31 October 2006
Mercator Gold plc
("Mercator" or the "Company")
PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2006
The financial year ended June 2006 was a significant year for Mercator Gold plc.
8 October 2005 marked the first anniversary of our listing on the AIM market of the London Stock Exchange. In that month we also announced our intention to acquire, at a cost of AUD$18 million dollars, 100% control of the St Barbara?s Meekatharra Goldfield.
The above acquisition included ownership of four historically productive gold areas namely Paddy?s Flat, Yaloginda, Nannine and Reedy. The gold resources contained within these leases now stand at 2,160,000 ounces.
At Yaloginda, as part of the St Barbara purchase, we also acquired the Yaloginda Mill with a rated capacity of 3,000,000 tonnes per annum of oxide material or 1,250,000 tonnes per annum of primary or fresh rock.
The Company?s management views the St Barbara acquisition as an opportunity to transform the Company from junior explorer to mid-tier producer and to work towards recommencing production on a profitable and sustainable basis as soon as it is practicable.
To assist us in reaching sustainable and profitable production the Company undertook two major capital raisings:
? the first, in December 2005 raised lb10 million at 50p and allowed us to complete the acquisition from St Barbara Ltd on 31 January 2006;
? the second in May 2006 raised a further lb10 million at 70p.
Since completing the acquisition and related fundraisings the Company?s activities have been primarily focused upon the expansion of its resource base and the lifting of the quality of selected resources to mineable reserve status.
As at the date of this report:
? Total resources had risen from 1,960,000oz to 2,160,000oz.
? Indicated resources had risen from 1,099,000oz to 1,401,000oz.
The indicated resource category is presently the subject of mining studies to assess what proportion may be suitable for profitable mining.
During its long history the Meekatharra district has been at various times a prolific generator of substantial profits from many individual mines and a quiet backwater of the Western Australian mining scene. Mercator intends to bring to the field what we believe has been lacking ? namely a commitment to ongoing exploration of the highest technical standards to ensure the producing operation has sufficient reserves/resources to ensure a long term mine life.
The Company?s exploration team considers, after an extensive and exhaustive review of over 138,000 drillholes, that the Company?s leases contain the potential for sufficient reserves/resources to contribute to a long term mine life provided existing and ongoing exploration expenditure/success is maintained.
We are pleased to have been able to attract and retain a quality team of personnel, with the exploration team headed by Dr Julian Vearncombe and operations headed by Mr Denis Geldard. We also have a group of dedicated professional staff which brings a mixture of youth and experience, enthusiasm and care to the task I believe is necessary in order to ensure the Company meets its defined objectives.
Your Company is also actively involved in the community with proactive policies in regard to employment and participation in community affairs. The introduction of a heritage trail, substantially within the Company?s tenements, is an example, together with our concern for the environment and other associated responsibilities.
I look forward to the next exciting year of Mercator?s growth and development.