Half Yearly Report

11 December 2013

Mwana Africa PLC

("Mwana", the "Group" or the "Company")

Unaudited results for the six months to 30 September 2013

Mwana Africa PLC is pleased to announce its unaudited interim financial results for the six months to 30 September 2013.

Financial Highlights

· Consolidated Group revenues up 7% to $65.0m (30 September 2012: $60.7m).

· Profit after tax up 88% to $7.5m (30 September 2012: $4.0m).

· Cash balance of $9.2m at 30 September 2013.

· Subscription and placing of 242.8m shares at 1.57 pence per share in September 2013 raised approximately $6.0m.

· Fully diluted earnings per share down by 40% to 0.45 cents (30 September 2012: 0.75 cents).

Operational Highlights

Freda Rebecca

· Freda Rebecca produced 32,252ozs of gold in the six months to September 2013 (30 September 2012: 36,335ozs).

· C1 cash costs of $887/oz (30 September 2012:$797/oz) and all in C3 sustaining costs of $1,098/oz (30 September 2012: $993/oz).

· Leach tank repairs were completed at Freda Rebecca in the period.

Bindura Nickel Corporation

· First shipment of nickel in concentrate from Bindura Nickel Corporation's ("BNC") Trojan mine in April 2013 following a successful restart programme.

· BNC sold 2,191t of nickel in concentrate in the six months to September 2013 (30 September 2012: 0t).

· C1 cash costs of $11,909/t and all in C3 sustaining costs of $12,770/t (30 September 2012:n/a). 

Zani Kodo

· Test work carried out on samples taken from the Kodo Main ore body found the ore to be non-refractory and showed higher than 90% gold extraction across all the recovery methods tested. 

Katanga Copper

· Eight targets have been delineated at Lunsano. Reverse Circulation drilling has started at Lunsano. Other important targets have been delineated at Kitemena East, Kawesitu North, Lutobwe, Kifita, and, Lukosombi.

· Completion of planned geophysical and geological mapping surveys.

Klipspringer

· A joint venture agreement was signed with Greenhurst Mining and Exploration (Pty) Ltd ("Greenhurst") to re-treat fine residue tailings at the Klipspringer diamond mine on a profit share basis. Site preparation, construction of the processing plant and erection on site was completed by the end of the period.

Post Period Highlights

· SRK Consulting (UK) Limited ("SRK"), in a competent persons report, confirmed that the updated Trojan mine plan targeting the higher grade ore zones is realistic and achievable.

· BNC updated Trojan's ore reserves statement to total proven and probable reserves of 3.168Mt at an average grade of 1.04% for 32,975 tonnes of nickel, a 28% increase to the previously reported Trojan reserves as at 31 March 2010 of 25,810 tonnes of contained nickel.

· The total combined JORC compliant gold resource at Zani Kodo increased to 2.975Mozs at 2.43 g/t (based on a cut-off grade of 0.5 g/t), a 13% upgrade to the February 2013 resource update statement, which was itself a 30% increase to the previous February 2012 resource statement.

· In November 2013, Klipspringer sold the first parcel of diamonds (1,512 carats) produced under the Greenhurst tailings retreatment joint venture.

Kalaa Mpinga, Chief Executive Officer of Mwana Africa, commented:

"The fall in gold and nickel prices earlier in the year resulted in a difficult period for Mwana. We reacted swiftly to the challenge, commencing a corporate cost cutting exercise and raising approximately $6.0 million to resolve the immediate working capital shortfall. Mwana is now stable and we are focused on delivering value from all of our projects."

"Despite the difficulties brought on by lower commodity prices, the Company has achieved considerable progress on all of its main projects. Significantly, in Freda Rebecca and Trojan, we now have two mines in production, and our resource base in gold and nickel, together with the copper potential under our Joint Venture with Hailiang underpins a promising future for Mwana."

For further information contact:

Charl du Plessis, Executive Vice President Exploration of Mwana Africa, who holds a PhD and is a Member of the AusIMM, is a 'Qualified Person' as defined in the AIM Rules. The exploration and resource information contained in this report pertaining to Zani-Kodo have been reviewed and verified by Dr Du Plessis.

About Mwana Africa PLC

Mwana Africa PLC is a pan-African, multi-commodity mining and development company. Mwana's principal operations and exploration activities cover gold, nickel, copper and diamonds in Zimbabwe, the DRC and South Africa.

