Half-Year Financial Report - 6 Months End 30 June

Herencia Resources plc

("Herencia" or the "Company")

HALF-YEARLY FINANCIAL REPORT

For the six months ended 30 June 2017

Herencia Resources plc is pleased to announce the unaudited half-yearly accounts of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2017.

Directors

The names of directors who held office during or since the end of the interim period and until the date of this report are noted below. Directors were in office for the entire period unless otherwise stated.

Peter Reeve Non-Executive Chairman

Jeffery Williams Executive Director

Graeme Sloan Managing Director (resigned on 31 March 2017)

Hon. John Moore Non-Executive Chairman (retired on 30 June 2017)

John Russell Non-Executive Director (resigned on 31 March 2017)

Our focus is to

· use our available capital resources to fully explore the Company's Picachos and Pastizal copper projects in Chile;

· start an intensive Reverse Circulation drill program of 3000 metres in October 2017 at the Picachos and Pastizal copper projects to explore the projects potential on strike and at depth;

· continue to explore at deeper copper mineralisation at Picachos and Pastizal below a vertical depth of 50 metres and may extend to 250 metres and along strike as some three (3) km of strike at Picachos and Pastizal mined for over 20 years by tribute underground mining methods; and

· Review processing opportunities as the Picachos and Pastizal projects are located within 25 kilometres (km) of four operating copper processing plants;

Other achievements during the period

· On 27 April 2017 secured funding by way of a placement of US$1,230,517 from the issue of 2,121,137,042 new ordinary shares at 0.045 pence.

· An ongoing process of restructure, including the board of directors, has been undertaken to re-establish Herencia as a viable junior exploration and development company.

· The restructured board of directors continue to actively pursue opportunities for the Picachos and Pastizal Projects.

Finally, I would like to thank my fellow director and our small and dedicated team in Chile for their efforts.

PD Reeve

Chairman

20 October 2017

Please refer to the project announcements at the Company's website (www.herenciaresources.com) for further information on the Company operations.

Suspension

Following the release of these interims, the ongoing suspension in trading in the Company's shares will be lifted and trading in the Company's shares will commence at 7.30am tomorrow (25 October 2017).

For further information please contact:

Peter Reeve +61 8 9481 4204 

Katy Mitchell/James Sinclair-Ford WH Ireland Limited +44 161 832 2174

Jon Belliss, Beaufort Securities Limited +44 207 382 8300

CONSOLIDATED STATEMENTS OF COMPRHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2017

STATEMENTS OF FINANCIAL POSITION

AT 30 JUNE 2017

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

CONSOLIDATED STATEMENTS OF CHANGES in EQUITY

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

1. Accounting policies

The condensed half-year accounts have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board as adopted for use in the EU. The condensed half-year accounts have been prepared using the accounting policies which have been applied in the Group's statutory financial statements for the year ending 31 December 2016.

1.1. Basis of preparation and going concern

Herencia Resources plc ('the Company') is incorporated in England and Wales. The half-yearly accounts for the six months ended 30 June 2017 is unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

The half-yearly accounts include unaudited comparative figures for the half year ended 30 June 2016. The comparatives for the year ended 31 December 2016 are not the Company's full statutory accounts for that period but have been extracted from the statutory accounts for that period which have been delivered to the Registrar of Companies. 

The financial reports have been prepared using the historical cost convention and are presented in UK pounds sterling. The half-yearly accounts for the six months ended 30 June 2017 has been prepared in accordance with IAS 34 'Interim financial reporting'.

The half-yearly accounts for the six months ended 30 June 2017 has been prepared pursuant to AIM Rule 18, which states "An AIM company must prepare a half-yearly report in respect of the six-month period from the end of the financial period for which financial information has been disclosed in its admission document and at least every subsequent six months thereafter (apart from the final period of six months preceding its accounting reference date for its annual audited accounts)."

At 30 June 2017 the Group had cash balances of £598,933. The Group proposes to conduct further exploration activities at its Chilean projects and accordingly, will need to raise additional funds before the end of 2017 to maintain sufficient cash resources for its working capital and particularly, continue its efforts to reduce outstanding obligations.

The Directors have a reasonable expectation that the Group has adequate access to resources to continue in operational existence for the foreseeable future and continue to meet, as and when they fall due, its planned exploration and development activities and other liabilities for at least the next twelve months from the date of approval of these financial statements. For this reason, the Directors continue to adopt the going concern basis in preparing these financial statements.

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

2. Income/(loss) per share

The basic and diluted (loss)/income per ordinary share of (0.04p) (30 June 2016: 0.06p and 31 December 2016: (0.06p)for the Group has been calculated by dividing the income/(loss) for the period attributable to equity holders of £206,879 (30 June 2016: £2,478,140 and 31 December 2016: £2,959,765 by the weighted average number of shares on issue.

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

The weighted number of ordinary shares on issue as at 30 June 2017 were 5,341,135,115; as at 30 June 2016 2,770,137,684 and, as at 31 December 2016 4,391,416,892. The diluted loss per share has been kept the same as the conversion of share options decreases the basis loss per share and therefore, anti-dilutive.

3. Segmental information 

The activities of the Group are broken down into the operating segments of Mineral Exploration and Central Costs. Segment information by operating segment and by region is as follows:

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

3. Segmental information (continued)

Segment information by region

At the end of the financial period, the Group had not commenced commercial production from its exploration sites and therefore had no turnover in the period.

NOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

On 28 July 2016, the Company announced that it had completed the sale with Golden Rim Resources Limited ("GMR") to acquire Herencia's wholly owned subsidiary Paguanta Resources (Chile) SA ("PRC") for a total of up to US$2.3 million in cash and GMR equity, and GMR agreeing to pay up to US$2.1m towards various contingent liabilities. PRC holds 70% of Compania Minera Paguanta S.A. which holds mineral concessions at the Paguanta silver-lead-zinc-copper project in northern Chile. As at 30 June 2016, an amount of £158,577 which represents part proceeds from this sale has been received and included within Trade and other payables.

Director Loans and Related Party Transactions

Former directors have made interest-free and interest-bearing loans to the Company for working capital purposes. As at 30 June 2017, interest-free loans from Messrs Moore, Russell and Sloan total £220,000 and interest-bearing loans total £276,087 (including £45,140 in accrued interest).

Initial repayment terms provide that the loans be repayable within 12 months; however, the terms were subject to extension if necessary. The Company is in discussions with the former directors to extend the term of the loans.

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

No other related party transactions have occurred during the period.

Convertible Note

During the six months ended 30 June 2017, the Company made further drawdowns from the funding arrangements entered with its major shareholders, the Australian Special Opportunity Fund ("Lind Partners") and Oriental Darius Co. Ltd ("Oriental").

On 1 March 2017 and 13 March 2017, the Company drew down US$50,000 from Lind Partners and Oriental, respectively. Proceeds from the convertible note drawdown totalled £79,422.

On 15 May 2017, Oriental converted US$50,000 in convertible notes into share capital with the Company issuing 388,018,400 fully paid shares.

Full details of the terms and conditions of the Secured Convertible Facilities including the conversion issue price and options are contained in the respective announcements.

As at 30 June 2017, the convertible note has a carrying value of £259,691 with £55,480 being classified as 'other reserve' in equity.

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

No other matter or circumstances have arisen since the end of the reporting date and the date of this report which significantly affect the results of the operations of the Company.

13. Contingent liabilities and capital commitments

There have been no changes to the contingent liabilities capital commitments as disclosed in the most recent annual financial report.