Final Results for the Year Ended 31 December 2013

Premier African Minerals Limited / Ticker: PREM / Index: AIM / Sector: Mining

26 June 2014

Premier African Minerals Limited ("Premier" or the "Company")

Final Results for the Year Ended 31 December 2013

Premier African Minerals Limited, the AIM quoted multi-commodity natural resource company with mineral projects located in Western and Southern Africa, announces its results for the year ended 31 December 2013.

Executive Chairman and CEO Statement

This is our first full year after admission to AIM and our seventh since our company acquired its first exploration licences. Over the past few years, and in particular during 2013, the realities of the risk/reward factors that apply to mineral exploration, in addition to the difficult market conditions for junior exploration companies, have collectively contributed to a very challenging year. Despite this, we have retained our focus on development of certain key projects and advancing our strategies for dealing with other assets either by disposal, joint development or monetisation, whichever is most efficient. Corporate costs associated with implementation of these strategies have been disproportionate. However, the benefits of persistence in closing several transactions are now being felt as we move through 2014. Against that backdrop, I am pleased to present results for Premier's financial year ended 31 December 2013.

Zimbabwe Operations

Zimbabwe is a melting pot of opportunity and challenge. Premier continues to have confidence in Zimbabwe. At the heart of this lies a fundamental appreciation that development of any asset in Zimbabwe, and for that matter in many other developing countries, requires equitable involvement of State interests and an acknowledgement that a natural resource asset, be it mineral, agricultural or socially based, is in fact an asset of the State. From inception, Premier has strived to reach equitable agreements that recognise the risks involved in mineral resource exploration and development and provide a sustainable and stable operating environment that adequately rewards risk.

In August 2013, Premier concluded a shareholders' agreement with the National Indigenisation and Economic Empowerment Fund ('NIEEF') in regard to our Zimbabwe subsidiary company, RHA Tungsten (Private) Limited ('RHA') which sees Premier retain operational control over the project. This agreement meets all Premier's reasonable expectations and provides a model for future agreements over other assets as they advance through exploration and approach mine development.

RHA Tungsten - Zimbabwe ('RHA')

During the year under review, we completed an initial Resource statement and published a mining study that indicated strong economics for advancement of our studies with a view to early mine redevelopment. Additional resource drilling was completed in December 2013 and in May 2014 we announced a SAMREC compliant resource tonnage of 2.73 million tonnes at a composite grade of 8.7 kilograms per tonne of Wolframite (WO3). The Measured and Indicated Resource increased to 1.55 million tonnes at a composite grade of eight kilograms per tonne of WO3. Mineralogical and metallurgical studies commissioned early in 2014 are partially completed, as is an update to the Mine Study published in 2013. Premier is currently reviewing certain low capital options that may result in much earlier production from the RHA mine. Further updates on this will follow later this year.

Zulu Pegmatite

Ongoing exploration activities at Zulu have resulted in the conclusion that future development will require significant bulk sampling of the deposit. The alternative to this is the establishment of a pilot plant, which Premier is now investigating. Further updates will follow later this year.

Danakil Option

Premier completed the sale of its Togo and Mali subsidiaries to AgriMinco Corp. (TSX-V: ANO) in July 2013. As a consequence, the Company acquired a 42% interest in ANO and gained exposure to the Danakil potash property in Ethiopia ('Danakil') in which ANO retained a 30% interest. At the reporting date, Premier had control of ANO with the majority of board members being representatives of Premier.

In a series of subsequent transactions post year-end, Premier first acquired by way of the exercise of an option granted by ANO, this 30% interest in Danakil and then subsequently sold on that same interest to Circum Minerals Ltd ('Circum'). The net effect of the transactions is set out in detail in various press releases issued at the time but in summary, Premier relinquished its 42% interest in ANO, financed the liquidation of certain secured debt due by ANO, issued CAD$1m worth of new Premier shares to ANO and secured net cash proceeds from Circum of $5m and a shareholding in Circum with a nominal value of $1.4m. Fundamentally, these transactions place Premier in a situation of being adequately funded for the foreseeable future.

Togo and West African Operations

Premier maintains a small operation in Togo on a much reduced budget following the sale of our Togo phosphate operations to ANO last year. This reflects our focus on near term production opportunities in Zimbabwe and difficulties in our relations with the Ministry of Mines in Togo. Given these issues, the Board has decided to impair all exploration and evaluation costs capitalised for the Togo assets at the financial year-end. 

Premier is in continuous discussions with Togolese authorities and is in early negotiations with other parties that have noted an interest in the Pagala deposits.

Board Members

On 20 August 2013, I was pleased to welcome to the Board Alexander du Plessis and Neil Herbert. Both have added invaluable expertise since their appointments.

I would also like to take this opportunity to thank Leslie Goodman and Bruce Cumming, both of whom stepped down from the Board during the year. Bruce Cumming still retains an active technical consulting role within the Group.

Funding

In January this year, the Company announced that it had entered into an agreement with YA Global Master SPV Limited ('YAGM') in January 2014. The agreement consists of a £3 million Standby Equity Distribution Facility ('SEDA'), and a £500,000 subscription agreement and an equity swap agreement. To date, Premier has not utilised the SEDA facility and following completion of the ANO/Circum transactions is unlikely to require this facility. In fact in the earlier months of 2014 as previously announced, I had made further loan funds available to Premier in advance of the closing of the ANO/Circum transactions, funds that Premier has already partly redeemed from initial proceeds of this transaction. As previously announced, Premier expects to receive further payments from Circum of $1m on each of 15 July, September and November 2014 and January 2015.

Outlook

We have made good progress in tough times and with the expectation of being in a strong cash position believe we can look forward to advancement of our prime assets.

Finally, I would like to take this opportunity to thank my fellow directors, management, advisors and most importantly shareholders for their assistance and support during the Company's first full financial year as a listed entity.

George Roach

Executive Chairman and CEO

25 June 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2013

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2013

1 General information

Premier African Minerals Limited ('Premier' or 'the Company'), together with its subsidiaries (the 'Group'), was incorporated in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands.

The Group's operations and principal activities are the exploration, evaluation and development of mineral reserves on the African continent.

Premier's shares were admitted to trading on the London Stock Exchange's AIM market on 10 December 2012.

2 Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue and as endorsed by the European Union. IFRS includes interpretations issued by the IFRS interpretations Committee (formerly IFRIC).

The consolidated financial statements have been prepared on the historical cost convention and on a going concern basis. The preparation of financial statements in conformity with EU adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

The accounting policies set out below are consistent across the Group and to all periods presented in these financial statements.

3 Significant accounting policies

Accounting for merger

On 4 December 2012, Premier entered into an agreement (conditional on AIM admission) to issue shares to acquire 100% of the shares in ZimDiv Holdings Limited ('ZimDiv'). Prior to this transaction, Premier and ZimDiv were controlled by Mr. George Roach and consequently this transaction is outside the scope of IFRS 3 "Business Combinations". This transaction has been accounted for as a merger, which is consistent with the aggregation presentation used in the AIM Admission Document. These consolidated financial statements merge the two groups as if they were one group controlled by Premier throughout the entire period of presentation of financial information. The difference between the share capital issued by Premier to acquire ZimDiv and ZimDiv's issued share capital is accounted for as a merger reserve.

Basis of consolidation

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. The group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control.

De-facto control may arise in circumstances where the size of the group's voting rights relative to the size and dispersion of holdings of other shareholders give the group the power to govern the financial and operating policies, etc.

Subsidiaries are fully consolidated from the date on which control is transferred to the group. Subsidiaries are consolidated, using the acquisition method, from the date that control is gained and non-controlling interests are apportioned on a proportional basis.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the group's accounting policies.

Business combinations

The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Adoption of new and revised standards

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not been applied in these financial statements, were in issue, but not effective for the year ended 31 December 2013:

*Effective in the EU from 1 Jan 2014

**subject to EU endorsement

Adoption of the above is not considered to have a material impact on the Group financial statements.

Revenue

The Group's principal activities are exploration and therefore it did not earn any revenue for the two years ending 31 December 2013.

Foreign currencies

The Group's presentation currency is US Dollars. Each entity in the Group determines its own functional currency. As at the reporting date, the asset and liabilities of these entities are translated into the presentation currency of the Group which is the US Dollar ($), at the rate of exchange ruling at the reporting date and their income statements are translated at the monthly average exchange rate.

Exchange rates used as at the reporting date were as follows:

US$: £ - 1.65

US$: Euro - 1.38

US$: XOF - 0.002

US$: ZAR - 0.095

US$:CDN$ - 0.950

Exchange differences arising, if any, on translation of the results and financial position of the Group's entities with functional currencies different from the Group's presentation currency are recognised in other comprehensive income and the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of. All other differences are taken to profit or loss.

Taxation

The Group has no taxable profit during the year.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the tax computations, and is 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.

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. Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Exploration and evaluation assets

The Group applies the full cost method of accounting for Exploration and Evaluation ('E&E') costs, having regard to the requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources. Under the full cost method of accounting, costs of exploring for and evaluating mineral resources are accumulated by reference to appropriate cost centres being the appropriate licence area and/or licence areas held under option agreements. An option agreement grants the option holder the right to explore and evaluate mineral resources, and to acquire the licences at a later date at the discretion of the option holder. Exploration and evaluation assets are tested for impairment as described further below. Where appropriate, licences may be grouped into a cost pool.

E&E assets comprise costs of E&E activities that are on-going at the reporting date, pending determination of whether or not commercial reserves exist and costs of E&E that, whilst representing part of the E&E activities associated with adding to the commercial reserves of an established license area, did not result in the discovery of commercial reserves.

All costs of E&E are initially capitalised as E&E assets, such as payments to acquire the legal right to explore, including option payments, costs of technical services and studies, seismic acquisition, exploratory drilling and testing. Intangible costs include directly attributable overheads together with the cost of other materials consumed during the exploration and evaluation phases.

Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to profit or loss as they are incurred.

E&E costs are not amortised prior to the conclusion of appraisal activities.

E&E assets related to each exploration licence or pool of licences are carried forward, until the existence (or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on an individual licence or cost pool basis, as appropriate, as set out below and any impairment loss is recognised in profit or loss. The carrying value, after any impairment loss, of the relevant E&E assets is then reclassified as development and production assets.

E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial reserves exist.

Where the E&E assets concerned fall within the scope of an established cost pool, the E&E assets are tested for impairment together with all development and production assets associated with that cost pool, as a single cash generating unit.

The aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of the future net cash flows expected to be derived from production of commercial reserves.

When a licence or pool of licences is abandoned or there is no planned future work the costs associated with the respective licences are written off in full.

Any impairment loss is recognised in profit or loss and separately disclosed.

The Group considers each licence, or where appropriate, a pool of licences, separately, for the purposes of determining whether impairment of E&E assets has occurred.

Investment in Joint Venture

The Company is accounting for its investment in the Joint Venture using IAS 31 Interests in Joint Ventures. IAS 31 sets out the accounting for an entity's interests in various forms of joint ventures: jointly controlled operations, jointly controlled assets, and jointly controlled entities. The standard permits jointly controlled entities to be accounted for using either the equity method or by proportionate consolidation. IAS 31 applies to accounting for all interests in joint ventures and the reporting of joint venture assets, liabilities, income, and expenses in the financial statements of venturers and investors, regardless of the structures or forms under which the joint venture activities take place, except for investments held by a venture capital organization, mutual fund, unit trust, and similar entity that (by election or requirement) are accounted for as under IAS 39 at fair value with fair value changes recognized in profit or loss.

The Group uses the equity method to account for its investment in joint venture.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all tangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:

· Buildings - 10 years

· Motor vehicles - 4 years

· Computer equipment - 5 years

· Office and other equipment - 5 years

Impairment of property, plant and equipment

At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment 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 (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. 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 current market assessments of the time value of money and the risks specific to the asset (or cash-generating unit) for which the estimates of future cash flows have not been adjusted.

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 as an expense immediately, 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. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Financial instruments

The Group's financial instruments comprise cash and cash equivalents, loans and shareholder borrowings and payables and receivables arising from its operations. The Group has subsidiaries in Togo, Mali, Benin and Zimbabwe whose expenses are denominated in the West African CFA Franc and US dollars. Exchange risk is inherent in the Group's activities and is accepted as such.

There is no material difference between the book value and fair value of the Group's financial instruments.

Financial assets

The Group classifies all its financial assets as loans and receivables. Management determines the classification of financial assets at initial recognition.

Loans and receivables are classified as current assets or non-current assets based on their maturity date. Loans and receivables comprise "Trade and other receivables" and "Cash and cash equivalents" in the statement of financial position. Loans and receivables are recognised initially at fair value and subsequently carried at amortised cost less any impairment.

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. Indicators of impairment would include financial difficulties of the debtor, likelihood of the debtor's insolvency, default in payment or a significant deterioration in credit worthiness. Any impairment is recognised in profit or loss.

Subsequent recoveries of amounts previously written off are credited in profit or loss.

Financial liabilities

Borrowings and other financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost. Any difference between the amounts originally received (net of transaction costs) and the redemption value is recognised in profit or loss over the period to maturity using the effective interest method.

Borrowings and other financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date, or may not have the ability to repay the liability within 12 months of the statement of financial position date.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Share capital

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

Share based payment transactions

The Group operates an equity-settled share option plan. The fair value of the service received in exchange for the grant of options is recognised as an expense. Equity-settled share based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of equity-settled share based payment is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. 

Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The Company also entered into agreements to settle amounts due from advisors using equity and an agreement to acquire a licence using equity. The fair value was measured using the fair value of goods and services received.

Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Operating segments

IFRS 8 provides segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed by the Group's board of directors. 

Operating loss

Operating loss is stated before income tax expense, share of results of joint ventures and finance costs.

4 Significant accounting judgments, estimates and assumptions

In applying the Group's accounting policies, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The key estimates and assumptions that have a significant risk of causing material adjustments to the carrying amounts of certain assets and liabilities recognised in these consolidated financial statements are:

Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of Mineral Resources.  If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of exploration and evaluation assets at 31 December 2013 was $5,906,000 (2012: $6,724,000). An impairment of $2,118,000 in respect of the Togo assets was recognised in 2013 (2012: $nil).

AgriMinco Corp.

During the year, Premier acquired a 42% stake in AgriMinco Corp. ('AgriMinco') and was the largest single shareholder at the reporting date. At 31 December 2013, the controlling shareholder in Premier held a 9% equity stake in AgriMinco, which is considered to give Premier effective control of over 50% of the equity shareholding in AgriMinco.

At the financial year end, Premier had effective control over the board with two Premier board members who also served on AgriMinco's board prior to the transaction and a further 2 board members appointed following the transaction. In all, Premier held 4 board positions out of 6. Premier has the right to appoint 2 directors as long as its shareholding is above 30%.

