Romarco Announces Fourth Quarter Results

ROMARCO MINERALS INC. ("TSXV: R" - the "Company") is pleased to report its financial results for the year ended December 31, 2005. Details of the Company's financial results are described in the audited consolidated financial statements and Management's Discussion and Analysis, which are available on SEDAR and on the Company's website at www.romarco.com.  

The loss from operations of the Company primarily reflects the overhead costs incurred by the Company as it oversaw exploration at its projects and evaluated precious metals properties for acquisition as well as costs incurred in the process of merging with Western Goldfields. The exploration and development costs incurred at the Company's projects have been capitalized to mineral property interests.

The Company had a net loss of $695,150 (2004 - $1,078,302) for the three months ended December 31, 2005 and $2,420,267 for the year ended December 31, 2005 (2004 - $1,732,283).

General and administrative costs for 2005 are higher than 2004 due primarily to the extra costs incurred by the company as it worked to complete the merger with Western Goldfields.

Merger costs of $691,621 include the US$200,000 due diligence fee paid to U.S. Gold Corp. Initially, the proposed merger between Romarco and Western Goldfields was to also include U.S. Gold. Under these initial terms, Romarco was to advance US$1,500,000 to U.S. Gold in the form of the US$200,000 fee, payable immediately, and a loan of US$1,300,000. Upon payment of this US$1,300,000 the previously paid US$200,000 fee would be waived by U.S. Gold and added to the US$1,300,000 to form a loan of US$1,500,000 repayable by U.S. Gold in cash or shares of U.S. Gold. In August 2005, and prior to Romarco advancing the additional US$1,300,000, Romarco was notified that U.S. Gold was withdrawing from the planned merger. As a result, Romarco expensed the US$200,000 fee paid to U.S. Gold. Merger costs also include legal fees incurred in the preparation of the merger agreement and planned F-4 Registration Statement, as well as the fees paid for the preparation of the independent fairness opinion.

Prior to entering into the agreements to merge with Western Goldfields and U.S. Gold, Romarco entered into an agreement with Quest Capital Corp. to provide a US$6.0 million standby facility to Romarco. The Facility was put in place to enable Romarco to proceed with negotiations regarding potential mergers and acquisitions. As consideration for Quest providing the Facility, Romarco issued 1,248,800 common shares to Quest in June 2005. The value of these shares was recorded as deferred financing costs and was amortized over the 5 month life of the facility. Romarco did not draw down any funds from the Facility which expired on October 31, 2005.

Salaries and office rent and communications costs increased from 2004 due to increased staffing levels. Shareholder relations and transfer agent costs increased in 2005 primarily due to increased shareholder relations activities by the Company as it seeks to increase public awareness of its projects and activities. While the Company's insurance rates remain the same in 2005 as in 2004, insurance costs for 2005 are greater than for 2004 due to the increased activity and thus, added exposure, of the Company. Legal fees, travel costs and consulting fees for 2005 are higher than for 2004 due to the extra activity involved as the Company sought out acquisition targets and negotiated its merger with Western Goldfields.

Stock-based compensation for 2005 is considerably higher than it was for the previous year. During 2005 the Company issued 1,450,000 options to staff, directors and consultants, while its previous grant of options was in 2003. The Company calculates stock-based compensation as the estimated fair value of stock options and recognizes this cost during the period that the options vest. As a result, stock-based compensation in 2005 includes the cost of options issued in both 2003 and 2005, while in 2004, stock-based compensation only includes the cost of the options issued in 2003.

The Company recognized $166,600 of stock-based compensation in 2005 with a corresponding increase in the separate component of shareholders' equity. For 2004, the Company recognized $113,000 of stock based compensation, of which $15,000 was capitalized as mineral property expenditures and $98,000 was expensed as stock based compensation, with a corresponding increase in the separate component of shareholders' equity.

Interest income earned in 2005 is lower than in 2004 due to decreased cash levels.

In February 2005 the Company gave notice to Seabridge Gold Inc. that it was terminating the option agreement on the Hog Ranch Gold Project. In accordance with CICA Handbook Section 3063, "Impairment of Long-Lived Assets", the accumulated acquisition, land holding and deferred exploration costs spent at Hog Ranch to December 31, 2004 of $815,114 were written-off. In 2005, the Company incurred an additional $7,570 in deferred exploration costs which were offset by the recovery of $11,615 for previously paid reclamation costs. This resulted in a net recovery of costs of $4,045 for 2005.

In September 2005, the Company completed a private placement financing. The Company issued 22,400,263 units for gross proceeds of $3,808,045. The terms of the private placement were $0.17 per unit with each unit consisting of one common share and one full common share purchase warrant. Each full warrant is priced at $0.21 with a two-year term. The common shares issued pursuant to the private placement are subject to hold periods expiring in January 31, 2006. In connection with this private placement, an arrangement fee of $120,000 and a finder's fee of $19,712 were paid. Total share issue costs for this private placement totalled $186,529.

During 2005, the Company spent $1,213,079 and issued 400,000 common shares valued at $88,000 for its mineral property interests while in 2004, the Company spent $1,128,350 and issued 500,000 common shares valued at $162,000 for its mineral property interests.

During October and November 2005 the Company advanced a total of US$705,000 to Western Goldfields under the interim financing provision of the merger agreement between Romarco and Western Goldfields. These advances plus accrued interest were repaid by Western Goldfields in February 2006 upon termination of the merger process. In consideration for agreeing to terminate the merger, Western Goldfields paid Romarco a total of US$1,953,000 for a break fee, expense compensation and the repayment of all outstanding loans and accrued interest. Romarco was initially optimistic about the potential for the combined company. However, in light of a variety of circumstances, including other corporate alternatives and delays in the merger process, Romarco determined that the termination of the merger process was in the best interests of Romarco's shareholders. Part of the determination was based on the receipt of the $2,250,000 in cash from Western Goldfields, which will enable Romarco to expand its exploration and drilling programs on its properties.

Drill programs at four of Romarco's properties are planned for 2006: Buckskin-National, Pine Grove and Roberts Mountains in Nevada; and Cori Puncho in Peru. In addition, Romarco believes that the termination of the merger will allow management to focus on alternative corporate development opportunities. Romarco plans to continue its acquisition strategy with the objective of having several projects at various stages of development in its portfolio to provide shareholders the maximum exposure and leverage to the gold market.

For further information, please contact Diane Garrett, President and C.E.O. at (830) 634-7489 or by e-mail at dgarrett@romarco.com or Mr. Ralf Langner, V.P. Finance at (604) 688-9271 or by e-mail at rlangner@romarco.com  

ON BEHALF OF ROMARCO MINERALS INC.

Diane R. Garrett
President and C.E.O.