Half Yearly Report

Herencia Resources plc

("Herencia" or the "Company")

HALF-YEARLY FINANCIAL REPORT

For the six months ended 30 June 2014

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 2014.

CHAIRMAN'S STATEMENT

The six months ended 30 June 2014 coincided with the successful completion of Herencia's first drilling program at our Picachos Copper Project in Chile and the announcement of excellent high-grade copper assay results located very close to surface.

The results are a vindication of our belief that the Picachos Project is indeed a game changer for the Company as it has the potential to be brought into production within 12 to 18 months and with a minimal capital cost. It is not every day that one can drill a hole and report 91m grading 1.42% copper from only 19m down-hole, but this is exactly what Herencia did in May this year. This was followed up by numerous additional broad high grade copper intercepts, and indeed the majority of holes drilled in the Picachos program intersected high grades at shallow depths.

The secret to Picachos lies in the fact that i) the high grade mineralisation is located at very shallow depths and indeed outcrops in several locations, and ii) there are a number or processing plants located within very close proximity to Picachos which are all potentially suitable to treat the proposed Picachos production on a toll treating arrangement. Under this scenario, there would be no need for Herencia to finance, permit and construct a processing plant or tailings dam.

In addition, we believe the operating costs would be low as the mineralisation is very shallow with almost no pre-stripping likely required and a low strip ratio anticipated, given the broad widths of mineralisation seen to date.

Herencia also announced, late in the half, that a wholly owned subsidiary of Australia's OZ Minerals, OZ Exploration Chile Limitada, had commenced drilling at the Guamanga Project in central Chile, the subject of a joint venture between the companies. The drilling is targeting a potential Iron Oxide Copper Gold (IOCG) system, similar to Anglo American's large Mantoverde copper mine located less than 20km away.

At the Company's 70% owned Pagaunta Project, management continues to progress the permitting process, which culminated in the approval, in August, for the next drill program. We see this as significant as approval of our drilling EIS is another important step along the path toward full Project EIS approval. Much of the data collected, and the process followed, has enhanced our understanding of the protocols necessary for project approval.

The development timetable for the Paguanta Project is tied to the zinc price and the Company views the recent strong gains in the price of zinc and the significant falls in warehouse zinc supply inventories as positive markers for the Project. The closure of several major zinc mines, along with the planned closure in 2015 of the Century Zinc Mine in Australia (one of the world's largest zinc producers), has highlighted the upcoming zinc supply constraints facing customers. The zinc price will continue to be closely monitored given the very advanced stage of the Paguanta Project.

On the corporate front, in early 2014 the Company secured the second tranche of investment from our new cornerstone investor, Shining Capital Management (Shining). Shining is now the Company's major shareholder and we look forward to continuing our relationship with them as we progress the Company toward producer status in the near future.

In summary, much has been achieved in the last 6 months by the management team in Perth and Chile. Given the excellent drill results at Picachos, Herencia is focussing attention on this advanced copper project as we believe that it is the Picachos Project which can be brought into production very quickly (within the next 12 to 18 months) and with minimal capital outlay (a result of the Company's intention to toll treat the ore mined at Picachos at a nearby third party owned processing plant).

We thank shareholders for their continued support and management for their hard work and we look forward to updating investors on the progress of our projects as we progress them towards production.

Hon. John Moore AO

Chairman

26 September 2014

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 Tel: +61 8 9481 4204

Katy Mitchell, WH Ireland Limited Tel: +44 161 832 2174

References in this announcement to exploration results and potential have been approved for release by Mr. Graeme Sloan (BAppSc Mining Engineering WASM) and Mr. Antonio Valverde (Bsc Geology Universidad Complutense de Madrid), both with more than 15 years relevant experience in the field of activity concerned. Mr. Sloan is a Member of the Australasian Institute of Mining and Metallurgy. Both Mr. Sloan and Mr. Valverde have 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 2014

The results shown above relate entirely to continuing operations.

STATEMENTS OF FINANCIAL POSITION

AT 30 JUNE 2014

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2014

CONSOLIDATED STATEMENTS OF CHANGES in EQUITY

NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX MONTH PERIOD ENDED 30 JUNE 2014

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 2014.

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 2014 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 2013. The comparatives for the year ended 31 December 2013 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 2014 has been prepared in accordance with IAS 34 'Interim financial reporting'.

The half-yearly accounts for the six months ended 30 June 2014 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)."

The financial report has 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 Directors have reviewed the Group's overall position and outlook and are of the opinion that the Group will be able to raise the required funding to carry out the planned activities and provide working capital to enable it to meet its liabilities as they fall due, for the foreseeable future, and for at least the next twelve months from the date of approval of these financial statements. The directors therefore believe that the use of the going concern basis is appropriate.

2. Loss per share

The basic loss per ordinary share of (0.03)p (30 June 2013: (0.08)p; 31 December 2013: (0.15)p)for the Group has been calculated by dividing the loss for the period attributable to equity holders of £698,867 (30 June 2013: £1,300,043; 31 December 2013: £2,826,407) by the weighted average number of ordinary shares in issue of 2,409,154,187 (30 June 2013: 1,712,963,094; 31 December 2013: 1,856,288,943).

The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 2,475,551,997 (30 June 2013: 1,801,208,950; 31 December 2013: 1,944,938,258). 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.

The convertible note issued by the Company has an original face value of US$0.75 million and a term of 24 months at a 0.0 % interest rate. The note may be converted in whole or in increments of no less than US$50,000 at a conversion price of 100% of the average three consecutive daily VWAP, during the 20 trading days prior to conversion.

On 4 September 2013, US$150,000 of the outstanding convertible security was converted into 24,055,424 ordinary shares in the Company at a price of 0.4p.

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

i Shares issued to Shining Capital Management as satisfaction for Tranche Two funding of £1,860,000.

No 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 £51,833 (note 6) has been made for any future costs of decommissioning or environmental damage.