Norseman Gold PLC - Interim Results

RNS Number:1207R
Norseman Gold PLC
31 March 2008

Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining & Exploration

Norseman Gold plc ("Norseman" or the "Company")

Interim Report for the half year ended 31 December 2007

Norseman Gold plc, the AIM listed Australian gold production company, is pleased
to announce the unaudited results for the half year ended 31 December 2007
relating to the six months of trading of the Norseman Gold Project in Western
Australia.

Highlights during the period and following the completion of the period

• Progress at the mine, although slower than anticipated, has continued on a
positive trend but personnel shortages and costs increases has placed
pressure on operations.

• Total production of 37,025 ounces from 219,085 tonnes treated for the
period.

• New operating equipment finance has been approved with equipment scheduled
to arrive commencing March 2008. Expected to result in annual savings in
excess of $AUD3.1m per annum.

• Regional drilling programme has continued and results have been
encouraging with further work being undertaken. Two drilling rigs now on
site at Mararoa North and Lady Miller.

• Major upgrade works on the Treatment Plant completed ahead of schedule.

• Senior management team placements finalised in January 2008.

• Continual monitoring of regional area for corporate opportunities that can
add to shareholder value.

• Work has continued on the proposal to dual list on the Australian
Securities Exchange to facilitate an increased shareholder base and create a
wider interest in the Company.

• 1 for 5 consolidation of all securities has been completed.

For further information visit www.norsemangoldplc.com or contact:

David Steinepreis Norseman Gold Plc Tel: 61 (0) 89 420 9300

Guy Wilkes Ocean Equities Ltd Tel: 020 7786 4370

Olly Cairns Blue Oar Securities Plc Tel: +61 (0) 8 6430 1631

Romil Patel Blue Oar Securities Plc Tel: 020 7448 4400

Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477

Forward-Looking Statements. This regulatory news release contains certain
forward looking statements, which include assumptions with respect to future
plans, results and capital expenditures. The reader is cautioned that
assumptions used in the preparation of such information may prove to be
incorrect. All such forward looking statements involve substantial known and
unknown risks and uncertainties, certain of which are beyond the Company's
control. Please refer to the Company's Admission Document available from the
Company's web site for a list of risk factors. The Company's actual results
could differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurances can be given that any
of the events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits the Company will derive therefrom.
All subsequent forward-looking statements, whether written or oral, attributable
to the Company or persons acting on its behalf are expressly qualified in their
entirety by these cautionary statements. Furthermore, the forward-looking
statements contained in this news release are made as at the date of this news
release.

Chairman's Statement

The interim financial results of the Company represent six months of operations
of the Central Norseman Gold Mine for the period 1 July 2007 to 31 December
2007. The loss of £3,686,209 contains a substantial amount of non operating
expenses which are short term charges likely to affect the Profit and Loss
Statement for the next two years.

During the period we have continued to implement the mine development plan which
is the long term future of any mining operation and, as we are now fully manned,
this task has begun to show positive results. However, as previously advised,
the Board believes the advancement in development will take up to a year to
reach prudent targeted levels. As with the mining industry as a whole, costs
have risen substantially and have only been partially offset by the rising gold
price. Whilst management constantly reviews costs the average cash cost per
ounce for the year to date have increased and it is anticipated that with the
operational improvements already in place that the estimated cash costs per
ounce for the year ended 30 June 2008 will be in the order of A$730 and A$760 on
forecast production of between 75,000 and 80,000 ounces. This forecast
production is on the basis of:

1. 6 months production reported above

2. 2 months of production data reported in our internal management accounts; and

3. the Company forecast of production for the remaining 4 months of the
financial year; which forecast assumes an improvement in recovery rates
from:

a. production of higher grade reef at Norseman once reached; which higher
grade reef is apparent from forward test drilling results; and

b. operational improvements in place at both mines.

The nature of costs in underground mines is such that a large proportion are
fixed so that any reduction in the production profile will raise the cash cost
per ounce of production. In terms of actual costs and in line with most
operators in Australia, the price of labour has continued to increase as a
result of the mining industry's skill shortage. The price of diesel has also put
upward pressure on power generation costs but the Company is evaluating ways to
alleviate this.

