Final Results

4 July 2012

Mwana Africa PLC

("Mwana", the "Group" or the "Company")

Audited results for the year to 31 March 2012

Mwana Africa PLC is pleased to announce its audited financial results for the year to 31 March 2012.

Kalaa Mpinga, Chief Executive Officer of Mwana, commented today:

"The Group's focus for the financial year has been on expanding production at Freda Rebecca Gold Mine to our target production rate of 50,000 oz per annum, increasing the gold resource at our Zani-Kodo project in the DRC through continued exploration drilling, and evaluating various funding structures to enable the restart of operations at Bindura Nickel Corporation's Trojan nickel mine. I am pleased to report to shareholders that we have made great strides on all three initiatives, and I believe that the past twelve months should be viewed as a great success."

For more information, please visit www.mwanaafrica.com or contact:

Donald McAlister / Lorenz WerndleTel: +44 (0)20 7654 5580

Liberum Capital LimitedMichael Rawlinson / Tom Fyson / Christopher KololianTel: +44 (0)20 3100 2000

Tavistock CommunicationsEd Portman / Mike Bartlett / Simon HudsonTel: +44 (0)20 7920 3150

Mwana Africa PLC is a pan-African, multi-commodity resources company. Mwana's principal operations and exploration activities cover gold, nickel and other base metals, and diamonds in Zimbabwe, the DRC and South Africa. Mwana was the first African owned and managed mining business to be listed on London's AIM market. Mwana's Freda Rebecca gold mine in Zimbabwe achieved its target production rate of 50,000 ounces gold per annum in 2011. In February, Mwana announced a gold mineral resource of 2.01 million ounces at its Zani Kodo project in Democratic Republic of Congo. Further information on the Company can be found at www.mwanaafrica.com

Chairman's Letter

Dear shareholder

Since my last Statement the Mwana Group has undergone a substantial metamorphosis in the state of its affairs. Despite difficult markets and a deepening financial crisis we have taken some major steps forward to ensure the long term profitability of the company.

In spite of ongoing political uncertainty in Zimbabwe the Freda Rebecca Gold Mine has reached and now exceeded its target annualised production rate of 50,000 ounces of production per annum and we have completed the previously agreed sale of a 15 percent interest in the company to a prominent Zimbabwean businessman. Freda Rebecca provides the Group with a significant cash generating project and demonstrates Mwana's ability to revitalise previously closed operations, rebuild a strong management team in Zimbabwe, access competitive debt finance and restore one of Zimbabwe's major mines to profitable production. I would like to record my personal thanks to the management and workforce at Freda Rebecca for their efforts over the past year.

Bindura Nickel Corporation has been through a difficult year and operations have remained on care and maintenance. In spite of this the management team has quietly gone about refurbishing the Trojan operation and priming it for the restart of production. Most major components of the operation have been refurbished to a high standard and this will be of major benefit to the production ramp-up when operations restart. The other BNC assets remain on care and maintenance but it is important to keep in mind the huge strategic value within BNC including a fully integrated Nickel smelter and refinery and the undeveloped Hunters Road Nickel deposit.

Our major gold exploration target in the North Eastern corner of the Democratic Republic of Congo, Zani-Kodo continues to be our main exploration focus. Here we have increased the JORC compliant gold resource by 41 percent to more than 2 Million ounces. This confirms our belief that Zani-Kodo has the potential to become a world class gold deposit in what is becoming one of the world's major new gold provinces. Exploration continues to produce encouraging results.

The Semhkat base metal exploration project in the Katanga Province of DRC continues to show good promise with the identification of new drill targets for copper and zinc.

Perhaps the most significant event for your company has been to welcome a new strategic investor in the form of China International Mining Group Corporation (CIMGC). In April $32.8 million dollars of new equity was raised from CIMGC and our institutional shareholders which puts us in a position to initiate the restart of operations at the Trojan Nickel Mine at Bindura and continue to fund our exploration activities in the DRC. Our new strategic investor who owns 22 percent of the company has already demonstrated his commitment to Mwana through his introductions to influential potential partners in China and Hong Kong. We welcome Mr Ning, the Chairman of CIMGC, to the Board of Mwana and we look forward to his contribution at our meetings. I certainly believe that the involvement of Mr Ning and his investors provides an important third leg to the Mwana story of exciting African assets and a strong management team.

In January we added technical strength to the Board with the appointment of Johan Botha who has many years of experience in the African mining arena particularly in the DRC.

At the end of September I assumed the role of Non-Executive Chairman.

With dark clouds looming for the established Western Economies it is perhaps understandable that the appetite for investment in Africa has been recently muted. There is no doubt in my mind however that demand for metals will remain strong and that Africa will continue to be a major source of production and of new mining projects. I believe the Mwana portfolio represents a good balance of Production Development and Exploration assets with the natural hedge between Gold and Base Metals. In the current year we are looking forward to increased production at Freda Rebecca, the rehabilitation of the Bindura Nickel Corporation, another increase in the resource at Zani-Kodo and further good progress at Semhkat. My thanks go to our exceptional teams in the operational and exploration divisions supported by the indefatigable management and of course you our ever loyal shareholders.

Oliver Baring

Chairman

Chief Executive's Review

The Group's focus for the financial year has been on expanding production at Freda Rebecca Gold Mine to our target production rate of 50,000 oz per annum, increasing the gold resource at our Zani-Kodo project in the DRC through continued exploration drilling, and evaluating various funding structures to enable the restart of operations at Bindura Nickel Corporation's Trojan nickel mine. I am pleased to report to shareholders that we have made great strides on all three initiatives, and I believe that the past twelve months should be viewed as a great success.

At Freda Rebecca, ramp up in production continued after the installation and commissioning of the second milling circuit in June 2011. The production rate of 50,000 ounces per annum was established in the quarter to September 2011. For the whole of the financial year Freda Rebecca produced a total of 47,770 oz of gold, contributing $17.7 million to group profits and generating $15.5 million of cash inflows.

Our success at Freda Rebecca has demonstrated our ability to complete a considerable mine and plant refurbishment and expansion programme and production ramp up in Zimbabwe. This, I believe, gave us the development and operating experience and credibility required to secure funding for the restart of BNC's Trojan nickel mine. We remain confident that Freda Rebecca will continue to be a robust provider of cash flow and revenue and we are now focussed on expanding production further and introducing operating efficiencies. These will have the effect of further increasing production levels beyond 50,000 oz per annum while simultaneously reducing operating costs. External consultants were hired to assist the operations team with this plant optimisation work at Freda Rebecca. The process plant is presently processing ore at the rate of 2,700t per day.

The major exploration focus of the Group has been on the Zani-Kodo gold project in the Democratic Republic of Congo. This is a large and highly prospective project situated in what is fast becoming a gold province of major world significance. Drilling was advanced over the Zani-Kodo trend on target areas with 66 holes completed for a total of 18,222m drilled. In January, an updated resource calculation was performed by BMRE which resulted in a 41% increase in the JORC compliant gold resource, with the new total combined resource standing at 2.01Moz. With a comprehensive ongoing work programme being progressed, we are confident that the project's JORC resource can be further increased, thereby demonstrating its enormous potential.

Last year, I wrote in my CEO Review on the steps that we had taken to plan for the restart of operations at BNC. Detailed plans to recommence operations were drawn up by management and verified by SRK Consulting in a Competent Person's Report, and an off-take agreement was signed with Glencore International. The restart plan for the Trojan mine involves the production of 7,000t Ni in concentrate per annum which will be sold to Glencore. Production ramp-up is very quick as would be expected and the operation should reach steady state production within 24 months. There has been a great deal of progress made in priming the operation for restart including complete refurbishment of the crushing circuit.

BNC work is now focussed on resolving legacy creditors and concluding a retrenchment programme at the Trojan mine, as well as recapitalising BNC, so that operations at Trojan may be restarted. Management commenced meetings with a mixture of existing and new institutional shareholders in March, and in April 2012 we announced a conditional placing of US$12.3 million, which was approved at a General Meeting later that month. Prior to the placing, negotiations were underway with China International Mining Group Corporation (CIMGC) who subsequently agreed to become a substantial shareholder of Mwana. We are delighted to have this strategic partnership and believe we will be able to leverage CIMGC's extensive contacts in China and interests in the DRC to the mutual benefit of both companies. Concurrently with the placing, CIMGC, through a subscription invested $21.2 million in Mwana. 

Additional capital will now be allotted to fund exploration activities and a pre-feasibility study at the Zani-Kodo gold project and also towards furthering SEMHKAT's exploration activities as well as a scoping study for a 10Ktpa copper operation on the Kibolwe prospect in the DRC.

Progress over the financial period at our SEMHKAT base metals concessions in Katanga has been steady and the Board has been continually pleased by early exploration results from geological work conducted by our exploration team at a number of target areas. Detailed geological mapping, soil sampling and trenching has been undertaken over various prospective areas and there has been prolific copper-cobalt mineralisation identified is encouraging, particularly at Lunsano. Work has been focussed on identifying potential drill targets and ground reconnaissance surveys will continue throughout 2012 and be evaluated before a decision is made confirming the location of drill sites.

The proceeds of our successful share placement in April 2012 and the increased production revenues from Freda Rebecca means the Company has a significantly strengthened balance sheet and is well placed to progress our four key projects to try and realise the considerable value for our shareholders.

Mwana remains committed to comply wherever possible with Zimbabwe's Indigenisation and Economic Empowerment Act whilst ensuring the best value for our shareholders. Our commitment also remains with the communities in which we operate. Education and employee and community health programmes are a priority at our assets, and our positive impact on the local economy has included infrastructure support and procurement expenditure sourced from local suppliers. At the end of the financial period, 2,615 people were employed by the group. Their safety and welfare is of paramount importance so we are pleased to report that there were no fatalities during the course of the financial period, and the loss time injury frequency rate remains very low at 0.67. Proactive labour relations to engage and discuss topics of interest such as wages, health and safety programme and diseases have been well received. No employee days were lost to industrial action. 

I would like to extend my thanks to our shareholders, management and operational teams, employees and all those who have supported us over the last year and are continuing to do so as we grow into the next stage of our development.

Kalaa Mpinga

Chief Executive Officer

Review of Operations and Exploration

PRECIOUS METALS

Freda Rebecca Gold Mine- Zimbabwe

The Freda Rebecca gold mine, situated in the town of Bindura, was acquired by Mwana Africa in April 2005. Production resumed in October 2009 following an extended period of care and maintenance.

Freda Rebecca continues to ramp up production. The mine produced 47,770 oz of gold in the year to March 2012, an increase of 75.4% from the March 2011 financial year (27,240 oz). Average quarterly production for the financial period was 11,943 oz of gold, and the highest level of gold production achieved in a single month was in January 2012, when 5,175 oz of gold was produced. Q1 2012 continued the trend of increased production with a total of 14,272 oz gold produced.

Phase II work was completed in June 2011 with the commissioning of the second mill. The ramp up of the Phase II target annualised production rate of 50,000 oz was successfully achieved, three months ahead of schedule, in the second quarter 2011.

The new combined milling circuits performed well following commissioning although two mechanical failures in Q4 2011 did affect mill throughput that in turn impacted production levels. Throughput was further affected in Q4 last year by down time of leach tanks within the circuit. Repairs were carried out on both Mill 1 and Mill 2 in Q4 2011, which resulted in a significant increase in mill throughput during Q1 2012. An increased head grade during Q1 2012 and an improvement in recovery resulted in increased gold production for the same quarter.

Plant recovery was variable throughout the financial period. The highest level of average recovery was 83% achieved in Q2 2011, with Q4 2011 experiencing the lowest level of 71%. This lower than desired level of recovery for the final quarter of 2011 was due to down time at the leaching circuit and variability in ore characteristics from one of the underground production areas.

Plant optimisation work continues with the focus on increasing plant throughput and recovery improvement. Consultants were engaged in Q1 2012 to assist management with the correct configuration of mills in terms of power draw, milling rates and grinds. Improvements in grinds and a reduction in mill ball consumption are being recorded and are encouraging. Metallurgical tests carried out in Q1 2012 indicated some variability in the ore characteristics, which had an impact on recovery. Mining schedules have been amended to ensure correct blending of ore supply to mitigate the effect on the plant process and recoveries have improved as a result.

In April 2011, the Company announced increased mineral resources at Freda Rebecca. Based on a cut-off grade of 1.5g/t gold, the Indicated Mineral Resource increased from just over 1 million ounces to 1.67 million ounces of gold, while the Inferred Mineral Resource, as similarly defined, was 0.64 million ounces. This increased resource will form the basis of an extended life of mine at Freda Rebecca. The new resources were independently verified by SRK Consulting (UK) Limited.

Throughout the financial period, Mwana continued to engage the government of Zimbabwe on the issue of indigenisation. The Board remains optimistic that this situation can be resolved to the satisfaction of all stakeholders.

Freda Rebecca production results for the periods to March 2011 and March 2012:

Freda Rebecca resources are given below:

The effective date for the Freda Rebecca resource estimate is April 2011

Zani-Kodo - Democratic Republic of Congo

Mwana has a joint venture with the state-owned Office des Mines d'Or de Kilomoto (OKIMO) for gold exploration in the Ituri district of the DRC. The joint venture, in which OKIMO has a 20% free carried interest, covers gold mining rights over 1,605 square kilometres in Orientale Province. The area contains a series of highly prospective greenstone belts of Kibalian age which are considered to have the potential to host world-class gold deposits. Zani-Kodo is situated between the Kibali (formerly Moto Mines) Project (Randgold/AngloGold Ashanti J.V.) and the Mongbwalu Project (AngloGold Ashanti).

In January 2012, an updated resource calculation was carried out by BMRE Ltd, and, in February the Company announced a 41% increase in the JORC compliant gold resource. The total combined resource for the Zani-Kodo project now stands at 2.01 Moz based on a cut-off grade of 0.5 g/t. This includes a JORC compliant resource at Kodo Main of 1.4 Moz at an average grade of 4.02 g/t.

The results along with a comparison to the previous update in July 2011 are below:

For the majority of the financial period two drill rigs were active on the ground at Zani-Kodo, with a third rig added in Q1 2012. Diamond core drilling was predominately focussed on the Kodo, Badolite, Zani Central and Gombiri areas. Thereafter, drilling commenced at two new targets: Zani South/Lelumodi and Kodo North. A total of 66 holes for 18,222 metres were drilled during the reporting period.

Drilling at Kodo commenced at the site of the old Kodo mine in April 2007. Exploration drilling is continuing at the target area with continuous mineralisation being identified over a strike length of 650m and a downdip length of 700m. A total of 35,181m has been drilled at this location.

Exploration drilling was completed at the La Badolite target area with continuous mineralisation being identified over a strike length of 600m.

At Zani Central, exploration drilling continued at the target area, located to the south of Badolite, with continuous mineralisation identified over a strike length of 650m. The zone remains open at depth and to the south. A total of 8,712m has been drilled at this location during the financial period.

The Zani South/Lelumodi area is situated along the southern extension of the Zani-Kodo trend and contains a major, linear gold in soil anomaly and significant artisanal activity. A major NE trending fault displaces the contact between Zani South and Gombiri. The area is interpreted to occur at a slightly higher structural level than Kodo Main, with steep dips in the area interpreted as hanging wall splays from a basal thrust. Initial observations are positive, with three visible mineralized zones identified. Importantly, these zones appear to flatten out (shallow-dipping) at depth in a similar fashion to Kodo Main. Good results in this area could open up a further 3 kilometers of the Zani-Kodo trend to the possibility of significant gold resources.

BASE METALS

Bindura Nickel Corporation - Zimbabwe

Situated near the town of Bindura, 90 kilometres north-east of Harare, BNC is Africa's only integrated nickel mine, smelter and refinery operation. In the past, ore from the company's Shangani and Trojan mines, with a combined hoisting capacity in excess of two million tonnes of ore per year, was concentrated and fed, along with concentrate from third parties, to BNC's smelter and refinery. BNC is listed on the Zimbabwe Stock Exchange having joined the exchange in 1971. Mwana Africa acquired its 52.9% stake in the company in 2003.

BNC's mines, smelter and refinery remained on care and maintenance throughout the year. The care and maintenance programme continued to preserve the integrity of the underground operations, surface concentrators and the smelter and refinery complex. The mine hoisted 4400 tonnes of ore and 1300 tonnes of waste during the financial year as part of its care and maintenance programme. Total underground development during the care and maintenance programme stood at approximately 1435m at the end of March 2012.

BNC's board has decided the most viable way to restart BNC's operations is in stages, starting with the resumption of concentrate production from the Trojan mine and processing facility. BNC has developed detailed plans for the resumption of operations at Trojan, and SRK completed an independent Competent Person's Report (CPR) reviewing these plans - the results of which were announced on 10 August 2010. The initial restart plan for the Trojan Mine is to ramp up production to 7,000 tonnes per annum of nickel in concentrate. Concentrate production will then be sold to Glencore, under the terms of an off take agreement signed in February 2011, and is estimated to take place within seven months of restart.

Preparatory work for the restart of operations has included the following:

·; Repairs to main rock shaft bunton sets, main rock shaft ore bin and waste conveyors

·; Repairs to crushing plant steel structures, rewiring electrical panels & relaying of electric cables overhauling crushers, conveyors and screens

·; Hot commissioning of crushing circuit

·; Repairs to main steel structures in the milling section is currently in progress

Work is now focused on resolving legacy creditors and finalising a retrenchment programme at BNC's subsidiary Trojan Nickel Mine, as well as on recapitalising BNC, such that the Trojan restart can begin with the refurbishment of the surface milling circuits and associated thickeners prior to restarting concentrate production. In June 2012 BNC announced the initiation of a rights issue process to raise US$21 million to fund the initial stage of the restart of its Trojan Nickel Mine. Further funding will be required to take Trojan to the stage where it is cash generative.

BNC - Resources at March 2012:

Note:

·; The effective date for the Trojan resource statement is March 2010, and, the effective date for the Shangani resource statement is August 2008.

·; The effective date for the Hunters Road resource estimate is May 2006. The JORC compliant Hunter's Road resource of 36,437kt is found in the West Ore body of Hunter's Road and includes 2,377kt of resource which forms part of a 30m cap of oxide ore mineralisation. In addition, in 1993, an Anglo American MinRED estimate showed 11,000kt grading 0.43% Ni approximately 600m east of the West Ore body of Hunter's Road which is not included in the resource shown above.

Katanga Base Metals Concessions (SEMHKAT) - DRC

Mwana holds a 100% interest in SEMHKAT which has exploration concessions covering 4,845 square kilometres in the south-east of the DRC. Exploration is focusing on sediment hosted stratiform copper-cobalt, iron oxide-copper-gold (IOCG) occurrences as well as on showings of lead and zinc.

http://www.rns-pdf.londonstockexchange.com/rns/8520G_-2012-7-3.pdf

Figure 1. SEMHKAT prospect areas.

Field camps were established at the Kitemena-Kitungulu-Kamungoti (KKK) area and geological mapping of the zones commenced during Q2 2011. Before the Kitemena-Kitungulu crew was moved to speed up work progress at Lunsano in Q4, a total of 224 soil samples were taken and the results received for the Kitemena Grid (PR754) were updated on plan. The results revealed that high copper values are associated with aeromagnetic highs and the contact between the Grand Conglomerate units and shale. Infil soil surveys are planned for 2012.

At Lunsano exploration during late 2011 and throughout 2012 is focussed on identifying potential drill targets through detailed geological mapping, trenching and pitting programmes on the Southern, Northern and Eastern copper anomalies. The Lunsano area is underlain by Roan units which have known potential for Cu-Co mineralisation. The local geology comprises units of argillaceous talcaceous shales, Grand Conglomerate, laminated and silicified dolomites, vuggy or stromatolitic dolomite, sandstone and ferruginous dolomitic shales. A total of 5088 samples comprising soil, termitaria, pit, trench and rock chip samples were taken at Lunsano over the period Q3 2011 to Q1 2012. A total of 4456 samples were sent to ALS Chemex laboratory and all the results were received. Among these were 3187 soil samples and 401 termitaria samples from which the results received were updated on plans. The results from the two methods support each other and outline a copper anomaly overlying the Roan Group. Niton analysis of samples previously sent to ALS Chemex laboratory commenced in Q1 2012 resulting in 811 pit and trench samples being assayed during the same quarter. In Q1 2012, mapping was focused on the exposed units of the Mines series to the south west of the southern copper anomaly at Lunsano. Trace malachite mineralization was exposed by trenching and pitting, hosted in breccia and shale units. Trace malachite mineralisation in trenches in the shale (Mine series unit) and the Niton results for these mineralised zones in shale are shown in table A.

Table A: Niton analysis of mineralized zones in trench MS3 and MS4

A total of 176 pits and 1913m of trenching, predominantly from the Southern copper anomaly at Lunsano, was completed during the reporting period. These results are being analysed with a view to identifying drill targets, while geological mapping, trenching and pitting continues on the eastern and northern anomalies.

In 2011 Ambase Exploration Africa, the SEMHKAT joint venture partner on the North West Block (PR739, 745, 747 & 749) investigated by drilling, the exploration targets generated by regional mapping, electromagnetic (SPECTREM) and soil geochemical surveys. A total of 625 short RAB holes were drilled over NW concessions yielding a total of 13 364m. All RAB samples were initially assayed using the NITON XRF and thereafter by the ALS Chemex laboratory. The results were encouraging leading to Ambase Exploration Africa planning a 16,000m RC Drilling campaign over the northwest Block for the 2012 year. Two track-mounted ALTON 450 Multipurpose drill rigs will be used, as these will provide the option to continue with diamond drilling after completion of the initial RC program.

An initial field team has been mobilised to Maina field camp during the last week of March 2012 in order to start re-establishing the camp. The RC drilling programme is set to begin in Q2 2012.

DIAMONDS

Klipspringer - South Africa

The Klipspringer diamond mine is situated approximately 250 kilometres north of Johannesburg. Mwana acquired its stake of approximately 62% through the purchase of SouthernEra in 2007. The company's stake has increased to 68.0% following dilution of the joint venture partner due to non-investment by the partner in the working capital requirements of Klipspringer.

Following a number of severe weather incidents in December 2010 and January 2011, which flooded the shaft bottom and lower level, a decision to stop production and development at Klipspringer for health and safety reasons, was taken.

Recovery operations continued during the financial period. The mine has been dewatered to below the main pump station. Cleaning the shaft bottom of the remnants of mud and debris is an on-going process.

Management completed a restart model at the end of 2011 and with a resurgent diamond market emerging, continue to review the options to restart operations at the mine. 

Other Interests - Botswana, Angola, Democratic Republic of Congo

Mwana Africa has minority stakes in a number of other diamond projects including a 20% interest in Société Miniére de Bakwanga (MIBA) in the DRC, an 18% interest in the Camafuca project in Angola, and a 12.5% interest in the BK16 project in Botswana.

Financial review

Income Statement

Pro-forma income and expense

The group reported turnover for the year of $81.3 million (2011: $43.7 million) and a net loss before income tax for the year of $1.2 million (2011: $6.0 million).

Freda Rebecca

During the year, Freda Rebecca sold 47,770 ounces of gold (2011: 27,240 ounces) at an average price of $1,664 per ounce (2011: $1,325 per ounce) as well as by-products, generating revenue of $79.8 million (2011: $37.5 million). Operating costs during the period increased in line with the ramp up of operations, and totalled $56.6 million (2011: $33.3 million) for the year. Profit before tax for the year was $23.2 million (2011: $4.4 million excluding reversal of impairment on property, plant and equipment)

Bindura Nickel Corporation

Revenue of $1.5 million (2011: $4.2 million) was generated through the sale of in-process inventories. Operating costs of $16.3 million (2011: $23.3 million) were reduced from the previous year which included additional provisions for under payment of labour costs. BNC reported a net loss before income tax of $14.3 million (2011: $17.2 million).

Other Mwana Africa group

The group, excluding BNC and Freda Rebecca, incurred operating costs of $10.9 million (2011: $15.1 million).

Cash flow statement

Pro-forma cash reconciliation

Freda Rebecca

Positive cashflow of $27.2 million (2011: $6.1 million) was generated by operations during the year. $10.8 million (2011: 4.4 million) was invested in additional working capital. Further capital expenditure of $8.2 million (2011: $4.2 million) comprises $3.8 million to maintain operations and $4.4 million to expand operations through the phase II project. Funding was made available by the drawdown of $5.2 million from a loan facility provided by the Industrial Development Corporation of South Africa and positive operating cash flow.

Bindura Nickel Corporation

Sales of inventory and intermediate material and receipt of cash from debtors, was offset by partial repayments to creditors, while the continued costs of the care and maintenance programme were funded from group borrowings. $5.4 million was drawn down against a $10 million facility made available by Mwana Africa. BNC's net cash position decreased from an opening balance of $2.4 million (2011: $7.5 million) to $0.4 million at the year end.

Other Mwana Africa group

Mwana Africa (excluding BNC and Freda) saw operating cash outflow of $9.7 million (2011: $11.6 million). During the year, Mwana Africa invested $10.2 million (2011: $12.4 million) on its portfolio of exploration prospects, $2.9 million in Semhkat (2011: $4.5 million) and $7.3 million in Zani (2011: $7.9 million).

During the period, the company issued 185.4 million shares at 5p per share (2011: 46.4 million shares at 11p per share), raising $14.2 million net of costs (2011: $7.7 million).

Balance sheet

At 31 March 2012, the group had cash balances of $6.7 million (2011: $7.4 million), comprising $0.4 million (2011: $2.4 million) held by BNC and $6.3 million (2011: $5.0 million) held by Freda Rebecca and other Mwana Africa group entities. The book value of shareholders' equity at the year-end was $81.5 million (2011: $68.3 million).

Freda Rebecca

Non-current assets increased by $3.3million (2011: $23.6 million including an impairment reversal of $18.8 million) as a result of continued investment in mining assets.

Current assets increased by $4.8 million (2011: $6.2 million increase) to $15.4 million (2011: $10.6 million). This amount includes an increase in trade debtors of $3.5m (2011: $1.9 million), an increase in spares and inventory of $0.9 million (2011: $3.2 million) and other debtors of $0.4 million (2011: $1.1 million). 

Draw down of the second and final portion of an IDC loan facility contributed to an increase in non-current liabilities to $19.9 million (2011: $12.5 million).

Bindura Nickel Corporation

The value of current assets reduced by $1.6 million (2011: $8.8 million) to $8.3 million (2011: $9.9 million) owing to conclusion of sales of various in-process inventories, and receipts from an outstanding debtor. Additional provisions have resulted in an increase in current liabilities of $3.8 million to $36.4 million (2011: $32.6 million).

Other Mwana Africa group

The value of non-current assets increased to $46.6 million (2011: $38.5 million). Additional exploration expenditure which was capitalised during the year in accordance with the group's policy was offset by the disposal of an investment in Signature Metals Ltd realising proceeds of $1.2 million.

Group liquidity

At 31 March 2012 the group, excluding BNC, held cash of $6.3 million (2011: $5.0 million). As at 30 June 2012 the group, excluding BNC, held cash of $33.7 million following funds raised of $32.8 million in April 2012 and positive operational cash flows from Freda Rebecca. 

IDC facility

As announced in August 2011, Freda Rebecca Gold Mine has drawn down the $5.2 million balance of the $10 million IDC project loan facility.

The facility is repayable in 10 equal instalments over a five-year period and attracts an interest rate of US$LIBOR plus 5%.

Going concern

The directors, after making enquiries and considering the uncertainties described further in note 3: Basis of preparation to the financial statements 'going concern', are confident that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the Annual Report and financial statements and these financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate. 

Overview of social and environmental responsibility

Mwana Africa's reputation for responsible development has been established by ensuring a safe working environment for its staff, by positively affecting the communities in which it operates, and by minimising the environmental impact of its activities. The company's primary contribution to the areas in which it operates is the stimulation of economic activity through the creation of jobs, development and support of local businesses, the use of local contractors, and the purchase of goods and services from nearby suppliers. The focus of Mwana Africa's social initiatives continues to be in education, health, and support of small and medium enterprises (SME's) to diversify local economies and reduce dependence on our operations as the sole significant employer in remote regions.

Stakeholder engagement is actively pursued through a variety of formal and informal meetings, briefings, surveys, and feedback sessions on issues raised. 

Workplace health and safety

Mwana Africa recognises that exploration and mining have an inherent level of risk, and is pleased to report that no fatalities occurred this year on any of its operations. Operations at BNC and Klipspringer remained on care and maintenance, whilst at Freda Rebecca Mine the implementation of proactive safety management programs resulted in the loss time injury frequency rate (LTIFR)remaining low at 0.67. All our mines and exploration operations routinely achieved extended periods in which no loss time injuries were reported. Freda Rebecca Mine achieved accreditation for OHSAS 18001: 1999 standard for occupational health and safety in March 2012.

Employment

At the year end, Mwana Africa employed 2,615 people, comprising 66 staff in senior management.

Preference during recruitment is given to the local community. At Freda Rebecca Mine in Zimbabwe, 90% of the workforce is from the local town of Bindura. One third of all staff at Bindura Nickel Corporation (BNC) are from the surrounding towns and villages.

On Klipspringer Mine in South Africa, all but one employee is from communities immediate to the mine. With the exception of senior expatriate management, all staff in our exploration operations are drawn from the surrounding communities. 

All operations and exploration management actively engage with union and workforce representatives, which contribute to positive labour relations, through collaboration with management joint forums on issues such as wages, conditions of employment, Occupational Health and Safety, and serious diseases such as HIV/AIDS. No employee days were lost to industrial action.

Local economic impact

At Freda Rebecca Gold Mine (FRGM), 55% of total procurement expenditure was sourced from local/provincial suppliers. Several small business enterprises continue to be assisted by Freda Rebecca to provide services to the Mine and the Mine villages, and to encourage entrepreneurial ventures. The exploration operations in Katanga source 15% of goods and services from local villages, with the remaining 85% split between the towns of Likasi and Lubumbashi. The remoteness of Mwana's operations in Zani necessitate that virtually all supplies are imported from Uganda.

The exploration projects routinely assist with infrastructure support such as the upgrading of roads and the construction of access bridges. In cases of extreme emergency, exploration staff assists community members by providing transport to hospitals.

In conjunction with Africare, a division of USAID, Freda Rebecca initiated a feasibility study into the establishment of small-scale commercial market gardens for local residents. The aim of this proposed project is to improve the financial standing of family units living in proximity to the mine. This project was selected as the majority of the participants already have a basic functional knowledge of agricultural techniques and practices. The project will consist of assisting each family unit with establishing and maintaining a small agricultural plot and growing appropriate vegetables for commercial sale. FRGM will provide the land on its mine lease, infrastructure, and the project financing. The technical expertise will be provided by Africare.

Education

Freda Rebecca Mine continued expanding its partnership with the Italian NGO Terre des Hommes to improve the educational facilities at the local village's pre-primary school. Last year, this NGO committed to uplifting 100 vulnerable children through the full provision of school fees for each child's educational career. The Mine undertook refurbishment of the buildings and surrounds of the school. In addition, the Mine upgraded the ablution facilities at Shashi primary school, and built two classrooms at RAN Mine primary school and Murongwe school. Freda Rebecca Mine is also sponsoring 5 students through their degrees at the School of Mines, and offers scholarships on a case-by-case basis to academically gifted students from the local community. 

BNC provides on-site primary school education, funds secondary schooling and grants a number of scholarships to higher education institutions for employees' children.

The exploration project at Zani in the DRC has constructed several classrooms for schools in the vicinity, and is currently refurbishing the dormitory at the secondary school adjacent to the camp. In addition, the project has also commissioned a local carpenter to fabricate desks for local primary and secondary schools.

Employee and community health

The principal health issues faced in the regions where Mwana Africa operates are malaria and HIV/AIDS. The company provides medicines, education and training for the prevention and treatment of both diseases, as well as associated infections such as tuberculosis. BNC and Freda Rebecca Mine also staff and fund the running of occupational health as well primary health care clinics for employees and their families. Both the Trojan Mine clinic (part of BNC) and the Freda Rebecca clinic have been certified by the government as an Opportunistic Infections Clinic. Freda Rebecca continued with its Employee Assistance Programme to its employees and dependents, which focused on councelling for work and lifestyle problems. Mwana's mine operations have all implemented community-wide HIV/AIDS management strategies linked to the concept of overall Wellness. This includes awareness and education campaigns, voluntary counselling and testing (VCT), and health care training. UNICEF donates primary health care drugs to Freda Rebecca, which passes on the unused portions to the local provincial hospital.

Freda Rebecca benefited from the association with the HIV/AIDS assistance programme co-ordinated by the Swedish Workplace HIV & AIDS Programme (SWHAP). This consisted of help with the implementation of HIV/AIDS and Wellness policies and practices, and specialized studies such a sero-prevalence study in which 78% of the workforce participated, and a Knowledge, Attitude and Practice (KAP) survey. The sero-prevalence study established that FRGM has a lower occurrence of HIV infections than the national average. Freda Rebecca was certified as an ART clinic to dispense anti-retroviral (ARV's) medication supplied by the government to affected employees and their dependents, as well as the local community. Both Freda Rebecca and BNC also receive assistance from the Zimbabwean Business Council on Aids (ZBCA).

Environmental impact

Mwana Africa limits the impact of its operations on the environment through responsible waste disposal and prevention of pollution, and optimising the use of resources such as water, fuel and electricity. Proactive measures are taken to conserve local biodiversity, and to re-establish habitats disrupted by vehicle movement, waste rock dumps and tailings dams.

In all but one of our operations, internal and external environmental audits were completed. No significant non-compliances were found. Ground and surface water monitoring at Freda Rebecca Mine has been re-introduced and has established that the groundwater has not been contaminated with Acid Mine Drainage (AMD) or industrial pollution or effluent. Working with the Zimbabwean Environmental Authorities and through the implementation of proactive water quality practices, FRGM have sufficiently improved its water discharge permits status from red to blue. Air quality monitoring shows that the dust generated by mining activities is not at a level that is impacting negatively on employee or community health. Freda Rebecca Mine successfully obtained ISO14001 certification for environmental practices in March 2012.

Mwana Africa recognises its obligation to rehabilitate the sites where it has operated. Financial provisions are in place for costs associated with the closure of the company's operations in Zimbabwe and South Africa, as prescribed by local laws.

Results for the year ended 31st March 2012

The financial information set out in this annual results announcement does not constitute the Company's statutory accounts for the years ended 31 March 2012 or 31 March 2011 but is derived from those accounts. Statutory accounts for the year ended 31 March 2011 have been delivered to the registrar of companies, and those for the year ended 31 March 2012 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) included an emphasis of matter relating to going concern and an emphasis of matter relating to the carrying value of the Company's investment (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Consolidated income statement for the year ended 31 March 2012

Consolidated statement of comprehensive income for the year ended 31 March 2012

Consolidated balance sheet as at 31 March 2012

Consolidated statement of changes in equity for the year ended 31 March 2012

Consolidated statement of changes in equity for the year ended 31 March 2012 (continued)

Consolidated statement of cash flows for the year ended 31 March 2012

1 Adoption of International Financial Reporting Standards as endorsed by the European Union

The consolidated financial statements of the parent company (the Company) and its subsidiaries (together, the group) and the financial statements of the company have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU).

2 Change in functional and reporting currency

The functional currency is the currency of the primary economic environment in which the entity operates and is normally the one in which it primarily generates and expends cash. An entity considers the following factors in determining its functional currency:

It is the currency:

that mainly influences sales prices for goods and services

of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services

in which funds from financing activities are generated

in which receipts from operating activities are usually retained

A decision was taken during the first quarter of the year to review the functional currencies of Group entities upon the achievement by Freda Rebecca of steady state production. The directors have considered the factors mentioned above and concluded that the US dollar is the functional currency of the Company for the following reasons:

Freda Rebecca which operates in US dollars, achieved steady state production, and began generating cash and repaying Group loans. Since then, most of the Company's cash inflows have been in US dollars.

The entities in which the Company invests operate in economies where the US dollar is the dominant currency used for commercial transactions, namely in Zimbabwe and the DRC.

The Company generates management fee income denominated in the US Dollar.

The Company holds its cash resources mainly in the US dollar.

The Company invests US dollar amounts in its exploration projects.

The Company raises funds based on US dollar investment plans presented to its shareholders for investment.

Consistent with the change in the Company's functional currency from pound sterling to US dollar, the Group has also changed its presentation currency from pound sterling to the US dollar with effect from 1 April 2011. Comparative figures of all the primary statements for 2011 year-end have been restated in the US dollar.

The change of the Group's presentation currency and that of the Company's functional currency have been accounted for in accordance with IAS 21 'The Effects of Changes in Foreign Exchange Rates'. The balance sheet, income statement and statement of cashflows for the year ended 31 March 2011 have been represented in US dollars using the closing exchange rate of £1=$1.6033.

3 Accounting policies

Basis of preparation

With the exception of certain items noted below, which are carried at fair value, the financial statements have been prepared under the historical cost convention.

The company and consolidated financial statements have been prepared in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Under section 408 of the Companies Act 2006, the company has elected not to present its own income statement.

 Going Concern

The Directors, having considered the Group's and the Company's current trading activities, funding position and projected funding requirements and the Zimbabwean environment for the period of at least twelve months from the date of approval of these Financial Statements consider it appropriate to adopt the Going Concern basis in preparing the Financial Statements for the year ended 31 March 2012.

The Group reports a loss for the year ended 31 March 2012 of $6.7 million (2011: $11.5 million). As at 30 June 2012, the group held cash of $33.7 million.

During the year to 31 March 2012, operations at Freda Rebecca Gold Mine (the Group's only cash generating asset) have continued to ramp up and the Phase II production rate of 50,000 ounces of gold per annum was achieved in the 3rd Quarter of 2011. Production averaged 3,981 ounces per month in the year to March 2012. The operating cash inflows from Freda Rebecca represent a strengthening of the Group's cash generating ability.

The Group's other activities have been funded by its cash resources, including cash generated by Freda Rebecca, together with proceeds from equity issues in May 2011 and April 2012 raising $14.2 million and $32.8 million respectively and the drawdown of the second tranche of the IDC loan amounting to $5.2 million. In line with other exploration companies the Group retains a high degree of flexibility over its exploration expenditure and will continue to need to pursue alternative funding options for its main exploration projects from time to time including potential farm-out or joint venture arrangements where appropriate.

Bindura Nickel Corporation ("BNC") remains on care and maintenance pending the restart of the Trojan mine. BNC's ongoing costs for the year to 31 March 2012 have been funded from its own resources, inter-company loans from the Company and by the continued deferral of significant amounts which remain due on demand to creditors.

The restart of operations at BNC remains a priority for the Directors. Preparations are well progressed for a restart and many areas of the Trojan mine and plant have been refurbished and commissioned during the care and maintenance period.

In June 2012, BNC initiated a rights issue process to raise US$21 million which will be, subject to certain conditions, fully underwritten by Mwana Africa. Concluding the BNC rights issue is conditional on restructuring the legacy creditor and workforce liabilities at BNC in a manner that will result in the settlement of these liabilities in shares, assets or in cash on a deferred basis. If these matters are not resolved to the satisfaction of Mwana Africa, the rights issue will not proceed and the Directors will consider other available options.

Assuming these matters are resolved, the rights issue will proceed and this will fund the restart of Trojan up to first production and sale of nickel concentrate but not beyond this point. The Directors estimate that a further US$12 million funding will be required no later than 10 months after the restart currently planned for August 2012 of the Trojan mine to fund its completion and reach a point where BNC is overall cash generative. The Directors believe that this funding can be secured as debt finance given that Trojan is expected to be generating revenue by that time. The Directors will also consider other options for funding including equity finance. However the Directors recognise that it may not be possible to raise the debt or other finance necessary to cover the period until the Trojan mine becomes cash generative.

The Directors have prepared the cash flow forecasts of the Group on the basis that the BNC rights issue proceeds successfully and are of the opinion that the Group's current cash resources, together with the cash forecast to be generated by Freda Rebecca and from the planned US$12m debt finance for the completion of the Trojan restart, are sufficient to fund all of the Group's planned activities for at least twelve months from the date of these Financial Statements, assuming the BNC rights issue proceeds successfully. However if it becomes apparent to the Directors that securing the additional planned US$12m debt funding will be delayed beyond 10 months after the restart currently planned for August 2012 the Group will need either to substantially curtail its discretionary exploration spend from early 2013 to finance part of the remaining work to complete the Trojan restart or defer the completion until alternative funding is available.

The Directors are aware that various uncertainties might affect the validity of their forecasts. These uncertainties include metal prices, mining and processing risks and resource and reserve risks, in addition to the political and indigenisation risks in Zimbabwe as noted above which may constrain the ability of the Company to control the movement of cash between entities. The Directors, however, believe they have the ability to manage cash flows by deferring exploration spend or delaying some of the activities planned for the Trojan restart or completion phase if necessary.

In addition, there is a further uncertainty linked to the reliance of BNC on reaching resolutions with creditors and staff in a manner that will allow the BNC rights issue to successfully conclude.

If the BNC rights issue does not proceed, this would cast significant doubt on the ability of BNC to continue as a going concern. In this event the Directors aim to maintain the Trojan mine on care and maintenance and continue to defer creditors whilst they consider other available options during which time the forecasts indicate that funding needs for the foreseeable future would be reduced.

The Directors recognise that the combination of these circumstances represents a material uncertainty that may cast significant doubt as to the Company's and the Group's ability to continue as a going concern and that therefore the Company and the Group may be unable to realise all their assets and discharge all of their liabilities in the normal course of business.

After making enquiries and considering the uncertainties described above the Directors are confident that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing these Financial Statements which do not include any adjustments that would result from the going concern basis of preparation being inappropriate. 

Basis of consolidation

Subsidiaries are those entities over whose financial and operating policies the Group has the ability to exercise control. The Group financial statements incorporate the assets, liabilities and results of operations of the company and its subsidiaries. The acquisition method of accounting has been adopted. Under this method, the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the date of acquisition or up to the date of disposal.

A joint venture is an entity in which the Group holds a long term interest and in which the Group has the ability to exercise joint control in terms of a contractual arrangement. The Group's interest in a jointly controlled entity is accounted for by proportionate consolidation. In terms of this method, the Group includes its share of the income and expenses, assets and liabilities, and cash flows on a line by line basis with similar items in the Group's financial statements.

Intra-group transactions and balances are eliminated in the consolidated financial statements.

Use of significant estimates and judgements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Derivation of assumptions used in the estimation of the recoverable values of assets requires a significant amount of judgement. The assumptions underlying the estimated recoverable values include, amongst others, the technical performance, revenue, operating costs and discount rate (for discounted cash flow based valuations), and are based on management's best judgements at the date of signing the accounts. The life of mine periods used for the purpose of calculating estimated recoverable values are based on resources and reserves. These judgements used by management correspond to realistic scenarios taking into account the information available. The impairment note discloses a sensitivity analysis with regard to the assumptions which the board deems most susceptible to variances against forecast.

Foreign currencies

The individual financial statements of each Group entity are prepared in its functional currency, which is the currency of the primary economic environment in which that entity operates. For the purpose of the consolidated financial statements, the results and financial position of each entity are translated into US dollars, which is the presentational currency of the Group.

Transactions in currencies other than the entity's functional currency (foreign currencies) are initially recorded at the rates of exchange prevailing on the dates of the transactions. At each subsequent balance sheet date:

foreign currency monetary items are re-translated at the rates prevailing at the balance sheet date. Exchange differences arising on the settlement or re-translation of monetary items are recognised in the income statement;

non-monetary items measured at historical cost in a foreign currency are not re-translated; and

exchange differences arising on the re-translation of non-monetary items carried at fair value are included in the income statement except for differences arising on the re-translation of non-monetary items in respect of which gains and losses are recognised in the other comprehensive income, in which case any exchange component of that gain or loss is also recognised directly in equity.

The directors have prepared the financial statements on the basis of their judgement that the functional currency under IAS 21 of the Group's Zimbabwean subsidiaries is the US dollar. The directors judge that the functional currency of these subsidiaries is the US dollar, based on revenue, capital expenditure and the majority of costs being denominated in US dollars.

When the functional currency of a Group entity is different from the Group's presentational currency (US dollars), its results, financial position and cash flows are translated into the presentational currency as follows:

assets and liabilities are translated using exchange rates prevailing at the balance sheet date;

income and expense items are translated at average exchange rates for the year, except where the use of such an average rate does not approximate the exchange rate at the date of the transaction, in which case the transaction rate is used; and

all resulting exchange differences are recognised in translation reserves as a separate component of equity and are recognised in the income statement in the period in which the foreign operation is disposed of.

Cash flows are translated using average exchange rates during the period and the effect of exchange rate changes on the balances of cash and cash equivalents is presented as part of the reconciliation of movements therein.

Property, plant and equipment and depreciation

Property, plant and equipment is stated at cost, net of depreciation and any provision for impairment.

Depreciation is provided to write off the cost less the estimated residual value of property, plant and equipment by equal instalments over the estimated useful economic lives as set out below.

Mining assets: mining assets are depreciated at varying rates on a straight-line basis over the expected useful lives, which range from three to 17 years.

Smelter and refinery assets: smelter and refinery assets are depreciated at varying rates on a straight-line basis over the expected useful lives, which range from five to 40 years.

Plant and equipment and motor vehicles: plant and equipment and motor vehicles are depreciated over their estimated useful lives on a straight line basis at the rate of 10% and 20% respectively.

Buildings: buildings are depreciated on a straight-line basis over the expected useful lives, currently 40 years.

Intangible assets - exploration and evaluation expenditure

All expenditure directly related to mineral exploration is capitalised on a project-by-project basis, pending the determination of the feasibility of the project. Exploration costs include certain administration and salary costs. If a project is ultimately deemed commercially and technically viable, the related exploration costs remain capitalised whilst the asset is developed, and are then written off over the life of the estimated ore reserve on a unit-of-production basis. If it is determined that a project is not expected to be successful, whether relinquished, abandoned or uncommercial, the related exploration costs are written off.

Once a decision is made to develop then the related exploration and evaluation costs are transferred from intangible to tangible assets.

Depreciation of property, plant and equipment used in exploration activities is capitalised to intangible exploration and evaluation assets.

For the purpose of impairment assessment, capitalised exploration and evaluation expenditures are allocated to the cash generating units on the basis of the exploration field in which the costs have been incurred.

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. 

Exploration and evaluation assets are also assessed for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

An impairment loss is recognised to the extent that the carrying amount of an asset or cash-generating unit ("CGU") exceeds its recoverable amount. The recoverable amount of an asset or CGU is the higher of i) its fair value less costs to sell and ii) its value in use, which is the present value of the future cash flows expected to be derived from the asset or CGU, discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks associated with the asset or CGU. Impairment losses are recognised in the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the unit. A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. It usually corresponds to the exploration field or the production unit.

When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been de-recognised. The amount of the cumulative loss that is recognised in the income statement is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the income statement.

The Company assesses for impairment the value of its investments in and loans to its subsidiaries.

Reversals of impairment

An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through the income statement. If the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed through the income statement. An impairment loss in respect of goodwill is not reversed.

In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment relating to other assets are recognised in the income statement.

Investments

The Group's investments in equity securities are recognised initially at fair value. Subsequent to their initial recognition, they are re-measured at fair value and changes therein, including impairment losses, are recognised through profit or loss.

The Group holds a 68.0% interest in the Klipspringer Diamond Mine joint venture, the assets, liabilities, income and expenses of which are consolidated on a proportional basis.

The company has investments in its various subsidiaries. These are accounted for at cost less impairment. All inter-group loans are repayable on demand.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits with an initial period to maturity of no more than three months. Cash reserves held in currencies other than sterling are subject to changes in value resulting from exchange rate fluctuations.

Inventories

Inventories are stated at the lower of cost and net realisable value. In determining the cost of raw materials, consumables and goods purchased for resale, the weighted average purchase price is used. For finished goods and work in progress which includes quantities of gold in process, cost is taken as production cost, which includes an appropriate proportion of attributable overheads. Net realisable value is calculated based on market prices prevailing as at the year-end less costs to sell.

Loan payable

Loans are recognised initially at fair value, net of transaction costs incurred. Loans are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest rate.

Rehabilitation provision

A provision is recognised when the Group has a present legal or constructive obligation as a result of past events, and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. 

Estimated long-term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the Group's environmental management plans in compliance with current technology, environmental and regulatory requirements.

On initial recognition, the net present value of estimated future decommissioning costs are capitalised to property, plant and equipment and the concomitant provisions are raised. These estimates are reviewed annually and discounted using a pre-tax rate that reflects current market assessments of the time value of money. Any increases in such revised estimates are capitalised to property, plant and equipment while decreases in estimates are recognised by impairing the asset in the income statement in the period in which they are incurred.

Revenue recognition

Revenue represents the sale of gold, nickel and diamonds net of discounts and taxes. Revenue also includes toll refining and processing of material on behalf of, or purchased from, non-group companies. Revenue from the sale of gold is based on the spot price on the date of delivery, while revenue from the sale of nickel is based on the international market price of nickel. Diamond revenue is based on negotiated prices. Revenue is only recognised when significant risks and rewards of ownership have passed to the purchaser.

Leases

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Operating lease rentals are charged to the income statement on a straight-line basis over the period of the lease.

The Group has not entered into any finance lease arrangements.

Employee benefits

Certain companies in the Group operate defined contribution pension schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. The amounts charged to the income statement represent the contributions payable to the schemes in respect of the accounting period.

The share option programmes allow employees to acquire shares of the company. The fair value of options granted is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using an option- pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where variations are due only to share prices not achieving the threshold for vesting.

Taxation

The tax expense represents the sum of the current tax and deferred tax. 

Current tax payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates and laws that have been enacted, or substantively enacted, by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates and laws that have been enacted, or substantively enacted, by the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the associated deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

4 Revised and Amended Standards and Interpretations

The following revised and amended standards and interpretations, which have all been endorsed by the EU, have been adopted by the Group in these consolidated financial statements; their adoption has had no material impact on the Group's net cash flows, financial position, total comprehensive income or earnings per share.

IAS 24 (Revised), Related Party Disclosures removes the requirement for government related entities to disclose details of transactions with the government and other government related entities and clarifies and simplifies the definition of a related party.

Amendments to IFRS 7, Financial Instruments: Disclosures adds an explicit statement that the interaction between qualitative and quantitative disclosures better enables users to evaluate an entity's exposure to risks arising from financial instruments.

Amendments to IAS 1 Presentation of Financial Statements clarifies that a reconciliation from opening to closing balances is required to be presented in the statement of changes in equity for each component of equity; and allows for the analysis of the individual OCI line items by component of equity to be presented in the notes (previously, such analysis could only be presented in the SOCIE).

Amendments to IAS 34 Interim Financial Reporting - Significant events and transactions adds a number of examples to the list of events or transactions that require disclosure under IAS 34.

Standards, Amendments and Interpretations That Are Not Yet Effective

The following new, revised and amended standards and interpretations have been issued and endorsed by the EU unless otherwise stipulated, but are not yet effective and have not been adopted by the Group in these consolidated financial statements. None of these revised and amended standards and interpretations is expected to have a material impact on the Group's net cash flows, financial position, total comprehensive income or earnings per share.

Amendments to IFRS 7 Financial Instruments: Disclosures, which is effective for accounting periods beginning on or after 1 July 2011, requires additional disclosures about transfers of financial assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period.

Amendments to IAS 1 Presentation of Financial Statements - Items of Other Comprehensive Income, which is effective for accounting periods beginning on or after 1 July 2012, requires that an entity present separately the items of OCI that may be reclassified to profit or loss in the future from those that would never be reclassified to profit or loss. It also preserves the existing option to present the profit or loss and other comprehensive income in two statements.

5 Segmental information

The Group has 4 reportable segments, as described below, which are the Group's strategic business units.

The strategic business units offer different products and services, and are managed separately because they

require different technology and marketing strategies. The CEO reviews internal management reports for each of the strategic business units. The following summary describes the operations in each of the Group's

reportable segments:

Gold: Gold mining and prospecting activities

Nickel: Nickel mining, smelting and refining activities currently on care and maintenance

Diamonds: Diamond mining activities currently on care and maintenance

Exploration: Gold and base metal exploration activities

Information about reportable segments - Operations

Reconciliation of reportable segment profit or loss