Final Results

North River Resources plc / Ticker: NRRP / Index: AIM / Sector: Mining

North River Resources plc

("North River" or the "Company")

Final Results for the year ended 31 December 2015

North River Resources plc is pleased to announce its results for the year ended 31 December 2015 and that the Annual General Meeting ("AGM") will be held at the offices of Shakespeare Martineau LLP, 5th Floor, One America Square, Crosswall, London EC3N 2SG on Tuesday 28 June 2016 at 11.00 am.

A notice convening the AGM, proxy form and Report and Accounts for the year ended 31 December 2015 will be posted to shareholders this Friday 3 June 2016 and will also be available to download from the Company's website at www.northriverresources.com.

Highlights

· Key milestones towards advancing the group's priority brownfield Namib Lead-Zinc project in Namibia towards a construction decision, have been:

· North River received and accepted a Notice of Preparedness to Grant the Mining Licence from the Namibian Ministry of Mines and Energy ("Ministry") for the Namib Lead Zinc Project. The Notice set out a process and timeline for the discussions with the Ministry to agree upon the Supplementary Conditions. A formal proposal was submitted to the Ministry on the Supplementary Conditions in late April 2016.

· A successful fund raising completed in September 2015 whereby an additional US$4.0 million was secured through an open offer to the market and placing of convertible loan notes with Greenstone Resources L.P.

· Completion of the drive on 5-level in the mine to open up access underground for the next step in resource drilling. The ongoing drilling programme has produced a number of highly positive drill results and the Company remains confident that the mine life initially estimated at 3.5 years, will be extended in due course through an increased defined resource at the Namib Lead-Zinc Project site.

· New appointments to the Board of Directors in 2015 have brought additional technical and commercial experience to the Company, helping to support the next phase of development at the Namib Lead-Zinc Project.

· A decision was taken to fully impair the goodwill attached to two early stage copper exploration concessions where recoverable value was deemed to be marginal at current consensus long-term copper prices. The exploration concessions, EPL 3257 and EPL 3258, held within West Africa Gold Pty Ltd, had allocated goodwill of £1,983,634 and £4,719,300 respectively.

· A loss before taxation reported for the year of £9,797,691 (2014: loss of £3,320,477). The increase versus the prior year reflects the one-off impairment of the two exploration licences EPL 3257 and EPL 3258. Excluding this charge, costs have fallen despite an increase in site based project activities as the Group benefitted from a weakening Namibian Dollar (2015 average GBP:NAD 1:19.47 versus a 2014 average GBP:NAD 1:17.84) and continued focus on minimising overhead costs pending receipt of the Mining Licence.

· The Group's cash position as at 31 December 2015 was £1,376,740 (2014: £1,904,860)

For further information please visit www.northriverresources.com or contact:

North River Resources plc

("North River" or the "Company")

Final Results for the year ended 31 December 2015

Chairman's Statement

North River continued during the year to focus on advancing its flagship Namib Lead Zinc Project ("Namib Project" or "Namib") in Namibia towards a construction decision. Project activities focused on additional technical evaluation work required to define a mine plan and processing plant design to a level of confidence to support the project investment decision. The Company also engaged regularly and proactively with Namibia's Ministry of Mines and Energy (the "Ministry") to progress the Mining Licence application, commenced a ~3,800m resource expansion drilling campaign and completed a US$4.0 million fundraising supported by strategic shareholder, Greenstone Resources L.P.

I am very pleased that once again we recorded no lost time injuries during 2015. Whilst this demonstrates the commitment of our entire team to operate a zero harm working environment we must remain focused to ensure this unblemished track record continues.

While good progress was made on the project workstreams, the mining licence for the Namib Project remains outstanding. The uncertainty around timing and conditions to be attached to the issue of the licence has been a source of frustration for the Company and its shareholders and has led to repeated changes in the pre-construction work programme and has made longer term planning for taking the project forward to an investment decision very difficult. In early 2016, we were issued with a Notice of Preparedness to Grant the Mining Licence for the Namib Project (the "Notice") subject to reaching agreement on various additional conditions to the mining licence (the "Supplementary Conditions"). The Notice set out a process and timeline for discussions with the Ministry to reach agreement on the Supplementary Conditions and in accordance with this process, we submitted a formal proposal to the Ministry on the Supplementary Conditions in late April 2016.

I am very encouraged by the receipt of the Notice in that it confirms there are no technical issues with the application, but remain cautious on the timeframe and extent to which agreement can be reached on the issue of the licence. Separately, the Government of the Republic of Namibia recently published a draft bill on proposed broad based economic empowerment in the country (the National Equitable Economic Empowerment Bill, the "Draft Bill"). The Draft Bill covers a number of obligations which would, if enacted into law, be inconsistent with those laid down under the Supplementary Conditions for the mining licence. Achieving further clarity in this area will be critical to advancing the project to a construction decision.

Outlook

We remain committed to bringing the Namib Project into production. We believe it is an economically robust, technically straightforward project with real potential to deliver benefits to both its shareholders and wider stakeholders in Namibia. The targeted increase in mineral resource, and consequent potential for a longer life of the mine will further enhance the economics of Namib and its funding options.

Whilst the average prices for zinc and lead in 2015 were lower than for the prior period, recent market developments indicate that the supply and demand balance is tightening which augurs well for the price outlook.

In light of the uncertain timeframe for securing the mining licence and gaining clarity on the implications of the proposed broad based economic empowerment legislation, we are focusing our immediate efforts in two areas: completing the resource expansion drilling campaign and progressing the mining licence application. Initial results from the resource drilling campaign have been encouraging and have confirmed mineralization 80 metres below the existing northern resource. Certain holes have achieved outstanding intersections, such as NLDD067 (57.1m, true width of 8.5 metres, at 28.6% zinc) and NLDD069 (35.7 metres, true width of 9 metres, at 33.8% zinc), providing increasing confidence that an enlarged resource supporting a longer life of mine will be delineated in due course.

Pending clarity on the timing for receiving the mining licence and taking the project forward, we are redoubling our efforts to conserve cash and identify further cost savings. In light of this, the Project Director has left the Company, and a number of project work streams, including the Front End Engineering and Design work ("FEED") continue to be deferred. The Company will nonetheless need to undertake a working capital fundraising in the short term, in order to continue to fund the work programme over a longer period than envisaged at the time of the placing and open offer completed in October 2015, and we are in the process of evaluating funding options and the structure under which funds may be raised.

This is my first Chairman's statement. As we all know this is a very difficult period for commodity producers and project developers. I joined the board because I am convinced of the emerging physical deficit of zinc in world markets and was attracted by the quality of the North River team. I remain so convinced. We all expect to make substantial progress in 2016/2017.

Rod Beddows

Chairman

31 May 2016

Chief Executive Officer's Statement

The Namib Project

Overview

The Namib Project entails re-opening a previously producing mine and the construction of a new plant to process 250,000 tonnes of ore per annum. The currently defined JORC resource supports an initial 3.5 year mine life although we are confident that this will be extended through the ongoing resource drilling campaign. Located 20km inland from Swakopmund in Namibia, the project benefits from being well located, with excellent surrounding infrastructure. Namibia has a well established mining industry and good access to local mining suppliers and support services.

Geology

Namib is hosted within the thinly interbedded clastics and carbonates of the Arises Marble unit of the Karibib Formation of the Swakop Group, which in the vicinity of the mine displays complex folding and deformation. The mineralised massive "Mine Marble" unit within the Karibib Formation is a weakly banded and coarse grained marble.

Structurally, mineralisation occurs in NE-SW striking tabular lodes that occur in the axial zone and limbs of a ductile SW-plunging anticlinal fold closure. The lodes have similar orientation around the fold closure and are therefore not folded. They are stratabound within the host mine marble unit but are very oblique to this enclosing envelope. As a result, the lodes typically have short strike lengths but much greater down-plunge continuity. Lodes do occur which are elongated along the mine marble strike, but this is less common.

The lodes within the deposit are assigned to four zones relative to their position in the fold closure, the North, South, N20 and Junction.

Minerals Resource Estimate as at 29 August 2014

Reported at a lower cut-off grade of 1% Pb% + Zn%

Tonnages have been rounded to the nearest 1,000t to reflect that this is an estimate. Apparent differences may occur due to rounding.

Definitive Feasibility Study ('DFS')

A DFS was completed in November 2014 and the highlights include:

· Maiden Mineral Ore Reserve of 585,000 tonnes at 6.2% zinc, 2.9% lead, and 46ppm silver

· Annual throughput of 250,000 tonnes at an average grade of 9% (Pb+Zn) producing 19,100 tonnes of metal in concentrate

· 280,000 ounces per annum silver by-product

· Initial mine life of 3.5 years (including ramp up and ramp down) and resources equivalent to five years of mine life

· Capital cost of US$27.8 million

· Robust project economics with a 12 month payback, post-tax NPV10 of $24.7 million and post tax IRR of 52% at consensus metal prices (assuming the resource base utilized)

Project optimisation and resource expansion

Following completion of the DFS in November 2014, a number of areas were identified where additional technical evaluation work was required to define a mine plan and processing plant design to a level of confidence to support a project investment decision.

Metallurgical testwork

North River appointed ALS Laboratories ('ALS') to conduct a detailed supplementary testwork programme supervised by Ken Sangster. ALS was selected for their relevant experience and knowledge of similar milling operations. The work was conducted to address the inconsistent grade recoveries experienced via processing routes proposed as part of the DFS which referred to a 'lack of agreement' on the performance of different samples.

The lack of a definitive processing solution in the DFS derives from the fact that the mineralisation at Namib contains the iron sulphide mineral, pyrrhotite, which responds to flotation in a similar manner to the minerals, sphalerite and marmatite which are the primary zinc ore minerals at Namib. This response can lead to a build-up of pyrrhotite, and consequently iron, in the zinc cleaner circuit. While iron is common in lead-zinc deposits, it is normally present as pyrite, which can be more easily depressed during flotation than pyrrhotite.

The implications of the presence of pyrrhotite were experienced first-hand in the previous operation and, as a result, intermediate products had to be dumped to tailings in order to maintain saleable concentrate quality, but at the sacrifice of zinc recovery during processing.

At the time of publication of the DFS, the locked cycle tests which were underway had not yet been completed. The DFS postulated that the use of magnetic separation as a means of removing some of the pyrrhotite from the circuit, but the subsequent results did not support this proposal as zinc recovery was compromised. Therefore the focus of the work was to produce a robust operating environment, taking into account the main variables in mineralogy and flotation chemistry.

Metallurgical optimisation work

To properly liberate the generally finer zinc minerals, a separate zinc regrind circuit is required to optimise the overall zinc recovery and concentrate grade. Extensive mineralogy was conducted as a precursor to flotation testwork to determine the most effective grind size. A primary grind of around 80% passing 100 micron level has been selected and this is also a practically achievable level within the proposed processing system.

Following this, the fundamental issue in improving the differential flotation performance was the selection of an optimal reagent regime. The use of zinc sulphate as a reagent, commonly used in other lead/zinc operations, was identified as a major contributor to slowing down the sphalerite recovery rate making effective separation from the pyrrhotite more difficult. Consequently, testwork was necessary to eliminate zinc sulphate from the flowsheet and identify a more selective lead collector. These newer collectors, replacing the more traditional xanthates and zinc sulphate, have proved successful in the testwork.

Using the optimised grind and new reagent regime, the Company has developed a robust processing methodology which can operate with consistent results with a wide range of mineral composition and particularly with the variable pyrite and pyrrhotite content.

This different regime has given reproducible results using locked cycle tests conducted to complete equilibrium. Overall the reproducible results, from the five different composites tested, gave the following results:

· Lead: 62.2%Pb at 91.1% Pb recovery

· Zinc: 52.4%Zn at 89.2% Zn recovery (optimum Zinc grades limited by the zinc mineral Marmatite which has a high iron content)

These are actual results with the top and bottom values discarded from compatible locked cycle tests. This has obviated the previous problem of using batch data when the concentrate grade and associated recoveries can be mutually unsustainable.

Detailed minor element analyses of the above reported concentrates show no impurities that could affect the marketing acceptability.

These results are a significant development, removing any residual concern over operational variability in the processing plant and demonstrating robust controls of the final saleable products. This greatly assists in overall project bankability as we move forward with financing plans and, in particular, its discussions with debt financiers.

Resource expansion

In addition to the project development activities, we view the increase of the Mineral Resource at Namib as a key component to unlocking project financing in a challenged commodity price environment and delivering overall shareholder value.

Drilling campaign from August 2014 to November 2015

Following the last Mineral Resource Estimate of August 2014, the Company completed 4,828 of drilling in 66 holes in the period to November 2015. Of these, 52% (34 holes) had significant intercepts. A summary of the intercepts can be found in Table 1.

The drilling campaign focussed primarily on targeting both new extensions of known mineralised shoots, as well as infill drilling to potentially convert Inferred Mineral Resources into the Indicated Mineral Resource category. Drilling was undertaken mainly in the top half of the North Orebody and also below the historic South Mine, which is around 200m below surface. The majority of the current Inferred Mineral Resources lie below the South Mine, which is also referred to as the Southern orebody. In general, the drilling results in both areas met management's expectations and increased its confidence in the Mineral Resource.

Drilling below the Junction stope, and between the Junction and the Central stopes of the Southern orebody targeting resource expansion, has yielded encouragingly high grade results:

· NLDDK070: 3.6m @ 15.6% Zn, 1.0% Pb

· NLDDK071: 7.3 @ 14.9% Zn, 3.2% Pb & 4.5m @ 9.3% Zn, 13.6% Pb

· NLDD062: 3.8m @ 10.9% Zn, 8.7% Pb

· NLDD061: 5.7m @ 16.8% Zn, 6.9% Pb

· NLDD056: 8.7m @ 9.6% Zn, 3.7% Pb

Ongoing resource expansion drilling campaign

Encouraged by these results, we embarked on a 3,800m expansion drilling campaign below the current North resource in late 2015, to test the extensions at depth of these ore envelopes. The drilling campaign also envisages infill and extension drilling in the existing Southern resource. The Company is confident that this campaign will result in an enlarged resource supporting a longer mine life.

To access sufficient underground drilling locations, a 300 metre drive underneath the existing North resource has been developed (the "5 Level Drive"). The 5 Level Drive was successfully completed in March 2016. As the mine moves into an operational phase, the development drive will be incorporated into the mine plan as an access road.

As at 26 April 2016, 18 holes totalling 1,767 metres had been drilled by the Company's own Kempe U3-9BQ together with a larger Diamec 262 rig under contract. Eleven holes have been reported and the summary results can be seen in Table 2 below with the remaining holes awaiting sampling or assay results. The Kempe is being used to search for shallower targets up to ~80m below the modelled envelopes while the more powerful Diamec rig is used for drill holes up to 200m deep. The drilling campaign is targeted for completion by end of June 2016.

Significant mineralisation has been intersected in six holes:

· NLDD067: 57.1m (true width of 8.5 metres) at 28.6% zinc and 33g/t silver*;

· NLDDK074: 3.0m (true width of 1.5 metres) at 35.0% zinc and 11.9m (true width of 6.0 metres) at 20.8% zinc;

· NLDDK075: 8.7m (true width of 4.0 metres) at 19.5% zinc and 3.0m (true width of 2.0 metres) at 12.2% zinc; and

· NLDDK076: 3.6m (true width of 1.3 metres) at 9.8% zinc, 2.6% lead and 42g/t silver, plus 8.1m (true width of 2.5 metres) at 6.7% zinc, 7.6% lead and 101g/t silver

· NLDD069: 35.7m (true width of 9 metres) at 33.8% zinc

· NLDDK077: 3.8m (true width of 1.5 metres) at 10.6% zinc and 5.8m (true width of 2 metres) at 12.2% zinc and 10.9% lead

* Silver results are provisional, awaiting QAQC checks

The early results from the drilling campaign indicate the continuation of mineralisation 80 metres below the existing Northern part of the orebody, providing support for the Company's confidence in delivering an increased resource estimate for the Namib Project following completion of the drilling campaign. As would be standard practice, all grade intercepts will be critically evaluated as part of the update to the Mineral Resource Estimate in due course, to ensure that lower angle drill intercepts returned (those with very high intercept lengths relative to true widths) do not bias the resulting grade estimation.

Significant intercepts table from drilling August 2014 to November 2015

* Holes reported in MRE update of 19 September 2014, but true widths have been updated to reflect the current geological interpretation

** Geotechnical holes drilled and not sampled.

Significant Intercepts are based on the following criteria:

· Minimum intercept length: 3 m

· Maximum internal waste: 1 m

· Cutoff Pb/Zn combined: 1 %

· True thickness lengths were obtained by measuring intercepts manually from a perpendicular-to-dip sectional review. Lengths are approximate due to the variable nature of the lodes.

Full details of the intercepts, QAQC and JORC Table 1 disclosure can be found in the Company's press release "Drilling campaign successfully delineated additional extensions of known lodes and identified additional high grade targets" dated 12 February 2016.

Table 2: Significant intercepts table from drilling December 2015 to April 2016

* Provisional results for silver as being re-assayed due to laboratory CRMs under reporting by approximately 5%

** Ag results not available (pending)

Significant Intercepts are based on the following criteria:

· Minimum intercept length: 3 metres

· Maximum internal waste: 1 metres

· Cut-off lead/zinc combined: 1 %

· True thickness lengths were obtained by measuring intercepts manually from a perpendicular-to-dip sectional review. Lengths are approximate due to the variable nature of the lodes.

Full details of the intercepts, QAQC and JORC Table 1 disclosure can be found in the Company's press release "Drilling update" dated 21 March 2016 and 26 April 2016.

Mining licence

Receipt of the mining licence for Namib remains a key outstanding permit. The mining licence application was filed in April 2014 and the Company has since then been actively and constructively engaged with the Ministry of Mines and Energy ("Ministry") in Namibia.

On 28 January 2016 the Company received from the Ministry a Notice of Preparedness to Grant the mining licence ("Notice") for the Namib Lead-Zinc Project. The Notice contained a number of supplementary terms and conditions relating to matters including, inter alia, the work programme, production, environment and Namibian participation in the Project that will apply to the mining licence (the "Supplementary Conditions").

North River sought clarification from the Ministry on certain aspects of the Supplementary Conditions and its interpretation of them, and pending this clarification, accepted the Notice on 26 February 2016. In accordance with the process set out in the Notice, the Company then submitted a proposal to the Ministry on 25 April 2016, covering local ownership of the Namib Project, participation by historically disadvantaged Namibians in management of the Namib Project, and the Company's corporate social responsibility strategy. The supplementary terms and conditions and the proposal must be agreed between the Company and the Ministry before the mining licence is issued. The Notice sets out a further process and timeline through to mid-2016 for these discussions.

National Equitable Economic Empowerment Bill

In conjunction with assessing the Supplementary Conditions, the Company has been examining the implications of the Government of Namibia's proposed broad based empowerment legislation. A draft bill (the National Equitable Economic Empowerment Bill, the "Draft Bill") has been published and a period of public consultation is open until 29 April 2016. If enacted, the Draft Bill will set out obligations for companies, irrespective of sector, in respect of, inter alia, ownership and management participation by previously disadvantaged Namibians. Certain obligations under the Draft Bill are inconsistent with those laid down under the Supplementary Conditions to the Notice. The extent to which the Draft Bill would place obligations on the Namib Project and the timeframe for finalising and enacting the Draft Bill is not clear at this stage, but will undoubtedly be an area on which the Company will need further clarity in due course.

Corporate and financial review

Board of directors

During the year we strengthened the board of directors. The new appointments bring extensive technical, commercial and funding experience to support the next phase of development at Namib.

I joined the company in January 2015 replacing Martin French as Chief Executive Officer and was appointed to the board in July 2015. A wealth of technical experience has been added by the appointment of two new independent non-executive directors: Keith Marshall, a mining engineer who has previously held senior mine leadership roles with Rio Tinto PLC; and Ken Sangster, a metallurgist with 49 years' experience in the mining industry.

This was followed by the appointment of new independent non-executive Chairman, Dr Rod Beddows in December 2015. Dr Beddows has over 35 years of experience as a strategy consultant and corporate finance adviser, specialising in the metals sector. Dr Beddows replaced Brett Richards who had been serving as interim Chairman.

Ms Ding Chan (Tina) was appointed to the Board as a non-executive Director representing the interests of China General Nuclear Power Company (CGNPC), a 12.1 per cent shareholder in North River, replacing non-executive Chairman Mr. Zuayuan.

Financial review

The Group is reporting a loss before taxation for the year of £9,797,691 (2014: loss of £3,320,477).

This loss includes exploration and administrative expenditure of £3,026,451 (2014: £3,326,325) with the exploration and evaluation costs accounting for £1,142,851 (2014: £2,178,666). The exploration and administrative expenditure costs were lower than 2014 despite an increase in site based project activities as we benefited from a weakening Namibian dollar (2015 average GBP:NAD 1:19.47; 2014 average GBP:NAD 1:17.84) and a continued focus on minimising overheads leading to a series of cost saving initiatives.

Given our continued primary focus on developing the Namib zinc-lead project and a softening in long term copper prices, we deemed it prudent to impair the goodwill related to our early stage Namibian copper exploration licences. This has resulted in a provision for impairment of £6,702,934 (EPL 3257 £1,983,634 and EPL 3258 £4,719,300). No impairment has been recorded against our flagship Namib project.

The Group's cash position as at 31 December 2015 was £1,376,740 (2014: £1,904,860).

During the year, the Independent Directors concluded that a number of project milestones required under the July 2014 Investment Agreement with Greenstone Resources L.P. were no longer achievable before the long-stop date in that agreement of 4 October 2015. As a result, the Company and Greenstone agreed in July 2015 to terminate the July 2014 Investment Agreement. Greenstone remains a committed shareholder and supportive of the Company's revised plans for the Namib Project.

In September 2015 we completed a US$4.0 million fundraising which we effected through an Open Offer and Placing. The Open Offer and Placing were both priced at 0.2p per Ordinary Share and under the Open Offer each shareholder was entitled to subscribe for 2 new shares for every 3 existing Ordinary Shares. Greenstone committed to follow its rights in the Open Offer and fully underwrote the balance of the fundraising with funds provided via the underwriting provided via convertible loan notes.

The Open Offer and Placing raised an aggregate £377,135 (approximately US$581,000) from non-Greenstone shareholders. This figure includes £133,627 placed with certain directors of the Company. The shortfall in the funds raised via the Open Offer and Placing required the Company to utilize the underwriting facility and Greenstone was issued with convertible loan notes with an aggregate principal of $3,127,126.

· Tranche one: $908,291 maturing 8 September 2018

· Tranche two: $2,218,835 maturing 22 October 2018

Both tranches of convertible loan notes bear interest at 10% per annum payable quarterly in arrears and are convertible at 0.2p per share with a fixed exchange rate of 1:1.541 (GBP:USD). The loan notes are subject to certain conditions including adherence to an agreed work programme and budget for the Namib project. The conditions are disclosed in the Open Offer circular.

Going concern

During the year ended 31 December 2015 the Group made a loss of £9,797,691 (2014: a loss of £3,320,477) which includes a goodwill impairment charge of £6,702,934. At the year end date the Group had net assets of £882,155 (2014: net assets of £10,083,685) of which £1,376,740 (2014: £1,904,860) was cash at bank. The operations of the Group are currently being financed from funds which the Parent Company raised from private and public share placings.

The Group's capital management policy is to raise sufficient funding to finance the Group's near term exploration and development objectives. Upon completion of objectives, or identification of new projects, the Directors will seek new funding to finance the next stage of the development programme or the new projects.

The Group had a cash balance of £330,578 at 31 May 2016.

As set out in Note 24, the Group has estimated possible exploration expenditure of up to £0.6 million for its Namibian licences through 2016. Total capital cost, that is still under review, for the life of the mine, as announced on 26 November 2014 in the Definitive Feasibility Study on Namib, is estimated as $27.8 million (£17.9 million). The Group will therefore need to raise or obtain additional cash funding to support both working capital requirements and the next stage of its exploration and development programme.

As set out in Note 6, applications for the Namib Lead Zinc Mining Licence (submitted in April 2014) and the renewal of several EPLs in the Licence Areas have been made and are awaiting confirmation. If the Mining Licence is not received or the EPLs are not renewed, the Directors would have to reconsider the position of the Group and the resulting ability to continue operations as planned. The Directors believe that all outstanding licence confirmations will be received but the requirement to reach agreement on additional conditions to be attached to licences, means the timeframe is uncertain.

Subject to receiving the Namib Mining Licence, the Directors believe that the Group will be able to raise as required, sufficient cash to enable it to continue its operations, and continue to meet, as and when they fall due, its planned and committed exploration and development activities and liabilities for at least the next twelve months from the date of approval of these financial statements. The Company is currently evaluating funding options and the structure under which such funds may be raised. For this reason, the Directors continue to adopt the going concern basis in preparing the accounts.

However, there can be no guarantee that the required funds will be raised within the necessary timeframe or that the mining and EPL licences will be renewed. Consequently, a material uncertainty exists that may cast doubt on the Group's ability to continue to operate as planned and to be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of this report.

The financial statements do not include the adjustments that would result if the Group was unable to continue in operation.

James Beams

Chief Executive Officer

31 May 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash and cash equivalents comprise cash on hand and bank balances.

1. ACCOUNTING POLICIES

The Group has adopted the accounting policies set out below in preparation of the financial statements. All of these policies have been applied consistently throughout the period unless otherwise stated.

1.1 Basis of preparation

The financial statements are prepared in accordance with the historical cost convention and in accordance with the International Financial Reporting Standards, as adopted by the European Union ("IFRS"), including IFRS 6 'Exploration for and Evaluation of Mineral Resources', and in accordance with the provisions of the Companies Act 2006. The parent Company's financial statements have also been prepared in accordance with IFRS and Companies Act 2006.

The Group and Company financial statements are presented in UK pounds sterling.

In accordance with the provisions of Section 408 of the Companies Act 2006, the Parent Company has not presented a Statement of Comprehensive Income. The Parent Company's loss for the year ended 31 December 2015 was £10,059,939 (2014: restated loss of £5,612,580).

1.2 Going concern

During the year ended 31 December 2015 the Group made a loss of £9,797,691 (2014: a loss of £3,320,477). At the year end date the Group had net assets of £882,155 (2014: net assets of £10,083,685) of which £1,376,740 (2014: £1,904,860) was cash at bank. The operations of the Group are currently being financed from funds which the Parent Company raised from private and public share placings.

The Group's capital management policy is to raise sufficient funding to finance the Group's near term exploration and development objectives. Upon completion of objectives, or identification of new projects, the Directors will seek new funding to finance the next stage of the development programme or the new projects.

The Group had a cash balance of £330,578 at 31 May 2016.

As set out in Note 24, the Group has estimated possible exploration expenditure of up to £0.6 million for its Namibian licences through 2016. Total capital cost, that is still under review, for the life of the mine, as announced on 26 November 2014 in the Definitive Feasibility Study on Namib, is estimated as $27.8 million (£19.4 million). The Group will therefore need to raise or obtain additional cash funding to support both working capital requirements and the next stage of its exploration and project development programme.

As set out in Note 6, applications for the Namib Lead Mining Licence (submitted in April 2014) and the renewal of several exploration and prospective licences ("EPLs") in the Licence Areas have been made and are awaiting confirmation. If the Mining Licence is not received or the EPLs are not renewed then the Directors would have to reconsider the position of the Group and the resulting ability to continue operations as planned. The Directors believe that all outstanding licence confirmations will be received within the normal timeframe for these applications.

Subject to receiving the Mining Licence, the Directors believe that the Group will be able to raise as required, sufficient cash to enable it to continue its operations, and continue to meet, as and when they fall due, its planned and committed exploration and development activities and liabilities for at least the next twelve months from the date of approval of these financial statements. The Company is currently evaluating funding options and the structure under which such funds may be raised. For this reason, the Directors continue to adopt the going concern basis in preparing the accounts.

However, there can be no guarantee that the required funds will be raised within the necessary timeframe or that the mining and EPL licences will be renewed. Consequently, a material uncertainty exists that may cast doubt on the Group's ability to continue to operate as planned and to be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of this report.

The financial statements do not include the adjustments that would result if the Group was unable to continue in operation.

1.3 Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company and its subsidiaries and have been prepared by using the principles of acquisition accounting ("the purchase method") which includes the results of the subsidiaries from their date of acquisition. Intra-group sales, profits and balances are eliminated fully on consolidation.

1.4 Goodwill

Goodwill is the difference between the amount paid on the acquisition of the subsidiary undertakings and the aggregate fair value of their separable identifiable assets acquired and liabilities assumed. Goodwill is capitalised as an intangible asset and in accordance with IAS 36 'Impairments of Assets' is not amortised but tested for impairment annually and when there are any indications that its carrying value is not recoverable. As such, goodwill is stated at cost less any provision for impairment in value. For impairment testing purposes goodwill is allocated to cash-generating units (CGUs). If a subsidiary undertaking is subsequently sold, goodwill arising on acquisition is taken into account in determining the profit or loss on sale.

1.5 Impairment of assets

Where appropriate the Group reviews the carrying amounts of its goodwill, plant and equipment, intangible assets and investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.

1.6 Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the costs of assets, over their estimated useful lives, using the straight line method, on the following basis:

Plant and machinery 4 years

Motor vehicles 4 years

Fixtures, fittings and equipment 4 years

Computers and software 3 years

1.7 Exploration and evaluation expenditure

The Group capitalises the fair value of the consideration paid for acquiring exploration and prospecting rights as intangible assets. All other exploration and evaluation costs incurred are expensed as they are incurred and included in the consolidated statement of comprehensive income. The Group has taken into consideration the degree to which expenditure can be associated with finding specific mineral resources. The intangible assets, comprising licence costs, will be amortised over the length of the mining licence and the amortisation expense included within the administration expenses in the statement of comprehensive income.

1.8 Revenue recognition

Revenue is measured at the fair value of consideration received or receivable from the sale of goods and services from the Group's ordinary business activities. Revenue is stated net of discounts, sales and other taxes. There was no revenue received in the current or prior year.

1.9 Interest income and expense

Interest income and expense are reported on an accrual basis.

1.10 Expenses

Operating expenses are recognised in the statement of comprehensive income upon utilisation of the service or at the date of their origin.

1.11 Investments in subsidiaries

The Parent Company's investments in subsidiary companies are stated at cost less provision for impairment in the Parent Company's Statement of Financial Position.

1.12 Associates

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. The Group's share of post-acquisition profits and losses is recognised in the consolidated statement of comprehensive income, except that losses in excess of the Group's investment in the associate are not recognised unless there is an obligation to make good those losses. The Parent Company's investments in associated companies are stated at cost less provision for impairment in the Parent Company's Statement of Financial Position.

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investors' share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

Any premium paid for an associate above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

1.13 Interests in joint ventures

The Group had an interest in a joint venture, which is a jointly controlled entity, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The arrangement requires unanimous agreement for financial and operating decisions among the venturers. The Group recognises its interest in the joint venture company using the equity method.

Under the equity method, the investment in the venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the joint venture since the acquisition date. Goodwill relating to the venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in the joint venture company. At each reporting date, the Group determines whether there is objective evidence that the investment in the joint venture company is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the venture and its carrying value, then recognises the loss as 'Impairment of investment in joint venture" in the income statement.

Upon loss of significant influence over the venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in the statement of comprehensive income.

1.14 Foreign currency translation

Items included in the Group's financial statements are measured using the currency of the primary economic environment in which the Group operates ("the functional currency"). The financial statements are presented in pounds sterling ("£"), which is the functional and presentational currency of the Parent Company and the presentational currency of the Group.

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the Statement of Financial Position date and the gains or losses on translation are included in the Statement of Comprehensive Income, with the exception of loans that are designated as part of the Group's net investment of a foreign operation. These are recognised in other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the original transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the Statement of Financial Position date. Income and expenses are translated at weighted average exchange rates for the period. The resulting exchange differences are recognised in other comprehensive income.

1.15 Deferred taxation

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Statement of Financial Position date and are expected to apply when the related deferred tax is realised or the deferred liability is settled.

Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the temporary differences can be utilised.

No deferred tax assets are recognised in the financial statements.

1.16 Cash and cash equivalents

Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand and short term deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

1.17 Receivables

Receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets' carrying amount and the recoverable amount. Provisions for impairment of receivables are included in the Statement of Comprehensive Income.

1.18 Trade and other payables

Trade payables and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

1.19 Share capital

Ordinary shares are classified as equity. Costs directly attributable to the increase of new shares are shown in equity as a deduction from the proceeds.

1.20 Compound financial instruments

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder. The number of shares to be issued does not vary with changes in fair value.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to their initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.

1.21 Share-based payments

The Parent Company has granted equity settled options in the past. The cost of equity settled transactions with employees is measured by reference to the fair value at the date on which they were granted and is recognised as an expense over the vesting period, which ends on the date the employee becomes fully entitled to the award. Fair value is determined by using the Black-Scholes option pricing model.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance or service conditions are satisfied.

At each Statement of Financial Position before vesting, the cumulative expense is calculated; representing the extent to which the vesting period has expired and management's best estimate of the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous Statement of Financial Position date is recognised in the Statement of Comprehensive Income, with a corresponding entry in equity.

When the exercise period for an option expires, the amount that has been charged through the Statement of Comprehensive Income is transferred from the share-based payments reserve to retained losses.

1.22 Critical accounting judgements and estimates

The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the process of applying the Group's accounting policies.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are as follows:

Impairment of goodwill and investments in and loans to subsidiaries

Management assess whether goodwill and investments in and loans to subsidiaries after taking into account potential ore reserves, and cash flows expected to be generated by estimated future production, sales and costs. If the assumed factors vary from actual occurrence, this will impact on the amount at which the assets should be carried on the Statement of Financial Position.

Factors which could impact the future recoverability of these assets include the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

Further detailed analysis of the critical judgements and estimates relating to goodwill and investments in, and loans to, subsidiaries is in notes 6 and 17 below.

Share-based payments

The Group records charges for share-based payments. For option based share-based payments management estimate certain factors used in the option pricing model, including volatility, exercise date of options and number of options likely to be exercised. If these estimates vary from actual occurrence, this will impact on the value of the equity carried in the reserves.

Further detailed analysis of the critical judgements and estimates relating to share-based payments is addressed in Note 18.

1.23 Financial instruments

IFRS 7 requires information to be disclosed about the impact of financial instruments on the Group's risk profile, how the risks arising from financial instruments might affect the entity's performance, and how these risks are being managed.

Financial assets and financial liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

The Group's policies include that no trading in derivative financial instruments shall be undertaken.

The required disclosures have been made in Note 20 to the accounts.

1.24 Adoption of new and revised International Financial Reporting Standards

The following relevant new IFRS standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2015, but had no significant impact on the Company:

Standards issued but not yet effective

The following relevant new IFRS standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning on 1 January 2015, and have not been early adopted:

2. SEGMENTAL REPORTING

For the purposes of segmental reporting, the operations and assets of the Group are focused in the United Kingdom, Namibia and Mozambique and comprise one class of business: the exploration and evaluation of mineral resources. The Parent Company acts as a holding company. At the end of 31 December 2015, the Group had not commenced commercial production from its exploration sites and therefore had no revenue for the year.

3. GROUP OPERATING LOSS

The Group's operating loss before tax is stated after charging:

4. INTEREST PAYABLE

5. LOSS PER SHARE

The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued and has been kept the same as the conversion of share options decreases the basic loss per share, thus being anti-dilutive.

6. GOODWILL AND IMPAIRMENT REVIEW

The Company acquired, on 20 November 2009, the entire issued share capital in, and the shareholder loans to, West Africa Gold Exploration (Namibia) (Pty) Ltd ("WAGE") and Namib Lead and Zinc Mining (Pty) Ltd ("Namib Lead"). The consideration paid by the Company for these two Namibian entities and the shareholder loans was satisfied by the allotment of 266,666,667 Ordinary shares of £0.002 each at 3 pence per share.

At the time of the acquisition of WAGE and Namib Lead, the Licence Areas were subject to an external review by MSA Geosciences of South Africa whose employee, Mike Venter, acted as a Competent Person, as disclosed in the AIM re-admission document dated 28 November 2009.

Goodwill arising on the acquisitions was £7,738,986 and was allocated to cash-generating units (CGUs) by reference to the exploration areas as shown below.

Goodwill impairment review

In accordance with the Group's accounting policies, and as required by IAS36 'Impairment of Assets', the Directors test each goodwill CGU for impairment annually, or sooner, where indications exist or information comes to light that clarifies the size, quality and economics of the licences and ore bodies held/owned by WAGE and Namib Lead.

West Africa Gold Exploration (Namibia) (Pty) Ltd

In testing for goodwill impairment of WAGE, it is noted that copper prices have been declining in recent years. The copper price fell from approximately $2.50/lb in January 2015 to approximately $2.10/lb by the end of December 2015.

The Directors believe that the licences held in WAGE have the potential to contain economic mineral resources supporting a development and that there is a market value for the licences. The Directors' calculation of the net present value ("NPV") of these early stage copper projects against which goodwill has been allocated, is marginal using long-term consensus copper prices. Further, the early stage nature of the WAGE projects and due to current fund raising constraints, the Company's primary focus is on the Namib Lead Project and the numerous renewals already granted against these EPLs have resulted in the Directors deeming it prudent to fully impair the goodwill for the WAGE CGU. Consequently, an impairment charge of £6,702,934 has been made at 31 December 2015 (2014: nil).

Namib Lead and Zinc Mining (Pty) Ltd ("NLZ")

The Namib Lead-Zinc project held by NLZ is the Group's flagship asset and is the primary focus of activity. To date, significant project work has been completed resulting in the publication of a definitive feasibility study in late 2014 showing an economically robust project. The feasibility study and the impairment testing of the goodwill has a calculated net present value of $24.7 million and an IRR of 52%. To further enhance the value of the project, the Group has undertaken project optimisation work and has embarked on a 3,800 metre resource drilling campaign targeted at increasing the resource base and mine life. As a result of the impairment tests carried out and the resulting CGU's net present value estimated, the Directors do not believe that the goodwill of NLZ's Namib Lead of £1,036,052 should be impaired.

Goodwill balances at the year end

The goodwill balances at each year end were as follows:

Exploration licences

It is further noted that the following EPLs in the Licence Areas have been renewed, or are awaiting confirmation of renewal, since acquisition thus providing additional security of tenure. As discussed in note 1.2, the renewal of seven EPLs (2902, 5075, 3257, 3258, 3261, 4560 and 4561) and the application of the Mining Licence (185) have not yet been confirmed which indicates an uncertainty over their renewal. If the pending EPLs are not renewed, or if the Mining Licence is not granted then the Directors would have to reconsider the position of the Group and the resulting ability to continue operations as planned. The Directors believe that all outstanding licence renewals and applications will be successful and therefore the current position of the licences does not constitute an indication of further impairment of the goodwill and associated assets.

7. INTANGIBLE ASSETS

8. PLANT AND EQUIPMENT