(SOLG.L) Solomon Gold PLC Buy/Sell

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COPYRIGHT

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The Board of Solomon Gold Plc ("Solomon Gold" or "Company") is pleased to provide the following update on exploration progress on its Guadalcanal, Solomon Islands exploration project, and its other interests in the Solomon Islands. The locations referred to hereunder may be found in the maps and diagrams in the November presentation on the Company's website www.solomongold.com

The airborne Hoist EM Electromagnetic survey flown by Newmont on behalf of the Joint Venture over the entire 300km2 area of the Company's exploration licences on Guadalcanal has been completed and final processed data received. The survey was designed to detect silica rich bodies which may host gold mineralisation, and conductors showing clay altered zones around copper gold porphyries. The survey was flown at a 200m line spacing at a nominal 60m above ground level over extreme terrain.

The data has been subject to preliminary interpretation and the results will be further refined using additional magnetic and geochemical data. At this stage, twenty (20) new targets have been identified from the program. These are currently the subject of ranking using Bulk Leach Extractable Gold (BLEG) stream sediment surveying results over the entire exploration licence area. The BLEG technique used has been developed and refined by Newmont and, due to its sensitivity, selects drainages up to 20km2 in area for follow up sampling.

Solomon Gold has identified four (4) targets with anomalism over 11 parts per billion (ppb) gold representing the best of the anomalies in the survey results to date. These are in the north of the Kuma anomaly north west of Silver Ridge, east of Kuma, the headwaters of the Koloula River draining the southern slopes of Mt Popomaneseu, and South of Chupukama draining from the Haviha anomaly.

Key additional targets supported by geophysics and/or geochemistry to date include:
Tenement Prospect Geochemical Geophysics Target
Rationale
Central Chupukama South BLEG TBA Magnetics and EM Cu-Au Porphyry
anomalies
Varasere BLEG TBA Magnetics and EM Cu-Au Porphyry
anomalies
Haviha 11.9 ppb Magnetics and EM Cu-Au Porphyry
anomalies
Tuhuratulu BLEG TBA Magnetics and EM Cu-Au Porphyry
anomalies
Sutakiki Upper Suta 3.5 g/t rock chip Magnetic anomalies Cu-Au Porphyry
samples
Koloula Popomanesu Source area for up Magnetic anomalies Cu-Au Porphyry and
to 70 ppb BLEG vein swarms on south
results to south of Mt Popomanesu
Kuma Lamasi BLEG TBA Magnetics and EM Au Silica cap and
anomalies vein swarms
Silver Ridge 11ppb Coincident Magnetic Au Silica cap
high and EM resistor
Kuma South east 11ppb EM conductor Au Vein swarms
Kuma West 30ppb Magnetic high Cu-Au Porphyry
Mbisambeti BLEG TBA Magnetic anomaly Cu-Au Porphyry
Mbetilonga Vuanimaho West Peripheral rock chip EM Resistor Au Silica cap
anomalies to 1.54
g/t
Vuanimaho No sampling cover to Magnetic porphyry Cu-Au Porphyry
date signature
Vuralangomma Utah drilling in Magnetic anomaly Skarn and breccia
1970s yielded 50m beside porphyry
@.35% Cu
copper-zinc skarns
Vuramindi High order rock Magnetic porphyry Cu-Au Porphyry
chips to 4.8 % signature with
copper coincident resistor

Mbetilonga

At Vuanimaho West in the Mbetilonga tenement, a strong resistor has been outlined in the EM survey and Solomon Gold interprets this to represent a silica rich gold target. EM resistors have historically been strong leads to the discovery of gold rich silica bodies related to porphyry copper gold mineral systems (eg. Martabe, Indonesia and Yanacocha, Peru).

The occurrences of gold anomalies up to 1.54g/t in silicified rocks including limestones in the area around the Vuanimaho resistor lends support to this interpretation. The area of the anomaly is covered with a limestone sequence and has therefore not been the subject of detailed mapping and sampling in the past. The area of the anomaly is approximately 1 km2 and there are a number of peripheral anomalies of similar character. The area is scheduled for detailed mapping and sampling programs on completion of the BLEG stream program.

In the context of the newly acquired EM data, Solomon Gold has reinterpreted the geology of the 60km2 Mbetilonga Caldera. Solomon Gold considers that the area was the centre of historic volcanic eruptions which deposited copper and clay rich debris in an apron around a central volcanic vent area. These deposits are responsible for the emplacement of rich surficial copper deposits such as at Hambusimaloso in the south western section of the caldera. Epithermal gold in quartz veins are interpreted to have deposited around the margins (eg. Vatuchichi) and where the mineralization was ponded underneath limestone units, gold mineralized silica bodies are believed to be prospective. Vuanimaho West is such a target area.

Unerupted porphyry targets remain at Vuanimaho, Kichia and Vuramindi, where copper mineralization in rock chip samples occurs up to 4.8% copper. These targets are characterized by the presence of strongly positive magnetic peaks. These are located immediately east of, and up to 6km south of, the Vuanimaho resistor. This special relationship is a relatively common one for porphyries and distal gold rich silica caps.

Central

At Haviha, 5km south of Chupukama in the Central licence area, a strong anomaly of 11ppb gold in a BLEG sample in a creek system draining a strong magnetic feature has been defined. The area is characterised by extreme terrain and additional mapping and sampling will be required to identify the source of the anomaly.

Analytical results from BLEG samples in creeks draining from the strong magnetic anomaly at Varasere 4km south south west of Chupukama are also pending.

Kuma

BLEG sampling at Kuma has been conducted over most of the prospective part of the tenement in the northern Kuma River drainage, and complete results are pending. To date two (2) strongly anomalous areas (11ppb samples) have been identified in drainages east and northwest of the strongly mineralized part of Silver Ridge. The anomalies are draining from the 4km2 silica clay pyrite cap on the east and a magnetic feature in the northwest, interpreted to have porphyry affinities.

On the far north west section of the Kuma licence area, coincident magnetic and EM resistor features are interpreted to have porphyry affinities. The area extends to the east south east on structural trends known to be mineralised in the Sutakiki area. This is also being targeted for mineralised shears, vein swarms and skarns, similar to the Sutakiki area, some 4km to the north west.

Chikora

The rock saw sampling and mapping program at Chikora has returned encouraging results of copper gold porphyry style mineralisation in the Legatugatu and Kolotolaka Creek areas. High density stockwork veined porphyry outcrop is very leached at surface, and higher order results are anticipated at depth below the water table. In the Legatugatu Creek, copper leaching from the host rock has precipitated on gravel and tree roots as copper carbonates. A 60m section in Legatugatu Creek open to the east returned 0.22% copper and 0.47g/t gold in a strongly fractured and veined porphyry system and in Kolotolaka Creek, 100m to the south, rocksaw sampling returned several zones over 80 metres, including 42 m @ 0.4% copper and 0.35g/t gold. Further rocksaw sampling and mapping is proceeding in order to define the best drill target.

At Levisivisi and Vurakara, 1.5km east north east of Kolotalaka, mapping and sampling has continued to define drilling targets. Assay results are awaited. Levisivisi hosts high grade copper and gold mineralization which was discovered in May this year. Grades of 5.8% copper and 7.7g/t gold were returned from bornite rich mineralized porphyry intrusions on Levisivisi Ridge.

