Peninsular Gold Ltd: Annual Financial Statements | Company Announcements

Friday 28 November, 2008

Peninsular Gold Ltd

Annual Financial Statements

RNS Number : 2091J

Peninsular Gold Limited

28 November 2008

Peninsular Gold Limited

Report and Consolidated Financial Statements

for the Year Ended 30June 2008

Chairman’s Review

The year to 30^th June 2008 was an eventful one for Peninsular Gold during which we issued US$20 million of convertible loan notes, commenced the construction of the new Carbon-In-Leach Plant (“Plant”) at Raub, repaid all prior banking debts, raised a further £2.5 million of equity investment and significantly improved the quality of the Raub resource inventory.

The construction of the new 1.1 mtpa Plant was completed at the end of September 2008 as planned and we are expecting the first gold pour in December 2008. Peninsular Gold will become a low cost producer (estimated average cash cost of less than US$300 per ounce) at a time when the gold price is holding firm and cash generation is ever more important given the current state of international debt and equity markets. Gold production is estimated at around 25,000 ounces per annum from the processing of the tailings reserve.

The uncertainty in global financial markets has continued unabated over the last year, with the most recent banking rescues in the US and European markets adding to the levels of concern. The realisation that global recession is now looming has also reinforced a broad sell off of commodities and a resulting drop in prices. In the light of this and the sharp price drops in other precious metals, it has been encouraging to see the resilience of the gold price which is currently just over US$800 per ounce.

During this period Peninsular Gold has focused on its core strategy of becoming a producer and developing its resource base with a view to further plant expansion to enable a future increase in its production level via the treatment of higher grade surface oxides.

The application for a judicial review, that has been made against the Department of Environment (Malaysia) and which Raub Australian Gold Mining Sdn. Bhd, the Company's wholly owned subsidiary, has been joined in as second respondent, is ongoing. The Application relates to a certain environmental approval granted to the Company's subsidiary. The proceedings are at a preliminary stage and the Court has not yet reached the merits stage of the application. Further details of the application are set out in Note 26 to these accounts. The Company will continue to vigorously oppose the application.

Raub Carbon-In-Leach (CIL) Project

As announced on 30^th September 2008 the construction of the Plant is complete and following commissioning, first gold production is planned for December 2008, marking Peninsular Gold’s transition from an explorer to a producer.

The tailings reserve at Raub, which the Plant will initially process, comprises approximately 8 million tonnes containing an estimated 202,000 ounces of gold.

The Plant was both designed and its construction project managed by Time Mining and Processing (Pty) Ltd. of South Africa. The actual construction work on the Plant was mainly carried out by local Raub contractors and workers from the surrounding communities.

As well as being a cornerstone project for Peninsular Gold the operation at Raub will continue to be a significant source of employment and knowledge transfer to the local economy in the future.

We are now considering the options to develop and expand the Plant to increase its capacity and to more rapidly process the higher grade Raub East Lode material in addition to the tailings. The Plant design was amended during the year to ensure its core infrastructure, such as power capacity, could accommodate future expansion with minimal disruption.

Financial Statements for the Year Ended 30^th June 2008

The pre and post tax loss for the year to 30^th June 2008 was £1,451,095. During the year a total of £4,417,294 was invested in the development of the Plant with a further £1,411,235 invested in MDE (exploration, licences and tailings facilities), principally in the Raub project area.

During the year to 30^th June 2008 Peninsular Gold raised US$20 million via the issue of convertible loan notes that were placed with a major US investment bank and an additional £2.36 million (net of costs) via an equity placing to a number of institutional investors in May 2008. The equity placing followed the appointment of Blue Oar Securities Plc as the Company’s new sole broker in April 2008.

Exploration

The completion of the extension drilling programme of the Raub East Lode, the results of which were announced in December, February and April, led to the JORC compliant resource update the Company made in June 2008. This update increased the East Lode resources slightly from 213,000 ounces to 218,000 ounces of gold. However, the shift of resources from the inferred to the measured and indicated categories was very significant, being an increase from 52,000 to 136,000 ounces of gold.

This resource upgrade and the identification of significant high grade zones starting from or near the surface in the East Lode zone has reinforced Raub as the primary area of focus and development for Peninsular Gold at present.

The completion of the transfer of MC511 to SEREM Sdn. Bhd. (100% owned by Peninsular Gold) was announced in August 2008, securing a key part of the Tersang project area.

Peninsular Gold’s Reserve & Resource Inventory

The current reserve and resource inventory of Peninsular Gold is summarised in the following table.

Project Area	JORC Classification	Project	Tonnes	Grade (g/t Au)	Troy Ounces
RAUB	Measured Resource	East Lode	1,338,000	1.43	62,000
RAUB	Indicated Resource	East Lode	1,666,000	1.38	74,000
RAUB	Measured + Indicated	East Lode	3,004,000	1.40	136,000
RAUB	Inferred Resource	East Lode	1,883,000	1.40	82,000
RAUB	Measured, Indicated and Inferred Resources	Total East Lode	4,887,000	1.39	218,000
RAUB	Proven Reserves	Tailings	8,600,000	0.73	202,000
RAUB	Indicated Resource	Tailings	700,000	0.73	15,400
TERSANG	Inferred (non-JORC)	Tersang	18,900,000	0.87	528,000

Values have been rounded to two or three significant figures to reflect the relative estimation precision of each resource classification. This rounding has also been applied to summations of raw values.

The information related to the current reserve and resource inventory presented in the above table has all been previously announced to the market. The relevant competent persons for the different projects are as follows:

1. The Raub (East Lode) project resources were compiled by Kevin Lowe, who is a member of the Australasian Institute Of Mining and Metallurgy and a full-time employee of Snowden Mining Industry Consultants, in accordance with the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves known as the JORC Code (JORC, 2004).

2. The Raub (Tailings) project was compiled by Bryan (Mort) Cowan, who is a member of the Australasian Institute of Mining and Metallurgy, in accordance with the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves known as the JORC Code (JORC, 2004).

3. Tersang project resources were reported on by ACA Howe, as the competent person, in Peninsular Gold Ltd.’s Admission document.

Corporate Social Responsibility and the Environment

Over the year, Peninsular Gold has demonstrated its commitment to the concept of corporate social responsibility towards the local area and economy. During the construction of the Plant we ensured that wherever possible local contractors, engineers and workers were used, giving a positive boost to the economies of the local communities. Going forward we will be training and using local workers in the Plant to embed the economic benefits and to better transfer knowledge, skills and technology to the Raub economy.

As the Plant comes into production we will continue to operate in accordance with international best practices for environmentally sustainable development.

Strategy and Outlook for 2008 - 2009

Peninsular Gold is delivering on its stated strategy to become both a producer and successful explorer, with the new Plant and the increase and improvement in resources during the year. The coming year will be an exciting one as the new Plant starts to deliver positive cash flows and Peninsular Gold progresses with both our plans to expand the Raub operation and also to seek to identify significant further ounces in both the Raub and Tersang areas.

In addition to our current tenements, we are also investigating the possible acquisition of ‘brown field’ projects, with established existing gold resources, that may become available within the region as a quicker route to adding cash flow and value to Peninsular Gold’s business.

I am proud of the achievements of the combined Peninsular Gold team, comprising staff, workers and key contractors, over the last year and would like to thank them all for their hard work and commitment to achieving our goals.

I look forward to further updating you all on our progress over the coming year.

Dato’ Sri Andrew Tai Yeow Kam

Chairman and Chief Executive

Report of the Directors

For the Year Ended 30^th June 2008

The directors’ present their report and the audited financial statements for the year ended 30^th June 2008.

Principal Activities

The principal activities of the Company and its subsidiaries during the year were the exploration and development of gold deposits in the state of Pahang in Peninsular Malaysia. These activities are performed via the Company’s two wholly owned subsidiaries, Raub Australian Gold Mining Sdn. Bhd. (“RAGM”) and S.E.R.E.M. Malaysia Sdn. Bhd. (“SEREM”).

A detailed review of the Group’s operations is included in the Chairman’s Review on page 2

Results and Dividends

The Consolidated Income Statement for the year is set out on page 14. The Group made a loss after tax of £1,451,095 (2007: £2,225,295). The directors do not recommend the payment of a dividend.

Directors

The names of the directors who held office during the year and to date were:

Dato’ Sri Andrew Tai Yeow Kam

Dato’ Mohamed Moiz Bin JM Ali Moiz

Dr. Yves Fernand Marcel Cheze

Mr. Timothy Patrick Watson

Directors’ Biographies

Dato’ Sri Andrew Tai Yeow Kam

Chairman and Chief Executive

Dato’ Sri Andrew Tai Yeow Kam (age 46) is a British educated, Malaysian citizen with a law degree from the University of Buckingham. He is an advocate and solicitor of the High Court of Malaya having been admitted to the Malaysian Bar in 1988. His business and entrepreneurial experience, in addition to his long involvement in gold mining, has included the development and completion of a large township, development of an orchard project, and the successful management, over many years, of a major palm oil mill and plantation.

Dato’ Mohamed Moiz Bin JM Ali Moiz

Non Executive Director

Dato’ Mohamed Moiz Bin JM Ali Moiz (age 48), is a Malaysian citizen. He has a degree in Business Administration and International Finance, graduating in 1985. He worked for Timbco Sdn. Bhd., a company involved in timber trading, processing and forestry management as a Project Manager from 1985 to 1986. In 1987 he was appointed CEO of the Tradium Group of companies, which have interests in property development, fashion retailing, manufacturing, food and beverage and equity investments. In 1999, he was appointed Chief Executive Officer of Effective Capital Sdn. Bhd., a company which successfully undertook the migration of the central limit order book of securities traded in an over the counter market in Singapore, from the Central Depository (Pte) Ltd to the Kuala Lumpur Stock Exchange in June 2000. Currently, he is the non-independent non-executive chairman of Bandar Raya Developments Berhad, a company listed on the Malaysian Securities Exchange. He also sits on the Boards of Mieco Chipboard Berhad and several other private companies.

Dr. Yves Fernand Marcel Cheze (Ph.D, B.Sc. and M.Sc.)

Non Executive Director

Dr. Yves Cheze (age 58), a French citizen, studied geology at the University of Clermont-Ferrand and has almost 30 years’ worldwide experience in most aspects of mineral exploration. Most of his experience has been gained in Western and Eastern Africa, South-East Asia (including Irian Jaya, Indonesia and over ten years in Malaysia), Papua New Guinea and both North and South America. Whilst with the French company BRGM, he was responsible for large international exploration projects that led to the discovery of major gold deposits, including the Ariab Gold Belt in Sudan; he was also Project Manager for feasibility study of a 50 million Euro programme in Papua New Guinea, for the European Commission. Dr. Cheze resigned from BRGM in 2001 and subsequently set up his own geological consulting company in Malaysia where he now lives.

Patrick Watson BSc.(Hons.), A.R.S.M., A.C.A.

Finance Director

Mr. Watson (age 45) is a British citizen who started his career working with the Anglo American Corporation of South Africa before attending the Royal School of Mines at Imperial College to read mining engineering. He graduated in 1985 and returned to Anglo in South Africa, to work in the gold division before later changing career to become a Chartered Accountant with KPMG in the UK. His mining career focused on deep level gold mining operations covering both production and development.

As a Chartered Accountant he has over sixteen years’ experience in financial and business management in senior roles with KPMG, Nationwide Building Society, PriceWaterhouseCoopers and LogicaCMG where he headed their UK Consultancy business. His experience crosses a range of industries, principally focused on advising finance and business executives in the area of financial and cost management. He knows Malaysia and South East Asia well, having previously lived there for sixteen years.

Directors and Directors' Interests

The directors and their families have the following interests in the shares of the Company:

	1^st July 2007	30^th June 2008
	Ordinary Shares of £Nil par value	Ordinary Shares of £Nil par value

Dato’ Sri Andrew Tai Yeow Kam	-	-
Dato’ Mohamed Moiz Bin JM Ali Moiz	4,500,000	4,500,000
Dr. Yves Fernand Marcel Cheze	-	50,000
Mr. Timothy Patrick Watson	-	-

Indirect Interests

Dato’ Sri Andrew Tai Yeow Kam ¹	25,000,504	21,638,869
Dato’ Mohamed Moiz Bin JM Ali Moiz	-	-
Dr. Yves Fernand Marcel Cheze	-	-
Mr. Timothy Patrick Watson	-	-

¹ Dato’ Sri Andrew Tai Yeow Kam’s indirect interest in Peninsular Gold Limited is via his ownership of 99.9% of the shares of Akay Holdings Sdn. Bhd. and 70% of the shares of Akay Venture Sdn. Bhd. which owned 25.22% and 24.35% (2007 : 35.97% and 27.55%) of Peninsular Gold Limited respectively at 30^th June 2008.

At30^th June 2008, the Company was aware of the following holdings of more than 3% of the issued share capital of the Company:

	Number of shares	%

Akay Holdings Sdn. Bhd.	12,919,840	25.2
Akay Venture Sdn. Bhd.	12,474,213	24.3
Dato’ Mohamed Moiz Bin JM Ali Moiz	4,500,000	8.8
Phoenix Gold Fund	3,450,000	6.7
Raub Oil Mill Sdn. Bhd.	2,565,000	5.0
Bridge Fund SPC (Bridge Global Opportunities Fund
Segregated Portfolio)	2,380,952	4.6
Granite Peak Ltd.	2,000,000	3.9

The Company is not resident in the United Kingdom and is, therefore, not a close company within the meaning of the United Kingdom Income and Corporation Taxes Act 1988.

By order of the Board

T. P. WATSON

Finance Director

Statement of Directors' Responsibilities

Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that period. In preparing those financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with laws and regulations.

Independent Auditors’ Report to the Shareholders of Peninsular Gold Limited

We have audited the group and parent company financial statements (the “financial statements”) of Peninsular Gold Limited for the year ended 30^th June 2008 which are set out pages 12 to 43. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company’s members, as a body, in accordance with the Companies (Jersey) Law 1991. 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 auditor’s 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

The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies (Jersey) Law 1991. We also report to you whether in our opinion the information given in the Directors’ Report is consistent with the financial statements.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Report of the Directors and the Chairman’s Review. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

§ the financial statements give a true and fair view, in accordance with IFRSs as adopted by the EU, of the state of the group’s and the parent company’s affairs as at 30^th June 2008 and of the group’s and parent company’s loss for the year then ended;

§ the financial statements have been properly prepared in accordance with Companies (Jersey) Law 1991; and

§ the information given in the Directors’ Report is consistent with the financial statements.

St Paul’s House
Warwick Lane                                                                                                    Moore Stephens LLP
LONDON EC4M 7BP                                                                                            Registered Auditors
                                                                                                                      Chartered Accountants
28^th November 2008

Consolidated Balance Sheet at 30^th June 2008

(Expressed in United Kingdom Sterling)

			(As Restated)
	Note	30^th June 2008	30^th June 2007
		£	£
Non-Current Assets
Property, plant and equipment	4	5,970,162	971,003
Other intangible assets	5	17,378,478	17,378,478
Mining development expenditure	6	3,338,799	1,927,565


Total Non-current Assets		26,687,439	20,277,046

Current Assets

Inventories	7	368,785	243,150
Trade and other receivables	8	1,908,716	161,598
Cash and cash equivalents	9	2,021,413	490,254
Short-term investments	9	24,572	616,013


Total Current Assets		4,323,486	1,511,015

Current Liabilities

Trade and other payables	10	(954,472)	(281,575)
Borrowings – current portion	11	(13,037)	(1,215,846)


Total Current Liabilities		(967,509)	(1,497,421)

Net Current Assets		3,355,977	13,594


Total Assets Less Current Liabilities		30,043,416	20,290,640

Non-Current Liabilities

Long-term borrowings	11	(10,420,779)	(1,557,071)


Net Assets		19,622,637	18,733,569


Shareholders’ Equity

Share capital	12	-	-
State capital account		24,580,891	22,218,844
Reserves		(4,958,254)	(3,485,275)


Total Equity		19,622,637	18,733,569

The financial statements were approved and authorised for issue by the Board on 28^th November 2008

and signed on its behalf by

T. P. WATSON

Finance Director

The accompanying notes form part of these financial statements

Company Balance Sheet at 30^th June 2008

(Expressed in United Kingdom Sterling)

			(As Restated)
	Note	30^th June 2008	30^th June 2007
		£	£
Non-Current Assets
Property, plant and equipment	4	1,067	1,219
Investment in subsidiaries	3	16,975,298	16,975,298


Total Non-current Assets		16,976,365	16,976,517

Current Assets

Trade and other receivables	8	14,139,030	4,009,201
Cash and cash equivalents	9	1,486,453	178,308


Total Current Assets		15,625,483	4,187,509

Current Liabilities

Trade and other payables	10	(673,487)	(35,784)


Total Current Liabilities		(673,487)	(35,784)

Net Current Assets		14,951,996	4,151,725


Total Assets Less Current Liabilities		31,928,361	21,128,242

Non-Current Liabilities

Long-term borrowings	11	(10,381,913)	850,000


Net Assets		21,546,448	20,278,242


Shareholders’ Equity

Share capital	12	-	-
State capital account		24,580,891	22,218,844
Reserves		(3,034,443)	(1,940,602)


Total Equity		21,546,448	20,278,242

The financial statements were approved and authorised for issue by the Board on 28^th November 2008

and signed on its behalf by

T. P. WATSON

Finance Director

The accompanying notes form part of these financial statements

Consolidated Income Statement

For the Year ended 30^th June 2008

(Expressed in United Kingdom Sterling)

	Note	30^th June 2008	30^th June 2007
		£	£


Revenue		-	-

Cost of sales		-	-


Gross Loss		-	-

Administrative expenses		(975,153)	(1,728,335)
Other operating expenses		(90,420)	(84,511)



Loss from Operations	14	(1,065,573)	(1,812,846)


Interest income		67,274	64,481
Finance costs	16	(365,333)	(154,762)

Other income / (expense) :
Loss on financial instruments	8	-	(417,227)
Loss on foreign exchange Profit on disposal of fixed assets		(87,642) 179	- 7,310
Income received from put option		-	87,749



Loss before Taxation		(1,451,095)	(2,225,295)

Income tax expense	18	-	-

Loss for the Year		(1,451,095)	(2,225,295)


Attributable to :

Equity shareholders of the parent		(1,451,095)	(2,225,295)



Basic loss per share	20	(3.17p)	(4.92p)

The accompanying notes form part of these financial statements

Consolidated Statement of Changes in Equity

For the Year ended 30^th June 2008

(Expressed in United Kingdom Sterling)

	Share	State capital	Accumulated	Capital	Equity reserve on	Translation
	capital	account	losses	reserve	loan notes	reserve	Total
	£	£	£	£	£	£	£


At 1^st July 2006, as previously reported	-	23,068,844	(1,441,978)	153,000	-	(15,160)	21,764,706
Prior period adjustment relating to preference shares – Debt portion (Note 12)	-	(850,000)	-	-	-	-	(850,000)


At 1^st July 2006, as restated	-	22,218,844	(1,441,978)	153,000	-	(15,160)	20,914,706

Loss for the year	-	-	(2,225,295)	-	-	-	(2,225,295)
Currency translation differences	-	-	-	-	-	44,158	44,158

At 30^th June 2007	-	22,218,844	(3,667,273)	153,000	-	28,998	18,733,569

Loss for the year	-	-	(1,451,095)	-	-	-	(1,451,095)
Issue of ordinary shares for cash (Note 12)	-	2,362,047	-	-	-	-	2,362,047
Convertible loan notes – Equity portion (Note 11)	-	-	-	-	108,587	-	108,587
Currency translation differences	-	-	-	-	-	(130,471)	(130,471)
At 30^th June 2008	-	24,580,891	(5,118,368)	153,000	108,587	(101,473)	19,622,637

The accompanying notes form part of these financial statements

Company Income Statement

For the Year ended 30^th June 2008

(Expressed in United Kingdom Sterling)

	Note	30^th June 2008	30^th June 2007
		£	£


Administrative expenses		(861,621)	(1,204,692)



Loss from Operations	14	(861,621)	(1,204,692)

Interest income		52,345	57,338
Finance costs	16	(305,510)	(1,875)

Other income / (expense) :
Loss on financial instruments	8	-	(417,227)
Loss on foreign exchange		(87,642)	-
Income received from put option		-	87,749



Loss before Taxation		(1,202,428)	(1,478,707)

Income tax expense	18	-	-

Loss for the Year		(1,202,428)	(1,478,707)

The accompanying notes form part of these financial statements

Company Statement of Changes in Equity

For the Year ended 30^th June 2008

(Expressed in United Kingdom Sterling)

	Share	State capital	Accumulated	Capital	Equity reserve on
	Capital	account	losses	reserve	loan notes	Total
	£	£	£	£	£	£

At 1^st July 2006, as previously reported	-	23,068,844	(614,895)	153,000	-	22,606,949

Prior period adjustment relating to preference shares – Debt portion (Note 12)	-	(850,000)	-	-	-	(850,000)


At 1^st July 2006, as restated	-	22,218,844	(614,895)	153,000	-	21,756,949

Loss for the year	-	-	(1,478,707)	-	-	(1,478,707)

At 30^th June 2007	-	22,218,844	(2,093,602)	153,000	-	20,278,242

Loss for the year	-	-	(1,202,428)	-	-	(1,202,428)
Issue of ordinary shares for cash (Note 12)	-	2,362,047	-	-	-	2,362,047
Convertible loan notes-Equity portion (Note 11)	-	-	-	-	108,587	108,587
At 30^th June 2008	-	24,580,891	(3,296,030)	153,000	108,587	21,546,448

The accompanying notes form part of these financial statements

Consolidated Statement of Cash Flows

For the Year ended 30^th June 2008

(Expressed in United Kingdom Sterling)

	Note	30^th June 2008	30^th June 2007
		£	£
Operating Activities
Loss before taxation		(1,451,095)	(2,225,295)
Adjustment for :
Depreciation of property, plant and equipment	4	41,099	33,396
Profit on disposal of fixed assets		(179)	(7,310)
Interest income		(67,274)	(64,481)
Loss on financial instruments		-	417,227
Loss on foreign exchange	11	180,948	-
Income from put option		-	(87,749)
Amortisation of put option		-	485,210
Write off of fixed assets		-	646
Finance costs		365,333	154,762
Amortisation of transaction costs for convertible loan notes		101,681	-


Cash outflow before working capital changes		(829,487)	(1,293,594)

Changes in working capital:
(Increase)/decrease in trade and other receivables		(1,747,118)	62,840
Increase in inventories		(125,635)	(1,005)
Increase/(decrease) in trade and other payables		672,897	(170,020)


Cash outflow from operating activities		(2,029,343)	(1,401,779)

Investing Activities

Purchase of property, plant and equipment	4	(4,981,129)	(379,799)
Interest received		67,274	64,481
Income from put option		-	87,749
Proceeds from disposal of fixed assets		179	7,310
Mining development expenditure	6	(1,411,234)	(608,936)
Withdrawal of fixed deposit	9	616,013	-
Placement of fixed deposit	9	(24,572)	(360,655)


Cash outflow from investing activities		(5,733,469)	(1,189,850)

Financing Activities

Proceeds from issue of ordinary shares	12	2,362,047	-
Proceeds from issue of convertible loan notes	11	9,357,871	-
Increase in bank loans		-	463,063
Repayment of hire purchase obligations		(10,660)	(15,679)
Repayment of bank loans		(1,860,354)	(422,140)
Finance costs paid	16	(365,333)	(154,762)


Cash inflow/(outflow) from financing activities		9,483,571	(129,518)



Net Increase/(decrease) in Cash and Cash Equivalents		1,720,759	(2,721,147)
Foreign exchange translation reverse		(189,600)	48,593
Cash and Cash Equivalents at beginning of Year		490,254	3,162,808


Cash and Cash Equivalents at end of Year	9	2,021,413	490,254

Company Statement of Cash Flows

For the Year ended 30^th June 2008

(Expressed in United Kingdom Sterling)

	Note	30^th June 2008 £	30^th June 2007 £
Operating Activities
Loss before taxation		(1,202,428)	(1,478,707)
Adjustments for:
Depreciation of property, plant and equipment	4	152	153
Interest income		(52,345)	(57,338)
Finance costs	16	305,510	1,875
Amortisation of put option		-	485,210
Loss on financial instruments		-	417,227
Loss on foreign exchange		180,948	-
Amortisation of transaction costs for convertible loan notes		101,681	-
Cash outflow before working capital changes		(666,482)	(631,580)
Changes in working capital
(Increase)/decrease in trade and other receivables		(187)	38,742
Increase/(decrease) in trade and other payables		637,703	(6,311)
Cash outflow from operating activities		(28,966)	(599,149)
Investing activities
Interest received		52,345	57,338
Loans to subsidiaries		(10,129,642)	(1,942,044)
Cash outflow from investing activities		(10,077,297)	(1,884,706)
Financing Activities
Proceeds from issue of ordinary shares	12	2,362,047	-
Proceeds from issue of convertible loan notes	11	9,357,871	-
Finance costs paid		(305,510)	(1,875)
Cash inflow/(outflow) from financing activities		11,414,408	(1,875)
Net Increase/(Decrease) in Cash and Cash Equivalents		1,308,145	(2,485,730)
Cash and Cash Equivalents at beginning of Year		178,308	2,664,038
Cash and Cash Equivalents at end of Year	9	1,486,453	178,308

Notes to the Financial Statements For the Year ended 30^th June 2008

1. Group and Company Information

Peninsular Gold Limited is a limited liability company, incorporated under the laws of Jersey on 8^th April 2005. The Company was listed on AIM on 23^rd June 2005. Its registered office is First Island House, Peter Street, St. Helier, Jersey. The Company place of domicile is in Jersey.

The Group is engaged in the exploration, development and mining of gold deposits. All of the Group’s activities are undertaken in the state of Pahang, Malaysia.

On 17^th June, 2005 under the terms of share swap agreements, the Company acquired the whole of the issued share capital of Raub Australian Gold Mining Sdn. Bhd. (“RAGM”) and S.E.R.E.M Malaysia Sdn. Bhd. (“SEREM”).

Key management comprise solely directors of the Company.

2. Significant Accounting Policies

(a) Basis of Preparation

The financial statements have been prepared in accordance with applicable International Financial Reporting Standards (“IFRS”).

The financial statements have been prepared on the going concern basis.

(b) Basis of Consolidation

The consolidation financial statements have been prepared under the historical cost basis other than financial instruments which are measured at fair value, and following the implementation of IFRS, the group’s accounting policies have been consistently applied to all the periods presented. The principal policies are set out below.

The Group financial statements include the assets, liabilities and results of Peninsular Gold Limited together with its subsidiaries, RAGM and SEREM from the date of acquisition. The subsidiaries were acquired via share swap agreements, which valued the Peninsular Gold Limited shares issued as consideration at 50 pence per share. This valuation was provided by an independent valuer and was based on the gold resources and exploration grounds held by RAGM and SEREM.

All significant intercompany transactions and balances within the Group are eliminated in the preparation of the consolidated financial statements. The financial statements of subsidiaries acquired are consolidated in the financial statements of the Group from the date that control commences until the date control ceases, using the purchase method of accounting.

Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Depreciation is provided on a straight-line basis at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

Plant and equipment		20%
Buildings		20%
Motor vehicles		20%
Furniture, fittings and equipment		10%
Renovation		10%
Leasehold land		10%
Gold production plant		Units of production basis

Leasehold land refers to a piece of land owned by SEREM on which mining certificate MC511 relates to.

Assets in the course of construction are capitalised in the assets under construction account and are not depreciated. On completion, the cost of construction is transferred to the appropriate category of property, plant and equipment and depreciated accordingly.

(d) Other intangible assets

Other intangible assets comprise principally measured reserves, indicated and inferred resources and the value of exploration grounds and licences. These assets have arisen as a result of the acquisition of RAGM and SEREM. They were independently valued just prior to the acquisition date of 17^th June, 2005. Other intangible assets are recorded at cost and are reviewed annually for any impairment and any such impairment would then be charged to the consolidated income statement for the period.

Once an intangible mining asset is developed into a producing asset, the value of the asset is written off over its producing life using a units of production basis.

Production of gold ceased in March 2006 to allow site clearance and preparation for construction of the Carbon-In-Leach (CIL) Plant. Amortisation of the other intangible assets will start on commencement of meaningful production on commissioning of the CIL Plant.

(e) Mining development expenditure

Mining development expenditure is capitalised when it is probable that the projects will be successful and the cost can be measured reliably. Development expenditure that has been capitalised is amortised over the life of the interest to which such costs relate on the units of production basis and recognised in the income statement upon the commencement of commercial production.

(f) Inventories

Inventories of consumable supplies and spare parts are valued at the lower of cost and net realisable value. Cost comprises direct costs and overheads that have been incurred in bringing the inventories to their present location and condition. The FIFO method is used for determining costs. Gold is valued at the lower of cost and net realisable value using market price at the year-end, or where applicable, a forward contract price. Work-in-progress comprises gold concentrates and gold contained in stockpiled ore as determined by production records. The cost of work-in-progress includes the cost of direct materials, labour, and variable and fixed overheads relating to mining activities.

(g) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method less appropriate allowances for the estimated irrecoverable amounts.

(h) Cash and cash equivalents

Cash and cash equivalents consists of cash in hand and balances and deposits with banks which mature within three months of deposit and have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts.

(i) Impairment

The carrying amounts of assets, other than inventories, deferred tax assets and financial assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses are recognised in the income statement.

The recoverable amount is the greater of the asset’s net selling price and its value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

(j) Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

(k) Borrowings and borrowing costs

All loans and borrowings are initially recognised at the fair value of the consideration received net of direct issue costs associated with the borrowing. Financing charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis and are expensed as incurred. The interest component of finance lease payments is recognised in the consolidated income statement so as to give a constant periodic rate of interest on the outstanding liability at the end of each accounting period.

Interest on borrowings relating to the financing of major capital projects under construction is capitalised during the construction phase as part of the cost of the project. Such borrowing costs are capitalised over the period during which the asset is being acquired or constructed and borrowings have been incurred. Capitalisation ceases when the asset is substantially complete and ready for use. Borrowing costs capitalised during the financial year amounting to £517,408 (2007 : £Nil).

(l) Leases

Leases in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Assets acquired by way of finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if this is practicable to determine; if not, the Group’s incremental borrowing rate is used.

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

(m) Revenue

Revenue is measured at the fair value of the consideration receivable and is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. During the current financial year there was no gold production pending the completion of the new Carbon-In-Leach plant.

(n) Retirement benefit costs

Obligations for contributions to defined contribution plans are recognised as an expense in the income statement as incurred.

(o) Income tax

Current tax is provided based on the results for the period.

Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates that are expected to apply when they crystallise based on current tax rates and law that have been enacted or substantially enacted at the balance sheet date. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the consolidated financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.

(p) Functional and Presentation Currency

The consolidated financial statements have been presented with United Kingdom Sterling as the presentation currency as the Company is incorporated in Jersey with Sterling denominated shares which are traded on AIM, a market operated by the London Stock Exchange.

In the opinion of the directors, Malaysian Ringgit is the functional currency as the major part of the Group’s finances are in Malaysian Ringgit and expenses in relation to mining activities, overheads and corporation tax are in Malaysian Ringgit.

(q) Foreign Currency Translation

Foreign exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded are recognised in the consolidated income statement in the period in which they arise.

Consolidated subsidiaries are considered as financially, economically and organisationally autonomous foreign entities. Their reporting currencies are the respective local currencies. Assets and liabilities of foreign consolidated subsidiaries are translated to United Kingdom Sterling at the rate of exchange ruling at the balance sheet date. Revenue and expenses are translated at the average exchange rates for the year. All resulting translation differences are included in a translation reserve in equity.

The closing rates used in the translation of foreign currency monetary assets and liabilities are as follows:

United Kingdom Sterling	1.00		Malaysian Ringgit	6.5114
United Kingdom Sterling	1.00		United States Dollar	1.9906

The average rates used in translation of foreign currency income and expenses during the year are as follows:

United Kingdom Sterling

1.00

Malaysian Ringgit

6.7172

(r) Financial Instruments

Financial assets and liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument. Derivative financial instruments, which are not effective hedges, are measured at fair value, with the movement in fair value being recognised in the income statement for the period. Movements in the fair value of derivative financial instruments which are considered effective hedges are recognised directly in equity.

(s) Deferred stripping costs

Stripping costs incurred during the production phase to remove waste ore are deferred to the balance sheet and charged to operating costs on the basis of the average life of the mine stripping ratio.

The average stripping ratio is calculated as the number of cubic metres of waste material removed per tonne of ore mined. The average stripping ratio over the life of the mine is revised annually in the light of additional knowledge and change in estimates.

(t) Environment protection, rehabilitation and closure costs

Provision is made for close down, restoration and for environment clean up costs, where there is a legal or constructive obligation to do so and when it is quantifiable. Any provision is reviewed on an annual basis for any charges in cost estimates or lives of operations.

As at the end of the financial year no such provision has been made.

(u) Judgements in applying accounting policies and sources of uncertainty

Certain amounts included in the financial statements involve the use of judgement and /or estimation. These are based on management’s best knowledge of the relevant facts and circumstances, having regard to prior experience. However, judgements and estimations regarding the future are a key source of uncertainty and actual results may differ from the amounts included in the financial statements. The key areas are summarised below:

Mining Development Expenditure

The recoverability of mining development expenditure, including exploration costs, is assessed based on a judgement about the likely economic feasibility of the project.

Carrying Values of Property, Plant and Equipment

The Group periodically makes judgements as to whether its property, plant and equipment may have been impaired, based on internal and external factors. Any impairment is based on estimates of future cash flows.

Environment protection, rehabilitation and closure provisions

Such provisions require a judgement on likely future obligations, based on assessment of technical, legal and economic factors. The ultimate of cost of such items is uncertain and cost estimates can vary in response to many factors, including changes to the relevant legal requirements and the life of mine.

Provisions and contingent liabilities

Judgements are made on whether a past event has lead to a potential liability that should be recognised in the financial statements or disclosed as a contingent liability. When or whether such a potential liability can be quantified it often involves judgements and estimations. These judgements are based on a number of factors including the nature of the claim or dispute, the legal process and potential amount payable, legal advice received, previous experience and the probability of a loss being realised. Several of these factors are a source of uncertainly.

3. Investment in subsidiaries

Company		2008
		£
Cost and net book value

At 30^th June 2006		16,975,298
Additions		-

At 30^th June 2007		16,975,298
Additions		-

At 30^th June 2008		16,975,298

The Company’s investment in RAGM is £10,199,588 and its investment in SEREM is £6,775,710.

Subsidiary Companies

The consolidated financial statements include the following subsidiary companies held at 30^th June 2008:

Subsidiary companies and country of incorporation	Nature of Business	Place of business	Ordinary shares owned


Raub Australian Gold Mining Sdn. Bhd. (“RAGM”)	Gold Mining	Malaysia	100%
(Malaysia)

S.E.R.E.M Malaysia Sdn. Bhd. (“SEREM”)	Holding of Mining rights	Malaysia	100%
(Malaysia)

4. Property, Plant and Equipment

	Furniture, fittings and equipment	Total
	£	£
Company

Cost

At 1^st July 2006	1,524	1,524

Additions	-	-

At 30^th June 2007	1,524	1,524

Additions	-	-

At 30^th June 2008	1,524	1,524

Accumulated depreciation

At 1^st July 2006	152	152

Charge for the year	153	153

At 30^th June 2007	305	305

Charge for the year	152	152

At 30^th June 2008	457	457

Net Book Value at 30^th June 2008	1,067	1,067
Net Book Value at 30^th June 2007	1,219	1,219

	Plant and equipment	Buildings	Motor vehicles	Furniture, fittings and equipment	Renovation	Assets under construction	Leasehold land	Total
Group	£	£	£	£	£	£	£	£

Cost

At 1^st July 2006	93,645	9,197	50,738	58,922	-	544,548	-	757,050

Currency translation difference	(12,901)	(366)	(1,803)	(1,933)	-	(4,032)	-	(21,035)

Additions	1,099	988	52,218	14,138	15,498	295,858	-	379,799

Disposals	-	-	(19,498)	-	-	-	-	(19,498)

Written off	(1,084)	-	-	-	-	-	-	(1,084)

Reclassification	2,498	-	-	(2,498)	-	-	-	-

At 1^st July 2007	83,257	9,819	81,655	68,629	15,498	836,374	-	1,095,232

Currency translation difference	5,187	611	5,088	4,314	966	52,112	-	68,278

Additions	474,257		5,039	7,751	-	4,417,294	76,788	4,981,129
Disposals	-	-	(728)	-	-	-	-	(728)

At 30^th June 2008	562,701	10,430	91,054	80,694	16,464	5,305,780	76,788	6,143,911

	Plant and equipment	Buildings	Motor vehicles	Furniture, fittings and equipment	Renovation	Assets under construction	Leasehold land	Total
Group	£	£	£	£	£	£	£	£

Accumulated depreciation

At 1^st July 2006	81,687	4,635	18,726	9,302	-	-	-	114,350

Currency translation difference	(2,275)	(150)	(737)	(407)	(12)	-	-	(3,581)

Charge for the year	950	1,860	19,419	10,080	1,087	-	-	33,396
Disposals	-	-	(19,498)	-	-	-	-	(19,498)
Written off	(438)	-	-	-	-	-	-	(438)
Reclassification	250	-	-	(250)	-	-	-	-

At 1^st July 2007	80,174	6,345	17,910	18,725	1,075	-	-	124,229

Currency translation difference	5,019	430	1,732	1,616	117	-	235	9,149

Charge for the year	742	1,073	19,499	10,745	1,596	-	7,444	41,099

Disposals	-	-	(728)	-	-	-	-	(728)

At 30^th June 2008	85,935	7,848	38,413	31,086	2,788	-	7,679	173,749

Net Book Value at 30^th June 2008	476,766	2,582	52,641	49,608	13,676	5,305,780	69,109	5,970,162

Net Book Value at 30^th June 2007	3,083	3,474	63,745	49,904	14,423	836,374	-	971,003

4. Property, Plant and Equipment (Continued)

Assets under construction refer to the construction works in progress for the Carbon-In-Leach plant. Included in assets under construction are borrowing costs capitalised amounting £517,408 (2007: £Nil). The rate of capitalisation is 11.7%.

Included in property, plant and equipment are motor vehicles acquired under hire purchase agreements with a net book value of £46,321 (2007 : £61,368).

Leasehold land refers to a piece of land owned by SEREM on which mining certificate MC511 relates to.

5. Other intangible assets – Mining reserves and resources

	SEREM	RAGM	Group
	£	£	£
Cost

At 1^st July 2006	7,300,483	10,077,995	17,378,478

Additions	-	-	-

At 1^st July 2007	7,300,483	10,077,995	17,378,478

Additions	-	-	-

At 30^th June 2008	7,300,483	10,077,995	17,378,478

Net book value

At 30^th June 2008	7,300,483	10,077,995	17,378,478

At 30^th June 2007	7,300,483	10,077,995	17,378,478

Other intangible assets comprise mineral properties including mining licences and rights.

The Group’s mining assets were valued by independent experts prior to the acquisition of the subsidiaries on 17^th June 2005 and these valuations were considered to be relevant and unimpaired at the balance sheet date. The valuation was based upon the defined reserves, resources and the Group’s prospecting interests. Valuation techniques most relevant to the asset type, as considered by the independent valuer, were applied and included discounted cash flows for the defined reserves, comparable transaction method for the inferred resources and the Geoscience Factor method for mineral titles. The gold price used for the discounted cash flow calculation of the reserves was US$ 420 per ounce.

The current profile and amount of gold reserves are disclosed in the Chairman’s Review.

6. Mining development expenditure

	SEREM	RAGM	Group
	£	£	£
Cost
At 1^st July 2006	89,521	1,229,108	1,318,629
Additions	210,632	398,304	608,936


At 30^th June 2007	300,153	1,627,412	1,927,565
Additions	167,157	1,244,077	1,411,234


At 30^th June 2008	467,310	2,871,489	3,338,799

Mining development expenditure relates principally to the exploration related costs incurred for the Raub and Tersang project areas. No revenue has been generated in the financial year ended 30^th June 2008. Hence, there has been no amortisation of mining development expenditure.

The directors are of the view that there will be sufficient future revenue from the extraction of gold to offset the mining development expenditure capitalised in the financial statements.

7. Inventories

Group
	2008	2007
	£	£

Spare parts and consumables	21,651	20,794
Work-in-progress	347,134	222,356


	368,785	243,150

8. Trade and other receivables

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Other receivables	1,908,716	161,598	287	100
Amounts due from subsidiaries	-	-	14,138,743	4,009,101


	1,908,716	161,598	14,139,030	4,009,201

Included in other receivables are deposits of £Nil (2007 : £30,715) which relate to the sub-lease (with an option to purchase) of a Mining Certificate which grants the right to occupy and mine a piece of mining land in Raub, Pahang. Also included in other receivables are refundable and interest free advances of £1,775,566 (2007: £74,236) to a third party in relation to the construction of the plant.

The amounts due from subsidiaries are unsecured, interest free and repayable on demand.

The put option purchased during the period from 8^th April 2005 to 30^th June 2006 expired during the year ended 30^th June 2007 resulting in a write-off of £417,227 recorded during the year ended 30^th June 2007.

9. Cash and Cash Equivalents

	Group		Company
	2008	2007	2008	2007
	£	£	£	£
Cash at bank and in hand	2,021,413	490,254	1,486,453	178,308

A fixed deposit of £24,572 (2007 : £616,013) with a licensed bank has not been included in Cash and Cash Equivalents as it has a maturity exceeding three months. It has been reported in short term investments.

10. Trade and other payables

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Trade payables	241,831	-	-	-
Other payables and accrued expenses	185,606	281,575	146,452	35,784
Amount due to related party (note 22)	527,035	-	527,035	-

	954,472	281,575	673,487	35,784

11. Long term borrowings

	Group		Company
		(As restated)		(As restated)
	2008	2007	2008	2007
	£	£	£	£

Bank loans	-	1,860,354	-	-
Convertible loan notes	9,531,913	-	9,531,913	-
Preference shares – debt portion (note 12)	850,000	850,000	850,000	850,000
Hire purchase obligations	51,903	62,563	-	-


	10,433,816	2,772,917	10,381,913	850,000
Less : current portion	(13,037)	(1,215,846)	-	-

	10,420,779	1,557,071	10,381,913	850,000

The Group’s bank loans were repaid during the year. The Group’s bank loans in 2007 were subject to interest at a rate of 1.50% per annum above the lender’s base lending rate. During the year the Company issued US$20 million of convertible loan notes. The convertible loan notes are convertible into new ordinary shares of no par value in the capital of the Company at a price of 30 pence per share on or after 22^nd August 2007. The foreign exchange rate for conversion is fixed at GBP1.00 : US$2.05.

Maturity of the notes is 5 years from the date of the Initial Issue (26^th July 2007) and the coupon rate is 10.50% per annum net, payable semi annually. The loan notes are secured by share pledges over subsidiaries and debentures (fixed and floating charges) and guarantees from subsidiaries. On or after the 3^rd anniversary of the Initial Issue, the Company has the right to redeem the loan notes at a redemption price as well as the right to require the holder(s) of the loan notes to convert the loan notes into new ordinary shares in the capital of the Company in the event that the Company’s share price is above the conversion price at that time by a certain level.

The net proceeds received from the issue of the loan notes have been split between the liability and the equity portions, representing the fair value of the embedded option to convert the liability into equity of the Group, as follows:

	2008	2007
	£	£

Proceeds of issue of convertible loan notes	9,357,871	-
Foreign exchange difference	180,948	-
Amortisation of transaction costs	101,681
Equity portion	(108,587)	-


Liability portion	9,531,913	-

The carrying value of the liability component of the convertible loan notes approximated its fair value at 30^th June 2008.

Hire purchase agreements are subject to fixed interest rates ranging from 2.45% to 4.65% (2007 : 2.45% to 4.65%) per annum.

Borrowings

	Effective interest rate per annum	Within one year	Within one – two years	Within two – five years	Total
Group	%	£	£	£	£

At 30^th June 2008

Convertible loan notes	10.50	-	-	9,531,913	9,531,913
Preference shares	6.00	-	-	850,000	850,000
Hire purchase obligations	3.27	13,037	13,030	25,836	51,903

		13,037	13,030	10,407,749	10,433,816

At 30^th June 2007 (as restated)

Floating rate bank loan	8.36	1,202,142	469,898	188,314	1,860,354
Preference shares	6.00	-	-	850,000	850,000
Hire purchase obligations	3.50	13,704	12,272	36,587	62,563

		1,215,846	482,170	1,074,901	2,772,917

Hire purchase obligations

Group	2008	2007
	£	£
Repayable within one year	13,618	16,236
Repayable between one and five years	48,517	58,491


	62,135	74,727

Finance charges and interest allocated to future accounting periods	(10,232)	(12,164)


	51,903	62,563
Included in liabilities falling due within one year	(13,037)	(13,704)


Included in liabilities falling due more than one year	38,866	48,859

12. Share Capital

Company	2008	2007
	£	£
Authorised
Unlimited ordinary shares of £Nil par value each	-	-


	-	-

Allotted, called up and fully paid
51,230,978 ordinary shares of £Nil par value each	-	-
2,560,000 preference shares of £Nil par value each	-	-


	-	-

The authorised share capital of the Company at 30^th June 2008 is an unlimited number of shares of no par value designated as Ordinary Shares and an unlimited number of shares of no par value designated as Preference Shares.

The Company has one class of ordinary shares which carry no right to fixed income. 45,278,596 ordinary shares were issued up to 30th June 2007. An additional 5,952,382 shares were issued on 30^th May 2008 at 42p per share. The net proceeds of the share issue (after deducting issue costs) was £2,362,047. 2,560,000 redeemable, convertible 6% Preference Shares were issued at £0.50 per share on 27^th May 2005.

The Preference Shares carry no right to vote save in certain limited circumstances including where the Company proposes to reduce its capital, wind itself up or dispose of the whole of its property and business. Payment of dividends is subject to Jersey Companies Law, the availability of distributable profits and the discretion of the Board. The Preference Shares may be converted into Ordinary Shares at the option of the holder at a rate of conversion determined by application of a formula that could result in every 4 Preference Shares being converted into 5 Ordinary Shares. The Preference Shares are redeemable at the option of the Company either in cash or through the issue of Ordinary Shares to the Preference Share holder based on a rate determined by application of a formula that could result in the issue of 5 Ordinary Shares for every 4 Preference Shares.

A prior period adjustment has arisen in respect of an error relating to the classification of the company's preference shares' debt portion at 30^th June 2007, amounting to £850,000. In accordance with IAS 32 (Financial instruments: presentation) the debt portion of the preference shares in issue at 30^th June 2006 should have been classified as a liability in the financial statements. The impact of the adjustment to the prior periods has been to reduce state capital account by £850,000 with a corresponding increase to long-term borrowings at 30^th June 2007. There was no impact on accumulated losses at 1^st July 2006 or on the loss for the year ended 30^th June 2007.

Warrants

On 3^rd November 2005, the Company issued 1,270,000 new Ordinary Shares at £0.50. The subscribers of these shares have been allotted free, one unquoted warrant exercisable at 65p per share by 31^st December 2008 for each share subscribed. At 30^th June 2008, these warrants had not been exercised.

Mining Rights Agreement

On 17^th June 2005, the Company entered into a Mining Rights Agreement, which provides for the issue by the Company of 1,356,780 Ordinary Shares to Akay Holdings Sdn. Bhd. in consideration for the procurement by Akay Holdings Sdn. Bhd. of certain mining rights. On 11^th December 2007, the Company entered into an agreement with Akay Holdings Sdn Bhd to vary the terms of the Mining Rights Agreement whereby the obligations under the agreement shall now be paid in cash (£678,390) no later than 30 November 2008 and that no interest in the company shall be payable to Akay Holdings Sdn Bhd in respect of this sum. RM1 million (£151,355) was paid on 31^st January 2008.

13. Segmental Information

Currently all revenues, losses before tax and the carrying value of assets and liabilities arise from the production and sale of gold doré bars, construction of the Carbon-In-Leach plant and gold exploration activity within Malaysia. During the financial year, there was no gold production, hence there was no sale.

14. Loss from Operations

Loss from operations for the year is arrived at after charging / (crediting) the following:

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Audit fees	49,997	35,933	43,000	29,500
Depreciation of property, plant and equipment	41,099	33,396	152	153
Amortisation of put option	-	485,210	-	485,210
Directors’ emoluments	320,138	290,391	263,778	263,417
Rental of premises	46,159	40,156	-	-
Rental of property, plant and equipment	9,157	3,618	-	-
(Gain) / loss on foreign exchange	(367,001)	83,646	(93,305)	45

15. Employees

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Wages and salaries	449,880	464,716	291,837	288,417
Social security costs	865	1,802	-	-
Other pension costs	10,071	13,536	-	-


	460,816	480,054	291,837	288,417

The average monthly number of employees during the year was as follows:-

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Administration	18	17	3	3
Other	21	27	-	-


	39	44	3	3

16 Finance costs

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Bank loan interest	58,594	151,718	-	-
Other financial charges	3,091	3,044	1,862	1,875
Interest on convertible loan notes	303,648	-	303,648	-


	365,333	154,762	305,510	1,875

17. Income tax expense

Malaysian Corporation Tax is provided on taxable profits at the appropriate rate. The Company has exempt company status for Jersey Income tax purposes and an exempt company tax at the fixed rate of £600 per annum is payable. As no relationship exists between the tax and the level of the company’s activities, the tax is included in administrative expenses.

Tax reconciliation :

Group

	2008		2007
	£	£

Loss before tax	(1,451,095)	(2,225,295)

Income tax using Malaysian tax rate	(377,285)	(600,830)
Non-deductible expenses	360,811	424,512
Effect of deferred tax assets not recognised	16,395	168,858
Effect of lower tax rate for Malaysian Companies with share capital below RM2.5 million	79	7,460



	-	-

18. Deferred taxation

No deferred tax asset has been recognised in respect of the following items:

Group	2008	2007
	£	£

Taxable temporary differences	(874,017)	(250,022)
Unabsorbed capital allowance	966,214	984,584
Unutilised tax losses	1,741,112	1,515,519


	1,833,309	2,250,081

One of the company’s subsidiaries, RAGM has received a confirmation from the Malaysian Industrial Development Authority, the government’s principal agency for the promotion and coordination of industrial development in Malaysia, that RAGM’s Raub Tailings Project is entitled to “Pioneer Status”. Under the Pioneer Status scheme, RAGM will be entitled to 85% tax exemption on its statutory income from the project for a period of 5 years commencing on the day that production reaches 30% of its planned capacity. The unutilised tax losses do not expire under the Malaysian tax legislation but cannot be offset against taxable profits in this period. As a result of uncertainty of recoverability of these losses, a deferred tax asset has not been recognised. If there is a substantial change in shareholders (more than 50%) however, the unutilised tax losses will not be available to the Company.

The company has tax exempt status for Jersey Income tax purposes.

19. Basic loss per share

The basic loss per share for the year is 3.17p (2007 : 4.92p). The calculation of the basic loss per share is based on the loss for the year of £1,451,095 (2007 : £2,225,295). The weighted average number of shares in issue during the year was 45,766,496 (2007 : 45,278,596 shares). The redeemable preference shares and the warrants attached to the 1,270,000 shares issued in November 2005 are non-dilutive. The rights of preference share holders on conversion are set out in Note 12.

20. Capital commitments

Group	2008	2007
	£	£

Authorised and contracted for	1,458,980	57,828
Authorised but not contracted for	921,461	-

The above relates to a commitment for the construction of the Carbon-in-Leach Plant (CIL). In 2007, the commitment relates to an amount payable upon approval for the extension of a mining certificate on a piece of land (MC511) for a period of not less than 10 years and upon completion of the transfer of ownership. The transfer was completed on 13^th July 2007.

21. Ultimate Controlling Party

The Company is controlled by Dato’ Sri Andrew Tai Yeow Kam, a director.

22. Related party transactions

As a result of Dato’ Sri Andrew Tai Yeow Kam’s 99.9% interest in Akay Holdings Sdn. Bhd. and 70% interest in Akay Venture Sdn. Bhd and the substantial shareholding of Akay Holdings Sdn. Bhd. and Akay Venture Sdn. Bhd. in the Company and Dato’ Mohamed Moiz Bin JM Ali Moiz’s substantial shareholding in the Company, the following are considered related party transactions:

(a) On 12^th July 2007, RAGM was granted by Akay Holdings Sdn. Bhd. a registered permit to undertake mining activities on the 1669 Mining Lease for a period of one year expiring on 30^th July 2008. Provided that RAGM does not breach the terms of the permit, Akay Holdings Sdn. Bhd. will grant an annual extension of the permit until expiry of the 1669 Mining Lease on 31^st December 2017. The Group pay Akay Holdings Sdn. Bhd. £1,536 annually under this agreement to permit the Group to carry out gold mining activity at Raub, Pahang.

(b) On 17^th June 2005, the Company entered into the Mining Rights Agreement with Akay Holdings Sdn. Bhd., pursuant to which the company will issue 1,356,780 ordinary shares

at £0.50 per share to Akay Holdings Sdn. Bhd. for procuring a permit for the company to undertake prospecting and mining activities on the Raub Mining Development Corporation Sdn. Bhd. (“RMDC”) land. On 11^th December 2007, the Company entered into an agreement with Akay Holdings Sdn Bhd to vary the terms of the Mining Rights Agreement whereby the obligations under the agreement shall now be paid in cash (£678,390) no later than 30 November 2008 and that no interest shall be payable to Akay Holdings Sdn Bhd in respect of this sum. RM1 million (£151,355) was paid on 31^st January 2008.

23. Financial risk management

The Group’s activities expose it to a variety of financial risks, including the effects of changes in commodity prices, exchange rates, interest rates, credit and liquidity risks. The Board reviews and agrees policies for managing each of these risks. Other than the use of the put options when appropriate in relation to gold price risk, the Group does not currently have a policy of using financial derivatives to mitigate these risks. The following information is presented in order to assist users of the financial statements in assessing the extent of risk related to financial instruments:

	2008	2007
	£	£
Financial assets
Cash and bank balances	2,021,413	490,254
Fixed deposit	24,572	616,013
Other receivables	1,908,716	161,598

	3,954,701	1,267,865

Financial liabilities
Trade and other payables	954,472	281,575
Hire purchase creditors	51,903	62,563
Other long-term liabilities	10,381,913	2,710,354

	11,388,288	3,054,492

Commodity price risk

The Group is subject to commodity price risk. Gold is sold at its spot rate. As at the financial year end, the spot price of gold was USD 930.25 per ounce. The gold price on 21 November 2008 was US$ 801.60 per ounce. The Group seeks to manage its exposure to commodity price risk through the use of put options.

Credit risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. At the balance sheet date, the areas of significant concentration of credit risk include cash and cash equivalents and a balance within trade and other receivables. The carrying amount of trade and other receivables, subsidiary companies and cash and cash equivalents represent the Group’s maximum exposure to credit risk.

Interest rate risk

The Group is exposed to interest rate risk through the holding of cash and cash equivalents, and borrowings. This exposure is limited, as all of the Group’s borrowings have fixed interest rates attached, as do the majority of cash and cash equivalents held by the Group. Where variable interest rates are attached to cash and cash equivalents, the maturity of these instruments is short-term.

The group’s exposure to interest rate risk is disclosed in note 11.

If interest rates had been 3% higher/lower and all other variables were held constant, the impact would be as follows:

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Increase/(decrease) in loss	(20,476)	19,275	(40,834)	(36,783)

In 2008, sensitivity on the group is negative as the group has fully repaid it floating rate term loan.

The Group finances its operations via convertible loan notes bearing an interest rate of 10.5% per annum. Hire purchase arrangements are subject to fixed interest rates ranging from 2.45% to 4.65% per annum. The Group has not entered into interest rate swap, cap and collar agreements to mitigate interest rate risk.

During the financial year, the Group fully repaid all its bank loans.

On 26^th July 2007, the Company entered into an agreement with Amstel Securities N.V. (‘Amstel’) pursuant to which Amstel placed a total of US$20 million of 10.5% convertible loan notes (the ’Notes’) on behalf of the Company.

Liquidity risk

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. At the balance sheet date the Group’s short term financial liabilities were as follows:

	Group		Company
	2008	2007	2008	2007
	£	£	£	£

Other short term financial liabilities	712,641	281,575	673,487	35,784
Hire purchase obligations	13,037	13,704	-	-
Trade payables	241,831	-	-	-


	967,509	295,279	673,487	35,784

During the recent uncertainty and shortage of funds in the financial markets, the Group has nonetheless raised both debt and equity funding when required.

Fair value

The carrying amounts of financial instruments reported in the financial statements approximate their fair values.

Exchange rate risk

The Group undertakes certain transactions denominated in foreign currencies, namely Malaysian Ringgit and US Dollars and is therefore exposed to exchange rate risk associated with fluctuation in the relative values of these currencies.

Exchange rate risks are mitigated to the extent considered necessary by the Board of Directors, through holding the relevant currencies. At present, the Group does not undertake any foreign currency transaction hedging but it may do so in the future for material transactions.

The carrying amounts of the Group’s currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

	Assets		Liabilities
	2008	2007	2008	2007
	£	£	£	£

GB Pounds Sterling	1,486,740	178,408	1,523,487	885,784
US Dollars	24,463	-	9,611,894	39,699
Malaysian Ringgit	2,443,498	1,089,457	252,907	2,129,009

Exchange rate risk (Continued)

The following table illustrates the Group’s sensitivity to the fluctuation of the major currencies in which it transacts. A 10% percentage movement has been applied to each currency in the table below, representing management’s assessment of a reasonably possible change in foreign currency rates.

	US Dollar currency impact		Malaysian Ringgit currency impact
	2008	2007	2008	2007
	£	£	£	£

Profit or (loss)	(958,743)	(3,970)	219,059	(103,955)

Sensitivity to foreign currency exposure is higher in 2008 as the Group held more financial assets and financial liabilities.

The Group does not enter into forward exchange contracts to hedge its foreign currency exposure. However, the Board keeps this policy under review.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders subject to maintaining sufficient financial flexibility to undertake its investment plans.

The Group monitors capital on the basis of the debt to adjusted capital ratio.

Adjusted capital of the Group is summarised as follows:

	2008	2007
	£	£

Cash and cash equivalent	(2,021,413)	(490,254)
Borrowings	10,433,816	2,772,917
Reserves and retained earnings	19,622,637	18,733,569
	28,035,040	21,016,232

Gearing ratio (Debt / Adjusted capital)	37.2%	13.2%

24. Recent Accounting Pronouncements

At 30^th June 2008, the following Standards and Interpretations were in issue but not yet effective:

IFRS 2	Share based payments (effective 1^st January 2009);
IFRS 8	Operating segments (effective 1^st January 2009);
Amendments to IAS 1	Presentation of financial statements (effective 1^st January 2009);
Amendments to IFRS 3	Business combinations (effective 1^st July 2009);
Amendments to IAS 23	Borrowing costs (effective 1^st January 2009);
Amend ments to IAS 27	Consolidated and Separate Financial Statements (effective 1^st January 2009);
Amendments to IAS 32	Financial instruments: Presentation (effective 1^st July 2009);
IFRIC 13	Customer loyalty programmes (effective 1^st July 2008);
IFRIC 14	The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The 2007 IASB improvements project was finalised in May 2008. The 2007 changes impacted twenty standards. Improvement projects will now be an annual occurrence. The 2008 improvements proposals have been issued and are expected to be finalised later in 2008 or update early 2009. Of these changes, it is likely that the amendments to IAS 36 will impact upon the Group’s approach to impairment testing, when applying a discounted cash flow approach for impairment. This change is effective for accounting periods beginning on or after 1^st January 2009.

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no impact on the results and financial position presented in this financial information other than substantial changes to the disclosures required in the financial information, as well as changes in the presentation of performance introduced by the revised IAS 1 which is effective for accounting periods beginning on 1^st January 2009.

25. Post balance sheet events

(a) In October 2008 the Company raised £1,000,000 via a private placement of 4,000,000 ordinary shares at 25p per share.

(b) RAGM accepted two permits to mine granted by Akay Holdings Sdn. Bhd. to undertake all mining activities on a piece of mining land at Mukim Gali, District of Raub, State of Pahang Darul Makmur. These are described in the following

(i) Mining Certificate No. PL 533 at Mukim Gali, District of Raub, State of Pahang Darul Makmur pursuant to the permit to mine agreement dated 2^nd July 2008.

(ii) Mining land at Mukim Gali, District of Raub, State of Pahang Darul Makmur described as Pajakan Lombong No. 1669, Lot 17478 PA 79770 pursuant to the permit to mine agreement dated11^th July 2008 respectively. As per the terms of the agreement, RM10,000 was paid to Akay Holdings Sdn Bhd.

(c) In September 2008 RAGM completed the building of its new 1.1 million tonnes per annum Carbon-In-Leach Plant and commissioning has begun at its Raub gold project in Pahang, Malaysia.

26. Contingent Liability

Application for Judicial Review

As announced on AIM on 25^th March 2008, an application was filed by four individuals (the “Applicants”) claiming to act in their own personal capacity and on behalf of the residents of Kampung Bukit Koman, Raub, Pahang Darul Makmur, Malaysia for leave for a judicial review against decisions made by the Director General of the Department of Environment in Malaysia (“DOE”) concerning the approval of the preliminary Environmental Impact Assessment granted to Raub Australian Gold Mining Sdn Bhd, (“RAGM”) on 13^th January 1997. The DOE is the first and principal respondent to the application whilst RAGM has been named as the second respondent.

The Applicants have made an application to the court to seek an extension of time to proceed with their application for a judicial review of the decision of the DOE made on 13^th January 1997 as their application is currently time-barred, as under the provisions of the Malaysian Rules of the High Court, an application for judicial review shall be made promptly and in any event within forty days from the date when the grounds for the application first arose or when the decision was first communicated to the applicant.

This issue of whether an extension of time ought to be granted to the Applicant goes very much to jurisdiction. At present, this matter is at a preliminary stage in the conduct of proceedings and has yet to reach the merits stage. In the event that the Applicants’ obtain an extension of time, the Applicants will still have to satisfy the Court that leave for judicial review ought to be granted. If leave is granted, then parties will move to the merits stage for a determination of the prayers set out in their application.

No provision has been made in the accounts for any liability which may arise as a result of the judicial review.

27. Comparatives

Certain comparatives have been amended to conform with the presentation in the current
year.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR BUBDBCSDGGII

Investegate takes no responsibility for the accuracy of the information within the site.

The announcements are supplied by the denoted source. Queries about the content of an announcement should be directed to the source. Investegate reserves the right to publish a filtered set of announcements. NAV, EMM/EPT, Rule 8 and FRN Variable Rate Fix announcements are filitered from this site.