Arc Minerals Regulatory News (ARCM)

12 August 2014

ORTAC RESOURCES LTD

("Ortac" or the "Company")

FINAL RESULTS

Ortac Resources Ltd, the AIM listed exploration and development company focussed on natural resource projects, announces its final results for the year ended 31 March 2014.

Highlights

· A pre tax loss of £1.768m (2013: restated loss of £1.849m) and a loss per share of £0.08 (2013: £0.08 (restated), in line with expectations and with last year; 

· Raised a further 200,000,000 ordinary shares of no par value in January 2014. Shares issued at a price of 0.25 pence per share, for a cash consideration of £500,000 before share issue costs;

· Cash and cash equivalents as at 31 March 2014 were £2,253,000;

· Šturec Biodiversity Baseline Study ("BBS") now completed. It will form part of the planned Environmental and Social Impact Assessment Program ("ESIA");

· Further engagement with the Kremnicko community with co-funding of over 50 community projects;

· Formation of a strategic alliance in January 2014 with Andiamo Exploration Ltd ("Andiamo") with an 18% stake;

· Andiamo commenced drilling at Yacob Dewar Deposit in Eritrea in March 2014.

Post year-end highlights

· Surface and underground rights to the Kremnica Licence confirmed by Slovak Mining Authorities;

· First phase of trial underground mining activity at Šturec deposit completed (the first mining in more than 20 years) with material extracted for testing and processing;

· Stake in Andiamo increased to 25% and a position on the Andiamo board taken up;

· Completed trenching programme at Yacob Dewar, with near surface high-grade oxide copper and gold mineralisation according to assay results;

· New discovery made of gold and silver bearing mining deposit at Ber Gebey which runs directly along strike from Yacob Dewar Deposit.

Anthony Balme, Chairman at Ortac, commented: "In a particularly challenging market environment, your Company has over the last 12 months achieved the milestones we set ourselves. We have made strategic decisions which we feel will strengthen the Company and post the year-end we have seen positive developments within our projects. 

I would like to take this opportunity to thank you all and I look forward to updating you with the further progress we aim to make in the year ahead."

ENDS

For further enquiries:

CHAIRMAN'S STATEMENT AND OPERATIONS AND FINANCE REVIEW

Chairman's Statement

In a particularly challenging market environment, your Company has over the last 12 months achieved the milestones we set ourselves from when I last reported to you. Foremost was satisfying the terms of the Mining License Area in Slovakia and secondly, our investment into Andiamo Exploration Limited a company whose gold-copper project we believe has the potential to be brought into production fairly quickly and with modest capital expenditure.

Operations

Slovakia: 

Since the completion of the Pre-Feasibility Study in April 2013, our main technical focus has been in two areas: the preparation and submission of an underground trial mining application that would satisfy the terms of our mining license and allow us to extract bulk samples for trial processing, and secondly the completion of a Biodiversity Baseline Study covering an area of 50 km2 surrounding the Šturec deposit- which is an important element in the development of the project. 

Trial underground mining commenced in June 2014 and sufficient material has been extracted for testing and processing. This work satisfied the terms of the Kremnica Mining License Area, which has now been superseded with a mining permit that can be extended on application to the Slovak Mining Bureau.

We are still awaiting a decision from the District Environmental Office in connection with our earlier application for trial surface mining, although we expect this to be made during the coming period. At the same time the Slovak Mining authorities have confirmed to us that Ortac's rights to the Kremnica Mining license area (both surface and underground) are still in place.

Concerning the BBS, this 18 month long program was completed during the period and will form an important element to an Environmental and Social Impact Assessment program, which in turn will lead to the co-development of a finalised "master" project for Šturec. 

Technical matters aside, we have continued our engagement program with key local stakeholders. Major efforts in these initiatives have been the implementation of specific communication along a number of channels intended to provide more information to all stakeholders. These have included regular releases of a bulletin called Ortac Info (see http://www.ortacresources.com/news/community/) and the previously reported upon release of our Sturec Land brochure (see http://www.sturecland.sk/brochure).

Concerning our Šturecland concept, this has been well received and we plan to begin to flesh out this concept even further during the course of this year.

As well as our own in-house initiatives, and as previously reported, we have supported, financially and in kind, the build up of 'Forum Kremnicko' ("the Forum"). Starting from scratch the Forum, which was set up to act as a platform catering for those who wish for better decision-making processes, has made good progress. Through the Forum, we have co-funded over 50 community projects from different areas such as culture, music, tourism, entrepreneurship, sport and access to information. These projects were implemented through local partnerships, with the support of local businesses, individuals, local organisations and the Forum itself. And we are pleased to report that the Forum presently has a further 50 projects currently being assessed.

Taken together these are substantial moves and we are beginning to see results from these investments into the local community.

