MercoPress. South Atlantic News Agency

Falkland Gold and Minerals Ltd Announcement

Falkland Gold and Minerals Limited, the exploration company with exclusive
rights to explore for gold and minerals in the Falkland Islands, is pleased to
provide the following operational update.

The Company has been drilling targets identified from its 2004 aeromagnetic survey of the Falkland Islands, a number of which have coincident alluvial gold in adjacent drainage systems. FGML identified at least 23 targets and has commenced exploration activities to investigate these targets.

Drilling commenced in March 2005 and as of the end of June a total of 2,630 metres of HQ core had been drilled on three targets located near our Goose Green facility (targets T5, T6 and T7).

The first analytical results from the drilling program have now been received and the Company can report the following findings relating to target T5 in East Falklands :

Sub-economic indications of gold (Au) were identified in three intersections (0.19 grams Au/tonne over 0.75 metres; 0.19 grams Au/tonne over 1.0 metre and 0.18 grams Au/tonne over 1.0 metre). There was one sub-economic intersection of platinum (Pt) and palladium (Pd) (0.17 grams Pt/tonne over 1.0 metre and 0.14 Pd grams/tonne over 1.0metre). A silver showing of 3.5g per ton over a 1.3 metre intersection was also identified in doleritic intrusions.

The gold and platinum anomalies were associated with carbonaceous shale and mudstones in an area which appears to be a structurally controlled fault wedge. Whilst the values received are sub-economic, they are of great geological merit to the exploration. The anomalies associated with the shale and mudstones and those with the doleritic dyke are encouraging as they demonstrate that the earlier exploration work has correctly identified anomalous areas. The results and core logs have also been re-submitted for analysis to enhance the original geophysical study.

This is the first drilling ever done on the Falklands and these initial assays are starting to validate the initial target selection from the geophysical and geochemical work carried out in 2004. Whilst this scientific success should assist in homing in on potential economic success, there is a need for considerable exploration work in order to fully understand the geological settings and to then focus in on any higher grade zones.

FGML has also commenced target refinement soil sampling on Target T11 where geochemical sampling has returned anomalous gold results confirming the original stream geochemical samples. The gold anomalies are co-incident with platinum and silver anomalies. At this stage, only a quarter of the geochemical work is complete but these preliminary results are encouraging.

Drilling continues in East Falklands with 20 of the initial 23 identified targets still to be investigated. As work advances on these targets and assay results are received back from the laboratory and interpreted, the Company will continue to report its findings on a regular basis.

Strategic Review and Operational Update

? Concept of an economically viable gold deposit in the Falkland Islands remains strong ? Strategy, as communicated at the time of the Company's flotation on AIM in December 2004, remains in place ? Current and planned expenditure is on target - FGML expects to complete its two year, initial exploration, programme on budget

Overview

Having completed approximately 25% of the planned drilling programme the Board of FGML has carried out a strategic review of the Company's original exploration programme set out in its November 2004 prospectus. The Board has concluded that this original strategy, and the timetable of planned activity within it, remains the optimum work programme to identify gold and minerals in the Falkland Islands.

To enhance the exploration work FGML is appointing independent consultants to review the selection and siting of new drill holes and ensure that no opportunity has been overlooked. In addition, a series of extensions to ground geophysics and ground geochemistry on sub peat soil sampling has been approved by the Board. This is intended to define further anomalies for drilling.

The Board is pleased to note that drilling continued throughout the Austral winter.

Drilling Operations

Drilling activity began in March 2005 and by 30 September 2005 a total of 6,000 metres of core had been drilled, testing seven of the originally identified nine priority targets. FGML remains on target to complete Stage 2 of its programme on schedule and to drill approximately another 18,000m, by Q4 2006, on the other fourteen of the twenty three identified targets, and any other targets subsequently identified.

Initial broad scale geochemistry has indicated promising new targets in the Glorious Hill region. These targets will be followed up with further soil sampling and drilling.

Drilling results have, to a large extent, confirmed prior geological interpretation and are being used to further refine target selection. The results to date, and the knowledge derived from them, have allowed the original model to be refined and improved and will focus future drilling activity. Progress to date has covered more of the identified targets than was originally planned and the improved model will continue this trend.

Financial

The total cash outflow is expected to be of the order of £100,000 per month until the conclusion of the exploration phase of the drilling at which time there will be in the region of £5.5million available for the definition drilling programme, which if required, could commence by Q4 2006.

Richard Linnell, Executive Chairman of FGML, commented:

'Our strategic review has confirmed my original confidence that the Falkland Islands represents an exploration target with real potential for a gold deposit. I am satisfied that we have sufficient financial resources to complete our preliminary exploration activity and define any discoveries'