Audited Results for the Year to 31 March 2014

9 July 2014 Mwana Africa PLC ("Mwana" or the "Company" or the "Group") Audited Results for the Year to 31 March 2014 Mwana Africa PLC is pleased to announce its audited financial results for theyear to 31 March 2014. Financial highlights Group revenue up 30.5% to $142.5m (2013: $109.2m) Group EBITDA up 40.4% to $25.0m (2013: $17.8m) Group net profit for the year of $50.6m after a $28.0m reversal of impairmenton BNC (2013: loss of $43.5m after a $43.7m impairment charge on BNC) Attributable Group net profit for the year of $36.6m (2013: net loss of $28.6m)which equated to a basic earnings per share for the year of 2.89 US cents (1.82GB pence). Prior year 2013: loss per share of 2.62 US cents (1.66 GB pence). Corporate costs cut from 7.8% to 4.5% of revenue. Group net cash from operating activities up 60.5% to $6.1m (2013: $3.8m) Exploration spend decreased by 65.4% to $5.3m (2013: $15.3m) Operational highlights Freda Rebecca gold sales of 58,704 ounces for the year (2013: 65,350 ounces) Freda Rebecca cash costs (C1) $959/oz (2013: $897/oz), all-in sustaining costs(C3) $1,186/oz (2013: $1,115/oz) Freda Rebecca gold recoveries up to 82% (2013: 81%) BNC first concentrate shipped April 2013 and new mining plan adopted July 2013 BNC production resumed profitably with nickel sales of 7,129 tonnes for theyear BNC cash costs (C1) $11,567/t, all-in sustaining cost (C3) $12,462/t Chinese partner initiated Katanga copper buy-in by funding $7m exploration Post period highlights Freda Rebecca investigates viability of gold recovery from tailings BNC Smelter restart plan in place, subject to funding, to produce nickel alloyby calendar 2015. Transfer of Zani Kodo mining licenses into Mizako SARL (Mwana Africa PLC is 80%shareholder) from SOKIMO SARL. Klipspringer investigates viability of underground mining Kalaa Mpinga, Chief Executive Officer of Mwana commented today: "Despite sometemporary setbacks at the beginning of the year, Mwana has made substantialprogress in the past financial year - progress that has continued since theyear's end - and that has resulted in a significant strengthening of theCompany's financial structure. Our principal success came with the resumption of sales of nickel inconcentrates by BNC's Trojan nickel mine in terms of an off-take agreement withGlencore. The significant cash-flow improvement that stemmed from higher nickelprices was complemented by solid production outcomes following the shift tomining the ore body's higher-grade massives. Nickel prices have improved inresponse to Indonesia's decision to restrict exports of nickel in ore, andwhile I am certain that the price will be volatile in the near term, we areexpecting it to have strengthened by 2017. At the start of the past financialyear we were contemplating having to ask shareholders for additional funding,but we took an early decision to change direction. The improved cash flow fromBNC enabled us to reverse $28m of the previous year's $43.7m BNC assetsimpairment. Operationally, we undertook a fundamental restructuring to cutcorporate costs. Since the financial year's end we have embarked on the project to restart BNC'ssmelter (subject to securing funding) with the aim of starting production ofnickel alloy in the first quarter of calendar 2015. Not only will this take thecompany up the value chain as better prices will more than offset the smelter'soperating costs, but we will have the benefit of the significantly lower costof transporting nickel metal rather than concentrate to our export harbour. Our strategy now is to reward shareholders for their unstinting financialsupport as we continue to build Mwana into a diversified, multi-national miningcompany. Our financial strategy is to be self-financing or, where appropriate,to take in other partners or funding for specific projects. The success of thisstrategy has been shown in our Katangese copper partnership with the Chinesecopper-products manufacturer, Zheijiang Hailiang Company Limited. The Freda Rebecca gold mine suffered some production set-backs in the pastfinancial year - temporarily lower mining grades and production interruptionswith the failure of a leach tank. The problems had been resolved by the end ofthe financial year. We are now in a position to evaluate the viability ofadding gold production from the reprocessing of old residues. In South Africa we are currently evaluating the viability of resumingunderground mining at the Klipspringer diamond mine as well as of thepossibility of recovering small diamonds from the mine's coarse-tailingsresidues. During the past financial year recovery of micro diamonds fromresidue slimes contributed to covering the property's care-and-maintenancecosts. The current financial year is confidently expected to result in Mwana's furtherfinancial strengthening and in that of our ability to advance the developmentof new projects. And, as the share price has advanced since the start of 2014,I am confident that further improvements will flow from our proving our abilityto develop and operate our assets profitably." About Mwana Africa PLC Mwana Africa PLC is a pan-African, multi-commodity mining and developmentcompany. Mwana's principal operations and exploration activities involve gold,nickel, copper and diamonds in Zimbabwe, the Democratic Republic of the Congo(DRC), South Africa, Angola and Botswana. In Zimbabwe, Mwana Africa's interests are the Trojan and Shangani nickel mines,and the Freda Rebecca gold mine. Mwana's nickel and gold projects includeHunter's Road and Maligreen, with the Makaha deposit being a gold explorationprospect. * The Freda Rebecca gold mine in Zimbabwe restarted operations in 2009 and in the 12 months ending March 2014, produced 58,704 oz of gold. * The Trojan nickel mine is owned by Mwana's Zimbabwe subsidiary, Bindura Nickel Corporation (BNC). After a four year period of being under care and maintenance, in 2012 BNC carried out a US$23m restructuring and recapitalisation programme which allowed it to restart the Trojan mine. The first sale of concentrate to Glencore took place in April 2013. * In the DRC, Mwana Africa has exploration programmes in Zani-Kodo (gold), Katanga (copper) and a 20% stake in Société Minière de Bakwanga (MIBA) - (diamonds). * Copper in the Katanga Province - Mwana has a Joint Venture Agreement with Zhejiang Hailiang Company Limited to jointly explore some of these licensed areas. The Katanga concessions are otherwise known as SEMHKAT (Société d'exploration Minière du Haut Katanga). * The joint venture Zani-Kodo project has a gold mineral resource of 2.97moz. * Klipspringer diamond mine is Mwana's South African interest. Mwana holds a 69.77% interest in Klipspringer, which is currently on care and maintenance but involved in a tailings retreatment project and investigating the viability of underground mining. Chairman's letter The past year has probably been one of the most significant in our company'shistory, both strategically and operationally. Strategically, we affirmed our position and goal to be a multi-commodity,multi-country Pan-African mining group. After several years of building ourasset portfolio with shareholder funding to achieve a position where we arecapable of achieving income self-sufficiency, our business model has moved intoits next logical phase of generating future growth organically, seeking fundingand, if appropriate, partners, on a specific project by project basis ratherthan by general capital raising. Our focus is firmly set on rewardingshareholders through growth in asset value. Operationally, we undertook a fundamental restructuring, founded on the premisethat, in mining, the lowest-cost producer wins the day. This was motivated byfalling prices for the commodities we produce (gold, nickel and diamonds); bythe understanding that raising further development capital could be difficultwithout offering increased foreseeable value and by the imperative of matchingour projects to our capacity. In laying the groundwork for this, during the 12months under review, we: • Trimmed our head count from board level down; • Reduced the scale of our London office; • Reduced salaries voluntarily; • Reduced our reliance on professional services; • Cut operating costs; and • Improved operating efficiencies. Our activities are being directed towards the consolidation of ourdiversification strategy, reducing overheads, derisking technical mining andexploration issues, increasing our operational cash generation capabilitiessuch that, of our five major projects, two - Bindura Nickel and Freda RebeccaGold Mine - are income generating; two - copper and diamonds - have reducedtheir burn rates; and one, the Zani-Kodo gold project in the eastern DRC, isadvancing at limited cost to Mwana. As regards corporate costs, we are on trackto achieve our target in annual savings, after allowing for once-offretrenchment and other costs of reduction or closure. We have the assets in our portfolio capable of delivering on our evolvingstrategic objectives. At BNC, the operational plan allows earlier mining accessand the blending of higher grade massives with disseminated ore to ensure asustainable improved feed grade through the Trojan life of mine plan. We haverestarted the deepening project and organic growth will centre on reopening thesmelter, subject to funding, to add value through beneficiation. Most of thelegacy labour liabilities at BNC should be discharged by December 2014 and theother liabilities by December 2015, freeing cash flows to be applied toinvestment and operational purposes. At Freda Rebecca, we will complement ourunderground production, by concentrating on improving the performance of ourplant and complete our testing programme of the recently commissioned tailingsretreatment plant. At SEMHKAT, the labour force has been substantially cut andour Chinese partner, Hailiang, has assumed responsibility for explorationexpenditure. At Klipspringer Diamonds, the joint venture to treat residuematerial is generating income while the restart of the mine is being evaluated.At Zani Kodo, we are assessing the prospects of feasibility studies and a smallpilot plant for gold production. Our emphasis upon becoming a multi-commodity company is bearing fruit throughthe reduction of risks associated with being dependant on a single metal. Wehave already enjoyed some benefits from this commodity diversification, withBindura Nickel production having supported the group and Freda Rebeccapre-2009, while Freda Rebecca production supported the group and Bindura Nickelpost-2009. I am confident of the sound long-term prospects of our two principalmetals, though the immediate future is likely to exhibit price volatility. Thenickel price has been bolstered by Indonesia's ban on exports of nickel ore,whilst the gold price has been lower as investors anticipate interest rateincreases that raise the cost of holding bullion as an investment. As the past year's results have shown, we have demonstrated an ability tocontain costs to acceptable levels. We are fortunate that the majority of bothour revenues and costs are denominated in US dollars as this relieves us ofsome of the distraction of managing exchange rate fluctuations. Our strategy isto mine profitably. We will not pursue new ventures unless they display clearprospects of sound returns on investment. Careful cash-flow management is central to our business plan and we will directinvestment to those projects and operations that offer the best prospects ofreturns. This applies as much to our exploration initiatives in the DRC as toour developed mines in Zimbabwe, and this is dealt with more fully by mycolleague and CEO, Kalaa Mpinga, in his CEO's report. In Zimbabwe - the central point of our mining and processing operations - theoutcome of the general election in July 2013 lifted much of the politicaluncertainty that preceded it. Like the governments of many other countriesdependent on primary products, Zimbabwe is aware of the need to foster miningand investment, at the same time being mindful of its responsibility to ensurethat the local populace should share fairly in the fruits of their country'sown resources. It is pleasing that we are in a position to resume smelting atBNC as it represents cooperation with the Zimbabwean government and itsbeneficiation objectives. We believe that this, too, can contribute to theindigenisation policy by creating more jobs for local people, by increasingpurchases from local suppliers and through generating higher taxable revenues. I have been Interim Chairman since only February 2014, but have alwaysappreciated the skills and expertise that my board colleagues and executivesbring to the management of our company. During the year my long-servingpredecessor Oliver Baring retired, along with John Anderson and Etienne Denisand I thank them for the direction they gave during their tenure on the Board.Oliver was succeeded, albeit briefly, by Mark Wellesley-Wood who we would alsolike to thank for his contribution. I would also like to thank Donald McAlisterwho left in September, for his contribution during his time on the Board and towelcome our new Finance Director Yim Kwan to the Board. These departures meanthat we are seeking to appoint a permanent Chairman, as well as improving thebalance of our Board, and that search will be completed as expeditiously aspossible. I would like to express my sincere thanks to my colleagues on theboard, our senior executives and all of our staff in many countries for theirsupport during the past challenging year. I also express my gratitude to ourshareholders and stakeholders for their continued support, which hascontributed the successes already mentioned above. Safety is our priority, and it is with deep regret that I record theunfortunate deaths of two of our colleagues, Lovemore Nyanusanu and ShepherdMuradzi, in accidents at Freda Rebecca and Trojan. My condolences go to thefamilies, friends and colleagues of the both men. I assure all of our employeesthat our efforts to ensure safety are a priority and remain unremitting. I make no forecast of our group's near-term performance, particularly given thecurrent uncertainties over commodity prices. There remains some distance totravel before we are generating positive cash flows at all of our projects. Butwhile we will be patient in achieving this, we remain mindful of our commitmentto deliver wealth to our shareholders. We shall build on our assets that aregenerating positive cash flows and carefully develop those that are still intheir infancy or are being maintained in anticipation of profitabledevelopment. Stakeholders may rest assured that we will work hard to implementour strategy and focus on the sound development of our assets. Stuart Morris Chairman Chief Executive's review The performance of Mwana's people during the past financial year underscoresour capacity to position our company as a leading emerging miner on the Africancontinent. It was a performance that overcame difficulties and set-backs whiletaking new projects forward. This demonstrated our ability to contain costs andto optimise our return on assets. But the past year was also one which delivered personal tragedies. At the FredaRebecca gold mine, excavator operator Lovemore Nyanusanu (32) died on 13October 2013 in a mud rush. At the Trojan nickel mine, Shepherd Muradzi (35), asupport rig assistant, lost his life in an underground tramming accident on 16March 2014. I join with all of my colleagues in sending my most profoundcondolences to the families of Lovemore and Shepherd and to their friends andcolleagues. Apart from these two unfortunate losses, our overall safety record measured inthe Lost Time Injury Frequency Rates (LTIFRs) improved at the two producingmines. Safety comes second to nothing at our operations. We ensure that ouremployees and contractors are equipped and trained to work safely and to ensurethe safety of their colleagues. As the past year started, members of the technical staff at Freda Rebecca wereengaged on replacing a leach tank that had failed in the previous year. Thereplacement was finished in the year's second quarter and complemented by asecond leach tank. Simultaneously the team completed the pilot treatment plantfor retreating tailings. Despite some difficulties with the tailings pilotplant's capital equipment, commissioning was nearing completion as thefinancial year ended. At the time of writing, commissioning had been completedwhich will allow thorough testing of the project. An important part of our emphasis at Freda Rebecca has been and continues to beon containing costs. While cash costs per ounce of gold remained comfortablybelow gold prices for the entire year, by the fourth quarter all-in sustainingcosts (C3) were close to the gold price, due to the operation not achieving itsvolume targets. I am, however, confident that by maximising gold production andwith careful cost controls the mine will continue to operate profitably. Ourpolicy is to mine profitable ore - we are not in the business of producing atany cost. While Freda Rebecca was being brought up to steady-state, profitableoperations, production at BNC's newly re-opened Trojan mine was being ramped upto full capacity. The year under review was the first operating period sinceoperations were placed on a care-and-maintenance basis in 2008. As thefinancial year began, we were faced with having to re-evaluate our operatingstrategy in the light of sharply declining nickel prices. We had hoped to raise additional capital to build operations, but this provedto be impractical as investors shied away from nickel as the metal's price fellsharply. Our response was to introduce a modified mining sequence, based on theresults from drilling carried out during care and maintenance. This miningmethod was evaluated thoroughly by our consultants, SRK, who confirmed it assafe, feasible and not impacting on the life of mine (LoM). This strategy hasproved its worth as nickel prices rose towards the year's end in response toIndonesia's restrictions on exports of nickel ore. Our confidence in thesustainability of nickel's price advance and the successful restart of Trojanhas allowed us to reverse a substantial part of the previous year's impairmentof BNC's assets. While this reversal has a significant positive effect on the year's reportedheadline earning, it is, perhaps, best to remember that this has no effect onthe group's cash flow. For the foreseeable future BNC will be conserving cashto fund the Trojan mine's deepening and capacity development from internalresources. Cash flow will continue to be directed at clearing BNC's legacyliabilities or debt, strengthening the balance sheet and laying the foundationfor the first profits to be reported since 2008. Once that is completed, and adding to the benefits of the mining developments,we are embarking on the current project to restart the BNC smelter, to move ournickel operations up the value chain. Preliminary planning started in the year under review and, based on the restartplan reviewed by consultant Hatch Goba, we estimate that the project can comeon stream in the first half of 2015 with a capacity to process an annual160,000 tonnes of concentrate, of which approximately one-third will be drawnfrom other local nickel miners. The capital cost is estimated at $26.5m ofwhich half will be debt and the remainder will come from BNC's improved cashresources and cash flow. The project is expected to generate financial benefitson two important fronts - an increase in profit from selling nickel leach alloyrather than concentrate and a reduction in transport costs as we ship leachalloy rather than concentrate. In South Africa, the management of our diamond interests reflects our carefulapproach to operations. Following extensive damage caused by the flooding ofunderground workings in 2010 and 2011, the Klipspringer mine was placed on careand maintenance, where it remains pending our securing funding to re-establishunderground mining. We remain, however, confident of the longer-term potential of Klipspringer'sdiamondiferous kimberlite fissure deposits and will retain the asset. InOctober 2013 we entered into an agreement with Greenhurst Mining & Explorationto recover diamonds from the old Marsfontein slimes dumps. Greenhurst broughtin a new process for recovering micro-diamonds, a process that has proved itsworth at the slimes recovery operation. During the second half of the yearunder review 28,600 carats of small diamonds were recovered and sold at anaverage price of $21 per carat. Revenue from this recovery operation isdirected at covering the property's care-and-maintenance costs. Continuing care and maintenance has ensured that underground workings could berestored to initial production within four months followed, three months later,by the preliminary sales of diamonds. In round figures, we estimate that thecapital investment required will be approximately $4m and the pay-back on theproject will be 28 months. Discussions are taking place with a number ofoff-takers to source funding. Full details are contained elsewhere in this report, but at our Zani-Kodo goldprospect in the Ituri district of the north-eastern DRC where we are partneredby the state-owned mining company Société des Mines d'Or de Kilomoto (SOKIMO),drilling allowed us to increase the size of our gold resource to 2.97m ounces.Metallurgical testing was largely completed in the year under review and wehave entered the current year examining various plant-design options to bebuilt into a project feasibility study based, initially, on the Kodo Mainproperty. The area is a highly-prospective zone of gold-bearing greenstonedeposits with other major gold companies actively drilling and exploring nearour permit areas. Our other interests in diamonds are limited to minority stakes in prospects inthe DRC, Angola and Botswana. Though they are comparatively small interests atpresent, they do not involve Mwana investing in exploration and development andwe look upon them as long-term projects to be undertaken with our partners atsome point in the future. While our understanding of our Zimbabwean and South African resources is welldeveloped, we also see opportunities in prospective ventures under explorationin the Katanga and Orientale provinces of the DRC. Again, we are adopting acautious approach, steadily adding to the value of our properties' resourceswhile not wanting to over-extend our finances on exploration. I believe it bears repeating that our strategy is to contain costs and, whenappropriate, to partner with others with whom we can share them. This isparticularly the case with our copper/cobalt prospect in the DRC's Katangaprovince where we are partnered in a joint venture between SEMHKAT and ZhejiangHailiang Company Limited, the Shanghai listed copper tubes fabricator. In termsof the agreement, Hailiang will finance the costs of exploring and drilling 28of our 34 copper permit areas at a total cost of $25m over four years, therebybuying into an interest in the venture. In the year under review, Hailiangspent $7m on exploration, which is subject to audit and verification. Targetshave been selected based on data collected from the year's field prospectingseason. Drilling and further regional prospecting has just begun. From a personal standpoint, I have again found working with my colleagues to bestimulating and I thank them sincerely for their contributions to thedevelopment of Mwana Africa in a year which has seen the company and our futurepotential and prospects change dramatically. Their contributions have been madeat a sometimes substantial individual personal cost. The board and staffmembers have voluntarily made salary sacrifices which have helped us mitigatefalling commodity prices. I express my sincere thanks to each of theindividuals who have made these sacrifices and contributed to the company'scontinued progress during the year. There have been difficulties, but they have been overcome with confidence anddedication and the company is now on a sound footing from which to developfurther. Kalaa Mpinga Chief Executive Officer Review of operationsand exploration Gold Freda Rebecca gold mine- Zimbabwe The Freda Rebecca gold mine (Freda Rebecca) is situated near the town ofBindura, some 90km north-east of Harare. Total gold production for the year ending 31 March 2014 was 58,704oz, 7.3% downon the previous year's production of 63,350oz. A significant contributor to thevariance was a leach tank failure in the last quarter of FY2013, which affectedrecovery during the first quarter of FY2014. The failed leach tank was replacedduring the past year and a new, additional leach tank has also beencommissioned. Recoveries have now been restored. Closure for the environmentalclean-up was successful, with additional lined spill containment ponds beingcompleted in the year. Average quarterly production for the financial period was 14,676ozs of gold,and the highest level of quarterly gold production was 17,536ozs, achieved inthe second quarter. Tailings retreatment project The mine, which has been in production since 1988, has accumulated some 13million tonnes of gold-bearing tailings in three main storage facilities withinthe mine lease area. During FY13, the economic potential of recovering goldfrom Freda Rebecca's tailings dumps was evaluated and the construction of apilot recovery plant initiated. The plant was completed and commissioning beganin the year ended 31 March 2014. The objective of the pilot scale test plant is to prove that gold can berecovered economically from the tailings with little reprocessing and lowmining and handling costs. An augering programme over the dumps is expected toresult in a JORC-compliant mineral resource that has the potential to addsignificantly to Freda Rebecca's gold production. Freda Rebecca continues to focus on mining and processing efficiencies,particularly on increasing plant throughput and recovery improvement. Freda Rebecca production results: Year ended March 2014 Year ended March 2013 ('FY14') ('FY13') Tonnes mined (t) Tonnes milled (t) 1,098,244 1,043,764 Head grade (g/t) 1,060,561 958,568 Recovery (%) 2.10 2.64 Gold sales (oz) 82 81 Average gold price ($/oz) 58,704 65,350received ($/oz) 1,319 1,654Cash cost (C1) ($/ 959 897All-in sustaining cost oz)(C3) 1,186 1,115 Freda Rebecca resources: Classification Cut-off (g Tonnes Grade Au (g Gold /t) ('000t) /t) ('000oz) Indicated 1.5 21,043 2.48 1,675 Inferred 1.5 8,746 2.28 640 Total 1.5 29,789 2.42 2,315 The effective date for the Freda Rebecca resource estimate is April 2011 Zani-Kodo project - Democratic Republic of Congo(DRC) The Zani-Kodo gold exploration project in the Ituri district of the DRCcoversgold mining rights over 1,605 square kilometres in the Orientale Province.Mwana is in a joint venture with the state-owned Office des Mines d'Or deKilomoto (SOKIMO) which holds a 20% free-carry interest. The licence areascontain a series of greenstone belts of Kibalian age which have the potentialto host world-class gold deposits. Zani-Kodo is situated between the Kibali(formerly Moto Mines) Project (RandgoldResources/AngloGold Ashanti jointventure) and the Mongbwalu Project (AngloGold Ashanti). The Zani-Kodo project total combined JORC-compliant gold resource now stands at2.97Moz at 2.43g/t(based on a cut-off grade of 0.5 g/t). This is an increase of13% on the February 2013 resource statement, which was itself a 30% increase onthe February 2012 resource statement. Zani-Kodo resources as at August 2013: Sub area Category Tonnes (t) Grade (g/t) Au (oz) Kodo Main Indicated 4,799,487 3.63 560,197 Inferred 10,330,969 3.52 1,169,293 Lelumodi Indicated 1,118,644 2.06 74,097 Inferred 8,154,092 1.81 474,563 Lelumodi North Inferred 1,150,062 2.34 86,532 Badolite Inferred 2,806,940 2.34 211,197 Zani Central Inferred 9,683,455 1.28 398,547 TOTAL 38,043,649 2.43 2,974,426 In response to lower commodity prices and in line with the company's strategyof cutting costs, Mwana suspended exploration drilling at Zani-Kodo during Q2of FY14. Prior to the cessation of drilling, 42 diamond core drill holes for atotal of 11,268m were completed. Results include 9m @ 6.46g/t Au and 4m @ 8.33g/t. Test work carried out on samples taken from the Kodo Main orebody found the oreto be non-refractory and showed higher than 90% gold extraction across all therecovery methods tested. As part of feasibility work underway at Kodo Main, a resource-conversiondrilling programme was completed in 2014. This will be followed by ageotechnical drilling programme and regional field investigations will continueduring FY2015. Nickel Bindura Nickel Corporation (BNC) -Zimbabwe BNC has been listed on the Zimbabwe Stock Exchange since 1971. Located near theFreda Rebecca gold mine close to the town of Bindura, north-east of Harare, BNCis Africa's only integrated nickel mining, smelting and refining operation.Historically, ore from the company's Shangani and Trojan mines, with a combinedhoisting capacity in excess of two million tonnes of ore per year, wasconcentrated and fed, along with concentrate from third parties, to BNC'ssmelter and refinery. BNC's mines, smelter and refinery were placed on care and maintenance in 2008and remained so until the conclusion of BNC's rights issue and restructuring inSeptember 2012when mining restarted at the Trojan nickel mine. The restart involved the refurbishment of the handling facilities for thesurface milling flotation, tailings and concentrate. The cold commissioning ofthe electrical and mechanical circuits of thefeed conveyors, mills, flotationcircuits, concentrate handling and tailings handling was completed in January2013 by passing water through the processing plant circuits. The hotcommissioning, with the introduction of ore into the milling circuit, commencedshortly afterwards. Progress on surface was matched by a successful ramp up of undergroundoperations. In April 2013, BNC sold its first shipment of nickel concentratesince the restart to Glencore, BNC's offtake partner. As a result of depressed nickel prices, additional financing to fund full rampup was not secured. BNC began reviewing options to resolve this cash shortfallincluding considering alternative mine plans at Trojan and seeking bridgingfinance. During Q1 of FY14, the Trojan mine plan was revised to target the higher-gradezones of the orebody, known as 'massives', with the aim of reducing the costper tonne of nickel produced. The impact of this was already being seen in thefirst six months, with a drop in cash costs from $19,251/t in Q1 to $9,689/t inQ2. In October 2013, a competent person's review of BNC's business plan forTrojan's operations concluded that the plan was realistic and achievable. Thisenabled BNC to update its ore reserves statement to total proven and probablereserves of 3.168Mt at an average grade of 1.04% for 32,975 tonnes of containednickel. This denotes a 28% increase on the previously reported Trojan reservesof 25,810 tonnes of contained nickel. Work has commenced on the Trojan shaft re-deepening project which had beensuspended while the mine was on care and maintenance. The re-deepening willextend the operating horizon of Trojan from 35 level to 45 level and secure thelife of mine of the Trojan asset. Trojan mine is making continued progress towards steady-state processing of195,000t per quarter and the increase in tonnes milled indicates moreconsistent, efficient operation of the mills. BNC Trojan mine production results for FY14: Total Q4 Q3 Q2 Q1 Tonnes mined (t) 595,656 161,964 159,600 158,694 115,398 Tonnes milled (t) 589,637 153,451 133,221 154,552 148,413 Nickel head grade % 1.382 1.621 1.730 1.597 0.652 Recovery (%) 86.2 88.8 87.5 88.6 70.7 Ni in concentrate (t) 7,026 2,207 2,016 2,117 686 Nickel sales (t) 7,129 2,250 2,651 1,505 723 Average nickel price ($/t) 14,298 14,075 13,870 13,787 15,460 Cash cost (C1) ($/t) 11,567 11,333 11,181 9,689 19,251 All-in sustaining cost (C3) ($/t) 12,462 12,220 11,819 10,390 21,521 BNC reserves: Tonnes Grade NickelClassification ofreserves ('000t) (%) (t) Proved Trojan 1,908 0.707 13,485 Shangani - - - Hunter's Road - - - Probable Trojan 1,002 1.37 13,721 Shangani - - - Hunter's Road - - - Total 2,910 0.93 27,206 BNC resources Tonnes Grade NickelClassification ofresources ('000t) (%) (t) Measured Trojan 2,358 1.07 25,185 Shangani 1,840 0.58 10,750 Hunter's Road - - - Total 4,198 0.85 35,935 Indicated Trojan 1,507 1.41 21,883 Shangani 480 0.59 2,840 Hunter's Road 36,437 0.55 200,404 Total 38,424 0.58 225,127 Inferred Trojan 3,755 1.69 63,407 Shangani 9,710 0.56 54,280 Hunter's Road - - - Total 13,465 0.87 117,687 Note: SRK completed a competent person's report on the Trojan resource in March2013 and this resource is based on that report, less the depletion from mining(April 2013 to 31 March 2014) based on mining shapes from stoping anddevelopment. The effective date for the Trojan resource statement is 31 March2014, and, theeffective date for the Shangani resource statement is August 2008. The effective date for the Hunter's Road resource estimate is May 2006. TheJORC-compliant Hunter's Road resource of 36,437kt is found in the West Ore bodyof Hunter's Road and includes 2,377kt of resource which forms part of a 30m capof oxide ore mineralisation. In addition, in 1993, an Anglo American MinREDestimate showed 11,000kt grading 0.43% Ni approximately 600m east of the WestOre body of Hunter's Road which is not included in the resource shown above. Copper SEMHKAT - Katanga, DRC The Mwana Group holds a 100% interest in 33 exploration concessions covering4,845 square kilometres in the south-east of the DRC. The Katanga concessionsare otherwise known as SEMHKAT (Société d'Exploration Minière du Haut Katanga).Exploration is focusing on sediment-hosted stratiform copper-cobalt,iron-oxide-copper-gold (IOCG) occurrences as well as on showings of lead andzinc. The Hailiang Joint Venture, signed in February 2013, covers 27licence areas,with a commitment by Hailiang to spend US$25m over a four-year period. In termsof the joint venture agreement, the licences will be transferred into adevelopment company in which Mwana will hold a 38% non-dilutable stake. Alsounderthe joint venture agreement, Hailiang had a six-month option over theKibolwe licence, which has expired. Kibolwe is the most advanced of the SEMHKAT concessions and is locatedapproximately 150 kilometres north-west of Lubumbashi and 86 kilometressouth-west of the town of Likasi. Kibolwe is a near surface secondary enrichedsediment-hosted stratiform copper deposit. The dominant oxide mineral ismalachite with minor amounts of cuprite and tenorite, occurring withinweathered argillaceous limestones. The drilling programmes have outlinednear-surface, flat-lying mineralised units up to 40m thick, extending over astrike of 1,500m. The exploration programme to date includes: * a high-resolution aeromagnetic and radiometric survey flown over the bulk of the area (54,000 line km) * 12,000m of drilling at the advanced Kibolwe surface deposit * 5,700m drilling on extensions of Kibolwe * 7,000m drilling at satellite targets within 10km of Kibolwe * soil geochemical sampling of an area of approximately 1,500km2 * geophysical and geological mapping surveys Following completion of the Phase 1 programme, which resulted in the statutoryshedding of 50% of ground holdings, Phase 2 work programme commenced in July2013. The programme has been executed by three Hailiang sub-contractors(Huakuan, Inner Mongolian and SinoMine) and the SEMHKAT technical team. A target generation exercise was conducted and defined high-priority targetsfor follow-up exploration during 2014. Eight targets were delineated at Lunsanoand reverse circulation drilling started. Other important targets weredelineated at Kitemena East, Kawesitu North, Lutobwe, Kifita and Lukosombi. SEMHKAT commenced an exploration programme on Lutobwe, Lombe, Kapande andMifumbi. Our joint venture partner will mobilise for the second year's explorationprogramme. This includes six targets, with geochemistry and geophysics,followed by drilling. Diamonds Klipspringer - South Africa The Project consists of several en echelon (staggered or overlapping)kimberlite fissures and blows trending in a northeast orientation, and includesthe Leopard Fissure, the Sugarbird Fissure, the Sugarbird Blow, the KuduFissure, and the Kudu Blow, amongst others. As a result of severe weather incidents in December 2010 and January 2011,which flooded the shaft bottom and lower (7) level of the Leopard fissure, themine was placed on care and maintenance. Ultimate funding from Mwana hascontinued to maintain the asset in a ready state and at the same time theinterest in the joint venture has increased to almost 70% due to non-investmentby the BEE partner in the working capital requirements of Klipspringer. Care and maintenance will continue until a source of finance is secured torestart the mine and has ensured that the mine will be in a position to takeadvantage of favourable market conditions. The evaluation of options to re-openthe underground operation along the Leopard fissure will continue. Klipspringer resource - Leopard fissure Gross Net attributable Gross Contained Contained Tonnes grade diamonds Tonnes Grade diamonds (millions) (cpht) (Mcts) (millions) (cpht) (Mcts) Measured 0.211 51.57 0.109 0.148 51.57 0.076 Indicated 0.433 51.57 0.223 0.303 51.57 0.156 Inferred 1.565 83.00 1.299 1.095 83.00 0.909 Total 2.209 73.83 1.631 1.546 73.83 1.141 Notes: 211,000 tonnes of proven reserves at a grade of 51.57cpht have beentransferred to measured resources while the mine is on care and maintenance; 433,000 tonnes of probable reserves at a grade of 51.57cpht have beentransferred to indicated resources while the mine is on care and maintenance. Slimes retreatment project In October 2012 an agreement was signed with Greenhurst Mining and Explorationto re-treat fine-residue tailings at Klipspringer on a profit sharing basis.Construction and commissioning of the processing plant with a capacity of 50tonnes per hour was completed by the end of September 2013. At steady state,the plant is projected to produce from 15,000 to 20,000 carats per month fromthe old Marsfontein fine residue tailings deposit. In November 2013, Klipspringer sold its first parcel of diamonds (1,512cts)under the Greenhurst agreement. During FY14, production of diamonds more thandoubled, quarter on quarter, as a result of the treatment of 16,000t offine-residue tailings, at an average grade of 88.5cts/100t. An average sellingprice of $21/ct was achieved. Following process changes in the plant, includingscreening improvements and a DMS surge bin, a substantial increase inthroughput is expected and thus a significant contribution to Klipspringer'smonthly care-and-maintenance costs should follow in FY15. Year ended - March 2014 Tonnes treated 23,019 Caratsrecovered 20,386 Grade (cpht) 88.60 Revenue $334,972 Carats -unsold 4,444 Carats per hundredtonnes The project will also be exploring other revenue-generating opportunities suchas diamond recovery from the tailings dump and the sale of washed aggregatematerial for the building industry. Other interests- Angola, DRC, Botswana Angola - Camafuca Project Five kimberlitic pipes intrude a valley and outcrop in the Chicapa River bedand both sides of the river. Contained diamond content for the 5 pipes, a totalsurface area of 167ha, quoted down to a depth of 145 metres is 23millioncarats. In 2005, the government approved the formation of the operating company,Sociedade Mineira do Camafuca Lda., which was issued the mining license for theCamafuca project. In terms of the shareholders agreement, Mwana will providethe technical skills and manage the project implementation. Mwana Africa has no further financial commitments to the development ofCamafuca and retains a free carried interest of 18% in the Camafuca projectthrough SoutherEra Diamonds. DRC - Mbuyi Maya (MIBA) The Mbuji Maya cluster in Kasai-Oriental Province of the DRC was recognised in1946, 28 years after diamonds were recovered in the surrounding rivers. Thecluster consists of 11 elliptical kimberlites totalling in excess of 39 ha,with associated elluvial and alluvial deposits. Mwana holds a minority interest of 20% in this project through the SociétéMinière de Bakwanga (MIBA). The company is in discussions with the DRCgovernment about the recapilization and restructuring of MIBA. Botswana - BK16 In June 2008, Firestone Diamonds entered into an agreement with Mwana underwhich it can acquire an 87.5% interest in the BK16 kimberlite in return forcarrying all costs to completion of bankable feasibility. At present Mwana holds 55% of the shares in this project through a Botswanaregistered company, Kenrod Engineering. Financial review Income Statement Other Mwana Freda Rebecca BNC Africa Group Total Group $ million 2014 2013 2014 2013 2014 2013 2014 2013 Revenue 77.5 108.1 65.0 1.0 - - 142.5 109.1 Cost of sales (54.2) (57.9) (29.7) (0.6) - (0.4) (83.9) (58.9) Gross profit/(loss) 23.3 50.2 35.3 0.4 - (0.4) 58.6 50.2 Other income 0.2 0.1 0.3 0.3 0.1 - 0.6 0.4 Freight and Insurance (0.4) - (11.7) (0.5) - - (12.1) (0.5)expenses General and (6.9) (7.5) (3.3) (3.0) (1.0) (1.1) (11.2) (11.6)administrative expenses Care and maintenance - - (1.3) (12.1) (0.6) (0.9) (1.9) (13.0)expenses Corporate costs - - - - (6.4) (8.5) (6.4) (8.5) Operating profit 16.2 42.8 19.3 (14.9) (7.9) (10.9) 27.6 17.0 Retrenchment and - - (2.0) - (2.0) -restructuring expenses - -Dividends received - 0.1 - - - 0.1 (Loss)/profit on sale (0.5) 0.1 - 0.2 (1.1) - (1.6) 0.3of assets Fair value adjustment - - - - - (0.4) - (0.4) Foreign exchange gain - - 0.1 0.5 0.9 0.3 1.0 0.8 EBITDA (1) 15.7 42.9 19.4 (14.1) (10.1) (11.0) 25.0 17.8 Impairment loss - (0.3) - (43.7) (0.7) - (0.7) (44.0) Impairment reversal - - 28.0 - - - 28.0 - Depreciation (6.7) (5.5) (0.9) - (0.1) (0.2) (7.7) (5.7) Finance income 0.1 - 0.2 0.3 - 0.3 0.3 0.6 Finance expense (0.5) (0.7) (0.5) (0.1) - - (1.0) (0.8) Profit/(loss) before 8.6 36.4 46.2 (57.6) (10.9) (10.9) 43.9 (32.1)income tax Income tax credit/ (3.9) (9.6) 10.9 - (0.3) (1.8) 6.7 (11.4)(expense) Net profit/(loss) for 4.7 26.8 57.1 (57.6) (11.2) (12.7) 50.6 (43.5)the year Non-controlling (0.5) (0.8) (13.5) 15.7 - - (14.0) 14.9interest Net profit/(loss)attributable to owners 4.2 26.0 43.6 (41.9) (11.2) (12.7) 36.6 (28.6)of the parent (1) Earnings before interest, impairments, tax, depreciation and amortisation. The group reported revenue for the year of $142.5m (2013: $109.1m) and anEBITDA (before impairments) for the year of $25.0m (2013: $17.8m). The netprofit for the year is $50.6m (2013: loss of $43.5m). Freda Rebecca During the year, Freda Rebecca sold 58,704 ounces of gold (2013: 65,350 ounces)at an average price of $1,319 per ounce (2013: $1,654 per ounce) as well asby-products, generating revenue of $77.5m (2013: $108.1m). Operating costsduring the period totalled $61.3m (2013: $65.3m) for the year. Profit beforetax for the year was $8.6m (2013: $36.4m). Bindura Nickel Corporation Revenue of $65.0m (2013: $1.0m) was generated through the sale of nickel inconcentrate (2013: sale of in-process inventories). Operating costs were $45.7m(2013: $15.9m) increased from the previous year due to the restart of theTrojan mine. BNC reported EBITDA (before impairments) of $19.4m (2013: loss of$14.1m). In the prior year 100% of BNC's non-current assets have been impaired in theGroup Financial Statements which resulted in an impairment loss of $43.7m.During the current financial year, $28m of the impairment relating to theTrojan mine was reversed. During the current year it became probable that BNCwould make taxable profits in the future and that deferred tax should berecognised in their accounts. A net deferred taxation credit of $3.6m wasincluded in profit during the financial year in respect of impairments. Seenote 35 which provides background and financial impact of this impairment andreversal. Other Mwana Africa group The group, excluding BNC and Freda Rebecca, incurred operating costs of $7.9m(2013: $10.9m). Cash flow statement Freda BNC Other Mwana Total Group Rebecca Africa Group $ million 2014 2013 2014 2013 2014 2013 2014 2013 Opening cash at 3.4 2.4 5.5 0.4 6.3 3.9 15.2 6.71 April 2013 Financing (6.1) (23.2) (1.5) 37.8 12.9 22.1 5.3 36.7 Equity issues - - - - 6.6 32.8 6.6 32.8 Loan finance(net) (1.9) (1.7) - 4.7 - - (1.9) 3.0 Cashtransferred(to)/from Group (4.0) (20.0) (2.3) 31.1 6.3 (11.1) - - Sale of equityinvestments - - - - - 0.4 - 0.4 Share issuanceto NCI - - 0.8 2.0 - - 0.8 2.0 Dividends paidto NCI (0.2) (1.5) - - - - (0.2) (1.5) Operations 4.8 24.2 0.2 (32.7) (16.4) (19.7) (11.4) (28.2) Operating cashflow 14.6 42.8 12.8 (15.8) (12.9) (10.7) 14.5 16.3 Change inworking capital (0.1) (1.9) (5.7) (7.5) 2.2 8.4 (3.6) (1.0) Capitalexpenditure (5.7) (8.6) (6.9) (9.4) - (0.4) (12.6) (18.4) Capitalisedexploration - - - - (5.3) (15.3) (5.3) (15.3) Taxation (4.0) (8.1) - - (0.4) (1.7) (4.4) (9.8) Closing cash at 2.1 3.4 4.2 5.5 2.8 6.3 9.1 15.231 March 2014 Freda Rebecca Positive cashflow of $14.6m(2013: $42.8m) was generated by operations duringthe year. $0.1m(2013: $1.9m) was invested in additional working capital.$5.7m(2013: $8.6m) was invested in capital expenditure. Bindura Nickel Corporation Positive cash of $12.8m was generated from operations compared to a negative$15.8m utilised in the previous year. Capital expenditure was $5.7m (2013:$7.5m). An additional $0.8m was generated by a share issue to the NCIshareholder (2013: $2m from the rights issue). Other Mwana Africa group Mwana Africa (excluding BNC and Freda) saw operating cash outflow of $12.9m(2013: $10.7moutflow). During the year, Mwana Africa invested $5.3m(2013:$15.3m) on its portfolio of exploration prospects, $1.5min SEMHKAT (2013:$3.8m) and $3.8min Zani (2013: $11.5m). Balance sheet Freda Rebecca BNC Other Mwana Total Group Africa Group $ million 2014 2013 2014 2013 2014 2013 2014 2013 Non-currentassets 49.4 49.3 52.5 0.5 64.8 61.5 166.7 111.3 Current assets(excl. cash) 17.3 13.7 13.1 9.0 1.4 1.4 31.8 24.1 Cash 2.1 3.4 4.2 5.5 2.8 6.3 9.1 15.2 Non-currentliabilities (18.8) (19.4) (18.9) (21.2) (1.5) (1.6) (39.2) (42.2) Currentliabilities (11.3) (8.4) (24.3) (22.8) (3.3) (5.3) (38.9) (36.5) Total equity 38.7 38.6 26.6 (29.0) 64.2 62.3 129.5 71.9 Non-controllinginterest (3.0) (2.6) (0.9) 13.4 - - (3.9) 10.8 Equityattributable to 35.7 36.0 (25.7) (15.6) 64.2 62.3 125.6 82.7owners of theparent At 31 March 2014, the group had cash balances of $9.1m (2013: $15.2m),comprising $4.2m (2013: $5.5m) held by BNC and $4.9m (2013: $9.7m) held byFreda Rebecca and other Mwana Africa group entities. The book value ofshareholders' equity for the group at the year-end was $125.6m (2013: $82.8m),whereas for the company it was $175.5m (2013:$139.1m). The reason for companyequity being more than group equity is because of equity deficits for certainsubsidiaries included in the consolidated figure. Freda Rebecca Non-current assets of $49.4m were in line with the prior year (2013: increaseof $3.7m to $49.3m). Current assets increased by $3.6m (2013: $1.7m decrease)to $17.3m (2013: $13.7m). This amount includes an increase in trade debtors of$3.7m (2013: $3.3m decrease), a decrease in spares and inventory of $0.1m(2013: $1.9m increase) and no change in other debtors (2013: $0.3m decrease). The movement in non-current liabilities to $18.8m (2013: $19.4m) is contributedto the interest on the IDC loan, the continued repayment of the IDC loanfacility as well as the increase in the environmental provision. Bindura Nickel Corporation The value of current assets increased by $4.1m (2013: $1.7m increase) to $13.1m(2013: $9.0m) still being the result of the restart programme whichnecessitates increased inventory. In the prior year, non-current assets(excluding investments of $0.5m) of BNC wasimpaired and the non-current assetsof Trojan impaired in 2013 was reversed in the current financial year, asdescribed in note 35. Other Mwana Africa group The value of non-current assets increased to $64.8m (2013: $61.5m). Additionalexploration expenditure was capitalised during the year in accordance with thegroup's policy. GROUP LIQUIDITY At 31 March 2014 the group held cash of $9.1m (2013: $15.2m). Included in thegroup cash balance is $1.8m (2013: $1.7m) reserved for loan repayments inrelation to the IDC loan facility in Freda Rebecca. At 30 June 2014, the groupheld cash of $7.3m (30 June 2013: $5.2m). IDC FACILITY Freda Rebecca Gold Mine has drawn down the full $10m of the IDC project loanfacility. IDC Project Loan $ million 2014 2013 Openingbalance 6.1 7.9 Interest 0.4 0.6 Draw down - - Repayments (2.2) (2.4) Closing 4.3 6.1balance The facility is repayable in 10 equal instalments over a five-year period andattracts an interest rate of US$LIBOR plus 5% with final repayment in 2016. GOING CONCERN The directors, after making enquiries and considering the uncertaintiesdescribed further in note 3: Basis of preparation to the financial statements'going concern', believe that the company and the group will be able to accessthe financial resources to continue in operational existence for theforeseeable future. Accordingly they continue to adopt the going concern basisin preparing the Annual Report and financial statements and these financialstatements do not include any adjustments that would result from the goingconcern basis of preparation being inappropriate. Overview of social and environmental responsibility Mwana Africa's social and environmental responsibility is driven by itspassionfor creating a synergy between sustainable investments, sustainablemining and sustainable communities. Mwana has consistently encouraged thissynergy by creating safe working environmentsfor staff, by positivelyaffectingthe communities in which it operates, and by minimising theenvironmental impact of its activities. The company's major contribution tosurrounding communities and social partners is through a multi-faceted approachof driving job creation, technical support of local businesses, theempowermentof local contractors, and the purchase of goods and services fromlocal suppliers. The Katanga concessions or SEMHKAT, which has 27 of its 33 exploration licencesin a joint venture with the Hailiang Group, is actively involved with the dailymanagement of the joint venture to ensure that standard operating proceduresare implemented. The three main pillars of Mwana Africa's corporate social responsibility (CSR)continue to be education, health, and support of small and medium enterprises(SMEs) to help empower local business enterprises. This resonates withgovernment policies of requiring every investor to play a role in thedevelopment of disadvantaged communities. Stakeholder engagement Stakeholder engagement with investors, employees, customers, community partnersand regulators and others is actively pursued. This is done through a varietyof formal and informal engagements, briefings, surveys, and feedback sessionson issues raised. Workplace safety Mwana Africa recognises that exploration and mining have inherent levels ofrisk. We regret deeply the loss of two workers this year - excavator operatorLovemore Nyanusanu (32) at Freda Rebecca mine and support rig assistantShepherd Muradzi (35) at the Trojan nickel mine. We extend our sincerecondolences to their families, colleagues and friends. At Freda Rebecca gold mine the implementation of proactive safety managementprogrammes resulted in a lost-time injury frequency rate (LTIFR) of 0.53 in our2014 financial year, compared with 0.91 in 2013. BNC achieved an LTIFR of 2.52. The company had progressed well until March 2014when the fatality took place which resulted in 6,000 lost shifts as we moved toassessed safety issues. The LTISR increased from 26 to 455.53. Some 600managerial and non-managerial employees were trained on Behaviour Based Safetyand the system is currently in the implementation phase. All our mines and exploration operations achieved extended periods in which nolost-time injuries were reported. No exploration related incidents or accidentswere reported during FY14. Freda Rebecca mine maintained OHSAS 18001 health and safety certification. TheTrojan mine is in the process of achieving similar accreditation in the verynear future. Operations at Klipspringer remained on care and maintenance. At the mine'sslimes retreatment project, no safety, health or environment issues wererecorded during FY14. The mine recorded zero lost time injuries during the sameperiod. Employee and community health The principal health issues faced in the regions where Mwana Africa operatesare malaria, HIV/AIDS and waterborne diseases such as typhoid and cholera. Thecompany provides medicines, education and training for the prevention andtreatment of these diseases, as well as associated infections such astuberculosis. During FY14 there were two reports of malaria in SEMHKAT'sLunsano camp. The contractors concerned were treated timeously and returned towork within a week. Freda Rebecca gold mine acts in partnership with the local Bindura municipalityto provide technical support for water reticulation. The mine also complementsmunicipal efforts in the provision of clean water programmes for outlyingcommunities to ensure access to safe water supplies. To date, 10 boreholes withmanual pumps have been donated to local communities. BNC runs its own watertreatment plant and has oxidation ponds for handling sewage. Mwana's mine operations have all implemented community-wide HIV/AIDS managementstrategies linked to the concept of overall wellness. They include awarenessand education campaigns, voluntary counselling and testing (VCT), andhealth-care training. At BNC and at Freda Rebecca, Mwana Africa staffs and funds the running ofclinics for employees and their families. Freda Rebecca and Trojan mine clinicsare certified Opportunistic Infections Clinics. Shangani mine has also appliedfor this status and is being monitored. Trojan and Freda Rebecca are alsocertified as Anti-Retroviral Therapy (ART) clinics and dispense anti-retroviral(ARVs) medication supplied by the government to affected employees and theirdependents, as well as to members of the local community. Both Freda Rebeccaand BNC receive assistance from the Zimbabwean Business Council on AIDS (ZBCA).BNC also runs anHIV/AIDS assistance project coordinated by the SwedishWorkplace HIV and AIDS Programme (SWHAP). The first phase of cooperationinvolves the review and implementation of HIV/AIDS and wellness policies andpractices. At BNC, a wellness programme is scheduled to be launched in the second quarterof the new financial year. This intervention is expected to result in asignificant reduction in AIDS-related psycho-social problems faced by employeesand their families, and also in problems ensuing from the period of care andmaintenance. Safety, health, environment and quality (SHEQ) management systemscertification is planned for December 2015. UNICEF donates primary health-care drugs to Freda Rebecca gold mine, whichpasses on the unused portions to the local provincial hospital. Mine teamsassist where required with ambulance services for critical health emergencies. All SEMHKAT personnel have access to one of two hospitals - the Panda Hospitalin Likasi and CMC in Lubumbashi. Klipspringer does not have any employee and community health programmes runningat present, due to the underground mining operation not being in production. At the Zani-Kodo gold project, a fresh-water borehole source has resulted in adramatic decrease in water-borne disease in Zani village. Mosquito nets havebeen distributed to all employees and their families. We give monthly financialsupport to the two local clinics and give Mwana staff free access to medicationfrom the hospital. Employment and labour relations At the year's end, Mwana Africa employed 1,605 people (2013: 1,560). * Diversity Preference during recruitment is given to members of the local community,especially for unskilled and semi-skilled positions. At the Freda Rebecca minein Zimbabwe, 60% of the workforce is from the local town of Bindura. One thirdof all staff members at BNC are drawn from the surrounding communities. Withthe exception of some of the senior expatriate management, all employees in ourexploration operations come from the surrounding communities. All casualemployees at SEMHKAT are recruited locally. At the end of FY14, Klipspringermine employed 70 people, both employees and contractors, more than 80% of whomare from local communities. A formal relationship with local leaders helpsensure that local community members benefit from preferential recruitmentopportunities. Male % Female % Directors 6 100.0 - 0.0 Senior managers 165 88.2 22 11.8 Employees 1,368 96.9 44 3.1 * Labour relations In all operations, joint consultative forums with employee leaders and unionsare conducted regularly and this has the effect of creating healthy labourrelations. The areas of mutual interest are generally wages, conditions ofemployment, occupational health and safety and serious diseases such as HIV/AIDS. No work stoppages were reported due to industrial action across thegroup. The Hailiang joint venture is actively assisted and encouraged to respectrelevant DRC law in connection with employees, contractors and local casualworkers. Regular meetings and inspections take place to monitor employmentprocesses. BNC has an active workers' committee at the Trojan nickel mine and the workersare free to join the trade union. Community development * Education Freda Rebecca mine has continued to enhance its CSR footprint in the area ofeducation. This is being done in partnership with other stakeholders such asthe NGO Terre des Hommes (TdH). TdH provides school fees for some 100 childrenat the Batanai Early Childhood Development Centre. Freda Rebecca mine is alsosponsoring five students working towards their degrees at the Zimbabwe Schoolof Mines, and offers scholarships on a case-by-case basis toacademically-gifted students from the local community. BNC provides on-site primary school education, funds secondary schooling andgrants a number of scholarships to higher education institutions for employees'children. The company also provides training opportunities for undergraduatesfrom different learning institutions, with Bindura University being given thefirst priority. The exploration project at Zani-Kodo in the DRC has constructed severalclassrooms for schools in the vicinity and has refurbished the dormitory at theadjacent secondary school. In addition, the project has also commissioned alocal carpenter to construct desks for local primary and secondary schools. Theproject has also been involved in donating stationery to local schools and hasrefurbished numerous community offices. Staff training in computer literacytakes place on a continual basis. Klipspringer does not provide any assistance in this regard due to its beingunder care and maintenance. Detailed programmes are included in our social andlabour plan and will be implemented once the mine returns to steady stateproduction. In Katanga, two local workers were provided with opportunities for part-timestudy in English and management during 2013. This programme will continue andbe extended to benefit more local workers. * Enterprise development The exploration projects continue to reach out to surrounding communities inthe areas of routine road upgrades and the construction of access bridges. BNCdonates material such as waste rock to the local authority and otherinstitutions for road construction and building. Freda Rebecca mine has consistently maintained the proportion of its localprocurement, with about 60% of total procurement sourced from local suppliers.A considerable number of small business enterprises continue to be assisted byFreda Rebecca mine in providing services to the mine and mine villages. Themine also encourages and supports local entrepreneurial ventures. BNC similarly sourced 76% of its total procurement locally. The remoteness ofMwana's operations in Zani-Kodo necessitates that many supplies have to beimported from Uganda, though fuel and some foodstuffs are sourced locally whenthey are available. The operations in Katanga source 15% of goods and services from local villages,with the remaining 85% split between the towns of Likasi and Lubumbashi.Villagers provide guard services for the camps, house and office. Despite the limited nature of operations at Klipspringer, the mine strives toensure that goods and services are sourced from local suppliers. We estimatethat between 65 % and 75% of procurement spend was sourced from localsuppliers. In 2012 (year), Bindura Estates (a wholly-owned subsidiary of Freda Rebeccamine) began establishing a commercial farm on the arable portions of the mine'slease areas. Bindura Estates successfully completed its first farming season inFY14 and the results are encouraging in the areas of potato, soya bean andmaize farming, enhancing the local economy of Bindura and improving foodsecurity. So far this venture has provided employment for more than 300 womenwho have been engaged on a seasonal labour basis. The limited income derived from diamond sales at Klipspringer does not allowthe mine to invest in infrastructure support or small business enterprises atpresent. Klipspringer mine personnel and equipment are on stand-by during thedry winter months to assist neighbouring land owners in combating the threat ofrunaway veld fires that may damage property or lives, including wildlife. Since the year-end, Mwana's Freda Rebecca gold mine and BNC have embarked onfurther empowerment plans in the areas of education and mining, incollaboration with Zimbabwe's Ministry of Youth, Indigenisation and EconomicEmpowerment. The two companies have offered to adopt and partner with BinduraVocational College, providing $200,000 sponsorship for the college'srefurbishment over a period of five years. In the area of mining, Freda Rebeccawill be assisting young people by making available on a tribute basis itsspecial grant claim on areas adjacent to the mining lease. The mine will alsoconsider purchasing a stamp mill for the site for use by the beneficiaries andoffering initial set-up technical training. Artisanal and small-scale mining Where operations interact with artisanal gold miners, the company hasundertaken studies to better understand the issues of and challenges faced bythese populations. This is a prelude to formulating a strategy aimed atimproving these miners' working conditions. At Zani-Kodo in the DRC, PACT, anAmerican NGO, is assisting Mwana with this process. Mwana Africa has also made progress with granting claims on a tributary basisto more than 200 applicants on its ground holdings near Kwe Kwe, Zimbabwe. Thisexercise is being conducted in conjunction with traditional leaders and therelevant regulatory authorities. The potential exists to assist small-scaleminers with the viable exploitation of mineral resources and, in turn, provideemployment and improve the local economy. Environmental impacts and mitigation Mwana Africa limits the impact of its operations on the environment throughresponsible waste disposal and prevention of pollution, and by optimising theuse of resources such as water, fuel and electricity. Proactivemeasures aretaken to conserve local biodiversity, and to re-establish habitats disrupted byvehicle movement, waste-rock dumps and tailings dams. In all but one of our operations, internal and external environmental auditswere completed. No significant non-compliances were found by Zimbabwe'sEnvironmental Management Authority. Freda Rebecca Mine has maintained itsISO14001 certification for environmental practices. Continued air-qualitymonitoring shows that the dust generated by mining activities is not at a levelthat impacts negatively on employees' or community health. BNC and the Zimbabwean Environmental Management Authority continue to monitordischarges from the permitted sources of effluent. The restart at BNCoperations involved the re-establishment of sound environmental practices,including programmes to reduce impacts, and the Trojan mine aims to obtain ISOand OHSAS certification by December 2015. Klipspringer continued during the year with external audits being conducted onour environmental impacts, including water abstraction and water disposal. Nosignificant areas of non-compliance were recorded. Regular inspections by SEMHKAT have been set up to monitor the environmentalimpact of the joint venture's operations, followed by minuted meetings. Mwana Africa recognises its obligation to rehabilitate the sites where it hasoperated. The company has put financial provisions in place for costsassociated with the closure of the company's operations in Zimbabwe and SouthAfrica, as prescribed by local laws. These provisions are audited and reviewedannually by independent consultants as prescribed by regulations. Anti-corruption measures The UK Bribery Act of 2010 updated and enhanced existing UK law on bribery andensured conformity with the requirements of the 1997 OECD anti-briberyConvention. It is now among the strictest laws governing internationalbribery, prohibiting actively bribing entities or persons in the context ofinternational business transactions and imposing heightened liability forcompanies, directors and individuals. Mwana Africa PLC, as a companyincorporated/doing business in the UK, supports the law and has implementedprocedures to ensure compliance with the Act's requirements for strong,effective anti-bribery policies and systems. Mwana Africa's proactive measuresprotect it from strict liability that the Act would otherwise impute to acompany in the event of an unacceptable bribery attempt by any of itsindividual officials. All of Mwana's executives have signed personalcommitments to respect the provisions and the intent of the UK Bribery Act of2010 and best practices. Supply chain management Mwana Africa has also been an active participant in and contributor to theICGLR-OECD UN GoE Joint Forum on Responsible Mineral Supply Chains fromConflicted-Affected and High-Risk Areas process which started with the firstconsultation meeting with the mining sector on December 8, 2009 in Paris. TheForum's Gold Supplement provides specific recommendations for gold producers,refiners and exporters to establish controls and transparency in their supplysystems to ensure identifiable chain of custody. The recommendations varydepending on the company's activity within the chain (refining mined gold,original recycled/scrap gold, consolidated recycled/scrap gold, melted recycled/scrap gold and/or mixed gold) because the risks of leakage are related to thespecific activities involved. Mwana Africa has regularly reviewed itsprocedures to ensure its ongoing compliance with these recommendations and bestpractices Directors' report The directors present their report and financial statements for the year ended31 March 2014. Principal activities The group's main activities are exploration, development and production ofgold, nickel, copper and diamonds. Further information concerning theactivities of the group and its future prospects are contained in theChairman's letter on page 5 and the Review of operations and exploration onpages 10to 17. Business review The Group profit before tax was $43.9m(2013: $32.1mloss). The profitfor theyear attributable to shareholders of the parent company was $36.6m(2013:$28.6mloss). The directors do not recommend the payment of a dividend onordinary shares. As required by the Companies Act 2006, the company mustprovide a fair review of the development and performance of the group duringthe year ended 31 March 2014, its financial position at the end of the year andlikely future developments in the group's business. The information whichsatisfies these requirements is to be found in the Chairman's letter on page 5,the Chief Executive's review on pages 7 to 9, the Review of operations andexploration on pages 10to 17, and the Financial review on pages 18 to 20. Principal risks and uncertainties The principal risks and uncertainties to which the Group is exposed relate tochanges in the market prices of gold, nickel and diamonds, resource andreserves risk, processing risk, environmental risk, mining and operating risk,financing risk and political risk. Financing Risk Mining is a capital intensive business and there is a risk that if finance isnot available for the development or further exploration of a project then thevalue of the project may not be realised. Mwana's financing risk is linked tothe availability of funding in the capital and debt market which are impactedby their perception of commodity and country risk. Mwana seeks to mitigate itsfinancing risk by diversifying its sources of finance for the development ofits projects. Political Risk There are political risks impacting the Group's operations in Africa, includingindigenisation regulations in Zimbabwe. Details of this risk and the actionsundertaken to mitigate it are detailed on page 30 of the Directors' Reportregarding Zimbabwean indigenisation. Metal Price Risk Fluctuations in metal prices can clearly affect the profitability of miningoperations. The Group seeks to protect itself from adverse fluctuations byinvesting in projects which can operate economically in lower metal priceenvironments and by controlling operating costs. The Group uses no financialinstruments or hedging products to fix metal prices. The impact of the metal prices on the performance of the period is assessed innote 34. Resource and Reserve Risk There is a risk that estimates of Mineral Resources and Reserves overstatetheir economic potential. This uncertainty could give rise to a situation wherea mine is, or becomes, commercially unviable. The Group manages risk by ensuring that all Mineral Resource and Reserveestimates are calculated by reference to internationally accepted standards (inthis case The Australian Code for Reporting of Exploration Results, MineralResources and Ore Reserves; "JORC"). In addition all Mineral Resource estimates published by the Group are signedoff by an independent qualified person. Information about the resources and reserves is included in the review ofoperations and exploration. Processing Risk There is a risk that the processing of ore to recover metal fails to deliverrecoveries expected and this may have the effect of reducing projectedprofitability. All of the Group's existing mining operations have a longhistory of economic production and the processing techniques used are wellunderstood. When the Group invests in new projects the metallurgical processesare thoroughly tested and reviewed by independent consultants before anyinvestment is made. Environmental Risk Exploration and development of a project can be adversely affected byenvironmental legislation and the unforeseen results of environmental studiescarried out during evaluation of a project. Once a project is in productionunforeseen events can give rise to environmental liabilities and or temporaryclosure of mining operations. The Group takes every care to comply with environmental legislation in thecountries in which it operates and designs its training and procedures tominimise the environmental impact of operations. The impact of the existing environmental obligations on the financialstatements is disclosed in note 29. The details of the mitigating actionsundertaken by the Group during the period are disclosed in the section'Environmental Impact' of the Overview of Social and EnvironmentalResponsibility. Mining and Operating Risk Mining is an inherently risky activity and can involve ground instability,failure of machinery and human error. The Group makes every effort to ensurethat these risks are minimised by ensuring that mining operations areprofessional, that a high level of workforce training and education ismaintained and by prompt reporting of incidents to management. Information about the Health and Safety framework at Freda Rebecca and BNC isincluded in the section 'Workplace Health and Safety' of the Overview of Socialand Environmental Responsibility. ZIMBABWEAN INDIGENISATION In 2007, the Zimbabwean Government published the Indigenisation and EconomicEmpowerment Act which made provision for the indigenisation of up to 51% of allforeign owned businesses operating in Zimbabwe. Regulations in support of theIndigenisation Act were published in February 2010 in preparation for theimplementation of the Act. On 25 March 2011 the Minister of Youth Development, Indigenisation andEmpowerment published a notice in the government gazette promulgating theIndigenisation and Economic Empowerment (General) Regulations in statutoryinstrument 21 of 2010. The document sets out the requirements for theimplementation of the Indigenisation Act and its supporting regulations as theypertain to the mining sector. These regulations include the requirement tosell a minimum of 51% or a controlling interest to indigenous Zimbabweans. During the year ended 31 March 2013, Mwana had disposed of 15% of Freda Rebeccato an Indigenous Zimbabwean. A community trust has been established in the year ended 31 March 2013 anddiscussions are underway with this trust about a disposal of some shareholdingin Freda Rebecca to this trust. Furthermore, discussions remain on-going withthe Zimbabwean Government to determine any further impact on Mwana'sshareholding in its Zimbabwean assets. The Board has considered the impact of the uncertainties stemming fromindigenisation risk on the financial statements as disclosed in note 3regarding the basis of preparation of the financial statements and in the note22 regarding investments. KEY PERFORMANCE INDICATORS Management monitors the group's liquidity requirement on a weekly basis.Financial and operational performance is measured regularly and operationalupdates are published quarterly. Key performance indicators are specific to each area of the business: Freda Rebecca Key performance indicators include tonnes mined and processed, grade ofmaterial delivered to plant, gold recovery, operating costs per ounce produced,ounces of gold produced, financial performance and management of assets,health, safety and environmental incidents including lost time events due toinjury. Refer to page 10 in the review of operations and exploration. Bindura Nickel Key performance indicators in respect of the Trojan Mine includes tonnes minedand processed, grade of nickel delivered to the plant, nickel recovery,operating costs per lb., tonnes of nickel in concentrate within specifications,both in %MgO and moisture content. Other measures considered are financialperformance and management of assets, health, safety and environmentalincidents including lost time events due to injury. The remainder of the BNCoperations remain on care and maintenance, and the key performance areasinclude maintenance and the operating integrity of all the assets and thefinancial performance against the care and maintenance budget. Refer to page 12in the review of operations and exploration. Exploration projects Key performance indicators include the addition of resource ounces in the caseof Zani and the identification of drill targets at SEMHKAT. Refer to pages 11and 14 in the review of operations and exploration. CHANGES IN SHARE CAPITAL Details of changes in the share capital during the year are set out in note 27to the financial statements. CREDITOR PAYMENT POLICY Each operating company in the group is responsible for agreeing the terms oftransactions, including payment terms, with suppliers and, provided thatsuppliers perform in accordance with the agreed terms, it is the group's policythat payment is made accordingly. Trade creditors of the group at 31 March 2014represented 76 days (2013: 65 days) of annual purchases, including capitalexpenditure. Subsequent events The post balance sheet events are described in note 36 to the financialstatements. Directors The current directors of the company are as follows: Executive directors KK Mpinga Chief Executive Officer YC Kwan Finance Director - appointed 1 October 2013 Non-executive directors SG Morris Interim Chairman (appointed as interim Chairman 24 February 2014) YH Ning YC Hu JL Botha The directors who left during the year were as follows: OAG Baring Resigned 1 September 2013 JA Anderson Retired 27 September 2013 E Denis Retired 27 September 2013 DAR McAlister Resigned 30 September 2013 M Wellesley-Wood was appointed a director on 3 September 2013 and left on 24February 2014. Mr JL Botha and Mr SG Morris are retiring by rotation and being eligible, offerthemselves for re-election. Mr YC Kwan was appointed as a director after the last annual general meetingand in accordance with the Articles & Association retires at the forthcomingannual general meeting. Being eligible, Mr Kwan offers himself for re-election. The interests of the directors and their remuneration are described in theDirectors' remuneration report which is on pages 33 to 39. Majorshareholdings The share register records that the following shareholders held 3% or more ofthe issued share capital of the company at 5 May 2014: Shareholder Number of shares % interest China International Mining Group Corporation 299,424,282 21.4 HSBC Client Holdings Nominee (UK) Limited 126,665,392 9.1 Yat Hoi Ning 106,709,262 7.6 Lynchwood Nominees Limited 49,381,326 3.5 Barclayshare Nominees Limited 44,241,658 3.2 Smart Landscape Holdings Limited 43,980,796 3.2 International financial reporting standards The group has prepared its consolidated accounts for the year ended 31 March2014 in accordance with International Financial Reporting Standards as endorsedby the European Union ("IFRSs"). Directors' and officers' liability insurance The company has purchased Directors' and officers' liability insurance whichremains in place at the date of this report. Political contributions and charitable donations Total contributions of $113,512 (2013: $799,205) were made during the year,$58,914 (2013: $237,162) as political contributions and $54,599 (2013:$562,043) as charitable donations. Disclosure of information to auditors The directors who held office at the date of approval of this Directors' reportconfirm that, so far as they are each aware, there is no relevant auditinformation of which the company's auditors are unaware; and each director hastaken all the steps that he ought to have taken as a director to make himselfaware of any relevant audit information and to establish that the company'sauditors are aware of that information. Auditors In accordance with Section 418 of the Companies Act 2006, a resolution toappoint KPMG LLP as auditors of the company is to be proposed at theforthcoming annual general meeting. By order of the Board: S Gilbert Company Secretary 8 July 2014 Directors' remuneration report Remuneration Committee The Remuneration Committee comprising non-executive directors JL Botha(Chairman) and SG Morris, reviews the performance of the executive directorsand sets and reviews the scale, structure and basis of their remuneration andthe terms of their service agreements, paying due regard to the interests ofshareholders as a whole and the performance of the company. In determining the remuneration of executive directors, the RemunerationCommittee seeks to enable the company to attract and retain executives of thehighest calibre. The Remuneration Committee also makes recommendations to theBoard concerning the allocation of share options to employees. No director ispermitted to participate in discussions or decisions concerning his ownremuneration. Remuneration policy The policy on directors' remuneration is that the overall remuneration packageshould be sufficiently competitive to attract and retain individuals of aquality capable of achieving the group's objectives. The remuneration policy is designed such that individuals are remunerated on abasis that is appropriate to their position, experience and value to thecompany. The Remuneration Committee determines the contract terms, basic salary andother remuneration for each of the executive directors, including performancerelated share options, bonuses, pension rights and any compensation payments. Executive remuneration package The details of individual components of the remuneration package and serviceand employment contracts are discussed below. Basic salary and benefits The policy is to review salary and benefits annually against competitive marketdata and analysis, and adjust accordingly. Bonus scheme There is no formal bonus scheme in place. Bonus awards in respect of the yearended 31 March 2014 are set out in the directors' remuneration report. Share options The company has outstanding options under an unapproved Share Option Schemeadopted in 1997 (1997 Scheme) and a new scheme which was approved byshareholders at the company's annual general meeting on 31 July 2007 (2007Scheme). Details of option awards made under these schemes are detailed in note33. 1997 Scheme Under the 1997 Scheme unapproved share options were granted to directors andemployees by the Board. The company's policy on the granting of share optionsis to make such awards that are necessary to recruit and retain executives. The company has operated this scheme since 1997 where options were granted toany employee, officer or director of the company or any subsidiary of thecompany. The limit for options granted under this scheme was not to exceed 15%of the number of issued ordinary shares from time to time. The Board granted options at its discretion. The subscription price was fixedby the Board at the price per share on the dealing day preceding the date ofgrant. These options vest immediately and may be exercised at any time within aseven-year period from the date of the grant, unless the Board determinesotherwise. The options lapse if not exercised by the seventh anniversary of thegrant. It was the Board's policy to spread the vesting period for optionsgranted to employees over two to three years. Unless the Board agrees otherwise, the right to exercise an option terminateson the holder ceasing to be a participant, subject to certain exceptions, whichbroadly apply in the event of death of the option holder or where the optionholder ceases to be a participant due to retirement, ill health, accident orredundancy. In such a case, the option may be exercised within six months ofsuch event provided such exercise will take place within seven years of theoriginal date of grant. 2007 Scheme The 2007 Scheme allows for awards of both tax approved options (approvedoptions) to be made to employees resident in the United Kingdom and unapprovedoptions (unapproved options), to be made to both resident and non-residentemployees. The company's policy on the granting of share options is to makesuch awards that are necessary to recruit and retain executives. Details ofoption awards made under this scheme are detailed in note 33. The company has operated this scheme since December 2007 where options may begranted to full-time employees and directors of the company or any subsidiaryof the company. The overall limit for options granted under this scheme and anyother employees' share scheme adopted by the company is, in any rolling 10-yearperiod, 10% of the issued ordinary share capital (including treasury shares) ofthe company for the time being plus 8,100,000 ordinary shares. There is anindividual limit of a maximum of ordinary shares to the value of £30,000 inrespect of approved options. Options may be granted when the Remuneration Committee determines, within 42days of the announcement by the company of its full or interim results. Optionsmay be granted outside the 42-day period if the Remuneration Committeeconsiders there to be exceptional circumstances. Options must be grantedsubject to performance conditions being satisfied. The performance conditionsmust be objective and, save where the Remuneration Committee determines thereto be exceptional circumstances, the performance conditions must relate to theoverall financial performance of the company or the market value of ordinaryshares over a period of at least three years. The performance conditions can bewaived or amended by the Remuneration Committee if it determines that a changeof circumstances means that the performance conditions cannot reasonably bemet. No consideration is payable on the grant of an option and no option may begranted after 31 July 2017. The Remuneration Committee determines the exercise price before the options aregranted which cannot be less than the market value of the shares on the date ofgrant. The options can be exercised only on or after the third anniversary of the dateof grant provided the performance conditions have been satisfied or waived bythe Remuneration Committee. The options lapse if not exercised by the 10thanniversary of the grant. These options lapse when the option holder ceases to be an eligible employee.In the case of death, a participant's personal representatives may exercise his/her options within 12 months after the date of death. Where an option holderceases to be an employee by reason of injury, disability, redundancy, thecompany that employs the option holder ceasing to be a subsidiary of thecompany, retirement, pregnancy or in any other circumstances determined by theRemuneration Committee, the options may be exercised within six months of thetermination of employment or such longer period as may be determined by theRemuneration Committee. Share incentives The Share Incentive Scheme was approved by shareholders at the company's annualgeneral meeting on 31 July 2007. The Share Incentive Scheme is designed tocomplement the Share Option Scheme to facilitate awards to selected executivesand managers. The Share Incentive Scheme permits the award of any one or acombination of the following incentives: the sale of ordinary shares on deferred payment terms; share awards as part of a bonus scheme by way of nil cost options inconsideration of cash bonuses forgone on terms that would be determined by theRemuneration Committee of the company; and the issue of share appreciation rights either by the company or EBT (as definedbelow). The company has also adopted an Employees' Benefit Trust (EBT) which willoperate in conjunction with the Share Option Scheme and Share Incentive Scheme.The EBT has not yet been utilised for this purpose and there have been noawards under the Share Incentive Scheme since it was approved by shareholders. Pensions The company does not operate a pension scheme for executive directors but does,according to the director's preference, contribute to the personal pension planof each executive director, or pays cash in lieu of such contributions up to aspecified maximum of 12.5% of salary. No pension contributions are made inrespect of non-executive directors. Fees The fees for non-executive directors are determined by the Board, having takenindependent expert advice on appropriate levels, and are reviewed on an annualbasis. Service contracts The service and employment contracts of the executive directors are not of afixed duration and therefore have no unexpired terms, but continuation inoffice as a director is subject to re-election by shareholders as requiredunder the company's Articles of Association. The company's policy is forexecutive directors to have service and employment contracts with provision fortermination of no longer than 12 months' notice. The non-executive directors do not have service contracts. Letters ofappointment provide for termination of the appointment with up to three months'notice by either party. Details of the current directors' contracts or appointment dates are asfollows: Executive directors Employer Date of contract KK Mpinga Mwana Africa Holdings Limited 16 December 2009 YC Kwan Mwana Africa Holdings Limited 30 September 2013 Non-executive directors Employer Date of appointment SG Morris Mwana Africa PLC 6 December 2005 JL Botha Mwana Africa PLC 4 January 2013 YH Ning Mwana Africa PLC 7 June 2013 YC Hu Mwana Africa PLC 4 July 2013 Directors' remuneration The remuneration of the directors who held office during the year is asfollows: Salary/ Annual Benefits Share-based 2014 2013Director fee(1,2) bonus in kind payments (5) (6) Total Total $ $ $ $ $ $ KK Mpinga 480,189 - 82,954 149,454 712,597 1,269,686 YC Kwan (8) 119,104 - - 4,163 123,267 - SG Morris (3) 49,627 - - - 49,627 158,028 JL Botha (3) 27,354 - - - 27,354 79,014(10) YH Ning (3) 24,813 - - - 24,813 72,429 YC Hu (3) 24,813 - - - 24,813 69,137 OAG Baring (4) 14,999 - 43,781 13,265 72,045 312,885(11) DAR McAlister 729,304 - 36,417 63,496 829,217 943,088(11) (12) JA Anderson (3) 22,332 - - - 22,332 118,520(11) E Denis (3) (7) 14,888 - - - 14,888 79,014(11) M 81,467 - - - 81,467 -Wellesley-Wood(9) (10) (12) Total 1,588,890 - 163,152 230,378 1,982,420 3,101,801 1. Salaries for Mr Mpinga and Mr McAlister were increased with effect from 1 April2013. 2. Salary for Mr Mpinga was reduced by 25% with effect from 1 September2013. 3. The fees payable to Mr Morris, Mr Anderson, Mr Denis, Mr Botha, Mr Ning and MrHu were decreased by 50% with effect from 1 July 2013. 4. Mr Baring was in receipt of a fee until June 2013 and benefits in kind inrespect of his role as Non-Executive Chairman until 31 August 2013. 5. No bonuses were awarded to any directors in respect of the year ended 31 March2014. In August 2013 Mr Mpinga waived his bonus award of £330,000 ($541,492) inrespect of the year to 31 March 2013. 6. Benefits in kind relate to life and medical insurance and pension contributionsfor Mr McAlister until 30 September 2013, to life and medical insurance for MrBaring until 31 August 2013 and to pension contributions and security servicesfor Mr Mpinga. 7. The fee is paid to Sapiensa Sprl, a company in which Mr Denis has aninterest. 8. Mr Y Kwan was appointed a director on 1 October 2013. 9. Mr M Wellesley-Wood was appointed Non-Executive Chairman on 3 September 2013and left the board on 24 February 2014. 10. Mr Botha and Mr Wellesley-Wood were paid additional fees of £800 for attendanceat each board committee meeting since the beginning of December 2013, whenthese payments were approved by the board. 11. Mr Baring resigned from the board on 1 September 2013, Mr Anderson and Mr Denisretired from the board on 27 September 2013 and Mr McAlister resigned from theboard on 30 September 2013. 12. Basic salary includes ex gratia payments to Mr McAlister of £322,743 inSeptember 2013 and to Mr Wellesley-Wood of £15,000 in March 2014 Contributions in lieu of director's pensions were as follows: 2014 2013 Director $'000 $'000 KK Mpinga 60 65 YC Kwan - - SG Morris - - JL Botha - - YH Ning - - YC Hu - - JA Anderson - - E Denis - - OAG Baring - 21 DAR McAlister 25 49 M Wellesley-Wood - - Total 85 135 All contributions were either made to personal pension schemes of directors oraccrued for future payment to personal pension schemes. Directors and directors' share interests The directors during the year and their beneficial interests at the year-endwere as follows: Ordinary shares of 1p each at 31 Ordinary shares of 1p each at March 2014 31 March 2013 Number % Number % Palanka Trust(1) 16,227,260 1.16 16,227,260 1.45 KatemaMukubayi Trust(2) 19,981,415 1.43 19,981,415 1.78 KK Mpinga(3) 3,000,000 0.21 3,000,000 0.27 YC Kwan - 0.00 - 0.00 SG Morris 2,409,090 0.17 2,409,090 0.22 JL Botha 954,545 0.07 954,545 0.09 YH Ning(4) 406,133,544 29.10 242,878,827 21.70 YC Hu 454,545 0.03 454,545 0.04 OAG Baring(5)(7) 2,652,976 0.18 3,080,879 0.28 DAR McAlister(7) 1,000,000 0.07 1,000,000 0.09 JA Anderson(7) 1,190,909 0.09 1,190,909 0.11 E Denis (6)(7) 1,454,545 0.10 1,454,545 0.13 MWellesley-Wood - 0.00 - 0.00 (1) Mr KK Mpinga controls the voting rights in Palanka Trust. (2) Related to Mr KK Mpinga. (3) In addition to the shares in Mwana Africa PLC, KK Mpinga also holds 666,667shares in BNC. This equates to 0.06% in BNC. (4) Includes 299,424,282 shares held by China International Mining GroupCorporation, a company in which Mr Ning has an interest. (5) Held through Mr OAG Baring's personal pension fund. (6) Includes 454,545 shares held by Sapiensa Sprl, a company in which Mr Denishas an interest. (7)Presented to the date of ceasing to be a director. Directors' share options Aggregate emoluments disclosed above do not include any amounts for the valueof options to acquire ordinary shares in the company granted to or held by thedirectors. Details of directors' interests in shares held under option areshown below: Options Options lapsed/ Options Options granted cancelled exercised Options Latest held at 31 during during during held at 31 Exercise expiryOfficer March 2013 the year the year the year March 2014 price(1) date Unapproved Options - 1997 Scheme 1,000,000 - - - 1,000,000 79p 12/07/KK Mpinga 2014 YC Kwan(2) - - - - - - - SG Morris - - - - - - - JL Botha - - - - - - - YH Ning - - - - - - - YC Hu - - - - - - - OAG Baring(3) - - - - - - - DAR McAlister - - - - - - -(3) JA Anderson(3) - - - - - - - E Denis(3) - - - - - - - MWellesley-Wood - - - - - - -(3) Unapproved Options - 2007 Scheme 20,000,000 - - - 20,000,000 10p 10/12/KK Mpinga 2022 YC Kwan(2) - 3,000,000 - - 3,000,000 1.6p 03/10/ 2023 SG Morris - - - - - - - JL Botha - - - - - - - YH Ning - - - - - - - YC Hu - - - - - - - OAG Baring(3) 2,800,000 - - - 2,800,000 9p 30/09/ 2014 DAR McAlister 7,679,684 - - - 7,679,684 7p 10/12/(3) 2022 JA Anderson(3) - - - - - - - E Denis(3) - - - - - - - MWellesley-Wood - 8,000,000 8,000,000 - - - -(3) Approved Options - 2007 Scheme - - - - - - -KK Mpinga YC Kwan(2) - - - - - - - SG Morris - - - - - - - JL Botha - - - - - - - YH Ning - - - - - - - YC Hu - - - - - - - OAG Baring(3) - - - - - - - DAR McAlister 574,861 - - - 574,861 9p 10/12/(3) 2022 JA Anderson(3) - - - - - - - E Denis(3) - - - - - - - MWellesley-Wood - - - - - - -(3) Exercise price is the weighted average of all share options held based on theprice at the grant date. Presented from the date of appointment as a director. Presented to the date of ceasing to be a director. The options are still heldby these previous directors where shown as held above. No share options were exercised during the current or prior year. The intrinsic values of all options which have vested during the year were nil(2013: Nil). No options have been awarded to directors between the year-end and the signingof these accounts. The market price of the company's shares on 31 March 2014 was 1.5 pence perordinary share and the highest and lowest share prices during the year were4.65 pence and 1.1 pence respectively. The agreements covering directors' options are available for inspection at thecompany's registered office: Premier House, 10 Greycoat Place, London, SW1P1SB. The company's register of directors' interests (which is also open toinspection) contains full details of the directors' shareholdings and optionsto subscribe. Statement of corporate governance The directors support the principles of good corporate governance. While notmandatory for an AIM company, the directors have implemented, where practicalfor a company of this size and nature, certain provisions of the principles ofgood governance and code of best practices set out in the UK CorporateGovernance Code. The disclosures presented herein are limited and are notintended to constitute a corporate governance statement as prescribed by theDisclosures and Transparency Rules or the Companies Act. The Board has also considered the guidance published by the Financial ReportingCouncil concerning the internal control requirements of the UK CorporateGovernance Code, in line with the Turnbull Report. The Board regularly reviewskey business risks, via a number of properly constituted committees, inaddition to the financial risks facing the group in the operations of thebusiness. The Board The Board meets at least quarterly throughout the year. The Board isresponsible for formulating, reviewing and approving the group's strategy,planning, budgets, acquisitions, risk, and environmental management. The non-executive directors SG Morris and JL Botha are considered by the Boardto be independent of management and free from any business or otherrelationship which could materially affect the exercise of their independentjudgement. Mr YH Ning and YC Hu have an interest in the Group's largestshareholder China International Mining Group Corporation. Directors have the facility to take external independent advice in furtheranceof their duties at the group's expense and have access to the services of theCompany Secretary. The Board delegates certain of its responsibilities to the Audit, Remunerationand Nomination Committees under clearly defined terms of reference. Audit Committee The Audit Committee meets at least twice during the year and is responsible forensuring that the financial performance of the company is properly reported onand monitored, and for meeting the auditors and reviewing the auditors' reportsrelating to the accounts. The committee also recommends the appointment of, andreviews the fees of, the external auditors. It meets once a year with theauditors without executive Board members present. The Audit Committee comprisesat least three members, two of whom shall be non-executive. The currentmembership of the committee is Mr SG Morris (Chairman) and Mr JL Botha, both ofwhom are non-executive, and Mr YC Kwan. Remuneration Committee The Remuneration Committee meets at least twice per year. It reviews theperformance of the executive directors and sets and reviews the scale,structure and basis of their remuneration and the terms of their serviceagreements paying due regard to the interest of shareholders as a whole and theperformance of the company. The Remuneration Committee comprises twonon-executive directors, Mr JL Botha (Chairman) and Mr SG Morris. Thedirectors' remuneration report appears on pages 33 to 39. Nomination Committee The role of the Nomination Committee is to recommend any new appointment ofdirectors to the board, based on the merits of the candidates and the relevanceof their background and experience. It periodically reviews the structure, sizeand composition of the Board. The committee comprises at least three members, two of whom shall benon-executive directors. The committee is chaired by the Chairman of the Board,Mr SG Morris. Mr JL Botha is the other non-executive member and Mr KK Mpinga isalso a member of the committee. The nomination committee met twice during the year. The appointments of Mr YCKwan as Finance Director and Mr M Wellesley-Wood as non-executive Chairman wereconsidered and approved by the full Board. Internal controls The directors have overall responsibility for the group's internal controleffectiveness in safeguarding the assets of the group. Internal control systemsare designed to identify and mitigate the particular type of business,operational and safety risks to which the group is exposed. Internal controlscan only provide a reasonable, but not absolute assurance against materialmisstatements or loss. The Board reviews the effectiveness of the internal controls through the AuditCommittee and through executive management reporting to the Board. Businessplans, budgets and authorisation limits for the approval of significantexpenditure, including investments are appraised and approved by the Board. TheBoard also seeks to ensure that there is a proper organisational and managementstructure with clear responsibilities and accountability. It is the Board's policy to ensure that the management structure and thequality and integrity of the personnel are compatible with the requirements ofthe group. The company complies with rule 21 of the AIM Rules for Companies regardingdealings in the company's shares and has adopted a share dealing code to ensurecompliance by the directors and applicable employees. Shareholder Relationships During the year the executive directors met frequently with shareholders andthe investment community. This included formal road shows and presentations,one-to-one meetings, analysts meetings and press interviews. The chiefexecutive officer and finance director regularly brief the Board on thesecontacts and relay the views expressed. Anti-Bribery and Corruption Following introduction of the UK Anti-Bribery & Corruption Act, the Boardintroduced a group policy in relation thereto. The Board takes a zero toleranceapproach to bribery and corruption and will uphold all laws relevant tocountering bribery and corruption in all jurisdictions in which the groupoperates. The Board expect the highest standard of personal and professionalbehaviour from all employees within the group and from external contractors andthird parties working or performing services on behalf of the group. The Boardwill not tolerate any incidence of bribery and will take action against anyoneemployed within the group, or associated with the group, who commits bribery. The group's policy on bribery and corruption has been communicated to allemployees and contractors. The Board has delegated oversight of the policy to the Audit Committee and hasappointed the finance director to act as the group's anti-bribery complianceofficer. The group regularly monitors and investigates all allegations of fraud andbribery and corruption and reports on all issues arising to the Board. INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MWANA AFRICA PLC We have audited the financial statements of Mwana Africa PLC for the year ended31 March 2014 set out below. The financial reporting framework that has beenapplied in their preparation is applicable law and International FinancialReporting Standards (IFRSs) as adopted by the EU and, as regards the parentcompany financial statements, as applied in accordance with the provisions ofthe Companies Act 2006. This report is made solely to the company's members, as a body, in accordancewith Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has beenundertaken so that we might state to the company's members those matters we arerequired to state to them in an auditor's report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the company and the company's members, as a body, for ouraudit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors' Responsibilities Statement set out onpage 40, the directors are responsible for the preparation of the financialstatements and for being satisfied that they give a true and fair view. Ourresponsibility is to audit, and express an opinion on, the financial statementsin accordance with applicable law and International Standards on Auditing (UKand Ireland). Those standards require us to comply with the Auditing PracticesBoard's Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided onthe Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate. Opinion on financial statements In our opinion: the financial statements give a true and fair view of the state of the group'sand of the parent company's affairs as at 31 March 2014 and of the group'sprofit for the year then ended; the group financial statements have been properly prepared in accordance withIFRSs as adopted by the EU; the parent company financial statements have been properly prepared inaccordance with IFRSs as adopted by the EU and as applied in accordance withthe provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirementsof the Companies Act 2006. Emphasis of matter - carrying value of company investments In forming our opinion on the financial statements, which is not modified, wehave considered the adequacy of the disclosures made in note 22 to thefinancial statements concerning the carrying value of investments held by theCompany in the Zimbabwean operation of $96.5m (2013: $74.6m). As disclosed innote 22, there are uncertainties linked to the implementation of theIndigenisation Law in Zimbabwe. The possible impact of this law is uncertainand causes doubt over the carrying value of the investments held by theCompany. The financial statements do not include the adjustments that wouldresult from the impact of the Zimbabwe indigenisation legislation on thecarrying value of the investment held by the company. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors'Report for the financial year for which the financial statements are preparedis consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where theCompanies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, orreturns adequate for our audit have not been received from branches not visitedby us; or the parent company financial statements are not in agreement with theaccounting records and returns; or certain disclosures of directors' remuneration specified by law are not made;or we have not received all the information and explanations we require for ouraudit. J Lowes (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15, Canada Square, Canary Wharf 8 July 2014 Consolidated statement of profit and loss for the year ended 31 March 2014 2014 2013 Note $'000 $'000 Revenue 8 142,460 109,159 Cost of sales 10 (83,850) (59,051) Gross profit 58,610 50,108 Other income 620 393 Freight and insurance expenses (12,098) (514) General and administrative expenses (11,240) (11,594) Care and maintenance expenses (1,890) (12,956) Corporate expenses (6,442) (8,504) Operating profit 10 27,560 16,933 Retrenchment and restructuring expenses (1) (2,004) - Dividends received - 83 (Loss)/profit on sale of assets 11 (1,636) 257 Fair value adjustment (6) (388) Foreign exchange gain 1,055 790 EBITDA (2) 24,969 17,675 Impairment loss 35 (671) (43,949) Impairment reversal 35 27,987 - Depreciation (7,631) (5,651) Finance income 15 319 645 Finance expense 15 (1,033) (784) Net profit/(loss) before income tax 43,940 (32,064) Income tax credit/(expense) 16 6,655 (11,397) Net profit/(loss) for the year 50,595 (43,461) Net profit/(loss) attributable to: Owners of the Parent 36,605 (28,641) Non-controlling interest 13,990 (14,820) Net profit/(loss) for the year 50,595 (43,461) Earnings/(loss) per share Basic earnings/(loss) per share (US cents) 19 2.89 (2.62) Diluted earnings/(loss) per share (US cents) 19 2.89 (2.62) The notes on pages 54 to 87 are an integral part of these consolidatedfinancial statements. (1) Following a decision to reduce corporate costs, certain staff retrenchmentand once-off costs in respect of restructuring costs were incurred during theyear in respect of London, Johannesburg and DRC (SEMHKAT). (2) Earnings before interest, impairments, tax, depreciation and amortisation. Consolidated statement of comprehensive income for the year ended 31 March 2014 2014 2013 $'000 $'000 Profit/(loss) for the year 50,595 (43,461) Other comprehensive loss Items that are or may be reclassified subsequently toprofit or loss: (884) (1,277)Foreign currency translation differences Other comprehensive loss for the year, net of income tax (884) (1,277) Total comprehensive profit/(loss) for the year 49,711 (44,738) Total comprehensive profit/(loss) attributable to: Owners of the Parent 35,721 (29,918) Non-controlling interest 13,990 (14,820) Total comprehensive profit/(loss) for the year 49,711 (44,738) These financial statements were approved by the Board of directors on 8 July2014 and were signed on its behalf by: SG Morris YC Kwan Chairman Finance Director Consolidated statement of financial position as at 31 March 2014 2014 2013 Note $'000 $'000 ASSETS Non-current assets Property, plant and equipment 20 81,355 49,283 Intangible assets 21 62,986 58,262 Investments 22 615 1,354 Deferred tax assets 17 19,406 1,186 Non-current receivables 23 2,288 1,268 Total non-current assets 166,650 111,353 Current assets Inventories 24 12,994 11,206 Trade and other receivables 25 18,832 12,911 Cash and cash equivalents 26 9,089 15,194 Total current assets 40,915 39,311 Total assets 207,565 150,664 EQUITY Issued share capital 27 99,572 95,162 Share premium 69,536 69,088 Reserves 97,157 96,526 Retained earnings (140,628) (177,949) Total equity attributable to equity holders of the 125,637 82,827parent Non-controlling interest 3,284 (10,793) Total equity 128,921 72,034 LIABILITIES Non-current liabilities Loan payable 28 2,446 4,273 Rehabilitation provisions 29 17,847 18,893 Other payables - 8,537 Deferred tax liabilities 17 18,878 10,506 Total non-current liabilities 39,171 42,209 Current liabilities Trade payables 15,300 10,825 Accruals and other payables 30 21,568 16,481 Provisions 31 2,605 9,115 Total current liabilities 39,473 36,421 Total liabilities 78,644 78,630 Total equity and liabilities 207,565 150,664 The notes on pages 54 to 87 are an integral part of these financial statements. These financial statements were approved by the Board of directors on 8 July2014 and were signed on its behalf by: SG Morris YC Kwan Chairman Finance Director Company statement of financial position as at 31 March 2014 2014 2013 Note $'000 $'000 ASSETS Non-current assets Property, plant and equipment 20 34 399 Investments 22 97,505 76,823 Total non-current assets 97,539 77,222 Current assets Trade and other receivables 25 80,902 , 63,598 Cash and cash equivalents 26 1,420 1,585 Total current assets 82,322 65,183 Total assets 179,861 142,405 EQUITY Issued share capital 27 99,572 95,162 Share premium 69,536 69,088 Reserves 2,933 1,418 Retained earnings 3,416 (26,607) Total equity attributable to equity holders of 175,457 139,061the company LIABILITIES Current liabilities Accruals and other payables 30 4,404 3,344 Total liabilities 4,404 3,344 Total equity and liabilities 179,861 142,405 These financial statements were approved by the Board of directors on 8 July2014 and were signed on its behalf by: SG Morris YC Kwan Chairman Finance Director Consolidated statement of cash flows for the year ended 31 March 2014 2014 2013 Note $'000 $'000 Cash flows from operating activities Profit/(loss) before income tax 43,940 (32,064) Adjustments for: Foreign exchange movements (1,055) (349) Depreciation 7,631 5,943 Fair value adjustments 6 413 Charge in relation to share-based payments 512 342 (Decrease)/increase in rehabilitation provisions (1,046) 210 Decrease in other provisions (9,947) (1,743) Increase in environmental assets - (96) Impairment loss 671 43,949 Impairment reversal (27,987) - Loss/(profit) on sale of non-current assets 1,636 (257) Finance income (319) (1,435) Finance costs 1,033 784 15,075 15,697 Increase in inventories (1,788) (3,153) (Increase)/decrease in trade and other receivables (10,813) 2,766 Increase/(decrease) in trade and other payables 9,074 (980) 11,548 14,330 Finance costs (1,033) (743) Income tax paid (4,421) (9,784) Net cash from operating activities 6,094 3,803 Cash flows from investing activities Additions to property, plant and equipment (12,770) (18,389) Investment in intangible exploration assets (5,235) (15,331) Proceeds from sale of property, plant and equipment 49 340 Proceeds on sale of investments - 412 Finance income 319 1,435 Net cash used in investing activities (17,637) (31,533) Cash flows from financing activities Proceeds from issue of share capital 6,990 33,845 Share issue expenses (413) (1,054) Dividends paid to non-controlling interests (150) (1,462) Share issuance to NCI 837 2,015 Loans advanced - 4,708 Loans repaid (1,827) (1,734) Net cash from financing activities 5,437 36,318 Net (decrease)/increase in cash and cash equivalents (6,106) 8,588 Cash and cash equivalents at beginning of the year 15,194 6,696 Exchange rate movement on cash and cash equivalentsat beginning of year 1 (90) Cash and cash equivalents at end of the year 26 9,089 15,194 Company statement of cash flows for the year ended 31 March 2014 2014 2013 Note $'000 $'000 Cash flows from operating activities Profit/(loss) before income tax 29,307 (39,872) Adjustments for: Depreciation 88 74 Fair value adjustments 395 - Foreign exchange movements (2,234) (314) Loss on sale of non-current assets 1,080 4 Charge in relation to share-based payments 512 225 Impairment loss - 35,107 Impairment reversal (35,044) - Finance income (776) (715) (6,672) (5,491) Increase in trade and other receivables (972) (5,348) Increase in trade and other payables 63 1,204 Net cash used in operating activities (7,581) (9,635) Cash flows from investing activities Additions to property, plant and equipment (10) (412) Acquisition of investments - (24,982) Proceeds from sale of non-current assets 17 4 Finance income 776 715 Net cash generated by/(used in) investing activities 783 (24,675) Cash flows from financing activities Proceeds from issue of share capital 6,990 33,845 Share issue expenses (413) (1,054) Net cash from financing activities 6,577 32,791 Net decrease in cash and cash equivalents (221) (1,519) Cash and cash equivalents at beginning of the year 1,585 3,104 Exchange rate movement on cash at beginning of year 56 - Cash and cash equivalents at end of the year 26 1,420 1,585 Consolidated statement of changes in equity for the year ended 31 March 2014 Share Share Translation Treasury Share based capital premium reserve stock(1) payments $'000 $'000 $'000 $'000 $'000 88,817 42,641 96,385 (1,719) 5,177Balance as at31 March 2012 Loss for the - - - - -year Foreigncurrency - - (1,277) - -translationdifferences Totalcomprehensive - - (1,277) - -loss for theyear Contributionsby anddistributionsto owners Issue ofordinary 6,345 27,501 - - -shares Share issue - (1,054) - - -expenses Sale ofinterest in - - - - -subsidiary Participationin subsidiary - - - - -rights issue Dividends paid - - - - -by subsidiary Share-basedpayment - - - - 342transactions Share-basedpayment - - - - (2,382)reversals Totalcontributionsby and 6,345 26,447 - - (2,040)distributionsto owners Balance as at 95,162 69,088 95,108 (1,719) 3,13731 March 2013 Total equity attributable to equity Total Retained holders of Non-con-trolling Total reserves earnings the parent interest equity $'000 $'000 $'000 $'000 $'000 Balance as 231,301 (149,810) 81,491 (3,527) 77,964at 31 March2012 Loss for the - (28,641) (28,641) (14,820) (43,461)year Foreigncurrency (1,277) - (1,277) - (1,277)translationdifferences Totalcomprehensive (1,277) (28,641) (29,918) (14,820) (44,738)loss for theyear Contributionsby anddistributionsto owners Issue ofordinary 33,846 - 33,846 - 33,846shares Share issue (1,054) - (1,054) - (1,054)expenses Sale ofinterest in - (2,849) (2,849) 3,254 405subsidiary Participationin subsidiary - 969 969 5,764 6,733rights issue Dividendspaid by - - - (1,464) (1,464)subsidiary Share-basedpayment 342 - 342 - 342transactions Share-basedpayment (2,382) 2,382 - - -reversals Totalcontributionsby and 30,752 502 31,254 7,554 38,808distributionsto owners Balance as at 260,776 (177,949) 82,827 (10,793) 72,03431 March 2013 The treasury stock reserve represents the market value of Mwana Africa PLCshares which were purchased, but not cancelled. This is held at the value onthe date of purchase. Consolidated statement of changes in equity for the year ended 31 March 2014(continued) Share Share Translation Treasury Share based capital premium reserve stock(2) payments $'000 $'000 $'000 $'000 $'000 95,162 69,088 95,108 (1,719) 3,137Balance as at31 March 2013 Profit for the - - - - -year Foreigncurrency - - (884) - -translationdifferences Totalcomprehensive - - (884) - -income for theyear Contributionsby anddistributionsto owners Issue of 4,410 - - [DEL:-:DEL] -ordinary shares Dividends - - - - - Premium onshare issue - 2,101 - - -less expenses Disposal of - (1,653) - 1,719 -treasury stock Share-basedpayment - - - - 512transactions Share-basedpayment - - - - (716)reversals Totalcontributionsby and 4,410 448 - 1,719 (204)distributionsto owners Balance as at 99,572 69,536 94,224 - 2,93331 March 2014 Total equity attributable to equity Total Retained holders of Non-con-trolling Total reserves earnings the parent interest equity $'000 $'000 $'000 $'000 $'000 Balance as 260,776 (177,949) 82,827 (10,793) 72,034at 31 March2013 Profit for - 36,605 36,605 13,990 50,595the year Foreigncurrency (884) - (884) - (884)translationdifferences Totalcomprehensive (884) 36,605 35,721 13,990 49,711income forthe year Contributionsby anddistributionsto owners Issue ofordinary 4,410 - 4,410 837 5,247shares Dividends - - - (750) (750) Premium onshare issue 2,101 - 2,101 - 2,101less expenses Disposal oftreasury 66 - 66 - 66stock Share-basedpayment 512 - 512 - 512transactions Share-basedpayment (716) 716 - - -reversals Totalcontributionsby and 6,373 716 7,089 87 7,176distributionsto owners Balance as at 266,265 (140,628) 125,637 3,284 128,92131 March 2014 (2) All of the treasury shares were sold by the Company pursuant to the 20September 2013 placing. Company statement of changes in equity for the year ended 31 March 2014 Share based Share Share Treasury payments Retained Total capital premium stock(1) (2) earnings equity $'000 $'000 $'000 $'000 $'000 $'000 Balance as at 31 88,817 42,641 (1,719) 5,177 10,883 145,799March 2012 Loss for the year - - - - (39,872) (39,872) Totalcomprehensive - - - - (39,872) (39,872)loss for the year Contributions byand distributionsto owners Issue of ordinary 6,345 - - - - 6,345shares Premium on shareissue less - 26,447 - - - 26,447expenses Share-basedpayment - - - 342 - 342transactions Share-based - - - (2,382) 2,382 -payment reversals Totalcontributions by 6,345 26,447 - (2,040) 2,382 33,134and distributionsto owners Balance as at 31 95,162 69,088 (1,719) 3,137 (26,607) 139,061March 2013 Profit for the - - - - 29,307 29,307year Totalcomprehensive - - - - 29,307 29,307profit for theyear Contributions byand distributionsto owners Issue of ordinary 4,410 - - - - 4,410shares Premium on shareissue less - 2,101 - - - 2,101expenses Disposal of (1,653) 1,719 - - 66treasury stock Share-basedpayment - - - 512 - 512transactions Share-based - - - (716) 716 -payment reversals Totalcontributions by 4,410 448 1,719 (204) 716 7,089and distributionsto owners Balance as at 31 99,572 69,536 - 2,933 3,416 175,457March 2014 (1) The treasury stock reserve represents the market value of Mwana Africa PLCshares which were purchased, but not cancelled. This is held at the value onthe date of purchase. All of the treasury shares were sold by the Companypursuant to the 20 September 2013 placing. (2) The share-based payments reserve represents the accrued employeeentitlements to share awards that have been charged to the income statement, aswell as accrued group employee entitlements that have been debited toinvestments in subsidiaries. Notes to the annual financial statement for the year ended 31 March 2014 1. Reporting entity Mwana Africa PLC ("the company") is a company domiciled in the UK. The addressof the company's registered office is Premier House, 10 Greycoat Place, London,SW1P 1SB. The consolidated financial statements of the company as at and forthe year ended 31 March 2014 comprise the Company and its subsidiaries(together referred to as "the Group" and individually as "Group entities") andthe Group's interest in jointly controlled entities. The Group primarily isinvolved in the mining of gold and nickel. 2. Adoption of International Financial Reporting Standards as endorsed by theEuropean Union The consolidated financial statements of the parent company (the Company) andits subsidiaries (together, the group) and the financial statements of thecompany have been prepared in accordance with International Financial ReportingStandards (IFRS) as endorsed by the European Union (EU). 3. Basis of Preparation Basis of preparation With the exception of certain items noted below, which are carried at fairvalue, the financial statements have been prepared under the historical costconvention. The company and consolidated financial statements have been prepared inaccordance with applicable law and International Financial Reporting Standardsas adopted by the EU ("IFRSs") and, as regards the company financialstatements, as applied in accordance with the provisions of the Companies Act2006. Under section 408 of the Companies Act 2006, the company has elected notto present its own income statement. Going Concern The Directors, having considered the Group's and the Company's current tradingactivities, funding position and the Zimbabwean environment for the period ofat least twelve months from the date of approval of these Financial Statementsconsider it appropriate to adopt the Going Concern basis in preparing theFinancial Statements for the year ended 31st March 2014. The Group's activities, together with the factors likely to affect its futuredevelopment, performance and position are set out in the Business Review onpage 29. The financial position of the Group, its cashflows and liquidityposition are as set out in the Financial Review on pages 18 to 20. During the year to 31 March 2014 operations at BNC have re-started successfullyand the operating cash inflows from BNC together with significant cost cuttingmeasures achieved during the year have significantly improved the Group's cashposition and outlook. The directors' cashflow forecasts assume: an average nickel price of $18,500 per tonne and average gold price of $1,250per ounce; settlement in full of the legacy creditors at BNC in line with agreementsconcluded last financial year. Staff creditors will be settled by December 2014and trade creditors in December 2015; all planned capital expenditure to maintain existing operations, with anyadditional capital expenditure to be funded from external sources. Thedirectors also plan to restart the smelter at BNC and expand the millingcapacity at Freda Rebecca if debt funding is obtained from external sources.These projects would impact positively the cashflow forecast if achieved duringthe period considered for the going concern analysis; the group's other activities are assumed to be funded from internally generatedcash resources, however, in line with other mining companies the Group retainsa high degree of flexibility over its expenditure and will continue to pursuealternative funding options for its main exploration projects from time to timeincluding potential farm-out or joint venture arrangements where appropriate. These forecasts indicate that the Group will have sufficient cash available tocontinue in operation for at least a year from the date of approval of thesefinancial statements. The Directors are aware that various uncertainties outside the Group's controlmight impact the validity of their forecasts. These uncertainties includefuture gold and nickel prices, mining and processing risks, resource andreserve risks and customer risks in addition to the political andindigenisation risks in Zimbabwe which may constrain the ability of the Companyto control the movement of cash between entities or receive dividends. Nickelprices in particular have been historically volatile, however absent astructural change in the market (such as a decision by Indonesia to reverse theexport ban) forecasts are considered to be achievable. Reasonably expectedvariations in nickel price would not cause the going concern assumption to beinappropriate. The Directors consider that they have a number of actions available to them inthe event of any of these uncertainties eventuating including constraining cashexpenditure at operations, curtailing exploration expenditure and arrangingadditional debt financing. The directors, after making enquiries and considering the uncertaintiesdescribed above, believe that the company and the group have adequate resourcesto continue in operational existence for the foreseeable future. Accordinglythey continue to adopt the going concern basis in preparing the Annual Reportand financial statements and these financial statements do not include anyadjustments that would result from the going concern basis of preparation beinginappropriate. Basis of consolidation Subsidiaries Subsidiaries are those entities over whose financial and operating policies theGroup has the ability to exercise control. The Group financial statementsincorporate the assets, liabilities and results of operations of the companyand its subsidiaries. The acquisition method of accounting has been adopted.Under this method, the results of subsidiaries acquired or disposed of duringthe year are included in the consolidated income statement from the date ofacquisition or up to the date of disposal. Non-controlling Interests Non-controlling interests exist in less than wholly-owned subsidiaries of theCompany and represent the outside interest's share of the carrying values ofthe subsidiaries. Non-controlling interests are recorded at their proportionateshare of the identifiable net assets acquired as at the date of acquisition andare presented immediately after the shareholder's equity section of theConsolidated Balance Sheet. When the subsidiary company issues its own sharesto outside interests, a dilution gain or loss arises as a result of thedifference between the Company's share of the proceeds and the carrying valueof the underlying equity. If the change in ownership does not result in loss ofcontrol, it is accounted for as an equity transaction. Jointly controlled entities A joint venture is an entity in which the Group holds a long term interest andin which the Group has the ability to exercise joint control in terms of acontractual arrangement. The Group's interest in a jointly controlled entity isaccounted for by proportionate consolidation. In terms of this method, theGroup includes its share of the income and expenses, assets and liabilities,and cash flows on a line by line basis with similar items in the Group'sfinancial statements. Transactions eliminated on consolidation Intergroup balances and transactions and any unrealised income and expensesarising from intergroup transactions are eliminated in the consolidatedfinancial statements. Companies with different year-ends than the parent company The following DRC subsidiaries of Mwana Africa PLC have 31 December year endsas required by DRC legislation: * Mwana Africa Congo Gold SPRL (Zani Kodo) * SEMHKAT SPRL 4. Significant estimates and judgements The preparation of financial statements in conformity with IFRSs requiresmanagement to make judgements, estimates and assumptions that affect theapplication of accounting policies and reported amounts of assets, liabilities,income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which theestimates are revised and in any future periods affected. Derivation of assumptions used in the estimation of the recoverable values ofassets requires a significant amount of judgement. The assumptions underlyingthe estimated recoverable values include, amongst others, the technicalperformance, revenue, operating costs and discount rate (for discounted cashflow based valuations), and are based on management's best judgements at thedate of signing the accounts. The life of mine periods used for the purpose of calculating estimatedrecoverable values are based on resources and reserves. These judgements usedby management correspond to realistic scenarios taking into account theinformation available. The impairment note discloses a sensitivity analysiswith regard to the assumptions which the board deems most susceptible tovariances against forecast. In particular, information about significant areas of estimation uncertaintyand critical judgements in applying accounting policies that have the mostsignificant effect on the amounts recognised in the financial statements isincluded in the following notes: Property, Plant and Equipment (Note 20) including: Assets' useful lives and depreciation rates for Property, Plant and Equipmentand Mineral Interests Depreciation, depletion and amortisation rates are calculated on astraight-line basis based on the estimated assets' useful lives. Should the asset's useful life differ from the initial estimate, an adjustmentwould be made. The assets' useful lives are estimated based on the shorter ofthe life of the mine and the useful life of the specific component of theasset. Commencement of Commercial/Operating level production As a mine is developed and until it reaches an operating level that isconsistent with the use intended by management, costs incurred are capitalisedas property, plant and equipment. The Company exercises judgement to determinethe commencement of commercial production that is defined as the date when amine achieves a sustainable level of production that provides a basis for areasonable expectation of profitability along with various qualitative factorsincluding but not limited to the achievement of mechanical completion, whetherproduction levels are sufficient to be at least capable of generatingsustainable positive cash flow, and whether the product is of sufficientquantity to be sold. Deferred Tax (Note 17) In assessing the probability of realising deferred income tax assets managementmakes estimates related to expectations of future taxable income, expectedtiming of reversals of existing temporary differences and the likelihood thattax positions taken will be sustained upon examination by applicable taxauthorities. Where applicable tax laws and regulations are either unclear orsubject to ongoing varying interpretations, it is reasonably possible thatchanges in these estimates can occur that materially affect the amounts ofincome tax assets recognised. Also, future changes in tax laws could limit theCompany from realising the tax benefits from the deferred tax assets. TheCompany reassesses unrecognised deferred income tax assets at each reportingperiod. Inventories (Note 24) The assumptions used in the valuation of work-in-progress and finished goodsinventories include estimates of gold contained in the leach tanks, the amountof gold in the mill circuits, recovery percentage and the estimation of thegold price expected to be realised when the gold is recovered. Rehabilitation provisions (Note 29) The cost estimates are updated annually during the life of a mine to reflectknown developments, (e.g. revisions to cost estimates and to the estimatedlives of operations), and are subject to review at regular intervals.Rehabilitation liabilities are estimated based on the Company's interpretationof current regulatory requirements, constructive obligations and are measuredat fair value. Fair value is determined based on the net present value ofestimated future cash expenditures for the settlement of decommissioning,restoration or similar liabilities that may occur upon rehabilitation of themine site. Such estimates are subject to change based on changes in laws andregulations, technology and negotiations with regulatory authorities. Provisions (Note 31) The use of estimates regarding the probability of the outflow of economicbenefits as well as whether the Company has an obligation which needs to besettled. Share-based payments (Note 33) The use of valuation models to fair value share-based payments requireassumptions regarding the estimated term of the option, share price volatilityand expected dividend yield. 5. Accounting policies The accounting policies set out below have been applied consistently to allperiods presented in these consolidated financial statements. Foreign currencies (a) Functional and presentation currency The individual financial statements of each Group entity are prepared in itsfunctional currency, which is the currency of the primary economic environmentin which that entity operates. For the purpose of the consolidated financialstatements, the results and financial position of each entity are translatedinto US dollars, which is the presentational currency of the Group. (b) Reporting foreign currency transactions in functional currency Transactions in currencies other than the entity's functional currency (foreigncurrencies) are initially recorded at the rates of exchange prevailing on thedates of the transactions. At each subsequent balance sheet date: foreign currency monetary items are re-translated at the rates prevailing atthe balance sheet date. Exchange differences arising on the settlement orre-translation of monetary items are recognised in the income statement; non-monetary items measured at historical cost in a foreign currency are notre-translated; and exchange differences arising on the re-translation of non-monetary itemscarried at fair value are included in the income statement except fordifferences arising on the re-translation of non-monetary items in respect ofwhich gains and losses are recognised in the other comprehensive income, inwhich case any exchange component of that gain or loss is also recogniseddirectly in equity. The directors have prepared the financial statements on the basis of theirjudgement that the functional currency under IAS 21 of the Group's Zimbabweansubsidiaries is the US dollar. The directors judge that the functional currencyof these subsidiaries is the US dollar, based on revenue, capital expenditureand the majority of costs being denominated in US dollars. (c) Translation from functional currency to presentational currency When the functional currency of a Group entity is different from the Group'spresentational currency (US dollars), its results, financial position and cashflows are translated into the presentational currency as follows: assets and liabilities are translated using exchange rates prevailing at thebalance sheet date; income and expense items are translated at average exchange rates for the year,except where the use of such an average rate does not approximate the exchangerate at the date of the transaction, in which case the transaction rate isused; and all resulting exchange differences are recognised in translation reserves as aseparate component of equity and are recognised in the income statement in theperiod in which the foreign operation is disposed of. Cash flows are translated using average exchange rates during the period andthe effect of exchange rate changes on the balances of cash and cashequivalents is presented as part of the reconciliation of movements therein. Intangible assets - exploration and evaluation expenditure All expenditure directly related to mineral exploration is capitalised on aproject-by-project basis, pending the determination of the feasibility of theproject. Exploration costs include certain administration and salary costs. Ifa project is ultimately deemed commercially and technically viable, the relatedexploration costs remain capitalised and are reclassified to tangible assetswhilst the asset is developed, and are then written off over the life of theestimated ore reserve on a unit-of-production basis. If it is determined that aproject is not expected to be successful, whether relinquished, abandoned oruncommercial, the related exploration costs are written off. Once a decision is made to develop then the related exploration and evaluationcosts are transferred from intangible to tangible assets. Depreciation of property, plant and equipment used in exploration activities iscapitalised to intangible exploration and evaluation assets. For the purpose of impairment assessment, capitalised exploration andevaluation expenditures are allocated to the cash generating units on the basisof the exploration field in which the costs have been incurred. Property, plant and equipment Items of property, plant and equipment is measured at cost less accumulateddepreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition ordevelopment of the asset. Capitalised mine development costs include expenditure incurred to develop newore bodies, to define further mineralisation in existing ore bodies and, tobuild or expand the capacity of a mine or to enhance its future economicbenefits. Development projects are stated at cost, net of depreciation and any provisionfor impairment. The costs capitalised under development projects will includean allocation of salary costs, materials and any other costs directlyattributable to the project. This does not include administration and generalexpenses which would have been incurred irrespective of whether the project wastaking place. Any sales taking place within the development project period would be shown asrevenue with corresponding costs allocated to cost of sales. When significant parts of an item of property, plant and equipment havedifferent useful lives, they are accounted for as separate items (majorcomponents) of property, plant and equipment. Items of property, plant and equipment are depreciated from the date they areavailable for use or, in respect of capitalised cost, from the date thatcommercial production is reached. Depreciation is calculated to write off the cost of items of property, plantand equipment less their estimated residual values using the straight-linebasis over their estimated useful lives, as set out below: Mining assets: mining assets consists of plant and equipment used in miningoperations and is depreciated at varying rates on a straight-line basis overthe expected useful lives (defined by reference to the life of mine), whichrange from three to 17 years. It also includes capitalised mine developmentcosts and development projects: The Group's policy is to depreciate the cost in equal instalments over theestimated economic life of the project. These costs are depreciated from thedate on which commercial production begins. Smelter and refinery assets: smelter and refinery assets are depreciated atvarying rates on a straight-line basis over the expected useful lives, whichrange from 5 to 40 years. Plant and equipment and motor vehicles: plant and equipment and motor vehiclesare depreciated on a straight line basis over their estimated useful lives atthe annual rate of 10% and 20% respectively. Buildings: buildings are depreciated on a straight-line basis over the expecteduseful lives, currently 40 years. Depreciation is generally recognised in profit and loss, unless the amount isincluded in the carrying amount of another asset. Land is not depreciated Depreciation methods, useful lives and residual values are reviewed at eachreporting date and adjusted if appropriate. Subsequent expenditure is capitalised only when it is probable that futureeconomic benefits associated with the expenditure will flow to the Group.Ongoing repairs and maintenance are expensed as incurred. Impairment (i) Non-financial assets The carrying amounts of the Group's assets are reviewed at each balance sheetdate to determine whether there is any indication of impairment. If any suchindication exists, the asset's recoverable amount is estimated. Exploration and evaluation assets are also assessed for impairment when factsand circumstances suggest that the carrying amount of an asset may exceed itsrecoverable amount. An impairment loss is recognised to the extent that the carrying amount of anasset or cash-generating unit ("CGU") exceeds its recoverable amount. Therecoverable amount of an asset or CGU is the higher of i) its fair value lesscosts to sell and ii) its value in use, which is the present value of thefuture cash flows expected to be derived from the asset or CGU, discountedusing a pre-tax discount rate that reflects current market assessments of thetime value of money and the risks associated with the asset or CGU. Impairmentlosses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocatedfirst to reduce the carrying amount of any goodwill allocated tocash-generating units and then to reduce the carrying amount of the otherassets in the unit. A cash generating unit is the smallest identifiable groupof assets that generates cash inflows that are largely independent of the cashinflows from other assets or groups of assets. It usually corresponds to theexploration field or the production unit. In respect of other assets, an impairment loss is reversed when there is anindication that the impairment loss may no longer exist and there has been achange in the estimates used to determine the recoverable amount. An impairmentloss is reversed only to the extent that the asset's carrying amount does notexceed the carrying amount that would have been determined, net of depreciationor amortisation, if no impairment loss had been recognised. Reversals ofimpairment relating to other assets are recognised in the income statement. (ii) Non-derivative financial assets When a decline in the fair value of an available-for-sale financial asset hasbeen recognised directly in equity and there is objective evidence that theasset is impaired, the cumulative loss that had been recognised directly inequity is recognised in profit or loss even though the financial asset has notbeen de-recognised. The amount of the cumulative loss that is recognised in theincome statement is the difference between the acquisition cost and currentfair value, less any impairment loss on that financial asset previouslyrecognised in the income statement. The Company assesses for impairment the value of its investments in and loansto its subsidiaries when there are indicators of impairment. An impairment loss in respect of an investment in an equity instrumentclassified as available-for-sale is not reversed through the income statement.If the fair value of a debt instrument classified as available-for-saleincreases and the increase can be objectively related to an event occurringafter the impairment loss was recognised in the income statement, theimpairment loss is reversed through the income statement. An impairment lossin respect of goodwill is not reversed. Financial instruments (a) Non-derivative financial assets The Group initially recognises loans and receivables on the date that they areoriginated. All other financial assets (including assets designated at fairvalue through profit and loss) are recognised initially on trade date, which isthe date that the Group becomes a party to the contractual provisions of theinstrument. The Group derecognises a financial asset when the contractual rights to thecash flows from the asset expire, or it transfers the rights to receive thecontractual cash flows in a transaction in which substantially all the risksand rewards of ownership of the financial asset are transferred. Financial assets and liabilities are offset and the net amount presented in thestatement of financial position when, and only when, the Group has a legalright to offset the amounts and intends either to settle them on a net basis orto realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial assets into the followingcategories: financial assets at fair value through profit and loss,held-to-maturity financial assets, loans and receivables and available-for-salefinancial assets. (i) Loans and receivables Loans and receivables are financial assets with fixed or determinable paymentsthat are not quoted in an active market. Such assets are recognised initiallyat fair value plus any directly attributable transaction costs. Subsequent toinitial recognition, loans and receivables are measured at amortised cost usingthe effective interest rate method, less any impairment losses. Loans and receivables comprise cash and cash equivalents, and trade and otherreceivables. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits withmaturities of three months or less from acquisition date that are subject to aninsignificant risk of changes in their fair value, and are used by the Group inthe management of its short-term commitments. (b) Non-derivative financial liabilities The Group initially recognises debt securities issued and subordinatedliabilities on the date that they are originated. All other financialliabilities are recognised initially on the trade date that the Group becomes aparty to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligationsare discharged, cancelled or expire. The Group classifies non-derivative financial liabilities into the otherfinancial liabilities category. Such financial liabilities are recognisedinitially at fair value less any directly attributable transaction costs.Subsequent to initial recognition, these financial liabilities are measured atamortised cost using the effective interest rate method. Other financial liabilities comprise loans and borrowings, bank overdrafts, andtrade and other payables. Investments Joint ventures The Group holds a 69.77% interest in the Klipspringer Diamond Mine jointventure, the assets, liabilities, income and expenses of which are consolidatedon a proportional basis. Investments in subsidiaries The company has investments in its various subsidiaries. These are accountedfor at cost less impairment. All inter-group loans are repayable on demand orat arm's length basis. Inventories Inventories are measured at the lower of cost and net realisable value. In determining the cost of raw materials, consumables and goods purchased forresale, the weighted average purchase price is used. For finished goods and work-in-progress which includes quantities of gold inprocess, cost includes an appropriate share of production overheads based onnormal capacity. Net realisable value is calculated based on market prices prevailing as at theyear-end less costs to sell. Rehabilitation provision A provision is recognised when the Group has a present legal or constructiveobligation as a result of past events, and when it is probable that an outflowof resources embodying economic benefits will be required to settle theobligation, and a reliable estimate of the amount of the obligation can bemade. Estimated long-term environmental obligations, comprising pollution control,rehabilitation and mine closure, are based on the Group's environmentalmanagement plans in compliance with current technology, environmental andregulatory requirements. On initial recognition, the net present value of estimated futuredecommissioning costs are capitalised to property, plant and equipment and theconcomitant provisions are raised. These estimates are reviewed annually anddiscounted using a pre-tax rate that reflects current market assessments of thetime value of money and the risks specific to the liability. The unwinding ofthe discount is recognised as finance cost. Any increases in such revisedestimates are capitalised to property, plant and equipment while decreases inestimates are recognised as an impairment of the asset in the period in whichthey are incurred. Revenue recognition Revenue from the sale of goods in the course of ordinary activities is measuredat the fair value of the consideration received or receivable, net of returns,trade discounts and volume rebates. Revenue represents the sale of gold, nickel and diamonds net of discounts andtaxes. Revenue also includes toll refining and processing of material on behalfof, or purchased from, non-group companies. Revenue is recognised when significant risks and rewards of ownership have beentransferred to the customer, recovery of the consideration is probable, theassociated costs and possible return of goods can be estimated reliably, thereis no continuing management involvement with the goods, and the amount ofrevenue can be measured reliably. If it is probable that discounts will begranted and the amount can be measured reliably, then the discount isrecognised as a reduction of revenue as the sales are recognised. The timing of the transfer of risks and rewards and measurement variesdepending on the item sold, which occurs as follows: * Revenue from the sale of gold is based on the spot price on the date of delivery, which is also the point at which the company recognises the revenue for gold sales * Revenue from the sale of nickel is recognised on delivery and the measurement based on the international market price of nickel. * Diamond revenue is based on negotiated prices and recognised on delivery. Leases Leases where the lessor retains the risks and rewards of ownership of theunderlying asset are classified as operating leases. Operating lease rentalsare charged to the income statement on a straight-line basis over the period ofthe lease. The Group has not entered into any finance lease arrangements. Employee benefits (a) Defined contribution pension scheme Certain companies in the Group operate defined contribution pension schemes.The assets of the schemes are held separately from those of the Group inindependently administered funds. Obligations for contributions to defined contribution plans are expensed as therelated service is provided. Prepaid contributions are recognised as an assetto the extent that a cash refund is available or a reduction in future paymentsis available. (b) Share-based payments The share option programmes allow employees to acquire shares of the company.The grant-date fair value of the share-based payment award is recognised asemployee expenses, with a corresponding increase in equity, over the periodthat the employees become unconditionally entitled to the awards. The fairvalue of the options granted is measured using an option- pricing model, takinginto account the terms and conditions upon which the options were granted. Theamount recognised as an expense is adjusted to reflect the actual number ofshare options that vest except where variations are due only to share pricesnot achieving the threshold for vesting. Taxation The tax expense represents the sum of the current tax (including withholdingtax) and deferred tax. (a) Current tax Current tax payable is based on taxable profit for the year. Taxable profitdiffers from profit before tax as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. TheGroup's liability for current tax is calculated using tax rates and laws thathave been enacted, or substantively enacted, by the balance sheet date. Currenttax also includes any tax liability arising from withholding tax on dividends. (b) Deferred tax Deferred tax is measured on temporary differences between the carrying amountsof assets and liabilities in the financial statements and the corresponding taxbases used in the computation of taxable profit, and are accounted for usingthe balance sheet liability method. Deferred tax liabilities are generallyrecognised for all taxable temporary differences and deferred tax assets arerecognised to the extent that it is probable that taxable profits will beavailable against which deductible temporary differences can be utilised. Suchassets and liabilities are not recognised if the temporary difference arisesfrom goodwill or from the initial recognition (other than in a businesscombination) of other assets and liabilities in a transaction that affectsneither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and interests in joint ventures, exceptwhere the Group is able to control the reversal of the temporary difference andit is probable that the temporary difference will not reverse in theforeseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised, based on taxrates and laws that have been enacted, or substantively enacted, by the balancesheet date. Deferred tax is charged or credited to the income statement, exceptwhen it relates to items charged or credited directly to equity, in which casethe associated deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset only when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority andthe Group intends to settle its current tax assets and liabilities on a netbasis. 6. Revised and Amended Standards and Interpretations The following revised and amended standards, which have been endorsed by theEU, have been adopted by the Group in these consolidated financial statements;the adoption has had no material impact on the Group's net cash flows,financial position, total comprehensive income or earnings per share. * Amendments to IFRS 7 - 'Offsetting Financial Assets and Financial Liabilities', issued December 2011 and endorsed by the EU December 2012. Additional disclosures for financial assets and liabilities within the scope of the common disclosures. * Amendments to IAS 19 - 'Employee Benefits', issued in June 2011, endorsed by the EU in June 2012. The amendments include clarification of miscellaneous issues and enhanced disclosure. * IFRS 13 'Fair Value Measurement', issued in May 2011 and endorsed by the EU in December 2012, is a new standard that aims to improve consistency and reduce complexity of fair value measurement techniques adopted in financial statements. * IFRIC 20 'Stripping Costs in the Production Phase of a Surface Mine', issued in October 2011 and endorsed by the EU in December 2012, is effective for the accounting period beginning on 1 January 2013. This interpretation applies to the treatment of waste removal (stripping) costs incurred in surface mining activity during the production phase of a mine. * Amendments to IAS 1 - 'Presentation of Items of Other Comprehensive Income',issued May 2012 and endorsed by the EU in June 2012. The amendment deals withthe clarification of the requirements for comparative information. Standards, Amendments and Interpretations that are not yet effective The following new, revised and amended standards and interpretations have beenissued and endorsed by the EU unless otherwise stipulated, but are not yeteffective and have not been adopted by the Group in these consolidatedfinancial statements. * IFRS 9 'Financial Instruments (Hedge accounting and Amendments to IFRS 9, IFRS 7 and IAS 39)' issued in November 2013, but not yet endorsed by the EU, the standard is IASB effective for periods beginning on or after 1 January 2018. The standard introduces a new hedge accounting chapter and makes improvements to the reporting of changes in the fair value of an entity's own debt. The Group is yet to assess IFRS 9's full impact on its financial position or performance. * IFRS 11 'Joint Arrangements', issued in May 2011, replaces IAS 31 'Interests in joint ventures'. The standard establishes accounting principles based on the rights and obligations of the joint arrangement rather than its legal form. The standard introduces two types of joint arrangement - joint operations and joint ventures - and eliminates proportionate consolidation for any form of joint arrangement. The standard has been endorsed by the EU and is effective for the accounting period beginning on 1 January 2014. The Group is yet to assess IFRS 11's full impact on its financial position or performance; * IFRS 12 'Disclosure of Interests in Other Entities', issued in May 2011, is a new standard that establishes the disclosure requirements for all entities that a Group has an interest in, including subsidiaries, joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. The standard has been endorsed by the EU and is effective for the accounting period beginning on 1 January 2014. The Group is yet to assess IFRS 12's full impact on its financial position or performance; * IFRS 15 'Revenue from Contracts with Customers'issued in May 2014, IASB effective for periods beginning on or after 1 January 2017 but not yet endorsed by the EU. The standard introduces a new revenue recognition model that recognises revenue either at a point in time or over time. The Group is yet to assess IFRS 15's full impact on its financial position or performance. * IAS 27 (2011) 'Separate Financial Statements', issued in May 2011 and endorsed by the EU in December 2012. Consolidation requirements previously forming part of IAS 27 (2008) have been revised and are now contained in IFRS 10 'Consolidated Financial Statements'. * Improvements to IFRSs. There are a number of amendments to certain standards following the 2011 annual improvements project of which some have been endorsed by the EU and others not. The impact of any consequential changes to the consolidated financial statements is not likely to be significant. The following amendments have been endorsed by the EU: * Amendments to IAS 28 (2008) Investments in Associates and Joint Ventures * Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities * Amendments to IAS 36 - Recoverable disclosures for non-financial assets * Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) * Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) IFRS 10 'Consolidated Financial Statements', issued in May 2011, replaces theconsolidation requirements in SIC-12 'Consolidation - Special Purpose Entities'and IAS 27 'Consolidated and Separate Financial Statements'. This standardbuilds on existing principles by identifying the concept of control as thedetermining factor in whether an entity should be included within theconsolidated financial statements of the parent company. The standard providesadditional guidance to assist in the determination of control where this isdifficult to assess. The standard has been endorsed by the EU and is effectivefor the accounting period beginning on 1 January 2014. The Group is yet toassess IFRS 10's full impact on its financial position or performance; 7. Financial risk management Overview The Group has exposure to the following risks in relation to its operating andfinancial activities: credit risk, liquidity risk, market risk, and currency risk. This note presents information about the Group's exposure to each of the aboverisks, the Group's objectives, policies and processes for measuring andmanaging risk, and the Group's management of capital. Further quantitativedisclosures are included within note 34. The Board of Directors has overall responsibility for the establishment andoversight of the Group's risk management framework. The subsidiaries reportregularly to the Board of Directors on their activities and their riskmanagement procedures. The Group Audit Committee oversees how management monitors compliance with theGroup's risk management policies and procedures and reviews the adequacy of therisk management framework in relation to the risks faced by the Group. Credit risk Credit risk is the risk of financial loss to the Group if a customer orcounterparty to a financial instrument fails to meet its contractualobligations, and arises principally from the Group's receivables fromcustomers. The Company's cash balances are held in investments and with institutionsconsidered by the directors to have a low risk of default. The Group's policyon credit risk is to seek, to the extent possible, to deal with customers witha strong financial position, and to ensure that appropriate measures are takento reduce the level of counterparty credit risk. Such measures may includelimiting shipments of material while balances are outstanding, requesting theuse of bank and/or corporate guarantees, and, where appropriate, retention ofamounts owed by the Group to its counterparties by way of offset againstamounts owed to the Group. At year-end, the Group's principal customers areFidelity Printers and Refineries who purchases gold production from FredaRebecca, as well as Glencore who purchases nickel production from BNC. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet itsfinancial obligations as they fall due and is measured by reference to cashlevels and forecasted cash flows. The Group's approach to managing liquidity isto seek to ensure, as far as possible, that it will have sufficient liquidityto meet its liabilities when due, under both normal and stressed conditions,without incurring unacceptable losses or risking damage to the Group'sreputation. The Group monitors its current and forecasted cash and cashequivalents positions to ensure that it will be able to meet its financialcommitments. Market risk Market risk is the risk that changes in market prices, such as foreign exchangerates and commodity prices will affect the Group's income. The Group's earningsare exposed to movements in the prices of gold, nickel, and diamonds that itproduces. The Group is also exposed to movements in interest rates on cash andcash equivalents as well as the risk related to market price of the investmentsheld. The objective of market risk management is to manage and control marketrisk exposures within acceptable parameters, while optimising the return. TheGroup's policy is not to hedge commodity price risk. Consequently, as at 31March 2014 and during the year, the Group did not have any long term commodityprice hedges in place. Currency risk The Group operates internationally and is exposed to foreign exchange riskarising from transactions and investments that are denominated in currenciesother than the US dollar, including pound sterling and the South African rand.Such risks include the effect of movements in exchange rates on the Group'sforecasts of capital and operating expenditure, and on the Group's forecasts ofrevenue. The Group's policy is not to hedge currency risk. Consequently, as at31 March 2014 and during the year, the Group did not have any currency hedgesin place. Capital management The Group considers its capital to be equal to the sum of its total equity.The Board is committed to maintaining a capital base that maintains creditors'confidence in Mwana's ability to meet its commitments. The company's primary objectives when managing its capital are: to ensure that the Company is able to operate as a going concern; to have available both the necessary financial resources and the appropriateequity to allow the Company to make investments including, where necessary,further investment in existing subsidiaries, that will deliver acceptablefuture returns to the Company's shareholders; and to maintain sufficient financial resources to mitigate against risks andunforeseen events. There were no changes in the Company's approach to capital management in theyear. Neither the Company nor any of its subsidiaries are subject toexternally imposed capital requirements. 8. Segmental information The Group has four reportable segments, as described below, which are theGroup's strategic business units. The strategic business units offer different products and services, and aremanaged separately because they require different technology and marketingstrategies. The CEO reviews internal management reports for each of thestrategic business units. The following summary describes the operations ineach of the Group's reportable segments: Gold: Gold mining and prospecting activities Nickel: Nickel mining, smelting and refining activities partially on care andmaintenance Diamonds: Diamond mining activities currently on care and maintenance Exploration: Gold and base metal exploration activities Information about reportable segments - Operations Gold Nickel Diamonds Exploration Total for (Freda (Bindura Nickel (Klipspringer Reportable Rebecca) Corporation) diamond mine) segments 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 External 77,449 108,116 65,011 1,026 - 17 - - 142,460 109,159revenue EBITDA 15,684 42,904 19,398 (14,188) (880) (1,536) (1,372) (845) 32,830 26,335 Impairmentreversal/ - (280) 27,987 (43,669) (118) - (553) - 27,316 (43,949)(loss) Reportablesegmentprofit/ 8,577 36,436 46,196 (57,552) (1,027) (1,581) (1,925) (844) 51,821 (23,541)(loss)beforeincome tax Reportablesegment 68,873 66,486 69,844 14,966 1,224 1,528 65,263 59,201 205,204 142,181assets Reportableadditionsto 5,723 8,586 7,030 9,365 - 1 7 13 12,760 17,965property,plant andequipment Reportableadditionsto - - - - - - 5,278 15,331 5,278 15,331intangibleassets Reconciliation of reportable segments information Corporate Total for (not a Total per Reportable reportable Financial segments segment) Statements 2014 2013 2014 2013 2014 2013 $'000 $'000 $'000 $'000 $'000 $'000 External 142,460 109,159 - - 142,460 109,159revenue EBITDA 32,830 26,335 (7,861) (8,660) 24,969 17,675 Impairmentreversal/ 27,316 (43,949) - - 27,316 (43,949)(loss) Reportablesegmentprofit/ 51,821 (23,541) (7,881) (8,523) 43,940 (32,064)(loss)beforeincome tax Reportablesegment 205,204 142,181 2,361 8,483 207,565 150,664assets Reportableadditionsto 12,760 17,965 10 424 12,770 18,389property,plant andequipment Reportableadditionsto 5,278 15,331 - - 5,278 15,331intangibleassets Information about reportable segments - Geographical Democratic South Africa and Republic of Zimbabwe the Congo Ghana United Kingdom Total 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Externalrevenue 142,460 109,159 - - - - - - 142,460 109,159 EBITDA 31,264 24,483 (1,372) (844) 33 (25) (4,956) (5,939) 24,969 17,675 Reportablesegmentprofit/(loss)beforeincome tax 50,866 (25,231) (1,925) (844) 33 (25) (5,034) (5,964) 43,940 (32,064) Reportablenon-currentsegmentassets 101,973 51,393 63,500 58,816 5 14 36 1,130 165,514 111,353 Reportablesegmentassets 140,272 87,825 65,263 59,201 16 14 2,014 3,624 207,565 150,664 Reportableadditionstoproperty,plant andequipment 12,753 17,964 7 13 - - 10 412 12,770 18,389 Reportableadditionstointangibleassets - - 5,278 15,331 - - - - 5,278 15,331 The main products sold at Freda Rebecca and BNC during the year were gold andnickel respectively and the major customers were well-established commoditiestraders. 9. Loss from joint venture Included in the group income statement are the following amounts relating tothe Klipspringer diamond mine joint venture: 2014 2013 $'000 $'000 Revenue - - Cost of sales - - Gross loss - - Other income 67 48 Care and maintenance expenses (630) (1,355) Selling and distribution expenses - (1) Impairment loss (118) - General and administrative expenses (346) (273) Loss before tax (1,027) (1,581) The group holds a 69.77% interest (2013: 68.93%) in the Klipspringer diamondmine joint venture. The group does not have control over the joint venture asthe decision making is still shared between the joint venture partners. Themine, which is situated in South Africa's Limpopo Province, was placed on careand maintenance in February 2011 following a number of severe weather incidentswhich occurred in December 2010 and January 2011, flooding the shaft bottomlower (7) level. Mwana Africa is currently the sole funder of the operation andthe joint venture partners' interest is being diluted in accordance with thecontractual agreement. 10. Operating profit Profit from operating activities is stated after charging: 2014 2013 $'000 $'000 Cost of goods sold 64,623 50,439 Provision for closure costs (598) 226 Selling and distribution expenses (1) 19,825 8,386 Cost of sales 83,850 59,051 Other income items 631 418 Loss on sale of available-for-sale financial assets (11) (25) Other income 620 393 Operations (technical) 10,837 10,827 Exploration 403 767 General and administrative expenses 11,240 11,594 (1)Selling and distribution costs are not comparable as in FY2013 BNC was notoperational. In the current year, some expenses were reclassified to show what managementbelieves to be a more accurate reflection of the expenses incurred. Prior yearfigures have been reclassified to be comparable to the current year. The effectis not significant and does not affect the profit/(loss) incurred by the group. 11. (Loss)/Profit on sale of assets The loss on sale of assets for the current year includes a loss of $810k on thedisposal of shares held in Mantle Diamonds Ltd., that were disposed of duringthe year in return for shares in Kimberley Diamonds Ltd with no cash effect.The current year loss also includes losses on disposal of Property, Plant andEquipment to the value of $824k mostly relating to Freda Rebecca. In the prior year, the profit on sale of assets ($257k) related to Property,Plant and Equipment disposed of in BNC and Freda Rebecca. 12. Amounts payable to KPMG 2014 2013 $'000 $'000 Audit of these financial statements 144 205 Audit of financial statements of subsidiaries pursuant to 152 172legislation Other services relating to taxation - 30 Services relating to corporate finance transactions - 49 All other services 7 23 Total Auditors' remuneration 303 479 13. Remuneration of key management personnel Key management personnel are people responsible for the direction of thebusiness, and comprise the executive and non-executive directors of MwanaAfrica PLC. The remuneration of key management personnel is set out below inaggregate for each of the categories as specified in IAS 24.9. 2014 Director Salary/ Annual Benefits in Share-based Total fee bonus(1) kind payments $'000 $'000 $'000 $'000 $'000 KK Mpinga 480 - 83 149 712 Y Kwan 119 - - 4 123 SG Morris 50 - - - 50 JL Botha 27 - - - 27 YH Ning 25 - - - 25 YC Hu 25 - - - 25 OAG Baring(2) 15 - 44 13 72 DAR McAlister(2) 730 - 36 64 830(4) JA Anderson(2) 22 - - - 22 E Denis(2) 15 - - - 15 M Wellesley-Wood 81 - - - 81(3)(4) Total 1,589 - 163 230 1,982 No bonuses were awarded to any directors in respect of the year ended 31 March2014. In August 2013 Mr Mpinga waived his bonus award of £330,000 ($541,492) inrespect of the year to 31 March 2013. Mr Baring resigned from the board on 1 September 2013, Mr Anderson and Mr Denisretired from the board on 27 September 2013 and Mr McAlister resigned from theboard on 30 September 2013. Mr M Wellesley-Wood was appointed Non-Executive Chairman on 3 September 2013and left the board on 24 February 2014. Basic salary includes ex gratia payments to Mr McAlister of £322,743 inSeptember 2013 and to Mr Wellesley-Wood of £15,000 in March 2014. 2013 Director Salary/ Annual bonus Benefits in Share-based Total fee (1) kind payments $'000 $'000 $'000 $'000 $'000 KK Mpinga 521 541 94 112 1,268 SG Morris 79 79 - - 158 JL Botha 39 40 - - 79 YH Ning 33 40 - - 73 YC Hu 30 40 - - 70 OAG Baring 33 134 113 33 313 DAR 411 411 66 55 943McAlister JA Anderson 59 59 - - 118 E Denis 40 40 - - 80 Total 1,245 1,384 273 200 3,102 In August 2013 Mr Mpinga waived his bonus award of £330,000 ($541,492) inrespect of the year to 31 March 2013.. 14. Employee benefits expense Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Wages and salaries 21,456 20,146 865 1,797 Decrease in labour accrual(1) - (5,365) - - Equity-settled share-based payment 512 342 276 225transactions (see note 33) Compulsory social security 438 566 220 219contributions Contributions to defined contribution 1,350 671 158 176plans Total employee benefits expense 23,756 16,360 1,519 2,417 Staff numbers Number of employees Group 2014 2013 Management and administration 193 184 Operatives 1,412 1,376 Total 1,605 1,560 The employee benefits expense includes remuneration of key management personnelas disclosed in note 13. (1) In the prior year, the release of the labour accrual was due to thesettlement agreement as part of the Trojan Mine restart in September 2013 15. Net finance income and costs Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Interest income on bank deposits 319 645 10 - Loans - - 766 715 Finance income 319 645 776 715 Interest costs (1,033) (784) - - Finance costs (1,033) (784) - - Finance income of the company was received from BNC. $2,000,000 of a $10million loan facility to BNC was repaid during the year (2013: $4,707,969 drawndown). Refer to note 25 Trade and other receivables for details of the loanbalances outstanding at year-end. 16. Income tax (credit)/expense 2014 2013 $'000 $'000 Current tax expense Current year tax 3,195 11,105 Prior periods tax (2) (48) Deferred tax expense Origination and reversal of temporary differences 12,107 340 Recognition of previously unrecognised tax losses (21,955) - Total income tax (credit)/expense (6,655) 11,397 Reconciliation of effective tax rate Profit/(Loss) before income tax 43,940 (32,064) Income tax using the company's domestic tax rate (10,107) 7,695-23% (2013: 24%) Effect of tax rates in foreign jurisdictions (1,843) (1,563) Non-deductible expenses (2,149) (5,330) Prior year current tax 2 48 Prior year deferred tax (previously not recognised) 20,955 - Utilised tax losses brought forward 418 2,814 Current year losses for which no deferred tax asset (324) (6,029)was recognised Impairment reversals non-taxable/(losses 449 (10,510)non-deductible) Other temporary differences not recognised (746) 1,478 Total tax credit/(expense) as per consolidated 6,655 (11,397)income statement Deferred taxation impacts are described more fully in note 17. Reductions in the UK corporation tax rate from 26% to 24% (effective from 1April 2012) and to 23% (effective 1 April 2013) were substantively enacted on26 March 2012 and 3 July 2012 respectively. Further reductions to 21%(effective from 1 April 2014) and 20% (effective from 1 April 2015) weresubstantively enacted on 2 July 2013. Changes to the company's domestic taxrate are unlikely to have a significant impact on the Group's current taxcharge as the majority of taxable income is incurred in foreign jurisdictions. Significant factors affecting the tax charge relate to the taxation regimes forthe mining sector in the UK, Zimbabwe, South Africa and the DRC. Changes inany of these areas could, adversely or positively impact the Group's tax chargein the future. 17. Deferred tax assets and liabilities 2014 2013 $'000 $'000 Net deferred tax liability at beginning of year 9,320 8,980 Charge to the income statement (9,848) 340 Exchange rate adjustment - - Net deferred tax (asset)/liability at end of the year (528) 9,320 Deferred tax assets (19,406) (1,186) Deferred tax liabilities 18,878 10,506 The elements of deferred taxation are as follows: Difference between accumulated depreciation and amortisation 18,734 10,496and capital allowances Unutilised losses (19,213) - Other timing differences (49) (1,176) (528) 9,320 The deferred tax liability represents the difference between the carryingamount of property, plant and equipment and the corresponding tax bases onthose assets. The deferred tax asset principally relates to unutilised taxlosses at Bindura Nickel Corporation. The full taxation loss has been fullyrecognised in the current year since the restart of the Trojan mine, asmanagement is now of the opinion that the full tax loss will be utilisedagainst future taxable generated by the operation. Unrecognised deferred taxes 2014 2013 $'000 $'000 Deferred taxes have not been recognised in respect of thefollowing items: Difference between accumulated depreciation and amortisation 981 1,105and capital allowances Intangible asset 6,743 6,577 Tax losses 11,722 39,514 Other timing differences 1,174 4,063 20,620 51,259 Deferred tax assets have not been recognised in respect of these items becauseit is not probable that future taxable profit will be available against whichthe group can utilise the benefits. Recognised deferred tax assets and liabilities Group deferred tax assets and liabilities are attributable to the following: Asset Liability Net 2014 2013 2014 2013 2014 2013 $'000 $'000 $'000 $'000 $'000 $'000 Property, - - (18,734) (10,496) (18,734) (10,496)plant andequipment Mine 1,186 - - - 1,186rehabilitation -provision Tax loss 19,213 - - - 19,213 - Others 193 - (144) (10) 49 (10) Total 19,406 1,186 (18,878) (10,506) 528 (9,320) 18. Dividends No dividends were declared during the 2014 financial year (2013: Nil). 19. Earnings per share Basic earnings per share (EPS) is computed by dividing the profit or loss aftertaxation for the year attributable to ordinary shareholders by the sum of theweighted average number of ordinary shares in issue ranking for dividend duringthe year. Diluted earnings per share is computed by dividing the profit or loss aftertaxation for the year attributable to ordinary shareholders by the sum of theweighted average number of ordinary shares in issue, adjusted for the effect ofall dilutive potential ordinary shares that were outstanding during the year. 2014 2013 $'000 $'000 Earnings Profit/(Loss) attributable to ordinary 36,605 (28,641)shareholders Number Number Weighted average number of shares Issued ordinary shares at the beginning of the 1,119,727,051 720,567,308year Effect of shares issued 146,596,861 373,104,337 Weighted average shares at the end of the year 1,266,323,912 1,093,671,645for basic and diluted EPS Basic earnings/(loss) per share 2.89c (2.62c) Diluted earnings/(loss) per share 2.89c (2.62c) The effect of shares issued reflects the number of shares in issue during theyear, weighted for the number of days that the shares were in issue for thefinancial year. Share placements were made on 12 September 2013 (130,254,717shares), 17 September 2013 (109,913,459 shares) and on 23 October 2013(37,885,448 shares). No dilutive effect was recognised for the 2014 financial year as the exerciseprice of all potentially dilutive instruments at year-end were higher than theaverage share price for the portion of the year that these instruments were inissue. No dilutive effect was recognised for the 2013 financial year as the dilutivepotential ordinary shares would have reduced the loss per share. 20. Property, plant and equipment Smelter and refinery Building Mining plant and Plant and Exploration & Motor assets equipment equipment assets leasehold vehicles Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 Cost ordeemed cost Balance at 1 121,843 33,991 3,241 4,217 31,645 14,010 208,947April 2012 Additions 17,288 - 929 13 - 159 18,389 Additions ofenvironmental 839 - - - - - 839assets Disposals (375) (340) (92) - - (29) (836) Effect ofmovements in - - (158) - - - (158)exchangerates Balance at 31 139,595 33,651 3,920 4,230 31,645 14,140 227,181March 2013 Additions 7,433 - 5,002 - - 335 12,770 Disposals (1) - (2,458) - - (125) (2,584) Impairment - - - - - - -reversal Effect ofmovements in - - (99) - - - (99)exchangerates Balance at 31 147,027 33,651 6,365 4,230 31,645 14,350 237,268March 2014 Depreciationandimpairmentlosses Balance at 1 (60,869) (20,099) (2,941) (4,014) (27,128) (13,826) (128,877)April 2012 Depreciation (5,466) - (312) - - (82) (5,860)for the year Depreciationcapitalised - - - (83) - - (83)to intangibleassets Disposals 95 295 68 - - 16 474 Impairment (25,570) (13,847) - - (4,097) (155) (43,669)Loss Effect ofmovements in - - 117 - - - 117exchangerates Balance at 31 (91,810) (33,651) (3,068) (4,097) (31,225) (14,047) (177,898)March 2013 Depreciation (3,119) - (4,446) - - (66) (7,631)for the year Depreciationcapitalised - - - (43) - - (43)to intangibleassets Disposals - - 1,636 - - 71 1,707 Impairment - - (112) - - - (112)Loss Impairment 24,221 - - - 3,766 - 27,987Reversal Effect ofmovements in - - 77 - - - 77exchangerates Balance at 31 (70,708) (33,651) (5,913) (4,140) (27,459) (14,042) (155,913)March 2014 Carryingamounts At 31 March 13,892 300 203 4,517 184 80,0702012 60,974 At 31 March - 852 133 420 93 49,2832013 47,785 At 31 March - 452 90 4,186 308 81,3552014 76,319 Property, plant and equipment includes rehabilitation assets of $3.7 millionfor Freda Rebecca. In the previous financial year an impairment loss to the value of $43,7m wasrecognised on all Property, Plant and Equipment held by BNC. In the currentyear, $28.0m of the impairment relating to the assets of the Trojan mine wasreversed as disclosed in note 35. The net book value of the company's property, plant and equipment as at 31March 2014 amounted to $34,137 (2013: $398,817). Depreciation charged to theincome statement of the company during the year amounted to $87,602 (2013:$73,829) and capital expenditure for the year to $10,157 (2013: $411,939). Mining Assets are a separate category of PPE defined in note 5. 21. Intangible assets Exploration and evaluation assets Total $'000 $'000 Cost or deemed cost Balance at 1 April 2012 71,437 71,437 Capitalised exploration costs 15,248 15,248 Capitalised depreciation 82 82 Impairment losses transferredfrom amortisation and - -impairment losses Effect of movements in exchange - -rates Balance at 31 March 2013 86,767 86,767 Capitalised exploration costs 5,235 5,235 Capitalised depreciation 43 43 Effect of movements in exchange - -rates Balance at 31 March 2014 92,045 92,045 Amortisationand impairmentlosses Balance at 1 April 2012 (28,505) (28,505) Impairment losses transferred - -to cost Effect of movements in exchange - -rates Balance at 31 March 2013 (28,505) (28,505) Impairment loss (refer to note (554) (554)35) Effect of movements in exchange - -rates Balance at 31 March 2014 (29,059) (29,059) Carrying amounts At 31 March 2012 42,932 42,932 At 31 March 2013 58,262 58,262 At 31 March 2014 62,986 62,986 The carrying amount of the intangible assets relates to capitalised explorationon the SEMHKAT and Zani-Kodo exploration projects. 22. Investments Group 2014 2013 Ownership % $'000 $'000 Mantle Diamonds Ltd Nil (2013: 3.73) - 780 Kimberley Diamonds Ltd 0.04 (2013: Nil) 50 - Other 565 574 Total Investments 615 1,354 The group has certain investments which include a 20% interest in SociétéMiniére de Bakwanga (MIBA) in the DRC, an 18% interest in the Camafuca projectin Angola, and a 12.5%(1) interest in the BK16 project in Botswana. Theseinvestments are carried at nil value (2013: Nil) (1) The group currently holds 55% of BK16 and has entered into an agreementwith Firestone Diamonds whereby Firestone can earn up to 87.5% of BK16 forfinancing and carrying out all work up to the completion of a bankablefeasibility study. Firestone Diamonds have sole management authority over theproject. The directors consider that the group does not have significant influence overthe entities classified as investments, as it cannot influence the operatingpolicy of these entities. The group's exposure to credit, currency and interest rate risks related toother investments is disclosed in note 34. Company Shares in non-group Shares in group undertakings undertakings Total $'000 $'000 $'000 Cost At beginning of year 780 219,697 220,477 Cumulative impairments - (143,654) (143,654) Net book value at 780 76,043 76,823beginning of the year Fair value adjustment1 80 (475) (395) Reversal of impairment2 - 21,887 21,887 Disposal of share (853) - (853)investment3 Additional Investments 43 - 43 At end of year 50 97,455 97,505 Net book value At 31 March 2012 1,228 72,835 74,063 At 31 March 2013 780 76,043 76,823 At 31 March 2014 50 97,455 97,505 1 The fair value adjustment was in relation the investment in Mantle DiamondsLtd and Kimberley Diamonds Ltd 2 The impairment reversal was in relation to all investments held in BNC. Referto note 35: Impairments 3 The disposal of share investment related to all the shares held in MantleDiamonds Ltd on 24 February 2014. The recoverable value of the investments in the Zimbabwean operation exceedsits carrying value but developments in the Zimbabwe indigenisation legislation,which are explained in more detail in the Director's report on page 30, mayhave an impact on the recoverable value of the investments. The impact cannot be reliably measured as there are uncertainties regarding theimplementation of this legislation which the directors consider may impact thecarrying value, amounting to $96.5m (2013: $74.6m), of the investments relatingto Zimbabwean subsidiaries consolidated in the Group financial statements. These financial statements do not include any adjustments that would resultfrom the impact of the Zimbabwe indigenisation legislation on the carryingvalue of the investment held by the company and on the entities that areincluded by consolidation in the Group financial statements. In addition to the company's investments in shares in group undertakings, loansto group undertakings totalling $77,708,300 (2013: $62,698,297) are included intrade and other receivables within note 25 below. The major subsidiaries inwhich the group's interest at the year-end is more than 20% are as follows: Percentage of shares held by group Subsidiary undertakings Country Activity % SEMHKAT SPRL1 DRC Base metal 100 exploration Bindura Nickel Corporation Zimbabwe Holding company 75Limited3 Trojan Nickel Mine Limited3 Zimbabwe Nickel mining 75 Freda Rebecca Gold Mine Zimbabwe Gold mining 85Limited2 Mwana Africa Holdings Mauritius Holding company 100Limited Mwana Africa Holdings (Pty) South Holding company 100Ltd * Africa Basilik Trading (Pty) Ltd South Management services 100 Africa Sibeka SA * Belgium Holding company 100 Mwana Africa Congo Gold DRC Exploration of gold 100SPRL1 SouthernEra Diamonds Inc. Canada Diamond exploration 100 SouthernEra International Cayman Holding company 100Limited Islands SouthernEra Management South Management services 100Services South Africa (Pty) Africa and diamondLtd exploration Zimnick Mauritius Holding Company 100 Congo Copper Ltd Mauritius Holding Company 100 Mwana Africa Congo Limited Mauritius Exploration of gold 100 * Companies in which Mwana Africa PLC has a direct holding. 1The year-end of these subsidiaries is 31 December as required by DRClegislation and appropriate adjustments were made to recognise movements to 31March, to bring the reporting date of these entities in line with the group'sfinancial year-end. The group holds a 69.77% interest (2013: 68.93%) in the Klipspringer diamondmine joint venture situated in South Africa's Limpopo Province. Informationregarding the group loss from the joint venture has been disclosed inaccordance with IAS31 Interests in Joint Ventures and can be found in note 9.The group had no other material interest in an associate or joint venture. As at 31 March 2014 27 exploration licences within SEMHKAT formed part of anunincorporated joint venture agreement entered into with Hailiang Mining(Congo) SPR. The Group retained a 100% interest in these licences at year-endand its interest may dilute based on the venture partner's investment. Additionally the joint venture partner can require the Group to transfer theselicenses into a Development Company that will be held at 38% by the Group. 23. Non-current receivables Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Loan to Community Trust (1) 1,136 - - - Loans and other receivables 2 5 - - Environmental investment 1,150 1,263 - - 2,288 1,268 - - The environmental investment relates to the Klipspringer diamond mine which hasplaced funds into an investment account for the purpose of fundingrehabilitation costs upon closure of the mine. (1) Previously the loan to Community Trust was included in current receivables. 24. Inventories Group 2014 2013 $'000 $'000 Raw materials and consumables 11,355 10,370 Work-in-progress 1,054 821 Finished goods 585 15 12,994 11,206 During the year, raw materials, consumables and changes in finished goods andwork-in-progress recognised as cost of sales amounted to $19,752,694 (2013:$18,144,471). No raw materials were written down to net realisable valuesduring the year (2013: Nil). 25. Trade and other receivables Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Trade receivables 10,765 3,133 - - Receivables from group undertakings - - 80,248 62,699 Loans and other receivables 6,589 8,940 516 639 Pre-payments 600 838 138 260 Tax receivable 878 - - - 18,832 12,911 80,902 63,598 All current trade and other receivables are due within 12 months of thefinancial year-end. At 31 March 2014, no trade receivables were outstandingpast their due repayment date. Receivables from group undertakings are due andpayable on demand. The group's exposure to credit and currency risks and impairment losses relatedto trade and other receivables is disclosed further in note 34. 26. Cash and cash equivalents Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Cash and cash equivalents 9,089 15,194 1,420 1,585 Net cash and cash equivalents were represented by the following majorcurrencies: Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 British pound 292 607 292 607 Euro 7 7 - - South African rand 211 527 3 7 United States dollar 8,579 14,053 1,125 971 Net cash and cash equivalents 9,089 15,194 1,420 1,585 Included in the group's cash and cash equivalents is an amount of $1,796,277(2013: $1,746,683) which represents restricted cash, of which $39,510 (2013:$15,103) is being held by banking institutions as guarantees, and $1,756,277(2013: $1,731,579) is reserved for loan repayments. The group's exposure to interest rate risks and sensitivity analysis forfinancial assets and liabilities is disclosed in note 34. 27. Issued share capital Nominal value of Number of shares shares 2014 2013 2014 2013 $'000 $'000 Allotted, called up andfully paid Opening balance 1,119,727,051 720,567,308 17,943 11,598 Split to deferred shares - - - - Issued during the year 278,053,624 399,159,743 4,410 6,345 Closing balance 1,397,780,675 1,119,727,051 22,353 17,943 Deferred shares Opening balance 535,141,760 535,141,760 77,219 77,219 Split from ordinary shares - - - - Closing balance 535,141,760 535,141,760 77,219 77,219 Total 1,932,922,435 1,654,868,811 99,572 95,162 On 12 September 2013, 130,254,717 ordinary shares were issued to new andexisting investors by the company and were admitted to the AIM market of theLondon Stock Exchange at a subscription price of 1.57 pence per share, raisinga total of £2,044,999. On 20 September 2013, 109,913,459 ordinary shares wereissued to new and existing investors by the company and were admitted to theAIM market of the London Stock Exchange at a subscription price of 1.57 penceper share, raising a total of £1,725,611. On 23 October 2013 the company implemented previously accrued bonusarrangements in respect of the year ended 31 March 2013, pursuant to which37,885,448 ordinary shares were admitted to the AIM market of the London StockExchange and were issued at a price of 1.57 pence per share in lieu of cashbonuses, none of which were issued to directors of the company. The deferred shares have no voting rights, no rights to dividends and only verylimited rights to a return on capital, whereas ordinary shares have theserights. No shares were issued but not fully paid as at 31 March 2014 (2013: Nil). Warrants Warrants were granted to Liberum Capital Ltd under the terms of a warrantagreement dated 20 April 2012. The warrants provide the warrant holder with theright to subscribe for 5,624,727 ordinary shares at an exercise price of 6pence per share at any time up to 3 years from 20 April 2012. 28. Loan payable 2014 2013 $'000 $'000 Total liability 4,269 6,066 Current portion (included in note 30) (1,823) (1,793) Long term portion 2,446 4,273 The loan is secured by a mortgage bond registered over moveable and immovableassets of Freda Rebecca Gold Mine. The following table illustrates the contractual maturities of financialliabilities, including estimated interest payments: 2014 2013 $'000 $'000 Cashflow profile: Within one year 2,121 2,250 Two to five years 2,577 4,717 Over five years - - Contracted 4,698 6,967 29. Rehabilitation provisions 2014 2013 $'000 $'000 Balance at beginning of year 18,893 18,064 Exchange rate adjustments (189) (224) Provisions made during the year 46 1,014 Provisions reversed during the year (949) - Unwinding of discount 46 39 Balance at end of the year 17,847 18,893 The rehabilitation provision relates principally to the estimated closure andrehabilitation costs of the business operations of BNC, Freda Rebecca, and theKlipspringer diamond mine joint venture. Settlement of this provision willoccur at the end of life of each mining operation. 30. Accruals and other payables 2014 2013 $'000 $'000 Accrued expenses and other payables 19,745 14,338 Tax payable - 350 Current portion of loan payable 1,823 1,793 Balance at end of the year 21,568 16,481 The company's other payables and accrued expenses as at 31 March 2014 amountedto $4,404,213 (2013: $3,344,145). 31. Provisions Provisions Effect of Additional Amounts Provisions Provisions at movements provisions settled reversed at end of2014 beginning in during during the year of year exchange the year rates year $'000 $'000 $'000 $'000 $'000 $'000 Legal1 1,387 - 264 (153) (247) 1,251 RBZSurrenderprovision2 5,065 - - - (5,065) - Other3 2,663 (20) 2,375 (3,004) (660) 1,354 Total 9,115 (20) 2,639 (3,157) (5,972) 2,605 Provisions Effect of Additional Amounts Provisions Provisions at movements provisions settled reversed at end of2013 beginning in during during the year of year exchange the year rates year $'000 $'000 $'000 $'000 $'000 $'000 Legal 3,727 - 693 (596) (2,437) 1,387 RBZ 5,065 - - - - 5,065Surrenderprovision2 Other 1,887 (29) 2,280 (1,233) (242) 2,663 Total 10,679 (29) 2,973 (1,829) (2,679) 9,115 (1) Contingent liabilities are disclosed in note 38 relating to these legalprovisions (2) The RBZ Surrender provision was presented as a contra against acorresponding receivable during the current financial year. (3) The provisions relate to various claims raised against the group'sZimbabwean subsidiaries. 32. Pension scheme Group Certain of the group's Zimbabwean subsidiaries contribute towards definedcontribution plans, details of which are provided below. Mining Industry Pension Fund The Mining Industry Pension Fund is a defined contribution plan. The group'sobligations under the scheme are limited to 5% of pensionable emoluments forlower grade employees and 10% for higher grade employees. Others The group contributes towards personal pension schemes of certain of itsemployees. The pension charge for the year represents contributions payable by the groupto the various schemes and amounted to $1,349,912 (2013: $670,814) There were no un-accrued or pre-paid contributions at either the beginning orend of the financial year. Company The company does not operate any pension schemes, but does make contributionstowards personal pension schemes of its employees, including certain directors. The pension charge for the year represents contributions payable by the companyto the personal pension schemes and amounted to $158,338 (2013: $175,543). There were no un-accrued or pre-paid contributions at either the beginning orend of the financial year. 33. Share-based payments Share options - employees The company has outstanding options under an unapproved share option schemeadopted in 1997 which expired in September 2007 (the 1997 Scheme) and a newscheme which was approved by shareholders at the company's annual generalmeeting on 31 July 2007 (the 2007 Scheme). 1997 Scheme The company has operated this scheme since 1997 where options were granted toany employee, officer or director of the company or any subsidiary of thecompany. The limit for options granted under this scheme was not to exceed 15%of the number of issued ordinary shares from time to time. The Board granted options at its discretion. The subscription price was fixedby the Board at the price per share on the dealing day preceding the date ofgrant. For the directors, these options vest immediately and may be exercised at anytime within a seven-year period from the date of the grant, unless the Boarddetermines otherwise. The options lapse if not exercised by the seventhanniversary of the grant. For the employees, there is a vesting period of one to three years from thedate of grant. Once vested, the options may be exercised at any time within aseven-year period from date of grant, unless the Board determines otherwise.The options lapse if not exercised by the seventh anniversary of the grant. The right to exercise an option terminates on the holder ceasing to be aparticipant, subject to certain exceptions, which broadly apply in the event ofdeath of the option holder or where the option holder ceases to be aparticipant due to retirement, ill health, accident or redundancy. In such acase, the option may be exercised within six months of such event provided suchexercise will take place within seven years of the original date of grant. 2007 Scheme The 2007 Scheme allows for both tax approved options (approved options) to bemade to employees resident in the United Kingdom and unapproved options(unapproved options), which can be made to both resident and non-residentemployees. The company has operated this scheme since December 2007 where options may begranted to full-time employees and directors of the company or any subsidiaryof the company. The overall limit for options granted under this scheme and anyother employees' share scheme adopted by the company is, in any rollingten-year period, 10% of the issued ordinary share capital (including treasuryshares) of the company for the time being plus 8,100,000 ordinary shares. Thereis an individual limit of ordinary shares to a maximum of £30,000 in value inrespect of approved options. Options may be granted when the Remuneration Committee determines, within 42days of the announcement by the company of its full or interim results. Optionsmay be granted outside the 42-day period if the Remuneration Committeeconsiders there to be exceptional circumstances. Options must be grantedsubject to performance conditions being satisfied. The performance conditionsmust be objective and, save where the Remuneration Committee determines thereto be exceptional circumstances, the performance conditions must relate to theoverall financial performance of the company or the market value of ordinaryshares over a period of at least three years. The performance conditions can bewaived or amended by the Remuneration Committee if it determines that a changeof circumstances means that the performance conditions cannot reasonably bemet. The current performance condition in relation to these options is that themarket value of the Company's shares must increase above the exercise price bynot less than 10% per annum on a compound basis. No consideration is payable onthe grant of an option and no option may be granted after 31 July 2017. The Remuneration Committee determines the exercise price before the options aregranted and cannot be less than the market value of the shares on the date ofgrant. The options can only be exercised on or after the third anniversary of the dateof grant provided the performance conditions have been satisfied or waived bythe Remuneration Committee. The options lapse if not exercised by the tenthanniversary of the grant. These options lapse when the option holder ceases to be an eligible employee.In the case of death, a participant's personal representatives may exercise his/her options within 12 months after the date of death. Where an option holderceases to be an employee by reason of injury, disability, redundancy, thecompany that employs the option holder ceasing to be a subsidiary of thecompany, retirement, pregnancy or in any other circumstances determined by theRemuneration Committee, the options may be exercised within six months of thetermination of employment or such longer period as may be determined by theRemuneration Committee. Share incentives The share incentive scheme was approved by shareholders at the company's annualgeneral meeting on 31 July 2007 (the Share Incentive Scheme). The ShareIncentive Scheme is designed to complement the Share Option Scheme tofacilitate awards to selected executives and managers. The Share IncentiveScheme permits the award of any one or a combination of the followingincentives: the sale of ordinary shares on deferred payment terms; share awards as part of a bonus scheme by way of nil cost options inconsideration of cash bonuses forgone on terms that would be determined by theRemuneration Committee of the company; and the issue of share appreciation rights either by the company or EBT (as definedbelow). The company has also adopted an Employees' Benefit Trust (EBT) which willoperate in conjunction with the Share Option Scheme and Share Incentive Scheme.The EBT has not yet been utilised for this purpose and there have been noawards under the Share Incentive Scheme since it was approved by shareholders. The share options have been valued using a Black Scholes model. 2014 2013 Weighted Weighted average Number of average Number of exercise price options exercise price options Unapproved Options- 1997 Scheme Outstanding at the 55p 5,900,000 54p 19,090,000beginning of theyear Granted during the - - - -year Exercised during - - - -the year Lapsed/cancelled 42.6p (3,900,000) 52p (13,190,000)during the year Outstanding at the 79p 2,000,000 55p 5,900,000end of the year Exercisable at the 79p 2,000,000 55p 5,900,000end of the year Unapproved Options- 2007 Scheme Outstanding at the 8p 62,813,094 15p 33,652,144beginning of theyear Granted during the 1.6p 11,125,000 5.5p 34,135,950year Exercised during - - - -the year Lapsed/cancelled 1.8p (8,434,000) 38p (4,975,000)during the year Outstanding at the 8p 65,504,094 8p 62,813,094end of the year Exercisable at the 22p 11,690,715 41p 11,690,715end of the year Approved Options -2007 Scheme Outstanding at the 9p 2,442,374 17p 936,702beginning of theyear Granted during the 1.6p 1,875,000 5.5p 1,627,595year Exercised during - - - -the year Lapsed/cancelled - - 36p (121,923)during the year Outstanding at the 5.6p 4,317,374 9p 2,442,374end of the year Exercisable at the 22p 351,208 41p 351,208end of the year The total expenses recognised for the year arising from share-based paymentsrelated to share options is $511,566 (2013: $342,224). No options were exercised during current or previous year. The options outstanding at the year-end have a range of exercise prices of 1.6pto 79p (2013: 5p to 79p) and a weighted average contractual life of 7.6 years(2013: 8.0years). The following assumptions have been used in valuing the share options: 2014 2013 Weighted average fair value at measurement date 0.01 0.02 Weighted average share price 0.02 0.06 Weighted average exercise price 0.02 0.06 Expected volatility 35% 35% Expected option life 4.5 years 4.5 years Expected dividends - - Risk-free interest rate 3.0% 3.0% The expected volatility is primarily based on the historic volatility. Since the year-end, no share options have been awarded, exercised or havelapsed. 34. Financial instruments The directors determine, as required, the degree to which it is appropriate touse financial instruments, commodity contracts, other financial instruments ortechniques to mitigate risks. The principal risks for which such instrumentsmay be appropriate are interest rate risk, liquidity risk, foreign currencyrisk and commodity price risk. The most significant of these is foreigncurrency risk which comprises transactional exposure on operating activities.Some translation exposure also exists in respect of the investments in overseasoperations, since these have functional currencies other than the group'sreporting currency. The group is also exposed to commodity price risk sinceits sales are dependent on the price of gold, nickel and diamonds. The group has not currently engaged in any instruments to mitigate or hedge anysuch risks, although the directors keep this regularly under review. Exposure to currency risk The group's exposure to currency risk was as follows based on notional amounts: 2014 2013 ZAR GBP Other Total ZAR GBP Other Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Receivables 68 558 - 626 436 899 - 1,335 Net cash and 211 292 7 510 526 607 7 1,140cashequivalents Payables (337) (1,733) - (2,070) (866) (3,210) - (4,076) Grossbalance (58) (883) 7 (934) 96 (1,704) 7 (1,601)sheetexposure The following significant exchange rates applied against the US dollar duringthe year: Average rate Balance sheet rate 2014 2013 2014 2013 EUR 0.7464 0.7768 0.7271 0.7799 GBP 0.6297 0.6328 0.6009 0.6575 ZAR 10.1238 8.4948 10.5833 9.2451 Sensitivity analysis A 10% weakening of the US dollar against the following currencies at 31 Marchand the average rate for the year ended 31 March would have increased/(decreased) equity and results before non-controlling interest by the amountsshown below. This analysis assumes that all other variables, in particularinterest rates, remain constant. The analysis is performed on the same basisfor 2013. Equity Results 2014 2013 2014 2013 $'000 $'000 $'000 $'000 EUR (2) (2) - 1 GBP 1 - 1 31 ZAR (495) (744) 207 74 A 10% strengthening of the US dollar against the above currencies would havehad a similar but opposite effect to the amounts shown above, on the basis thatall other variables remain constant. Credit risk The company's maximum exposure to credit risk is the value of its tradereceivables, and loans and other receivables which are reflected in note 25. In Freda Rebecca, trade receivables of $4,513,938 (2013: $2,927,307) were dueby Fidelity Printers and Refineries (2013: Zimbabwe Chamber of Mines), none ofwhich was outstanding past its due date. In BNC, trade receivables of $6,024,342 (2013: Nil) were due by Glencore, whichwere due within normal terms of agreement. There is a concentration of risk in respect of trade receivables from FidelityPrinters and Refineries as well as Glencore, being the two major customers ofthe respective subsidiaries. Based on historical default rates, the group believes that no impairmentallowance is necessary in respect of trade receivables as explained in note 7. Commodity price risk For the 2014 financial year, the group's earnings were mainly exposed tochanges in the prices of gold and nickel. A 10% increase and decrease in theseprices would have increased/(decreased) equity and results by the amounts shownbelow. This analysis assumes that all other variables, in particular interestrates, remain constant. The analysis is performed on the same basis for 2013. Equity Results 2014 2013 2014 2013 $'000 $'000 $'000 $'000 10% increase in nickel price 6,501 103 6,501 103 10% decrease in nickel price (6,501) (103) (6,501) (103) 10% increase in gold price 7,729 10,780 7,729 10,780 10% decrease in gold price (7,729) (10,780) (7,729) (10,780) Liquidity risk The group analysis of the liquidity risk is based on an 18-month term cash flowprojection. This is disclosed in detail in note 3, along with the risks anduncertainties included within the forecasts. Financial risk management Fair Values Fair value is defined as the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. Wherever possible, fair value iscalculated by reference to quoted prices in active markets for identicalinstruments. Where no such quoted prices are available, other observable inputsare used and if there are no observable inputs then fair values are calculatedby discounting projected future cash flows at prevailing rates translated atyear-end exchange rates. Fair values for financial assets and liabilities recognised at cost in thegroup balance sheet: Book value Fair value 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Financial assets Investments held at fair value through profit orloss Investments 615 1,354 615 1,354 Loans and receivables Non-current receivables 2,288 1,267 2,288 1,267 Trade and other receivables 18,832 12,911 18,832 12,911 Cash and cash equivalents 9,089 15,194 9,089 15,194 30,209 29,372 30,209 29,372 Financial liabilities Loan payable(1) 2,446 4,273 2,446 4,273 Trade payables 15,300 10,825 15,300 10,825 Accruals and other payables 21,568 16,481 21,568 16,481 39,314 31,579 39,314 31,579 (1) Management is of the opinion that the expected recoverable amount is equalto the book value Fair value hierarchy The table below analyses financial instruments measured at fair value, into afair value hierarchy based on the valuation technique used to determine fairvalue. Level 1: quoted prices (unadjusted) in active markets for identical assets orliabilities Level 2: inputs other than quoted prices included within Level 1 that areobservable for the asset or liability, either directly (i.e. as prices) orindirectly (i.e. derived from prices) Level 3: inputs for the asset or liability that are not based on observablemarket data (unobservable inputs). 2014 2013 Level Level Level Total Level Level Level Total 1 2 3 1 2 3 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Mantle Diamonds - - - - - - 779 779Ltd Kimberley Diamonds 50 - - 50 - - - -Ltd Others 6 - 559 565 16 - 559 575 Total investments 56 - 559 615 16 - 1,338 1,354 Total loans and - - 30,209 30,209 - - 29,372 29,372receivables Total financial - - 39,314 39,314 - - 31,579 31,579liabilities During the financial year there were no transfers between Levels. In order todetermine the fair value of investments, management used a valuation techniquein which all significant inputs were based on observable market data for Level1 including quoted share prices. The group's only financial asset held at fair value through profit or loss isits investment in Kimberley Diamonds Ltd which is categorised as Level 1. Reconciliation of Level 3 fair value measurements of investments for the groupis as follows: 2014 2013 $'000 $'000 Opening balance 1,338 1,785 Fair value adjustment recognised in profit or loss - (387) Disposal of financial assets (853) - Foreign exchange adjustments 74 (60) Closing balance 559 1,338 35. Impairment Group An impairment indicator was identified for Freda Rebecca, being the low goldprice. Management calculated the value-in-use for the cash-generating unit ofFreda Rebecca Gold Mine by applying a discounted cashflow model to the futureexpected cashflows expected to arise from the operation. The key assumptions ofthe discounted cashflow model were a gold price of $1,250/oz at an averageyearly production of around 62,000oz p.a. for another 7 years of the mine stillbeing in production. A pre-tax discount rate ranging between 20% and 25% wasused and was calculated as a discounting rate for similar mining operations indeveloping countries, adjusted for the specific risks of the Freda Rebecca GoldMine. Management was satisfied that the value-in-use exceeded the carryingamount of the assets despite the lower current gold price and no impairment ofFreda Rebecca's assets was deemed necessary. In the prior year all of BNC's non-current assets were impaired after thefalling nickel price was deemed a trigger event for impairment testing and adiscounted cash flow model was applied to the Trojan life of mine model. In thecurrent year nickel prices have steadily been increasing and with the Trojanmine becoming fully operational, another discounted cash-flow model was appliedto the updated Trojan life of mine plan. The key assumptions for the model wasa long-term nickel price of $18,500 for the remaining life of mine of anestimated 8 years, a pre-tax discount rate ranging between 20% and 25% whichwas calculated as a discounting rate for similar mining operations indeveloping countries, adjusted for the specific risks of BNC. The Trojan mineoperates independently and is regarded as a separate Cash Generating Unit("CGU") from other BNC assets. This resulted in a reversal of the impairment ofthe non-current assets of Trojan mine recorded in the prior year to the amountof $28.0m (before tax). This value represents the fair value less costs ofdisposal for the CGU. The BSR smelter and Shangani mine are still under careand maintenance and no impairment reversal was deemed appropriate. During the year, SEMHKAT exploration licenses for ASMA, PACHALU and Kinkombesites expired, were not renewed and no future plans to explore these areas areexpected. This was a trigger event for impairment testing. These licenses werefor specific geographical areas and are regarded as separate CGUs. Managementis of the opinion that no future benefits or cashflows will come from the pastcosts capitalised to these projects, and the full value of these intangibleassets were fully impaired to the amount of $553,824. The Klipspringer Diamond Mine is currently on care and maintenance andthis, inconjunction with current issues regarding the renewal of the diamond license,was deemed a trigger event for impairment testing. Adecision was made to impairthe full value of the non-current assets to the value of $117,514. Company During the year, the company reversed impairments relating to loans andinvestments of BNC (directly and indirectly) after management was satisfiedthat BNC will be able to repay these loans and the full value of the investmentis expected to be recovered from future cash flows. The effect of the impairment reversal/(losses) on the balance sheet is asfollow: Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Property, plant and equipment 27,870 (43,949) - -(1) Intangible assets (554) - - - Investments - - 21,887 (21,887) Trade and other receivables - - 13,157 (13,157) Net Assets 27,316 (43,949) 35,044 (35,044) Retained earnings 20,269 (33,709) 35,044 (35,044) Non-controlling interest 7,047 (10,240) - - Net Equity and Liabilities 27,316 (43,949) 35,044 (35,044) (1) The current year impairment for Property, Plant and Equipment includes animpairment charge of $118k shown as net of an impairment reversal of $27,987k,which amounts to a total impairment charge for the year of $671k and a totalimpairment reversal for the year of $27,987k. 36. Events after the reporting period Subsequent to the end of the reporting period, the Zani Kodo mining licenseshave been transferred into Mizako SARL (Mwana Africa PLC is 80% shareholder)from SOKIMO SARL. This is a non-adjusting balance sheet event, which therefore does not impactthe financial statements as at 31 March 2014. 37. Related party disclosures Group Transactions between group subsidiaries, which are related parties, have beeneliminated on consolidation and are not disclosed in this note. Remuneration ofkey management personnel are disclosed in note 13. Company The company provided funding to subsidiary companies which are disclosed ascurrent receivables in note 25. Investments in subsidiaries are disclosed innote 22. Related party transactions during the year: Management fees (paid)/received were in relation to management time spent on/(by) these companies during the year. 2014 $'000 Management fees received Mwana Africa Holdings (Pty) Ltd 32 Basilik Trading (Pty) Ltd 28 Management fees paid Mwana Africa Holdings (Pty) Ltd (202) Interest received Bindura Nickel Corporation Ltd 767 Transactions with key management personnel and director transactions aredisclosed in note 13. 38. Commitments and contingent liabilities Commitments Capital commitments at the end of the financial year relating principally toproperty, plant and equipment for BNC and Freda Rebecca, for which no provisionhas been made, are as follows: Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Contracted 1,220 1,253 - - The group and company have the following total minimum lease payments undernon-cancellable operating leases: Group Company 2014 2013 2014 2013 $'000 $'000 $'000 $'000 Operating leases which expire: Within one year 281 168 178 96 Two to five years 615 842 448 572 Over five years - - - - Contracted 896 1,010 626 668 Contingent liabilities The group and company monitor contingent liabilities, including, inter alia,those relating to taxation in the various jurisdictions in which the company'soperate, environmental, closure and other contingent liabilities, on an ongoingbasis. Provision for such liabilities is raised in the financial statementswhen the necessary recognition criteria have been satisfied. The following contingencies exist at the year-end: Group - There are a number of legal claims which have been brought against BNC andFreda Rebecca. These have been provided for when the obligation relating tothese liabilities met the criteria for recognition under IAS 37 and aredisclosed in note 31. Company - The company has committed to a death in service benefit of five timesexecutive annual salary for Mr. KK Mpinga. Twice the annual salary is coveredby an insurance policy leaving the company with a remaining exposure of threeyears. - The company has issued a guarantee to the Industrial Development Corporationof South Africa for the loan given to Freda Rebecca.