A Year ago FlyOrDie was not responsible for the code relating to the new island.
After FlyOrDie bought the code many changes have taken place. It was clearly stated at that time that there was no estimate on when the new island would be ready, and there were other more important issues to deal with, such as reducing the lag players experienced (which was by far the most important issue in the game at the time FlyOrDie took over the game). An intergrated chat room was also produced, and a lot of other changes also took place.
Just because you do not see a lot of changes does not mean that work isnt being done with larkinor. Many of the changes and upgrades to the game take place "behind the scenes" and will not have any obvious effect the players in general can see.
Currently the status of the code for the new island remains unchanged. It is being worked on but there is no current estimate for its release.