29th Jun 2007 10:00
Condor Resources PLC29 June 2007 29th June, 2007 Condor Resources plc (''Condor'' or ''the Company'') Audited Results for the Year Ended 31 December 2006 Condor is pleased to announce the audited financial results for the year ended31 December 2006. HIGHLIGHTS • Successful listing of the Company on the Alternative Investment Market (AIM) of the London Stock Exchange on 31st May 2006 - £4.85m raised. • Commissioning of the Nicaraguan and London offices. • Awarded the El Gigante licence in El Salvador, further consolidating the Pescadito Project area which covers several significant historical workings. • Commenced diamond drilling at the Loma del Caballo Prospect, El Salvador. • Secured the Kuikuinita and Columbus Projects in Nicaragua for an initial cost of US$300,000. Indications of porphyry copper-gold style mineralisation are present. A further US$200,000 to be paid after full due diligence completed. • Global Resources up 32% from those quoted at IPO through reporting a maiden JORC mineral resource of 112,600 ounces of gold and 97,300 ounces of silver at La Calera, El Salvador. A further 193,000 ounces of gold and 155,000 ounces of silver are contained within the block model over an initial strike length of some 700 metres. • Completed 1,500 metres of trenching at the Pescadito Project, El Salvador where an extension program is underway at the Santo Thomas - Protectora - Carolina - Divisidero structure. The directors believe that trench results reported at Corozal include 14 metres @ 1.01g/t gold and 19.9g/t silver; 2 metres @ 2.19g/t gold and 50.2g/t silver; 2 metres @ 2.59g/t gold and 12.5g/ t silver and 1 metre @ 8.61g/t gold and 491.1g/t silver. • Completion of technical reviews of four licences within Nicaragua. Results of these reviews of the Chachagua, Cerro de Oro, Guapinol and El Gallo licences resulted in the the licences being returned to the vendors, Chorti Holdings with no further work commitments to Condor. POST PERIOD HIGHLIGHTS • Payment made of a further US$200,000 to secure the Kuikuinita and Columbus projects after completion of a favourable technical due diligence process. • Significant initial trench results reported from the Company's 100% owned El Cacao Project in Nicaragua showing excellent width and grade and continuity of mineralization over at least 400 metres strike length on a virgin epithermal vein discovery. Further trenching is in progress on a potential 2,000 metres of mineralised strike. • Released significant trenching results on its San Albino Project in northern Nicaragua, close to the historical high grade San Albino Mine, with high grade trenching results including 18 metres at 6.77g/t gold. Mineralisation remains open along strike in both directions and the width remains unconstrained at the thickest intersection in the south-east. • Two additional parallel mineralised structures have been identified at the same prospect. Both parallel systems are open along strike and returned the following assay results: 3 metres at 2.94g/t gold and 3 metres @ 20.11g/t gold respectively. CHAIRMAN'S STATEMENTS Dear Shareholder, I am pleased to present Condor Resources PLC's annual report for the 12 monthfinancial period to the 31st December 2006. It has been a busy year for yourCompany. The main corporate event was the listing of your Company on the 31stMay 2006 on the Alternative Investment Market of the London Stock Exchange. OnAdmission to AIM the Company raised £4.85 million. I joined the Board asChairman immediately prior to listing. Condor is an exploration company, focused on the discovery of gold, silver andbase metals in Central America. The Company currently has 5 explorationslicences in El Salvador and 5 explorations licences in Nicaragua with anadditional two licences under application. Condor has been operating in CentralAmerican countries since June 2003. Condor has a JORC Compliant InferredResource of 467,104 ounces of gold and 18.4 million ounces of silver. Condor's strategy is to secure 100% ownership of licences in under exploredmineral rich areas, which have a history of mining. Condor evaluates eachproject via a process of rock chip sampling, trenching and mapping, at whichstage a decision is made whether to discard the project or embark on a drillcampaign. To this extent, Condor has discarded five concessions during theperiod and added a further five. The objective of this strategy is to focus on alead project in each country and drill up resources and reserves to a JORCstandard, which are commercial in quantity. Condor's stated objective is toprove a resource of 1 to 2 million ounces of gold and 30 to 50 million ounces ofsilver within approximately 2 years of Admission to AIM. In order to execute the strategy your executive management has assembled asmall, highly focused team of geologists and mining executives with provenexploration, project development and business analysis expertise. Condor has ateam of 20 personnel in Central America, including 4 expatriate and 6 nationalgeologists and associated senior management personnel. The year has not beenwithout challenges. Initially there was difficulty securing a suitable drillingrig and technical staff, but these issues have been overcome. More recently, inEl Salvador the Ministry of the Environment (MARN) has delayed issuingenvironmental permits to drill. This has delayed drilling on a key project.However, Condor is still drilling on other licences where an environmentalpermit to drill has been granted. The Board is carefully monitoring thesituation and is seeking clarification from MARN and will inform shareholders ofdevelopments in due course. Looking to the future, Condor has produced very encouraging results from severalof its concessions in El Salvador and Nicaragua and the Board is confident thatone of these concessions can be developed into a commercial deposit of at least1 million ounces of gold. I would like to thank shareholders for their confidence and support during theyear. My thanks also go to my fellow directors and to a loyal, motivated andhard working team who are equally excited by the discoveries they are making inCentral America. Mark Child Non-executive Chairman MANAGING DIRECTORS'S REVIEW Dear Shareholder, In this, my first Annual Report as Chief Executive Officer of Condor ResourcesPLC, I would like, at the outset, to thank shareholders for their confidence andsupport to my team and me, shown throughout a more difficult than expected year.Your support has ensured that Condor is well funded and strategically positionedto take advantage of the under developed opportunities in the resources sectorwithin Central America at this very positive time in the commodities cycle. Condor has assembled a small, highly focused team with proven exploration,project development and business analysis and evaluation expertise, ensuringthat the Company's growth vision will not be impeded by the skills shortagebeing experienced across the industry. In addition, Condor's board includes abalanced spread of experienced and accomplished financial, mining executives andgeologists with the capability of delivering on our focused long-term growthstrategy in the minerals sector. At 31st December 2006, Condor had £3.4 million in cash reserves and a strong,long-term investor and shareholder base. A comprehensive review of the Company'sexisting projects in El Salvador and Nicaragua is continually being undertakento evaluate the most appropriate projects to enable Condor to achieve its statedobjectives and to maximize long term value for its shareholders from theseassets. At the same time we are assessing a broad range of opportunitiespredominantly in gold and base metals in Central America, with a focus onsecuring 100% ownership of under explored areas or advanced projects withpossible production. Our first new projects are through an exploration farm-in and joint-venture withChorti Holdings of Nicaragua on the Columbus and Kuikuinita Concessions in theRAAN of north eastern Nicaragua, which was announced in November 2006 last year.This farm-in and joint venture represents a very attractive gold and base metalsexploration opportunity of considerable size for Condor within a region that isone of Nicaragua's major metal producing areas. An initial field program of gridestablishment, mapping and trenching is underway and is to be followed by amaiden drilling program to test the depth and extent of the mineralizationoutlined already. Further details of this are contained within the Review ofOperations section of this Annual Report. Although Condor's primary aim is to meet its stated resource targets, theassessment of more advanced or production opportunities will continue to bediligently analysed on a systematic basis. We have a clear vision to build Condor into a substantial new resource companywith a strong focus on securing and pursuing new exploration and developmentprojects in Central America with a view to moving to production status as soonas possible. I