Half Yearly Report

Herencia Resources plc

Registered number 05345029

("Herencia" or the "Company")

HALF-YEARLY FINANCIAL REPORT

For the six months ended 30 June 2015

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 2015.

CHAIRMAN'S STATEMENT

The six months ended 30 June 2015 was a busy period for Herencia which included the achievement of a significant milestone for the Company with the announcement of a maiden resource for the Picachos Copper Project in northern Chile.

The results of the second drilling program at Picachos confirmed the excellent high-grade copper assay results achieved in mid-2014. Not only were the earlier high copper grades confirmed, they were also extended and allowed a maiden Mineral Resource Estimate, compliant with the JORC Code, to be published.

The Mineral Resource estimate announced on 26 February 2015 (for the 40M Shaft area only) stands at 10.7Mt at 0.61% copper and 5.6g/t silver (at 0.1% Cu cut-off) and 7.1Mt at 0.85% copper and 7.6g/t silver (at 0.2% Cu cut-off).

The Resource includes a higher grade core of 3.4Mt at 1.12% copper and 9.6g/t silver (at 0.85% Cu cut-off) with 56% of the high grade core in the Measured and Indicated categories.

It is important to point out that the maiden resource at Picachos covers only a small portion of the Picachos tenements, with most drilling less than 100 metres deep (vertically). The resource remains open in all directions and the mineralisation looks to extend for several kilometres. One drill hole (PP14049) approx. 200 metres north of the resource area returned 19m at 1.83% copper and 17.9g/t silver from close to the surface highlights the potential extension to the current resource.

As previously emphasised, the Picachos Project has many appealing factors, the high grade mineralisation is located at very shallow depths and outcrops in many areas, there are a number or processing plants located in close proximity to Picachos which are all potentially suitable to treat the proposed Picachos production, and we believe the operating costs would be low given the initial open-pitable nature of the mineralisation and the broad widths of copper mineralisation confirmed in drilling programs.

It is worth noting that Picachos was further advanced just after the period end with the announcement of a proposed Tambillos-Herencia Joint Venture ("THJV") Memorandum of Understanding ("MoU") looking to combine the current Tambillos mining operations with the Company's Picachos Project. The THJV would consist of Tambillos' two underground mines and their nominal 1Mtpa treatment plant and Herencia's proposed Picachos open pit operations. The business combination would look to schedule and blend ore from both projects mines to optimise the production of copper, silver and gold.

Both companies have commenced due diligence and subject to that process and approval by both Boards, the aim would be to execute a formal agreement by year-end.

Outside of Picachos, during the period the Company also announced the sale of its La Serena Project. An initial non-refundable payment of US$150,000 was received by Herencia with three further payments scheduled, in the event the buyer proceeds to fully exercise the option, after 12 months (US$350,000), 24 months (US$500,000) and 36 months (US$3,000,000). La Serena is part of the original portfolio of assets when the Company was first admitted to trading on AIM. It is an exploration prospect that contains several targets, all of which will require drilling and expenditure commitments to fully test. Given that the Company's current development strategy is on Picachos, La Serena was deemed 'non-core' and given the favourable payment terms on offer, a divestment decision was made by the Board.

At the Company's Paguanta Project (70% owned and managed by Herencia), management continues to keep this project in a state of readiness as the development timetable is closely tied to the zinc price. The Company continues to see a positive outlook for the medium term zinc price, with the 2015 closure of the Century Zinc Mine in Australia (one of the world's largest zinc producers) likely to impact on global supply.

Much has been achieved in the last 6 months by the team in a challenging environment for resources juniors. Given the significant advancement at Picachos, Herencia is seeking to achieve production as soon as possible and with the proposed THJV, with as little capital outlay as possible.

Subsequent to 30 June 2015, the Company successfully completed a private placing which raised approximately £0.5 million from the issue of 512,000,000 new ordinary shares of 0.1p each.

Finally, we thank shareholders for their continued support as we progress the Company's development plan.

Hon. John Moore AO

Chairman

30 September 2015

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

For further information please contact:

Graeme Sloan, Herencia Resources plc +61 8 9481 4204 

Katy Mitchell, WH Ireland Limited (NOMAD) +44 161 832 2174

Stephen Allen, RFC Ambrian (Australia) +61 8 9480 2507

John van Eeghen, RFC Ambrian (UK) +44 203 440 6816

Jon Belliss, Beaufort Securities Limited (UK) +44 207 382 8300

References in this announcement to exploration results and potential have been approved for release by Mr Graeme Sloan (BAppSc Mining Engineering WASM) who has more than 20 years relevant experience in the field of activity concerned. Mr Sloan is a Member of the Australasian Institute of Mining and Metallurgy. Mr Sloan has consented to the inclusion of the material in the form and context in which it appears.

CONSOLIDATED STATEMENTS OF COMPRHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2015

The results shown above relate entirely to continuing operations.

STATEMENTS OF FINANCIAL POSITION

AT 30 JUNE 2015

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2015

CONSOLIDATED STATEMENTS OF CHANGES in EQUITY

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX MONTH PERIOD ENDED 30 JUNE 2015

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 are expected to be applied in the Group's statutory financial statements for the year ending 31 December 2015.

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 2015 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 2014. The comparatives for the year ended 31 December 2014 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 2015 has been prepared in accordance with IAS 34 'Interim financial reporting'.

The half-yearly accounts for the six months ended 30 June 2015 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)."

As part of the Group's capital management strategy, on 10 September 2015, the Company completed a private placement raising £512,000 from the issue of 512 million ordinary shares at a price of 0.1p per share. 

In addition, the Directors continue to advance a number of negotiations to secure further funding and are confident that they can raise sufficient funds to ensure the Company can continue as a going concern. As a consequence, the Directors believe that both the Group and Company are well placed to manage their business risks successfully despite the current uncertain economic outlook.

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. Loss per share

The basic loss per ordinary share of (0.04)p (30 June 2014: (0.03)p; 31 December 2014: (0.08)p)for the Group has been calculated by dividing the loss for the period attributable to equity holders of £1,465,600 (30 June 2014: £698,867; 31 December 2014: £2,038,055) by the weighted average number of ordinary shares in issue of 3,528,165,440 (30 June 2014: 2,409,154,187; 31 December 2014: 2,610,013,783).

The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 3,573,165,440 (30 June 2014: 2,475,551,997; 31 December 2014: 2,676,211,044). The diluted loss per share has been kept the same as the conversion of share options decreases the basic loss per share, thus being 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:

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.

On 11 February 2015 and 5 March 2015, the remaining outstanding convertible security note of US$0.6 million was fully converted. This concluded shares to be issued pursuant to this Note.

As at 30 June 2015, the convertible note has a carrying value of £Nil (2014:£378,264) with £112,048 being classified as 'other reserve' in equity.

i Shares issued to The Australian Special Opportunity Fund, a New York-based institutional investor managed by The Lind Partners as satisfaction of conversion of the US$600,000 Convertible Loan Note.

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.

12. 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.

13. Decommissioning expenditure

The Directors have considered the environmental issues and the need for any necessary provision for the cost of rectifying any environmental damage, as might be required under local legislation. A provision of £48,739 (note 6) has been made for any future costs of decommissioning or environmental damage.