Eritrea:

During the period and after an extensive due diligence exercise over the last few years, we made an investment into Andiamo, a private UK incorporated mineral exploration company currently developing advanced, exploration stage Volcanogenic Massive Sulphide, gold-copper projects in Eritrea.

Andiamo's main asset is its Yacob Dewar deposit, which appears to be a relatively high grade gold-copper oxide deposit that has the potential to be developed into a producing mine, at modest capital expenditure and within a relatively short time frame.

Our involvement has brought greater focus to Andiamo as it develops its core discovery, and our money has enabled Andiamo to carry out a further drilling campaign and initiated a detailed trenching program over a 1km strike length at Yacob Dewar, which we are confident will generate a commercial gold-copper project. We will be working closely with Andiamo over the coming period to move this project through the feasibility stage to enable it to apply for a Mining License for this deposit in the next 12-18 months.

Financial & Corporate Overview

During the period 1 April 2013 to date, and showing commitment to the Company the directors acquired a further 17.5 million shares in the Company (2013: 6.6m) representing 0.70% (2013:0.29 %) of the Company. 

In addition, in January of this year we also raised a further 200,000,000 ordinary shares of no par value, which were issued at a price of 0.25 pence per share, for a cash consideration of £500,000 before share issue costs. 

In line with expectations and with last year, we report a pre tax loss of £1.768m (2013: restated loss of £1.849m) and a loss per share of £0.08 (2013: £0.08 (restated)).

Outlook

Notwithstanding the cost rationalisation measures implemented over the period and the reduction in head count, Ortac continues to possess a reasonable cash treasury and maintain a small, but core team, which has the capabilities to continue our development objectives, and enhance and build our portfolio of assets. 

For the coming period, our team will be focussed on continuing with development of the initiatives implemented in Slovakia and assist Andiamo in completing the technical work required for an application for a mining permit to be granted at Yacob Dewar. 

Finally and before thanking our shareholders for their valued support, I would like to express my personal thanks to the Ortac team and all those who have helped us, and been with us over the last year. As to our shareholders, despite the difficult global market conditions and the challenges faced by junior mining companies over the last few years, the support we have received is acknowledged and greatly appreciated and I would like to take this opportunity to thank you all and I look forward to updating you with further positive progress in the year ahead. 

Anthony Balme

Chairman

11 August 2014

FINANCIAL STATEMENT

Group Statement of Comprehensive Income for the Year ended 31 March 2014

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Company Statement of Comprehensive Income for the Year ended 31 March 2014

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Group Balance Sheet as at 31 March 2014

These financial statements were approved by the Board of Directors on 11 August 2014 and signed on its behalf by:

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Company Balance Sheet as at 31 March 2014

These financial statements were approved by the Board of Directors on 11 August 2014 and signed on its behalf by:

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Group Statement of Cash Flows for the Year ended 31 March 2014

There were no material non-cash items.

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Company Statement of Cash Flows for the Year Ended 31 March 2014

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Group Statement of Changes in Equity for the Year ended 31 March 2014

The notes on pages 33 to 57are an integral part of these consolidated financial statements

Company Statement of Changes in Equity for the Year ended 31 March 2014

The notes on pages 33 to 57are an integral part of these consolidated financial statements

NOTES TO THE FINANCIAL STATEMENTS

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 2014 were authorised for issue by the Board on 11 August 2014 and the Balance Sheets were signed on the Board's behalf by Mr. Anthony Balme and Mr. Charles Wood.

b. Statement of Compliance with IFRS

The following new IFRS standards and/or amendments to IFRS standards are mandatory for the first time for the Group. Except as otherwise noted as being irrelevant to the Group, the implementation of these standards did not have a material effect on the Group: 

Standards, amendments and interpretations that have been issued, but are not yet effective or have not yet been EU-endorsed and have not been early adopted are as follows: 

1. Effective date 1 January 2014 for the EU.

2. Not relevant to the Group

3. Not yet endorsed by the EU.

4. Effective date 1 January 2013 for the EU.

5. Effective date 1 July 2014 for the EU.

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

c. Basis of Preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union. 

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. 

The financial statements of the year ended 31 March 2013 have been restated as per Note 27 to correct a prior period error resulting from the cost of warrants and options issued and expiring in 2013 not being charged to the financial statements.

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. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

e. 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 2 and 4; in addition note 22 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 revenues and an operating loss has been reported, the Directors consider that the Group has sufficient funds to undertake its operating activities for a period of at least the next 12 months following approval of the consolidated financial statements, including any additional payments required in relation to its current exploration projects. The Group has financial resources which will be sufficient to fund the Group's committed expenditure both operationally and on its exploration projects for the foreseeable future. However, as additional projects are identified and the projects moves towards production, additional funding will be required. The amount of funding is unforeseen at the point of approval of these Financial Statements and the Group will be required to raise additional funds either via an issue of equity or through the issuance of debt. 

The Directors are confident that funds will be forthcoming if and when they are required and therefore have a reasonable expectation that the Group and 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 these Financial Statements.

f. Business combinations

The acquisition of subsidiaries in a business combination is accounted for using the acquisition 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 as goodwill under intangibles within the Group Balance Sheet and any excess net fair value is recognised immediately in the Income Statement as negative goodwill on acquisitions of subsidiaries. 

Any 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. There are no minority/non- controlling shareholders of subsidiaries.

g. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer, the Group's chief operating decision-maker.

h. Contingent consideration

Contingent consideration is chargeable to the profit and loss in the period in which it is recognised as payable. See note 25 below.

i. Revenue

The Group and Company had no revenue during the years ended 31 March 2014 and 31 March 2013.

j. Foreign currencies

The Group and Company'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. At present the functional currency of all of the Slovakian subsidiaries is Euro. 

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· monetary assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

· non-monetary assets and liabilities for each balance sheet presented are translated at the historic rate at the date of that transaction;

· income and expenses for each statement of comprehensive income presented are translated at average exchange rates; and all resulting exchange differences are recognised in other comprehensive income where material.

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 cumulative exchange differences are subsequently reclassified in the income statement as part of the gain or loss on sale.

k. Taxation

Tax is recognised in the Income Statement/Statement of Comprehensive Income, 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 and associates, and interests in joint ventures, except where the Company 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.

There has been no tax credit or expense for the period relating to current or deferred tax.

l. Intangible Assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets, liabilities and contingent liabilities of the acquired subsidiary at the date of acquisition. Goodwill arising on the acquisition of subsidiaries is included in 'intangible assets'. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Exploration and evaluation assets

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 amortised to the Income Statement.

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 (useful economic life) of the commercial ore reserves on a unit of production basis. Impairment reviews are 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 to the Income Statement. 

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. 

m. 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 Intangible assets

Exploration and evaluation costs have a carrying value at 31 March 2014 of £12,084,000 (2013: £11,137,000). Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in note aa. 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 to the Income Statement. 

Goodwill has a carrying value at have a carrying value at 31 March 2014 of £ 270,000 (2013: £270,000). The Group tests annually whether goodwill has suffered any impairment. Management has concluded that there is no impairment charge necessary to the carrying value of goodwill.

Further information as to the impairment review carried out by the Directors can be found in notes 5 and 12.

ii) Available for sale financial assets

Available-for-sale financial assets consist of equity investments that are neither classified as held for trading nor designated at fair value through profit or loss. After initial recognition whereby these are recognised at cost being their initial fair value, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the Income Statement within finance costs.

During the year, Ortac Resources Limited made an investment in Andiamo Exploration Limited of £605,000 (2013: £nil), which is treated as an available for sale financial asset. Given it is an unquoted company, the available for sale financial assets is categorised as Level 3, which is described in more detail within Note 22.

iii) Share-based payments

The Directors are required to make certain estimates when determining the fair value of share options and warrants issued ("awards"), and the number of awards that are expected to vest. These estimates affect the amount recognized as share based payments in the Income Statement in respect of share based payments. The assumptions made have been described in more detail in accounting policy x), cc) and note 20 below. 

Were the actual number of awards that vest to differ by 10% from management's estimates the overall option charge would increase/decrease by £26,000 (2013 as restated: £10,300). 

iv) Contingent Liability

As referred to in note 25, the contingent consideration arrangement requires Ortac Resources UK Limited to pay vendor royalties of up to US$3,750,000 -£2,253,335 at 31 March 2014- (2013: -£2,440,940) 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 £ 65,726 lower or £ 65,726 higher if the US$ exchange rate was to change by 5% from its year end rate. 

n. Finance Income

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

There is no finance income in respect of the available for sale financial assets.

o. Cash and Cash Equivalents

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

p. 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. 

q. Trade and Other Receivables

Trade receivables, which generally have 15-day terms, are recognised initially at cost, being their initial fair value. These are classified as loans and receivables, and so are subsequently carried at cost using the effective interest method. The Directors are of the view that such items are collectible and no provisions are required. 

r. Investments

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

s. Financial Instruments

The Group's financial instruments are classified as loans and receivables and available for sale financial assets. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments 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, except where impaired as per note m) ii) 

Trade and other payables are classified as financial liabilities, and are initially recognised a cost, being its fair value, and subsequently measured at amortised cost using the effective interest method. Any interest is recognised as a finance cost within the Income Statement.

There is no material difference between the carrying values and fair value of the Group's financial instruments. 

t. Share capital:

This represents the nominal value of the equity shares in issue.

u. Share premium:

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

v. Retained earnings:

This records the accumulated profits and losses of the Group since inception of the business and adjustments relating to options and warrants. 

w. Available for sale investment reserve.

This reserve is used to record the fair value movements in available for sale financial assets as per note m (ii) and s). 

x. 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. The 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 and share premium.

y. 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. 

z. Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. 

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:

· 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.

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 replacement part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.

The asset's residual value and useful economic lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying value is written down 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 the Income Statement.

aa. 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 the Income Statement 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. 

bb. Trade and Other Payables

Trade and other payables are carried at amortised cost under the effective interest method 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. 

cc. Share-based payments

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 the Income Statement 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. 

dd. 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. 

ee. Earnings per share

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

Diluted Earnings 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);

· 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, such as share based payments;

· All divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 

2. 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.

There are no transactions occurring during the year, or comparative year, between reportable segments, that affect the Income Statement.

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. Other income

4. Expenses by nature

Establishment expenses includes £46,780 (2013: £49,413) relating to operating lease payments in connection with the Group's rental of office space in London. 

Auditor's remuneration includes £24,000 (2013: £24,000) relating to the audit of the subsidiary companies. Professional fee's include £3,375 (2013: £4,279) relating to non audit related fees paid to the Group's auditors.

5. Impairment

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 of exploration and evaluation assets was necessary as at 31 March 2014 (2013: £105,000) and that no impairment of goodwill was required either (2013: £nil).

6. Employee Information

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

7. Taxation

The taxation charge on the Group's loss before income tax 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 8.74% (2013: 12.21%) used is a combination of the 24% standard rate of corporation tax in the UK, 22% Slovakian corporation tax and 0% BVI corporation tax. There is a minor change this year, due to the UK standard rate of corporation tax falling to 24% and Slovakian standard taxation rate reducing to 22%.

There are tax losses in the Group of £4,421,000 (2013 Restated: £3,757,000) which are carried forward for relief in future periods. The potential deferred tax asset of £926,000 (2013 Restated: £884,000) has not been recognised 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. On 17 July 2013, legislation was enacted to further reduce the UK corporation tax rate. The new tax rates are 21% for income earned from 1 April 2014 and 20% from 1 April 2015. The effect of the reduction to 20% is reflected in the deferred tax balance disclosure note. No further changes are foreseen to the future tax rates in the Slovak Republic or the BVI.

8. Dividends

No dividends were paid or are proposed. 

9. Directors' Remuneration

No pension benefits are provided for any Directors. 

10. Earnings per share

The calculation of Earnings per share is based on the loss attributable to equity holders 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 earnings per share, they are considered to be anti-dilutive. As such, diluted and basic earnings per share are the same. 

11. Finance Income

12. 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 a leading group of mining consultants 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, a Pre-Feasibility Study, carried out by a leading practice of mining consultants, 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, in June 2014 and following an application which was approved by the Slovak Authorities, a program of trial underground mining was started, which plans to extract 4,000 tonnes of ore over the next three years. The commencement of this activity has satisfied the Company's obligations to the Slovak Republic, for maintaining the validity of its Mining License Area.

At the same time the relevant authorities have recently confirmed that Ortac s.r.o continues to hold both underground and surface mining rights to the Kremnica Mining License Area. 

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. 

An impairment review of exploration and evaluation assets and goodwill is carried on out an annual basis in order to ensure that each is valued at the lower of cost and recoverable amount. Following their assessment the Directors concluded that no impairment of exploration and evaluation assets was necessary as at 31 March 2014 (2013: £105,000) and that no impairment of goodwill was required either (2013: £nil).

13. Property, Plant and Equipment

Depreciation charges for the year ended 31 March 2014 of £27,000 (2013: £46,000) have been charged to "administrative expenses". 

14. Investment in Subsidiaries

At 31 March 2014 the Company held 100% of the share capital of the following wholly owned subsidiary companies:

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

From 1 April 2014, Bellmin s.r.o. and G.B.E. s.r.o. have been merged into St. Stephans Gold s.r.o. In addition, Kremnica Gold s.r.o. has been merged into Ortac s.r.o. from this date.

15. Available for Sale Financial Assets

Available for sale investments at the beginning of the year comprised the United Kingdom listed equity securities in Vatukoula Gold Mines plc; these were sold during the year realising a loss on sale of £32,000. 

Additions during the year relate to the acquisition, by way of subscription agreement, of 18.47% of the enlarged share capital of Andiamo, a private UK incorporated Eritrean focussed mineral exploration company. Under the terms of this strategic alliance, Ortac has, until December 2015, the right to acquire an additional 21% of Andiamo.

16. Inventories 

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17. Trade and Other Receivables

Current trade and other receivables are all due within one year. 

Loans advanced to subsidiaries are unsecured, interest free and have no fixed repayment date. 

The fair value of trade and other receivables is the same as their carrying values as stated above.

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