Final Results

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

2 June 2014

North River Resources plc ('North River' or 'the Company')

Final Results

North River Resources plc, the AIM listed resource company focussed on Namibia, is pleased to announce its results for the year ended 31 December 2013 and that the Annual General Meeting ("AGM") will be held at the offices of SGH Martineau LLP, 5th Floor, One America Square, Crosswall, London EC3N 2SG on Wednesday 25 June 2014 at 11.00 am.

A notice convening the AGM, proxy form and Report and Accounts for the year ended 31 December 2013 will be posted to shareholders today and will also be available to download from the Company's website at www.northriverresources.com.

OVERVIEW

· Significant developments made to progress the flagship Namib Lead-Zinc Mine towards production

· 129% increase in overall resource to 1,527,000 tonnes - significant increase in fresh ore Resource to 917,000 tonnes, and an upgrade in classification category

· Commencement and advancement of the Namib Feasibility Study - optimisation work underway while on-going lock-cycle metallurgical testing of the fresh ore is completed

· An Environmental Impact Assessment ('EIA') and Environmental Management Plan ('EMP') submitted to the Namibian Ministry of Environment and Tourism

· Mining Licence application submitted to the Ministry of Mines and Energy in Namibia

· Three new directors appointed to the Board, further strengthening the Company's operational and corporate acumen

· Maiden Resource identified on the tailings dump of 610,000 tonnes @ 2.1% zinc

· Reduction in loss before taxation to £2,195,891 (2012: loss of £2,816,853)

MANAGING DIRECTOR'S STATEMENT

2013 was a year of significant development in your Company, with the focus remaining on progressing our flagship Namib Lead-Zinc-Silver Mine ('Namib') towards production. In line with this, North River has made numerous important advances which have enhanced the tangible value of Namib, including a significant resource update and the commencement of a Feasibility Study, which is now approaching completion. These operational objectives have been supported by three successful funding rounds, completed during a difficult market for junior mining companies, which have driven our exploration and development programme forward and strengthened our shareholder register.

Operational Review

In June 2013, the Company decided to execute a "proof of concept" programme designed to give increased confidence of deep ore, under the historic mine workings and existing resource, at Namib. This comprised a down-hole electromagnetic (DHEM) survey at the mine site, a technique employed to provide a better picture of the presence and approximate location of lead/zinc mineralisation underground.

The Company conducted DHEM surveys on three new holes together with four existing deep holes drilled in 2007. The survey provided numerous responses around the surveyed holes to their maximum depth of around 300m. The historic drill intercepts provide evidence that the Southern ore body is also broader than the DHEM modelling implies. Further conductive responses from the probe were shown building at the bottom of the survey holes. The modelled plates indicate conductive materials to a depth of approximately 700m below surface. 

The DHEM survey conducted on two holes, NLDD004 and NLRCDD001, was designed to test the extension of the Junction ore body. Multiple conductive responses from NLDD004 are consistent with underground drilling and mineralised intercepts obtained in 2011. The new hole, NLRCDD001, intercepted 42cm of mineralisation with 7.8% zinc, 0.08% lead, 7ppm silver and 10.3ppm indium at 382m below surface. While the intercept was narrow, it is significant as it is the deepest mineralisation yet discovered at Namib. To that end, conductive responses from the probe around the same depth indicate that this was probably a "near miss" of a larger conductor.

An additional hole, NLRC109 was drilled on a gossan along strike of the Northern ore bodies. This represents the first drilled target of North River's exploration programme for near-mine and regional targets. The hole was drilled to 200m and intersected 3m of sulphides, mainly pyrrhotite at 112m below surface with lower grades of zinc and lead. Previous drilling on the gossan intersected numerous zinc intervals, and there is an ore model in place above the recent intersection. Generally, there were indications that grades can be variable on this gossan. 

Following the analysis of these results, the Board was satisfied that this initial programme provided further confidence of deep ore at Namib. It was subsequently decided that additional work should be conducted with the objective of enhancing the Resource estimate at Namib. In October 2013 resource drilling at Namib commenced which culminated in a substantial Resource upgrade in December 2013. The upgraded JORC compliant Resource estimated a 129% increase in overall resource to 1,527,000 tonnes with a significant increase in fresh ore Resource to 917,000 tonnes, and an upgrade in classification category. In addition, a maiden Resource was identified on the tailings dump of 610,000 tonnes @ 2.1% zinc. The resultant in-situ metal inventory is set out in Table 1.1.

Table 1.1

In January this year we signed an innovative "drill-for-equity" agreement with Wilhelm Shali, our principal contractor. Shali, as he prefers to be known, is a prominent businessman in Namibia and is very well connected within the Namibian establishment. Under the agreement, £175,000 worth of drilling and mining contracts will be paid by the issue of equity at the equivalent of £0.06 per share. We welcome Shali as a local partner.

The Company has made good progress in the permitting process for Namib. In January 2014, the Company submitted Environmental Impact Assessment ('EIA') and Environmental Management Plan ('EMP') to the Namibian Ministry of Environment and Tourism, for Namib. The report is the culmination of almost two years of an independent and comprehensive investigation into the environmental effects of re-opening Namib, which was previously operational from 1965-1992.

In addition, public and private consultations were held with Interested and Affected Parties (the 'IAPs'), which included local residents, businesses, the local council, government departments representing service providers, TransNamib (rail), Namwater (national water authority), Nampower (national power authority), Namport (Walvis Bay port authority), and Directorate of Parks. All of the issues and concerns raised by the IAPs have been assessed in the EIA and EMP and all significant impacts have been mitigated.

The Company was pleased to report that on 17 April 2014, it submitted an application for a Mining Licence for Namib with the Ministry of Mines and Energy in Namibia. The Company has also applied for a renewal of the EPL 2902, in which the mine is located and which contains a number of near mine exploration targets integral to the longevity and overall financial performance of the project (see Notes 1.2 and 5 for further details).

A major theme during 2013, and into 2014, has been the commencement and advancement of the Namib Feasibility Study. Two consultants were engaged for this work, Tenova, for work primarily related to the design of the processing plant, and Snowden Mining Industry Consultants, primarily for work relating to resource expansion, mine design and associated services. We had hoped to complete the study in March 2014 but it became delayed due to on-going lock-cycle metallurgical testing of the fresh ore. In the meantime we are continuing to perform value optimisation on the various studies and we currently anticipate the study to be completed in the coming months. We will keep shareholders informed of future developments.

North River retains an interest in a number of other exploration licences, including some potentially commercial copper resources, in Namibia. There will be some renewed focus on these during the year.

Corporate Overview

We boosted our market presence with the appointment of VSA Capital plc, a specialist investment bank providing corporate finance and corporate broking services to companies operating in the natural resources sector, as joint broker in August 2013. VSA Capital was mandated to work alongside Pareto Securities (formerly known as Ocean Equities), a long-time and supportive broker for North River. Together, I believe that Pareto Securities and VSA Capital form a highly complementary team with the ability to further raise North River's profile in the investment community.

The Company also welcomed three new directors to its Board during 2013, further strengthening the Company's operational and corporate acumen at this important juncture in North River's development.

In January 2013 the Company appointed Brett Richards as a Non-Executive Director. Mr Richards, who has a degree in engineering, began his career at Co-Steel Inc. in 1985 where he worked for 16 years in several operating and executive positions. He has since worked for a number of mining companies including Katanga Mining and Kinross Gold. Most recently he was the Chief Executive Officer of Avocet Mining plc where he also served on the board. He is currently Chief Executive of BSG Resources.

Also in January 2013, the Company welcomed Qi Yu as a Non-Executive Director. Qi (pronounced "Chi") is a Chinese Certified Public Accountant and worked at a senior level in the accounting industry in China for 15 years before relocating to the UK. She is currently the Chief Operating Officer of Kalahari Minerals, which holds an interest in Extract Resources. Both Kalahari and Extract Resources were previously listed (on AIM and the ASX respectively) and were taken private when acquired by Taurus Minerals Limited ("Taurus"). As discussed later in my statement, our relationship with Taurus precipitated Board representation by associated nominated directors, and we have welcomed Qi's significant industry and commercial expertise through this affiliation.

Finally, in September 2013 we were delighted to introduce Mark Thompson to the Board as an independent Non-Executive Director. Mark is the former Chief Investment Officer and co-founder of Galena Asset Management Ltd, the fund management arm of Trafigura Beheer b.v., and latterly a partner at Apollo Management, one of the world's largest alternative asset managers. Mark has managed in excess of $750m, across four separate funds, all of which were focused on natural resources. Mark has extensive experience in raising capital for natural resource companies, portfolio management, commodity derivatives trading and personal investment in the natural resources sector. He is executive Chairman of Treliver Minerals Ltd and possesses a number of directorships in private companies engaged in mineral exploration.

As the Company transitions into a development company it has also been bolstering its ranks with the addition of key consultants including Dominic Claridge, Donald McAlister, Aidan Bailey and Andrew Little. Dominic Claridge was previously Group Executive of Project Development for Weatherly International, where he managed mining studies on three projects in Namibia, notably Berg Akas, another brownfield lead, zinc, and silver mine. Prior to this he was Chief Operating Officer of AIM listed Griffin Mining Limited. Donald McAlister was previously Finance Director of Mwana Africa plc and has considerable experience in raising and structuring development finance. Aidan Bailey was previously a finance consultant at Shanta Gold plc and has a wealth of financial management experience. Andrew Little has over 20 years' experience in mining project design, development, construction and management.

Financial Overview

The Group reduced its loss before taxation to £2,195,891 (2012: loss of £2,816,853). Due to the Group's heightened focus on Namib, its expenditure on its additional assets has been substantially reduced, and the Group focussed primarily on the Feasibility Study at Namib during the period. The Group has worked hard to minimise administrative overhead.

Share placings during the year raised gross proceeds of £1,800,000. The Group's cash position as at 31 December 2013 was £577,551. Post period end, the Group's cash treasury was further supported through two placings which raised a total of £1,225,000. These funds are being utilised for further development work at Namib in additional to general working capital purposes.

Taurus, a 60:40 joint venture company between the China Guangdong Nuclear Power Holding Corp (CGNPC) and the China-Africa Development Fund (CADF), was formed to develop the large Husab open pit uranium mine which is located not far from Namib. When Taurus acquired Kalahari Minerals in 2012, it also acquired a 38% interest in North River. As part of the transaction, Taurus also acquired rights to a Relationship Agreement with North River, which gave it the right to appoint three directors, including the chairman, giving Tauris effective control of the Board. However, the Relationship Agreement only remained in effect whilst Taurus owned 20% or more of North River. Taurus has on the whole been a passive shareholder and has not participated in any of the recent share issues approved by the Board. Consequently Taurus's equity share of North River has been steadily diluted and now stands at 19.7% and the Relationship Agreement has now been permanently terminated.

Outlook

The remainder of 2014 will be marked with further news flow relating to our primary focus, advancing Namib back into production. Most notably, our Feasibility Study is expected for publication in the coming months and I am confident that this will highlight the commercial value of driving progress forward at Namib. As a low-cost project benefitting from proximal major transport infrastructure, power and water connections, I am confident that our proposition will continue to galvanise support in the investment community.

I would like to take this opportunity to thank our shareholders for their continued support and I look forward to the future at Namib as we move through the gears towards commercial production in the near term.

Martin French

Managing Director

30 May 2014

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

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF CASH FLOW

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

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

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 ("IFRS") including IFRS 6 'Exploration for and Evaluation of Mineral Resources' as adopted by the European Union ("EU") 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 2013 of £985,983 (2012: loss of £1,344,883) has been included in the Group's Statement of Comprehensive Income.

1.2 Going concern

During the year ended 31 December 2013 the Group made a loss of £2,195,891 (2012: a loss of £2,816,853). At the year end date the Group had net assets of £8,473,236 (2012: net assets of £9,067,468) of which £577,551 (2012: £858,677) 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 Company successfully raised, via two private share placings, £1.225 million of working capital subsequent to the year end in January and March 2014. These funds are being used to meet day-to-day expenditure on the Namib project. The Group had a cash balance of £802,500 at 30 April 2014.

As set out in Note 23, the Group has exploration commitments of £1.86 million for its Namibian licences through 2014 and into 2015. 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 5, applications for the Namib Lead Mining Licence 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 time duration for these applications.

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. 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 net assets. 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. 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. The Group has taken into consideration the degree to which expenditure can be associated with finding specific mineral resources. The intangible assets are amortised over the length of the mining licences and the amortisation expense is 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. 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 comprisecash 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 unsecuredand are usually paid within 30 days of recognition.

1.19 Share capital

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

1.20 Share-based payments

The Parent Company has granted equity settled options. 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. In valuing equity settled transactions, no account is taken of any service and performance (vesting conditions), other than performance conditions linked to the price of the shares of the Parent Company (market conditions). Any other conditions which are required to be met in order for an employee to become fully entitled to an award are considered to be non-vesting conditions. Like market performance conditions, non-vesting conditions are taken into account in determining the grant value.

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.

Where the terms of the equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if the difference is negative.

Where an equity based award is cancelled (including when a non-vesting condition within the control of the entity or employee is not met), it is treated as if it had vested on the date of the cancellation, and the cost not yet recognised in the Statement of Comprehensive Income for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the Statement of Comprehensive Income.

1.21 Critical accounting judgements and estimates

The preparation of financial statements in conformity with International Financial Reporting Standards 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 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 addressed in Notes 5, 8 and 15.

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 16.

1.22 Financial instruments

IFRS7 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 18 to the accounts.

1.24 New standards and interpretations not applied

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

Management anticipates that all of the pronouncements will be adopted in the company's accounting policy for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Group's financial statements.

Based on the Group's current business model and accounting policies, management does not expect material impacts on the Group's financial statements when the new Standards and Interpretations become effective.

The Group does not intend to apply any of these pronouncements early.

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 2013, 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. 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.

5. 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. Goodwill arising on the acquisition was:

Goodwill impairment review

The Directors are of the opinion that the Goodwill acquired in respect of WAGE and Namib Lead in November 2009 represents the value of the Licence Areas held by WAGE and Namib Lead at 31 December 2013 with the exception of EPL 3139 in the Ubib area which was relinquished in April 2013 with a carrying value at 31 December 2012 of £92,782. A goodwill impairment charge of £92,782 was made as at 31 December 2012.

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.

The goodwill has not been impaired as commercial reserves have not yet been established or the determination of the evaluation process in incomplete at the year end. The continued exploration and development work within the Licence Areas since acquisition has not revealed anything that would suggest that there has been a further impairment to the carrying value of the goodwill.

In reviewing the Goodwill value, it is noted that the commodity prices for the commodities that WAGE and Namib Lead are exploring for in Namibia have increased since November 2009. Copper prices have moved from approximately US$6,500 per tonne in November 2009 to approximately US$7,000 per tonne in May 2014 as well as the increase in lead and zinc prices over that time.

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 two EPLs (3207 and 3258) and the application of the Mining Licence (2902) have not yet been confirmed which indicates an uncertainty over their renewal. If 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 renewal confirmations will be received within the normal time duration for these applicationsand therefore this does not constitute an indication of impairment of the goodwill and associated assets.

In accordance with the Group's accounting policies the Directors review their opinion on impairments of goodwill annually, or sooner, where information comes to light that clarifies the size, quality and economics of the licences and ore bodies held/owned by WAGE and Namib Lead. In the opinion of the Directors, taking into account the expiry dates of those licences, the likelihood of their renewal, the availability of further funds, and the intention to continue exploration and evaluation in the licence areas, no indication of impairment of the current carrying value of the goodwill currently exists. No impairment of the goodwill has therefore been made in the year ended 31 December 2013. No such indications of impairment are evident up to the date of approval of these financial statements.

On the date the Licence Areas were acquired, the Goodwill was allocated to the exploration areas in proportion to the historic exploration costs associated with the areas, as shown below. Management consider this to be an appropriate basis on which to recognise the goodwill purchased and the continued carry values.

6. INTANGIBLE ASSETS

7. PLANT AND EQUIPMENT