Interim Results

North River Resources plc / Ticker: NRRP / Index: AIM / Sector: Mining

30 September 2014

North River Resources plc

('North River' or 'the Company')

Interim Results for the six months ended 30 June 2014

North River Resources plc, the AIM listed resource company focussed on Namibia, is pleased to announce its unaudited interim results for the six months ended 30 June 2014.

Overview:

· The Company has made significant progress towards first production at its flagship Namib Lead-Zinc-Silver Project, this includes:

o a 36% increase in the underground Mineral Resources from 0.92Mt to 1.25Mt

o an increase in the reported zinc and lead head grades from 5.2% and 2.4% to 6.5% and 2.5% respectively

o Completion of the Mine Development Plan ('MDP')

o Multiple high grade drill intercepts (up to 9.76% Zn and 2.73% Pb over 46.3m) below known existing mineralisation

· Engaged CSA Global (UK) Ltd and Bara Consulting to elevate the MDP to a full Definitive Feasibility Study

· Namibian Government clearance for Environmental Impact Assessment ("EIA") and Environmental Management Plan ('EMP')

· Application for a Mining Licence submitted

· $12.0m project equity funding secured from Greenstone Resources LP (subject to meeting project miletsones)

· Detailed implementation planning and site preparation underway:

o construction of site offices

o surface and underground communications installed

o mine access road upgraded

o long lead-time equipment procurement process started

· Loss before taxation of £1,726,901 for the period (30 June 2013: loss of £772,515) as the Company continues its development of the flagship Namib Lead-Zinc-Silver Mine

Managing Director's Statement

Our core strategy for the Namib-Lead-Zinc-Silver Mine in Namibia ('Namib' or 'the Project') is focussed on achieving commercial, low-cost production in the near term and I am pleased to report that we met a number of key objectives towards this goal during the period and in the subsequent months. 

Having defined a resource of 917,000 tonnes at 2.4% lead ('Pb'), 5.7% zinc ('Zn') and 44.8g/t silver ('Ag') in December 2013, we commenced further drilling at the beginning of the year, targeting both new extensions of known mineralised shoots, as well as infill drilling to convert Inferred Resources into the higher confidence Indicated category. A total of 45 new diamond drill holes were completed (4,090 m). On the back of this programme, which recovered significant quantities of high grade mineralisation, we recently announced a 36% increase in our JORC Mineral Resource to 1,250,000 tonnes. Within this, Indicated Resources have increased by 33% to 877,000 tonnes, at 2.7% Pb, 6.0% Zn and 44.4 g/t Ag. Notably, the average zinc grade has increased by 13% and the average lead grade by 4%. 

The resource increase at Namib was undertaken in connection with the Company's plan to complete a forthcoming Feasibility Study for the project. Having already demonstrated that the Project has good economics based on the previous Mineral Resource by way of a Mine Development Plan ('MDP'), we appointed CSA Global (UK) Ltd (CSA) and Bara Consulting (Bara) to elevate this to feasibility status. With the new Resource, published on 19 September 2014, we believe that this has the potential to increase the economics of the project and further to the completion of metallurgical studies, verification and mine design work, we will have all the pre-requisites in place to deliver initial JORC Reserves and a Definitive Feasibility Study. 

A milestone for the Company was our entry into a Binding Investment Agreement with Greenstone Resources for $12.0 million of new equity funding subject to completion of a number of project milestones, announced on 4 July 2014. The agreement will provide funding to complete the Definitive Feasibility Study, the approval process for the mine restart, and full development equity funding. 

We have also proactively progressed the permitting process to re-commission Namib during the period. As a result of this, we have been granted environmental clearance for our Environmental Assessment and Environmental Management Plan for the project by the Ministry of Environment and Tourism of the Republic of Namibia, as announced on 30 June 2014. Further to this, detailed implementation planning and site preparation is underway at Namib with site offices being installed and heavy equipment procurement being evaluated. In April, we also made an application for a Mining Licence for Namib with the Ministry of Mines and Energy in Namibia.

Financial Review

The Company is reporting a loss before taxation of £1,726,901 (30 June 2013: loss of £772,515). Due to the Group's heightened focus on Namib, its expenditure on its additional assets has been substantially reduced, and the Group focussed primarily on the Feasibility Study at Namib during the period. The Group has worked hard to minimise administrative overhead.

The Company's cash position at the end of the period was £528,796 (31 December 2013: £577,551). On 4 July 2014, North River announced the signing of a Binding Investment Agreement with Greenstone, whereby Greenstone will invest up to $12.0 million in the Company in a series of tranches by way of equity subscriptions and one or more non-secured, non-redeemable, zero coupon convertible debentures, which significantly reduces the near term financing risks associated with the Company. The first tranche of $3.125 million was received in July 2014. In addition to significantly de-risking the development phase of Namib, by providing North River with the construction equity funding, it also enables the Company to complete the study and approval process for Namib, accelerate development through early works and to place long-lead item orders. The full details of the agreement can be found in the announcement dated 4 July 2014.

During the period, the Company also conducted placings which saw a total of £1,225,000 raised successfully to continue the current drilling programme, feasibility study and for general working capital purposes.

Outlook

I believe that Namib distinguishes itself as a rare, and attractive project: a brownfield asset with modest capital expenditure, established infrastructure and robust economic fundamentals. With this in mind it continues to be prioritised in the North River portfolio of assets, due to its potential to generate meaningful revenues in the near term and a highly attractive IRR of 38 per cent based on the MDP announced in June 2014. The coming months will see this potential value translated into more tangible terms following the publication of the Feasibility Study and the achievement of additional components required in our journey to production, including the grant of a Mining Licence.

I continue to be highly encouraged by the progress being made operationally at Namib, and corporately with our partners and other stakeholders. I look forward to providing further updates regarding our advancement towards production in due course. In the meantime, I would like to take this opportunity to thank our valued shareholders again for their support as we look forward to another year of progress at North River. 

Martin French

Managing Director

30 September 2014

For further information please visit www.northriverresources.com or contact:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 1 JANUARY 2014 TO 30 JUNE 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 JANUARY 2014 TO 30 JUNE 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM 1 JANUARY 2014 TO 30 JUNE 2014

Cash and cash equivalents comprise cash in hand and bank balances.

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2014

1. BASIS OF PREPARATION

The condensed half year accounts have been prepared using accounting policies based on International Financial Reporting Standards (IFRS and IFRIC Interpretations) issued by the International Accounting Standards Board ("IASB") as adopted by the European Union, including IAS 34 'Interim Financial Reporting' and IFRS 6 'Exploration for and Evaluation of Mineral Resources' and on the historical cost basis.

The Group's financial risk management objectives and policies are consistent with those disclosed in the 2013 annual report.

These interim results for the six months ended 30 June 2014 are unaudited and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. They have been prepared using accounting bases and policies consistent with those used in the preparation of the financial statements of the Company and the Group for the year ended 31 December 2013 and expected to be adopted in the financial year ending 31 December 2014. The financial statements for the year ended 31 December 2013 have been delivered to the Registrar of Companies and the auditor's report on those financial statements was unqualified and did not contain a statement made under Section 498(2) or Section 498(3) of the Companies Act 2006. The auditors' report included an 'emphasis of matter' in connection with the Group's going concern and licence renewal position.

The Directors believe that the Group will be able to raise as required, sufficient cash to enable it to continue its operations, and continue to meet, as and when they fall due, its planned and committed exploration and development activities and liabilities for at least the next twelve months from the date of approval of these condensed half year accounts. For this reason the Directors continue to adopt the going concern basis in preparing the accounts.

Applications for the Namib Lead Mining Licence and the renewal of several exploration EPLs in the Licence Areas have been made and are awaiting confirmation. If the Mining Licence is not received or the EPLs are not renewed then the Directors would have to reconsider the position of the Group and the resulting ability to continue operations as planned. The Directors believe that all outstanding licence confirmations will be received within the normal time duration for these applications.

The condensed half year accounts include unaudited comparative figures for the half year ended 30 June 2013 and comparatives for the year ended 31 December 2013 that have been extracted from the audited financial statements for that year.

No new IFRS standards, amendments or interpretations became effective in the six months to the 30 June 2014 which had a material effect on this consolidated interim financial information.

2. SEGMENT REPORTING

For the purposes of segmental information, the operations of the Group are focussed in the United Kingdom, Namibia and Mozambique and comprise one class of business: the exploration and evaluation of mineral resources.

The Company acts as a holding company.

The Group's operating loss for the period arose from its operations in the United Kingdom, Namibia and Mozambique. In addition, all of the Group's assets are based in the United Kingdom, Namibia and Mozambique.

Geographical Segment - Group 30 June 2014 (UNAUDITED)

At the end of June 2014, the Group had not yet commenced commercial production from its exploration sites and therefore had no turnover for the period.

Geographical Segment - Group 30 June 2013 (UNAUDITED)

Geographical Segment - Group 31 December 2013 (Audited)

3. LOSS PER SHARE

The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued and has been kept the same as the conversion of share options decreases the basic loss per share, thus being anti-dilutive.

4. GOODWILL

The Company acquired, on 20 November 2009, the entire issued share capital in, and the shareholder loans to, West Africa Gold Exploration (Namibia) (Pty) Ltd ("WAGE") and Namib Lead and Zinc Mining (Pty) Ltd ("Namib Lead"). The consideration paid by the Company for these two Namibian entities and the shareholder loans was satisfied by the allotment of 266,666,667 Ordinary shares of £0.002 each ("Ordinary shares") at a price of 3 pence per Ordinary share.

Goodwill impairment review

The Directors are of the opinion that the Goodwill acquired in respect of WAGE and Namib Lead in November 2009 represents the value of the licence areas held by WAGE and Namib Lead at 30 June 2014. However, this goodwill has been written down by £92,782 in prior years being the value of the Ubib Exclusive Prospecting Licences (EPL) 3139 which, was relinquished in April 2013.

5. INTANGIBLE ASSETS

6. PROPERTY, PLANT AND EQUIPMENT

7. INVESTMENT IN JOINT VENTURE

Brandberg Energy (Proprietary) Limited ('Brandberg') was a 50:50 joint venture with Extract Resources Ltd ('Extract') and NRR Energy Minerals Limited. NRR Energy Minerals Limited transferred US$800,000 (£509,635) to Brandberg to acquire its share in the JV in January 2012. The principal assets of Brandberg were EPL 3327 and EPL 3328, pursuant to which Brandberg had the rights to explore for nuclear fuel minerals. Located west and north respectively of the historic tin mining centre of Uis in western Namibia, previous exploration activity undertaken by Brandberg has shown that these licences have the potential to host secondary uranium deposits associated with palaeodrainages of the Orawab and Ugab ephemeral river systems. The subscription funds were used by Brandberg to expedite further uranium exploration on these licences. The exploration activity to discover uranium was unsuccessful and in January 2013 the licences were relinquished. The decision was made to close Brandberg and return any assets to its shareholders by way of a dividend.

8. INVESTMENT IN ASSOCIATED COMPANY

The following entity meets the definition of an associate and has been equity accounted in the consolidated interim financial information:

North River Resources (Murrupula) Limitada ('Murrupula') is a company that was registered in Mozambique on 27 January 2011. The Group's 40% interest in Murrupula is jointly held by North River Resources Plc (20%) and NRR Mozambique Limited (20%). It is the beneficial owner of two exploration licences, which are in the process of being registered in the name of the company by the Ministry of Mines in Mozambique. The licences and Murrupula are the subject of a joint venture ("JV") agreement between Baobab Resources Limited ("Baobab") and North River Resources Plc. Under the JV agreement Baobab was entitled to a 60% participation interest in Murrupula on completing an agreed level of exploration expenditure before 13 November 2011. Baobab has completed the agreed exploration work and is now entitled to 60% ownership of Murrupula. Due to the fact that the exploration licences have not yet been registered in the name of Murrupula, legal control over Murrupula has not yet passed to Baobab, however effective control has passed. Accordingly, this consolidated interim financial information has been prepared on the basis that control has passed and that Murrupula is treated as an associate as from 1 October 2011.

9. SHARE CAPITAL

Allotted, issued and fully paid:

10. SUBSIDIARY ENTITIES

The consolidated interim financial information includes the following group companies:

NRR Energy Minerals Limited and NRR Mozambique Limited act as holding companies to associates, joint venture companies and subsidiaries in Namibia and Mozambique respectively.

11. SHARE-BASED PAYMENTS

Share options outstanding

Details of share options outstanding as at 30 June 2014:

All share options were fully expensed in prior periods.

12. CONTROL

No one party is identified as controlling the Group.

13. EXPLORATION EXPENDITURE COMMITMENTS

Restoration commitments

The Company has no obligations to undertake any rehabilitation or restoration activity on the licences currently held.

Existing Exploration Licences in Namibia

The Group has a number of exploration licences in Namibia. There is a commitment to spend £1,860,000 on these licences through 2014 and into 2015. There is scope in the Mines and Minerals Act for expenditure to be altered by the Company and still keep the licences in good standing. The commitments are based on a positive outcome for all stages of work within the period of tenure of each licence. It should also be noted that if the project has negative results in the first 6 months of the licence tenure - then the project can be terminated without further expenditure.

Existing Exploration Licences in Mozambique

The Group has a 40% interest in a licence in Mozambique, through its associated company North River Resources (Murrupula) Limitada. The cost of maintaining this licence is not significant to the Group and will be borne by North River Resources plc (see Note 8).

14. SUBSEQUENT EVENTS

$12.0 million project equity agreement with Greenstone Resources and placing of $3.125 million:

In July 2014 Greenstone Resources LP ("Greenstone") completed a share placing totalling £1,823,531 ($3.125 million) and signed a binding investment agreement, whereby Greenstone will invest up to $12.0 million in the Company in a series of tranches by way of equity subscriptions and one or more non-secured, non-redeemable, zero coupon convertible debentures. This agreement will provide North River Resources with funding to complete the feasibility study and the approval process for Namib to accelerate development through early works and the placing of long-lead item orders, as well as providing construction equity funding.

Environmental Clearance for Namib:

At the end of July 2014 environmental clearance was granted for the Environmental Assessment and Environmental Management Plan for the re-commissioning of Namib. This is an important prerequisite for the granting of a Mining Licence.

Increase in underground Mineral Resources at Namib:

On 19 September 2014 the Company announced a 36% increase in total underground mineral resources to 1,250,000 tonnes. Made up of 877,000 tonnes indicated and 372,000 tonnes inferred, with increases in the reported zinc and lead grades to 6.5% and 2.5% respectively.

In September 2014 a number of engineering firms have been invited to tender for an Engineering, Procurement, Construction Management ("EPCM") contract for the turn-key construction of a processing plant at Namib.

15. AVAILABILITY OF INTERIM REPORT

A copy of these results will be made available for inspection at the Company's registered office during normal business hours on any week day. The Company's registered office is at One America Square, Crosswall, London, EC3N 2SG.

A copy can also be downloaded from the Company's website at www.northriverresources.com. North River is registered in England and Wales with registered number 05875525.