With operational improvements now in place and at higher levels of production
relative to fixed costs, the Board expect that cash operating costs should fall
going forward. The Company estimates that if a consistent production level of
8,500 ounces per month can be reached, the equivalent cash cost to that forecast
above would fall to between A$550 and A$600 per ounce.

The Board reaffirms its commitment to the task over the next twelve months of
re-fitting the mine and stabilisation of the workforce that we hope will lead to
a substantially improved production profile that will limit some of our risks,
although the risk of mined grade continues to be one of the most exacting tasks
management faces.

Vince Pendal

Chairman

Interim Financial Information of Norseman Gold plc

The following interim financial information of Norseman Gold plc is for the
period from 1 July 2007 to 31 December 2007. The financial information was
approved by the directors on 31 March 2008.

NORSEMAN GOLD PLC

GROUP INCOME STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2007

Unaudited Unaudited Audited
Period ended Period ended Year ended
31 December 2007 31 December 2006 30 June 2007
£ £ £

Continuing operations

Group revenue 13,744,015 - 4,869,941

Cost of sales (13,953,015) (88,679) (4,324,273)

Gross profit (loss) (209,000) (88,679) 545,668

Administrative expenses
before depreciation and
amortisation and charge
for share-based payments (439,976) (27,808) (553,288)

Exploration and
rehabilitation expenditure (213,321) - (169,973)

Impairment of Goodwill on
acquisition - - (15,927,910)

Depreciation and
Amortisation (1,727,515) - (641,431)

Share-based payments (934,535) - (531,370)

Total administrative
expenses (3,315,347) (27,808) (17,823,972)

Group operating loss (3,524,347) (116,487) (17,278,304)

Interest receivable 145,552 2,720 49,517

Interest payable (307,414) - (149,430)

Loss before taxation (3,686,209) (113,767) (17,378,217)

Taxation - - -

Loss for the period (3,686,209) (113,767) (17,378,217)

Attributable to:

Equity holders of the
Company (3,686,209) (113,767) (17,378,217)

Loss per share (pence)

Basic and diluted (0.93)p (0.33)p (13.4)p

NORSEMAN GOLD PLC

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2007

Foreign
Share Share Currency Equity Retained Total
Capital Premium Reserve Reserve Losses Equity
£ £ £ £ £ £
Unaudited
Period ended
31 December
2007

Balance at 1
July 2007 994,500 27,807,030 400,756 759,632 (17,378,217) 12,583,701

Share issues 2,875 112,125 - - - 115,000

Foreign
currency - - (135,046) - - (135,046)

Other
reserves - - - 774,858 - 774,858

Net loss for
31 December
2007 - - - - (3,686,209) (3,686,209)
__________ __________ __________ __________ __________ __________

Balance at 31
December 2007 997,375 27,919,155 265,710 1,534,490 (21,064,426) 9,652,304
========= ========= ========= ========= ========= =========

Unaudited
Period ended
31 December
2006

Balance 1
July 1 - - - - 1
2006

Share issues 137,499 388,890 - - - 526,389

Net loss for
31 December
2006 - - - - (113,767) (113,767)
__________ __________ __________ __________ __________ __________

Balance at 31
December 2006 137,500 388,890 - - (113,767) 412,263
========= ========= ========= ========= ========= =========

Audited
Year ended 30
June 2007

Balance at 1
July 2006 1 - - - - 1

Share issues 994,499 27,807,030 - - - 28,801,529

Foreign
currency - - 400,756 - - 400,756

Other
reserves - - - 759,632 - 759,632

Net loss for
30 June 2007 - - - - (17,378,217) (17,378,217)
__________ __________ __________ __________ __________ __________

Balance at 30
June 2007 994,500 27,807,030 400,756 759,632 (17,378,217) 12,583,701
========= ========= ========= ========= ========= =========

NORSEMAN GOLD PLC

GROUP BALANCE SHEET

AS AT 31 DECEMBER 2007

Unaudited Unaudited Audited
As at As at As at
Notes 31 December 31 December 30 June
2007 2006 2007
£ £ £

ASSETS

Non-Current
Assets
Property,
plant &
equipment 4 3,412,228 - 3,514,913

Mine
properties in
production
phase 5 5,234,934 - 4,965,563

Exploration &
evaluation
expenditure 6 1,116,911 30,000 421,487

Goodwill 7 6,247,500 - 6,247,500
__________ __________ __________
16,011,573 30,000 15,149,463
__________ __________ __________
Current
Assets

Trade and
other
receivables 1,131,634 2,151 827,200

Investments 31,622 48,591 -
Inventories 8 2,773,553 - 2,886,069

Cash at bank
and in hand 5,422,943 421,581 7,347,233
__________ __________ __________
9,359,752 472,323 11,060,502
__________ __________ __________
Total Assets 25,371,325 502,323 26,209,965
__________ __________ __________
LIABILITIES

Current
Liabilities

Trade and
other 9 4,026,266 89,700 2,382,238
payables

Provisions 10 1,092,272 - 1,080,688

Convertible
Notes 11 2,082,401 - 1,955,258
__________ __________ __________
7,200,939 89,700 5,418,184
__________ __________ __________
Non-Current
Liabilities

Provisions 10 2,000,069 - 1,927,280

Convertible
Notes 11 6,518,013 - 6,280,800
__________ __________ __________
8,518,082 - 8,208,080
__________ __________ __________
Total
Liabilities 15,719,021 89,700 13,626,264
__________ __________ __________
Net Assets 9,652,304 412,623 12,583,701
========= ========= =========
EQUITY

Capital and
Reserves

Share capital 12 997,375 137,500 994,500

Share premium
account 27,919,155 388,890 27,807,030

Currency
translation
reserve 13 265,710 - 400,756

Equity 13 1,534,490 - 759,632
reserve

Retained (21,064,426) (113,767) (17,378,217)
losses
__________ __________ __________
Shareholders'
Equity 9,652,304 412,623 12,583,701
========= ========= =========

NORSEMAN GOLD PLC

GROUP CASH FLOW STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2007

Unaudited Unaudited Audited
Period Period Year ended
ended ended
Notes 31 December 31 December 30June
2007 2006 2007
£ £ £

Net cash inflow
(outflow) from
operating
activities 16 1,039,312 (78,344) (699,210)
__________ __________ __________

Investing activities

Funds used in mine
properties, exploration
& production (2,056,111) (57,572) (367,451)

Payments to purchase
plant and
equipment (610,583) - (20,992)

Costs of acquiring
subsidiaries - - (17,409,487)

Interest 145,552 2,720 49,517
received

Interest
payable (307,414) - (149,430)
__________ __________ __________

Net cash used in
investing
activities (2,828,556) (54,852) (17,897,843)
__________ __________ __________

Financing activities

Loan from Ascent
Capital
Holdings Pty Ltd - 28,387 -

Cash proceeds
from issue of
shares - 715,000 27,225,999

Share issue costs - (188,610) (1,682,470)
__________ __________ __________

Net cash from
financing activities - 554,777 25,543,529
__________ __________ __________

Increase(decrease)
in cash and
cash equivalents (1,789,244) 421,581 6,946,476

Effect of foreign
currency translation
reserve (135,046) - 400,756

Cash and cash
equivalents
at beginning of
period 7,347,233 - 1
__________ __________ __________

Cash and cash
equivalents
at end of period 5,422,943 421,581 7,347,233
========= ========= =========

NORSEMAN GOLD PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2007

1. Accounting policies

The principal accounting policies applied in the preparation of these financial
statements are set out below. These policies have been consistently applied to
all the periods presented, unless otherwise stated below.

1.1 Basis of preparation

This interim report, which incorporates the financial information of the Company
and its subsidiary undertakings ("the Group"), has been prepared using the
historical cost convention and in accordance with the International Financial
Reporting Standards ("IFRS") including IAS 34 'Interim Financial Reporting' and
IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the
European Union ("EU").

These interim results for the six months ended 31 December 2007 are unaudited
and do not constitute statutory accounts as defined in section 240 of the
Companies Act 1985. They have been prepared using accounting bases and policies
consistent with those used in the preparation of the financial statements of the
Company and the Group for the year ended 30 June 2007 and those to be used for
the year ending 30 June 2008. The financial statements for the year ended 30
June 2007 have been delivered to the Registrar of Companies and the auditors'
report on those financial statements was unqualified and did not contain a
statement made under Section 237(2) or Section 237(3) of the Companies Act 1985.

1.2 Goodwill

Goodwill is the difference between the amount paid on the
acquisition of the subsidiary undertakings and the aggregate fair value of their
separable net assets. Goodwill is capitalised as an intangible asset and in
accordance with IFRS3 'Business Combinations' is not amortised but tested for
impairment when there are any indications that its carrying value is not
recoverable. As such, goodwill is stated at cost less any provision for
impairment in value. If a subsidiary undertaking is subsequently sold, goodwill
arising on acquisition is taken into account in determining the profit and loss
on sale.

1.3 Mine properties in production phase

Exploration and evaluation expenditure

Exploration, evaluation and development expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are only carried
forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not yet
reached a stage which permits reasonable assessment of the existence of
economically recoverable reserves. Accumulated costs in relation to an abandoned
area are written off in full against profit in the year in which the decision to
abandon the area is made. When production commences, the accumulated costs for
the relevant area of interest are amortised over the life of the area according
to the rate of depletion of the economically recoverable reserves. Economically
recoverable reserves are determined by the following: For open pit operations -
proven and probable reserves; and for underground operations - proven and
probable reserves and reasonably assured potential additional reserves.
Accumulated costs associated with underground operations include an estimate of
the future costs associated with the conversion of 'indicated' and 'inferred'
resources into the 'measured category'. This estimate is based on the historical
cost per ounce discovered. A regular review is undertaken of each area of
interest to determine the appropriateness of continuing to carry forward costs
in relation to that area of interest.

Costs of site restoration are provided when an obligating event occurs from when
exploration commences and are included in the costs of that stage. Site
restoration costs include the dismantling and removal of mining plant, equipment
and building structures, waste removal and rehabilitation of the site in
accordance with clauses of the mining permits. Such costs have been determined
using estimates of future costs, current legal requirements and technology on a
discounted basis. Any changes in the estimates for the costs are accounted for
on a prospective basis. In determining the costs of site restoration, there is
uncertainty regarding the nature and extent of the restoration due to community
expectations and future legislation. Accordingly the costs have been determined
on the basis that the restoration will be completed within one year of
abandoning the site.

1.4 Inventories

(i) Raw Materials and Stores

Inventories of raw materials and stores expected to be used in production are
valued at average cost. Obsolete or damaged inventories of such items are valued
at net realisable value. There is a regular and ongoing review of inventories
for surplus items and provision is made for any anticipated loss on their
disposal.

(ii) Work in Progress and Gold in Circuit

Inventories of broken ore, work in progress and gold in circuit are valued at
the lower of cost and net realisable value. Cost comprises direct material,
labour and transportation expenditure incurred in getting inventories to their
existing location and condition, together with an appropriate portion of fixed
and variable overhead expenditure based on weighted average costs incurred
during the period in which such inventories were produced. Net realisable value
is the amount anticipated to be realised from the sale of inventory in the
normal course of business less any anticipated costs to be incurred prior to its
sale.

1.5 Revenue

Revenue from the sale of goods (precious metals) is recognised upon production.
Interest revenue is recognised on a proportional basis taking into account the
interest rates applicable to the financial assets.

1.6 Share based payments

The Company made share-based payments to certain directors and advisers by way
of issue of share options. The fair value of these payments is calculated by the
Company using the Black-Scholes option pricing model. The expense is recognised
on a straight line basis over the period from the date of award to the date of
vesting, based on the Company's best estimate of shares that will eventually
vest.

The Company has issued shares to management which will vest in one and two years
following readmission, provided certain requirements are met. The Company
records an expense, based upon the market price at date of issue of shares
expected to vest, on a straight line basis over the vesting period.

1.7 Foreign Currency Transactions and Balances

(i) Functional and presentational currency

Items included in the Group's financial statements are measured using Australian
Dollars ("A$"), which is the currency of the primary economic environment in
which the Group operates ("the functional currency"). The financial statements
are presented in Pounds Sterling ("£"), which is the functional currency of the
Company and is the Group's presentation currency.

The individual financial statements of each Group company are presented in the
functional currency of the primary economic environment in which it operates.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.

Transactions in the accounts of individual Group companies are recorded at the
rate of exchange ruling on the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the rates ruling
at the balance sheet date. All differences are taken to the income statement.

For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at exchange rates
prevailing on the balance sheet date. Income and expense items are translated at
the average exchange rates for the period. Exchange differences arising are
classified as equity and transferred to the Group's translation reserve. Such
translation differences are recognised as income or as expenses in the period in
which the operation is disposed of.

1.8 Convertible notes

Convertible notes are regarded as compound instruments, consisting of a
liability component and an equity component. At the date of issue, the fair
value of the liability component is estimated using the prevailing market rate
for similar non-convertible debt. The difference between the proceeds of issue
of the convertible notes and the fair value assigned to the liability component,
representing the embedded option to convert the liability into equity of the
Company, is included in equity.

Issue costs are apportioned between the liability components of
the convertible notes based on their relative carrying amounts at the date of
issue. The portion relating to the equity component is charged directly against
equity.

The interest expense on the liability component is calculated by applying the
prevailing market interest rate for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the convertible note.

2. Loss per share

The basic loss per ordinary share has been calculated using the loss for the
period of £3,686,209 (31 December 2006: £113,767, 30 June 2007: £17,378,217)
and the weighted average number of ordinary shares in issue of 398,482,418 (31
December 2006: 33,794,449, 30 June 2007: 129,517,317).

The diluted loss per share has been calculated using a weighted average number
of shares in issue and to be issued of 398,950,000 (31 December 2006:
55,000,000, 30 June 2007: 129,517,317). The diluted loss per share has been kept
the same as the basic loss per share as the conversion of share options
decreases the basic loss per share, thus being anti-dilutive.

3. Segmental reporting

For the purposes of segmental information, the operations of the Group are
focused on Australia and comprise one class of business: the production,
exploration, evaluation and development of mineral resources.

The Company acts as a holding Company.

The Group's operating loss arose from its operations in Australia. In addition,
all the Group's assets are based in Australia.

4. Property, plant & equipment

Unaudited

Group - 31 December 2007
Land and Plant and Mine Capital Total
Buildings Equipment Infrastructure Works in
Progress
£ £ £ £ £
Cost
At 1 July 2007 153,121 1,014,370 1,975,148 614,549 3,757,188
Additions 9,883 306,810 51,222 242,668 610,583
Disposals - - - - -
At 31 December 2007 163,004 1,321,180 2,026,370 857,217 4,367,771

Depreciation
At 1 July 2007 (9,436) (54,153) (178,686) - (242,275)
Charge for period (29,938) (187,703) (495,627) - (713,268)
Depreciation on disposals - - - - -
At 31 December 2007 (39,374) (241,856) (674,313) - (955,543)

Net book value
31 December 2007 123,630 1,079,324 1,352,057 857,217 3,412,228

Audited

Group - 30 June 2007
Land and Plant and Mine Capital Total
Buildings Equipment Infrastructure Works in
Progress
£ £ £ £ £
Cost
At 1 July 2006 - - - -

-
Additions 153,121 1,014,370 1,975,148 614,549 3,757,188
Disposals - - - - -
At 30 June 2007 153,121 1,014,370 1,975,148 614,549 3,757,188

Depreciation
At 1 July 2006 - - - -
Charge for year (9,436) (54,153) (178,686) - (242,275)
Depreciation on disposals - - - - -
At 30 June 2007 (9,436) (54,153) (178,686) - (242,275)

Net book value
30 June 2007 143,685 960,217 1,796,462 614,549 3,514,913

5. Mine properties in production phase

Group
Unaudited Unaudited Audited
31 December 2007 31 December 2006 30 June
£ £ 2007

£
Opening balance 4,965,563 - -
Mining expenditure incurred during the period 1,285,944 - 367,451
Acquisition of mining properties - - 4,998,000
Amortisation during the period (1,016,573) - (399,888)

Closing balance 5,234,934 - 4,965,563

6. Exploration & evaluation expenditure

Group
Costs carried forward in respect of areas of Unaudited Unaudited Audited
interest in: 31 December 2007 31 December 2006 30 June
£ £ 2007
Exploration and evaluation phases: £

Opening balance 421,487 - -
Acquired - Norseman Project - - 504,787
Exploration expenditure capitalised 738,545 30,000 -
Exploration expenditure written off (43,121) - (83,300)

Closing balance 1,116,911 30,000 421,487

The amounts for intangible exploration and evaluation ("E & E") assets represent
costs incurred in relation to the Group's operations at Norseman. These amounts
will be written off to the income statement as exploration expenses unless
commercial reserves are established or the determination process is not
completed and there are no indicators of impairment. The outcome of ongoing
exploration and evaluation, and therefore whether the carrying value of E & E
assets will ultimately be recovered, is inherently uncertain. The Directors have
assessed the value of the exploration and evaluation expenditure carried as
intangible assets and in their opinion no provision for impairment is currently
necessary.

7. Goodwill

Group Goodwill
£

Cost

At 30 June 2007 and 31 December 2007 22,175,410

Amortisation and impairment

At 30 June 2007 and 31 December 2007 (15,927,910)
__________

Net book value

At 30 June and 31 December 2007 6,247,500
=========

Goodwill arose on the acquisition of the Company's subsidiary undertakings.
The Group tests goodwill for impairment if there are indicators that goodwill
might be impaired. The Board impaired the value of goodwill at 30 April 2007.

8. Inventories

Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2007 2006
£ £ £

Gold Bullion 893,623 - 1,089,475

Work in Progress - at cost

- Ore Stockpiles 679,929 - 694,282

- Gold in circuit 241,971 - 531,300

Raw materials and stores
- at net realisable
value 958,030 - 571,012
__________ __________ __________

2,773,553 - 2,886,069
========= ========= =========

9. Trade and other payables

Trade accruals 2,913,809 89,700 1,771,072

Other payables 1,112,457 - 611,166
__________ __________ __________

4,026,266 89,700 2,382,238
========= ========= =========

10. Provisions

Unaudited
Group - 31 December 2007

Current:
Employee Restoration and Total
benefits decommissioning
£ £ £

At 1 July 2007 690,582 390,106 1,080,688

Charge to income statement (29,130) 40,714 11,584
__________ __________ __________

At 31 December 2007 661,452 430,820 1,092,272

========= ========= =========

Non-current: Restoration and Total
decommissioning
£ £
At 1 July 2007 1,927,280 1,927,280

Charge to income statement 72,789 72,789
__________ __________

At 31 December 2007 2,000,069 2,000,069
========= =========

Audited
Group - 30 June 2007

Current:

Employee Restoration and Total
benefits decommissioning
£ £ £

At 1 July 2006 - - -

Charge to income statement 690,582 390,106 1,080,688
__________ __________ __________

At 30 June 2007 690,582 390,106 1,080,688
========= ========= =========

Non-current: Restoration and Total
decommissioning
£ £

At 1 July 2006 - -

Charge to income statement 1,927,280 1,927,280
__________ __________

At 30 June 2007 1,927,280 1,927,280
========= =========

The Directors have considered environmental issues and the need for any
necessary provision for the cost of rectifying any environmental damage, as
might be required under local legislation and the Group's license obligations
and have provided the above provisions for any future costs of decommissioning
or any environmental damage.

11. Convertible Notes

Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2007 2006
£ £ £

Current:

Convertible note, unsecured 2,082,401 - 1,955,258
========= ========= =========

Non-current:

Convertible notes, unsecured 6,518,013 - 6,280,800
========= ========= =========

Within not more than one year 2,082,402 - 1,955,258

Payable between 1 and 2 years 2,082,402 - 1,955,258

Payable between 2 to 5 years 4,435,610 - 4,325,542
__________ __________ __________

8,600,414 - 8,236,058
========= ========= =========

12. Share capital and options

Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
£ £ £

Authorised

4,000,000,000 Ordinary
shares of 0.25p each 10,000,000 10,000,000 10,000,000
========= ========= =========

Allotted, called up and fully paid
Ordinary shares of 0.25p each 997,375 137,500 994,500
========= ========= =========

On 12 September 2007, the Company announced that, following the termination of a
consultancy agreement with one of its consultants (the "Consultant") provided
through Infinity Resources Pty Ltd ("Infinity"):

(a) the Consultant was issued with 1,150,000 ordinary shares in the
Company (the "Shares"); and

(b) the Consultant's 3,000,000 options to subscribe for Shares and the
Consultant's right to be issued with 1,850,000 Shares were assigned for no
consideration to Infinity (the "Assignments") and reconfirmed by the Company.

The Ordinary Shares rank pari passu in all respects including the right to
receive all dividends and other distributions declared, made or paid.

Share options

The details of share options outstanding at 31 December 2007 are as follows:

Unaudited Unaudited Audited
Number of share options 31 December 31 December 30 June
2007 2006 2007

Opening balance 19,300,000 - -
Granted during the period - - 19,300,000
Exercised during the period - - -
Lapsed during the period - - -

19,300,000 - 19,300,000

13. Reserves

Group

Foreign Currency, movements Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
£ £ £

Opening balance 400,756 - -
Foreign currency transactions - 400,756
Movement in reserve (135,046) - -
Closing balance 265,710 - 400,756

Group - Unaudited 31 December 2007
Unaudited Unaudited Audited
Equity reserves, movements: 31 December 31 December 30 June
2007 2006 2007
£ £ £

Opening balance 759,632 - -
Share based payments - charge 934,535 - 531,370
Share based payments transferred to issued
capital and share premium reserve
(115,000) -
Equity component of convertible note (44,677) - 228,262

Closing balance 1,534,490 - 759,632

14. Share-based payments

Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
£ £ £

The Group and Company recognised the
following charge in the income statement
in respect of its share based payment plans:

Share option charge 59,535 - 245,953

Management share charge 875,000 - 285,417
__________ __________ __________

934,535 - 531,370
========= ========= =========

Management share charge

The Management Shares will be issued provided that the relevant director,
employee or consultant remains a director, employee or consultant at that time.
If he does not, the relevant Management Shares will not be issued unless the
reason for cessation was ill health, disability, death or termination by the
Company or by the relevant employee or consultant or his associated consultancy
entity for breach by or insolvency of the Company, in which case the relevant
Management Shares may be required to be issued at any time after the first
anniversary of Re-Admission (or earlier in case of death). The Management
Shares may also be required to be issued after such first anniversary in case of
a change of board control (in the case only of Management Shares held by
associates of the Directors) or at any time in case of a change of voting
control of the Company. Of the total of 30,750,000 Management Shares issued
1,150,000 have been converted to ordinary shares and 2,350,000 will vest on the
first anniversary of Re-Admission and the balance on the second anniversary of
Re-Admission.

The Company's market price at readmission was 10p, the discount of £3,075,000
will be amortised over the vesting period of one and two years for the two
allocations respectively.

15. Exploration expenditure commitments

In order to maintain an interest in the mineral assets in which the Group is
involved, the Group is committed to meet the conditions under which the licences
were granted. The timing and amount of exploration expenditure commitments and
obligations of the Group are subject to the work programme required as per the
licence commitments and may vary significantly from the forecast based upon the
results of the work performed. Exploration results in any of the projects may
also result in variation of the forecast programmes and resultant expenditure.
Such activity may lead to accelerated or decreased expenditure.

31 December 2007
Group
£

As at the balance sheet date the
aggregate amount payable is:

Within not more than one year 2,685,071
=========

16. Reconciliation of operating cash flows to net cash outflows from operating
activities

Group

Unaudited Unaudited Audited
31 December 31 December 30 June
2007 2006 2007
£ £ £
Group operating loss (3,524,347) (116,487) (17,278,304)

Adjustments for items not
requiring an outlay of funds:

Foreign currency - unrealised 319,680 1,333 197,018

Depreciation and amortisation 1,729,841 - 641,431

Exploration expenditure written
off 43,121 83,300

Share-based payments charge 934,535 - 531,370

Impairment of goodwill on acquisition - - 15,927,910
__________ __________ __________

Operating profit (loss) before
changes in working capital (497,170) (115,154) 102,725

Decrease (increase) in
inventories 112,516 - (2,441,521)

Increase in receivables and
prepayments (Note a) (304,434) (2,151) (827,201)

Increase in provisions 84,373 - 84,549

Increase in trade and other
payables 1,644,027 38,961 2,382,238
__________ __________ __________

Net cash inflow (outflow)
from operating activities 1,039,312 (78,344) (699,210)
========= ========= =========

Note a: Inventories includes £893,623 of Gold Bullion on hand at 31 December
2007 (30 June 2007: £1,089,475).

17. Events after the balance sheet date

On 18 January 2008, the Company's ordinary share capital was consolidated
resulting in every 5 Existing Ordinary Shares being consolidated into 1 New
Ordinary Share.

18. Dividend

The Directors do not recommend the payment of a dividend.

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

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