Mwana's Freda Rebecca gold mine in Zimbabwe, having restarted operations in 2009, produced 65,350 ozs of gold in the 12 months to March 2013.

In October 2013, Mwana announced that the gold mineral resource at its Zani Kodo project in Democratic Republic of Congo had increased to 2.975 million ounces.

In February 2013, Mwana announced it had signed a Joint Venture Agreement with Zhejiang Hailiang Company Limited to jointly explore some of its copper license areas in the Katanga Province of the DRC.

The restart of operations at The Trojan Nickel Mine (owned by Mwana's Zimbabwe subsidiary Bindura Nickel Corporation ("BNC")) followed four years during which all of the BNC assets were on care and maintenance. In September 2012, BNC carried out a restructuring and recapitalisation involving US$23m being invested into BNC which has allowed it to restart the Trojan mine. First sale of concentrate to Glencore took place in April 2013.

Six Month Review and Outlook

The six months to the end of September have been a difficult period during which the Company has had to react to falling nickel and gold prices. To illustrate this, the average gold price achieved by Freda Rebecca for the six month period to September 2012 was $1,642/oz compared to $1,352/oz for this six month period. Nickel prices also fell with BNC achieving an average nickel price of $14,268/t for the six months to September 2013, compared to the highs of $18,000/t in January 2013. In response to the lower commodity prices, Mwana initiated a corporate cost cutting exercise as well as suspending exploration drilling at its Zani Kodo project in the DRC. Mwana also concluded a share subscription and placing in September 2013, raising approximately $6.0m of funding which stabilised the Company financially. 

Despite the fall in the gold price, and resultant fall in revenue at Freda Rebecca, Group revenues increased by 7% for this period compared to September 2012 because the Trojan nickel mine commenced sales in April 2013, contributing significantly to Group revenue. Profits after tax increased by 88% to $7.5m for this period compared to September 2012. The Group is thus already enjoying the benefit of having BNC back in production and having two producing mines in its portfolio. 

Apart from the difficulties brought on by the lower commodity prices, the Company achieved considerable progress on all of its main projects. Operations at the Freda Rebecca Gold Mine stabilised during the period following the leach tank incident in the March 2013 quarter. Whilst recoveries initially suffered in the June 2013 quarter dropping to 78%, the September 2013 quarter saw them rise back above 80% to 84%. Freda Rebecca produced 32,252ozs for the period at a C1 cost of $887 per ounce and achieved revenue of $43.6m (30 September 2012: $59.6m).

In April 2013, BNC sold its first nickel concentrate since the restart of the Trojan nickel mine. This first shipment of concentrate marked a major milestone in the restoration of the Company's nickel assets, following a four year period of care and maintenance. During the period BNC implemented a new mine plan targeting the higher grade zones of the ore body, known as "massives". The impact of this is clearly seen in the drop of C1 costs from $19,251/t in the June 2013 quarter to $9,689/t in the September 2013 quarter. Post period, SRK confirmed in a competent persons report that the Trojan mine plan is realistic and achievable, and, BNC updated Trojan's Ore Reserves statement to total proven and probable reserves of 3.168Mt at an average grade of 1.04% for 32,975 tonnes of nickel. BNC sold 2,191t of nickel in concentrate for the period at a C1 cost of $11,909 per tonne and achieved revenue of $21.4m (30 September 2012: $0.992k).

Test work was carried out on samples taken from the Kodo Main ore body at Zani Kodo during the period. The ore was found to be non-refractory and showed higher than 90% gold extraction across all recovery methods tested. A resource update for Zani Kodo was announced post period, including updates to the Kodo Main and Lelumodi areas as well as a maiden resource for the Lelumodi North area. The total combined JORC compliant gold resource at Zani Kodo now stands at 2.975Mozs at 2.43 g/t (based on a cut-off grade of 0.5 g/t).

Exploration work within the Hailiang JV on our Katanga concessions has progressed well. Following completion of the Phase 1 programme, which resulted in the statutory shedding of 50% of ground holdings, the Phase 2 work programme commenced in July 2013. A target generation exercise has been conducted and has defined high priority targets for follow-up exploration during 2014. Eight targets have been delineated at Lunsano and reverse circulation ("RC") drilling has started here. Other important targets have been delineated at Kitemena East, Kawesitu North, Lutobwe, Kifita, and, Lukosombi.

Mwana also concluded an agreement with Greenhurst to re-treat fine residue tailings at the Klipspringer diamond mine on a profit share basis. The proceeds accruing to Klipspringer will assist in covering its care and maintenance costs.

Two new board appointments have been made with the Company welcoming Mr. Wellesley-Wood as Non-Executive Chairman and Mr. Kwan as Finance Director. A number of directors resigned and retired from the Company with Mwana thanking Mr. Baring, Mr. McAlister, Mr Anderson and Mr. Denis for their significant contributions over the years. The next six months will see Mwana continuing to implement its corporate cost cutting initiative, seeking greater efficiencies to improve throughput and recoveries at Freda Rebecca and consolidating the successes of the Trojan restart. The Group will also be considering the next steps for its Zani Kodo gold project in the DRC and BNC's smelter, refinery and Hunters Road project in Zimbabwe.

Review of Operations and Exploration

GOLD

Freda Rebecca Gold Mine - Zimbabwe

Production levels at Freda Rebecca recovered during this financial period from the leach tank incident that occurred at the end of the last financial year. The mine produced 32,252ozs of gold in the six months to September 2013, a decrease of 11.2% from the same period last year (30 September 2012 36,335ozs). Average monthly production for the period was 5,375oz of gold.

The decrease in gold produced for the six months was attributable to disruption due to the leach tank incident, lower grade and lower recoveries, which were partially offset by an increase in milled tonnage. Profits fell for the six month period relative to the same period in the previous financial year; this is attributable to lower head grade and recoveries and a lower gold price. Recoveries suffered due to the leach tank incident, falling to 81% for the six months to September 2013 (30 September 2012: 82%). However, recoveries have already begun to improve towards the end of the period with the quarter to September 2013 showing recoveries of 84% versus 78% in the quarter to June 2013.

Table 1: Freda Rebecca production results for the six month periods to 30 September 2012 and 30 September 2013

Figures shown are unaudited and may vary upon final audit. Gold ounces produced incorporate gold released from or caught in 'lock-up' for each period.

C1 Cash cost includes costs for mining, processing, administration, accounting movements for stockpiles and gold-in-circuit, and, net proceeds from by-product credits. It excludes capital costs for exploration, mine development or processing mill capital works, and, the cost of royalties.

C2 Production Cost reflects C1 costs plus depreciation and amortisation, thus incorporating the capital cost of production.

C3 Total Cost reflects C2 plus interest, other indirect costs and royalties. Total cost represents all costs attributable to gold production over the period.

Table 2: Freda Rebecca unaudited key financial performance indicators for the six month periods to 30 September 2012 and 30 September 2013

The numbers shown are after the elimination of intercompany transactions within the group for consolidation purposes

Construction of the pilot plant for tailings retreatment is complete and has entered the commissioning phase.

Zani-Kodo - Democratic Republic of Congo

Test work was carried out on samples taken from the Kodo Main ore body at Zani Kodo during the period. The ore was found to be non-refractory and showed higher than 90% gold extraction across all the recovery methods tested. The ore showed high amenability to the following process routes for gold recovery:

• Cyanidation on a milled run of mine ("ROM") ore

• Gravity recovery followed by cyanidation on the gravity concentrate and gravity tails

• Normal flotation on ROM followed by cyanidation

• Flash flotation on ROM followed by cyanidation

• Gravity concentration followed by flotation on the gravity tails and intense leach on the gravity concentrate, and float concentrate with carbon in leach ("CIL") on the final float tails.

In response to lower commodity prices and a requirement to cut costs, Mwana suspended exploration drilling at Zani Kodo during the period. Prior to the cessation of drilling, 42 diamond core drill holes for a total of 11,268m were completed.

A resource update was announced post period. This included updates to the Kodo Main and Lelumodi areas as well as a maiden resource for the Lelumodi North area.

The updated resource is shown in Table 5, with the location of sub-areas shown in Figure 1.

For associated map (Figure 1), please click on, or paste the following link in to your web browser, to view the PDF file:

http://www.rns-pdf.londonstockexchange.com/rns/2195V_-2013-12-10.pdf

Table 5: Zani Kodo JORC compliant Resource

The overall resource increased by 13% to 2.975Mozs and the Indicated resource increased by 16% to 0.634Mozs.

In accordance with the transition towards JORC 2012 requirements, a fourth (Exploration Target) classification has been introduced for additional deep extensions at Zani Kodo and strike extensions at Lelumodi North. In line with JORC compliant resource practice, the Exploration Target is not included in the resource numbers in Table 5.

Based on the excellent geological continuity at Kodo this projected target is anticipated to be in the range of 1.3 to 2.3Mt at an average grade of 3 to 4g/t (Note: Figures are expressed as ranges to reflect uncertainty in the estimate.)

At Lelumodi North excellent geological control is also present and given the open ended nature of the mineralized zones, Exploration Target estimates for the area have been defined. This target is anticipated to be in the range of 1.5 to 3Mt at an average grade of 2 to 2.5g/t (Note: Figures are expressed as ranges to reflect uncertainty in the estimate).

Additional drilling is required to upgrade the Exploration Target to JORC compliant resource status.

NICKEL

Bindura Nickel Corporation - Zimbabwe

Following the successful restructuring of BNC and commencement of the restart programme at the Trojan nickel mine, BNC sold its first nickel in concentrate in April 2013. This first shipment of concentrate marked a major milestone in the restoration of the Company's nickel assets, following a four year period of care and maintenance.

In August 2013 Mwana and BNC announced that the Trojan mine plan had been revised to target the higher grade zones of the ore body, known as "massives". The occurrence of the massives enables higher grade ore to be mined and thus reduces the cost per tonne of nickel produced, significantly improving the prospects of the Trojan mine.

In October 2013, Mwana announced the completion of a competent person's review by SRK Consulting (UK) Limited ("SRK") of the updated Trojan mine plan, in which SRK confirmed that the plan is realistic and achievable. This enabled BNC to update Trojan's ore reserves statement to total proven and probable reserves of 3.168Mt at an average grade of 1.04% for 32,975 tonnes of nickel, a 28% increase to the previously reported Trojan reserves as at 31 March 2010 of 25,810 tonnes of contained nickel.

The six month period to September has been characterised by the ramp up of production and the shift to the new mine plan, with record production months in both August and September. The impact of the new mine plan on costs is most clearly seen in the low C1 costs of $9,689/t for the September 2013 quarter, down from $19,251/t in the June 2013 quarter.

Table 3: BNC production results for the six month periods to 30 September 2012 and 30 September 2013

Figures shown are unaudited and may vary upon final audit.

Average Nickel Price represents the average LME nickel price utilised under the terms of the Glencore offtake contract.

C1 Cash Cost includes costs for mining, processing, administration, offtake TCRC's and penalties, transport costs, accounting movements for stockpiles, and net proceeds from by-product credits. It excludes capital costs for exploration, mine development or processing mill capital works, and, the cost of royalties.

C2 Production Cost reflects C1 costs plus depreciation and amortisation, thus incorporating the capital cost of production.

C3 Total Cost reflects C2 plus interest, other indirect costs and royalties. Total cost represents all costs attributable to nickel production over the period.

Table 4: BNCunaudited key financial performance indicators for the six month periods to 30 September 2012 and 30 September 2013

The numbers shown are after the elimination of intercompany transactions within the group for consolidation purposes. The September 2013 numbers shown are after the reversal of depreciation on assets that were impaired at the March 2013 year-end.

All 2,191t of nickel in concentrate sold was sold under the terms of BNC's offtake agreement with Glencore.

COPPER

Katanga Copper- Democratic Republic of Congo (click link for Figure 2)

Following completion of the Phase 1 programme, which resulted in the statutory shedding of 50% of ground holdings, the Phase 2 work programme commenced on 15 July 2013. The programme has been executed by three Hailiang sub-contractors (i.e. Huakuan, Inner Mongolian and SinoMine) and the SEMHKAT technical team as a short-term sub-contractor. Huakan and Inner-Mongolian completed their planned geophysical and geological mapping surveys. SinoMine was still active on its geophysical and geological programmes at the end of the reporting period.

A target generation exercise has been conducted and has defined high priority targets for follow-up exploration during 2014. The targeting criteria included:

• Favorable lithology and structures from both Gecamines regional mapping and prospect-scale mapping by SEMHKAT;

• Historical soil geochemistry results;

• Recent IP and ground-mag geophysical survey results.

Eight targets have been delineated at Lunsano (click link for Figure 3). Reverse circulation (RC") drilling has started at Lunsano. Other important targets have been delineated at Kitemena East (PR758), Kawesitu North (PR975), Lutobwe (PR779), Kifita (PR751), and, Lukosombi (PR768)

SEMHKAT commenced an exploration programme on Lutobwe, Lombe, Kapande and Mifumbi. The Lutobwe programme was completed by the end of September. On Lutobwe a significant thrust-hosted massive to replacement hydrothermal magnetite alteration zone (7km long strike averaging 300m width) with a strong cobalt response (Niton quick assay) has been discovered (click link Figure 4). This discovery needs to be confirmed by laboratory assays.

For associated maps (Figures 2, 3 & 4), please click on, or paste the following link in to your web browser, to view the PDF file:

http://www.rns-pdf.londonstockexchange.com/rns/2195V_1-2013-12-10.pdf

DIAMONDS

Klipspringer Diamond Mine - South Africa 

During the period, Mwana's subsidiary, Southern Era, concluded an agreement with Greenhurst Mining and Exploration (Pty) Ltd ("Greenhurst") to re-treat fine residue tailings at the Klipspringer diamond mine on a profit share basis. The proceeds accruing to Klipspringer will assist in covering its care and maintenance costs. In terms of the agreement Greenhurst will supply and operate a diamond processing facility to extract diamonds that are 0.5mm-1.5mm in size. Southern Era will not incur any operating costs nor be required to invest in the project. The recovered diamonds will be sold by open tender.

Greenhurst engaged the services of Gemcore Sampling (Pty) Ltd ("Gemcore") to collect and process bulk samples from the slimes dams. Gemcore is a bulk sampling company based in Kimberley, South Africa, that has completed several bulk sampling projects in Southern Africa. Sampling of the Marsfontein and Klipspringer fine residue tailings was completed in late 2012 and the results demonstrated that there are sufficient quantities of diamonds present to make re-treatment economically viable. In November 2013, Klipspringer sold the first parcel of diamonds (1,512 carats) produced under the tailings retreatment joint venture. Gemcore will remain as the operator for this project and will be responsible for both the mining and processing of the slimes material. The project is funded by Greenhurst using a mix of asset finance and shareholder contributions.

Site preparation, construction of the processing plant and erection on site was completed by the end of September 2013. Commissioning of the plant is also complete and the first tailings material was processed through the plant on 10 October. The plant is currently operating on three shifts per day and a steady ramp up of production is under way. At steady state the plant will process 22,560 tons of slimes material per month at a grade of 0.89 carats per ton. 

Diamonds - other interests

Mwana Africa has minority stakes in a number of other diamond projects including a 20% interest in Societe Miniere de Bakwanga (MIBA) in the DRC, an 18% interest in the Camafuca project in Angola and 55% interest in the BK16 project in Botswana.

Mwana currently holds 55% of BK16 and has entered into an agreement with Firestone Diamonds whereby Firestone can earn up to 87.5% of BK16 for financing and carrying out all work up to the completion of a bankable feasibility study.

Condensed Group interim financial statements

For the six months ended 30 September 2013

(Unaudited)

Financial Review

Income Statement

The Group reported revenue of $65m for the period (H1 2012: $60.7m). Freda Rebecca generated $43.6m of revenue (H1 2012: $59.7m) from the sale of 32,252oz of gold (H1 2012: 36,335oz) and BNC generated $21.4m of revenue (H1 2012: $1.0m) from the sale of 2,191t of nickel in concentrate.

The Group generated a gross profit of $27.3m for the period (H1 2012: $33.1m); $15.4m at Freda Rebecca and $11.9m at BNC.

Operating costs of $55.9m (H1 2012: $49.6m) increased from the previous year mainly due to the restart of BNC's Trojan mine.

No impairment or reversal of impairment of assets was recorded in the period. The Group reported a profit before tax of $10.0m (H1 2012: $10.1m).

Fully diluted earnings per share for the period was 0.45 cents per share (H1 2012: 0.75 cents per share).

Cash flow

During the period the Company raised approximately $6.0m through an equity issue. This was achieved through the placing of and subscription for 242,834,776 ordinary shares in September 2013.

The Group generated $12.9m of cash flow from operations during the period. $13m and $5.3m of operating cash flows were generated, respectively, by Freda Rebecca and BNC. These were offset by $0.5m of care and maintenance costs at Klipspringer diamond mine, $0.1m of exploration costs and $4.8m on corporate costs. $12.1m of cash flow was absorbed by working capital; mainly from the repayment of creditors and an increase in debtors at Freda Rebecca and BNC. Financing costs were $0.3m and income tax charges of $0.5m, mainly on the profits of Freda Rebecca, resulted in net cash outflow from operations of $0.1m.

Capital investment comprised $7.9m (H1 2012: $4m) on property, plant and equipment, principally at BNC, and a further $3.9m (H1 2011: $6.6m) on exploration assets.

Capital commitments at the end of the period comprised of $330k at BNC and $386k at Freda Rebecca.

At 30September 2013, the Group, held cash balances of $9.2m (H1 2012: $39.9m).

Condensed Group balance sheet

As at 30 September 2013

(Unaudited)

Condensed Group income statement

For the six months ended 30 September 2013

(Unaudited)

Condensed Group statement of comprehensive income

For the six months ended 30 September 2013

(Unaudited)

Condensed Group statement of changes in equity

For the six months ended 30 September 2013

(Unaudited)

Condensed Group cash flow statement

For the six months ended 30 September 2013

(Unaudited)

Notes to the condensed Group interim financial statements

For the six months ended 30 September 2013

(Unaudited)

1. Reporting entity

Mwana Africa PLC (the "Company") is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 September 2013comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities. The audited consolidated financial statements of the Group as at and for the year ended 31 March 2013 are available upon request from the Company's registered office at 43 Palace Street, London, SW1E 5HL or at www.mwanaafrica.com.

2. Statement of compliance

These condensed financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting, as adopted by the EU. These condensed financial statements have been prepared using the same accounting policies as used in the preparation of the Group's annual financial statements for the year ended 31 March 2013, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS"). They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2013. The financial information presented in this document is unaudited.

The comparative figures for the financial year ended 31 March 2013 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was unqualified, included emphasis of matter paragraphs in which the auditor drew attention to significant uncertainties that may cast significant doubt regarding going concern and the carrying value of investments, and did not contain a statement under section 498(2) or (3) of the Companies Act 2006. These sections address whether proper accounting records have been kept, whether the Company's accounts are in agreement with those records and whether the auditor has obtained all the information and explanations necessary for the purposes of its audit.

3. Going concern

The Directors, having considered the Group's and the Company's current trading activities, funding position and projected funding requirements and the Zimbabwean environment for the period at least twelve months from the date of approval of these Interim Financial Statements, consider it appropriate to adopt the Going Concern basis in preparing the Interim Financial Statements for the six months ended 30th of September 2013.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Operational Review on pages 3 to 10. The financial position of the Group, its cash flows and liquidity position are as set out in the Financial Review on page 11.

The group reports a profit for the six months ended 30 September 2013 of $7.5 million (September 2012: $4.0 million). As at 30 September 2013, the group held cash of $9.2 million.

During the six months to 30 September 2013, Freda Rebecca's cash flow contribution to the Group fell due to a lower gold price and lower production relative to the same period last year. However, BNC's Trojan nickel mine recommenced production in this period which augmented the Group's cash flow. Having two mines in production represents a strengthening of the Group's cash generating ability.

Discussions are on-going with the Zimbabwean Government pertaining to the implementation of the country's Indigenisation Act in relation to Mwana's Zimbabwean assets. Mwana's implementation of the Indigenisation Act may reduce the quantum of cash flow Mwana receives from its Zimbabwean entities. Furthermore, the lack of clarity around indigenisation makes it harder for Mwana to raise funding as required for its Zimbabwean assets.

The Directors have prepared the cash flow forecasts of the Group and are of the opinion that the Group's current cash resources, together with the cash forecast to be generated by Freda Rebecca and BNC, are sufficient to fund all of the Group's planned activities for at least twelve months from the date of these Financial Statements.

The Directors are aware that various uncertainties might affect the validity of their forecasts. These uncertainties include metal prices, mining and processing risks and resource and reserve risks, in addition to indigenisation risks in Zimbabwe. The Directors, however, believe they have the ability to manage cash flows and implement indigenisation proposals in such a way to minimise the cash flow impact to the Group. However, the Directors acknowledge that there is no certainty of successfully carrying out mitigating steps.

The Directors have concluded that the combination of these circumstances represents a material uncertainty that may cast significant doubt on the Company's and the Group's ability to continue as a going concern and that therefore the Company and the Group may be unable to realise all their assets and discharge all of their liabilities in the normal course of business.

Nevertheless, after making enquiries and considering the uncertainties described above the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing these Financial Statements which do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

4. Significant accounting policies

In the preparation of these condensed financial statements, the Group has applied the same accounting policies as those presented in the Group's consolidated financial statements for the year ended 31 March 2013, as set out on pages 53 to 57 of the Annual Report, as adjusted for the effects of the following amendments to published standards and interpretations are effective for the Group for the half year ended 30 September 2013:

· Amendments to IFRS 7, Financial Instruments: Requires additional disclosure about transfer of financial assets e.g. securitisations and should enable users to understand the possible effects of any risks that may remain with the transferor.

· IFRS 13 'Fair Value Measurement', issued in May 2011 and endorsed by the EU in December 2012, is a new standard that aims to improve consistency and reduce complexity of fair value measurement techniques adopted in financial statements. As the requirements, which are largely aligned between IFRSs, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs, the adoption of the standard is not expected to have a material impact on the financial position or performance of the Group. The effective date for application in the EU has not yet been set;

· IFRIC 20 'Stripping Costs in the Production Phase of a Surface Mine' issued in October 2011 and endorsed by the EU in December 2012, is effective for the accounting period beginning on 1 January 2013. This interpretation applies to the treatment of waste removal (stripping) costs incurred in surface mining activity during the production phase of a mine. The Group has assessed that IFRIC 20 will have no material impact on its financial position and performance as the Group has no significant surface mining activity;

The Group has reviewed the effect of these amendments and interpretations, and has concluded that they have no material impact on these condensed consolidated interim financial statements.

The Group is currently assessing the potential impacts of the other new and revised standards and interpretations that will be effective from 1 April 2014 and beyond, and which the Group has not early adopted. The Group does not anticipate that these will have a material impact on the Group's overall results and financial position.

Standards, Amendments and Interpretations that are not yet effective

The following new, revised and amended standards and interpretations have been issued and endorsed by the EU unless otherwise stipulated, but are not yet effective and have not been adopted by the Group in these consolidated financial statements.

· IFRS 9 'Financial Instruments', IASB effective 1 January 2015, however, not yet endorsed by the EU. Based on the nature of the Group's financial assets, the adoption of the standard is not expected to have a material impact on the financial position or performance of the Group;

· IFRS 10 'Consolidated Financial Statements', issued in May 2011, replaces the consolidation requirements in SIC-12 'Consolidation - Special Purpose Entities' and IAS 27 'Consolidated and Separate Financial Statements'. This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.

The standard has been endorsed by the EU and is effective for the accounting period beginning on 1 January 2014. The Group is yet to assess IFRS 10's full impact on its financial position or performance;

· IFRS 11 'Joint Arrangements', issued in May 2011, replaces IAS 31 'Interests in joint ventures'. The standard establishes accounting principles based on the rights and obligations of the joint arrangement rather than its legal form. The standard introduces two types of joint arrangement - joint operations and joint ventures - and eliminates proportionate consolidation for any form of joint arrangement. The standard has been endorsed by the EU and is effective for the accounting period beginning on 1 January 2014. The Group is yet to assess IFRS 11's full impact on its financial position or performance;

· IFRS 12 'Disclosure of Interests in Other Entities', issued in May 2011, is a new standard that establishes the disclosure requirements for all entities that a Group has an interest in, including subsidiaries, joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. The standard has been endorsed by the EU and is effective for the accounting period beginning on 1 January 2014. The Group is yet to assess IFRS 12's full impact on its financial position or performance; and

· Improvements to IFRSs. There are a number of amendments to certain standards following the 2011 annual improvements project which have not yet been endorsed by the EU. The impact of any consequential changes to the consolidated financial statements is not likely to be significant.

5. Operating segments

The Group has four reportable segments, as described below, which are the Group's strategic business units.

The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies.

The following summary describes the operations in each of the Group's reportable segments:

· Gold: Gold mining activities

· Nickel: Nickel mining. Smelting and refining activities are currently on care and maintenance

· Diamonds: Diamond mining activities currently on care and maintenance

· Exploration: Gold and base metal exploration activities

Information about reportable segments - Operations

6. Property, plant and equipment