Following the above assessment, the Directors considered that Premier had control over AgriMinco at 31 December 2013 and therefore consolidated 100% of AgriMinco and recognised non-controlling interests of 58% in the group financial statements. 

RHA Tungsten (Private) Limited

During the year, Premier concluded a shareholders' agreement with the National Indigenisation and Economic Empowerment Fund ('NIEEF') whereby NIEEF acquired 51% of the shares of RHA Tungsten (Private) Limited ('RHA'). The principal terms of the agreement are as follows:

· ZimDiv Holdings Limited ('ZimDiv'), a wholly owned subsidiary, is appointed as the Manager of the project for an initial 5 year term.

· ZimDiv has marketing rights to the product.

· Each shareholder can appoint up to two directors each, with a 5th director who is rotated between each shareholder. The 5th director will not have a vote.

· Although the local Zimbabwean company is responsible for financing and repayment of such, Premier is actively engaged in securing funding to advance RHA to mine development and operations.

· There has been no operational change since the agreements were signed and Premier continues to fund RHA through loan accounts until outside funding can be secured.

At the financial year-end, the directors of RHA were all from the Premier Group. Premier still retains the majority vote at board level given the current board composition and retains operational control. Following the assessment, the Directors concluded that Premier, through its wholly owned subsidiary ZimDiv retained control and should continue to consolidate 100% of RHA and recognise non-controlling interests in the group accounts.

5 Going concern

These consolidated financial statements are prepared on the going concern basis. The going concern basis assumes that the Group will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities and commitments in the normal course of business. The Group has incurred significant operating losses and negative cash flows from operations as the Group is an exploration stage resource Group.

The recoverability of the underlying value of exploration and evaluation assets is entirely dependent on the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, the ability of the Group to obtain the necessary financing to complete development, and future profitable production.

The Group has cash reserves at 20 June 2014 of approximately $300k. The Directors have prepared cash flow forecasts for the period ended 30 June 2015, taking into account forecast expenditure, available working capital, contracted cash inflows from Circum and the existing Chairman's loan facility. These forecasts indicate that the Group will not need to obtain additional finance or equity to fund its operations for the period to 30 June 2015.

In January this year, the Group announced that it had entered into a funding agreement with YA Global Master SPV Limited. The agreement consists of a £3 million Standby Equity Distribution Facility ('SEDA') and a £500,000 subscription agreement and an equity swap agreement (refer note 32). To date, Premier has not utilised the SEDA facility and following the completion of the AgriMinco Corp. and Circum Minerals Limited ('Circum') transactions in May 2014 (refer note 32) is unlikely to require this facility. Premier received the first million in consideration from Circum on exercise of the option agreement and expects to receive further payments from Circum of $1 million on each of the 15 July, September, November 2014 and January 2015, for total consideration of $5 million.

After careful consideration of those matters set out above, the Directors are of the opinion that the Group has adequate resources to enable it to undertake its planned activities for the period to 30 June 2015 and have prepared these consolidated financial statements on the going concern basis.

6 Segmental Reporting

Segmental information is presented in respect of the information reported to the Directors. The Group is in the exploration phase and revenue is not being generated. The main business segment is that of an exploration group and a corporate administrative entity.

Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

This presentation has changed from the method used in previous reporting to better reflect changes in operations and strategy for the Group.

7 Administrative Expenses

8 Directors' remuneration

(*) The difference in Directors fees with note 7 are the fees paid to AgriMinco directors during the year.

(*) These directors were not employed during the full financial year.

No pension benefits are provided for any Director.

9 Finance costs

10 Taxation

There is no taxation charge in the year ended 31 December 2013 (2012: nil). As the group is an international Business Group, the British Virgin Islands imposes no corporate taxes or capital gains tax. However, the Group may be liable for taxes in the jurisdictions of the underlying operations.

The Group has tax losses available in Canada of approximately $6.3 million which expire between 2028 and 2033. There are no recognised tax losses in West Africa or Zimbabwe at this time.

To date, the Group has incurred tax losses however a deferred tax asset has not been recognised in the accounts due to the unpredictability of future profit streams.

11 Loss per share

The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the year:

As the Group incurred a loss for the year, there is no dilutive effect from share options and warrants in issue or the shares issued after the reporting date.

12 Exploration and evaluation assets

Exploration costs not specifically related to a license or project or on speculative properties are expensed directly to profit or loss in the year incurred. During the year $nil (2012: $36,000) exploration costs were incurred.

Capitalised expenditure in the year of $1,254,000 comprised entirely of cash outflows. During 2012, expenditure capitalised of $4,188,000 included cash outflows of $1,516,000 and non-cash outflows comprising shares issued and to be issued to Mr Richard Dollar to acquire the Zulu claims of $2,000,000 and an allocation of $363,000 of the fair value of the shares received by Mr Bruce Cumming (note 21).

a) During the year capitalised costs relating to the Togo exploration assets were impaired. The Group has decided to take a conservative view and write off the investment in exploration assets in respect of all projects in Togo given issues with maintaining tenements, non-renewal of certain permits and lack of exploration work undertaken during the year due to concentration of funds into the Group's key projects located in Zimbabwe.

13 Investment in Joint Venture

The joint venture listed below has share capital consisting solely of ordinary shares, which is held directly by the group.

Note 1: Danakil Holdings Limited is engaged in exploration for potash in Ethiopia.

Danakil Holdings Limited is a private company and there is no quoted market price available for its shares.

There are no contingent liabilities relating to the group's interest in the joint venture or in the joint venture itself.

15 Subsidiaries

Premier had investments in the following subsidiary undertakings as at 31 December 2013, which principally affected the losses and net assets of the Group:

*Interest held through AgriMinco Corp, which in turn holds 100% of the subsidiary

** Accounted as a 100% subsidiary, refer note 4, Significant accounting judgments, estimates and assumptions

As at 31 December 2013, the financial statements of AgriMinco Corp. include the following figures before any inter-group adjustments:

Non-current assets $3,181,000

Current assets $82,000

Current liabilities $2,896,000

As at 31 December 2013, the financial statements of RHA Tungsten (Private) Limited include the following figures before any inter-group adjustments:

Non-current assets $1,881,000

Current liabilities ($2,583,000)

16 Other receivables

Other receivables at 31 December 2013 consist of value added tax refunds and are due within one year. The Directors consider that the carrying amount of other receivables and prepayments approximates their fair value.

17 Trade and other payables 

All trade and other payables at 31 December 2013 are due within one year, non-interest bearing and comprise amounts outstanding for purchases and on-going costs. The Directors consider that the carrying amount of trade and other payables approximates their fair value.

18 Borrowings

Loans from a related party are further disclosed in Note 28, Related Party Transactions. The loans are unsecured and non-interest bearing (2012: at rates of zero and 4 per cent. per annum) and repayable on demand.

During 2013, Premier received $nil (2012: $612,000) from Paddington Commercial Limited under a short-term non-interest bearing facility agreement. Paddington Commercial Limited is owned by Brendan Roach, George Roach's son. The total loan of $612,000 was capitalised as equity as part of Premier's Admission to AIM.

19 Debentures

All debentures are unsecured and held by AgriMinco Corp.

*(a) Non-interest bearing, maturing on 30 June 2014, issued to an arms-length party to satisfy an outstanding loan.

*(b) Non-interest bearing, maturing on 30 June 2014, issued to a non-arms-length party to satisfy an outstanding payable. Debenture was issued to a consulting firm, the owner of which is also a Director of AgriMinco.

*(c) Interest bearing at a rate of 8% per annum, maturing on 30 June 2014, issued to an arms-length party with principal amount $826,000 to satisfy an outstanding payable. At 31 December 2013, interest accrued on the debenture was $38,000 (refer note 9).

*(d) Non-interest bearing, maturing on 15 December 2013, issued to an arms-length party to satisfy an outstanding payable. The debenture term was extended beyond the maturity date by mutual agreement.

*(e) Non-interest bearing, maturing on 30 June 2014, issued to an arms-length party to satisfy an outstanding payable.

Debentures in the amount of $1,688,000 (debentures (a) to (d) above) were settled on 13 May 2014 with the exercising of the option agreement over Mandalore Development Limited (refer note 32).

20 Shares to be issued

*(1) Shares issued in settlement of Zulu option agreement (refer note 21).

*(2) Shares issued to a consultant subsequent to year end in settlement of consulting fees accrued at 31 December 2013 (refer note 32).

21 Share capital

* As described in note 3, Premier acquired the ZimDiv Group in a Share Exchange Agreement in advance of the Initial Public Offering. The transaction has been accounted for as a merger of entities under common control and presented in the consolidated financial statements as if the Group had been one since from 1 January 2011.

** Shares were issued to Mr B Cumming who is a Director of Premier as fully paid shares in recognition of his work performed to date on acquiring and securing of mineral assets and building the business since inception. Eighty per cent. of the value of the shares issued has been capitalised as an addition to the intangible exploration and evaluation asset while twenty per cent. has been expensed as a share based payment in 2012.

*(1) On 18 October 2013, 2,010,000 shares were issued to an advisory firm in settlement of brokerage fees to the value of $32,000. The fair value of the fees has been charged to administration expenses during the year.

*(2) On 18 October 2013, 48,878,000 shares were issued to Alpha International Business Limited in settlement of the Zulu option exercise (refer note 20).

*(3) On 19 December 2013, 2,013,000 shares were issued on exercise of share options under the Group's share option plan. The share options had an exercise price of $nil. The fair value of the share options has been credited to share capital (refer notes 24 and 25).

Issue costs allocated against equity can be seen in the Statement of Changes in Equity.

22 Merger reserve

23 Foreign exchange reserve

24 Share based payment reserve

* During the year 7.5 million share options were cancelled for a director who resigned before the options had vested. The $109,000 reversal of the share options charge represents the fair value of the options granted and charged to date.

25 Share based payments

Under IFRS 2 "Share Based Payments", the Group determines the fair value of shares, options and warrants issued to Directors and Employees as remuneration and Consultants and Advisors as consideration for their services, and recognises an expense in profit or loss, a deduction from equity or an addition to intangible assets depending on the nature of the services received. A corresponding increase is recognised in equity in the share based payment reserve.

Details of shares issues are provided in note 21 and details of share options and warrants are set out below.

Share Options

The Company adopted a new incentive share option plan (the 'Plan') during 2012. The essential elements of the Plan provide that the aggregate number of common shares of the Company's capital stock issuable pursuant to options granted under the Plan may not exceed 15% of the issued and outstanding Ordinary Shares at the time of any grant of options. Options granted under the Plan will have a maximum term of 10 years. All options granted to Directors and management are subject to vesting provisions of one to two years.

The Company granted the following share options during the two years ended 31 December 2012:

1. These share options vest on the two-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.

2. These share options vest in equal instalments annually on the anniversary of the grant date over a two year period. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.

3. These share options vested on the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.

No new options were granted during the year ended 31 December 2013, but a charge of $562,000 was recognised in respect of the above option schemes (2012: $213,000).

The fair value of the options granted and vested during the year ended 31 December 2013 was $nil (2012: $213,000). The assessed fair value of the options granted to employees and consultants was determined by an estimation of the fair value of services rendered. The assessed fair value of options granted to directors was determined using the Black-Scholes Model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free rate interest rate for the term of the option. 

The following table lists the inputs into the model:

Expected volatility is normally determined by calculating the historic volatility of the share price over the most recent period that is commensurate with the expected award term. As at 31 December 2012 the Group was a newly listed entity with limited trading history. Share price volatility has been based on the average share price volatility of similar sized publicly listed resource companies and the Company's recent trading history.

The Group has the following share options outstanding:

A summary of the status of the Group's share options as of 31 December 2013 and changes during the year are as follows:

Warrants

During the year the Company granted nil warrants over Ordinary Shares (2012: 207,171,000).

The warrants issued to placees and on loan conversion do not qualify as share based payments, so there is no fair value charge arising.

The fair value of the warrants granted to advisors during the year ended 31 December 2013 was $nil (2012: $71,000).

The following table lists the inputs into the model for the year ended 31 December 2012:

A summary of the status of the Company's share warrants as of 31 December 2013 and changes during the year are as follows:

26 Notes to the cash flow statement

Cash and cash equivalents comprise cash at bank and short term bank deposits with an original maturity of three months or less. The carrying value of these assets is approximately equal to their fair value.

27 Financial instruments

The Group uses financial instruments comprising cash, receivables, payables, borrowings and debentures. Cash balances are held in Sterling, US Dollars, Canadian Dollars, Euro and the West African CFA Franc (XOF).

The Group has a policy of not hedging and therefore takes market rates in respect of foreign exchange risk. However, rates are monitored closely by management.

The fair value of financial assets and liabilities approximates the carrying values disclosed in the financial statements.

Financial assets and liabilities

Capital management

The Group manages its capital resources to ensure that entities in the Group will be able to continue as a going concern, while maximising shareholder return.

The capital structure of the Group consists of equity attributable to shareholders, comprising issued share capital and reserves. The availability of new capital will depend on many factors including a positive mineral exploration environment, positive stock market conditions, the Group's track record, and the experience of management. There are no externally imposed capital requirements. The Directors are confident that adequate cash resources exist to finance operations but controls over expenditure are carefully managed.

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

The presentation currency of the Group is US dollars.

The Group is exposed primarily to movements in USD, the currency in which the Group receives its funding, against other currencies in which the Group incurs liabilities and expenditure. Since the Group's operations in Western Africa are primarily transacted in XOF, there is a risk that purchasing power in XOF is lost through foreign exchange movements.

Sensitivity analysis

Financial instruments affected by market risk include cash and cash equivalents, other receivables, trade and other payables and debentures. The following analysis, required by IFRS 7 Financial Instruments: Disclosures, is intended to illustrate the sensitivity of the Group's financial instruments (at year end) to changes in market variables, being exchange rates.

The following assumptions were made in calculating the sensitivity analysis:

· All income statement sensitivities also impact equity

· Translation of foreign subsidiaries and operations into the Group's presentation currency have been excluded from this sensitivity as they have no monetary effect on the results

Amounts held in XOF during 2012 were not considered material for the analysis.

The above sensitivities are calculated with reference to a single moment in time and will change due to a number of factors including:

· Fluctuating other receivable and trade payable balances

· Fluctuating cash balances

· Changes in currency mix

Credit risk

Financial instruments that potentially subject the Group to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Group limits its exposure to credit loss by placing its cash with major financial institutions. As at 31 December 2013, the Group held $88,000 in cash and cash equivalents (2012: $1,518,000).

Liquidity risk

All of the Group's financial liabilities are classified as current and are anticipated to mature within the next fiscal period. The Group intends to settle these liabilities from sale of assets and working capital with the exception of shares to be issued which will be settled from equity.

28 Related party transactions

On 1 November 2011, Premier entered into a short-term loan agreement (note 17) with a facility of up to $1 million (subsequently increased to $4.5 million) with Coc'Roach Limited. Coc'Roach Limited is owned by the Coc'Roach Trust. The Coc'Roach Trust is a partial discretionary trust pursuant to the terms of which George Roach may fall within the class of potential beneficiaries. 

Funds advanced against the facility during the year ended 31 December 2013 were $nil (2012: $2,957,000). Interest on the loan of $4,000 accrued at 31 December 2011 was reversed during 2012. The total loan of $4,110,000 was capitalised as equity as part of Premier's Admission to AIM

During 2013, Premier received $nil (2012: $197,000) in non-interest bearing loans from Corestar Holdings Ltd under a non-interest bearing facility agreement. Corestar Holdings Ltd. is a BVI company which is wholly owned by the Corestar STAR Trust, a trust established for the furtherance of certain purposes which could include the provision of benefits to George Roach and his family, at the discretion of the trustees of the trust. The total loan of $2,477,000 was capitalised to equity as part of Premier's Admission to AIM.

During 2013 administration fees of $nil (2012: $27,000) were paid by Premier to a trading business in which Mr G Roach, Director is the beneficial owner. Administration fees comprised allocated rental costs and accounting and administrative support services. 

On 4 December 2012 Premier entered into a loan facility with Mr G Roach for up to £300,000 to be used for working capital purposes. The loan facility is available for drawdown from the date of admission of the shares in the Company to the AIM market of the London Stock Exchange plc until the date 18 months thereafter. The loan facility is unsecured and non-interest bearing. The loan is convertible at the discretion of Mr G Roach 30 days after the repayment date at the Placing Price of the new shares issued at Admission. On 14 November 2013 Mr Roach increased the facility to not less than £600,000 on substantially the same terms. The conversion price for any additional drawings under the increased facility will be set by reference to the then most recent fundraising.

As at 31 December 2013 the Company had drawn down the entire facility and the balance of the loan was $1,108,000 (refer note 18).

The following table shows receivables from related parties within the Premier Group. There were no payables from Premier to group companies.

1. Premier is the controlling party of AgriMinco Corp. which is accounted for as a subsidiary (refer note 4). The receivable relates to advances made to meet its expenses totaling $41,000 (2012: $80,000). The balance outstanding at the year-end is $41,000 (2012: $80,000).

2. ZimDiv Holdings Limited is a subsidiary and is therefore a related party. The receivable relates to advances made to its operating companies in Zimbabwe to further exploration and fund administrative costs and to its holding companies in Mauritius for administrative costs, totaling $2,838,000 (2012: $828,000). The balance outstanding at the year-end is $3,666,000 (2012: $828,000).

3. G and B African Resources SARL is a subsidiary and is therefore a related party. The receivable relates to advances made to meet its administrative expenses in Togo and to fund exploration in the first half of 2013 totaling $169,000 (2012: $560,000). The balance outstanding at the year-end is $2,984,000 (2012: $2,815,000). The full loan was ceded to Premier's other Togolese subsidiary, Regent Resources Capital Corporation SAU (RRCC) on the sale of G and B African Resources SARL to AgriMinco.

4. G and B African Resources Mali SARL was a wholly owned subsidiary during 2013 until sold to AgriMinco Corp. which is still accounted for as a subsidiary. The receivable relates to advances made to meet its administrative expenses in Mali during the first half of 2013 totaling $86,000 (2012: $185,000). The balance of the loan of $309,000 was written off on the sale of the subsidiary to AgriMinco Corp.

5. G and B African Resources Benin SARL is a wholly owned subsidiary. The receivable relates to advances made during 2012 to meet its expenses in Benin. No advances were made during 2013. The balance outstanding at the year-end is $22,000 (2012: $22,000).

On 5 July 2013, Premier acquired a 42% stake in AgriMinco Corp. (refer note 4 and note 29). AgriMinco is a related party by virtue of 2 board members on Premier who are also board members of AgriMinco as well as the controlling shareholder in Premier owning a significant shareholding in AgriMinco prior to the transaction. The gain of $725,000 related to the part-disposal of the assets in Mali and Togo to AgriMinco is recognised within equity, and disclosed in the statement of changes in equity.

Also on 5 July 2013 2013, Premier entered into a shares for debt transaction with AgriMinco Corp., whereby Premier received 821,000 shares in AgriMinco at a deemed value of CDN$ 0.10 per share. The value of an AgriMinco share on 30 June 2013 was CDN$ 0.02 therefore Premier received consideration valued at $14,000. The loss on settlement of the receivable of $66,000 is included in profit and loss during the year.

During 2013 consulting fees for technical services of $273,000 (2012: $54,000) were paid by Premier to a trading business in which Mr A du Plessis, Director is the beneficial owner. Of this amount $96,000 remains in creditors at the year-end. Mr du Plessis was not considered a related party during the 2012 financial year.

Remuneration of key management personnel

The remuneration of the Directors, who are the key management personnel of the Group, is set out below for each of the categories specified in IAS 24 Related Party Disclosures.

29 Acquisition of subsidiary

On 5 July 2013, 42% of the share capital of AgriMinco Corp. was acquired for $2,280,000, in exchange for the Group's Mali and Togo subsidiaries. As a result, the Group has retained a 42% interest in these subsidiaries.

As a result of the acquisition, the Group planned to diversify its commodity base and increase its footprint in the agricultural commodity sector with the addition of potash to its group of commodities it is currently exploring for.

The following table summarises the consideration paid for AgriMinco Corp., the fair value of assets acquired, liabilities assumed and the non-controlling interest at the acquisition date.

Acquisition-related costs of $180,000 attributable to the owners of the parent have been charged to equity in the statement of changes in equity for the year ended 31 December 2013.

The fair value of the 120 million ordinary shares issued by AgriMinco ($2,280,000) in exchange for the Mali and Togo subsidiaries was based on the published share price on 28 June 2013. The fair value of the business received in consideration for the assets in Togo and Mali, based on the 58% disposed was $1,322,000. The book value of the assets and liabilities given up in Mali and Togo, based on the 58% disposed of was equal to $597,000. The gain, recognised in the statement of changes in equity is equal to $725,000. 

30 Disposal of interest in subsidiary without loss of control

On 23 September 2013, the Company disposed of a 51% interest held in RHA Tungsten (Private) Limited ('RHA') for nil consideration to the National Indigenisation and Economic Empowerment Fund ('NIEEF'), Zimbabwe (refer note 4). The carrying amount of the non-controlling interest in RHA arising on the date of disposal was $742,000 (representing a 51% interest). The effect of changes in the ownership interest of RHA on the equity attributable to owners of the Company during the year is summarised as follows:

On 31 August 2013 all funds advanced to RHA in respect of exploration costs prior to that date was deemed to be $6 million and will accrue as an interest bearing loan at the prime lending rate of LIBOR plus 3%. The loan will be repaid by RHA according to its profit distribution policy and will be subordinate to any other debt. 

There were no transactions with non-controlling interests in 2012.

31 Contingent liabilities

Conditions set out in the shareholders' agreement with the National Indigenisation and Economic Empowerment Fund ('NIEEF') concluded during the year may give rise to future equity issues. The agreement calls for the issue to NIEEF of $750,000 in Premier ordinary shares. The issue of equity is conditional upon the satisfaction of the following conditions:

32 Events after the reporting date

Funding

On 28 January 2014, the Company entered into a finance package with YA Global Master SPV ('YAGM'), Ltd to provide funds for the continuing development of its RHA Tungsten Project in Zimbabwe and to fund ongoing overheads. The finance package included a £3 million Standby Equity Distribution Facility ('SEDA') and a £500,000 subscription agreement and, separately, a £300,000 equity swap agreement covering ordinary shares. YAGM subscribed for a total of 42,735,030 shares at a price of 1.17p per share.

Under the swap agreement, YAGM will make fifteen monthly settlement payments based on a formula related to the difference between the prevailing market price of ordinary shares in any month and a 'benchmark price' that is equal to the subscription price. Therefore the monthly settlement payments received by the Company will be dependent on the future price performance of the ordinary shares. To date, the Company has received £35,000 in settlement payments from YAGM.

The Company has not yet made any drawdowns under the SEDA facility.

Issue of equity

On 28 January 2014, the Company issued 1,079,550 new ordinary shares for a total value of £22,000 to a consultant in satisfaction of the obligation for fees accrued at 31 December 2013 (refer note 20). 

AgriMinco Option Agreement

On 20 March 2014, the Company entered into an option agreement with AgriMinco in which AgriMinco granted Premier the exclusive option to purchase AgriMinco's 30% interest in the Danakil Potash Project through its subsidiary Mandalore Development Limited ('Mandalore'). The option agreement was exercisable on or before 30 April 2014 and subject to TSX Venture exchange ('TSXV') approval.

The consideration payable by Premier on exercise comprised:

On 28 February 2014, Premier exercised its option over the Liebenberg tungsten minerals claims. The properties however have not been transferred at the date of this report due to a dispute with the grantors of the option who in our opinion have failed to comply with various warranties under the agreement. The grantors are not due the exercise payment of approximately $150,000 until such time as the warranties are complied with. The estimated cost to comply with the warranties exceeds the option payment. Premier has now elected to pursue a mining lease over the entire area including our own RHA Tungsten Claims and all un-worked surrounding claims.

33 Ultimate Controlling Party

There is no single ultimate controlling party.

34 Audit Report

The audit report for the year ended 31 December 2013 does not include any qualifications.

35 Posting of Accounts

The annual report for the financial year to 31 December 2013 will be distributed to all shareholders on 27 June 2014 and will be available for download on the Company's website at www.premierafricanminerals.com.

**ENDS**

For further information please visit www.premierafricanminerals.com or contact the following: