PRELIMINARY RESULTS

Ortac Resources Ltd / Epic: OTC / Market: AIM / Sector: Mining & Exploration

ORTAC RESOURCES LTD ('ORTAC' OR 'THE COMPANY')

PRELIMINARY RESULTS

Ortac Resources Ltd, the AIM listed exploration and development company focussed on natural resource projects in Europe, announces its Preliminary Results for the year ended 31 March 2013.

CHAIRMAN'S STATEMENT

Introduction

The last 12 months have been perhaps the most active period for Ortac since it was founded. Our activities have been directed on three fronts: firstly, the technical advancement its Šturec Gold Deposit in Slovakia ('Šturec or 'the 'Deposit''), secondly the evolution of the Šturec Project to a win-win proposal for all stakeholders, and thirdly a sector wide review to seek out a new project to complement our Slovak portfolio.

Operations

On the technical front, during the financial year Ortac updated the Mineral Resource and completed a Pre-Feasibility Study (PFS) of the Šturec Deposit. The PFS builds upon the Scoping Study that we completed in January 2012 and demonstrates that Šturec can be developed with robust profitably, even below current metal prices, whilst still respecting the concerns of the local community and the environment.

The highlight of the PFS was at a straight line base case gold price of $1,350/oz, the project generates a post tax Net Present Value of US$145m (at an 8% discount rate) and an Internal Rate of Return of 30%. Equally importantly, given the decline in the gold price in recent months, there is a considerable buffer between the base case prices used and project break even levels. 

In addition to the PFS, Ortac has commenced detailed baseline environmental surveys of the local and regional biodiversity, habitats and ecosystems. This work is being undertaken in association with some of Slovakia's most respected experts. It is planned that the results of this work will then be made publicly available, to enable the Company, the Slovak Authorities and the local communities to make informed decisions regarding the project and, it is envisaged that after a period of consultation, Ortac will be able to submit a Preliminary Environmental Report and begin the EIA process for the project. 

Operationally, we have substantially added to Ortac's in country presence, with the appointment of a Slovak Managing Director for Slovakia in May 2012 and this has been followed by other key local appointments and partnerships. 

In terms of project development and community engagement two key initiatives are now coming to fruition: namely Šturecland, and the foundation of Forum Kremnicko. 

Firstly Šturecland, this is an interim name for a green energy, tourism development funded from the extraction of gold and silver in Šturec. At its heart, Šturecland is a vision based upon using the known precious metal and geothermal energy resources to support a sustainable economic future for the Company and the region, and it is one that uses future mining activity as an integral part of the project's construction process.

The elaboration of Šturecland has been an intensive piece of engagement work involving many different parties and experts over the last year. The concept has evolved as a result of our in-country teams efforts, and is being developed in line with both the Aarhus Convention and applicable Equator principles. Šturecland is the cornerstone on which the next steps of our project development process will proceed, and engagement on it by the local inhabitants and people in the surrounding region has now started. 

Further information on the Šturecland concept can be obtained via the company's website or directly from www.strurecland.sk 

Secondly, we are in the process of facilitating the creation of "Forum Kremnicko" as a response to the historic lack of dialogue around the potential natural resource developments linked to Šturec. Forum Kremnicko is a platform that caters for those who wish for better local decision-making processes on designs, alternatives and related local needs and opportunities. Within it, interested public, authorities and investors will be in a position to examine the evolution of the Šturecland concept as a serious and transformational proposition for the benefit of all stakeholders in the region.

The Company believes that a policy of proactive dialogue and engagement are key to project success. The Directors are of the view that the results to date suggest a discernible turnaround in the level of interest of the local communities, amongst which certain recent decisions in the Kremnica, Micro-Region and Regional Governments are encouraging. Taken together with a more general openness to engage, persuades us that our initiatives to design a win-win investment are working. Building on this momentum, we believe that the collaborative studies now released and underway, in conjunction with the PFS and our engagement program, will lead to the recognition that the Šturec project is indeed both achievable and sustainable, and that the path now being pursued is the appropriate way to develop a sensitive and economically viable project. At the same time it must be recognised that there will be on-going lack of trust with those who have been concerned with the locally termed 'destructive mining'. As a result of this, opposition may continue to be encountered and efforts made to frustrate, confuse and delay formal decision making processes until sufficient mutual trust has been earned. It is in this vein that opponents to the project have used the media and online and social networking sites to misrepresent facts and add confusion to the issue of Ortac's mining rights to the Kremnica Mining License Area.

Notwithstanding, these actions the Directors are confident in the status of the joint surface and underground mining rights. Indeed, they can confirm that the mining bureau have recently confirmed that Ortac s.r.o (formerly Kremnica Gold Mining s.r.o) continues to hold both underground and surface mining rights to the Kremnica Mining License Area, (they expire on 30 June 2014 at the earliest). It should however also be noted that the date limit above excludes any time taken up by environmental consideration processes and it can also be further extended by beginning an operation before the expiry date. As previously reported, an application for small scale surface mining that would satisfy the requirement to mine is with the Slovak Authorities and is in the environmental consideration stage of the permitting process. The Directors are also advised that an underground operation from the existing workings would equally satisfy the terms of the license extension, and are in the process of preparing such an application to be submitted for environmental consideration shortly. Indeed, Ortac is likely to submit further application(s) in the coming period. 

Lastly, and concerning our initiatives to expand our project portfolio beyond Slovakia, this has been a matter of a considerable investment of time by your board, the Company's management and advisers. With a number of potential projects already assessed and a pipeline of projects waiting to be assessed, I am confident that the combination of our people, our expertise and our capital will lead to a transaction in due course.

Finance Review

Showing commitment to the company during the period the directors acquired approximately 17 million shares representing 0.7 % of the company. 

In line with management expectations we report a pre tax loss of £1.746m (2012: loss of £1.987m) and a loss per share of £0.008 (2012: £0.009). 

We remain well funded, and at the date of this report, we have cash of approximately £4.2m. The outflow of funds since 31 March 2013 was budgeted for and aside from normal operating outflows, is largely associated with the settlement of professional costs associated with the completion of the PFS, the release of the Šturecland project and the build up of our outreach activities in Slovakia. 

Outlook

Despite the challenges of operating within the current volatile market, the progress we have made during the last year with the Šturec project together with our well founded financial position reassures us that we are positioned to generate value for shareholders over the medium term. At the same time we have recently implemented a number of measures to reduce costs, including a 25% cut in Directors remuneration, to ensure that the Company is in a position to not only advance the Šturec project but also actively search for other opportunities to add value for our shareholders. 

Given the above, the key developmental milestones for the coming period are the satisfaction of our license terms, and progress towards the EIA process and feasibility study on the Šturec project, that will have the support of the local communities.

Finally, and to take advantage of the value we perceive to be available due to the current market conditions, and also to provide diversification beyond Slovakia, the board has made the decision to expand Ortac's project portfolio beyond Slovakia (and Europe). Against such a background we will therefore be restricting our Slovak activities to Kremnica and Šturec for the time being.

I would like to thank our valued shareholders for their support, and look forward to providing further updates on Ortac's progress. 

Anthony Balme

Chairman

07 August 2013

FINANCIAL STATEMENTS

Group Statement of Comprehensive Income for the Year ended 31 March 2013

Company Statement of Comprehensive Income for the Year ended 31 March 2013

Group Balance Sheet as at 31 March 2013

Company Balance Sheet as at 31 March 2013

Group Cash Flow Statement for the Year ended 31 March 2013

Company Cash Flow Statement for the Year Ended 31 March 2013

Group Statement of Changes in Equity for the Year ended 31 March 2013

Share capital: represents the nominal value of the equity shares in issue.

Share premium reserve: When shares are issued, any premium paid above the nominal value is credited to the share premium reserve. 

Available for sale (AFS) reserve: represents the temporary differences arising on the fair value of the available for sale investments.

Foreign exchange reserve: represents differences arising on the foreign exchange rates used to consolidate foreign subsidiaries.

Share based payment reserve: represents the fair value of options and performance share rights recognised as an expense. Upon exercise of options or performance share rights, any proceeds received are credited to share capital.

Retained earnings reserve: records the accumulated profits and losses of the Group since inception of the business and adjustments relating to options and warrants.

Company Statement of Changes in Equity for the Year ended 31 March 2013

Share capital: represents the nominal value of the equity shares in issue.

Share premium reserve: When shares are issued, any premium paid above the nominal value is credited to the share premium reserve. 

Available for sale (AFS) reserve: represents the temporary differences arising on the fair value of the available for sale investments.

Foreign exchange reserve: represents differences arising on the foreign exchange rates used to consolidate foreign subsidiaries.

Share based payment reserve: represents the fair value of options and performance share rights recognised as an expense. Upon exercise of options or performance share rights, any proceeds received are credited to share capital.

Retained earnings reserve: records the accumulated profits and losses of the Group since inception of the business and adjustments relating to options and warrants.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Summary of Significant Accounting Policies

a. General Information and Authorisation of Financial Statements

The Company is registered in the British Virgin Islands under the BVI Business Companies Act 2004 with registered number 1396532. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange. The Group Financial Statements of Ortac Resources Limited for the year ended 31 March 2013 were authorised for issue by the Board on 1 August 2013 and the Balance Sheets signed on the Board's behalf by Mr. Anthony Balme and Mr. Charles Wood.

b. Statement of Compliance with IFRS

The following new standards and amendments to standards are mandatory for the first time for the Group for the financial period 1 April 2013. Except as noted, the implementation of these standards did not have a material effect on the Group: 

Standards, amendments and interpretations that are not yet effective and have not been early adopted: 

1 Effective date 1 January 2014 for the EU.

2. Not yet endorsed by the EU

The Group has not early adopted these revised standards and is currently assessing the impact that these standards will have on the consolidated financial statements.

c. Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of available-for-sale financial assets as described in the accounting policies below, and they have also been prepared on a going concern basis. 

The financial information is presented in Pounds Sterling (£) and all values are rounded to the nearest thousand Pounds Sterling (£ 000's) unless otherwise stated. 

d. Basis of Consolidation

The consolidated financial statements incorporate the results of the Company and its subsidiaries (the "Group") using the acquisition method. Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. In the Group Balance Sheet, the acquiree's identifiable assets and liabilities are initially recognised at their fair values at the acquisition date. The results of acquired or disposed operations are included in the Group Statement of Comprehensive Income from the date on which control is obtained, or up to the date of disposal. Inter-company transactions and balances between Group companies are eliminated in full. 

e. Business combinations

The acquisition of subsidiaries in a business combination is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 "Non Current Assets Held for Sale and Discontinued Operations", which are recognised and measured at fair value less costs to sell. 

Where there is a difference between the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the cost of the business combination, any excess cost is recognised in the Group Balance Sheet as goodwill and any excess net fair value is recognised immediately in the Income Statement as negative goodwill on acquisition of subsidiary. 

The interest of minority shareholders in the acquiree is initially measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

f. Contingent consideration

Contingent consideration is charged to the profit and loss in the period in which it is recognised as payable. See note 22 below.

g. Revenue

The Group had no revenue during the two years ended 31 March 2013.

h. Foreign currencies

The Group's functional currency is Pounds Sterling. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. As at the reporting date, the assets and liabilities of the subsidiaries are translated into the presentation currency of Ortac Resources Limited, which is Pounds Sterling, at the rate of exchange ruling at the reporting date and their Income Statements are translated at the average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. 

All other exchange differences are recognised in profit or loss with the exception of differences on foreign currency borrowings which, to the extent that they are used to finance or provide a hedge against foreign equity investments, are taken directly to reserves to the extent of the exchange difference arising on the net investment in these enterprises. 

i. Exploration and Development Costs

Exploration and development costs are carried forward in respect of areas of interest where the consolidated entity's rights to tenure are current and where these costs are expected to be recouped through successful development and exploration, or by sale. Alternatively, these costs are carried forward while active and significant operations are continuing in relation to the areas of interest and it is too early to make reasonable assessment of the existence or otherwise of economically recoverable reserves. When the area of interest is abandoned, exploration and evaluation costs previously capitalised are written off to the profit or loss.

In accordance with the full cost method, costs incurred by the Company on behalf of its subsidiaries and associated with mining development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If a mining development project is successful, the related expenditures will be written-off over the estimated life of the commercial ore reserves on a unit of production basis. Impairment reviews will be carried out regularly by the Directors of the Company. Where a project is abandoned, or is considered to be of no further commercial value, the related costs will be written off. 

The recoverability of deferred mining costs and mining interests is dependent upon the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposal of recoverable reserves. 

j. Significant Accounting Judgements, Estimates and Assumptions

Critical Accounting Estimates and Judgements

The preparation of financial statements using accounting policies consistent with IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of income and expenses. The preparation of financial statements also requires the Directors to exercise judgement in the process of applying the accounting policies. Changes in estimates, assumptions and judgements can have a significant impact on the financial statements.

Critical accounting estimates

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively from the period in which the estimates are revised. The following are the key estimate and assumption uncertainties that have a significant risk of resulting in a material adjustment within the next financial year:

i) Impairment of non-financial assets

Exploration and evaluation costs have a carrying value at 31 March 2013 of £11,408,000 (2012: £10,024,000). Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in note t. below). Each exploration project is subject to an annual review. When there are indications that an asset may be impaired, the Group is required to estimate the asset's recoverable amount. Recoverable amount is the greater of value in use and fair value less costs to sell.

Determining the value in use requires the Group to estimate expected future cash flows associated with the asset and a suitable discount rate in order to calculate present value. If this proves to be incorrect and the project does not have any value, the exploration and evaluation costs will be written off. 

Further information as to the impairment review carried out by the Directors can be found in notes 4 and 11.

ii) Stock-based compensation

The Directors are required to make certain estimates when determining the fair value of share options awards, and the number of awards that are expected to vest. These estimates affect the amount recognized as stock based compensation in the profit or loss in respect of share based payments. The assumptions made have been described in more detail in note v. below. 

Were the actual number of options that vest to differ by 10% from management's estimates the overall option charge would increase/decrease by £nil (2012 £5,000). 

iii) Contingent consideration

As referred to in note 22, the contingent consideration arrangement requires Ortac Resources PLC to pay vendor royalties of up to US$3,750,000 (£2,440,940 at 31 March 2013 ) in either shares or cash-being $15 per ounce on the first 250,000 ounces of gold equivalent (gold plus silver) resource defined as proven and probable reserve in the bankable feasibility study. This will become payable within 60 days of all required permits being obtained to allow commercial production at the Kremnica property.

The fair value of the above have been determined on the basis that the Directors are confident that the resource threshold referred to above will be exceeded, and in which case the carrying value is the maximum vendor royalties payable, as translated at year end US$/ Sterling exchange rates. 

The Directors estimate that the carrying value of contingent consideration would be £76,938 lower or £76,938 higher if the US$ exchange rate was to change by 5% from its year end rate. 

k. Finance Revenue

Finance revenue consists of bank interest which is recognised as accruing on a straight line basis, over the period of the deposit.

l. Cash and Cash Equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. 

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, 

m. Inventories

Inventories largely consist of operational and maintenance consumables held and are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method, and the Directors are of the opinion that there is no significant difference between cost and net realisable value, and no provisions are required. 

n. Trade and Other Receivables

Trade receivables, which generally have 15-day terms, are recognised and carried at original value. The Directors are of the view that such items are collectible and no provisions are required. 

o. Investments

Investments in subsidiary undertakings are stated at cost less any provision for impairment in value, prior to their elimination on consolidation. 

p. Financial Instruments

The Group's financial instruments are classified as loans and receivables and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, and comprise trade and other receivables and cash and cash equivalents (see separate accounting policies for these items).

Available-for-sale financial assets are non-derivatives that are not included in any other category, and comprise current asset investments. They are initially recognised at fair value plus transaction costs, and are subsequently carried at fair value with changes in fair value being recognised in other comprehensive income. 

The Group has overseas subsidiaries in the Slovak Republic whose expenses are denominated in Euros. Market price risk is inherent in the Group's activities and is accepted as such. 

There is no material difference between the book value and fair value of the Company's financial instruments. 

q. Available for sale investment reserve.

This reserve is used to record the fair value movements in available for sale investments. 

r. Share-based payments reserve

This reserve is used to record the value of share-based payments provided to employees and Directors as part of their remuneration and provided to consultants and advisors hired by the Group from time to time as part of the consideration paid. 

s. Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries and the retranslation of monetary items forming part of the net investment in those subsidiaries. 

t. Property, Plant and Equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. 

Depreciation is provided on all tangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:

·; Property 20% or straight line over the period of the lease- whichever is the lesser;

·; Plant and Equipment - between 5% and 25%

All assets are subject to annual impairment reviews. 

u. Impairment of Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. 

An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use. This is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, and the asset's value in use cannot be estimated to be close to its fair value. In such cases, the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, it is considered impaired and is written down to its recoverable amount. 

In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset, unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). 

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. 

v. Trade and Other Payables

Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. 

w. Share-based payment transactions

The Group provides benefits to senior personnel, consultants and advisors of the Group in the form of share-based payments, whereby such parties render services in exchange for shares or rights over shares (equity-settled transactions). 

The cost of these equity-settled transactions with such parties is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes model. 

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Ortac Resources Limited (market conditions) if applicable. 

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant party become fully entitled to the award (the vesting period). 

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:

(i) the extent to which the vesting period has expired and;

(ii) the Group's best estimate of the number of equity instruments that will ultimately vest. 

No adjustment is made for the likelihood of market performance conditions being met, as the effect of these conditions is included in the determination of fair value at grant date. The charge to profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. 

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings/(loss) per share (see note 9). 

x. Operating leases

Leases of assets under which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to profit or loss on a straight-line basis over the period of the respective leases. 

y. Loss per share

Basic loss per share is calculated as total comprehensive income for the period attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. 

Diluted loss per share are calculated as total comprehensive income for the period attributable to members of the parent, adjusted for:

·; Costs of servicing equity (other than dividends) and preference share dividends;

·; The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

·; Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 

2. Revenue and Segmental Analysis

Segment information has been determined based on the information reviewed by the Board, being the Group's chief operating decision-maker, for the purposes of allocating resources and assessing performance. No revenue is currently being generated.

Head office activities are mainly administrative in nature and are located in the UK/BVI whilst the activities in Slovakia relate to exploration and evaluation work. 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. 

3. Expenses by nature

Establishment expenses includes £35,800 (2012: £16,380) relating to operating lease payments in connection with the Groups rental of office space in London. 

Auditor's remuneration includes £24,000 (2012: £3,000) relating to the audit of the subsidiary companies. Professional fee's include £4,279 (2012: nil) relating to non Audit related fee's paid to Group Auditors.

4. Impairment

The Directors have concluded that given present market conditions and the fact that it has not proved possible to verify the recoverable amount or the value in use it was prudent to impair certain of the Group's Eastern Slovak Assets by £105,000 (2012: £596,000). 

5. Employee Information

The average number of persons employed in the Group, including executive Directors, was:

6. Taxation

The taxation charge on the Group's loss before taxation differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows:

No taxation has been provided due to losses in the year. 

The weighted average applicable tax rate of 12.21% (2012: 11%) used is a combination of the 26% standard rate of corporation tax in the UK, 23% Slovakian corporation tax and 0% BVI corporation tax.

There are tax losses in the Group of £3,700,000 (2012: £3,200,000) which are carried forward for relief in future periods. The deferred tax asset of £877,000 (2012: £668,000) has not been provided in respect of these losses as there is presently insufficient evidence of the timing of suitable future profits against which they can be recovered. 

Factors that may affect future tax charges:

The UK government legislated during 2012 to reduce the main rate of corporation tax to 23%, applicable from 1 April 2013, which has been reflected in the above unrecognised tax asset. Furthermore, the Government announced in March 2013 as part of the Budget a further reduction of 2% to 21% to apply from 1 April 2014, with an additional reduction of 1% to 20% with effect from 1 April 2015. These reductions have not been taken account in the disclosed deferred tax asset as they were not substantively enacted at the balance sheet date.

The directors estimate the further reduction would reduce the unrecognised deferred tax asset by £19K once the 23% rate is enacted.

No changes are foreseen to the future tax rates in the Slovak Republic or BVI.

7. Dividends

No dividends were paid or are proposed. 

8. Directors' Remuneration

No pension benefits are provided for any Director. 

9. Loss per share

The calculation of loss per share is based on the loss after taxation divided by the weighted average number of share in issue during the year. 

As the inclusion of potential Ordinary shares would result in a decrease in the loss per share, they are considered to be anti-dilutive. As such, diluted and basic loss per share are the same. 

10. Finance Revenue

11. Intangible Assets

Exploration projects carried out by the subsidiaries are at an early stage of development and can be split into two categories:

1. Those based upon JORC or JORC compliant resource estimates which enable value in use calculations to be prepared: A reclassification of resource estimates undertaken in 2012 by Snowdens led to the announcement of maiden JORC Ore Reserves for the Šturec Deposit with 13.97Mt of ore at a grade of 1.70g/t Au and 14.22g/t Ag (1.90g/t Au Equivalent) classified in the Proven and Probable categories, giving an open pit Ore Reserve of 873,000oz of gold equivalent (28 tonnes). Subsequently, an SRK Consulting Pre-Feasibility Study of the Šturec Project announced on 8 April 2013 further confirmed the economic feasibility of the Šturec project: which based upon a metals price of (at US$1,343/oz Au Eq net price) and a discount rate of 8% gave an NPV of US$195m (post tax US$145m) and Internal Rate of Return ('IRR') of 30%. Gold prices are presently close to this price.

As regards the status of the mining license, the relevant authorities have recently confirmed that Ortac s.r.o (formerly Kremnica Gold Mining) continues to hold both underground and surface mining rights to the Kremnica Mining License Area, (they expire on 30 June 2014). However, the Directors are advised that this may be extended by environmental impact consideration processes on foot, and can also be further extended by beginning a mining operation before the expiry date. 

As previously reported an application for trial surface mining that would satisfy the license requirements has been lodged with the Slovak Authorities and is in the environmental consideration stage of the permitting process. As to a trial underground operation, the Directors are also advised that this would equally satisfy the terms of the license, and are in the process of preparing such an application to be submitted shortly, with further applications likely to be submitted in the coming period. 

2. Those other projects, for which no JORC or non-JORC compliant resource estimates are available to enable value in use calculations to be prepared. Given that these projects are at an early stage, and are unlikely to be pursued and with preliminary results indicating modest returns, the Directors have continued with the policy of expensing the exploration costs incurred on these projects during the year. 

Following their assessment the Directors concluded that no further impairment of exploration and evaluation assets was necessary during the year ended 31 March 2013.

12. Tangible Assets

Depreciation charges for the year ended 31 March 2013 of £46,000 (2012: £30,000) have been charged to "administrative expenses". 

13. Investment in Subsidiaries

At 31 March 2013 the Company held 100% of the share capital of the following wholly owned subsidiary companies:

* Wholly owned subsidiary of Ortac Resources (UK) Limited.

14. Available for Sale Investments

Available for sale investments comprise the United Kingdom listed equity securities in Vatukoula Gold Mines plc. 

15. Inventories

16. Trade and Other Receivables

Current trade and other receivables are all due within one year. The fair value of receivables is the same as their carrying values as stated above.

Loans due from subsidiaries are interest free and have no fixed repayment date. 

The carrying amounts of the Group's and Company's current and non current trade and other receivables are denominated in the following currencies:

Other receivables do not contain any impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.

17. Trade and Other Payables

The carrying values are considered to be a reasonable approximation of the fair value and are considered by the Directors as payable within one year.

18. Share Capital

Total share options in issue

No options were granted over ordinary shares during the year ended 31 March 2013 (2012: 60,000,000). 

As at 31 March 2013, the unexercised options in issue were:

No options were exercised during the year (2012: Nil). 

10,000,000 options were cancelled during the year (2012: 5,000,000).

No options were repriced during the year (2012: Nil). 

As at 31 March 2013 209,800,000 options were exercisable (2012: 219,800,000). 

Total share warrants in issue

No share warrants over ordinary shares were granted during the year ended 31 March 2013 (2012: Nil). 

As at 31 March 2013, the unexercised warrants in issue were:

Share Based Payments

Under IFRS 2 "Share-based Payments", the Company determines the fair value of options issued to Directors, Employees and other parties as remuneration and recognises the amount as an expense in the Income Statement with a corresponding increase in equity.

The total number of options in issue during the year has given rise to a charge to profit or loss for the year ended 31 March 2013 of nil (2012: nil) based on the fair values at the time the options were granted.

19. Analysis of Changes in Net Funds

20. Financial Instruments and Capital Risk Management

The Group holds cash as a liquid resource to fund its obligations. The Group's cash balances are held in Sterling and Euros. The Group's strategy for managing cash is to maximise interest income whilst ensuring its availability to match the profile of the Group's expenditure. This is achieved by regular monitoring of interest rates and monthly review of expenditure forecasts. 

The Group has a policy of not hedging and therefore takes market rates in respect of foreign exchange risk; however, it does review its currency exposures on an ad hoc basis. Currency exposures relating to monetary assets held by foreign operations are included within the foreign exchange reserve in the Group Balance Sheet. 

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. 

To date the Group has relied upon equity funding to finance operations. The Directors are confident that adequate cash resources exist to finance operations for commercial exploitation but controls over expenditure are carefully managed. The currency and interest rate profile of the cash and short term deposits is as follows: 

On the assumption that all other variables were held constant, and in respect of the Group's cash position, the potential impact of a 5% increase/decrease in the UK Sterling/Euro foreign exchange rate would have increased the Group's loss for the year and on equity as at 31 March 2013 £8,651 (2012: £5,455).

Financial Risk Management

Financial Risk Factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

a) Market Risk

i) Foreign Exchange Risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the UK pound sterling and Euro. Foreign exchange risk arises from recognised monetary assets and liabilities. The exposure to this risk is not considered material to the Group's operations and thus the Directors consider that, for the time being, no hedging or other arrangements are necessary to mitigate this risk.

On the assumption that all other variables were held constant, and in respect of the Group and the Company's expenses the potential impact of a 5% increase/decrease in the UK Sterling/ Euro Foreign exchange rate on the Group's loss for the year and on equity is as follows: