Moto Goldmines Limited - Issue of 2006 annual financial statements and management's discussion and analysis



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR
    DISSEMINATION IN THE UNITED STATES/

    TSX Code - MGL
    AIM Code - MOE

    PERTH, WESTERN AUSTRALIA, March 30 /CNW/ - Moto Goldmines Limited
("Moto") has today issued consolidated financial statements and management's
discussion and analysis for the year ended December 31, 2006. The Company also
announces the Annual General Meeting of shareholders of Moto Goldmines Limited
will be held Monday, June 18, 2007 in Toronto Ontario. The formal Notice of
Meeting will be forwarded to shareholders by April 12, 2007 together with the
Company's Annual Report. The Record Date is May 18, 2007. Excerpts from the
Management's Discussion and Analysis, and the Consolidated Balance Sheets,
Statements of Operations and Statements of Cash Flows are included below.
    Complete copies of these documents are available on the Company's website
www.motogoldmines.com.

    Nominated adviser for the purposes of AIM: RFC Corporate Finance Ltd
    Contact: Stephen Allen



    Moto Goldmines Limited
    Management's Discussion and Analysis
    For the year ended December 31, 2006

    The following discussion and analysis of financial position and results
of operations of Moto Goldmines Limited is presented as of March 28, 2007. The
discussion should be read in conjunction with the Annual Report for the
12 month period ended December 31, 2006. Moto Goldmines Limited's consolidated
financial statements have been prepared in accordance with Canadian generally
accepted accounting principles. All amounts in the discussion are in
Australian dollars unless otherwise stated.
    Moto Goldmines Limited ("the Company", formerly King Products Inc.) is
continued under the Business Corporations Act (British Columbia). Hereinafter
the consolidated group comprising Moto Goldmines Limited and its subsidiaries
is referred to as "the Group". By an agreement dated 23 December 2004 King
Products Inc. ("King") and Moto Goldmines Limited (an Australian incorporated
company, "Moto Australia") agreed to combine the companies. The combination
was completed on May 26, 2005 pursuant to a court-approved scheme of
arrangement under Australian law. Under the terms of the scheme of arrangement
King became the Canadian parent company of Moto Australia and King changed its
name to Moto Goldmines Limited.
    The Company's consolidated financial statements have been prepared to
reflect the combination occurring on May 26, 2005 and are based on a business
combination under the purchase method, applying reverse takeover accounting.
As a result of the combination, control of King passed to the shareholders of
Moto Australia. Under reverse takeover accounting, Moto Australia is deemed to
be the acquirer and the continuing entity. The financial statements of the
combined entity are issued under the name of the legal parent, Moto Goldmines
Limited, but are considered to be a continuation of the financial statements
of the legal subsidiary, Moto Australia.
    Upon completion of the business combination, the Company elected to adopt
the financial year-end of King Products, resulting in a change of the
financial year-end from June 30 to December 31. Consequently comparative
figures are as at and for the 6 months ended June 30, 2006.
    The Company's securities are listed for trading on the Toronto Stock
Exchange and the London Stock Exchange's AIM market.

    Summary

    Moto Goldmines Limited is a gold exploration and development company
listed on the TSX and the London Stock Exchange's Alternative Investment
Market ("AIM").
    During the 12 month period ended December 31, 2006 the principal focus of
the Company was to progress the Moto Gold Project in the north-east of the
Democratic Republic of Congo from advanced exploration and pre-feasibility
through to a definitive feasibility and project pre-development.
    At the corporate level, the following significant events occurred:

    
        -  Mr Mark Arnesen joined the Company's Board of Directors in the
           position of Finance Director and Chief Financial Officer and will
           have principal responsibility for all financial and financing
           aspects of the development of the Moto Gold Project. Mr Arnesen is
           a Chartered Accountant with over 18 years experience in the
           international resources industry. He has extensive experience in
           the structuring and negotiation of finance for major resource
           projects in Africa. Mr Andrew Dinning, the Company's Chief
           Operating Officer, has also joined the Company's Board of
           Directors in the position of Executive Director. Mr Dinning has
           extensive knowledge and experience in mine management, project
           funding and contract and risk management and his principal
           responsibility will remain the overall management of the
           feasibility process, mine development, plant construction and
           commissioning of the Moto Gold Project.

        -  Completion of a bought deal in March 2006 of 5.5 million common
           shares at C$7.65 per share for gross proceeds of C$42.1m to be
           used primarily to fund the exploration programme, the feasibility
           study and proposed mine development at the Moto Gold project.

        -  Entered into the November 2006 Protocol with L'Office des Mines
           d'or de Kilo-Moto ("Okimo"), which is described below under The
           Moto Gold Project - Tenure.

        -  Moto Goldmines Limited listed on the AIM in March 2006 and
           de-listed from the Australian Stock Exchange (ASX) in
           October 2006.

    The main activities undertaken during the year at and to support the
development of the Moto Gold Project were:

        -  The continuation of the extensive exploration and development
           programme at the Moto Gold Project in the Democratic Republic of
           Congo ("DRC");

        -  The completion of several resource estimates by independent
           geological consultants. The most recent report for the project, by
           Cube Consulting Pty Limited ("Cube Consulting") dated
           December 2006, estimated indicated resources of 65.49 million
           tonnes at 2.9 g/t for 6.163 million ounces of gold and inferred
           resources of 97.22 million tonnes at 4.0 g/t Au for 12.365 million
           ounces of gold.

        -  A fully independent audit of resource estimates and exploration
           procedures at the Moto Gold Project was undertaken in mid 2006 by
           Snowden Mining Industry Consultants.

        -  A project pre-feasibility study was completed by Lycopodium
           Engineering and Cube Consulting, indicating potential for the
           development of a significant gold mine.

        -  Substantial infill, technical and sterilisation drilling programs
           were undertaken to support ongoing feasibility studies.

        -  Lycopodium Engineering was appointed to undertake a bankable
           feasibility study and manage a large metallurgical test work
           program for the Moto Gold Project, this work commenced in October
           and was ongoing at year end.

        -  Ongoing development of a site management and operating team to
           transition the Doko site from exploration to development. Key
           appointments include qualified operations and project management
           personnel, accounting, community development and environmental
           management personnel.

        -  Commencement of consultation with local stakeholder groups to
           support the development of the project.

        -  Commencement of reconstruction of local infrastructure including
           roads, bridges and public facilities and also the construction of
           a fully staffed medical clinic, dispensary and birthing centre.

    The Company's plans for the 2007 year are:

        -  Continue with an extensive exploration drilling program with the
           objective of identifying additional resources, upgrading the
           existing resources from the Inferred to the Indicated category,
           gaining a better understanding of the geological setting of the
           Moto Gold Project and to commence defining the underground
           potential of the project.

        -  Conclude technical, sterilisation and infill drilling programmes
           to enable the finalisation of the bankable feasibility study.

        -  Completion of a bankable feasibility study for the Moto Gold
           Project by mid to late 2007.

        -  Substantially reconstruct 160km of road from Doko, where the Moto
           Gold Project is located, to Aru on the DRC Ugandan border to
           facilitate the commencement of project construction activities
           anticipated to commence in 2008.

        -  Complete environmental and social base line studies and community
           consultations at the Moto Gold Project in preparation for
           construction activities.

        -  Complete an underground mining study by mid to late 2007 to enable
           the assessment of preliminary economics and to undertake detailed
           planning for further exploration and feasibility work to define
           the underground potential of the project.

        -  Agree and finalise supporting documents for the November 2006
           Protocol Agreement to further support development of the Moto Gold
           Project, including the consolidated lease and progress with the
           registration of the lease under the DRC Mining Code.

        -  Advance arrangements for financing the construction of the Moto
           Gold Project.
    


    The Moto Gold Project


    Overview

    The Company's principal asset is its interest in the Moto Gold Project,
which is located in the Moto goldfields in the north east of the DRC,
approximately 560 kms north east of the city of Kisangani and 150 kms west of
the Ugandan border town of Arua.
    The Moto goldfields are located primarily within rocks of the Moto
greenstone belt, which consists of Archaean rocks of the Lower Kibalian
System. The Moto greenstone belt is bounded to the north by the Archaean West
Nile Gneiss complex and to the south by the (younger) Upper Zaire granitic
complex.
    The Moto greenstone belt has a history of gold production. Three of the
deposits in the area, Gorumbwa, Agbarabo and Durba, which were exploited
primarily in the 1950s and 1960s by the Belgians, have produced more than 60%
of the +3 million ounces of recorded production from the Moto area. Most of
the remainder of production has come from placer, alluvial and small
oxide-zone workings. Many of the past-producing high-grade gold mines in the
Moto greenstone belt fall within a 7km by 5km area near the towns of Doko and
Durba (the "Durba Gold Camp"). At present the Moto goldfields remain
relatively unexplored by today's standards.
    The activities undertaken by the Company during the period have continued
to highlight the world class potential of this previously underexplored
project. Whilst the consolidated lease covers an area of approximately
2,350 sq kms, activities to date have primarily focussed on the 35 sq kms of
the Durba Gold Camp. As a result a large number of untested gold occurrences
remain to be systematically explored using modern techniques.
    There are presently 4 drill rigs (one RC and three diamond) operating on
the Moto site, with soil sampling teams also collecting samples from various
project areas. The RC and soil samples are shipped to SGS in Mwanza, Tanzania
for assay, whilst the diamond core samples are dispatched to Genalysis
Laboratory Services in Perth, Australia for assay.
    The principal focus of the programme during the period was to progress
the Moto Gold Project from the exploration stage to project feasibility and
development.

    Tenure

    The Company has entered into a joint venture through a wholly owned
subsidiary with the privately owned company Orgaman sprl ("Orgaman") to form a
number of local operating companies, including Borgakim sprl ("Borgakim").
    These local operating companies had in turn entered into leasing
agreements and a contract of technical and financial assistance ("the Existing
Contracts") with the L'Office des Mines d'Or de Kilo-Moto ("OKIMO"), the
state-owned company that holds mineral rights in the north-east of the DRC.
The Company is the operator in respect of all activities at the Moto Gold
Project. Most of these agreements are of indefinite duration. However, Okimo
can terminate, with 60 days notice, for:

    
        -  non-payment of State taxes and duties;

        -  non-compliance with laws and regulations that can lead to the
           financial and administrative prejudice to Okimo; or

        -  non-payment of rents due to Okimo.
    

    In November 2006 the Company entered into an agreement ("November 2006
Protocol") with Okimo to enter into a simplified contractual arrangement that
will govern the development of and future production activities at the Moto
Gold Project in the north east of the Democratic Republic of Congo ("DRC").
Under the November 2006 Protocol the parties re-iterated the validity of the
existing contracts and agreed the following principal terms:

    
        -  The Existing Contracts be amalgamated in favour of a 30 year lease
           in respect of a newly consolidated perimeter in favour of Borgakim
           or an exploitation company covering approximately 2,350 sq kms,
           with the balance of the area being released to Okimo.

        -  The interests of the partners in the exploitation company be
           Okimo 30% (non-dilutable), the Company 60% and Orgaman sprl
           ("Orgaman") 10%.

        -  The Company will pay to Okimo through Borgakim, US$5 million, and
           the exploitation company will pay ongoing monthly rentals of
           US$350,000 until the commencement of production.

        -  Okimo currently owes Orgaman approximately US$21 million. The
           Company has agreed through Borgakim to purchase this debt from
           Orgaman on terms to be negotiated in an agreement between the
           Company, Borgakim, Okimo and Orgaman. The Company has agreed to
           purchase the debt from Orgaman and to pay Orgaman approximately
           US$8 million in respect of interest accrued to date on this debt
           as described below.

        -  Borgakim has agreed to provide Okimo with the funding required to
           pay the arrears and balance due to its employees of retirement age
           according to the findings of an audit to be conducted by Okimo;
           such funds form a non-interest loan to Okimo which is to be repaid
           by Okimo with its share of income generated by the project.
    

    The mineral rights held by Okimo are granted until November 2008, subject
to extension for force majeure. Pursuant to the new DRC Mining Code Okimo is
required to transform its existing rights into an exploitation licence under
the Mining Code. Okimo is yet to commence this procedure. Once the rights have
been transformed into an exploitation licence such mineral rights are
renewable (subject to satisfying certain conditions) on application for
periods of fifteen years (upon granting of an application), until the deposits
are exhausted.
    In January 2007, certain of the Company's subsidiaries received letters
from the then Chief Executive Officer of Okimo and now Vice Minister of Mines
claiming certain obligations under the Existing Contracts had not been
satisfied and giving the relevant company ninety days to rectify matters. The
Company strongly disputes that it has failed to satisfy any performance
criteria under any of the contracts with Okimo and is seeking formal
withdrawal of the letters. The Company has received a copy of a letter to the
former CEO of Okimo from the Chairman of Okimo making it clear that he had no
authority to write the letters, but the Company is still awaiting formal
withdrawal of the letters.
    Further documentation has been prepared by the Company to implement the
November 2006 Protocol. However the Company was requested to wait until the
appointment of the new Government of the DRC and the appointment of officials
to the state companies following the recent elections before progressing the
documentation. The relevant appointments have been made; however the recent
outbreak of unrest in the capital may delay the withdrawal of the letters from
the former CEO of Okimo and finalisation and implementation of these ancillary
documents. These financial statements have been prepared on the basis of the
agreements contained in the November 2006 Protocol.
    In light of the current potential challenges to the Group's title, the
Company has been actively updating influential people in the DRC and
internationally, including the board and current executive team at Okimo and
the new ministers, as to the Company's activities and has engaged both
international and local DRC legal experts to prepare and take the appropriate
legal action. The Board is also meeting frequently both to review the position
and to determine the appropriate action. The Board is seeking to achieve
resolution of the issues as soon as practicable.

    Resource Estimate for Moto Gold Project Deposits

    In December 2006 independent consultants Cube Consulting estimated the
following resources, which are all within the consolidated lease area, at a
nominal 1/gt Au lower cutoff:

    
    -------------------------------------------------------------------------
    Deposit                     Indicated                   Inferred
                        -----------------------------------------------------
                         Tonnes              Au      Tonnes             Au
                           Mt      Au g/t  '000Oz      Mt     Au g/t  '000Oz
    -------------------------------------------------------------------------
    Pakaka                16.13      2.7    1,414
    Gorumbwa                                          8.29      5.2    1,374
    Kibali                                            16.6      2.2    1,173
    Mengu Hill             6.26      3.5      699     0.15      2.5       12
    Mengu Village          1.28      1.8       76
    Karagba                6.23      2.6      523    21.13      3.2    2,142
    Chauffeur             21.88      3.4    2,407    34.91      5.8    6,533
    Durba                                             4.66      2.5      376
    Megi                                              3.88      2.2      270
    Marakeke                                          2.34      1.8      133
    Kombokolo              1.79      2.9      166      .01      1.6        0
    Sessenge               6.68      2.5      540     0.74      2.4       58
    Ndala                                             0.24      4.3       33
    Pamao                  5.23      2.0      337     4.26      1.9      260
    -------------------------------------------------------------------------
    TOTAL                 65.49      2.9    6,163    97.22      4.0    12.36
    -------------------------------------------------------------------------
    

    Cube Consulting utilized the Australian standard of resource
classifications, JORC, which are in principle equivalent to the CIM
classifications used in Canada.
    Upon completion of the November 2005 Resource estimate extensive infill
and extension drilling programmes were principally undertaken at Karagba,
Chauffeur and Durba and to a lesser extent across a remainder of the principal
economic orebodies as identified in the November 2005 Conceptual Study. The
infill drilling programmes have been designed to upgrade the resource from the
Inferred to the Indicated category to support feasibility work and financing
needs. The exploration and extension drilling programme is planned to continue
throughout 2007 with period reviews to ensure drilling is properly targeted
for project and exploration needs.
    Further resource upgrades are expected during 2007 as new drilling
information becomes available and is incorporated to existing geological
models.

    Pre-Feasibility Study

    On the basis of the results of the November 2005 Conceptual Study
completed by Cube Consulting which indicated that a gold mine supporting
production of approximately 240,000 ozs of gold per annum was possible, the
company engaged Lycopodium Engineering and Cube Consulting to undertake a
pre-feasibility study on the Moto Gold Project. This study commenced in
December 2005 and was completed in July of 2006, based on approximately 5
million ounces of indicated resources, the study showed that project economics
were robust and that it was worth advancing to a bankable feasibility study
which was subsequently commenced in October 2006. It is expected the bankable
feasibility study will enhance the project physicals and economics. The
principal pre-feasibility study findings are listed below.

    
    -------------------------------------------------------------------------
    Design and modelling gold price assumption           US$500 per ounce Au
    Resource base used for PFS modelling                5.077 million ounces
    Average Throughput                            3 million tonnes per annum
    Average Gold Production                         290,000 ounces per annum
    Mine, Plant and infrastructure capital
     expenditure                                              US$296 million
    Project pay back period at
     US$600 per ounce Au                               Approximately 3 years
    Estimated cash costs                                    US$274 per ounce
    Mining Reserves (probable)                  25.6mt at 3.4 g/t for 2.8moz
    Estimated Mine Life                                Approximately 8 years
    -------------------------------------------------------------------------
    

    The pre-feasibility study used only indicated resources and did not take
into account approximately 10.8 million ounces of inferred resources. The
study was based on the mining of 6 open pits with an average strip ratio of
6.1:1 and a nominal plant throughput of 3 million tonnes per year at an
average grade of 3.6 g/t gold and an estimated cash cost of US274 per ounce.
The mining schedule was optimised within the limits of the study however the
opportunity remains to enhance this side of the project/this will be reviewed
as part of the bankable feasibility study. The process route chosen was a
standard CIL circuit for the treatment of oxide ore with the inclusion of a
floatation and ultra fine grind circuit prior to the leach circuit for fresh
ore. Metallurgical test work for the pre-feasibility study was not optimised
and early indications are that this area will present an opportunity for
optimisation and improvement in the bankable feasibility study resulting in a
positive impact on project economics.
    Costing for the project, as set out in the pre-feasibility study, assumes
that hydro electric power is used to run the operation for approximately 80%
of the year, and this is a key economic driver for the project. Approximately
30% of the project capital costs are attributed to infrastructure including
US$53 million for the construction of a hydro electric facility, while mining
fleet, pre-strip and processing plant comprise a further 36% of the estimated
capital expenditure. Significant amounts were also allowed for logistics;
engineering, procurement and construction management ("EPCM"); contingency and
owners costs.

    Bankable Feasibility Study

    The Company has retained the same team who completed the pre-feasibility
study to undertake the bankable feasibility study. The principal engineer
Lycopodium Engineering Pty Ltd from Perth, Western Australia (WA) will manage
key elements of and compile the bankable feasibility study. Their scope
includes management of a significant metallurgical test work program, process
flow sheet definition, design and costing of the process plant and
infrastructure, management of Knight Piesold and compilation of the overall
study. The team of consultants working with Lycopodium include:

    
        -  Cube Consulting (Perth WA) - Resource Estimates and Mine Design

        -  Ammtech (Australian Metallurgical and Mineral testing consultants)
           (Perth WA) - Metallurgical test work

        -  SGS Ghana - Environmental and Social studies

        -  George Orr & Associates (Perth WA) - Geotechnical studies

        -  Knight Piesold (through Lycopodium, Perth, WA) - Tailings dam
           design, hydrogeological studies, civil engineering and hydro
           electric facility study and design.
    

    Activities in relation to bankable feasibility study are ongoing and the
Company is continuing to work towards completion of the bankable feasibility
study by mid to late 2007. Following approval of the bankable feasibility
study by the Company's Board and relevant stakeholders, including Okimo, the
Company intends to move into the value engineering stage of the project in the
second half of 2007 and review the requirements for securing long lead items
needed for the construction and start up of the mining operation. The Company
has continued with the work to prepare the bankable feasibility study since
the challenges to the Company's title have been received as the Board
considers this to be in the best interests of the Company and its
stakeholders, including Okimo and the DRC Government. Consequently the Board
does not currently envisage any delay in the process, but this will need to be
kept under review and the shareholders informed appropriately.

    Regional Exploration

    The Company continued soil sampling programmes on a number of untested
gold occurrences. Several regional targets were tested using the RC drill rig
with encouraging results as reported throughout the course of 2006. Follow up
work is planned as a matter of process in respect of significant gold-in-soil
anomalies identified to date with a number of potential areas to follow up.

    Expenditure

    Exploration and feasibility costs during the period ended December 31,
2006 on the Moto Gold Project totalled approximately $22.8 million. These
costs included infill and exploration drilling, sterilisation and geotechnical
drilling, consumables, staff costs, fuel, equipment, consultants,
metallurgical test work, mine design and environmental analysis costs. These
costs are in accordance with budget expectations. As noted above the work
being undertaken is expected to result in completion of bankable feasibility
work by mid to late 2007. Estimated expenditures to complete the bankable
feasibility study are set out below.


    Other Mineral Interests

    The Company also holds interests through joint ventures in a number of
other exploration properties in Burundi in Central Africa and in Western
Australia.

    Burundi Joint Venture (Moto diluting to 15%)

    The Group is a party to an agreement in respect of three areas of Central
Burundi in Central Africa totalling 376 square kilometres. The projects are
prospective for nickel, copper, cobalt and platinum. A major North American
mining company can earn a 65% interest (Moto diluting to 15%) by sole funding
US$4.875 million exploration expenditure.

    Gidji Joint Venture (Moto 30% and diluting)

    The Group is party to a joint venture with Placer Dome covering
approximately 50 km2 in the eastern goldfields region of Western Australia.
Moto has an interest of approximately 30% in the joint venture, and this
interest is reducing as Moto is not contributing to the current exploration
programme.

    Pilbailey Joint Venture (Moto 16% and diluting)

    The Group is party to a joint venture with Harmony Gold Mining Ltd
covering approximately 75 km2 in the eastern goldfields region of Western
Australia. Moto has an interest of approximately 16% in the joint venture, and
this interest is reducing as Moto is not contributing to the current
exploration programme.

    Corporate

    In conjunction with the change in the focus of the Company from the
exploration stage at the Moto Gold Project to project feasibility and
development, a number of significant appointments were made to the board of
directors and the management team.

    
        -  In August 2006 Mr Mark Arnesen was appointed Chief Financial
           Officer and was appointed to the board as a Finance Director.
           Mr Arnesen has extensive experience in the structuring and
           negotiation of finance for major resource projects in Africa.
           Mr Andrew Dinning, the Company's Chief Operating Officer, has also
           joined the board as an Executive Director.

        -  In February 2006 Mr Louis Watum was appointed as General Manager
           for the DRC operations. Mr Watum is Congolese and a metallurgist
           by training and has extensive international mining industry
           experience, he was the operations manager at Yatela in Mali for
           Anglogold Ashanti prior to joining the company. Mr Watum has
           direct responsibility for daily management of operations in the
           DRC and is involved in in-country affairs.

        -  In January 2007 Mr Antony Cronin was appointed as Group Chief
           Accountant and with effect from March 2007 as Company Secretary,
           following the resignation of Mr Patrick Flint. Mr Cronin has
           extensive experience in public company administration, corporate
           regulation and mine site operations within the resources industry.
    

    In March 2006 the Company completed a bought deal of 5.5 million common
shares at C$7.65 per share for gross proceeds of C$42.1m to be used primarily
to fund the exploration programme, the feasibility study and proposed mine
development at the Moto Gold project.
    In addition during the period a total of 11,197,519 warrants and stock
options were exercised, resulting in the contribution of a further
approximately $19.1 million in cash. As the Company is at the development
stage it has no sales revenue. Expenditure is funded by equity raisings. At
December 31, 2006 the Company had cash at bank and short term marketable
securities of $62.3 million.

    Summary Financial Information

    The following financial statements should be read in conjunction with the
2006 Consolidated Financial Statements and Management's Discussion and
Analysis available on the Company's website at www.motogoldmines.com



    
    CONSOLIDATED BALANCE SHEET
    As at December 31, 2006, 2005 and June 30, 2005
    (Stated in Australian Dollars)

                                          Dec 31,      Dec 31,     June 30,
                                           2006         2006         2005
                                             $            $            $
    ASSETS
    Current Assets
      Cash and cash equivalents         62,336,081   24,474,298    5,984,558
      GST recoverable                      229,263      136,699      150,549
                                       ------------ ------------ ------------
                                        62,565,344   24,610,997    6,135,107
                                       ------------ ------------ ------------

    Receivable                          26,667,085            -            -
    Capital assets                       1,003,859      551,887      414,807
    Mineral properties                  66,511,552   26,171,721   18,594,681
                                       ------------ ------------ ------------
                                        94,182,496   26,723,608   19,009,488
                                       ------------ ------------ ------------

                                       156,747,840   51,334,605   25,144,595
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------
    LIABILITIES
    Current Liabilities
      Accounts payable and accrued
       liabilities                       1,788,052    1,669,062    1,991,443
      Loan due to joint venture
       partner                          12,669,454            -            -
      Consolidation payment due
       to Okimo                          6,334,727            -            -
                                       ------------ ------------ ------------
                                        20,792,233    1,669,062    1,991,443
                                       ------------ ------------ ------------
    Non Current Liabilities
      Loan due to joint venture
       partner                          24,668,446            -            -
                                       ------------ ------------ ------------
                                        45,460,679    1,669,062    1,991,443
                                       ------------ ------------ ------------
    SHAREHOLDERS' EQUITY
      Share capital                    135,479,418   65,658,479   41,089,339
      Warrants                           2,053,152    3,043,065      774,389
      Contributed surplus               12,043,193    5,823,781    1,869,732
      Deficit                          (38,288,602) (24,859,782) (20,580,308)
                                       ------------ ------------ ------------
                                       111,287,161   49,665,543   23,153,152
                                       ------------ ------------ ------------

                                       156,747,840   51,334,605   25,144,595
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------



    CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
    For the year ended December 31, 2006, the 6 month period ended
    December 31, 2005 and the year ended June 30, 2005
    (Stated in Australian Dollars)


                                         12 month      6 month     12 month
                                          period       period       period
                                         ended Dec    ended Dec   ended June
                                           2006         2005         2005
                                             $            $            $

    Interest Revenue                     2,821,931      313,225      350,834
                                       ------------ ------------ ------------

    Operating Expenses
    Employees and consultants            1,677,718      494,470      878,460
    Amortization                           393,650      117,420      162,752
    Occupancy                              255,840      107,325       48,686
    Shareholder and listing                588,988       77,582      293,460
    Marketing and promotion                881,098      519,369      599,377
    Foreign exchange loss/(gain)         3,407,406     (516,170)           -
    Stock based compensation             8,377,507    3,611,633      277,033
    Interest                               405,036            -            -
    Other                                  263,508      181,070      183,544
                                       ------------ ------------ ------------
                                        16,250,751    4,592,699    2,443,312
                                       ------------ ------------ ------------

    Loss for the period                 13,428,820    4,279,474    2,092,478

    Deficit - beginning of period       24,859,782   20,580,308   18,487,830
                                       ------------ ------------ ------------

    Deficit - end of period             38,288,602   24,859,782   20,580,308
                                       ------------ ------------ ------------

                                             Cents        Cents        Cents

    Basic loss per share                     23.71         10.8          7.3

    Weighted average number of shares
     outstanding                        56,649,524   39,622,368   28,766,109
                                       ------------ ------------ ------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the year ended December 31, 2006, the 6 month period ended
    December 31, 2005 and the year ended June 30, 2005
    (Stated in Australian Dollars)

                                         12 month      6 month     12 month
                                          period       period       period
                                         ended Dec    ended Dec   ended June
                                           2006         2005         2005
                                             $            $            $

    Cash flows used in operating
     activities
    Loss for the year                  (13,428,820)  (4,279,474)  (2,092,478)
    Items not affecting cash:
    Amortization                           393,650      117,420      162,752
    Stock based compensation             8,377,507    3,611,633      277,033
    Interest accretion on joint
     venture loan                          405,036            -            -

    Changes in non-cash working
     capital balances
    GST recoverable                        (92,564)      13,850       25,882
    Accounts payable and accrued
     liabilities                           112,405     (322,381)     146,128
                                       ------------ ------------ ------------
                                        (4,232,786)    (858,952)  (1,479,683)
                                       ------------ ------------ ------------

    Cash flows used in investing
     activities
    Expenditures on mineral
     properties                        (23,732,532)  (7,577,040) (10,891,804)
    Purchases of capital assets           (845,831)    (254,500)    (263,467)
                                       ------------ ------------ ------------
                                       (24,578,363)  (7,831,540) (11,155,271)
                                       ------------ ------------ ------------

    Cash flows provided by financing
     activities
    Proceeds from issuances of shares
     and warrants                       69,798,927   28,987,738   13,334,412
    Share issue costs                   (3,125,995)  (1,807,506)    (424,624)
                                       ------------ ------------ ------------
                                        66,672,932   27,180,232   12,909,788
                                       ------------ ------------ ------------

    Net increase in cash and cash
     equivalents                        37,861,783   18,489,740      274,834

    Cash and cash equivalents -
     beginning of period                24,474,298    5,984,558    5,709,724

                                       ------------ ------------ ------------
    Cash and cash equivalents -
     end of period                      62,336,081   24,474,298    5,984,558
                                       ------------ ------------ ------------
    


    Additional Notes

    Scientific or technical information in this Annual Report has been
prepared under the supervision of Greg Smith, technical consultant for the
Company and a qualified person under National Instrument 43-101 and a member
of the Australasian Institute of Mining and Metallurgy (AusIMM). Greg Smith
has sufficient experience which is relevant to the style of mineralisation
under consideration and to the activity which he is undertaking to qualify as
a Competent Person as defined in the 2004 Edition of the "Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the
JORC Code).
    The Information in this report that relates to Mineral Resources is based
on a resource estimate compiled by Rick Adams who is a member of the
Australasian Institute of Mining and Metallurgy (AusIMM) and a qualified
person under National Instrument 43-101. Rick Adams is a director of Cube
Consulting Pty Ltd. Rick Adams has sufficient experience which is relevant to
gold mineralisation and resource estimation to qualify as a Competent Person
as defined in the December 2004 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the
JORC Code). Rick Adams consents to the inclusion in this report of the
Information, in the form and context in which it appears.
    The November 2005 Conceptual Study was undertaken by Cube Consulting Pty
Ltd. The objectives of this high level study were a) to provide a first pass
indication of the potential of the resource, and b) to provide guidance for
exploration drilling with the aim of improving the confidence level of the
resource. The assessment is preliminary in nature, and includes inferred
mineral resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be
categorized as mineral reserves. There is no certainty that the preliminary
assessment will be realized.
    The July 2006 pre-feasibility study was principally undertaken by
Lycopodium Engineering and Cube Consulting Pty Ltd. The objectives of this
study were a) provide initial project economics including a capital
expenditure estimate for the Moto Gold Project, estimates of operating
expenditures and overall project economics, b) provide estimates of project
physicals including mining rates and gold output, c) define a way forward to
enable planning for completion of a bankable feasibility study in a timely and
cost effective manner. The study was completed to a pre-feasibility level of
confidence using indicated resources.





For further information:

For further information: in respect of the Company's activities, please
contact: Klaus Eckhof, President and CEO, Tel: (61 8) 9240 1377, Email:
eckhofk@crcpl.com.au; Mark Arnesen, Financial Director and Chief Financial
Officer, Tel: (61 8) 9240 1377, Email: marnesen@motogoldmines.com; Andrew
Dinning, Chief Operating Officer, Tel: (61 8) 9240 1377, Email:
adinning@motogoldmines.com

Organization Profile

MOTO GOLDMINES LIMITED

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