ALO.L Regulatory News (ALO)

Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector: Mining

6 June 2016

Alecto Minerals plc ('Alecto' or the 'Company')

Final Results for the year ended 31 December 2015 and Notice of AGM

Alecto Minerals plc (AIM: ALO), the Africa-focused gold and base metal exploration and development company, is pleased to announce its audited final results for the year ended 31 December 2015. In addition, the Company announces that its Annual General Meeting ('AGM') will be held at the Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE on 30 June 2016 at 12.00 p.m. Copies of the Company's Annual Report and Financial Statements, together with the Notice of AGM, will be posted to shareholders today and will shortly be available to view and download on the Company's website at www.alectominerals.com.

Highlights

· Transformation into a pre-production gold company with near to mid-term cash flow potential following the successful acquisition of the historical Matala and Dunrobin Gold Mines in Zambia

· Feasibility Study on Matala completed post period end, demonstrating positive economics for a proposed 400,000 tonnes per annum ('tpa') oxide and transitional open pit operation with a mine life of approximately 4 years 8 months at US$1,200/oz Au with exploration upside and underground mining potential:

o Estimated capital cost for plant and infrastructure of US$14.4 million

o Project NPV of US$28.6 million at an 10% discount rate

o Unlevered project IRR of 52%

· Vendor financing progressing post period end with Yantai Xinhai Machinery Co. Ltd with respect to the proposed construction and financing of mining operations at Matala

· Delivery of two joint venture agreements ('JV') for the Group's Malian gold properties post period end enabling Alecto to retain exposure to its promising exploration assets in Mali, without further direct expense

o JV with Randgold Resources ('Randgold') for Kossanto West - Randgold to fund all costs up to and including the completion of a pre-feasibility study - Alecto to retain a 35% interest

o JV with Kola Gold ('Kola') via its subsidiary for the Karan Gold Project - Kola will solely fund all exploration and development costs up to and including the completion initially of a scoping study and ultimately a Bankable Feasibility Study

· Profit before taxation for the Group for the year ended 31 December 2015 of £3,343,615 (31 December 2014: restated loss of £767,804) - due to a fair value adjustment to the exploration and evaluation assets acquired by the Group in November 2015

· Cash position of £530,003 (2014: £114,258) bolstered post period end via £665,000 (before expenses) placing - solid position to fund working capital requirements as Matala is progressed towards future production

Alecto's CEO, Mark Jones, commented:

"We made great strides towards becoming an African gold producer in 2015. The strong economics and low costs associated with delivering production at the historical Matala Gold Mine in Zambia, which was acquired alongside the Dunrobin Mine late last year, have been demonstrated and with vendor financing progressing we are in a solid position to execute on our production plans in the near term. This exciting period was also marked by a significant amount of work towards securing joint venture partners for the rest of our African gold exploration portfolio, which were documented and formalised post the period end. With production targeted in the near to mid-term and exposure to a prospective exploration portfolio in proven gold regions at no cost to Alecto, I am confident that the coming months will prove to be both busy and positive for the Company as we seek to build value in our business for shareholders."

Chairman's Statement

Despite the extremely difficult market conditions faced by junior mining and exploration companies over the last several years, this has been a transformational period for Alecto with significant corporate activity in pursuit of our stated strategy to become a gold producer in Africa in the near to mid-term. We made considerable headway in setting the parameters for the successful negotiation of joint venture partnerships in respect of for our attractive exploration portfolio in West Africa and ended the reporting period as a very different Group from how we began in 2015.

As my first statement since being appointed as Chairman of the Company, I am delighted to report on the successful transition of Alecto from explorer to developer, with a JORC Code compliant total estimated resource of over 1 million oz gold ('Au') (from 247,000 oz Au in the prior year) and approximately a further 0.24 million oz Au of non-JORC resources and a 25-year renewable mining licence, with a clear path to production being established in Zambia. This is in addition to the successful delivery of two joint venture agreements for our Malian properties through partnerships with both FTSE-100 Randgold Resources Limited (LSE:RRS) ('Randgold Resources') and Kola Gold Limited, via its subsidiary Cora Gold Limited ('Cora Gold'), which enables us to retain exposure to our promising exploration assets in Mali, without incurring any further direct expense. Accordingly, I believe the Group is well positioned for achieving future growth.

Our executive management and technical staff had been working since 2014 on securing a project that would meet the stringent criteria we had set to ensure that we would have the necessary degree of confidence in financing, developing and managing a resultant future mining operation. Their ability to effectively identify and evaluate mining opportunities in Africa, culminating, in November 2015, in the successful acquisition of the historic Matala and Dunrobin gold mines in Zambia, confirmed that focused determination and effort to acquire the right project clearly pays off. This acquisition marked a turning point for the Company and is expected to deliver substantial future value and economic returns to stakeholders.

Key Project Developments

Zambia

In November 2015, Alecto acquired a 100% interest in the historic Matala and Dunrobin gold mines in Zambia. With an existing 25-year renewable mining licence covering 32km2 of the Mwembeshi Shear Zone, an environmental permit in place, feasibility study and nearly US$20 million of historic investment, the acquisition brought an additional 760,000 oz Au of estimated resources into the group at an acquisition cost of less than US$3 per ounce, which is substantially below the industry standard cost for a discovery resource of this type.

Having worked closely with the vendor's team for several months prior to completing the acquisition, Alecto developed a new approach to mining the advanced deposits, culminating in the production of an internal Scoping Study that indicated strong economics at the prevailing gold price. Pursuant to this new approach, Alecto was well placed to negotiate and sign an engineering, procurement and construction ('EPC') contract with South African mining consultants and EPC specialists, PenMin (Pty) Ltd ('PenMin') in December 2015, less than a month after acquiring the historic mines.

Post the end of the reporting period, Alecto's executive management team completed an introductory visit to China with PenMin in order to establish a relationship with Yantai Xinhai Machinery Co. Ltd ('Xinhai'), a private Design, Build and Operate ('DBO') contractor, able to supply vendor financing. A key component of these initial meetings was to understand Xinhai's commercial requirements for financing a project such as Matala. Accordingly, in February 2016, PenMin produced a feasibility study for the Matala project which addressed all of Xinhai's requirements, following which all parties signed a Letter of Intent for the provision of up to US$14.4 million of financing for the Design, Build and Operation of a proposed 400,000 tonne per annum mine, expected to produce circa 33,000 oz Au per annum, with a net present value for the project (at a 10% discount rate) of US$28.6 million and an estimated internal rate of return (IRR) of 52%.

Our development plan for Matala is designed to be rapid and robust. Taking advantage of the measured and indicated portions of the shallow oxide and transitional ores to reduce both mining and process risk, a narrow slot cut along strike is planned to create an elongated pit with a reduced stripping ratio. Ore at the relatively high-grade of 2.8g/t Au will be delivered to the run-of-mine ('ROM') pad and a simple crushing, gravity and direct cyanidation process will be adopted. Additional oxide ores from dump and process material from historical mining activity and fresh ores from satellite deposits have been identified and will be mined along with the oxide opportunity at the Dunrobin pit, providing for an estimated 10 year life of mine ('LOM'). Once the oxide and transitional ores have been exhausted a simple process upgrade will allow for the processing of sulphide ores from all deposits and is expected to increase the LOM substantially.

With a recent strengthening of the price of gold, excellent project economics, and a financing route that minimises shareholder dilution, Alecto has established a solid backbone for a profitable and successful future mining operation that will define the Group as a producer in the near to mid-term.

Mali

The Group commenced 2015 with an estimated resource of 247,000 oz Au at its Kossanto East gold project, having grown such resource estimate by 131% during the course of 2014. With market conditions unfavourable to secure funding for further exploration expenditure, and having gauged the level of interest from major gold producers in the Company's assets, the Board took the decision to leverage the strong balance sheets of interested parties and seek joint venture partnership arrangements for the continued development of its exploration portfolio assets in West Africa. The objective of this approach was to maintain exposure to what the Board views as being highly attractive and promising early stage exploration opportunities, without incurring additional expenditure on further drilling and exploration activities.

Kossanto West - Randgold Resources Joint Venture

The process of partnering with a 'major', meant that certain pre-conditions were required to be met including the consolidation and renewal of certain of the Group's licences. To this end, the licences of Kobokoto and Kobokoto East in Mali were consolidated into a single block and, packaged together with Koussikoto, thereby offering Randgold Resources exposure to the regional structure of the Main Transcurrent Shear Zone (MTZ), the current focus for much of their exploration activities in western Mali and eastern Senegal.

A joint venture agreement was duly signed post the end of the reporting period, in February 2016, and activities on the ground are currently expected to commence in late Q2 2016.

Kossanto East

In March 2015, Alecto signed a co-operation agreement with TSX.V quoted Desert Gold Ventures Inc. ('Desert Gold'), to enable information sharing and collaboration, with a view to potentially jointly developing Alecto's Kossanto East and Desert Gold's Barani East deposits as one project. Throughout the reporting period a number of tasks were achieved, including a new technical report on Barani East, preliminary engineering work, and economic and base case studies, which culminated in the production of a scoping study. Initial scoping study level results demonstrated positive economics based on a 400,000 tonnes per annum heap-leach project with an NPV (at a 10% discount rate) of US$27.4 million and an IRR of 107%.

The decision as to precisely how to proceed with potentially developing the Kossanto East project remains to be taken. Whilst the economics for the joint development of the project appear positive, it was noted that Desert Gold are in the process of renewing their permit's validity. In addition, guidance has been sought from the government of Mali on their interpretation of what exactly constitutes a Small Scale Mining licence, as this will impact both the licence cost and the scope of the economic impact assessment. As further detailed engineering and process design work continues, so do discussions with other potentially interested third parties, who have approached Alecto with regard to this particular project.

Karan - Cora Gold Joint Venture

Kola Gold Limited, through its subsidiary Cora Gold, approached Alecto during the reporting period to discuss the possibility of working on, and ultimately partnering together for, the exploration of our Karan exploration permit in southern Mali. In line with our strategy to reduce exploration expenditure, Alecto worked closely with Cora Gold to provide support on the ground, such that initial exploration work could be completed and a view formed as to whether gold anomalies identified at Cora Gold's exploration project, to the south of Karan, continued to coincide with the geophysical anomaly that can be seen running the entire length of the Karan permit. Soil and termite mound sampling activities were used to map a number of these anomalies.

Joint venture negotiations commenced in Q4 2015 culminating in the signing of a formal agreement in May 2016. Further work has been planned throughout 2016 and we look forward to updating shareholders on the progress of Cora Gold's exploration programme in due course.

Burkina Faso

Kerboulé

Alecto acquired its Kerboulé gold project in Burkina Faso in late 2014 and quickly undertook a full re-work and compilation of all the existing exploration data that had been generated by the previous owners over a period of many years.

The political landscape in Burkina Faso was unusually interrupted during 2014 due to a popular uprising that saw long-time leader, Blaise Compaoré, removed from office, a transitional government installed and a military coup d'état, before finally returning to an elected democracy in November 2015. Nevertheless, Alecto's dedicated team were not deterred and, in April 2015, we were able to publish a maiden independent in situ mineral resource estimate (non-JORC) for the project, completed by Wardell Armstrong International ('WAI'), of 6.2Mt grading at 1.16g/t Au for 230,758 oz Au at a cut-off grade of 0.5 g/t Au.

Having proved the potential for a significant deposit to be defined in the Kerboulé-Yalema Corridor ('KY Corridor') and that further large-scale gold anomalies exist in the project area, attention turned to renewing the exploration permits, in order that the property could be given the opportunity to deliver on a focussed exploration programme. The exceptional renewal of the permits was completed in May 2016 which sets the conditions for further joint venture discussions with a number of interested parties. It is the Board's current intention to commence exploration work at Kerboulé, within a joint venture partnership, as soon as possible so that the true extent of the identified exploration potential at Kerboulé can be defined.

Ethiopia

In February 2015, the Group was disappointed that Centamin plc ('Centamin') decided to terminate our joint venture on the Wayu Boda and Aysid Metekel licences. In light of the licences large size, their early stage of exploration, including a limited amount of work performed by Centamin, and the high carrying costs of exploration permits in Ethiopia, the Board decided that divestment of the Group's Ethiopian assets was the most appropriate course of action. In Q3 2015, we therefore announced that both permits had been sold to a private Ethiopian mineral development company, Wame Mineral Development ('Wame').

Wame acquired the assets on a deferred consideration basis, in the form of a royalty of US$3 per JORC resource ounce of gold (or gold equivalent), up to a maximum of US$1 million in respect of each licence. Thus, the maximum potential aggregate deferred consideration that Alecto may receive in the future from this disposal is US$2 million. The disposal provides Alecto and its shareholders with exposure to any mineral discoveries on these expansive projects whilst reducing administrative costs by removing the overheads associated with running the Ethiopian operation.

Mauritania

The Group continues to seek a joint venture partner for its Mauritanian Wad Amour iron oxide copper gold asset.

Corporate Update

As mentioned above, this is my first Chairman's statement, having joined the Board in November 2015, alongside the acquisition of the historic Matala and Dunrobin gold mines. As a qualified engineer, I have over 30 years' experience in the mining sector, with specific skills in contract mining and infrastructure build, which I hope will prove to be extremely valuable as we look to advance Matala into production in the near to mid-term.

Financial Review

The profit before taxation for the Group for the year ended 31 December 2015 amounted to £3,343,615 (31 December 2014: restated loss of £767,804). The profit this year is due to a fair value adjustment to the exploration and evaluation assets acquired by the Group in November 2015, net of the loss realised on the disposal of the Group's Ethiopian assets. See Note 20. The Group's cash position as at 31 December 2015 was £530,003 (2014: £114,258).

In June 2015, Alecto successfully raised £300,000 (before expenses) by way of a placing of 300 million new ordinary shares of 0.01 pence each in the capital of the Company ('Ordinary Shares') at a price of 0.1 pence per share, with an existing institutional investor. In November 2015, the Company successfully raised a further £650,000 (before expenses) by way of a placing of 812,500,000 new Ordinary Shares at a price of 0.08 pence per share, with certain new and existing shareholders. These placings were augmented post-period end, in May 2016, with the raising of an additional £665,000 (before expenses) by way of a placing of 831,250,000 new Ordinary Shares at a price of 0.08 pence per share, with new and existing shareholders. The net proceeds of the placings provided the Group and Company with additional working capital as it continues to make rapid progress towards achieving its goal of bringing the 400,000 tonnes per annum open-pit Matala Gold Project in south-central Zambia into low-cost production in the near to mid-term.

Outlook

Having finalised our landmark acquisition of the Matala Gold Project, we have made swift progress in proving its commercial viability. With an established resource in place with additional upside potential, attractive value fundamentals, a clear route to production and planned vendor financing progressing, our focus going forward is very much on achieving gold production at this project location at the earliest opportunity.

In support of our primary Matala objectives, I am delighted with the success we have achieved in securing joint venture agreements for two of our Malian gold projects. This serves to underpin our strategy to maintain exposure to any significant discoveries made across our West African gold exploration portfolio whilst minimising the impact on our balance sheet.

We will endeavour to secure similar partnership agreements for the rest of our portfolio in Mali, Burkina Faso and Mauritania going forwards so that we can concentrate our efforts on bringing Matala into commercial production. We will continue to operate at low-cost and as rapidly as possible, and look forward to achieving producer status at the earliest opportunity.

Finally, I would like to take this opportunity to thank shareholders for their on-going support and our management team for their dedication and hard work.

I look forward to the year ahead with much excitement and optimism.

Gerald Chapman

Chairman

6 June 2016

STATEMENT OF FINANCIAL POSITION

As at 31 December 2015

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2015

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2015

COMPANY STATEMENT OF CASH FLOWS

For the year ended 31 December 2015

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2015

1. General information

The principal activity of Alecto Minerals plc (the 'Company') and its subsidiaries (together the 'Group') is to implement its mineral exploration strategy to advance projects towards defining a sufficient in-situ mineral resource to support a detailed feasibility study towards mine development and production. The Company's shares are quoted on the AIM market of the London Stock Exchange plc. The Company is incorporated and domiciled in the UK. The address of its registered office is 47 Charles Street, London, W1J 5EL.

2. Summary of Significant Accounting Policies

The principal Accounting Policies applied in the preparation of these Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1. Basis of Preparation of Financial Statements

The Consolidated Financial Statements of Alecto Minerals plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC Interpretations Committee (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have also been prepared under the historical cost convention, as modified by the fair value of available-for-sale financial assets.

The Financial Statements are presented in UK Pounds Sterling rounded to the nearest pound.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.

2.2. Basis of Consolidation

The Consolidated Financial Statements consolidate the Financial Statements of the Company and the management accounts of all of its subsidiary undertakings made up to 31 December 2015.

Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred unless they result from the issuance of shares, in which case they are offset against the premium on those shares within equity.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Investments in subsidiaries are accounted for at cost less impairment.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All intercompany transactions and balances between Group enterprises are eliminated on consolidation.

Disposal of subsidiaries

When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

2.3. Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Statement on pages 3 to 5. In addition, Note 3 to the Financial Statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposure to credit and liquidity risk.

The Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating steady revenue streams and an operating profit has been reported, an operating loss is expected in the 12 months subsequent to the date of these Financial Statements. The Directors believe, having considered all available information, including cash flows prepared by management, that the Group, having raised £665,000 (gross) in May 2016, has sufficient funds to meet its expected committed and contractual expenditure through to the end of 2016, and are confident that they will be able to raise funding to provide additional working capital to continue its current exploration programme as well as additional works through to at least the end of Q2 2017.

Based on the Board's assessment that the cash flow budgets can be achieved and that the necessary funds will be raised, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements for the year ended 31 December 2015.

The Financial Statements do not include any adjustments that may be required should the Group be unable to continue as a going concern. If the Group were unable to continue as a going concern, then adjustments would be necessary to write assets down to their recoverable amounts, non-current assets and liabilities would be reclassified as current assets and liabilities and provisions would be required for any costs associated with closure.

Going concern is referred to in the auditor's report starting on pages 13 to 14 as an emphasis of matter.

2.4. New and Amended Standards

(a) New and amended standards mandatory for the first time for the financial year beginning 1 January 2015

There were no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning 1 January 2015 that had a material impact on the Group or Company.

(b) New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted

The standards and interpretations that are relevant to the Group or Company, issued, but not yet effective, up to the date of issuance of the Financial Statements are listed below. The Company and Group intend to adopt these standards, if applicable, when they become effective.

* Subject to EU endorsement

The Group is evaluating the impact of the new or amended standards above. The new or amended standards are not expected to have a material impact on the Group's results or shareholders' funds.

2.5. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

2.6. Foreign Currencies

(a) Functional and presentation currency

Items included in the Financial Statements of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the UK parent entity is Pounds Sterling and the functional currency of the BVI subsidiary is US Dollars. The currency of Mauritania is the Mauritanian Ouguiya; however all material contracts with the Mauritanian subsidiary are denominated in Euros which is, therefore, its functional currency. The currency of Mali is the Central African Franc, which is therefore the functional currency of the Malian subsidiary. The currency of Burkina Faso is the Central African Franc, which is therefore the functional currency of the Burkina Faso subsidiary. The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Company's functional and Group's presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance income or costs'. All other foreign exchange gains and losses are presented in the income statement within 'Other (losses)/gains - net'.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets measured at fair value, such as equities classified as available for sale, are included in other comprehensive income.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position sheet;

· income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

· all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Statement of Comprehensive Income as part of the gain or loss on sale.

2.7. Intangible assets

(a) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the Income Statement.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(b) Exploration and evaluation

The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets, relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.

Exploration and evaluation assets are recorded and held at cost.

Exploration and evaluation assets are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas.

Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Income Statement.

2.8. Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.

Depreciation is provided on all property, plant and equipment 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:

Field equipment - 20% straight line

Motor vehicles - 20% straight line

Computer equipment - 20-50% straight line

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Income Statement.

2.9. Impairment of non-financial assets

Intangible assets that have an indefinite useful life, for example, goodwill, exploration and evaluation intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment.

Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.10. Financial Assets

Classification

The Group classifies its financial assets in the following categories: 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.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the Statement of Financial Position date. These are classified as non-current assets. The Group's loans and receivables comprise trade and other receivables, restricted assets and cash and cash equivalents in the Statement of Financial Position.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Group commits to purchasing or selling the asset. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership.

Available-for-sale financial assets are subsequently carried at fair value unless the Group is precluded from doing so as, in the case of unlisted equity securities, the range of reasonable fair value estimates is significant and the probabilities of the various estimates cannot be reasonably assessed. In such circumstances available-for-sale financial assets are held at cost and reviewed annually for impairment.

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the Income Statement as "gains and losses from investment securities."

Interest on available-for-sale securities calculated using the effective interest method is recognised in the Income Statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the Income Statement as part of other income when the Group's right to receive payments is established.

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.

2.11. Trade Receivables

Trade receivables are amounts due from third parties in the ordinary course of business. If collection is expected in one year or less they are classified as current assets. If not they are presented as non-current assets.

Trade receivables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.12. Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and in hand, and are subject to an insignificant risk of changes in value.

2.13. Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.14. Share Based Payments

The Group operates a number of equity-settled, share-based schemes, under which the entity receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers' services received in exchange for the grant of the options is recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted:

· including any market performance conditions;

· excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and

· including the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.

When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

2.15. Reserves

Share Premium Reserve - the share premium reserve includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from the share premium.

Share Option Reserve - the share option reserve represents the total fair value of all outstanding share based options and warrants of the Group in issue at each period end.

Available-For-Sale Financial Asset Reserve - the available-for-sale financial asset reserve represent the changes in fair value of monetary and non-monetary securities classified as available-for-sale financial assets.

Translation Reserve - the translation reserve represents the cumulative differences arising due to foreign exchange on consolidation of all the Company's subsidiaries.

Retained Losses - the retained losses reserve includes all current and prior periods retained profit and losses.

2.16. Trade Payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

2.17. Taxation

There has been no tax credit or expense for the period relating to current or deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax assets and liabilities are not discounted.

2.18. 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 the income statement on a straight-line basis over the period of the respective leases.

2.19. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods or services supplied in course of ordinary business, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the Group's activities described below.

Revenue is recognised in respect of amounts recharged to project strategic partners in accordance to their contractual terms.

2.20. Finance income

Interest income is recognised using the effective interest method.

2.21. Borrowings

Compound financial instruments

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder. The number of shares to be issued does not vary with changes in their fair value.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to their initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition, except on conversion or expiry.

3. Financial Risk Management

3.1. Financial Risk Factors

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency 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.

Risk management is carried out by the London based management team under policies approved by the Board of Directors.

Market Risk (including foreign currency risk)

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro, Central African Franc, Mauritanian Ouguiya and the Pound Sterling. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group negotiates all material contracts for activities in relation to its subsidiaries in either Pounds Sterling or Euros which in the Directors' opinion are more stable than the respective local currencies. The Group also holds minimal liquid assets in Central African Franc and Mauritanian Ouguiya. The Group does not hedge against the risks of fluctuations in exchange rates. The volume of transactions is not deemed sufficient to enter into forward contracts. The Group has not sensitised the figures for fluctuations in foreign exchange rates as the Directors are of the opinion that these fluctuations would not have a significant impact on the financial statements of the Group at the present time. The Directors will continue to assess the effect of movements in exchange rates on the Group's financial operations and initiate suitable risk management measures where necessary.

Credit Risk

Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables.

The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.

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

Liquidity Risk

In keeping with similar sized mineral exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations (see Note 2.3). Controls over expenditure are carefully managed.

3.2. Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, in order to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.

At 31 December 2015 the Group had borrowings of £528,576 (2014: £nil) and defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time.

4. Critical Accounting Estimates and Judgements

The preparation of the Financial Statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce these Financial Statements.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant items subject to such estimates and assumptions include, but are not limited to:

Fair value of exploration and evaluation assets

In connection with the business combination detailed in Note 26 the Directors' determined that the consideration paid did not reflect the fair value of the exploration assets acquired. The fair value of the exploration assets of £11,880,210 was estimated by applying a number of valuation metrics which include; geological upside potential, mineralogy, market benchmarks, application of local market factors and in particular consideration of internally prepared feasibility study which indicated a net present valuation of US$25 million, resulting in a US$16.25 million fair value adjustment before consideration of tax implications.

Impairment of exploration and evaluation costs

Exploration and evaluation costs have a carrying value at 31 December 2015 of £16,677,503 (2014: £7,217,039). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7 to the Financial Statements. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the year warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration. The Directors have reviewed the estimated value of each project prepared by management and have concluded that no impairment would be required and provided against the exploration assets.

Estimated Impairment of Goodwill

Goodwill has a carrying value of £404,213 (2014: £423,785). The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.7 to the Financial Statements.

Management has concluded that no impairment charge is necessary to the carrying value of goodwill. See Note 7 to the Financial Statements.

Share based payment transactions

The Group has made awards of options and warrants over its unissued share capital to certain Directors and employees as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and suppliers for various services received.

The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 16 to the Financial Statements.

Contingent consideration

As part of the acquisition of Gazelle Resources Inc, the Group has entered into a contractual arrangement with Swala Resources Inc ('Swala'), in which, under certain milestones being reached, would result in the Group paying further consideration of US$1.5m. For full details on the arrangement, please see Note 28.

The Directors have reviewed the progress of the project and consider reaching the milestones unlikely. Given this, the Directors have assessed the fair value of the contingent consideration to be nil; it is unlikely that the Company will have any additional liability arising.

5. Segment Information

Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the year the Group had interests in six geographical segments; the United Kingdom, Mauritania, Ethiopia, Burkina Faso, Mali and Zambia. Activities in the UK are mainly administrative in nature whilst the activities in Ethiopia, Mauritania, Burkina Faso, Mali and Zambia relate to exploration and evaluation work. In September 2015 the Group disposed of its interests in Ethiopia, see Note 27.

A reconciliation of adjusted loss from operations per reportable segment to profit/(loss) before tax is provided as follows:

6. Property, Plant and Equipment

Depreciation expense of £71,310 (2014: £69,945) has been charged in administration expenses (Note 17).

7. Intangible Assets

Exploration and evaluation assets are all internally generated.

Exploration projects acquired during the year in Zambia at 31 December 2015 had a gold JORC compliant resource estimate of 760,000 ounces in the measured, indicated and inferred categories at an average grade of 2.3 grams per ton. In determining the fair value on acquisition the Directors' applied a number of valuation metrics including geological upside potential, mineralogy, market benchmarks, local market factors and internally generated feasibility studies. For more information see Note 26.

Exploration projects in Burkina Faso, Mali and Mauritania are at an early stage of development and, with the exception of the JORC Code compliant inferred resource estimate of 247,000 oz Au for the Kossanto Project in Mali as at 31 December 2015, no JORC or non-JORC compliant resource estimates were available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:

• The Group's right to explore in an area has expired, or will expire in the near future without renewal;

• No further exploration or evaluation is planned or budgeted for;

• A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; and

• Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.

An impairment review of exploration and evaluation assets is carried on out an annual basis in order to ensure that it is valued at the lower of cost and recoverable amount. Following their assessment, the Directors concluded that no impairment charge was necessary at the year end. This included the Group's two gold exploration licences in Mauritania for which no significant exploration activity has been conducted over the past two years.

8. Investments in Subsidiary Undertakings

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

Details of Subsidiary Undertakings

9. Available-for-Sale Financial Assets

All available-for-sale financial assets are UK listed equity securities denominated in Pounds Sterling.

Losses of £7,650 (2014: £6,600) were due to a change in fair value.

10. Trade and Other Receivables

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

The Group has provided bank guarantees as security for the minimum spend requirements on the Mauritanian exploration licences. The guarantees are not released until the end of the licence period. The balance held via bank guarantee at 31 December 2015 is £21,307 (31 December 2014: £21,601) and is included within restricted assets.

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

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. At 31 December 2015 all trade and other receivables were fully performing.

11. Cash and Cash Equivalents

All of the Company's cash at bank is held with institutions with an AA credit rating.

12. Trade and Other Payables

Trade payables include amounts due of £8,554 (2014: £5,019) in relation to exploration and evaluation activities.

13. Borrowings

On 23 November 2015, the Company issued 800,000 interest fee convertible loan notes at a par value of US$1 per loan note. The loan notes are convertible at the higher of 80% of the Company's mid-market closing share price at the time of exercise and 0.08 pence.

14. Deferred tax

An analysis of deferred tax liabilities is set out below.

The movement in the deferred tax account is as follows:

The Group has additional capital losses of approximately £440,000 (2014: £440,000) and other losses of approximately £4,498,000 (2014: £5,126,000) available to carry forward against future taxable profits. No deferred tax asset has been recognised in respect of these tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset.

15. Share Capital and Share Premium

Group and Company

(1) Includes issue costs of £98,380

(2) Includes issue costs of £65,000

(3) Includes issue costs of £25,000

(4) Includes issue costs of £67,715

On 14 January 2015 the Company raised £600,000 (gross) through the issue of 200,000,000 new Ordinary Shares at a price of 0.3 pence per share.

On 22 June 2015 the Company raised £300,000 (gross) through the issue of 300,000,000 new Ordinary Shares at a price of 0.1 pence per share.

On 23 November 2015, the Company issued 943,750,000 new Ordinary Shares at a price of 0.12 pence per share as consideration for business acquisitions. On the same date the Company raised £650,000 (gross) through the issue of 812,500,000 new Ordinary shares at a price of 0.08 pence per share.

16. Share Based Payments

Share options and warrants outstanding and exercisable at the end of the year have the following expiry dates and exercise prices: