Final Results

Tethyan Resources plc

('Tethyan' or the 'Company')

Final Results

The Company is pleased to announce its final results for the 9 month period ended 31 December 2016.

Chairman's Statement

During 2016, the Company built on the strategic decision taken at the end of 2015 to focus on gold and base metal exploration in the Balkans Region of south east Europe, which is geologically part of the Western Tethyan Metallogenic Belt. The Company changed its name from Aurasian Minerals plc to Tethyan Resources plc to reflect this new regional focus.

The Western Tethyan Metallogenic Belt is an orogenic belt formed by closure of the Tethys palaeo-ocean and the subsequent collision of the African and Eurasian tectonic plates over the last 120 million years. This belt extends from Pakistan in the east through Iran, Turkey, Bulgaria and the Balkans into Romania and Central Europe. It is one of the great mineral belts of the world, being prospective for porphyry copper and epithermal gold deposits as well as numerous other styles of mineralisation. This belt contains a number of world class mines, and it is relatively under-explored especially in comparison with the similar magmatic belts and metallogenic provinces of North and South America.

Tethyan's country focus has been Serbia and in May 2016 the Company acquired a Jersey-based private company, Moroccan Minerals, which held an option over a polymetallic project, the Cadinje project, located in Western Serbia. In conjunction with the acquisition of Moroccan Minerals, Didier Fohlen, Chairman of Moroccan Minerals, became a non-executive director of the Company in May 2016 and was appointed an executive director in October 2016.

In mid-year, Tethyan drill tested the Cadinje project, but the results were not encouraging and local community issues proved challenging. The Company therefore decided to withdraw from this project.

During the year Tethyan acquired options over two new projects in Serbia, Suva Ruda and Gokcanica, which the company believes have considerable potential for porphyry copper-gold and epithermal gold styles of mineralisation. The first round of drilling at the priority target in the Suva Ruda licence, the Rudnitza Porphyry system, commenced in late 2016 with encouraging results. Exploration field work also commenced on Gokcanica.

Tethyan plans to advance both the Suva Ruda and Gokcanica projects during the remainder of 2017. The work will include drilling, deep penetration IP geophysics, geochemical sampling and geological mapping. Ideally, the Rudnitza porphyry system will be advanced to an initial resource estimate and Gokcanica to a decision on drilling.

Tethyan sees strong potential for additional acquisitions in the Balkans region and continues to identify and evaluate other opportunities.

Corporately, Tethyan was very active during the year.

The following steps were taken, following shareholder approval at the AGM in July 2016:

The Company changed its name to Tethyan Resources plc. The Company consolidated its stock on a 1 for 6 basis to reduce the number of shares in issue to a more manageable number and to raise the share price further above its par value. Since then, following encouraging results from Tethyan's exploration programme, the Company's share price has traded at around or above the price at the date of consolidation.

During the year, the Company completed the three financings listed below and brought on board a major shareholder and strategic partner, Southern Arc Minerals Inc, a Canadian junior exploration company listed on the Toronto Venture stock exchange (TSX-V).

April 2016: issued 43,000,000 shares at 0.38 pence, pre-consolidation, for £ 163,400

November 2016: issued 16,500,000 shares at 2.18 pence, post consolidation, to Southern Arc Minerals in a non-brokered placement for £ 360,000.

December 2016: issued 39,100,000 shares at 2.18 pence in a brokered placement for £ 852,380.

Subsequent to the period end, in March 2017, the Company raised a further £1million at 4.5 pence a share.

During November 2016 Southern Arc Minerals Inc. agreed to make a strategic investment of up to 29.9 % of Tethyan's issued share capital. Southern Arc subsequently bought Newmont's block of 14,653,966 shares and participated in two of the three financings completed in 2016. At the end of 2016 Southern Arc owned 43,653,966 shares in Tethyan Resources, or approximately 29.9 % of the Company's issued share capital. As part of this transaction two Southern Arc directors were appointed to the Tethyan Board, John Proust and Dr Mike Andrews.

In addition, it was agreed that Southern Arc would:

- have a first right of refusal on any further fundraisings undertaken by the Company for a period of 2 years to enable it to increase its holding to and maintain its interest at 29.9% of the issued share capital of the Company; and

- use its commercially reasonable efforts to seek a listing on the TSX Venture Exchange in as soon as reasonably practicable following completion of the Southern Arc Subscription.

As of 31 December 2016, Tethyan Resources had 145,959,829 shares outstanding and was trading at approximately 2.25 pence, representing a market capitalisation of £ 3.28 million. Subsequent to the period end, following the announcement of the results from the drilling at Rudnitza, the share price moved above 4 pence.

Tethyan plans to list its shares on the Toronto Venture exchange and it will then be dual listed on AIM and the TSX-V. This is to allow Tethyan access to North American capital markets and increase share trading liquidity.

Tim Coughlin resigned from the board of directors during 2016. The board would like to thank Tim for helping the Company during a challenging transition phase.

Over the last year, the risk appetite of investors for early stage exploration projects has improved. It is hoped this improvement will continue into 2017 to allow Tethyan to remain well-financed and to achieve its goals of acquiring and advancing quality exploration projects to increase the Company's value for shareholders.

Your board will continue to manage expenditure to maintain a secure cash balance. Tethyan ended 2016 with approximately £1 million in the bank. The involvement of Southern Arc, who have already made two substantial investments, increases our confidence that we will be able to advance our exploration programme as planned while maintaining a robust financial position.

Christopher Goss

Non-Executive Chairman

The Company's Annual General Meeting, notice of which has been posted to shareholders, will be held at the offices of Gowling WLG (UK) LLP, 4 More London Riverside, London, SE1 2AU on 26 June 2017 at 11:00am.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information please contact:

Consolidated income statement

For the 9 months ended 31 December 2016

Consolidated statement of comprehensive income

For the 9 months ended 31 December 2016

Consolidated balance sheet

As at 31 December 2016

Consolidated statement of cash flows

For the 9 months ended 31 December 2016

Consolidated statement of changes in equity

For the 9 months ended 31 December 2016

1 Reporting entity

Tethyan Resources plc (the "Company") is a public limited company incorporated and domiciled in England and its shares are traded on the AIM Market of London Stock Exchange plc. The address of the Company's registered office is 27/28 Eastcastle Street London W1W 8DH. The consolidated financial statements of the Company as at and for the period ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as the 'Group' and individually as 'Group entities').

2 Going concern

The Group had cash balances of approximately £1.0 million as at 31st December 2016 with total liabilities at that date of £309,000. At 30 May 2017 the Group had cash balances of approximately £1.25 million with total liabilities at that date of £100,000.

The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

The activities in the period and future prospects of the Group are discussed in the Chairman's Statement and Strategic Report. The Group has not yet earned revenue as it is still in the exploration phase of its business.

On 28 March 2017, Tethyan Resources plc announced an issue of 22,222,223 new ordinary shares at a subscription price of 4.5p per ordinary share, raising £1,000,000 from a combination of new and existing strategic shareholders and management. The proceeds will be used towards a 6,000 metre drilling programme at the Company's Suva Ruda project in addition to working capital requirements.

The Board has reviewed current cash balances and projected expenditure during the next 12 months, within the Group, and is confident that all liabilities can be met. As part of the ongoing development of the company in the event that new projects are identified careful consideration will be made as to their viability and, if deemed to fit in with the company aims, additional funding will be sought at that time.

The Directors have reviewed the Group's overall position and confirm that there is adequate working capital in the business to meet its liabilities for the next twelve months and beyond. Accordingly, the Directors believe that the use of the going concern basis is appropriate.

3 Basis of preparation

a) Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The Company's individual statement of comprehensive income has not been presented in the Group's annual financial statements as the Company has taken advantage of the exemption not to disclose under Section 408(3) of the Companies Act 2006. The Company's comprehensive loss for the period ended 31st December 2016 was £948,000 (31 March 2016: £465,000) and is included in the consolidated statement of comprehensive income.

b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis and as a going concern.

c) Functional and presentation currency

These consolidated financial statements are presented in GBP Sterling, which is the Company's functional currency. All information presented in GBP Sterling has been rounded to the nearest thousand, except when otherwise indicated.

d) Use of estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRS 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.

Information about critical judgements, estimates and assumptions in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements are disclosed below.

• The carrying values of balances due from subsidiaries and EBT in the Parent Company's balance sheet (note 14). The Directors consider that although the balances are recoverable in full they are not repayable on demand and so are regarded as long term in nature (i.e. due in more than one year).

• The share options and JSOP shares have been valued using a simulation model and binomial model respectively. These models require assumptions around interest rates and share price movements, further details can be found in note 24 to these financial statements.

4 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

a) Basis of consolidation

i) Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is recognised where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those used by the Group.

Investments in subsidiaries are included at cost less impairment in the financial statements of the parent Company.

ii) Transactions eliminated on consolidation

Intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions are eliminated in preparing the consolidated financial statements.

iii) Business combinations

For business combinations, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair value at the date of acquisition.

Any excess of the fair value of the consideration over the fair values of the identifiable net assets acquired is recognised as goodwill, which is subsequently tested for impairment rather than amortised. If the cost of the acquisition is less than the fair value of net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

b) Foreign currency

i) Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.

Non-monetary assets carried at fair value and denominated in foreign currency are translated at the rate prevailing when the fair value was determined.

ii) Financial statements of foreign operations

On consolidation, the assets and liabilities of the Group's overseas operations that do not have a Sterling functional currency are translated at exchange rates prevailing at the balance sheet date. Income and expense items are translated at the dates of the transactions. Exchange differences arising are recognised in other comprehensive income and the Group's translation reserve. Such translation differences are reclassified to profit and loss in the period in which the operation is disposed of.

c) Intangible assets - Deferred exploration and evaluation costs

Exploration and evaluation (E&E) expenditure costs comprise costs associated with the acquisition of mineral rights and mineral exploration, including those incurred through joint operations, and are capitalised as intangible assets pending determination of the technical and commercial feasibility of the project. They also include certain administrative costs that are allocated to the extent that those costs can be related directly to operational activities.

If an exploration project is deemed successful based on feasibility studies, the related expenditures are transferred to development and production (D&P) assets and amortised over the estimated life of the ore reserves on a unit of production basis. Where a project is abandoned or considered to be no longer economically viable, the related costs are written off in the income statement.

To date the Group has not progressed to the development and production stage in any areas of operation.

d) Impairment testing of intangible assets and property, plant and equipment

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash- generating unit level.

Intangible assets with an indefinite useful life and those intangible assets not yet available for use are tested for impairment at least annually. All other individual assets or cash- generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the assets or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

e) Financial instruments

i) Trade and other receivables

Trade and other receivables are not interest bearing and are recognised initially at their fair value plus transaction costs and subsequently at amortised cost. Provision is made if there is any objective evidence of impairment.

ii) Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

iii) Trade and other payables

Trade and other payables are not interest bearing and are recognised initially at their fair value less transaction costs and subsequently at amortised cost. Provision is made if there is objective evidence of impairment.

f) Share-based payments

The Group has applied the requirements of IFRS 2 'Share-based payments'. Directors, senior executives and consultants of the Group have been granted options to subscribe for ordinary shares. All options are equity settled.

The fair value of services received in return for share options granted is measured by reference to the fair value of the share options granted, at date of grant, and this is expensed on a straight line basis over the estimated vesting period with a corresponding credit in equity. The estimated fair value is determined using an appropriate valuation model considering the effects of the vesting conditions, expected exercise period and the payment of dividends by the Company.

If the share options lapse before being exercised a related portion of the share-based payment reserve is transferred to retained earnings. On cancellation any cost not yet recognised is expensed immediately in the profit and loss.

g) Operating lease payments

Operating lease payments are charged to the income statement on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.

h) Share capital

The Company's ordinary shares are classified as equity. Costs directly attributable to the increase of new shares are shown in equity as a deduction from the proceeds.

i) Taxation

The charge for taxation is based on the profit or loss for the period and takes into account deferred tax. Deferred tax is the tax expected to be payable or recoverable on temporary 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 or loss, and is accounted for using the balance sheet method.

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

j) Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker.

The Chief Operating Decision Maker, responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors.

5 New IFRS Standards and Interpretations not yet adopted

At the date of approval of these financial statements, the following IFRS Standards and Interpretations, which have not been applied in these financial statements, were in issue but not yet effective. These new Standards, Amendments and Interpretations are effective for accounting periods beginning on or after the dates shown below:

6 Segmental information

The following information is given about the Group's reportable segments for continuing operations.

The Chief Operating Decision Maker is the Board of Directors. The Board reviews the Group's internal reporting in order to assess performance of the business. Management has determined the operating segment based on the reports reviewed by the Board.

Although the board review the various exploration activities individually it considers the business has a single operating segment (as its knowledge and services are applied to a broad geographical spread of exploration interests). This incorporates the activities and services of the Head Office and the development and management of joint operations.

Reconciliations

(i) Group revenues

(ii) Group loss before tax

 (iii) Group assets

(iv) Group liabilities

7 Operating loss

8 Auditors' remuneration

Auditors' remuneration in respect of the Company amounted to £24,000 (31 March 2016: £15,000).

9 Directors' remuneration

Directors' remuneration is set out below:

Details of options and shares held under the JSOP are given in note 24.

10 Employees and Key Management

(a) Staff numbers

(b) Staff costs

Staff costs consist of remuneration for the Board of Directors and further key management personnel who have the authority and responsibility for planning, directing and controlling the activities of the Group.

11 Finance income and finance costs

Recognised in profit or loss

12 Income taxes

No liability to income tax arises in the period.

The current tax charge for the period differs from that resulting from the loss before tax at the standard rate of corporation tax in the UK. The differences are explained below:

Temporary differences for which no deferred tax assets have been recognised

Unrecognised deferred tax assets reflect only those of the United Kingdom based parent Company. No deferred tax asset has been recognised in respect of taxable overseas subsidiaries due to the relatively unsettled legal and tax codes of the countries in which they operate.

Deferred tax assets carried forward have not been recognised in these financial statements because there is insufficient evidence of the timing of suitable future taxable profits against which they can be recovered.

13 Loss per share

Basic loss per share

The calculation of basic loss per share for the period ended 31 December 2016 was based on the loss attributable to ordinary shareholders of £1,296,000 (2016: loss £465,000) and the weighted average number of ordinary shares in issue of 93,814,890 (31 March 2016: 69,384,745 adjusted for comparison), giving a basic loss per share of (1.38)p for the 9 months to 31 December 2016 and a basic loss per share of (0.67)p for the year ended 31 March 2016, calculated as follows:

Loss attributable to ordinary shareholder (basic)

Weighted average number of ordinary shares (basic)

Diluted loss per share

There is no difference between the diluted loss per share and the basic loss per share presented. Share options granted to employees could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share as they are anti-dilutive for the period presented.

The diluted weighted average number of shares in issue and to be issued is 145,959,829.

14 Non-current trade and other receivables

15 Exploration and evaluation assets held

16 Investment in subsidiaries

Tethyan Resources Jersey Ltd Acquisition

In May 2016 the Company acquired the entire issued share capital of Tethyan Resources Jersey Ltd (formerly Moroccan Minerals Ltd). The acquisition constitutes an asset acquisition as Tethyan Resources Jersey Ltd, at the time of the acquisition, did not meet the definition of a business, as defined in IFRS 3 'Business Combinations'. The Company acquired all of the issued and outstanding common shares of Tethyan Resources Jersey Ltd, being 17,974,054 shares, by issuing 75,850,508 shares of the Company in a 4.22 to 1 ratio. In addition 105,560 warrants were issued with a strike price of 0.348 p per share.

As the acquisition was deemed to be for an asset acquisition and not a business combination, the excess of the consideration over the net assets or liabilities acquired is expensed to the income statement and is not treated as goodwill arising on the acquisition. The 'loss on asset acquisition' expensed in the income statement is arrived at as follows:

Fair value of net assets of Tethyan Resources Jersey Ltd at acquisition date:

Plant & equipment 4,792

Bank 37,215

Prepaid expenses 11,787

Amounts due from related parties 85,727

Accounts payable (55,330)

Amounts due to company (135,340)

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Net liabilities at acquisition (51,149)

Consideration for acquisition:

75,850,508 shares at 0.35p per share 265,477 (non-cash consideration)

Loss on asset acquisition 316,626

Company's subsidiary undertakings

As at 31 December 2016, the Group owned interests in the following subsidiary undertakings, which are included in the consolidated financial statements:

17 Amounts receivable from subsidiary and related parties

The amounts due from related parties are due from Global Mineral Resources d.o.o, and Tethyan Resources Serbia d.o.o, companies incorporated in Serbia which were incorporated under the ownership of F Baker, COO of the Company. These two companies became subsidiaries of the group subsequent to the period end (note 28). Both the amounts due from subsidiaries and related parties shown above are net of impairment charges of £192,000 against amounts not deemed to be recoverable in connection with funds spent on the unsuccessful Cadinje project.

18 Current trade and other receivables

The unpaid share capital arose from a share issue near the period end and was received subsequent to the end of the period. The cash proceeds for share issues of £1,096,000 in the statements of cash flows therefore excludes the £263,000 unpaid share capital and also excludes shares issued as consideration (£266,000) for the acquisition of Tethyan Resources Jersey Ltd in the period.

19 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and short term fixed deposits. Cash and cash equivalents comprise the following:

20 Share capital

In July 2016 the Company's ordinary shares were sub-divided on a 1 for 6 basis.

The Deferred Shares are not listed on any Stock Exchange, and have no rights to vote at any meeting of the Company. Nor do they have any rights to dividends, nor any other form of distribution other than a maximum of 0.9 pence per share on a return of capital on a winding up of the Company (provided the Company has sufficient cash after the holders of the New Ordinary Shares have been paid an aggregate amount of the paid up capital thereon being 0.1 pence plus £10,000,000 for each such Ordinary Share).

Details of share options issued during the period and outstanding at 31st December 2016 are set out in the Directors' Report.

Changes in issued share capital and share premium:

Subsequent to the period end, on 28 March 2017, Tethyan Resources plc announced an issue of 22,222,223 new ordinary shares at a subscription price of 4.5p per ordinary share, raising £1,000,000 from a combination of new and existing strategic shareholders and management.

Capital and reserves

The share-based payment reserve includes a charge for the period in respect of the fair value of share options issued in the period of £76,000. Details of the share options outstanding are set out in note 24.

21 Trade and other payables

22 Financial risk management

The Group's and Company's principal financial assets comprise cash and cash equivalents, trade receivables and other receivables. In addition the Company's financial assets include amounts due from subsidiaries. The Group's and Company's financial liabilities comprise: trade payables and other payables.

The Board of Directors determines, as required, the degree to which it is appropriate to use financial instruments, commodity contracts or other hedging contracts or techniques to mitigate financial risks. The main risks for which such instruments may be appropriate are interest rate risk, liquidity risk and foreign currency risk, each of which is discussed below. All non-routine transactions require Board approval. During 2016 and 2015 the Group has not used derivative financial instruments.

The Board consider that the risk components detailed below apply to both Group and Company. Financial risks are managed at Group rather than Company level.

Credit risk

Credit risk refers to the risk that the Group's financial assets will be impaired by the default of a third party. The Group is exposed to credit risk on its cash and cash equivalents, as set out in note 18, and to other receivables as set out in notes 14 and 17. Credit risk is managed by ensuring that surplus funds are deposited only with well-established financial institutions of high quality credit standing.

The Group's maximum exposure to credit risk is limited to its bank balances and trade and other receivables.

Foreign currency risk

Foreign currency risk refers to the risk that the value of a financial commitment, recognised asset or liability will fluctuate due to changes in foreign currency rates. The Group reports its financial results in Sterling and is therefore exposed to foreign currency risk as a result of financial assets and future transactions denominated in currencies other than Sterling.

Exchange gains and losses on financial assets or future transactions are recognised directly in profit or loss. A proportion of the Group's costs are incurred in US Dollars. Accordingly, movements in exchange rates could have a detrimental effect on the Group's results and financial condition.

The cash balances carried within the Group comprise the following currency holdings:

The Group operates within the UK and Europe. All transactions are denominated in Sterling, Euro or US Dollars. As such the Group is exposed to transactional foreign exchange risk. The mix of currencies and terms of trade are such that the Directors believe that the Company's exposure is minimal and consequently they do not specifically seek to hedge that exposure.

The table below demonstrates the sensitivity of the Group's consolidated loss before tax to illustrative changes in the value of the US dollar with respect to Sterling, all other variables held constant. The sensitivity analysis includes only US dollars because the effect of other currencies is not significant. The sensitivities reflect the effect on profit before tax and total equity respectively of 5% changes in the exchange rates of US dollars vs. GBP £'s.

The table below shows an analysis of net monetary assets and liabilities by functional currency of the Group:

31 December 2016

Liquidity risk

Liquidity risk relates to the ability of the Group to meet future obligations and financial liabilities. The Group monitors its risk to a shortage of funds using cash flow models, which consider existing financial assets, liabilities and projected cash inflows and outflows from operations.

The table below sets out the maturity profile of financial liabilities at 31st December:

To date the Group has relied upon shareholder funding of its activities. Development of mineral properties, the acquisition of new opportunities, or the recovery of royalty income from third party assets, may be dependent upon the Group's ability to obtain further financing through joint ventures, equity or debt financing or other means. Although the Group has been successful in the past in obtaining equity financing there can be no assurance that the Group will be able to obtain adequate financing in the future or that the terms of such financing will be favourable.

Interest rate risk profile of financial assets

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the Group uses. Interest bearing assets comprise cash and cash equivalents. It is the Group's policy to settle trade payables within the credit terms allowed and the Group does not therefore incur interest on overdue balances.

At 31st December 2016 the Group had cash balances and short term deposits which attracted interest as follows:

The value of the Group's assets at 31st December 2016 and the result for the period would not be materially affected by changes in interest rates.

The interest rate risk profile of the Company is materially the same as the Group.

Fair values of financial assets and liabilities

It is the Directors' opinion that the carrying values of the Group's and the Company's financial assets and liabilities as at 31st December 2016 and 31st March 2016 are not materially different from their fair values. They have therefore not been shown separately.

23 Capital management

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern, and develop its activities to provide returns for shareholders and benefits for other stakeholders.

The Group's capital structure comprises all components of equity (i.e. ordinary share capital, share premium, retained earnings and other reserves). At 31 December 2016 the Group had no debt.

When considering the future capital requirements of the Group and the potential to fund specific project development the Group's preferred funding option is equity rather than debt.

24 Share-based payments

Share options

The Company and Group operate an unapproved share option plan for the benefit of employees.

Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the period are as follows:

The fair value of share options and warrants granted during the period was estimated using a Black Scholes pricing model, with a resulting expense of £76,000 for the period ended 31 December 2016, the inputs to which were as follows:

Share options outstanding at 31 December 2016 had a weighted average exercise price of 3.14 pence (2016: 3.14 pence) and a weighted average contractual life of 4.5 years (2015: 5.6 years). The expected volatility was 50% and the risk free rate used was 2.56%, giving a fair value at date of grant of £59,350.

To date no share options have been exercised. There are no market based vesting conditions attaching to any share options outstanding at 31st December 2016.

At 31st December 2016 the total number of options over ordinary shares outstanding was as follows:

The Directors' report, under the section "Share capital, options and warrants", provides further details.

Joint Share Ownership Plan ("JSOP")

The Employee Benefit Trust ("EBT") is administered by Equiom (Guernsey) Limited as trustees. The trustees hold the shares for the purpose of entering into incentive awards and other arrangements within the terms of its trust deed. The EBT has an interest free loan from the Company to buy shares.

Under the terms of the JSOP which the EBT has entered into, each participant enters into a joint ownership of the respective shares together with the EBT. The interest of the participant relates to the increase in value of the shares above a 'Hurdle Value'. The JSOP may be realised on certain events, including a 'change of control' of the Company, or after the earliest date for realisation set out below, but before the expiry date set out below. The amount that can be realised under the award depends on the nature of the event.

In the event that the JSOP award is realised by a sale of the shares, the difference between the Hurdle Value and the sales price will be held by the EBT and may be applied either to repay the loan outstanding with the Company or to provide further benefits to its beneficiaries.

References in the statement of financial position and changes in equity to own shares held by EBT relate to those shares issued as part of the JSOP.

Due to the conditions described above this is considered an equity settled share-based payment transaction.

The number of shares granted and outstanding as 31 December 2016 is as follows:

The fair value of this incentive was measured at the date of the award using a binomial option valuation model and is considered the most appropriate method taking into account the effect of the vesting conditions, the expected exercise period and the dividend policy of the Company. There are no market vesting conditions attached to these awards.

The variables used in arriving at a fair value of the awards were as follows:

The calculation of the volatility of the share price was based upon the FTSE All Share Gold Mining Index. The life of the embedded option is estimated in the light of relevant factors, including behavioural considerations.

Share Warrants

As at 31 December 2016 there were 2,447,060 warrants outstanding with a weighted average exercise price of 1.31 pence per share. Details were as follows:

25 Contingent liabilities

Deferred Consideration

Contingent deferred consideration, estimated at £100,000 (31 March 2016: £100,000), becomes payable if either of the following events crystallise:

a. the Group discovering a proven deposit of at least three million ounces of gold or gold equivalent at the Pu Sam Cap operation in Vietnam and such deposit having been proven to be capable of extraction by bulk-mining methods; or

b. a bona fide takeover offer having been made for the entire issued share capital of the Company which values the Company at no less than £133,333,333.

In the event either of the above events crystallise, any liability would be settled by further payment in the form of a share issue equal to the lesser of:

• 33,333,333 Consideration Shares of 1p each issued at the market value at the date of issue; or

• such number of Consideration Shares as will be equal to 7.5% of the number of Ordinary Shares in issue.

As the likelihood of these events happening is presently considered remote the deferred consideration has not been recognised as a liability. The contingency arose when the Company acquired the Larchland Group from the vendors in the year ended 31 March 2005 and was part of the terms of the sale and purchase agreement with Candice Holdings Limited.

26 Capital commitments and project options

As at 31 December 2016 the Group has not been notified of any capital commitments by its joint venture partners (31 March 2016: nil). Tethyan has long term option deals on two projects located in Serbia, Suva Ruda and Gokcanica. These are option deals and Tethyan is not obligated to continue with either deal should they desire to terminate the deals.

On the Suva Ruda deal the first 2000 meters of drilling was completed in December 2016 and the first payment of €100,000 was completed by 1 March 2017.

As of the date of approval of these financial statements both deals were in good standing.

Suva Ruda deal

Under the terms of the Agreement Tethyan is entitled to purchase 100% of the License or Deep Research (at Tethyan's discretion) for a cash payment of €6 million, plus a percentage of the eventual capital cost of building the mine (details set out below), at any time during the total duration of the License and any future extensions of the License (a minimum of 7 years from the date of the Agreement).

The decision whether or not to exercise the Option during this period is at the sole discretion of the Company. The percentage of the capital costs payable by Tethyan in relation to the building of the mine, will only become payable if Tethyan exercises the Option, secures the necessary financing and proceeds with the building of the mine. The percentage of these costs due to Deep Research will be calculated as follows:

● 4% of CAPEX up to €200m;

● 2% of CAPEX between €200 - 500m;

● 1% of CAPEX in excess of €500m.

Pursuant to the terms of the Agreement, and in order to retain the Option, the Company will arrange to complete, at its sole discretion, the following work program on the License:

● a minimum of 2,000m drilling before 28 December 2016;

● a minimum of 5,000m additional drilling before 28 December 2018;

● complete a preliminary economic assessment before the sixth anniversary of the date of the Agreement; and

● complete an economic feasibility study before the seventh anniversary of the Agreement.

The Company will also make certain milestone payments, at its sole discretion, in order to retain the Option:

● €100,000 by 1 March 2017;

● €100,000 on each anniversary of the signing the Agreement up until the third year (September 2017, September 2018, September 2019).

Gokcanica option agreement

Tethyan may earn up to an 80% interest in the Gokcanica project by completing the following:

(a) Stage 1:

In order to earn a 51% interest in the Gokcanica Permits, Tethyan must commit a minimum expenditure of USD 500,000 on an exploration program that will include a drilling of a minimum of 1,000m of either reverse circulation and/or diamond drilling within 2 years. This could include, but is not restricted to, mapping, trenching, rock-chip sampling, soil sampling, remote sensing, geophysics as well as other relevant items such as logistics and administration.

(b) Stage 2:

In order to earn a 70% interest in the Gokcanica Permits, in addition to the drilling commitment outlined above, Tethyan must complete a Pre-Feasibility Study ("PFS") within 5 years.

(c) Stage 3:

In order to earn an 80% interest in the Gokcanica Permits, in addition to the drilling commitment and PFS, Tethyan must complete a Bankable Feasibility Study ("BFS") within the time-frame of the exploration permits, their renewals or conversion to a mining permit.

Restoration commitments

The Group has no obligations at 31 December 2016 to undertake any rehabilitation or restoration activity on the licences currently held.

 27 Related parties transactions

The Group's investments in subsidiaries have been disclosed in note 16.

The Group's Key Management Personnel remuneration is disclosed in note 9.

During the period ended 31 December 2016 the Group transferred £305,754 to Global Mineral Resources d.o.o and £260,000 to Tethyan Resources Serbia d.o.o, both companies are incorporated in Serbia. The owner of these companies is Fabian Baker, COO of Tethyan Resources Jersey Ltd, who was the nominated owner in order to incorporate the business locally to ensure permits were applied for in respect of Chadine and Gokinica exploration work.

During the period the Company financed exploration activity relating to the Cadinje project through a related party transaction. Of the £225,000 that was remitted the Board have considered that £192,000 related to exploration activities which have ceased and therefore came to the conclusion to fully impair that cost.

28 Subsequent events

On 24 February 2017 Tethyan Resources d.o.o a company incorporated in Serbia, which had been incorporated under the ownership of F Baker, COO of Tethyan Resources Jersey Ltd, formally became a wholly owned subsidiary of Tethyan Resources Jersey Ltd, and therefore part of the Group. The company, along with Global Mineral Resources d.o.o had been incorporated to secure permits within Serbia. Subsequently, Global Mineral Resources d.o.o also became a wholly owned subsidiary of Tethyan Resources Serbia d.o.o as of 3 April 2017.

Terenure Limited, a wholly owned subsidiary based in Papua New Guinea, was formally removed from the register on 2 March 2017. The company had been dormant for over 12 months and had no assets or liabilities.

On 28 March 2017, Tethyan Resources plc announced an issue of 22,222,223 new ordinary shares at a subscription price of 4.5p per ordinary share, raising £1,000,000 from a combination of new and existing strategic shareholders and management. The proceeds will be used towards a 6,000 metre drilling programme at the Company's Suva Ruda project in addition to working capital requirements.

29 Control

No one party is identified as controlling the Group.

30 Publication of Report & Accounts

The report and accounts for the period ended 31 December 2016 will be posted to shareholders shortly and will be available from the Company's website, https://tethyan-resources.com/