hope that shareholders will continue to share this vision with usas we move forward into what promises to be an exciting stage of development forCondor. My thanks go to my fellow directors for their support and as well to the loyal,motivated and hardworking team, most of whom have worked successfully buildingother resource companies in the past. This highly supportive and experiencedteam will undoubtedly underpin the future success of Condor Resources PLC. Shareholders requiring additional information on the Company's activities areinvited to contact me at any time during business hours or to access theCompany's web site at www.condorresourcesplc.com. Nigel Ferguson Managing Director OPERATIONS REPORT During the year, exploration proceeded on a number of fronts with the main focusbeing the more advanced resource opportunities in El Salvador. Exploration inNicaragua continued whilst two new, Condor managed gold exploration farm-in andjoint ventures commenced at Columbus and Kuikuinita in the north eastern RAANregion of Nicaragua. Summary of Operations - El Salvador Project Licence Ownership Licence Prospect Exploration Stage JORC Area (km2) ResourceLa Calera La Calera 100% 42.00 La Calera Resource Yes Trenching and awaiting drilling, awaiting environmental permits El Pescadito El 100% 50.00 Loma del Resource Yes Pescadito Caballo Virginia Trenching and No Agua drilling -Caliente Corazal Trenching No El Tigre Trenching and No drilling Santo Thomas Drilled No Protectora Awaiting drilling No Pepe Drilled No Carolina 100% 40.50 Divisidero Resource, Yes Awaiting drilling El Gigante 100% 42.50 El Gigante Mapping, No trenching El Potosi El Potosi Earning 48.00 El Potosi Drilled No 100% El Capulin Drilled No Summary of Operations - Nicaragua Project Licence Ownership Licence Exploration Stage JORC Area (km2) Resource Segovia San Albino Earning 80% 87.00 Trenching and drill ready. No Awaiting permits Potrerillos 100% 12.00 Pending award No El Golfo 100% 20.00 Pending award No Matagalpa Cacao 100% 11.90 Drill ready awaiting drill No rig. Las 100% 62.40 Pending first phase No Morritas exploration Siuna Kuikuinita Earning 80% 136.00 Trenching, drill planning No underway Columbus Earning 80% 140.00 Trenching, drill planning No underway The Company released on the 29th November 2006, its unaudited Interim Resultsfor the ten months ended 31st August 2006 and instigated the process ofupgrading its accounting software to handle three operational areas. Condors' total global resources to Inferred JORC compliance are some 476,104ounces of gold and 18.4 million ounces of silver. Central American Mineral Resources - Condor Resources plc Gross Gold Gross SilverProspect JORC Tonnes Grade (g Contained Tonnes Grade (g/ Contained /t) Metal (oz) t) Metal (oz) Category Loma del Inferred 2,517,300 1.44 116,500 2,517,300 39.00 3,200,000CaballoDivisidero Inferred 2,748,200 2.70 238,000 2,748,200 171.00 15,100,000La Calera Inferred 1,692,000 2.07 112,604 1,692,000 1.79 97,373TOTAL 6,957,500 2.09 467,104 6,957,500 82.00 18,397,373 EL SALVADOR Condor, through its wholly owned El Salvadoran subsidiary, Minerales Morazan SAde CV, has been exploring for epithermal gold silver systems in MorazanFormation of El Salvador. The area of interest lies within the Nicaraguan Graben that hosts several majorgold and silver deposits along its 750 kilometre length including El Dorado, SanSebastian, El Limon and La Libertad. It is one of the areas best endowed goldprovinces within the region yet, it remains relatively under explored. Exploration during the year focused on the Pescadito and La Calera projects. Atthe Pescadito project, mapping, trenching, air photo interpretation and bothreverse circulation and diamond core drilling has been completed to investigatebroad zones of intense surface alteration with associated historical workings. Drilling has confirmed that the Pescadito project's Divisadero structurecomprises broad mineralized stockwork breccia zones with interstitial high gradequartz veins. Alteration in the form of silica flooding and pyritisation isevident over lateral widths of up to 60 metres in places. Gold and silverresults indicate at least three extensive mineralised zones of greater than 1g/tgold and up to 1200g/t silver within the 3 kilometre structure coincidental tohistorical workings. At La Calera, a maiden JORC compliant mineral resource of some 112,600 ounces ofgold and 97,300 ounces of silver was calculated and reported by the Company on20th December 2006. Modelling of the deposit by Independent Geologist andCompetent Person Ravensgate, also indicates a further 193,000 ounces of gold and155,000 ounces of silver are contained within this block model covering a strikelength of some 700 metres. Work continues on the project with intensive trenching and mapping definingseveral new mineralised structures over a broader zone of definedmineralization. Aerial Photography has been completed for all licences in El Salvador whichallows regional targeting and topographical control within the project areas. Project Reviews La Calera Project (Condor 100% ownership) Summary of Mineral Resources - La Calera Prospect Mineral Gross Gold Gross SilverResources Grade Contained Grade Contained Tonnes (g/t) Metal (oz) Tonnes (g/t) Metal (oz)Total 1,692,000 2.07 112,604 1,692,000 1.79 97,373Inferred Up to the date 13th December 2006, the company continued with its aggressivetrenching program utilising a local labour force of up to 100 at times. Severalnew mineralised zones were discovered and will be further tested by drilling.Our knowledge of the mineralised system has been greatly enhanced through thistrenching program allowing better definition of drilling targets. Multiplemineral stockwork and vein systems have now been outlined and warrant furtherdrill testing. Highlights from the La Calera trenching program to year end include 5 metres @5.51g/t gold; 13 metres @ 8.57g/t gold including 6 metres @ 17.21g/t gold; 5metres @ 4.29g/t gold; 6 metres @ 3.06g/t gold; 11 metres @ 3.15m gold; 7 metres@ 2.51g/t gold and 9 metres @ 2.26g/t gold. Several of these trenches containopen ended mineralisation and Condor has progressed to a further trenchingprogram that will infill and extend the known mineralisation. The culmination of the trenching program was the delivery of a maiden resourceto the market on the 20th December 2006 of some 112,000 ounces of gold and97,000 ounces of silver. This in itself was a significant increase in thecompany's Central American resources - up 32% from those quoted at IPO. Independent Geologist Ravensgate's modelling of the deposit also indicates thatusing similar parameters for resource calculation, a further 193,000 ounces ofgold and 155,000 of silver are contained within the prospect that do not howevermeet the strict criteria for JORC reporting and compliance. Pescadito Project (Condor 100% ownership) Global Mineral Resources - Condor Resources plc Gross Gold Gross SilverProspect JORC Tonnes Grade Contained Tonnes Grade (g/ Contained Metal (g/t) Metal (oz) t) (oz) Category Loma del Inferred 2,517,300 1.44 116,500 2,517,300 39.00 3,200,000CaballoDivisidero Inferred 2,748,200 2.70 238,000 2,748,200 171.00 15,100,000 Trenching has formed an integral part the Company's exploration tools and workprogressed during the period at the Pescadito Project produced some significantand interesting intercepts. These included trench results at Corozal including14 metres @ 1.01g/t gold and 19.9g/t silver; 2 metres @ 2.19g/t gold and 50.2g/tsilver; 2 metres @ 2.59g/t gold and 12.5g/t silver and 1 metre @ 8.61g/t goldand 491.1g/t silver. The mineralisation and alteration encountered within thistrenching gave excellent confirmation of Condor's target model of broad stockwork zones of gold mineralisation with inter-fingering high grade quartz veins.This suggests that open pit mining may be possible, with subsequent undergroundmining of higher grade mineralised zones. Additionally, an initial 1,500m trenching programme was completed and anextension program is still underway at the Santo Thomas - Protectora - Carolina- Divisidero structure, within the Pescadito Project. Condor was also awarded the El Gigante licence in El Salvador which forms thethird licence within the Pescadito project. The El Gigante licence, contains anumber of historical workings and exhibits a geological setting similar to thatof the San Sebastian Gold Mine area to the south east, which is recorded as ElSalvadors' most prolific and richest gold producer. SHAPE /* MERGEFORMAT Condor was also awarded the El Gigante licence in ElSalvador which forms the third licence within the Pescadito project. The ElGigante licence, contains a number of historical workings and exhibits ageological setting similar to that of the San Sebastian Gold Mine area to thesouth east, which is recorded as El Salvadors' most prolific and richest goldproducer. Historical underground workings from circa 1935, indicate the average grade ofunderground sampling