid on settlement of its assets and liabilities.  A
summary of the major financial instrument risks and the Company's approach to
management of these risks are highlighted below. 
 
Credit Risk 
 
The Company is exposed to credit risk primarily from the financial
institutions with which it holds cash and cash deposits.  The Company's cash
and cash deposits are held with Australian, Ecuadorian and Solomon Island
financial institutions.  Management believes that the credit risk
concentration with respect to financial instruments included in other
receivables and prepayments is manageable. 
 
Foreign Currency Risk 
 
The Company transacts a significant portion of its business in US dollars,
which is the currency of Ecuador, and therefore is subject to foreign exchange
risk on US dollar receivables, trade payables and cash balances.  The Company
attempts to mitigate these risks by managing its US dollar inflows and
outflows and maintaining a significant portion of it cash and cash deposits in
US dollars.  No hedging instruments have been used by the Company, however,
depending upon the nature and level of future foreign exchange transactions,
consideration may be given to the use of hedging instruments.  The Company
believes that it adequately manages its foreign exchange risk. 
 
Liquidity Risk 
 
The Company has no source of operating cash flow to funds its exploration
projects and is dependent on raising funds in capital markets from a variety
of eligible private, corporate and fund investors, or from interested third
parties (including other exploration and mining companies) which may be
interested in earning an interest in the exploration project. The success or
otherwise of such capital raisings is dependent upon a variety of factors
including general equities and metals market sentiment, macro-economic
outlook, project prospectivity, operational risks and other factors from time
to time. 
 
Financial Instruments and Related Risks (continued) 
 
Other Price Risk 
 
The Company is exposed to price risk with respect to commodity and equity
prices.  Equity price risk is defined as the potential adverse impact on the
Company's earnings due to movements in individual equity prices or general
movements in the level of the stock market.  Commodity price risk is defined
as the potential adverse impact on earnings and economic value due to
commodity price movements and volatilities. The Company monitors commodity
prices of gold, copper and other metals, individual equity movements, and the
stock market to determine the appropriate course of action to be taken by the
Company.  The Company believes that both commodity and equity price movements
can have a substantial effect on the market value of the Company's
investments. 
 
Interest Rate Risks 
 
The Company's policy is to retain its surplus funds on the most advantageous
term of deposit available up to twelve month's maximum duration.  The
Company's cash and cash deposits may fluctuate in value depending on the
market interest rates and time to maturity of the instruments. 
 
Debt is initially recognised at fair value.  Subsequent to initial recognition
these financial liabilities are held at amortised cost using the effective
interest rate method. 
 
Subsequent Events 
 
On 8 November 2017 the Company entered into an agreement with a syndicate of
underwriters led by National Bank Financial Inc. and Canaccord Genuity
Corp.(collectively, the "Underwriters") pursuant to which the Underwriters
have agreed to purchase, on a bought deal private placement basis, 180,000,000
ordinary shares (the "Ordinary Shares") of SolGold at a price of 25 pence per
Ordinary Share for aggregate gross proceeds of £45,000,000 (the "Offering"). 
The Offering is expected to close on or about November 30, 2017 and is subject
to certain closing conditions. 
 
Off-Balance Sheet Arrangements 
 
At 30 September 2017, the Company had no off-balance sheet arrangements such
as guarantee contracts, contingent interest in assets transferred to an
entity, derivative instruments obligations or any obligations that trigger
financing, liquidity, market or credit risk to the Company. 
 
Critical Accounting Estimates 
 
The preparation of financial statements in accordance with IFRS requires
management to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities, disclosure of commitments and contingent
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. The determination of
estimates requires the exercise of judgement based on various assumptions and
other factors such as historical experience, current and expected economic
conditions. Actual results could differ from these estimates. 
 
The significant judgements and estimates used in the preparation of these
interim condensed consolidated financial statements that have a significant
risk of causing a material adjustment to the carrying amount of assets and
liabilities and earnings within the next financial reporting periods include: 
 
Critical Accounting Estimates (continued) 
 
Impairment and reversal of impairment of deferred exploration assets 
 
Deferred exploration assets are tested for impairment at the end of each
reporting period if in management's judgement there is an indicator of
impairment. If there are indicators, management performs an impairment test on
the major assets within this balance. 
 
Impairment reviews for deferred exploration costs are carried out on a
project-by-project basis, with each project representing a potential single
cash generating unit.  An impairment review is undertaken when indicators of
impairment arise, typically when one of the following circumstances apply: 
 
·      The period for which the entity has the right to explore in the
specific area has expired during the period or will expire in the near future,
and is not expected to be renewed; 
 
·      Substantive expenditure on further exploration for and evaluation of
mineral resources in the specific area is neither budgeted nor planned; 
 
·      Exploration for and evaluation of mineral resources in the specific
area have not led to the discovery of commercially viable quantities of
mineral resources and the entity has decided to discontinue such activities in
the specific area; and 
 
·      Sufficient data exist to indicate that, although a development in the
specific area is likely to proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full from successful
development or by sale. 
 
Fair value of share based payments 
 
Determining the fair value of share-based payments involves estimates of
interest rates, expected life of options, share price volatility and the
application of the Black-Scholes option-pricing model.  The Black-Scholes
option-pricing model requires the input of highly subjective assumptions that
can materially affect the fair value estimate.  Share options granted vest in
accordance with the ESOP.  The valuation of share based compensation is
subjective and can impact profit and loss significantly.  Several other
variables are used when determining the value of share options using the
Black-Scholes valuation model: 
 
·      Dividend yield: The Company has not paid dividends in the past because
it is in the exploration stage and has not yet earned any significant
operating income.  Also, the Company does not expect to pay dividends in the
foreseeable future.  Therefore, a dividend rate of 0% was used for the
purposes of the valuation of the share options. 
 
·      Volatility: The Company uses historical information on the market price
to determine the degree of volatility at the date when the share options are
granted.  Therefore, depending on when the share options were granted and the
period of historical information examined, the degree of volatility can be
different when calculating the value of different stock options. 
 
·      Risk-free interest rate: The Company used the interest rate available
for government securities of an equivalent expected term as at the date of the
grant of the share options.  The risk-free interest rate will vary depending
on the date of the grant of the share options and their expected term. 
 
Changes in IFRS Accounting Policies and Future Accounting Pronouncements 
 
New standards and interpretations not yet adopted 
 
The Company has elected not to early adopt the following revised and amended
standards, which are not yet endorsed in the EU. The list below includes only
standards and interpretations that could have an impact on the consolidated
financial statements of the Company. 
 
Changes in IFRS Accounting Policies and Future Accounting Pronouncements
(continued) 
 
IFRS 9 Financial instruments 
 
The complete standard has been issued in July 2014 including the requirements
previously issued and additional amendments. The new standard replaces IAS 39
and includes a new expected loss impairment model, changes to the
classification and measurement requirements of financial assets as well as to
hedge accounting. The new standard becomes effective for financial years
beginning on or after 1 January 2018. The Company will assess the impact on
its consolidated financial statements. 
 
IFRS 15 Revenue from contracts with customers 
 
The new standard was issued in May 2014 and establishes the principles for the
disclosure of useful information in the financial statements in respect of
contracts with customers. The new standard becomes mandatory for financial
years beginning on or after 1 January 2018. The effect will be assessed and
disclosure will be made once the Company has assessed the impact of applying
IFRS 15. However as the Company currently does not generate revenue there is
no significant impact expected. 
 
IFRS 16 Leases 
 
The new standard was issued in January 2016 replacing the previous leases
standard, IAS 17 Leases, and related Interpretations. IFRS 16 establishes the
principles for the recognition, measurement, presentation and disclosure of
leases for the customer ('lessee') and the supplier ('lessor'). IFRS 16
eliminates the classification of leases as either operating or finance as is
required by IAS 17 and, instead, introduces a single lessee accounting model
requiring a lessee to recognise assets and liabilities for all leases unless
the underlying asset has a low value or the lease term is twelve months or
less. This new standard applies to annual reporting periods beginning on or
after 1 January 2019 subject to EU endorsement. The Company will review its
arrangements in place in order to evaluate the potential impact of the new
standard. 
 
Risks and Uncertainties 
 
Resource exploration is a speculative business and involves a high degree of
risk.  There is no certainty that the expenditures made by the Company in the
exploration of properties will result in discoveries of commercial quantities
of minerals.  Exploration for mineral deposits involves risks which even a
combination of professional evaluation and management experience may not
eliminate.  Significant expenditures are required locate and estimate ore
reserves, and further the development of a property.  Capital expenditures to
bring a property to a commercial production stage are also significant.  There
is no assurance the Company has, or will have, commercially viable ore bodies.
 There is no assurance that the Company will be able to arrange sufficient
financing to bring ore bodies into production.  The following are some of the
risks to the Company, recognising that it may be exposed to other additional
risks from time to time: 
 
·      General geological risks 
 
·      Title risk 
 
·      Permitting risk in Ecuador 
 
·      Dependence on key management personnel 
 
·      Volatility of commodity prices 
 
·      Project development risks 
 
·      Currency fluctuations 
 
·      Land access risks 
 
·      Environmental risks 
 
·     Geopolitical, regulatory and sovereign risk 
 
The Company is diligent in minimising exposure to business risk, but by the
nature of its activities and size, will always have some risk.  These risks
are not always quantifiable due to their uncertain nature.  Should one or more
of these risks and uncertainties materialise, or should underlying assumptions
prove incorrect, then actual results may vary materially from those described
on forward-looking statements. 
 
Management's Responsibility for Financial Statements 
 
The Board of Directors carries out its responsibility for the interim
condensed consolidated financial statements primarily through the audit
committee which is comprised of independent, non-executive directors who meet
periodically with management and auditors to review financial reporting and
internal control matters. 
 
Additional Information 
 
Additional information relating to the Company is available on the SEDAR under
the Company's issuer profile at www.sedar.com and can be found on the
Company's website at www.solgold.com.au. 
 
Forward-looking Statements 
 
Certain statements contained in this MD&A may be deemed "forward-looking
statements" within the meaning of applicable Canadian and U.S. securities
laws.  All statements in this MD&A, other than statements of historical fact,
that address future events, developments or performance that SolGold expects
to occur including management's expectations regarding SolGold's growth,
results of operations, estimated future revenues, requirements for additional
capital, mineral reserve and mineral resource estimates, production estimates,
production costs and revenue estimates, future demand for and prices of
commodities, business prospects and opportunities and outlook on gold and
currency markets are forward-looking statements.  In addition, statements
(including data in tables) relating to reserves and resources and gold
equivalent ounces are forward-looking statements, as they involve implied
assessment, based on certain estimates and assumptions, and no assurance can
be given that the estimates will be realized.  Forward-looking statements are
statements that are not historical facts and are generally, but not always,
identified by the words "expects", "plans", "anticipates", "believes",
"intends", "estimates", "projects", "potential", "scheduled" and similar
expressions or variations (including negative variations), or that events or
conditions "will", "would", "may", "could" or "should" occur including,
without limitation, the performance of the assets of SolGold, the realization
of the anticipated benefits deriving from SolGold's investments and
transactions and the estimate of gold equivalent ounces to be received in
2017.  Although SolGold believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions, such
statements involve known and unknown risks, uncertainties and other factors,
most of which are beyond the control of SolGold, and are not guarantees of
future performance and actual results may accordingly differ materially from
those in forward-looking statements.  Factors that could cause the actual
results to differ materially from those in forward-looking statements include,
without limitation: fluctuations in the prices of the commodities;
fluctuations in the value of currency of Canada, Australia and the United
Kingdom; regulatory changes by national and local governments, including
permitting and licensing regimes and taxation policies; regulations and
political or economic developments in any of the countries where properties in
which SolGold holds interest are located; risks related to the operators of
the properties in which SolGold holds interests; business opportunities that
become available to, or are pursued by SolGold; continued availability of
capital and financing and general economic, market or business conditions;
litigation; title, permit or license disputes related to interests on any of
the properties in which SolGold holds interest; development, permitting,
infrastructure, operating or technical difficulties on any of the properties
in which SolGold holds interest; risks and hazards associated with the
business of exploring, development and mining on any of the properties in
which SolGold holds interest, including, but not limited to unusual or
unexpected geological and metallurgical conditions, slope failures or
cave-ins, flooding and other natural disasters or civil unrest or other
uninsured risks.  The forward-looking statements contained in this MD&A are
based upon assumptions management believes to be reasonable, including,
without limitation: the ongoing operation of the properties in which SolGold
holds interest by the owners or operators of such properties in a manner
consistent with past practice; no material adverse change in the market price
of the commodities that underlie the asset portfolio; no adverse development
in respect of any significant property in which SolGold holds interest; the
accuracy of publicly disclosed expectations for the development of underlying
properties that are not yet in production; and the absence of any other
factors that could cause actions, events or results to differ from those
anticipated, estimated or intended. For additional information on risks,
uncertainties and assumptions, please refer to the AIF of SolGold filed on
SEDAR at www.sedar.com which also provides additional general assumptions in
connection with these statements. SolGold cautions that the foregoing list of
risk and uncertainties is not exhaustive.  Investors and others should
carefully consider the above factors as well as the uncertainties they
represent and the risk they entail. SolGold believes that the assumptions
reflected in those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be correct and such
forward-looking statements included in this MD&A should not be unduly relied
upon.  These statements speak only as of the date of this MD&A.  SolGold
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, other than as required by applicable law. 
 
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