The subsurface extent of the copper minerals intrusive host has not yet been resolved. Solomon Gold considers that the most intensely mineralized porphyry phases at Chikora generally are only evident at surface in restricted intrusive outcrops. Several intrusive phases with varying degrees of mineralization have been defined and fieldwork is proceeding in the area to define the porphyry source and a detailed drilling target in the Vuarakara - Levisivisi area.

Sutakiki

The Sutakiki tenement has been renewed for a period of two (2) years from October 2009. The Joint Venture has defined several early stage targets in the licence area which require follow up mapping and sampling. Upper Suta in the headwaters of the Sutakiki River exhibits strong magnetic features indicative of a porphyry, with vegetation anomalies and rock chip anomalies reporting up to 3.5g/t gold.

Fauro - Proposed A$2m Program (Solomon Gold 100%)

The Company is continuing to progress landowner access arrangements for Fauro Island, 30 km south of Bougainville Island, the home of the world class Panguna Porphyry Copper Gold Mine. Fauro is interpreted as an erupted volcano, and the exposed western rim is known to be strongly gold mineralized in a number of locations. Solomon Gold is planning an A$2m budget over the next two (2) years to follow up a number of soil, rock and trench anomalies and shallow drill intersections recovered during past exploration by other companies. The Meringuna, Hornbill, Ballyorlo and Kiovakase Prospects are all significantly gold mineralised and have returned encouraging shallow drilling results from the programs of previous explorers.

The area is highly prospective for gold deposits in silica rich distal zones of a porphyry intrusive to the east in the flooded caldera. Solomon Gold's program here is expected to include intense mapping and sampling of previously investigated targets to define extensions to mineralisation. Complete coverage using BLEG techniques and Airborne Magnetics and EM to define resistive silica bodies expected to host concealed gold mineralisation is planned. A number of fresh logging tracks in the area are expected to provide access to previously unknown highly prospective zones. Local reports of alluvial gold occurrences in all of the creeks draining the area demonstrate the potential for significant bedrock mineralisation.

Drilling - Guadalcanal Venture

The Joint Venture is preparing for a drilling campaign on a number of mature targets. A drilling contract is being prepared for this program. At present Kolotalaka, Vurakara and Levisivisi are approaching drill readiness, and the Venture will be defining additional targets before recommencing the drilling program. Following the Chikora drilling, a program at Kuma is expected to test for porphyry mineralisation under the extensive clay silica pyrite zone near Silver Ridge. The next drilling phase thereafter is likely to include targets at Mbetilonga near Vuanimaho on the east side of the Mbetilonga Caldera.

Ongoing Program and Budget - Guadalcanal Venture

The Joint Venture expenditure for the year to date is satisfactorily close to budget. However, the extension of the EM survey over additional areas, delays to flying caused by weather, additional processing required as a result of the rough terrain occasioning the need for terrain corrections to the data, and the alteration of the program as originally planned due to the discovery of rich but sporadic mineralization at Chikora has resulted in planned drill programs commencing later than originally expected. Further maturation of porphyry drill targets is considered necessary by the Joint Venture in view of the complex geological features encountered.

Solomon Gold plans an enhanced budget and program for the next twelve (12) months however the final determination of this is subject to approval by Newmont under the terms of the Joint Venture Agreement, dated March 5th, 2009.

Until the end of December 2009, the continued Guadalcanal Venture exploration program is expected to entail:

Chikora

Kuma

Mbetilonga

Central

Sutakiki

Upper Koloula River

About Solomon Gold

Solomon Gold listed on the London AIM exchange in early 2006 following a £5m IPO raising. The Company was floated by the listed ASX resource generation house D'Aguilar Gold Ltd (ASX:DGR). Solomon Gold currently has 84.9m shares on issue and the Board and management hold approximately 21%.

Since inception, Solomon Gold and its subsidiary, Australian Resource Management (ARM) Pty Ltd have expended approximately A$20m on the search for a giant gold copper porphyry system. The Company currently holds tenement interests over 612km2 land covering highly prospective terrane on the southwest Pacific rim of fire, a region known for very large copper gold porphyry deposits, such as Grasberg, Lihir, Bougainville, Ok Tedi and Batu Hijau in Indonesia. In 1989, the Australasian Geoscience Organisation, in a regional assessment of prospectivity, concluded that the Solomon Islands was "highly prospective for mineral deposits and was the next most highly mineralised country in the South Pacific after Papua New Guinea."

Solomon Gold's prior programs established an understanding of the geology of the area and the Company procured a substantial geological, geochemical and airborne magnetic database over the tenements. The data collected indicated a very strong potential for large porphyry copper gold deposits. The Company drilled 14,000 metres of core, resulting in its best intersection, in late 2007, of 32m@9.45g/t gold in drillhole SK11 in the Sutakiki Valley, 30km south east of Honiara.

As a result of the development of long term relationships with the local people on Guadalcanal, Solomon Gold enjoys unprecedented access to areas never previously explored. The Company established and maintains a fully operational base in Honiara, and separate field capabilities in central Guadalcanal.

On 5th March 2009, Solomon Gold announced its definitive Venture Agreement with Newmont Ventures Limited, a subsidiary of Newmont Mining Corporation (NYSE:NEM) ("Newmont"), under which Newmont can earn 51% of the project area by expending US$6 million within three (3) years, and may elect to expend a further US$6 million within a further two (2) years to earn a further 19% to reach 70%. Thereafter, Solomon Gold may elect to contribute its own funds on a pro rata basis, or elect for Newmont to debt fund the Solomon Gold share in the project to mining, for which Newmont would earn a further 10% interest in the Solomon Gold - Newmont Venture. Solomon Gold would in that case be obligated to repay its 20% share of all of Newmont's costs from the 70% earn point, plus interest.

Importantly, in the first year of the Venture, it has completed the acquisition of highly diagnostic Airborne EM data over the entire Guadalcanal Venture licence area, and is well advanced in the collection of a complete stream sediment Bulk Leach Extractable Gold data set, also over the entre licence area. Interpretation of this data, along with the detailed mapping and sampling of advanced prospects being prepared for drill testing in 2010 is well advanced.

The Solomon Gold Board considers Newmont's interest in Guadalcanal as a significant demonstration of support for the prospectivity of Solomon Gold's projects on Guadalcanal. Newmont is one of the world's leading gold project development and operating companies, with considerable experience in the south west Pacific and Indonesia.

Solomon Gold continues to hold a 100% interest in the gold project exploration licence on Fauro Island near Bougainville, and nickel exploration tenements on Ngella Island in the Florida's Group north of Honiara, and on eastern Guadalcanal.

The Solomon Islands Mining Act provides for an orderly regulatory environment under which to conduct exploration programs. Solomon Islands is governed by a Westminster style elected parliament and enjoys the assistance and support of a number of south west Pacific nations including Australia, through RAMSI, the Regional Assistance Mission to Solomon Islands.

Qualified Person

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

By order of the Board

Karl Schlobohm

Company Secretary

Contacts:

Mr Karl Schlobohm

Company Secretary

Tel: +61 7 3303 0660 or kschlobohm@solomongold.com

Mr Stephen Weir

RFC Corporate Finance

Nominated Advisor

Tel +61 2 9250 0048 or Stephen.Weir@rfc.com.au

This information is provided by RNS The company news service from the London Stock Exchange

MSCIIFETLSLEIIA

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 the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.

DISCLOSURE OF AUDIT INFORMATION

In the case of each person who are Directors of the Company at the date when this report is approved:

This report was approved by the board on 26 August 2009 and signed on its behalf.

Karl Schlobohm

Company Secretary

Level 5, 60 Edward Street

Brisbane QLD 4000

Australia
INDEPENDENT AUDITORS' REPORT

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SOLOMON GOLD PLC

We have audited the financial statements of Solomon Gold plc for the year ended 30 June 2009 which comprise the consolidated income statement and the consolidated and company balance sheets, consolidated and company statements of cash flows and consolidated and company statements of changes in shareholders' equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with sections 495 and 496 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditors

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

Emphasis of matter - availability of project finance

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note 1 to the financial statements concerning the requirement for the group to raise further funding if it is to bring its exploration projects into the development stage. If the group is unable to secure such additional funding to develop its projects further, this may have a consequential impact on the recoverability of the carrying value of the related exploration assets and the investment of the parent company in its subsidiaries. No adjustments have been made in the financial statements to reflect changes to asset carrying values that may be necessary should the company be unsuccessful in raising further finance.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

Nicole Kissun (Senior statutory auditor)

For and on behalf of PKF (UK) LLP, Statutory auditors

London, UK

26 August 2009

Notes Group Group

A$ A$
Revenue - -
Cost of sales - -
Gross profit - -
Other income 96,155 -

Administrative expenses
Exploration costs written-off (14,480) -
Other (1,376,014) (1,810,604)
Operating loss (1,294,339) (1,810,604)
Finance income 6 54,842 206,977
Loss before and after tax 3 (1,239,497) (1,603,627)
Loss for the year attributable to equity (1,239,497) (1,603,627)

holders of the parent

Basic and diluted loss per ordinary share
Basic and diluted 8 A$(0.0224) A$(0.0443)

Notes Group Group Company Company

A$ A$ A$ A$

Assets
Property, plant and equipment 10 207,726 246,617 5,742 652
Intangible assets 11 18,021,422 14,976,454 - -
Investment in subsidiary 9 - - 18,374,693 16,613,720
Total non-current assets 18,229,148 15,223,071 18,380,435 16,614,372
Other receivables and 13 152,338 326,105 69,692 157,766

prepayments
Cash and cash equivalents 14 1,449,697 1,874,805 1,393,906 202,196
Total current assets 1,602,035 2,200,910 1,463,598 359,962
Total assets 19,831,183 17,423,981 19,844,033 16,974,334

Equity
Share capital 15 1,736,803 1,033,527 1,736,803 1,033,527
Share premium 15 20,215,990 17,613,615 20,215,990 17,613,615
Other reserves 1,411,570 1,683,142 1,411,570 1,683,142
Accumulated loss (4,396,801) (3,457,595) (4,129,247) (3,460,706)
Total equity 18,967,562 16,872,689 19,235,116 16,869,578

Liabilities
Trade and other payables 16 863,621 551,292 608,917 104,756
Total current liabilities 863,621 551,292 608,917 104,756
Total liabilities 863,622 551,292 608,917 104,756
Total equity and liabilities 19,831,183 17,423,981 19,844,033 16,974,334

The financial statements were approved and authorised for issue by the Board and were signed in its behalf on 26 August 2009.

Brian Moller

Director

Consolidated Statement of changes in shareholders' equity

Note Share capital Share premium Share option reserve Warrants reserve A$ Accumulated loss Total
A$ A$ A$ A$ A$
Balance 30 June 2007 631,679 10,752,408 676,448 172,803 (1,853,968) 10,379,370
Loss for the period - - - - (1,603,627) (1,603,627)
New share capital subscribed 401,848 6,831,422 - - - 7,233,270
Share issue costs - (130,819) - - - (130,819)
Adjustment to previous share - 160,604 - - - 160,604
issue costs
Value of options issued to - - 833,891 - - 833,891

Directors, employees and
consultants
Balance 30 June 2008 15 1,033,527 17,613,615 1,510,339 172,803 (3,457,595) 16,872,689
Loss for the period (1,239,497) (1,239,497)
New share capital subscribed 703,276 2,718,173 3,421,449
Share issue costs (115,798) (115,798)
Value of options issued to 28,719 28,719

Directors, employees and
consultants
Reserve Transfers on (127,488) (172,803) 300,291 -
Expiration
Balance 30 June 2009 15 1,736,803 20,215,990 1,411,570 - (4,396,801) 18,967,562

Company Statement of changes in shareholders' equity

Note Share capital Share premium Share option reserve Warrants reserve A$ Accumulated loss Total
A$ A$ A$ A$ A$
Balance 30 June 2007 631,679 10,752,408 676,448 172,803 (1,857,699) 10,375,639
Loss for the period - - - - (1,603,007) (1,603,007)
New share capital subscribed 401,848 6,831,422 - - - 7,233,270
Share issue costs - (130,819) - - - (130,819)
Adjustment to previous share 160,604 160,604
issue costs
Value of options issued to - - 833,891 - - 833,891

Directors, employees and
consultants
Balance 30 June 2008 15 1,033,527 17,613,615 1,510,339 172,803 (3,460,706) 16,869,578
Loss for the period (968,832) (968,832)
New share capital subscribed 703,276 2,718,173 3,421,449
Share issue costs (115,798) (115,798)
Value of options issued to 28,719 28,719

Directors, employees and
consultants
Reserve Transfers on (127,488) (172,803) 300,291 -
Expiration
Balance 30 June 2009 15 1,736,803 20,215,990 1,411,570 - (4,129,247) 19,235,116

Group Group Company Company
Note 2009 2008 2009 2008
A$ A$ A$ A$

Cash flows from operating activities
Operating loss (1,294,339) (1,810,604) (1,010,165) (1,609,406)
Depreciation 49,698 50,981 1,177 762
Share based payment expense 224,280 833,891 224,280 833,891
Decrease in other receivables 173,767 55,619 72,460 86,229

and prepayments
Increase/(decrease) in trade 112,329 185,317 304,161 (121,541)

and other payables
Cash used in operations (734,265) (684,797) (408,087) (810,065)
Net cash outflow from (734,265) (684,797) (408,087) (810,065)
operating activities

Cash flows from investing activities
Interest received 54,842 206,977 41,333 6,399
Acquisition of property, plant (10,807) (23,629) (6,267) -

and equipment
Acquisition of intangible (2,648,788) (8,176,728) - -

assets (exploration)
Loans advanced to subsidiary - - (1,349,178) (6,097,526)
Net cash outflow from (2,604,753) (7,993,380) (2,463,753) (6,091,127)

investing activities Cash flows from financing activities
Proceeds from the issue of 2,829,708 7,233,270 2,829,708 7,233,270

ordinary share capital
Payment of issue costs (115,798) (130,819) (115,798) (130,819)
Loan from Director-related 200,000 - 200,000 -

entity
Net cash inflow from financing 2,913,910 7,102,451 2,913,910 7,102,451

activities
Net increase in cash and cash (425,108) (1,575,725) 1,191,710 201,259

equivalents
Cash and cash equivalents at 1,874,805 3,450,530 202,196 937

beginning of period
Cash and cash equivalents at 1,449,697 1,874,805 1,393,906 202,196

end of period

NOTE 1 ACCOUNTING POLICIES

The Company is a public limited company incorporated in England and Wales and is listed on the AIM market of the London Stock Exchange.

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with IFRSs and their interpretations adopted by the International Accounting Standards Board (IASB), as adopted by the European Union. They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The accounting policies set out below have been applied consistently throughout these consolidated financial statements.

(b) Basis of preparation of financial statements and going concern

The consolidated financial statements are presented in Australian dollars ("A$").

The Company was incorporated on 11 May 2005. The Group has elected, from incorporation, to prepare annual consolidated financial statement in accordance with IFRS.

A separate income statement for the parent company has not been presented as permitted by section 408 of the Companies Act 2006.

In common with many exploration companies, the Company raises finance for the Group's exploration and appraisal activities in discrete tranches. The Directors are confident that the Company's track record of successful capital raisings will continue, as will the funding arrangements for the Guadalcanal Venture agreed with Newmont in March 2009. The Company currently has sufficient cash on hand to meet its on-going expenditure commitments for the next twelve (12) months.

However, it should be noted that the Company's funds will not be sufficient to bring the projects into 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 its current arrangements with Newmont, other third parties or capital raisings, it may not be able to fully develop the project.

(c) Basis of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is recognised where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair value at the date of acquisition. Any excess of the cost of the acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If the cost of the acquisition is less than the fair value of net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those used by the Group.

(ii) Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(d) Foreign currency

The Company's functional and presentational currency is Australian dollars (A$). The exchange rate at 30 June 2009 was £0.48702/A$1.0, SBD$6.14330/A$1.0 (30 June 2008: £0.48210/A$1.0, SBD$7.33969/A$1.0).

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Australian dollars at the foreign exchange rate ruling at that date.

NOTE 1 ACCOUNTING POLICIES (Continued)

(e) Property, plant and equipment

(i) Owned asset

Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see accounting policy i below).

(ii) Subsequent costs

The Group recognises in the carrying amount of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

(iii) Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each item of property, plant and equipment. The estimated useful lives of all categories of assets are:

Office Equipment 3 years
Furniture and Fittings 5 years
Motor Vehicles 5 years
Plant and Equipment 5 years
Land and Buildings 12 years

The residual value is assessed annually. Gains and losses on disposal are determined by comparing proceeds with carrying amounts and are included in the income statement.

(f) Intangible assets

Deferred exploration and evaluation costs

Costs incurred in relation to the acquisition of, or application for, a tenement area are capitalised where there is a reasonable expectation that the tenement will be acquired or granted. Where the Company is unsuccessful in acquiring or being granted a tenement area, any such costs are immediately expensed.

All other costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written-off as incurred.

Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses recognised.

If an exploration project is successful, the related expenditures will be transferred to mining assets and amortised over the estimated life of the ore reserves on a unit of production basis.

The recoverability of deferred exploration and evaluation costs is dependent upon the discovery of economically recoverable ore reserves, the ability of the Group to obtain the necessary financing to complete the development of ore reserves and future profitable production or proceeds from the disposal thereof.

(g) Other receivables and prepayments

Other receivables and prepayments are not interest bearing and are stated at their nominal amount less provision for impairment.

(h) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowing in current liabilities on the balance sheet.

NOTE 1 ACCOUNTING POLICIES (Continued)

(i) Impairment

Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable an asset is reviewed for impairment. An asset's carrying value is written down to its estimated recoverable amount (being the higher of the fair value less costs to sell and value in use) if that is less than the asset's carrying amount.

Impairment reviews for deferred exploration and evaluation 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:

(j) Share capital

The Company's ordinary shares are classified as equity.

(k) Employee benefits

(i) Share based payment transactions

Certain Group employees are rewarded with share based instruments. Shares were also issued to third parties as consideration for good or services. Shares are recorded at their market value at the time of their issue. Option instruments are stated at fair value at the date of grant and this is expensed on a straight line basis over the estimated vesting period. The latter is based on the Group's estimate of shares that will eventually vest. The fair value of an option instrument is estimated using the Black-Scholes valuation model. The estimated life used in the model represents management's best estimate of the effects of non-transferability, exercise restrictions and behavioural considerations.

(ii) Retirement benefits

The Group operates a defined contribution pension scheme. Contributions payable for the year are charged to the income statement.

(l) Provisions

Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

(m) Trade and other payables

Trade and other payables are not interest bearing and are stated at their nominal value.

(n) Revenue

During the exploration phase, any revenue generated from incidental sales is treated as a contribution towards previously incurred costs and offset accordingly.

(o) Other income

Other income is recognised in the income statement as it accrues.

(p) Expenses

(i) Financing costs

Financing costs comprise interest payable on borrowing calculated using the effective interest rate method and interest receivable on funds invested.

(ii) Finance income

Interest income is recognised in the income statement as it accrues, using the effective interest method.

NOTE 1 ACCOUNTING POLICIES (Continued)

(q) Taxation

The charge for taxation is based on the profit or loss for the year and takes into account deferred tax. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss, and is accounted for using the balance sheet method.

Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available in the foreseeable future against which the temporary differences can be utilised.

(r) Segment reporting

A segment is a component of the Group distinguishable by economic activity (business segment), or by its geographical location (geographical segment), which is subject to risks and rewards that are different from those of other segments.

The Group currently operates in one business segment, being mineral exploration and two geographical segments, being Australia and Solomon Islands.

(s) Project Financing / Farm-outs

The Group, from time to time, enters into funding arrangements with third parties in order to progress specific projects. The Group accounts for the related exploration costs in line with the terms of the specific agreement.

(t) Accounting policies for the Company

The accounting policies applied to the Company are consistent with those adopted by the Group with the exception of the following:

(i) Company income statement

As permitted by Section 408 of the Companies Act 2006, the income statement of the Company has not been separately presented in these financial statements. The Company's loss for the year was A$968,832.

(ii) Subsidiary investments

Investments in subsidiary undertakings are stated at cost less impairment losses.

(u) Changes in accounting policies

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the accounting periods commencing 1 July 2008 but are not applicable to the group and had no impact on these financial statements.

The Group has not adopted any standards or interpretations in advance of the required implementation dates. It is not expected that adoption of standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the financial statements, other than in relation to IAS 1 Presentation of financial statements and IFRS 8 Operating Segments which will lead to presentation and disclosure amendments.

NOTE 2 SEGMENT REPORTING

A segment is a component of the Group distinguishable by economic activity (business segment) or by its geographical location (geographical segment) which is subject to risks and returns that are different from those of other segments. Based on risk and returns the Directors consider that the primary reporting format is by business segment. The Directors consider that the Group's only business segment is the exploration for, and ultimately the development of, mineral deposits. Therefore the disclosures for the primary segment have already been given in these financial statements.

The secondary reporting format is geographical analysis by origin. All the Group's activities are related to the exploration for mineral deposits in the Solomon Islands, with support provided from Australia. In presenting information on the basis of geographical segments, segment assets and the cost of acquiring them are based on the geographical location of the assets. Segment capital expenditure is the total cost incurred during the period to acquire segment assets and where the assets are located.

30 June 2008 Revenue Result Assets Liabilities Capex Depreciation
$ $ $ $ $ $
Australia - (1,583,575) 2,096,079 421,318 - (762)
Solomon Islands - (20,052) 15,327,902 129,974 8,200,357 (50,219)
Total - (1,603,627) 17,423,981 551,292 8,200,357 (50,981)
30 June 2009 Revenue Result Assets Liabilities Capex Depreciation
$ $ $ $ $ $
Australia - (1,237,293) 1,539,993 766,894 6,267 (1,177)
Solomon Islands - (2,204) 18,291,190 96,728 3,049,508 (48,521)
Total - (1,239,497) 19,831,183 863,622 3,055,775 (49,698)

NOTE 3 LOSS BEFORE TAX

Group Group

A$ A$

Loss is stated after charging: Auditors' remuneration:
Fees payable to the company's auditor for the audit of the 40,000 31,698

company's annual accounts Fees payable to the company's auditor and its associates for other services:
Tax services 27,509 29,805
Depreciation 49,698 50,981
Foreign exchange gains 18,260 33,414
Share based payments 224,280 833,891

NOTE 4 STAFF NUMBERS AND COSTS

The average number of persons employed (including Directors) during the year, analysed by category, was as follows:

Group Group Company Company

Corporate finance and administration 10 13 6 5
Technical 37 37 - -

The aggregate payroll costs of these persons were as follows:

Group Group Company Company

A$ A$ A$ A$
Wages and salaries 1,342,828 1,661,085 369,382 429,195
Contributions to defined contribution 6,866 20,928 6,866 1,407

plans
Share based payments 224,280 671,993 224,280 671,993
1,573,974 2,354,006 600,528 1,102,595

Included within staff costs is A$878,328 (2008: A$1,173,315) which has been capitalised as part of deferred exploration costs.

NOTE 5 REMUNERATION OF KEY MANAGEMENT PERSONNEL

Basic Annual Salary Other Benefits(1) Total Remuneration
A$ A$ Pensions A$
A$

Directors
Nicholas Mather 161,000 - - 161,000
Brian Moller 50,243 - - 50,243
Cameron Wenck 61,545 - - 61,545
Robert Weinberg 55,144 - - 55,144
327,932 - - 327,932
Non-Directors 458,654 224,280 - 682,934
TOTAL 786,586 224,280 - 1,010,866
Basic Annual Salary Other Benefits(1) Total Remuneration
A$ A$ Pensions A$
A$

Directors
Nicholas Mather 155,425 132,303 - 287,728
Brian Moller 64,228 26,580 - 90,808
Cameron Wenck 66,726 34,895 - 101,621
Robert Weinberg 55,716 26,580 - 82,296
342,095 220,358 - 562,453
Non-Directors 406,412 237,928 - 644,340
TOTAL 748,507 458,286 - 1,206,793

(1) Share based payments issued.

NOTE 6 FINANCE INCOME

Group Group

A$ A$

Interest income 54,842 206,977
Finance income 54,842 206,977

NOTE 7 INCOME TAX EXPENSE

Factors affecting the tax charge for the current period

The tax credit for the period is lower than the credit resulting from the application of the standard rate of corporation tax in the UK of 28% (2008: 28%) being applied to the loss before tax arising during the year. The differences are explained below.

Group Group

A$ A$

Tax reconciliation
Loss before tax (1,239,497) (1,603,627)
Tax at 28% (2008: 28%) (347,059) (449,016)

Effects (at 28%) of: Capitalisation of exploration costs (741,660) (2,571,865)
Non-deductible expenses 97,702 98,620
Tax losses carried forward 991,017 2,922,261
Tax on loss - -

Factors that may affect future tax charges

The Group has carried forward tax losses of approximately A$24.8m (2008:A$21.2m). These losses may be deductible against future taxable income dependent upon the on-going satisfaction by the relevant Group company of various tax integrity measures applicable in the jurisdiction where tax the loss has been incurred. The jurisdictions in which tax losses have been incurred include the United Kingdom, Australia and the Solomon Islands.

NOTE 8 LOSS PER SHARE

The calculation of basic loss per ordinary share on total operations is based on losses 1,239,497 (2008: A$1,603,627) and the weighted average number of ordinary shares outstanding of 55,218,452 (2008: 36,222of A$,261).

There is no difference between the diluted loss per share and the basic loss per share presented as the share options in issue during the period were not considered dilutive. At 30 June 2009 there were 5,615,000 (2008: 4,970,000) share options on issue.

NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

Country of incorporation Principal activity Solomon Gold plc's
and operation effective interest

Australian Resource Management Australia Exploration 100% 100%

(ARM) Pty Ltd
Solomon Operations Ltd Solomon Islands Exploration 100% 100%

NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (Continued)

Investment in subsidiary
undertakings
Total
Shares Loans A$
A$ A$

Cost
Balance at 30 June 2007 270,571 10,245,623 10,516,194
Advances in the period - 6,097,526 6,097,526
Balance at 30 June 2008 270,571 16,343,149 16,613,720
Advances in the period - 1,760,973 1,760,973
Balance 30 June 2009 270,571 18,104,122 18,374,693

Amortisation and impairment losses
Balance at 30 June 2007 - - - -
Balance at 30 June 2008 - - -
Balance 30 June 2009 - - -

Carrying amounts
At 30 June 2007 270,571 10,245,623 10,516,194
At 30 June 2008 270,571 16,343,149 16,613,720
At 30 June 2009 270,571 18,104,122 18,374,693

Details of all loans within the group made during the year are set out below:

Shares Loans Total
A$ A$ A$

Cost
Balance at 30 June 2007 270,571 10,245,623 10,516,194
Advances in the period from Solomon Gold plc - 6,097,526 6,097,526

to ARM Pty Ltd
Balance at 30 June 2008 270,571 16,343,149 16,613,720
Advances in the period from Solomon Gold plc - 1,760,973 1,760,973

to ARM Pty Ltd
Total Investment in subsidiary by the Company 270,571 18,104,122 18,374,693

at 30 June 2009

NOTE 10 PROPERTY, PLANT AND EQUIPMENT

Group
Land and Plant and Equipment Motor vehicles Office equipment Furniture & Fittings
Buildings A$ A$ A$ A$ Total Company
A$ A$ A$

Cost
Balance 30 June 2007 194,000 47,993 30,092 28,419 14,710 315,214 2,290
Additions - 8,161 - 15,468 - 23,629 -
Balance 30 June 2008 194,000 56,154 30,092 43,887 14,710 338,843 2,290
Additions - - - 10,807 - 10,807 6,267
Balance 30 June 2009 194,000 56,154 30,092 54,694 14,710 349,650 8,557

Depreciation & impairment losses
Balance 30 June 2007 (5,768) (11,351) (9,258) (13,841) (1,027) (41,245) (876)
Depreciation charge for the (19,966) (10,214) (6,001) (11,866) (2,934) (50,981) (762)

year
Balance 30 June 2008 (25,734) (21,565) (15,259) (25,707) (3,961) (92,226) (1,638)
Depreciation charge for the (16,300) (11.323) (6,068) (13,041) (2,966) (49,698) (1,177)

year
Balance 30 June 2009 (42,034) (32,888) (21,327) (38,748) (6,927) (141,924) (2,815)

Carrying amounts
At 30 June 2007 188,232 36,642 20,834 14,578 13,683 273,969 1,414
At 30 June 2008 168,266 34,589 14,833 18,180 10,749 246,617 652
At 30 June 2009 151,966 23,266 8,765 15,946 7,783 207,726 5,742

NOTE 11 INTANGIBLE ASSETS

Deferred
exploration costs
A$

Cost
Balance 30 June 2007 6,799,726
Additions 8,176,728
Disposals -
Balance 30 June 2008 14,976,454
Additions 3,044,968
Disposals -
Balance 30 June 2009 18,021,422

Impairment losses
Balance 30 June 2008 -
Provision for impairment -
Balance 30 June 2009 -

Carrying amounts
At 30 June 2007 6,799,726
At 30 June 2008 14,976,454
At 30 June 2009 18,021,422

NOTE 11 INTANGIBLE ASSETS (Continued)

Newmont Guadalcanal Venture

On 5th March 2009, the Company announced its definitive Venture Agreement with Newmont, under which Newmont can earn 51% of the defined project area by expending US$6 million within three (3) years, and may elect to expend a further US$6 million within a further two (2) years to earn a further 19% to reach 70%. The defined project area comprises five (5) adjoining tenement areas on Guadalcanal, Solomon Islands. The carrying value of the Capitalised Exploration of these 5 tenement areas as at 30 June 2009 is $A17,349,918.

The expenditure undertaken by Newmont under the terms of the Venture Agreement has not been booked by the Company.

Should Newmont meet the terms of its initial earn-in entitlement by expending US$6 million within three (3) years, the Company will grant Newmont a 51% equitable interest in the tenements at that point.

Impairment loss

During the year the Group has not considered it necessary to make a provision for impairment against any of its deferred exploration assets (2008: Nil). A detailed assessment of the carrying values of deferred exploration costs is provided in note 22.

NOTE 12 DEFERRED TAXATION

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following amounts. Deferred tax has been calculated at the future rate of corporation tax of 28%.

Group Group Company Company

A$ A$ A$ A$
Deductible temporary differences - 9,934 - -
Tax losses 6,940,284 5,949,267 801,924 674,231
6,940,284 5,959,201 801,924 674,231

The deferred tax asset in respect of these items has not been recognised as future taxable profit is not anticipated within the foreseeable future.

NOTE 13 OTHER RECEIVABLES AND PREPAYMENTS

Group Group Company Company

A$ A$ A$ A$
Other receivables 113,140 270,932 68,281 126,206
Prepayments 39,198 55,173 1,411 31,560
152,338 326,105 69,692 157,766

NOTE 14 CASH AND CASH EQUIVALENTS

Group Group Company Company

A$ A$ A$ A$
Bank balances 1,449,697 1,869,290 1,393,906 202,179
Call deposits - 5,515 - 17
Cash and cash equivalents in the 1,449,697 1,874,805 1,393,906 202,196

statement of cash flows

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 15 CAPITAL AND RESERVES

(a) Authorised Share Capital

No. of shares Nominal value
£
On incorporation - ordinary shares of 1,000,000,000 100,000

£0.0001 each
Consolidated into ordinary shares of 10,000,000 100,000

£0.01 each on 27 October 2005
Creation of additional shares of £0.01 40,000,000 400,000

each on 27 October 2005
Creation of additional shares of £0.01 50,000,000 500,000

each on 11 December 2007
At 30 June 2008 - Ordinary Shares 100,000,000 1,000,000

No. of shares Nominal value
£
At 1 July 2008 - Ordinary shares 100,000,000 1,000,000
Creation of additional shares of £0.01 100,000,000 1,000,000

each on 1 December 2008
At 30 June 2009 - Ordinary Shares 200,000,000 2,000,000

(b) Changes in Issued Share Capital and Share Premium

No. of shares Nominal value Share premium Total
A$ A$ A$
Ordinary shares of 1p each at 26,825,000 631,679 10,752,408 11,384,087

30 June 2007
Adjustment to share issue - - 160,604 160,604

costs
Shares issued at £0.18 - 17,500,000 401,848 6,831,422 7,233,270

placing 18 December 2007
Share issue costs charged to - - (130,819) (130,819)

share premium
Ordinary shares of 1p each at 44,325,001 1,033,527 17,613,615 18,647,142

30 June 2008

No. of shares Nominal value Share premium Total
A$ A$ A$
Ordinary shares of 1p each at 44,325,001 1,033,527 17,613,615 18,647,142

30 June 2008

Shares issued at £0.03 - 11,666,667 275,625 551,250 826,875

placing 21 November 2008
Share issue costs charged to (115,798) (115,798)

share premium account
Shares issued at £0.03 - 7,299,836 163,071 332,665 495,736

conversion 4 February 2009
Shares issued at £0.09 - 2,000,000 40,636 355,544 396,180

consideration 10 March 2009
Shares issued at £0.05 - 1,750,000 35,557 160,003 195,560

remuneration 5 May 2009
Shares issued at £0.08 - 30 9,189,622 188,387 1,318,711 1,507,098

June 2009 (see note below)
Ordinary shares of 1p each at 76,231,126 1,736,803 20,215,990 21,952,793

30 June 2009

As at 30 June 2009, the Company had received A$1,507,098 and allotted 9,189,622 shares to various parties under written placement agreements. Together with the funds received in July 2009, the placement ultimately totalled A$2.8 million. The shares were admitted to AIM on 8 and 9 July 2009.

NOTE 15 CAPITAL AND RESERVES (Continued)

Potential issues of ordinary shares

At 30 June 2009 the Company had 5,615,000 options outstanding for the issue of ordinary shares, as follows:

Options

Date of grant Exercisable from Exercisable to Exercise prices Number granted Number at 30 June

10 February 2006 1 January 2007 1 January 2011 £0.50 to £1.00 1,740,000 1,040,000
12 September 2006 1 January 2007 1 January 2011 £0.50 to £1.00 650,000 575,000
31 December 2007 31 December 2007 31 December 2010 £0.25 to £0.75 1,380,000 1,000,000
31 December 2007 31 December 2007 8 November 2010 £0.20 500,000 500,000
31 January 2008 31 January 2008 31 December 2010 £0.25 to £0.75 1,000,000 1,000,000
27 May 2008 27 May 2008 31 December 2010 £0.25 to £0.75 400,000 200,000
20 May 2009 14 October 2009 30 April 2011 £0.10 1,300,000 1,300,000
6,970,000 5,615,000

Warrants

There were no warrants outstanding as at 30 June 2009.

Share options issued

During the year, 655,000 unlisted share options in Solomon Gold plc were cancelled as a result of employee resignations.

On 20 May 2009 the Company issued 1,300,000 unlisted share options to the CFO / Company Secretary. The options were issued free of charge and are exercisable at 10 pence per ordinary share. The period during which these share options can be exercised is between 14 October 2009 and 30 April 2011.

Dividends

The Directors do not recommend the payment of a dividend.

Capital Management

Given the nature of the group's current activities the entity will remain dependant on equity funding in the short to medium term until such time as the group becomes self-financing from the commercial production of mineral resources.

NOTE 16 TRADE AND OTHER CURRENT PAYABLES

Group Group Company Company

A$ A$ A$ A$

Current
Trade payables 381,520 423,088 241,895 43,253
Other payables 115,755 60,897 24,432 4,520
Accrued expenses 166,346 67,307 142,591 56,983
Short-term Loan 200,000 - 200,000 -
863,621 551,292 608,917 104,756

The short-term loan of $200,000 was repaid in full on 8 July 2009.

NOTE 17 EMPLOYEE BENEFITS

Share-based payments

On 5 May 2009 the Company issued a total of 1,750,000 fully paid ordinary shares to key employees and contractors working on the Company's projects. The shares were issued free of charge.

On 20 May 2009 the Company issued 1,380,000 unlisted share options to the CFO / Company Secretary. The options were issued free of charge and are exercisable at 10 pence per ordinary share. The period during which these share options can be exercised is between 14 October 2009 and 30 April 2011.

The number and weighted average exercise price of share options are as follows:

Weighted average Number of options Weighted average Number of options 2008
exercise price 2009 2009 exercise price 2008
Outstanding at the beginning £0.52 4,970,000 £0.75 2,390,000

of the period
Lapsed during the period £0.47 (655,000) £0.75 (700,000)
Granted during the period £0.10 1,300,000 £0.40 3,280,000
Outstanding at the end of the £0.43 5,615,000 £0.52 4,970,000

period
Exercisable at the end of the £0.43 5,615,000 £0.52 4,970,000

period

The options outstanding at 30 June 2009 have an exercise price in the range of £0.10 pence to £1.00 (2008: £0.25-1.00) and a weighted average contractual life of 1.31 years (2008: 2.38 years).

Share options held by Directors are as follows:

Share options held At 30 June 2009 At 30 June 2008 Option Price Exercise Period
Share options held At 30 June 2009 At 30 June 2008 Option Price Exercise Period
Nicholas Mather 233,333 233,333 50p 01/01/07 - 01/01/10
233,333 233,333 75p 01/01/08 - 01/01/11
233,334 233,334 100p 01/01/08 - 01/01/11
250,000 250,000 25p 31/01/08 - 31/12/10
125,000 125,000 50p 31/01/08 - 31/12/10
125,000 125,000 75p 31/01/08 - 31/12/10
Cameron Wenck 25,000 25,000 50p 01/01/07 - 01/01/10
25,000 25,000 75p 01/01/08 - 01/01/11
25,000 25,000 100p 01/01/08 - 01/01/11
100,000 100,000 25p 31/01/08 - 31/12/10
50,000 50,000 50p 31/01/08 - 31/12/10
50,000 50,000 75p 31/01/08 - 31/12/10
Brian Moller 25,000 25,000 50p 01/01/07 - 01/01/10
25,000 25,000 75p 01/01/08 - 01/01/11
25,000 25,000 100p 01/01/08 - 01/01/11
75,000 75,000 25p 31/01/08 - 31/12/10
37,500 37,500 50p 31/01/08 - 31/12/10
37,500 37,500 75p 31/01/08 - 31/12/10
Robert Weinberg 25,000 25,000 50p 01/01/07 - 01/01/10
25,000 25,000 75p 01/01/08 - 01/01/11
25,000 25,000 100p 01/01/08 - 01/01/11
75,000 75,000 25p 31/01/08 - 31/12/10
37,500 37,500 50p 31/01/08 - 31/12/10
37,500 37,500 75p 31/01/08 - 31/12/10

NOTE 17 EMPLOYEE BENEFITS (continued)

The total number of options outstanding at year end are as follows:

Share options held Share options held Option price Exercise periods
at 30 June 2009 at 30 June 2008
1,300,000 - £0.10 14/10/09 - 30/04/11
500,000 500,000 £0.20 31/12/07 - 08/11/10
1,100,000 1,390,000 £0.25 31/12/07 - 31/12/10
1,088,331 1,258,331 £0.50 01/01/07 - 31/12/10
1,088,334 1,258,334 £0.75 31/12/07 - 01/01/11
538,335 563,335 £1.00 01/01/08 - 01/01/11
5,615,000 4,970,000

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. This estimate is based on a Black-Scholes model which is considered most appropriate considering the effects of the vesting conditions, expected exercise period and the dividend policy of the Company.

Fair value of share options and assumptions
granted 19 May 2009 £0.10 options
Fair value at issue date £0.0386
Exercise price £0.10
Expected volatility 156%
Option life 1.9 years
Expected dividends 0.00%
Risk-free interest rate (short-term) 3.50%

The calculation of the volatility of the share price was based on the Company's daily closing share price over the two-year period prior to the date the options were issued.

NOTE 18 FINANCIAL INSTRUMENTS (GROUP AND COMPANY)

If required, the Board of Directors determines the degree to which it is appropriate to use financial instruments, commodity contracts or other hedging contracts or techniques to mitigate risks. The main risks for which such instruments may be appropriate are foreign currency risk and liquidity risk, each of which is discussed below. The main credit risk is the non-collection of other receivables which include tax (VAT, withholding tax), refunds and tenement security deposits. There were no overdue receivables at year end.

There have been no changes in financial risks from previous year.

During the period ending 30 June 2009 no trading in commodity contracts was undertaken.

Foreign currency risk

The Group has potential currency exposures in respect of items denominated in foreign currencies comprising:

The table below shows the extent to which Group companies have monetary assets and liabilities in currencies other than the Group functional currency. Foreign exchange differences on retranslation of such assets and liabilities are taken to the income statement.

NOTE 18 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) (Continued)

Group Group

A$ A$
Solomon Island dollar (SBD) 25,644 221,054

The main currency exposure relates to the effect of re-translation of the Group's assets and liabilities in Solomon Island dollar (SBD). A 1% change in the SBD/A$ exchange rate would give rise to a change of approximately A$256 (2008 A$2,000) in the Group net assets and reported earnings.

In respect of other monetary assets and liabilities held in currencies other than Australian dollars, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.

The company did not have any monetary assets and liabilities in currencies other than the company functional currency.

Liquidity risks

The Group and Company raises funds as required on the basis of budgeted expenditure for the next 12 to 24 months, dependent on a number of prevailing factors. Funds are generally raised 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 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. When funds are sought, the Group balances the costs and benefits of equity financing. When funds are received they are deposited with banks of high standing in order to obtain market interest rates. The Group deals with banks with high credit ratings assigned by international credit rating agencies. Funds are provided to local sites weekly, based on the sites' forecast expenditure.

Fair values

In the Directors' opinion there is no material difference between the book value and fair value of any of the Group's and Company's financial instruments. The classes of financial instruments are the same as the line items included on the face of the balance sheet and have been analysed in more details in notes to the accounts.

All the group's financial assets are categorised as loans and receivables and all financial liabilities are measured at amortised cost.

NOTE 19 COMMITMENTS

The Company has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Company.

The commitments to be undertaken are as follows:

Tenement Number / Name Commitment (A$) Period to meet commitment
PL 02/05 - Koloula $1,065,000 08/12/08 - 07/12/10
PL 03/05 - Central $1,053,000 08/12/08 - 07/12/10
PL 04/05 - Mbetilonga $1,085,000 08/12/08 - 07/12/10
PL 05/05 - Sutakiki $580,000 10/11/05 - 10/09/09
PL 08/06 - Kuma $500,000 23/11/06 - 22/11/09

To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Company has the option to negotiate new terms or relinquish the tenements. The Company also has the ability to meet expenditure requirements by joint venture or farm in agreements.

It should be noted that the expenditure undertaken by the Guadalcanal Venture, which Newmont is contractually committed to fund until at least March 2010, qualifies towards the above-mentioned commitments. The Board fully expects Newmont to continue to fund the Guadalcanal Venture until at least March 2012, whereupon they achieve the first of their two earn-in stages.

NOTE 20 RELATED PARTIES

(a) Group

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
a) Transactions with Directors and Director-Related Entities

(i) On 6 December 2005 the Company entered into a consultancy agreement with Samuel Capital Ltd (*Samuel*), an entity associated with Nicholas Mather (a Director). Under this agreement, Mr Mather will act as an executive Director of the Company at an annual salary of $161,000, terminable by either party giving twelve months written notice. The appointment of Samuel was for two years from the date of Admission (10 February 2006), and was recently renewed for a further two year period until 10 February 2010. For the year ended 30 June 2009 A$161,000 was paid or payable to Samuel (2008: A$155,425). These amounts are included in Note 5 (Remuneration of Key Management Personnel). The total amount outstanding at year end is A$68,507 (2008: Nil).

(ii) On 17 December 2008, the Company entered into an agreement with Samuel Holdings Pty Ltd (an entity associated with Nick Mather) for the provision of a short-term loan of $200,000. Interest was paid by the Company on a monthly basis at the agreed rate of 12%p.a. As at 30 June 2009, the principal amount of $200,000 was outstanding. This loan was discharged in full on 8 July 2009.

(iii) In late 2008, the Company entered into an agreement with Samuel Holdings Pty Ltd for the placement in early 2009 of 22,191,500 Convertible Notes, each with a face value of 1 pence for gross proceeds of £221,915 with the funds being required to meet the general working capital requirements of the Company. In February 2009, the notes were converted into Solomon Gold shares at 3.04 pence per share (being 80% of the 30-day volume weighted average price of 3.80 pence) as follows:
· Nicholas and Judith Mather <Superannuation Fund A/C> - £154,786
· Samuel Holdings Pty Ltd <Samuel Discretionary A/C> - £67,129

(iv) The Company has a long-standing legal agreement with D*Aguilar Gold, an entity associated with Nicholas Mather (Director) and Brian Moller (Director), for the provision of administration services, whereby D*Aguilar Gold provides certain services including the provision of its premises (for the purposes of conducting the Company*s business operations), use of existing office furniture, equipment and certain stationery, together with general telephone, reception and other office facilities (**Services**). In consideration for the provision of the Services, the Company shall reimburse D*Aguilar Gold for any expenses incurred by it in providing the Services. For the year ended 30 June 2009 A$38,872 was paid or payable to D*Aguilar Gold (2008: A$24,989) for the provision of administration, management and office facilities to the Company during the year. The total amount outstanding at year end is A$Nil (2008: A$4,921).

(v) From 2005, D'Aguilar Gold Ltd held a royalty right in respect of four exploration licences (Koloula PL 02/05, Central PL03/05, Mbetilonga PL04/05 and Sutakiki PL05/05) on Guadalcanal pursuant to an agreement with Solomon Gold*s subsidiary, Australian Resource Management (ARM) Pty Ltd. In March 2009, Solomon Gold entered into an agreement with D'Aguilar Gold to cancel the royalty agreement entered into with ARM, and agreed to allot it with 2 million Solomon Gold shares and also reimburse it with $50,000 in cash. The shares were allotted on 10 March 2009, and the cash component paid on 1 July 2009. The amount therefore outstanding at 30 June 2009 was $50,000.

(vi) Mr Brian Moller (a Director), is a partner in the Australian firm Hopgood Ganim lawyers. For the year ended 30 June 2009, Hopgood Ganim were paid A$131,062 (2008: A$228,253) for the provision of legal services to the Company. The services were based on normal commercial terms and conditions. The total amount outstanding at year end is A$102,223 (2008: A$2,234).
(b) Share and Option transactions of Directors are shown under notes 5 and 17.

NOTE 20 RELATED PARTIES (Continued)

(b) Company

The Company has a related party relationship with its subsidiaries (see note 9), Directors and other key personnel (see note 20 (a)).

Subsidiaries

The Company has an investment in subsidiaries balance of A$18,374,693 which comprises funds advanced during the period of A$1,760,973 (see note 9). As the Company does not expect repayment of this amount and will not call payment until the subsidiary can adequately pay it out of working capital, this amount has been included in the carrying amount of the investment in the Parent Entity's balance sheet. The following table details transactions carried out with subsidiary undertakings:

A$
Balance 30 June 2007 10,516,194
Transactions during period 6,097,526
Balance 30 June 2008 16,613,720
Transactions during period 1,760,973
Balance 30 June 2009 18,374,693

The Company has a professional services agreement with ARM to provide certain management services to ARM. During the year A$15,334 (2008: A$26,810) was payable to the Company for the provision of professional services.

(c) Controlling party

In the Directors' opinion there is no ultimate controlling party.

NOTE 21 SUBSEQUENT EVENTS

Prior to 30 June 2009 the Company announced two (2) separate share placements, and entered into written placement agreements with numerous parties in relation thereto. The placement raised a combined total of approximately $2.8 million. The shares for these placements were admitted to AIM on 8 and 9 July 2009.

NOTE 22 ACCOUNTING ESTIMATES AND JUDGEMENTS

Key sources of estimation uncertainty

The Audit Committee has carried out an assessment of the carrying values of deferred exploration costs and any required impairment.

Koloula PL 02/05

Exploration on Koloula PL 02/05 is still at an early stage and the drill testing of the key targets is not yet complete. Further drilling targets are likely to be identified for several localities in the tenement based on data collected by the Company and its subsidiaries in 1996 and 1997, and by the Guadalcanal Venture during 2009. Previously tested drill locations have intersected mineralised zones which provide encouragement in support of the presence of a significant minerals system. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of A$3.7 million is considered to be unimpaired.

Central Guadalcanal PL 03/05

Exploration on Central Guadalcanal PL 02/05 is still at an early stage and the drill testing of the key targets is not yet complete. Previous rock chip channel sampling of anomalies in the tenement by previous workers and Solomon Gold's wholly owned subsidiary ARM, demonstrates potential for the presence of significant gold resources. Recent work has highlighted potential for significant copper porphyry systems. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of A$0.28 million is considered to be unimpaired.

NOTE 22 ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

Key sources of estimation uncertainty (continued)

Mbetilonga PL 04/05

This tenement is still at an early stage and the drill testing of the key targets has not yet been completed. Five holes were previously drilled into two prospects in the tenement, with inconclusive results. Several historical and newly defined targets are yet to be tested. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of A$4.0 million is considered to be unimpaired.

Sutakiki PL 05/05

Exploration on Sutakiki PL 02/05 is still at an early stage however previous drill testing of the key targets to date has indicated that there are both high tonnage low grade and high grade low tonnage prospects in the tenement. The results of mapping sampling and drilling programs in the tenement to date are consistent with the discovery of a significant gold and copper mineral system which may ultimately yield resources. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of A$8.7 million is considered to be unimpaired.

Kuma PL 08/06

Exploration on Kuma is at an early stage and the mapping and sampling phase of the program of testing of the key targets has resulted in the identification of extensive mineralised complexes which show potential to yield resources. There is no exploration data to hand, or access or other conditions notified or evident which have the effect of adversely affecting the prospectivity of the tenement. It is considered likely that ongoing exploration and expenditure will result in a resource or commercial arrangement in excess of the costs of such a discovery. The carrying value of A$0.16 million is considered to be unimpaired.

Florida PL 57/07

Exploration on Florida is at an early stage and work has identified prospective rocks hosting significant nickel anomalies. The carrying value of A$0.47 million is considered to be unimpaired.

East Guadalcanal PL 02/08

Exploration on East Guadalcanal is at an early stage and work has commenced. The carrying value of A$0.03 million is considered to be unimpaired.

Fauro Application

The costs related to Fauro are in connection with the application for the tenement and the negotiations and meetings with land owners. There has been no exploration undertaken to date, as the tenement has not yet been granted. The carrying value of A$0.16 million is considered to be unimpaired, as the Directors are confident that the Company will successfully agree on access arrangements with the locals and therefore be granted the legal right to the tenement area.

This information is provided by RNS The company news service from the London Stock Exchange

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