Annual Financial Report 2009

RNS Number : 5204A

Solomon Gold PLC

09 October 2009

9 October 2009

Announcement to London Stock Exchange

Annual Report 2009

Solomon Gold plc has today issued its finalised Annual Report for the Financial Year ended 30 June 2009. The Chairmans' Statement, Operation Review, Directors' Report, Consolidated Income Statement, Consolidated and Company Balance Sheets, Statement of Changes of Equity and Consolidated and Company Statements of Cash Flows and supporting notes are included below.

The full and formatted Annual Report is available on the Company's website www.solomongold.com

By order of the Board

Karl Schlobohm

Company Secretary

Contacts:

Karl Schlobohm

Company Secretary

Tel: +61 7 3303 0660

Email: kschlobohm@solomongold.com

Stephen Weir

RFC Corporate Finance

Nominated Adviser

Tel: +61 2 9250 0048

Email: Stephen.Weir@rfc.com.au

Annual Report

For the year ended 30 June 2009 CORPORATE INFORMATION

DIRECTORS

Cameron Wenck (Non-Executive Chairman)

Nicholas Mather (Chief Executive Officer)

Brian Moller (Non-Executive Director)

Dr Robert Weinberg (Non-Executive Director)

COMPANY SECRETARY

Karl Schlobohm

REGISTERED OFFICE

7 Pilgrim Street, London EC4V 6LB

United Kingdom

Registered Number 5449516

AUSTRALIAN OFFICE

Level 5, 60 Edward Street,

Brisbane QLD 4000

Phone: + 61 7 3303 0660

Fax: +61 7 3303 0681

Email: info@solomongold.com

Web Site: www.solomongold.com

AUDITORS

PKF (UK) LLP

Farringdon Place, 20 Farringdon Road

London EC1M 3AP

NOMINATED ADVISOR

RFC Corporate Finance Ltd

Level 14, 19-31 Pitt Street

Sydney NSW 2000, Australia

BROKER

Hanson Westhouse Ltd

One Angel Court, London EC2R 7H

United Kingdom

BANKERS

Macquarie Bank Ltd (Brisbane Branch)

300 Queen Street, Brisbane QLD 4000

Australia

SOLICITORS

Faegre & Benson LLP

7 Pilgrim Street, London EC4V 6LB

United Kingdom

AUSTRALIAN SOLICITORS

Hopgood Ganim

Level 8, Waterfront Place

1 Eagle Street, Brisbane QLD 4000

REGISTRARS

Computershare Investor Services plc

The Pavilions, Bridgwater Road

Bristol BS99 7NH

CHAIRMAN'S STATEMENT

Dear Fellow Shareholder

The financial year ended 30 June 2009 was one full of challenging and exciting developments.

Like many junior resource and exploration companies around the world, Solomon Gold felt the effects of the tightening across global credit and investment markets during the latter part of 2008. Fortunately, and due in no small part to the loyalty and commitment of our dedicated management and staff, we were able to continue to progress the Company's projects in the Solomon Islands during this time.

During this same period, the Company entered into negotiations with Newmont Ventures Limited (Newmont) a wholly owned subsidiary of Newmont Mining Corporation (NYE: NEM) regarding their participation in Solomon Gold's copper gold exploration projects on the island of Guadalcanal, Solomon Islands. The parties executed a definitive agreement in March of 2009, the details of which are outlined in the Operational Review below. Needless to say, the relationship developed with Newmont is of enormous strategic importance to Solomon Gold, and Newmont's experience and expertise will continue to underpin the Company's exploration program on Guadalcanal.

The exploration programme implemented since the formation of the Newmont Guadalcanal Venture is outlined in detail in the Operations Review. A comprehensive EM survey has been undertaken and analysed, extensive mapping and sampling of localised mineralisation has taken place, and several targets have been identified for the recommencement of drilling in the fourth quarter of 2009.

Solomon Gold continues to hold a 100% interest in its prospecting licence application on Fauro Island, and its Nickel exploration tenements on eastern Guadalcanal and Ngella in the Floridas and Makira Island. Further progress on these areas is expected over the forthcoming year.

The Company continued its successful track record of capital raising during the year, undertaking placements in November of 2008 and June of 2009. As a result, Solomon Gold enters the 2010 financial year in a strong position from a financial and technical alliance perspective. This will allow the Company to continue to pursue its objective to discover and define a world class copper gold ore body within the South Pacific Region.

The Board has continued to consider further investment options to secure and build the Company's future prospects and projects in line with its stated corporate and exploration objectives. In this regard I am ably supported by a very active Board of Directors and a deeply committed executive team, all of whom are focussed on the Company's continued development and its ultimate objective of delivering shareholder value. I am thankful and appreciative of the efforts of the team to date, and confident in their combined ability to deliver on the Company's objectives.

Cameron Wenck

Chairman

OPERATIONS REPORT

Company History and Strategy

Solomon Gold Plc was listed on AIM in February 2006, having raised £5 million in its IPO. The Company's aim was to discover a world class copper gold porphyry system similar to other large ore bodies in the region such as Ok Tedi, Grasberg and Bougainville which each host resources in excess of 40m oz of gold equivalent as gold and copper (refer Figure 1). The Rim of Fire is a circum Pacific zone of earthquakes and volcanoes which, in the South West Pacific, result from the collision of the Pacific Ocean crustal plate and marginal continental Australian plate. It hosts numerous copper and gold orebodies, several of which contain more than 40M oz of gold equivalent.

The South Pacific Applied Geoscience Commission in 2001 concluded that "Solomon Islands is perhaps the most prospective Pacific island country for minerals after Papua New Guinea (PNG)."

The geology of the project area on Guadalcanal is considered analogous to that on Bougainville where the giant Panguna Mine is located. Andesitic volcanic piles located parallel to the Rim of Fire have been intruded by younger diorite and porphyry bodies.

Intrusions and mineralisation have been preferentially localised on north north-east zones of weakness known as transform faults. One of these runs through the Koloula - Sutakiki intrusive centre and another through the Mbetilonga exploration area, on Solomon Gold's tenements.

The project area was originally selected as containing the most interesting porphyry targets on Guadalcanal. The tenements are held in Solomon Gold's wholly owned subsidiary Australian Resource Management (ARM) Pty Ltd, which acquired the tenements after extensive reviews and research in 1995.

Figure 1: Solomon Gold Regional Setting

Between 1995 and 1998, reconnaissance field map sampling and airborne magnetics and radiometrics were conducted by ARM. Data from these programs formed the base data for the programs implemented since 2005. Work ceased between 1998 and 2005 due to civil unrest in the Solomons. However, during its initial work period, the ARM management team developed an unrivalled record of successful liaison with the local Solomon Islanders. This record is the basis for the Company's ongoing and unprecedented access arrangements in the field.