at El Gigante was 5.33g/t gold (max. 37.32g/t gold) and228g/t silver (max 1,023g/t silver). A 6 diamond drill hole program wascompleted in 2004 by Intrepid Minerals Corp. of Canada with significantintercepts including 3.35m @ 15.61g/t gold and 1393g/t silver from 29.9m depth;0.2m @ 44.86g/t gold and 2516g/t silver from 24.65m depth and 9.65m @ 4.00g/tgold and 231g/t silver from 48.45m depth. These drill results show at least two parallel structures that have never hadfollow up work completed on them. Condor completed only reconnaissance rock chipsampling on the licence which confirms gold mineralisation on a structure 1,000mlong and 2m to 5m wide. The limited sampling program includes values up to 4.83g/t gold; with channel chip results of some 5m @ 2.51g/t gold and 4m @ 1.33g/tgold. The structure remains open in all directions. Further significant results were reported from trenching at the Loma del CaballoProspect in line with those disclosed in the Admission Document, and confirmingthe width and nature of mineralization in the resource area. These included 8m @0.57g/t gold and 46.94g/t silver; 7m @ 1.88g/t gold and 17.61g/t silver; 15m @3.24g/t gold and 41.96g/t silver including 2m @ 17.53g/t gold and 229.25g/tsilver. El Potosi Project (Condor earning 100%) Encouraging assay results were received from exploration work at the PotosiProject in El Salvador where highlights included 5.0 metres @ 9.23 g/t goldincluding 1m @ 30.93g/t gold, and 5.35 metres @ 22.15g/t gold including 0.38m @98.6g/t gold and 41.1g/t silver from diamond and reverse circulation drillingcompleted on the main project area. Further drilling was undertaken and results indicate that similar mineralisedzones are evident within the Potosi workings zones at depths of plus 120 metres.The Company is assessing further work and may complete further drilling on theproject should it be warranted. NICARAGUA Condor has progressed with exploration of the licences within Nicaragua with theaim of getting all prospects to the drilling stage within a 12 to 18 monthperiod from listing. The Nicaraguan licences are presently secondary to the moreadvanced El Salvador package and will require further preparatory work to ensurethat exploration funds are spent in a diligent manner testing structures withsignificant potential to add value to the company. General field work including operational setup of offices and field camps wasfollowed by mapping and sampling of prospective areas of the company's'licences. Trenching of most highlighted areas of gold anomalism has beenundertaken and progress has been made in defining drilling targets for late 2007early 2008. The Company secured two new exciting prospects in November of 2006; theKuikuinita and Columbus projects. These will form an integral part of thestrategy to develop and build value for shareholders as the Directors believethat they hold significant as yet untested potential. Under the terms of the agreement for these two licences Condor has made cashpayments totalling US$290,000 and must expend US$1 million on each licence overa three year term to earn an 80% interest. The Company also completed its initial review of four licences within Nicaraguathrough field verification of anomalous zones as defined by previous explorationprograms. The Company considered the results of the verification program on thefour licences, Chachagua, Cerro de Oro, Guapinol and El Gallo, to fall short ofthe criteria for further work commitments. It was therefore decided to returnthe licences to the vendors; Chorti Holdings. Project Reviews Columbus Project(Condor earning up to 80%) The Columbus Concession includes Cerro Columbus, which extends west to anotherzone of greisen alteration with associated breccia pipes with gold occurring ina quartz-specularite breccia pipe. Trench results by previous explorers include19.5 metres at 2.26g/t gold. Gold is also associated with the quartz-tourmalinebreccia pipes in oxide zones after sulphides, with results of 13.35 metres at1.43g/t gold being reported from this zone. The presence of highly anomalous molybdenum, averaging 682ppm Mo over 35.4metres in trench COL-04 and associated copper and silver mineralisation mayindicate a proximal intrusion related system consistent with the previouslyproposed theory that there are multiple intrusive phases, indicating afavourable environment for porphyry hosted mineralization. Significant results from previous diamond drilling completed by Pila Goldincludes 8.68m @ 2.52g/t gold including 1.52metres @ 6.5g/t gold, 22.3g/tsilver, 0.12% Copper and 0.2% molybdenum; 19.8metres @ 3.14g/t gold; 2.58metres@ 18.37g/t gold;22.4metes @ 1.07g/t gold including 3.05metres @ 2.46g/t gold,12.3g/t silver, 0.23% copper. Condor's objective is to discover a substantial deposit capable of underpinninga stand alone mining operation. To this end, Condor commenced its fieldoperations late in 2006 with initial work including cutting and assaying ofprevious drill core to confirm previous assay tenor, mapping on a re-establishedgrid plan and planning future work. Kuikuinita Project(Condor earning up to 80%) The Kuikuinita Project contains Tertiary aged dacitic tuffs overlaying anUltramafic sequence intruded by coeval dacite dykes. A trenching programmecarried out by Pila Gold in late 2002 demonstrated that gold mineralisation inthe Loma Los Indios area occurs either in the Dacite dykes or adjacent to themin the surrounding intruded units. Trench sampling by Pilar Gold in the San Antonio area in an oxidized andweathered Ultramafic returned 5 metres at 17.3g/t gold. The most significantgold mineralisation intercepted in the Pilar exploration program included 2.8metres at 12.85g/t gold, 0.86 metres at 16.2g/t gold and 82.6g/t silver and 1.52metres at 8.6g/t gold. Both these and Pila trenches were duplicated by Condorand the results have shown a high level confidence in the sampling process. Additionally, silver and base metal mineralisation associated with a fault zonewas intercepted in drill hole KUDH-7. Oxide mineralisation occurs in maficvolcanics adjacent to a dacite dyke suggesting a genetic association with thedyke. This intercept averaged 20.9 metres at 226g/t silver, 0.82g/t gold, 0.6%copper, 3.35% lead and 1% zinc, with a high of 774g/t silver, 2.2g/t gold,12.48% lead and 1.9% copper over 2.74 metres. Condor believes that further investigative work is required to determine theprojects full potential which the company has commenced in an infill trenchingprogram to be followed by exploration reverse circulation drilling. San Albino Project(Condor earning 80% at San Albino and has 100% of El Golfo and Potrerillos) During the year, steady progress has been made with field work focussed onreconnaissance chip sampling and follow up trenching of anomalous areas. A totalof 110 chip grab samples were taken in the course of mapping 89 kilometres oftracks and grid lines with results as high as 100g/t gold returned. Visible goldwas seen in several samples and follow up trenching commenced late in the year.A total of 336 metres of hand excavated trenches were completed and 1 metressamples submitted to the laboratory for analytical determinations. Results for the majority of trenching samples were outstanding at the end of theyear however ongoing trenching based on geological results continues. The San Albino Project has the ability to provide several high grade quartzveins within close proximity of each other with high grade gold results of up toone or two ounces per tonne. It is expected that the average grade will be wellabove 5g/t gold. Cacao and Las Morritas Projects(Condor 100% ownership) Two new licences were applied for directly to Government by Condor Resource'ssubsidiary in country, Condor SA. Full environmental clearances andinvestigations for initial exploration work were carried out simultaneously andthe licences were awarded early in 2007 post end of year. Juan Sebastian Project(Condor earning up to 80%) During the year, a total of 20km(2) of mapping was completed with a view toinvestigate the anomalous copper mineralisation within the licence area. A zoneto the southern boundary was defined as the greater area of anomalism howeverfurther investigation revealed that copper mineralisation was contained within abasaltic flow with an expected thickness of 120m. This negated easy explorationof the anomalous areas and it was decided that the licence would be returned tothe vendor. POST PERIOD HIGHLIGHTS Post period highlights include the delivery of several significant assay resultsto Company. These include the following: On the 1st March, 2007, Reverse Circulation drilling commenced at El Pescaditoin El Salvador after a substantial delay in the ability to secure a suitabledrilling rig for El Salvador. On the 11 May, 2007, significant trenching results from the Company's 100% ownedEl Cacao Project in Nicaragua were released for the initial phase of trenching.These assay results show excellent width and grade and establish a continuity ofmineralization over at least 400m strike length on a virgin epithermal veindiscovery. The Company completed 290.6m of an ongoing programme exposing gold-bearingepithermal quartz veins as well as testing for possible strike extensions andadditional parallel zones. Mineralised veins up to 3.1m wide at grades of 2.58g/t gold were reported, including a one metre wide, higher grade zone of greaterthan 10g/t gold. Selected highlights include: Trench Number Width Gold Grade CCTR0004 1.0 metre 11.54g/t CCTR0005 2.8 metres 3.06g/t CCTR0006 3.1 metres 2.58g/t CCTR0007 1.2 metres 1.17g/t CCTR0007 2.0 metres 1.19g/t CCTR0009 2.4 metres 2.18g/t These results define a highly gold anomalous area with a strike length of 400metres containing several parallel quartz veins and associated wide alterationzones that will require further follow up work, including an extensive drillingprogram. Mapping of lag and float material suggests that the Cacao vein couldextend for a further 2km to the west, partially buried beneath a thin cover ofalluvium. Further trenches are being excavated to test the western strike extentof the structure. On 18th May 2007, the Company released significant news on its San AlbinoProject in northern Nicaragua close to the historical high grade San Albino Minewhere high grade trenching results included 18 metres at 6.77g/t gold. Significant gold intercepts in four adjacent trenches approximately 50 metresapart, define a mineralised corridor greater than 200 metres long and varyingbetween 3 metres width in the northeast to over 18 metres width towards thesouth-west. Mineralisation remains open along strike in both directions and thewidth remains unconstrained at the thickest intersection in the south-east. In addition, two parallel mineralised structures have been identified in trenchSATR010 which was extended further to the south-east than the other trenches totest for such parallel mineralised structures. Both parallel systems are openalong strike and returned the following assay results from SATR010: 3 metres at2.94g/t gold and 3 metres @ 20.11g/t gold respectively. All the significant uncut intersections are summarised in the table below: Trench Number Width Gold Grade Silver Grade SATR003 12 metres 5.59g/t 23.11g/t SATR010 18 metres 6.77g/t 11.84g/t SATR010 3 metres 2.94g/t 5.40g/t SATR010 3 metres 20.11g/t 31.07g/t SATR011 16 metres 7.89g/t 10.23g/t SATR013 3 metres 4.99g/t 24.37g/t The gold mineralization is hosted by a south-east dipping shear zone ofchloritic and locally graphitic quartz-bearing schist that cuts through apackage of medium to high grade metamorphic rocks. Width and grade of the goldmineralization increases to the south-east, where both width and strike extenthave not yet been constrained. Extensions to existing trenches and further trenching to test the strike extentare planned. An initial reverse circulation program to test continuity ofmineralization at depth is also being planned for commencement after receipt ofGovernment Environmental Permits and on securing a suitable drilling rig. Thewide intersections indicated in trenching to date suggest that the San AlbinoProspect may be amenable to low cost open pit bulk mining. The Company is very excited about the recent results and prospectivity of thelicence and looks forward to continue excellent results from the field throughadditional trenching and subsequent drilling of the highly mineralisedstructures. DIRECTORS REPORT The directors present their report with the financial statements of the companyand the group for the year ended 31 December 2006. Incorporation The company was incorporated in England and Wales on 10 October 2005. Itre-registered as a public limited company on 7 April 2006 and floated on the AIMstock market on 31 May 2006. principal activity The principal activity of the group in the year under review was that ofexploration of gold and silver concessions in El Salvador and Nicaragua. review of developments and future prospects The group's financial performance for the year was in line with Directors'expectations. The group loss after taxation for the year to 31 December 2006amounted to £690,464. The record of the business during the year and an indication of likely furtherdevelopments may be found in the Chairman's statement (page 3) and the ManagingDirector's Review (page 4). DIRECTORS The directors shown below have held office during the period: N M Ferguson - appointed 24 March 2006 M L Child - appointed 24 May 2006 S Dobson - appointed 24 March 2006 - resigned 13 September 2006 K P Eckhof - appointed 24 March 2006 T L Wall - resigned 7 April 2006 Gower Nominees Limited - resigned 22 March 2006 DIRECTORS INTERESTS The directors in office during the period under review and their interests inordinary shares and unlisted options of the company at 31 December 2006 were: 31 December 2006Directors Holding Number of Number of shares optionsM L Child Direct 2,000,000 1,250,000 Indirect Nil NilN M Ferguson Direct Nil Nil Indirect 800,000 4,500,000K P Eckhof Direct Nil Nil Indirect 240,000 1,750,000 The interests of the Directors, financial advisers and staff in options tosubscribe for ordinary shares of the company were: Exercise Latest As at 1 Granted Lapsed As at 31 price (p) exercise January during the in the December date 2006 year year 2006DIRECTORSM L Child 15 30 May 2011 Nil 1,250,000 Nil 1,250,000N M Ferguson 15 30 May 2011 Nil 4,500,000 Nil 4,500,000K P Eckhof 15 30 May 2011 Nil 1,750,000 Nil 1,750,000 FINANCIAL ADVISERSNabarro Wells 15 30 May 2011 Nil 2,000,000 Nil 2,000,000 OTHERS 15 30 May 2011 Nil 2,250,000 Nil 2,250.000 Nil 11,750,000 Nil 11,750,000 SUBSTANTIAL SHAREHOLDERS Shareholders Number of Holding % ordinary sharesPershing Keen Nominees Limited 17,865,600 13.7Roy Nominees Limited 11,000,000 8.4Teawood Nominees Limited 8,840,000 6.8ISI Nominees Limited 7,100,000 5.5Chase Nominees Limited 6,000,000 4.6T. Hoare Nominees Limited 5,140,000 3,9S. Dobson 5,000,000 3.9Vidacos Nominees Limited 4,745,000 3.6HSBC Global Custody Nominee (UK) Limited 4,400,000 3.4Bear Sterns Securities Corp 4.275,000 3.3Chase Nominees Limited 4,000,000 3.1Giltspur Nominees Limited 3,917,000 3.0 FINANCIAL RISK MANAGEMENT The group's operations expose it to financial risks that include liquidity risk,interest rate and foreign exchange risk. The group does not have any debt and isnot therefore required to use derivative financial instruments to manageinterest rate costs nor is hedge accounting applied. 1. Price Risk The directors do not consider there is a price risk to the business. The grouphas no exposure to equity securities price risk as it holds no other listed orequity investment 2. Credit Risk At this early stage of the group's development, in the absence of customers, itdoes not have credit risk. 3. Liquidity Risk The group actively manages its working finance to ensure the group hassufficient funds for operations and planned expansions. 4. Interest Rate Cash Flow Risk The group does not have interest-bearing liabilities. Interest bearing assetsare only cash balances that earn interest at a floating rate. The directors do not consider there to be a material cash flow risk. 5. Foreign Exchange Risk The group principally operates in US Dollars. It does not currently consider therisk of exposure to be material. As such the directors do not currently considerit necessary to enter into forward exchange contracts. This situation ismonitored on a regular basis. Corporate Governance Corporate Policies Condor takes its health, safety, environmental and community responsibilitiesseriously, and has developed policies and systems to ensure that it explores ina safe, low impact and consultative manner, maximising the sustainability of itspresent and future operations for the benefit of all stakeholders. Health and Safety Condor takes the health and safety of its employees and contractors seriously,and strives to exceed statutory obligations and achieve best practice. To thisend, a new safety management system has been implemented for its explorationoperations. Environment Condor operates in strict adherence to local and Governmental standards withregard to environmental impact on the local community. This procedure includespre-exploration checks and post-exploration remediation programs. Community Condor is committed to working consultatively and co-operatively within thecommunities in which it operates, which includes local subsistence farmers andpastoralists and firmly believes that future mining operations should be to thebenefit of all. To this end, Condor personnel participate in cultural awarenessprograms and have forged close ties with landholders and maintain a constructivedialogue with the Department of Environment and local community representatives.Condor is also a sponsor of many community development and aid programscurrently in place including the provision of clean water through drilling waterwells, tree planting, the supply of school books and training of locals in bothtechnical and non technical skills to assist their personal development. Compliance with the Combined Code The directors recognise the value of the Combined Code on Corporate Governance,and whilst under AIM rules full compliance is not required, the directorsbelieve that the company applies the recommendations insofar as is practicableand appropriate for a public company of its size. Board of Directors The board of directors comprises one executive director and two non-executivedirectors who qualify as independent non-executive directors as defined by theCombined Code. The directors are of the opinion that the board comprises asuitable balance and that the recommendations of the Combined Code have beenimplemented to an appropriate level. The board, through the chairman andexecutive director in particular, maintain regular contact with its advisers andpublic relations consultants in order to ensure that the board develops anunderstanding of the views of major shareholders about the company. The board meets regularly throughout the year and met 10 times during the periodto 31 December 2006. The board is responsible for formulating, reviewing andapproving the company's strategy, financial activities and operatingperformance. Day-to-day management is devolved to the executive director who ischarged with consulting with the board on all significant financial andoperational matters. Consequently, decisions are made promptly and followingconsultation among directors concerned where necessary and appropriate. All necessary information is supplied to the directors on a timely basis toenable them to discharge their duties effectively, and all directors have accessto independent professional advice, at the company's expense, as and whenrequired. The participation of both private and institutional investors at the AnnualGeneral Meeting is welcomed by the board. CommitteesEach of the following committees has its own terms of reference. Audit CommitteeThe Audit Committee comprises the non-executive director and the non-executivechairman. Its terms of reference indicate at least two regular meetings per yearand its formal meeting, to review the findings of the 2006 audit work, tookplace on 19 June 2007. All directors received a copy of the audit committeereport prior to the meeting and had an opportunity to comment. The meeting wasattended by the auditors. The chief financial officer and a representative of the external auditors arenormally invited to attend meetings. Other directors or staff may be invited toattend, as considered beneficial by the committee. The Audit Committee's primary responsibilities are to review the effectivenessof the company's systems of internal control, to review with the externalauditors the nature and scope of their audit and the results of the audit, andto evaluate and select external auditors. Remuneration CommitteeThe Remuneration Committee plans to meet at least twice in each year. Itsmembers are M L Child (chairman) and K Eckhof, both of whom were in attendanceat the meeting. The company's policy is to remunerate senior executives fairly in such a manneras to facilitate the recruitment, retention and motivation of staff. TheRemuneration Committee agrees with the Board a framework for the remuneration ofthe chairman, the executive directors and the senior management of the company.The principal objective of the committee is to ensure that members of theexecutive management of the company are provided incentives to encourageenhanced performance and are, in a fair and responsible manner, rewarded fortheir individual contributions to the success of the company. Non-executive feesare considered and agreed by the Board as a whole. Service ContractsThe company has service contracts with its executive and non-executivedirectors. The service contracts also provide that the directors and parties related to thedirectors are entitled to participate in the share option arrangements operatedby the Company as well as consultancy payments. Details of the contracts currently in place for directors and related partiesare as follows: Annual salary Consultancy Date of Contract Unexpired Notice period £'000 payments £'000 term M. L. Child 12 24 24 May 2006 - 6 monthsN. M. Ferguson 24 100 24 May 2006 - 6 monthsK. P. Eckhof 12 24 24 May 2006 - 6 months Subject to the notice requirements described above, there is no provision in theservice agreements for compensation to be payable on early termination of the contract. Supplier payment policy It is the group's policy to pay suppliers in accordance with the terms ofbusiness agreed with them. The number of days' purchases outstanding for thegroup as at 31 December 2006 was 30 days. Change of fiscal year end Condor Resources Plc changed its fiscal year end from 31st October to a 12 monthperiod ending 31st December to align its reporting period with that of itssubsidiary companies. Annual general meeting Your attention is drawn to the Notice of Meeting enclosed with this reportconvening the Annual General Meeting of the company at 10 a.m. on 25 July 2007at the offices of the company at 1 Warwick Row, London SW1E 5ER. The Notice ofMeeting sets out and explains the special and ordinary business to be conductedat the meeting. STATEMENT OF DIRECTORS' RESPONSIBILITIES The directors are responsible for preparing the financial statements inaccordance with applicable laws and regulations. Company law requires the directors to prepare financial statements for eachfinancial year. Under that law the directors have elected to prepare thefinancial statements in accordance with International Reporting Standards asadopted for use in the European Union. The financial statements are required bylaw to give a true and fair view of the state of affairs of the company and thegroup and of the profit and loss of the group for that period. In preparingthese 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; • 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 whichdisclose with reasonable accuracy at any time the financial position of thecompany and the group and to enable them to ensure that the financial statementscomply with the Companies Act 1985. They are also responsible for safeguardingthe assets of the company and the group and hence for taking reasonable stepsfor the prevention and detection of fraud and other irregularities. ON BEHALF OF THE BOARD: 26 June 2007 STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS So far as the directors are aware, there is no relevant audit information (asdefined by Section 234ZA of the Companies Act 1985) of which the group'sauditors are unaware, and each director has taken all steps that he ought tohave taken as a director in order to make himself aware of any relevant auditinformation and to establish that the group's auditors are aware of thatinformation. AUDITORS The auditors, Mazars LLP, will be proposed for re-appointment in accordance withSection 385 of the Companies Act 1985. REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF CONDOR RESOURCES PLC We have audited the group and parent company financial statements (the "financial statements") of Condor Resources plc for the year ended 31 December2006, which comprise the Consolidated Income Statement, Consolidated Statementof Changes in Equity, Consolidated Balance Sheet, Company Balance Sheet,Consolidated Cash Flow Statement, Company Cash Flow Statement and the relatednotes. These financial statements have been prepared on the basis of theaccounting policies set out therein. This report is made solely to the company's members, as a body, in accordancewith Section 235 of the Companies Act 1985. Our audit work has been undertakenso that we might state to the company's members those matters we are required tostate to them in an auditors' report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother 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 theFinancial Statements in accordance with applicable law and InternationalFinancial Reporting Standards as adopted for use in the European Union are setout in the Statement of Directors' Responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements, International Standards on Auditing(UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and have been properly prepared in accordance with the CompaniesAct 1985. We also report to you if, in our opinion, the Directors' Report isconsistent with the financial statements. In addition we report to you, if inour opinion, the company has not kept proper accounting records, if we have notreceived all the information we require for our audit, or if informationspecified by law regarding directors' remuneration and transactions with thegroup is not disclosed. We read other information contained in the Annual Report and consider whether itis consistent with the audited financial statements. This other informationcomprises the Directors' Report, Chairman's Statement and Operational andFinancial Review. We consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencies with thefinancial statements. Our responsibilities do not extend to any otherinformation. 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 includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgements made by the directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the group's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy 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 International Financial Reporting Standards as adopted by use by the European Union, of the state of the group's and company's affairs as at 31 December 2006 and of the group's result for the period then ended; • the financial statements have been properly prepared in accordance with the Companies Act 1985; and • the information given in the Directors' Report is consistent with the financial statements. Mazars LLPChartered accountantsRegistered auditors3 Sheldon SquareLondonW2 6PS 26 June 2007. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 Period 10.10.05 to 31.12.05 Year Ended 31.12.06 Notes £ £CONTINUING OPERATIONSRevenue 2 - - Administrative expenses (807,565) - OPERATING LOSS (807,565) - Finance income 4 117,342 - LOSS BEFORE TAX 5 (690,223) - Tax 6 (241) - LOSS FOR THE YEAR (690,464) - Attributable to: (690,464) - Equity holders of the parent Earnings per share expressed in pence per 8share: Basic (0.72) -Diluted (0.72) - CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 Year Ended Period 10.10.05 31.12.06 to 31.12.05 Notes £ £ASSETS NON-CURRENT ASSETSProperty, plant and equipment 10 69,473 -Intangible assets 11 4,464,040 -Trade and other receivables 13 170,076 - 4,703,589 - CURRENT ASSETSTrade and other receivables 13 40,818 -Cash and cash equivalents 14 3,456,183 - 3,497,001 - LIABILITIESCURRENT LIABILITIESTrade and other payables 15 176,934 -Tax payable 241 - 177,175 - NET CURRENT ASSETS 3,319,826 - NET ASSETS 8,023,415 - SHAREHOLDERS' EQUITYCalled up share capital 18 1,298,118 -Share premium 19 7,306,486 -Legal reserves 19 60 -Share options reserve 19 109,275 -Retained earnings 19 (690,524) - Total shareholders' equity 8,023,415 - TOTAL EQUITY 8,023,415 - The financial statements were approved by the Board of Directors on 26 June2007. COMPANY BALANCE SHEET AS AT 31 DECEMBER 2006 Year Ended Period 10.10.05 31.12.06 to 31.12.05 Notes £ £ASSETS NON-CURRENT ASSETSIntangible assets 11 234,807 -Investments 12 3,606,021 -Trade and other receivables 13 1,018,330 - 4,859,158 - CURRENT ASSETSTrade and other receivables 13 22,345 -Cash and cash equivalents 14 3,405,764 - 3,428,109 - LIABILITIES CURRENT LIABILITIESTrade and other payables 15 166,707 - NET CURRENT ASSETS 3,261,402 - NET ASSETS 8,120,560 - SHAREHOLDERS' EQUITYCalled up share capital 18 1,298,118 -Share premium 19 7,306,486 -Share options reserve 19 109,275 -Retained earnings 19 (593,319) - Total shareholders' equity 8,120,560 - TOTAL EQUITY 8,120,560 - The financial statements were approved by the Board of Directors on 26 June2007. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 Period Year Ended 10.10.05 to 31.12.06 31.12.05 Notes £ £Cash flows from operating activitiesLoss before tax (690,223) -Share based payment 109,275 -Depreciation charges 4,332 -Exchange rate differences 11,310 -Profit on disposal of fixed assets (690) -Finance income (117,342) - (683,338) - Increase in trade and other receivables (208,454) -Increase in trade and other payables 176,934 - Gross cash payments from operations (714,858) - Net cash from operating activities (714,858) - Cash flows from investing activitiesPurchase of subsidiaries (55,570) -Purchase of intangible fixed assets (234,807) -Purchase of tangible fixed assets (74,736) -Increase in exploration costs (354,327) -Sale of tangible fixed assets 4,710 -Interest received 117,342 - Net cash from investing activities (597,388) - Cash flows from financing activitiesProceeds from share issue 5,545,000 -Less issue costs (776,571) - Net cash from financing activities 4,768,429 - Increase in cash and cash equivalents 3,456,183 -Cash and cash equivalents at beginning of year 1 - - Cash and cash equivalents at end of year 1 3,456,183 - NOTES TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 1. CASH AND CASH EQUIVALENTS The amounts disclosed on the cash flow statement in respect of cash and cashequivalents are in respect of these balance sheet amounts: Period ended 31 December 2006 31.12.06 1.1.06 £ £ Cash and cash equivalents 3,456,183 - Period ended 31 December 2005 Cash and cash equivalents - - COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 Period Year Ended 10.10.05 to 31.12.06 31.12.05 Notes £ £Cash flows from operating activitiesLoss before tax (593,319) -Share based payment 109,275 -Finance income (117,184) - (601,228) - Increase in trade and other receivables (744,719) -Increase in trade and other payables 166,707 - Gross cash payments from operations (1,179,240) - Cash flows from investing activitiesPurchase of intangible fixed assets (234,807) -Purchase of fixed asset investments (65,802) -Interest received 117,184 - Net cash from investing activities (183,425) - Cash flows from financing activitiesProceeds from share issue 5,545,000 -Less issue costs (776,571) - Net cash from financing activities 4,768,429 - Increase in cash and cash equivalents 3,405,764 -Cash and cash equivalents at beginning of year 1 - - Cash and cash equivalents at end of year 1 3,405,764 - NOTES TO THE COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 1. CASH AND CASH EQUIVALENTS The amounts disclosed on the cash flow statement in respect of cash and cashequivalents are in respect of these balance sheet amounts: Period ended 31 December 2006 31.12.06 1.1.06 £ £ Cash and cash equivalents 3,405,764 - Period ended 31 December 2005 Cash and cash equivalents - - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006 1. ACCOUNTING POLICIES Basis of preparation These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards and with those parts of the Companies Act 1985applicable to companies reporting under IFRS. The financial statements have beenprepared under the historical cost convention. The accounts have been rounded to the nearest pound. Basis of consolidation The group accounts consolidate the accounts of its wholly owned subsidiaries;Minerales Morazan S.A. De C.V. and Condor S.A. under the acquisition method. Thefinancial statements of subsidiaries are included in the consolidated financialstatements from the date that control commences until the date control ceases. Acquisitions On the acquisition of a subsidiary, fair values are attributed to the group'sshare of net assets. Where the cost of acquisition exceeds the valuesattributable to such net assets, the difference is treated as purchase goodwill,which is capitalised and amortised over its estimated useful life. Where thecost of acquisition is less than the value attributable to such net assets, thedifference is treated as negative goodwill and is recognised immediately in theincome statement. Property, plant and equipment Property, plant and equipment is stated at cost, or deemed cost less accumulateddepreciation, and any recognised impairment loss. Depreciation is provided at the following annual rates in order to write offeach asset over its estimated useful life. Freehold Property The rental property is being completely refurbished and will be depreciated over its useful economic life once work is finished. Plant and machinery - 20% on costFixtures and fittings - 50% on costMotor vehicles - 25% on costComputer equipment - 50% on cost Financial instruments Financial assets and financial instruments are recognised on the group's balancesheet when the group becomes a party to the contractual provisions of theinstrument. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and othershort-term highly liquid investments that are readily convertible to a knowncash amount and are subject to an insignificant risk of changes in value. Financial liabilities and equity Financial liabilities and equity instruments issued by the group are classifiedaccording to the substance of contractual arrangements entered into and thedefinitions of a financial liability and an equity instrument. An equityinstrument is any contract that evidences a residual interest in the assets ofthe group after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received,net of direct costs. Taxation Current taxes are based on the results shown in the financial statements and arecalculated according to local tax rules, using tax rates enacted orsubstantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date. A deferred tax asset is only recognised when it is more likely than not that theasset will be recoverable in the foreseeable future out of suitable taxableprofits. Intangible assets - exploration costs, licences and minerals resources Exploration expenditure comprises costs which are directly attributable toresearching and analysing data. Licences include the costs incurred inacquiring mineral rights and, the entry premiums paid to gain access to areas ofinterest. Mineral resources include amounts paid to third parties to acquireinterests in existing projects. When it has been established that a mineral deposit has development potential,all costs (direct and applicable overhead) incurred in connection with theexploration and development of the mineral deposits are capitalised until eitherproduction commences or the project is not considered economically viable. In the event of production commencing, exploration costs, licences and mineralresources are amortised through administrative expenses, over the expected lifeof the mineral reserves on a unit production basis. Other pre-trading expensesare written off as incurred. Where a project is abandoned or is considered tobe of no further interest, the related costs are written off. Foreign currencies Assets and liabilities in foreign currencies are translated into sterling at therates of exchange ruling at the balance sheet date. Transactions in foreigncurrencies are translated into sterling at the rate of exchange ruling at thedate of transaction. Exchange differences are taken into account in arriving atthe operating result. On consolidation of a foreign operation, assets and liabilities are translatedat the balance sheet rates, income and expenses are translated at rates rulingat the transaction date. Exchange differences on consolidation are taken to theincome statement. Share based payments The fair value of equity instruments granted to directors, employees andconsultants is charged to the income statement with a corresponding increase inequity. The fair value of share options is measured at grant date, using theBlack-Scholes model, and spread over the period during which the employeebecomes unconditionally entitled to the award. The charge is adjusted to reflectthe number of shares or options that vest, except where forfeiture is due tocriteria, as stated in the share option agreements. 2. REVENUE AND SEGMENTAL REPORTING The group has not generated any revenue during the period. The group's operations are located in England, El Salvador and Nicaragua. The following is an analysis of the carrying amount of segment assets, andadditions to plant and equipment, analysed by geographical area in which theassets are located. Carrying amount of Additions to Depreciation Carrying amount of Result for the segment assets property, plant & charged in the year liabilities year equipment and intangible assets Year ended Period Year ended Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended 31.12.06 31.12.05 31.12.06 31.12.05 31.12.06 31.12.05 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £ £ £ £ £ £ £ £ England 3,872,977 - 234,807 - - - 166,707 - (593,319) -El Salvador 2,414,781 - 2,219,887 - 3,906 - 9,709 - (57,063) -Nicaragua 1,912,832 - 1,806,131 - 426 - 759 - (40,082) -Total 8,200,590 - 4,260,825 - 4,332 - 177,175 - (690,464) 3. EMPLOYEES AND DIRECTORS Period 10.10.05 Year Ended to 31.12.06 31.12.05 £ £ Wages and salaries 51,657 -Social security costs 2,259 - 53,916 - The average monthly number of group and company employees during the year was as follows: Group Company Year ended Period ended Year ended Period ended 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £ £ Directors' 3 2 3 2Employees 34 - 1 - 37 2 4 2 Salary payments Termination payment Personal Related party Total consultancy payment payments * Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended 31.12.06 31.12.05 31.12.06 31.12.05 31.12.06 31.12.05 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £ £ £ £ £ £ £ £ T Wall - - - - - - 21,000 - 21,000 -M Child 7,000 - - - - - 43,475 - 50,475 -N Ferguson 14,000 - - - 33,785 - 66,664 - 114,449 -K Eckhof 7,000 - - - - - 14,000 - 21,000 -S Dobson 12,000 - 36,000 - - 24,000 - 72,000 -Total 40,000 - 36,000 - 33,785 - 169,139 - 278,924 - * = Refer to note 22 for listing of related parties The Company has adopted a discretionary bonus scheme by which bonuses are paidto directors, employees and consultants and used by the recipients to subscribefor new Ordinary Shares at market value. A total of up to 10 percent of thetotal share capital in issue from time to time will be made available for thispurpose without the Board having first obtained the consent of the Shareholders.The amount of any bonus payable under this scheme will be subject to approval bythe remuneration committee. At the year end no bonuses were paid. The interests of the Directors in options to subscribe for ordinary shares ofthe company were: Exercise Latest As at 1 Granted Lapsed As at 31 price (p) exercise January 2006 during the in the December date year year 2006DIRECTORS M L Child 15 30 May 2011 Nil 1,250,000 Nil 1,250,000N M Ferguson 15 30 May 2011 Nil 4,500,000 Nil 4,500,000K P Eckhof 15 30 May 2011 Nil 1,750,000 Nil 1,750,000 4. NET FINANCE INCOME Period 10.10.05 Year Ended to 31.12.06 31.12.05 £ £Finance income:Deposit account interest 117,342 - 5. LOSS BEFORE TAX The loss before tax is stated after charging/(crediting): Period 10.10.05 Year Ended to 31.12.06 31.12.05 £ £ Depreciation - owned assets 4,332 -Auditor's remuneration 14,100Non-audit fees 34,768Profit on disposal of fixed assets (690)Foreign exchange differences 61,633 - 6. TAX Analysis of the tax charge Period 10.10.05 Year Ended to 31.12.06 31.12.05 £ £Current tax: Tax 241 - Total tax charge in income statement 241 - Reconciliation of the tax charge The tax assessed for the period is different than the standard rate ofcorporation tax in the UK (19%). The differences are explained below: Year Ended 31.12.06 £Loss before tax (690,464) Loss before tax multiplied by standard rate ofCorporation tax in the UK of 19% (131,188) Effects of:Deferred tax not provided 131,188Tax charge relating to Minerales Morazan S.A 241 Total tax charge in income statement 241 7. LOSS OF PARENT COMPANY As permitted by Section 230 of the Companies Act 1985, the profit and lossaccount of the parent company is not presented as part of these financialstatements. The parent company's loss for the financial year was (£593,319)(2005 - £nil). 8. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary sharesoutstanding during the period. A reconciliation is set out below: Basic EPS Loss for the period (690,494)Weighted average number of shares 95,744,592Loss per share (in pence) (0.72) In accordance with IAS 33 and as the group has reported a loss for the period,the share options are not dilutive. 9. STATEMENT OF CHANGES IN EQUITY Group Profit and Share capital Share Share option Total loss premium reserve reserve £ £ £ £ £ At 1 January 2006 - - - - -Loss for the period (690,464) - - - (690,464)New shares issued - 1,298,118 8,083,057 - 9,381,175Transaction costs - - (776,571) - (776,571)Share based payment - - - 109,275 109,275 (690,464) 1,298,118 7,306,486 109,275 8,023,415 Profit and Share capital Share Share option Total loss premium reserve reserve £ £ £ £ £ Company At 1 January 2006 - - - - -Loss for the period (593,319) - - - (593,319)New shares issued - 1,298,118 8,083,057 - 9,381,175Transaction costs - - (776,571) - (776,571)Share based payment - - - 109,275 109,275 (593,319) 1,298,118 7,306,486 109,275 8,120,560 10. PROPERTY, PLANT AND EQUIPMENT Group Freehold Plant and Fixtures and property machinery fittings £ £ £COSTAdditions 951 8,707 6,984Exchange differences - - (149) At 31 December 2006 951 8,707 6,835 DEPRECIATIONCharge for year - - 2,189 At 31 December 2006 - - 2,189 NET BOOK VALUEAt 31 December 2006 951 8,707 4,646 Motor vehicles Computer equipment Totals £ £ £COSTAdditions 54,486 3,745 74,873Exchange differences (919) - (1,068) At 31 December 2006 53,567 3,745 73,805 DEPRECIATIONCharge for year 1,762 381 4,332 At 31 December 2006 1,762 381 4,332 NET BOOK VALUEAt 31 December 2006 51,805 3,364 69,473 11. INTANGIBLE ASSETS Group Exploration Mineral Licences Total costs resources £ £ £ £COSTAdditions 628,790 3,600,443 234,807 4,464,040 At 31 December 2006 628,790 3,600,443 234,807 4,464,040 NET BOOK VALUEAt 31 December 2006 628,790 3,600,443 234,807 4,464,040 Company Licences £COSTAdditions 234,807 At 31 December 2006 234,807 NET BOOK VALUEAt 31 December 2006 234,807 The JORC inferred reserves of the company are as follows: Gold 467,000 contained metal ounces Silver 18.4m contained metal ounces. 12. INVESTMENTS Company Shares in group undertakings £COSTAdditions 3,606,021 At 31 December 2006 3,606,021 NET BOOK VALUEAt 31 December 2006 3,606,021 The company's investments at the balance sheet date in the share capital ofcompanies include the following: Subsidiaries Name Country of Interest Class of Nature of the Share capital Profit/ shares business and reserves (loss) for incorporation the year £ £Minerales El Salvador 100.00% Ordinary Gold and 4,209 211Morazan S. A. silverde C. V. exploration Condor S. A. Nicaragua 100.00% Ordinary Gold and (32,454) (34,049) silver exploration On 24 March 2006 the company entered into an Asset Sale Agreement with CondorResources Limited, a company incorporated in Australia, for the acquisition ofthe assets held by that company, which comprised other receivables andinvestments in subsidiaries. The acquisition of the net assets of those subsidiaries have been accounted forin accordance with IFRS3, Business Combinations, using the purchase method. Theremainder of the assets acquired were accounted for at their fair value. The total consideration of the Asset Sale Agreement was paid by way of a cashpayment amounting to £50,000 and the issue of 35,383,230 Ordinary Shares at 10peach. The fair value of the net assets acquired with the subsidiaries was asfollows: Minerales Morazan Condor S. A. Total Assets S.A. de C. V. £ £ £ Property, plant & equipment 8,106 - 8,106Mineral resources 1,800,221 1,800,222 3,600,443Exploration costs 274,463 - 274,463Trade and other receivables 10,576 1,595 12,171Cash and cash equivalents 10,232 - 10,232Trade and other payables (299,394) (299,394) 3,606,021 Satisfied by:Cash payment 50,000Issue of 35,383,230OrdinaryShares at 10p each 3,538,323Transaction costs 17,698 3,606,021 13. TRADE AND OTHER RECEIVABLES Group Company 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £Current:Other debtors 25,222 - 19,995 -Other taxes 5,474 - - -Prepayments 10,122 - 2,350 - 40,818 - 22,345 - Non-current:Amounts owed by group undertakings - - 947,771 -Loans receivable 36,534 - - -Accounts receivable 43,613 - - -Other debtors 89,929 - 70,559 - 170,076 - 1,018,330 - Aggregate amounts 210,894 - 1,040,675 - 14. CASH AND CASH EQUIVALENTS Group Company 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £ Bank accounts 3,456,183 - 3,405,764 - 15. TRADE AND OTHER PAYABLES Group Company 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £Current:Trade payables 121,736 - 120,727 -Social security and other taxes 6,012 - - -Other creditors 10,602 - 10,602 -Accrued expenses 38,584 - 35,378 - 176,934 - 166,707 - 16. LEASING AGREEMENTS Group Non-cancellable operating leases 31.12.06 31.12.05 £ £ Within one year 16,076 -Between one and five years 8,737 - 24,813 - The group lease all of its properties, the terms of which vary from country tocountry. Company Non-cancellable operating leases 31.12.06 31.12.05 £ £ Within one year 4,200 - 17. CAPITAL COMMITMENTS Group Company 31.12.06 31.12.05 31.12.06 31.12.05 £ £ £ Within one year 344,546 - 344,546 -Between one and five years 3,866,571 - 3,866,571 - 4,211,117 - 4,211,117 - Capital Commitments is comprised of licence option fees, land surface taxes,exploration and development costs made under two licence option agreementsentered into in Nicaragua. This assumes that all licences in Nicaragua covered by option agreements areconsidered viable by the board, and all future option payments to maintainCondor's interest in these projects are maintained. The option agreements inplace, however, permit Condor to discontinue exploration and development of anylicence at any time at its sole discretion; with concurrent reduction inliability without penalty should the management believe this licence will notlead to economic exploitation. 18. CALLED UP SHARE CAPITAL Authorised Class: Nominal 31.12.06 31.12.05Number: value: £ £ 1,000,000,000 Ordinary shares 1p 10,000,000 1,000,000 2005: 1,000,000,000 Ordinary shares of 0.1p each Alloted and issued Class: Nominal 31.12.06 31.12.05Number: value: £ £129,811,753 Ordinary shares 1p 1,298,118 2005: 2 Ordinary shares of 0.1p each The following shares were allotted at par during the period: 39,999,998 Ordinary shares of 1p each The following were allotted during the period at a premium as shown below: 89,811,753 Ordinary shares of 1p each at 10p per share On 17 January 2006 the nominal capital was increased by £9,000,000 and on thesame date it was consolidated on from £10,000,000 divided into 10,000,000,000ordinary shares of £0.001 each to £10,000,000 divided into 1,000,000,000ordinary shares of £0.01 each. 19. RESERVES Group Retained Share Legal Share option Total earnings premium reserve reserve £ £ £ £ £Deficit for the year (690,464) - - - (690,464)Transfer to legal reserve (60) - 60 - -Cash share issue - 7,306,486 - - 7,306,486Share based payment - - - 109,275 109,275At 31 December 2006 (690,524) 7,306,486 60 109,275 6,725,297 Retained Share Share option Total earnings premium reserve £ £ £ £CompanyDeficit for the year (593,319) - - (593,319)Cash share issue 7,306,486 - 7,306,486Share based payment - - 109,275 109,275At 31 December 2006 (593,319) 7,306,486 109,275 6,822,442 Retained earnings represent the cumulative net gains and losses recognised inthe consolidated income statement. Share premium reserve represents the amounts subscribed for share capital inexcess of the nominal value of the shares issued, net of cost of issue. Legal reserve represents the El Salvadorean statutory reserve calculated onresults declared. Share options reserve represents the cumulative fair value of share optionsgranted. 20. RECONCILIATION OF MOVEMENTS IN RESERVES Group 31.12.06 31.12.05 £ £ Loss for the financial year (690,464) -Share capital 1,298,118 -Share premium 7,306,486 -Share option 109,275 - Net addition to reserves 8,023,415 -Opening reserves - - Closing reserves 8,023,415 - Company 31.12.06 31.12.05 £ £ Loss for the financial year (593,319) -Share capital 1,298,118 -Share premium 7,306,486 -Share option 109,275 - Net addition to reserves 8,120,560 -Opening reserves - - Closing reserves 8,120,560 - 21. EQUITY-SETTLED SHARE OPTION SCHEME The company has a share option scheme for directors, employees andconsultants to the group. Details of the share options outstanding during the year are asfollows: 1-Jan-06 31-Dec-06 Date of No. of Issued in Forfeit or No. shares Date from which Lapse date Price Grant shares year lapsed in options are first per year exercisable share 24/03/2006 0 15,000,000 3,250,000 11,750,000 31-May-06 30-May-11 15p The estimated fair value of the options granted in 2006 is £109,275 and has beenfully recognised within administration expenses. This fair value has beencalculated using the Black-Scholes option pricing model. The inputs into themodel were as follows: 2006 Weighted average share price 6.0pWeighted average exercise price 15.0pExpected volatility 45%Expected life 4Risk free rate 5.9%Expected dividend yield Nil Expected volatility was determined with reference to the historical volatilityof the company's share price. The expected life used in the model has beenadjusted, based on management's best estimate, for the effects ofnon-transferability, exercise restrictions and behavioural considerations. Theweighted average remaining contractual life of the share options outstanding atthe end of the period is 4.5 years. 22. RELATED PARTY TRANSACTIONS During the year the company received consultancy advice for an amount of £66,664from Ridgeback Holdings Pty Limited, a company incorporated in Australia inwhich Nigel Ferguson, a director, has an interest. There was £nil outstanding atthe year end. During the year the company received consultancy advice for an amount of £14,000from Iguana Resources Pty Limited, a company incorporated in Australia, in whichKlaus Eckhof, a non-executive director, has an interest. There was £niloutstanding at the year end. During the year the company received consultancy advice for an amount of £43,475from Axial Associates Limited, a company incorporated in England and Wales, inwhich Mark Child, a non-executive director, has an interest. There was £niloutstanding at the year end. During the year the company received consultancy advice for an amount of £24,000from Fortview Capital Management Pty Limited, a company incorporated inAustralia, in which Stephen Dobson, a director, has an interest. There was £niloutstanding at the year end. During the year the company received consultancy advice for an amount of £21,000from Horseford Limited, a company incorporated in England and Wales, in whichTim Wall, a director, has an interest. There was £nil outstanding at the yearend. 23. NON-CASH TRANSACTIONS During the year, the group acquired Minerales Morazan S. A. de C. V. and CondorS. A. The consideration was partly satisfied by the issue of 35,383,230 ordinaryshares of 1p each. This is the only major non-cash transactions. 24. CONTROLLING PARTY There is no ultimate controlling party. The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2006, but is derived fromthose accounts. Statutory accounts for the period have been delivered to theRegistrar of Companies. Copies of the accounts will be posted to shareholders very shortly. - Ends - For further information please visit www.condorresourcesplc.com or enquire to: Condor Resources Plc Mark Child, Chairman +44 20 7408 1067 Nigel Ferguson, CEO +44 20 7808 7222 Nabarro Wells & Co. Limited Hugh Oram +44 20 7710 7400 Anthony Rowland +44 20 7710 7419 Mirabaud Securities Limited Rory Scott +44 20 7878 3360 Parkgreen Communications Limited Clare Irvine Brendan McNamara +44 (0) 20 7851 7480 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Condor Gold