Over the period from 2005 to 2008 the Company set about an intensive program of fieldwork involving detailed mapping and sampling of known prospects. The strategy culminated in a concentration of effort on drill testing which resulted in some significant and some spectacular intersections such as at Valehailali, Sutakiki, where 32m @ 9.45g/t gold was encountered in a peripheral skarn system. Whilst this was a spectacular result, this activity resulted in a diversion of effort from the main thrust of locating a large porphyry system and thus in 2009, the Company entered into a Joint Venture with Newmont Ventures Limited, a subsidiary of Newmont Mining Corporation ("Newmont") (NYE: NEM). The aim of this initiative was to refocus the exploration program from the diversionary high grade vein search to porphyry exploration.

Accordingly, during the year, Solomon Gold designed its exploration objectives and work programs based on this strategy, focussing mainly on its existing tenement areas on the island of Guadalcanal in the Solomon Islands (refer Figure 2). In the period from 1 July 2008 to 28 February 2009, the Company expended A$2,540,556 in furthering its exploration of these tenements, utilising the services of 4 geologists and 15 field hands. The total carrying value of the Guadalcanal tenements in the Company's accounts as at 30 June 2009 is A$17,349,918. The Board of Directors considers this expenditure to be a relatively small investment when compared to the significance of the data acquired, the prospects defined and the historic sizes of analogous discoveries elsewhere in the region on the Rim of Fire.

Guadalcanal Venture with Newmont

Following the decision to refocus on high-tonnage porphyry exploration, Solomon Gold executed a Venture Agreement with Newmont Ventures Limited, a subsidiary of Newmont Mining Corporation ("Newmont") (NYE: NEM) on 5 March 2009, in respect of Solomon Gold's copper gold exploration projects on the island of Guadalcanal, Solomon Islands (refer Figure 2). The Solomon Gold board considers Newmont's interest in Guadalcanal as a significant demonstration of support for the prospectivity of the Company's projects and exploration strategy on Guadalcanal Island. Newmont is one of the world's leading gold project development and operating companies, with considerable experience in the south west Pacific and Indonesia.

The principle terms of the agreement provide that Newmont may earn a 51% interest by expending USD6 million within 3 years from the date of execution (Stage 1 earn-in), and may elect to expend a further USD6 million (total USD12 million) to earn a further 19% to a total 70% over a further 2 year period (Stage 2 earn-in). Solomon Gold is acting as the manager for the first year of the program, and Newmont may elect to manage the program thereafter. The management fee ranges between 5% and 10 % of exploration costs.

After Newmont has earned a 70% interest in the project within 5 years from the date of execution of the Venture Agreement, Solomon Gold may elect to accept a Newmont funding option which provides for Newmont to earn a further 10% (to a total of 80%) by funding Solomon Gold through to the mining stage of the project.

Solomon Gold would in that case be obligated to repay its 20% share of all of Newmont's costs from the 70% earn-in point at the end of year 5, plus interest.

If either Solomon Gold's or Newmont's interest in the Guadalcanal Venture is reduced below 10%, that party shall revert to a 0.5% net smelter return royalty on production within the project. Alternatively, in the event that Newmont does not elect to progress to Stage 2 of the earn-in, the parties will contribute pro-rata to a minimum $1m per annum budget or dilute on a pro rata basis.

Figure 2: Guadalcanal Island Prospects and Tenements

For the period from 5 March 2009 to 30 June 2009, a further A$1,262,724 was expended by Newmont on the Guadalcanal tenements as part of its Stage 1 earn-in commitments under the Venture Agreement. In accordance with applicable accounting standards, Solomon Gold has not included this expenditure within its own books in line with the group's accounting policy.

Accordingly, the Company's carrying value of these tenements as at 30 June 2009 does not include this amount.

Field work for the venture, operated by Solomon Gold, commenced in March 2009 with two key senior Newmont secondees with significant porphyry copper experience.

Extensive mapping and grid soil and rock chip sampling was undertaken on the Chupukama, Chikora, Vurakara and Kuma target areas in central and southern Guadalcanal, as outlined in further detail below (Refer Table 1).

An airborne electromagnetic and magnetic survey was conducted over 1300 line kms, using state of the art Newmont proprietary techniques and interpretation, in order to assist in defining new, and refining known drilling targets across the tenements.

A Bulk Leach Extractable Gold (BLEG) survey is underway across the entire tenement area in order to augment existing stream sediment data. This survey, using proprietary Newmont sampling and analytic techniques, is designed to detect low order gold responses up to 20km downstream from outcropping mineralisation.

With the airborne EM and magnetic, Solomon Gold is confident that important field targets in very remote and previously inaccessible locations yet to be investigated will be identified.

The work undertaken since the formation of the Venture has refocussed the Company's exploration objective strategy on porphyry discoveries, and the field and survey results have identified the potential existence of ore bodies in new locations as well as the reprioritisation of Solomon Gold's existing exploration targets. Extensive fieldwork has been undertaken utilising the services of up to 10 geologists and 42 field hands, together with interpretative and analytical work conducted in Solomon Gold's Honiara and Brisbane Offices, and Newmont's Perth Office.

Across the Guadalcanal prospects a total of 2,017 rock chip & channel, 4,297 soil samples, 210 stream sediment, 94 stream BLEG, 1,776 trench, and 13,620 drill core samples have been taken since ARM commenced work in 1995. Line metres of trenching totals 1,776m and historical drilling totals 13,620m.

Table 1: Summary of sampling results to date

Sample Type	Sutakiki	Central	Koloula	Kuma	Mbetilonga	TOTAL
Rock Chip & Channel	688	108	328	378	515	2,017
Soil	373	95	219		3,610	4,297
Stream Sediment	118		52	40		210
Stream BLEG		5	12	77		94
Trench Channel (m)	57	555	761	383	20	1,776
Drill Core (m)	9,378		3,333		909	13,620

Guadalcanal Venture Main Prospect Summaries

Kuma

The Kuma prospect target is a 4km x 1km zone of strong silica pyrite mineralisation supported by weak copper gold and silver mineralisation lying approximately 5km east of the Koloula Valley. The target was discovered, sampled and mapped by Solomon Gold in 2007, and is considered to be a silica pyrite cap rock system with potential to represent the upper zones of a mineralising system.

Figure 3: Kuma geological structure

Recent analysis of the newly acquired EM data has identified a 1km x 1km resistive electromagnetic anomaly, coincident with discrete magnetic highs. The anomaly is interpreted as a porphyry target surrounded by a conductive apron of clay alteration over a 2km x 4km zone at the headwaters of the Kuma River (Refer Figure 3).

At Kuma, geological mapping has defined a leached-cap (lithocap) over 3km2. Current work involves collection of spatial rock chip clay minerology data in order to determine the central portion of the lithocap using and clay and alteration indicator minerals.

Two other magnetic features 2km west north west of the main Kuma zone of interest at Silver Ridge, one with a strong 30ppb gold supporting stream sediment anomaly, were defined on the magnetic survey (Refer Figure 4). Targets within the Kuma prospect area are being defined for a drilling program.

Figure 4: Kuma Magnetic Features

CHIKORA

The Chikora area prospects are located within the Koloula tenement. The main prospect areas are known as Kolotalaka, Vurakara, and Levisivisi. During the year, drainage outcrop mapping in the Chikora area was completed, and a total of 486 samples collected. These comprise 31 rock chips, 255 trench samples, 40 bulk leach stream sediment samples and 160 rock saw channel samples.

KOLOTALAKA

Recently at Kolotalaka, the location of previously reported gold anomalism up to 9.85g/t gold in rock chip samples, rock saw sampling has been conducted to enable the collection of representative samples in hard rock environments. The technique is expected to result in the retention of mineralised fine material in fine veins during the sampling process.

Kolotalaka is in an area which has previously been the subject of some drill testing but this has not conclusively tested the mineralised zones. Several intersections of low grade copper mineralisation have previously been encountered, and these are considered to indicate deeper porphyry targets. These are supported by the geophysical data, particularly magnetic, in the area.

Rock chip highlights of 0.9% copper, 9.34g/t gold and 100g/t silver lie coincident with a 500x500m wide >1000ppm soil copper anomaly. Previous drill testing along the rim of this target area returned 45.7m@0.34% copper in DDH CH04, 62.5m@0.34% copper in DDH CH02, and 115m@0.38% copper (& 142ppm Mo) in DDH CH08. Recent drilling returned 222m@0.17% copper in DDH CK001, and 114m@0.18% copper in DDH CK002. Recent geological work in conjunction with the Newmont team indicates that drilling to date has not adequately tested the zone of potential to the north west where coincident magnetic high and recent Hoist EM resistivity anomalies. This area forms the western part of a greater 1.8km long and up to 1km wide 500ppm soil copper anomaly.

The eastern end of this zone holds the Vurakara copper-molybdenum and Levisivisi copper-gold prospects.

VURUKARA

The Vurakara prospect is situated at a vertical elevation of between 650m and 1000m above sea level and is believed to represent a deeper, copper and molybdenum phase of the gold/zinc/lead mineralisation seen at higher elevations within the Guadalcanal tenements (notably at Mbina (850m to 1100m above sea level) and Sutakiki (950m to 1300m above sea level) located 2km and 6km respectively to the north-north-east).

At Vurakara, rock chip sample highlights include 37.5g/t gold, 2.32% copper, and 0.29% molybdenum and 14.7g/t gold, 0.16% copper, and 0.23% molybdenum. A further highlight included the definition of a 600m x 300m area of intense veining and fracturing at Vurakara.

A total of 24 rock chip samples (including previous programs) were collected, of which 11 ranged from 0.5% to a high of 2.8% copper. Significant molybdenum anomalism was also recorded.

LEVISIVISI

The Levisivisi prospect has been previously referred to as the area of interest between Kolotalaka and Vurakara, and was discovered during mapping and sampling activities in the area in April 2009, when visually obvious copper mineralisation was first located.

Since the first occurrences were noted by field crews, work in the area has centred on detailed mapping, sampling and trenching. Numerous outcrops of variably fractured, altered, quartz veined and mineralized porphyry phases have been outlined in a 600 x 600 m area located between Kolotalaka and Vurakara (Levisivisi). Original samples located in the area show varying levels of copper mineralisation ranging up to visibly spectacular bornite mineralisation.

Analytical reports received from the initial sampling confirmed the high copper contents observed in samples up to 5.77% copper and revealed anomalously high gold values up to 7.5g/t gold. Three other initial samples assayed 1.39% copper and 18.6g/t silver; 1.12g/t gold; and 0.56% copper.

Outcrop is poor in the Levisivisi area as the alteration and weathering profile is well developed. The initial results received from Levisivisi returned rock chip results up to 7.5g/t gold, 5.8% copper, and 33g/t silver.

Table 2: Levisivisi Summary of Sample Results

Sample Origin	Copper (%)	Gold (g/t)	Silver (g/t)
Levisivisi drainage sample	3.1	3.02	25.2
Levisivisi Ridge	5.77	7.48	33
Kolotolaka Creek Chikora	0.9	9.34	100

Trenching results from LVTR001 in leached tonalite/quartz diorite rocks at Levisivisi Ridge returned an encouraging 9m@3,285ppm copper, including accessory 0.2g/t gold and 2.32g/t silver. Hydrothermal and weathering zone leaching are believed to be intense and widespread. Geophysical interpretation following the recent survey is underway.

Recently, an additional target prospect has been identified within the Koloula tenement at Inamumu (1.5km west north west of Levisivisi).

Figure 5: Recent copper sampling has highlighted the Vurukara prospect at Chikora

INAMUMU

At Inamumu, a zone of gold vein mineralisation has been recognized, with rock chip samples returning up to 27.8g/t gold. The extent of this zone has not yet been determined by mapping and sampling.

The prevalence of high grade copper mineralisation in scattered veins in the Chikora area prospects continues to focus exploration effort in the area. Drilling in the Kolotalaka - Levisivisi - Vurakara area will form part of the follow up field campaign to commence in the last quarter of 2009.

MBINA

At Mbina prospect, in the Koloula tenement, initial rock chip results of 27.0g/t gold and 9.3g/t gold were taken immediately north of a coherent 500m wide 500ppm soil anomaly.

This anomaly, identified in previous work by Utah Development Company is situated on the slopes of Mt Makarakomburo and it is proposed that previous drilling targeted only the transported lower section of the anomaly. The non-transported bulk of the anomaly to the west remains untested.

This prospect is being reassessed in light of the data recently acquired from the airborne EM survey.

MBETILONGA

The Mbetilonga tenement is the closest to Honiara, lying approximately 11-15km south of the capital. The area hosts large areas of high copper values in soil and rock chip samples. Limited drilling in 2006 did not resolve the genesis of the copper anomalism.

The area has been intensely sampled, and it is considered that the best chance for resolution is by using geophysics, particularly EM and magnetics.

In June and July of 2009, Mbetilonga was included in the 1,300 line km EM and magnetic survey which resulted in the identification of an extensive alteration pattern over 60km, believed to be indicative of a porphyry system which had vented explosively resulting in the distribution of extensive volumes of detrital copper-bearing material over wide areas of the tenement (60km2). This area is known as the Mbetilonga Caldera. Such copper mineralisation is the basis of the Hambusimaloso copper prospect on the western side of the Mbetilonga Caldera. Interpretation of the surveys resulted in the definition of key targets at Vuanimaho and Vurakara on the eastern side of the Caldera.

The most significant of these is the Vuanimaho EM resistor anomaly, which is a 1km x 1km electromagnetic resistor, interpreted to represent a silicified cap related to a porphyry system. Magnetic signatures on the north eastern side of the EM resistor are interpreted as porphyry related features, as are those at Vurakara and Kichia, south east of the Vuanimaho cap (Refer Figure 7).

Figure 7: HOIST Electromagnetics with anomalies and targets highlighted

Recently, detailed mapping and sampling was conducted in the Vatuchichi area of the Mbetilonga tenement. Scattered sulphide mineralisation in silica cap material over an area of 500m x 750m with scattered outcrop yielded results in rock chip and trench samples up to 13.05% copper and 5.22g/t gold from 59 samples.

Vatuchichi is also currently considered to be a target for the origin of the copper mineralisation at Mbetilonga generally. The Vatuchichi area lies on the western side of the recently identified Vuanimaho EM anomaly.

At Mbetilonga, highlights from previous work include rock chips up to 16.95% copper with 20 samples returning results greater than 3% copper, and 66 samples returning results greater than 1% copper.

The Vuanimaho resistor, Vuanimaho porphyry targets to the east, the Vurakara, Kichia and Vuralongoma porphyry targets on the eastern side of the Mbetilonga Caldera, and the Vatuchichi epithermal gold target on the northern side, are all potential targets for the forthcoming drill program.

SUTAKIKI

At Sutakiki, drilling in 2007 and 2008 intersected a porphyry gold occurrence with weak epithermal overprint was intersected in SK001, returning 309m@0.54ppm gold and 0.13ppm copper from 291m. This target remains open to the north west. A number of gold skarn occurrences also occur within the Sutakiki Valley highlighted by drill hole SK011 which returned a long, high-grade intersection of 50m@6.39g/t gold from 133m (including 32m@9.45g/t gold and 10m@21.1g/t gold). Further trench channel sampling along strike, at Vunuvalekama, returned 19m@1.8g/t gold (including 3m@2.91g/t gold).

A further thirteen (13) holes in the area demonstrated widespread mineralisation considered to be located in the vicinity of a significant mineralised porphyry copper gold system. The Company will reassess the prospect with the assistance of the recently acquired airborne EM survey data.

CHUPUKAMA

Located within the Central tenement, Chupukama is a porphyry copper gold target with encouraging geophysical signatures over an area of 2km2. Sampling by Solomon Gold has showed strongly anomalous copper results over the 200m wide centre of the prospect, together with alteration and mineralisation features indicative of a gold mineralized halo around a magnetic central copper porphyry core zone covering 300m x 100m (refer Figure 8).

Figure 8: Exploration sampling, mapping and targets at Chupukama

Background is "reduced to pole" aeromagnetics

white - red = highly magnetic

blue - purple = poorly magnetic

The broader prospective mineralized zone, including the gold halo target, is approximately 1km2 in area and known from past sampling programs to be strongly anomalous on the east side (50m@1.63g/t gold and 55m@2.39g/t gold). The on-going fieldwork program is focused on following-up panned concentrate samples in the Tina River on the west side of the complex collected by Kia Ora Gold in the 1980s, which gave anomalous values up to 10g/t gold. Rock samples collected up tributaries in this area have returned up to 7g/t gold and in the clay and silica altered environment indicate the presence of a silica pyrite halo (around a porphyry system) prospective for gold.

Recent trenching over the top of the central magnetic core of the system yielded 76m@0.18g/t gold and 0.18% copper.

A masked porphyry copper gold target with a gold rich zone in the clay rich halo is highlighted by a coherent 300m x 100m soil Cu anomaly contoured at the 500ppm copper level, with co-incident magnetic high and potassium low signatures.

The gold zone in the halo at Chupukama is highlighted by rock chips including 488g/t gold, and 46.8g/t gold. Targets within the Chupukama prospect area are being defined for the next drilling program.

SOLOMON GOLD - OTHER PROJECTS

NICKEL PROJECT, NGELLA FLORIDA ISLANDS

During the year, the Company defined a maiden resource of 1.695 Mt at a grade of 0.6% nickel and 0.06% Cobalt at Ngella. Based on increased grades at the bottom of pits, a target of 5.4 Mt at a grade of 1.0% nickel and 0.1% cobalt has been defined.

The Company is currently assessing the prospectivity of the area for additional tonnages of laterite mineralisation.

Figure 9: Ngella Prospect Nickel Sampling

FAURO ISLAND

The Fauro project area is located on the north western end of Solomon Islands on the island of Fauro, Shortland group of islands, Western Province, immediately south of the Papua New Guinea border and approximately 50 kilometres south east of the giant Panguna copper gold porphyry deposit on Bougainville Island. Fauro Island lies on the south-east trending volcanic arc that extends from the Tabar group of islands in Papua New Guinea through the Solomon Islands volcanic chain. Fauro Island exhibits all the favourable characteristics of an area that is highly prospective for both oxide and epithermal gold mineralisation. Solomon Gold holds a 100% interest in a Prospecting License Application over Fauro Island, which has not yet been determined.

Figure 10: Fauro Island Project Location

The Fauro project area covers an extinct volcanic caldera with extensively altered and brecciated quartz rich intrusive and volcanic rocks. The area has yielded significant gold anomalies in surface sampling and drilling programs conducted by other explorers, notably BHP, in the late 1980s and Western Pacific Mining Corporation in the late 1990s. In the light of the results of work carried out initially by the Solomon Islands' Ministry of Natural Resources in the early 1970s and by these previous explorers, Solomon Gold considers the Fauro gold project area to have considerable potential for the discovery of both oxide and epithermal gold deposits. The area covered by the Prospecting Licence Application measures approximately 70km2 and is considered by Solomon Gold to be geologically analogous to the Lihir Island gold mine which has reported measured and indicated resources of approximately 35 million ounces of gold.

Qualified Person statement

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.

RISKS AND UNCERTAINTIES

The Directors consider that the factors and risks described below are the most significant.

Funding risks

On 5th March 2009, the Company 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%. It is possible that results and circumstances may dictate a departure from the existing work plans and expenditure budgets from time to time, and it is possible that Newmont may elect to terminate its participation in the Venture prior to its full term.

The ability of the Group to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions as well as the business performance of the Group. The development and exploration of the Group's properties may require substantial additional financing. Failure to obtain such financing may result in delaying or indefinite postponement of exploration, development or production on any or all of the Group's properties or even a loss of property interest. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Group. If additional financing is raised by the Group through the issuance of securities from treasury, control of the Group may change and security holders may suffer dilution.

General exploration and extraction risks

There is no certainty that the Company will identify commercially mineable reserves in the Tenements. The exploration for, and development of, mineral deposits involves significant uncertainties and the Company's operations will be subject to all of the hazards and risks normally encountered in such activities, particularly given the terrain and nature of the activities being undertaken. Although precautions to minimise risks will be taken, even a combination of careful evaluation, experience and knowledge may not eliminate all of the hazards and risks.

The targets identified by the Company's personnel and consultants, are based on current experience and modelling and all available data. There is no guarantee that surface sample grades of any metal or mineral taken in the past will persist below the surface of the ground. Furthermore, there can be no guarantee that the estimates of quantities and grades of gold and minerals disclosed will be available for extraction and sale.

Project development risks

If the Company discovers a potentially economic resource or reserve, there is no assurance that the Company will be able to develop a mine thereon, or otherwise commercially exploit such resource or reserve. Further, there can be no assurance that the Company will be able to manage effectively the expansion of its operations or that the Company's current personnel, systems, procedures and controls will be adequate to support the Company's operations as operations expand. Any failure of management to manage effectively the Company's growth and development could have a material adverse effect on the Company's business, financial condition and results of operations. There is no certainty that all or, indeed, any of the elements of the Company's current strategy will develop as anticipated.

Tenements and regulatory environment

ARM tenements 02/05, 03/05 and 04/05 were renewed on 8 December 2008 for two (2) years. ARM tenement 08/06 will be required to be renewed on 22 November 2009. A period of 2 months was added to the tenure of PL 05/05 from 10 July 2009 to facilitate the renewal application process. There is no guarantee that if ARM applies for a mining lease in respect of minerals it has discovered within the Tenements that it will be granted one. The grant of a mining lease is subject to the exercise of ministerial discretion and no guarantee can be given as to the favourable exercise of any such discretion. There is no guarantee of the terms of any mining lease. The exploration and extraction activities of ARM are subject to various laws governing prospecting, development, production, taxes, labour standards and occupational health, site safety, toxic substances, environmental and other matters. Although the Directors believe that ARM's exploration activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing or future rules and regulations will not be applied in a manner which could limit or curtail exploration, production or development. Amendments to current laws and regulations governing operations and activities of exploration and extraction, or more stringent implementation thereof, could have a material adverse impact on the business, operations and financial performance of the Company.

Volatility of prices of gold and copper

The market prices of gold and copper are volatile and are affected by numerous factors which are beyond the Company's control. These include international supply and demand, the level of consumer product demand, international economic trends, currency exchange rate fluctuations, interest rates, inflation, global or regional political events and international events as well as a range of other market forces. Sustained downward movements in gold or copper prices could render less economic, or uneconomic, some or all of the exploration activities to be undertaken by the Company.

Title matters

Whilst the Company has the benefit of granted Prospecting Licenses (PLs) and has diligently investigated its title to, and rights and interests in, the Tenements, there is no absolute guarantee that such title, rights and interests will be held valid in the event of any undetected defects. If a defect does exist it is possible that ARM may lose all or part of its interest in those Tenements to which the defect relates.

The grant and future renewals of PLs, as the case may be, are governed by the requirements and restrictions set out in the Mining Act. Whilst the Company believes it is entitled to rely upon all the actions of the Minerals Board and the Minister as being valid, compliance with the requirements and restrictions under the Mining Act may be open to differing interpretations which, in the case of an adverse interpretation, may have a material adverse effect on the Company's title.

Currency fluctuations

The future value of the Ordinary Shares may fluctuate in accordance with movements in the foreign currency exchange rates. For example, it is common practice in the mining industry for mineral production revenue to be denominated in USD, although some but not all of the costs of exploration production will be incurred in USD and not all of the ore or metal obtained from the Tenements will be sold in USD denominated transactions.

Landowner issues

In the case of mining and exploration operations in Solomon Islands, there is a complex land tenure structure and while ARM's PLs and Access Agreements entitle it to explore for the duration of the term of each PL, the existing legislative framework only provides for limited forms of negotiation between the landowners/community leaders on the one hand and mining companies on the other. It is also incumbent on the Director of Mines and the mining tenement holder to identify which landowners and community leaders they need to negotiate with. The Company does not guarantee that the identifications made to date and upon which the Access Agreements are currently based may not be contested. As a consequence there may be unexpected difficulties experienced in progressing a promising resource into a commercial mining operation.

The Company has also procured Access Agreements for areas within the Tenements after the grant of the Tenement. Whilst the Company believes that it is entitled to rely upon the same to conduct exploration within these areas, no assurance can be given that there may not be some future challenge to the Company's ability to do so.

Whilst the Company has the Access Agreements with landowners covering the majority of the prospective areas identified by the Company within the Tenements, its ability to carry out exploration in the residual areas will require additional access agreements to be entered into.

Access agreements were renewed in 2008 for the tenements PL's, 02/05, 03/05 and 04/05.

Sovereign risk and civil disobedience

The Company intends to continue to make a significant investment of capital in Solomon Islands. The conduct of exploration and mining-related activities and the investment of capital and placement of personnel in Solomon Islands are potentially subject to a degree of sovereign risk and civil disobedience generally. A decay in law and order in Solomon Islands may expose the Company to un-budgeted costs, delays and other potential damage and loss.

FINANCIAL REVIEW

Equity

On 21 November 2008, the Company issued 11,666,667 shares at 3 pence each to investors as a placing to raise £435,452 (A$826,875 less share issue costs of A$115,798).

On 4 February 2009, Convertible Notes held by two entities associated with the Managing Director, Mr Nicholas Mather, were converted into 7,299,836 shares in the Company at a price of 3 pence each.

On 10 March 2009, the Company issued 2,000,000 shares to D'Aguilar Gold Ltd in consideration for D'Aguilar's agreement to cancel its previously negotiated Royalty Agreement.

On 5 May 2009, the Company issued 1,750,000 shares to key staff and contractors as part of their remuneration arrangements.

On 19 May 2009, the Company issued 1,300,000 options to the Company Secretary / CFO as part of his remuneration arrangements. The options vest on 14 October 2009, are exercisable at 10 pence each, and expire on 30 April 2011.

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.

At the date of this report, the Company had 84,941,504 ordinary shares, 5,615,000 unlisted options and no unlisted warrants on issue.

Financial Controls and Risk Management

The Board regularly reviews the risks to which the Group is exposed and ensures through Board Committees and regular reporting that these risks are managed and minimised as far as possible. The Audit Committee is responsible for the implementation and review of the Group's internal financial controls and financial risk management systems.

Nominated Advisors and Brokers

RFC Corporate Finance Limited ("RFC") and Hanson Westhouse Limited continue to act as Nominated Advisor and Broker to the Company respectively.

DIRECTORS

The Board consists of one Executive Director and three Non-Executive Directors.

Cameron Wenck

(Non-Executive Chairman)

Cameron Wenck (48), appointed 22 November 2005, is a financial adviser and company Director with over 20 years' experience in the financial services industry. Earlier in his career he worked for the London stockbrokers Scrimgeour Vickers and Chartered Accountants PricewaterhouseCoopers. He has a Bachelor of Commerce, a Diploma of Financial Planning, is a Fellow of the Australian Society of Accountants and a Certified Financial Planner.

Nicholas Mather

(Chief Executive Officer)

Nicholas Mather (52), appointed 11 May 2005, graduated in 1979 from the University of Queensland with a B.Sc. (Hons, Geology). He has over 25 years' experience in exploration and resource company management in a variety of countries. His career has taken him to numerous countries exploring for precious and base metals and fossil fuels. Nicholas Mather has focused his attention on the identification of and investment in large resource exploration projects.

He was managing Director of BeMaX Resources NL (an ASX-listed company) from 1997 until 2000 and instrumental in the discovery of the world class Ginkgo mineral sand deposit in the Murray Basin in 1998. As an executive Director of Arrow Energy NL (also ASX-listed) until his resignation in 2004, Nicholas Mather drove the acquisition and business development of Arrow's large Surat Basin Coal Bed Methane project in south-east Queensland. He was managing Director of Auralia Resources NL, a junior gold explorer, before its USD23 million merger with Ross Mining NL in 1995. He was a non-executive Director of Ballarat Goldfields NL until 2004, having assisted that company in its recapitalisation and re-quotation on the ASX in 2003.

Nicholas Mather is Chief Executive of D'Aguilar Gold Ltd and a non-executive Director of ASX-listed companies Bow Energy Limited and Mt Isa Metals Limited.

Brian Moller

(Non-Executive Director)

Brian Moller (50), appointed 11 May 2005, is a corporate partner in the Brisbane-based law firm Hopgood Ganim Lawyers, the Australian solicitors to the Company. He was admitted as a solicitor in 1981 and has been a partner at Hopgood Ganim since 1983. He practices almost exclusively in the corporate area with an emphasis on capital raising, mergers and acquisitions.

Brian Moller holds an LLB Hons from the University of Queensland and is a member of the Australian Mining and Petroleum Law Association.

Brian Moller acts for many publicly-listed resource and industrial companies and brings a wealth of experience and expertise to the board, particularly in the corporate regulatory and governance areas. He is a non-executive Director of ASX listed D'Aguilar Gold Ltd and Platina Resources Ltd and TSX-V listed WCB Capital Ltd.

Dr Robert Weinberg

(Non-Executive Director)

Rob Weinberg (62), appointed 22 November 2005, gained his doctorate in geology from Oxford University in 1973. He has more than 30 years experience of the international mining industry and is an independent mining research analyst and consultant. He is a Fellow of the Geological Society of London.

Prior to his current activities he was Managing Director, Institutional Investment at the World Gold Council, and a Director of Gold Bullion Securities. Previously he was a Director of the investment banking division at Deutsche Bank in London after having been head of the global mining research team at SG Warburg Securities. He has also held senior positions within Société Générale and was head of the mining team at James Capel & Co. He was formerly marketing manager of the gold and uranium division of Anglo American Corporation of South Africa Ltd.

Dr Weinberg is a non-executive Director of the ASX listed Kasbah Resources Ltd and Medusa Mining Ltd, a company listed on the ASX, AIM and Frankfurt Stock Exchanges.

SECRETARY

Mr Karl Schlobohm commenced as the Secretary of the Company on 14 April 2009.

Karl Schlobohm

(Company Secretary and Chief Financial Officer)

Karl Schlobohm (41) has over twenty (20) years experience in the accounting profession across a wide range of businesses and industries. He has been employed in accounting roles with ASX-listed resource companies Discovery Metals Limited and Meridian Minerals Limited, and has also held the position of Company Secretary with ASX-listed Linc Energy Limited, Agenix Limited, Discovery Metals Limited and Global Seafood Australia Limited.

Mr Schlobohm is a Chartered Accountant and holds Bachelor Degrees in Commerce and in Economics, and a Masters Degree in Taxation.

Mr Schlobohm is also contracted to act as the Company Secretary / CFO of the ASX-listed D'Aguilar Gold Ltd.

DIRECTORS' REPORT

The Directors present their annual report and audited financial statements for the year ended 30 June 2009.

PRINCIPAL ACTIVITIES

The principal activities of Solomon Gold plc (the "Company") and its subsidiaries (together "Solomon Gold" or the "Group") are gold and mineral exploration in Solomon Islands. Details of the Group's activities, together with a description of the principal risks and uncertainties facing the Group, and the development of the business, are given in the Chairman's Statement and Operations Review.

The principal activity of the Company is that of a holding company.

BUSINESS REVIEW

A review of the Group's business and future developments is set out in the Operations Report and Financial Review.

The principal risks and uncertainties facing the group at its present stage of development are given under Risks and Uncertainties.

LAND AND BUILDINGS

The Directors are of the view that the book value and market value of land and buildings are not materially different. The land and buildings were acquired during 2007 and no independent valuation has been obtained since its acquisition.

GOING CONCERN

In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. In June and July 2009, the Company undertook two (2) capital raisings totalling approximately A$2.8 million. This capital, together with the fact that Newmont has agreed to fund the exploration work being undertaken on the Guadalcanal project under the terms of the Venture Agreement executed between the two parties, means that the Company has sufficient working capital to fund its own operations, including the exploration of those tenement areas held outside of the Newmont Guadalcanal Venture. It should be noted that the current working capital levels will not be sufficient to bring the Company's 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 its projects.

CURRENCY

The functional and presentational currency is Australian dollars ("A$") and all amounts presented in the Directors' Report and financial statements are presented in Australian dollars unless otherwise indicated.

RESULTS

The Group's consolidated loss for the period was A$1,239,497 (2008: A$1,603,627).

CHANGES IN SHARE CAPITAL DURING 2009

A statement of changes in the share capital of the Company is set out in Note 15 to the financial statements.

KEY PERFORMANCE INDICATORS

Given the stage of the Group's operations, the Board regards the maintenance of tenure and land access arrangements, maintenance of operation capabilities and the continued collection of exploration data in order to advance the prospectivity of the project areas to be the key performance indicators in measuring the Group's success. The review of the business with reference to key performance indicators is set out in the Operations Report and Financial Review.

DIVIDENDS PAID OR RECOMMENDED

The Directors do not recommend the payment of a dividend.

FINANCIAL INSTRUMENTS

The Company does not undertake financial instrument transactions that are speculative or unrelated to the Company's or Group's activities. The Company's financial instruments consist mainly of deposits with banks, accounts payable, and loans to subsidiaries. Further details of financial risk management objectives and policies, and exposure of the group to financial risks are provided in Note 18 to the financial statements.

POLICY AND PRACTICE ON PAYMENT OF CREDITORS

The Group policy on the payment of creditors is to settle bills in accordance with the terms agreed with suppliers.

At the year end there were 49 days (2008: 11 days) worth of purchases in Group trade creditors and 71 days (2008: 10 days) worth of purchases in Company trade creditors.

SUBSEQUENT EVENTS

Prior to 30 June 2009 the Company undertook two (2) separate share placements, raising a combined total of approximately A$2.8 million. The shares for these placements were admitted to AIM on 8 and 9 July 2009.

DIRECTORS AND DIRECTORS' INTERESTS

The Directors who held office during the period were as follows:

Cameron Wenck	Non-Executive Chairman
Nicholas Mather	Chief Executive Officer
Brian Moller	Non-Executive Director
Robert Weinberg	Non-Executive Director

The Company has a Directors' and Officers Liability insurance policy with AFM Insurance Brokers Pty Ltd for all its Directors.

The Directors who held office at the end of the financial year held direct and indirect interests in the ordinary shares and unlisted options of the Company as shown in the tables below.

Shares held	At 30 June 2009	At 30 June 2008
Nicholas Mather	13,783,433	2,905,680
Brian Moller	782,068	210,518
Cameron Wenck	959,962	332,045
Robert Weinberg	311,723	82,556

No options were issued to Directors during the year.


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

MAJOR SHAREHOLDERS

The following parties represented the top 10 shareholders in the Company as at 14 August 2009.

Major Shareholders	Number of Shares	% of Issued Capital
Barclayshare Nominees Limited	8,392,137	9.9
N&J Mather <Mather Super Fund>	7,042,915	8.3
Tenstar Trading Limited	6,633,933	7.8
Samuel Holdings Pty Ltd	6,194,311	7.3
James Capel Nominees Limited	3,994,489	4.7
TD Waterhouse Nominees Europe Limited	3,683,551	4.3
D'Aguilar Gold Limited	3,555,557	4.0
LR Nominees Limited	3,010,971	3.5
HSDL Nominees Limited	2,876,092	3.4
HSDL Nominees Limited (IWEB)	2,824,855	3.3

CORPORATE GOVERNANCE

In formulating the Company's corporate governance procedures the Board of Directors takes due regard of the principles of good governance set out in the Combined Code issued by the Financial Reporting Council in June 2006 (as appended to the Listing Rules of the Financial Services Authority) so far as is practicable for a company of Solomon Gold's size.

The Board of Solomon Gold plc is made up of one Executive Director and three Non-executive Directors. Cameron Wenck chairs the Board and Nicholas Mather is the Company's Chief Executive. It is the Board's policy to maintain independence by having at least half of the Board comprising Non-executive Directors who are free from any material business or other relationship with the Group. The structure of the Board ensures that no one individual or group is able to dominate the decision making process.

The Board ordinarily meets on a monthly basis providing effective leadership and overall control and direction of the Group's affairs through the schedule of matters reserved for its decision. This includes the approval of the budget and business plan, major capital expenditure, acquisitions and disposals, risk management policies and the approval of the financial statements. Formal agendas, papers and reports are sent to the Directors in a timely manner, prior to Board meetings. The Board also receives summary financial and operational reports before each Board meeting. The Board delegates certain of its responsibilities to management, who have clearly defined terms of reference.

All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that all Board procedures are followed. Any Director may take independent professional advice at the Company's expense in the furtherance of his duties. One third of the Directors retire from office at every Annual General Meeting of the Company. In general, those Directors who have held office the longest time since their election are required to retire. A retiring Director may be re-elected and a Director appointed by the Board may also be elected, though in the latter case the Director's period of prior appointment by the Board will not be taken into account for the purposes of rotation.

The Audit Committee, which meets not less than twice a year, is responsible for ensuring that the financial performance, position and prospects of the Group are properly monitored as well as liaising with the Company's auditors to discuss accounts and the Group's internal controls. The Committee is chaired by Brian Moller, the other members being Cameron Wenck and Robert Weinberg. The Audit committee has reviewed the systems in place and considers these to be appropriate.

The Remuneration Committee, which meets at least once a year and is responsible for making decisions on Directors' and key management's remuneration packages, is chaired by Cameron Wenck. Brian Moller and Robert Weinberg are the other committee members.

The remuneration of the non-executive Directors is determined by the executive Directors who consider it essential, not withstanding the small size of the Company and the fact that it is not yet revenue earning, to recruit and retain individuals of the highest calibre for that role. Consequently they believe that it is in the interests of shareholders that non-executive Directors should be provided with share options in addition to the level of fees considered affordable. The number of such options currently amounts to 725,000 in total, or just over 1% of the current issued share capital, and in the opinion of the executive Directors is not of sufficient magnitude as to affect their independence.

The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all price sensitive information is released to all shareholders at the same time, in accordance with London Stock Exchange rules. The Company's principal communication with its investors is through the Annual General Meeting and through the annual report and accounts and the interim statement.

The 2009 Annual General Meeting will provide an opportunity for the Chairman and/or Chief Executive Officer to present to the shareholders a report on current operations and developments and will enable the shareholders to question and express their views about the Company's business. A separate resolution will be proposed on each substantially separate issue, including the receipt of the financial statements and shareholders will be entitled to vote either in person or by proxy.

A Health, Safety, Environment and Community Committee (HSEC Committee) is responsible for the overall health, safety and environmental performance of the Company and its operations and its relationship with the local community and is chaired by Brian Moller, the other members being Nicholas Mather and Robert Weinberg.

EXECUTIVE REMUNERATION STRATEGY

Remuneration of Executive Directors is established by reference to the remuneration of executives of equivalent status both in terms of the level of responsibility of the position and by reference to their job qualifications and skills. The Remuneration Committee will also have regard to the terms which may be required to attract an executive of equivalent experience to join the Board from another company. Such packages include performance related bonuses and the grant of share options.

POLITICAL AND CHARITABLE CONTRIBUTIONS

The Group made no political or charitable donations in the year (2008: A$ nil).

AUDITORS

A resolution for the reappointment of PKF (UK) LLP will be proposed at the forthcoming Annual General Meeting.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have, as required by the AIM Rules of the London Stock Exchange, elected to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and have also elected to prepare the parent company financial statements in accordance with those standards.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements the Directors are required to:

select suitable accounting policies and then apply them consistently;

make judgments and estimates that are reasonable and prudent;

state whether the financial statements have been prepared in accordance with IFRSs as adopted by the European Union;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company and the group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and 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:

So far as they are individually aware, there is no relevant audit information of which the Company's auditors are unaware; and

Each of the Directors has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of the information.

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:

the financial statements give a true and fair view of the state of the group's and parent company's affairs as at 30 June 2009 and of the group's loss for the year then ended;

the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

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:

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of Directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Nicole Kissun (Senior statutory auditor)

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

London, UK

26 August 2009

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

	Notes	Group 2009	Group 2008
		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 holders of the parent		(1,239,497)	(1,603,627)


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

CONSOLIDATED AND COMPANY BALANCE SHEETS AS AT 30 JUNE 2009

	Notes	Group 2009	Group 2008	Company 2009	Company 2008
		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 prepayments	13	152,338	326,105	69,692	157,766
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

STATEMENTS OF CHANGES IN EQUITY

Consolidated Statement of changes in shareholders' equity

	Note	Share capital A$	Share premium A$	Share option reserve A$	Warrants reserve A$	Accumulated loss A$	Total 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 issue costs		-	160,604	-	-	-	160,604
Value of options issued to Directors, employees and consultants		-	-	833,891	-	-	833,891
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 Directors, employees and consultants				28,719			28,719
Reserve Transfers on Expiration				(127,488)	(172,803)	300,291	-
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 A$	Share premium A$	Share option reserve A$	Warrants reserve A$	Accumulated loss A$	Total 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 issue costs			160,604				160,604
Value of options issued to Directors, employees and consultants		-	-	833,891	-	-	833,891
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 Directors, employees and consultants				28,719			28,719
Reserve Transfers on Expiration				(127,488)	(172,803)	300,291	-
Balance 30 June 2009	15	1,736,803	20,215,990	1,411,570	-	(4,129,247)	19,235,116

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2009

			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 and prepayments			173,767		55,619	72,460	86,229
Increase/(decrease) in trade and other payables			112,329		185,317	304,161	(121,541)
Cash used in operations			(734,265)		(684,797)	(408,087)	(810,065)
Net cash outflow from operating activities			(734,265)		(684,797)	(408,087)	(810,065)
Cash flows from investing activities
Interest received			54,842		206,977	41,333	6,399
Acquisition of property, plant and equipment			(10,807)		(23,629)	(6,267)	-
Acquisition of intangible assets (exploration)			(2,648,788)		(8,176,728)	-	-
Loans advanced to subsidiary			-		-	(1,349,178)	(6,097,526)
Net cash outflow from investing activities		(2,604,753)		(7,993,380)		(2,463,753)	(6,091,127)
Cash flows from financing activities
Proceeds from the issue of ordinary share capital			2,829,708		7,233,270	2,829,708	7,233,270
Payment of issue costs			(115,798)		(130,819)	(115,798)	(130,819)
Loan from Director-related entity			200,000		-	200,000	-
Net cash inflow from financing activities		2,913,910		7,102,451		2,913,910	7,102,451
Net increase in cash and cash equivalents			(425,108)		(1,575,725)	1,191,710	201,259
Cash and cash equivalents at beginning of period			1,874,805		3,450,530	202,196	937
Cash and cash equivalents at end of period			1,449,697		1,874,805	1,393,906	202,196

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

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.

(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.

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

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.

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

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:

Unexpected geological occurrences that render the resource uneconomic;
Title to the asset is compromised;
Variations in metal prices that render the project uneconomic; and
Variations in the currency of operation.

(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.

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

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.

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

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 2009	Group 2008
	A$	A$
Loss is stated after charging:
Auditors' remuneration:
Fees payable to the company's auditor for the audit of the company's annual accounts	40,000	31,698
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

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

NOTE 4 STAFF NUMBERS AND COSTS

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

	Group 2009	Group 2008	Company 2009	Company 2008
Corporate finance and administration	10	13	6	5
Technical	37	37	-	-
	47	50	6	5

The aggregate payroll costs of these persons were as follows:

	Group 2009 A$	Group 2008 A$	Company 2009 A$	Company 2008 A$
Wages and salaries	1,342,828	1,661,085	369,382	429,195
Contributions to defined contribution plans	6,866	20,928	6,866	1,407
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 A$	Other Benefits(1) A$	Pensions A$	Total Remuneration A$
2009
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 A$	Other Benefits(1) A$	Pensions A$	Total Remuneration A$
2008
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.

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

NOTE 6 FINANCE INCOME

Group

2009

Group

2008

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 2009 A$	Group 2008 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 and operation		Principal activity	Solomon Gold plc's effective interest
Country of incorporation and operation		Principal activity	2009	2008
Australian Resource Management (ARM) Pty Ltd	Australia	Exploration	100%	100%
Solomon Operations Ltd	Solomon Islands	Exploration	100%	100%

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

NOTE 9 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (Continued)

	Shares A$	Loans A$		Investment in subsidiary undertakings Total 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 A$		Loans A$	Total A$
Cost
Balance at 30 June 2007	270,571	10,245,623	10,516,194
Advances in the period from Solomon Gold plc to ARM Pty Ltd	-	6,097,526	6,097,526
Balance at 30 June 2008	270,571	16,343,149	16,613,720
Advances in the period from Solomon Gold plc to ARM Pty Ltd	-	1,760,973	1,760,973
Total Investment in subsidiary by the Company at 30 June 2009	270,571	18,104,122	18,374,693

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

NOTE 10 PROPERTY, PLANT AND EQUIPMENT

		Group
	Land and Buildings A$	Plant and Equipment A$	Motor vehicles A$	Office equipment A$	Furniture & Fittings A$	Total A$	Company 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 year	(19,966)	(10,214)	(6,001)	(11,866)	(2,934)	(50,981)	(762)
Balance 30 June 2008	(25,734)	(21,565)	(15,259)	(25,707)	(3,961)	(92,226)	(1,638)
Depreciation charge for the year	(16,300)	(11.323)	(6,068)	(13,041)	(2,966)	(49,698)	(1,177)
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

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

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
	2009 A$	2008 A$	2009 A$	2008 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
	2009	2008	2009	2008
	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
	2009	2008	2009	2008
	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 statement of cash flows	1,449,697	1,874,805	1,393,906	202,196

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

NOTE 15 CAPITAL AND RESERVES

(a) Authorised Share Capital

	2008	2008
	No. of shares	Nominal value £
On incorporation - ordinary shares of £0.0001 each	1,000,000,000	100,000
Consolidated into ordinary shares of £0.01 each on 27 October 2005	10,000,000	100,000
Creation of additional shares of £0.01 each on 27 October 2005	40,000,000	400,000
Creation of additional shares of £0.01 each on 11 December 2007	50,000,000	500,000
At 30 June 2008 - Ordinary Shares	100,000,000	1,000,000

	2009	2009
	No. of shares	Nominal value £
At 1 July 2008 - Ordinary shares	100,000,000	1,000,000
Creation of additional shares of £0.01 each on 1 December 2008	100,000,000	1,000,000
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 30 June 2007	26,825,000	631,679	10,752,408	11,384,087
Adjustment to share issue costs	-	-	160,604	160,604
Shares issued at £0.18 - placing 18 December 2007	17,500,000	401,848	6,831,422	7,233,270
Share issue costs charged to share premium	-	-	(130,819)	(130,819)
Ordinary shares of 1p each at 30 June 2008	44,325,001	1,033,527	17,613,615	18,647,142

	No. of shares	Nominal value	Share premium	Total
		A$	A$	A$
Ordinary shares of 1p each at 30 June 2008	44,325,001	1,033,527	17,613,615	18,647,142

Shares issued at £0.03 - placing 21 November 2008	11,666,667	275,625	551,250	826,875
Share issue costs charged to share premium account			(115,798)	(115,798)
Shares issued at £0.03 - conversion 4 February 2009	7,299,836	163,071	332,665	495,736
Shares issued at £0.09 - consideration 10 March 2009	2,000,000	40,636	355,544	396,180
Shares issued at £0.05 - remuneration 5 May 2009	1,750,000	35,557	160,003	195,560
Shares issued at £0.08 - 30 June 2009 (see note below)	9,189,622	188,387	1,318,711	1,507,098
Ordinary shares of 1p each at 30 June 2009	76,231,126	1,736,803	20,215,990	21,952,793

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 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 2009
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 2009	Group 2008	Company 2009	Company 2008
	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.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 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 exercise price 2009	Number of options 2009	Weighted average exercise price 2008	Number of options 2008
Outstanding at the beginning of the period	£0.52	4,970,000	£0.75	2,390,000
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 period	£0.43	5,615,000	£0.52	4,970,000
Exercisable at the end of the period	£0.43	5,615,000	£0.52	4,970,000

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

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

NOTE 17 EMPLOYEE BENEFITS (continued)

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

Share options held at 30 June 2009	Share options held at 30 June 2008	Option price	Exercise periods
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:

Transactional exposure in respect of operating costs, capital expenditures and, to a lesser extent, sales incurred in currencies other than the functional currency of operations which require funds to be maintained in currencies other than the functional currency of operation; and
Translational exposures in respect of investments in overseas operations which have functional currencies other than Australian dollars. Currency risk in respect of non-functional currency expenditure is reviewed by the Board.

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.

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

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

Group

2009

Group

2008

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.

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

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.

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

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.

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.

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

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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