Berkeley Mineral Resources Regulatory News (BMR)

Berkeley Mineral Resources PLC

("BMR" or the "Company")

2014 Final Results

Berkeley Mineral Resources PLC announces its full year results for the year ended 30 June 2014.

CHAIRMAN'S STATEMENT

As your new Chairman, I present below the financial statements of the Company for the year ended 30 June 2014. I succeeded the former Chairman on 23 October 2014 following his resignation due to ill health.

I was shocked by my initial findings at the Company which resulted in my appointment of independent advisers to carry out an investigation into concerns over £4.3 million of prepayment for non-current assets and subsequently the announcement of expected write-downs of between £10 million and £12 million and the appointment of a new team of directors and advisers.

I am disappointed in the delay in reporting these results but this is out of necessity. I deferred the reporting of the results, the original audit for which was in its final stages, pending the conclusion of the investigation.

The Directors have had the opportunity of speaking to a number of shareholders and I have considered their views in the various ways in which they have been expressed. I recognise the extent of concerns about the Company and past actions taken by its former management which have had serious consequences for shareholders in terms of the valuation, and erosion thereof, of the assets of the Company. Shareholders are entitled to place a high degree of confidence in a company's management and a company's reported audited results. However, I believe there has been an abuse of trust at the Company which, together with other factors, has led to the substantial write-downs recorded in these results.

After having taken a number of positive actions at the Company and working tirelessly on behalf of shareholders with a small professional team with very effective results, I believe that this unfortunate chapter in the Company's history can soon be concluded.

I note that the Directors believe that there remains significant value in the Company's assets represented by the audited consolidated net asset value of £8.09 million as at 30 June 2014, following our detailed review. The principal value comprises the washplant and leachplant tailings at Kabwe arising from the Company's historic acquisitions in Zambia.

On the other hand, the acquisitions of the Company's copper interests in Zambia have been carefully considered by the Directors and we have determined that there is minimal value in these interests that were accounted for at significant cost to the Company. Accordingly, the balances of these assets have been written off as noted below.

Investigation

Following my initial review of the reported historic results and my visit to the operations at Kabwe, Zambia, in October 2014, it became clear that there were anomalies in the recording of assets. On 23 October 2014, the Company announced that certain material concerns had come to light as to the classification and valuation of approximately £4.3 million of prepayments for non-current assets. The Company instructed independent accountants, Crowe Clark Whitehill LLP ("CCW"), and lawyers to investigate the circumstances underlying these concerns and obtained the permission of AIM for trading in its securities on AIM to be suspended forthwith.

As a result of these investigations, the Directors conducted a thorough review of the draft financial statements for the year ended 30 June 2014 and so the timetable for the publication of these results had to be extended. On 11 December 2014, the Company announced that it would not be in a position to announce audited final results and to post the accounts with the Notice of Annual General Meeting, until early 2015. As a major step in reporting results, in which the Directors could be confident, to shareholders the Company announced on 2 February 2015 that CCW had been appointed as auditors. Following a detailed review of the draft financial statements and taking into account the £4.3 million prepayment for non-current assets, the Company announced on 19 February 2015 that the results for the year ended 30 June 2014 would incorporate write downs of assets in the range of £10 million to £12 million.

The actual level of write downs and provisions before depreciation and foreign exchange differences amounts to £10.296 million, of which £4.029 million has been treated as prior year adjustments resulting in the re-statement of consolidated net assets at 30 June 2013 and 30 June 2012. £6.267 million has been written down against the audited consolidated net assets of the Group at 30 June 2014, the resulting balance of which amounts to £8.087 million.

The investigation was necessary to determine the actual assets held by the Company at 30 June 2014, to assess how amounts on the balance sheet had been derived, to investigate whether there had been inappropriate or wrong recording of assets and to assess the parties from whom recoveries could be considered. The cost of the investigation carried out, together with an assessment of the financial standing of certain parties from whom recovery was considered by the Company, together with advisers' fees, amounted to over £100,000, a significant but not an unreasonable cost in the context of the level of write-downs. The investigation enabled the Directors to prepare a detailed asset statement and provided sufficient evidence for them to enter into discussions with certain parties for recovery of funds. Consequently, the Company entered into the settlement agreement, as previously announced and detailed below.

Analysis of the write-downs and provisions

In the light of the aforementioned investigation, the Directors determined to write down the Group's net assets by, in aggregate, £10.296 million. As shareholders will understand from this statement, this total includes assets which are considered to have no or limited value, capitalised expenditure which has been written off, assets to which the Directors believe no value should be attributed and a significant element of what the Directors consider to be fundamentally flawed accounting.

The write-downs and provisions of £10.296 million comprise:

(i) assets now written down in respect of prior years amount to £4.029 million;

(ii) assets written down or provisions made in the current year amount to £4.57 million due mainly to impairment losses where the carrying values are assessed and deemed to be below their recoverable values; and

(iii) the balance of £1.697 million attributable to depreciation not previously provided and foreign exchange differences during the periods.

The write-downs and provisions comprise the following, and are analysed below:

(i) Prepayment for non-current assets £4,066,277

At 30 June 2013, the audited net assets included an amount of £4.23 million described as prepayment for non-current assets which increased to £4.26 million at 30 June 2014. This balance has been reduced by £197,160 to £4.066 million in respect of accounting for payments to be made to the joint venture companies as noted below.

It is very disappointing to note the Directors have now concluded that there were no significant copper interests ever acquired by the Company. Only limited copper interests were held which were within the five joint venture companies but these are now being written-off. As a result, the balance of £4.066 million has been written-off in full of which £3.665 million was not properly attributable to the acquisition of, or prepayments in respect of, copper interests; and £598,437 less £197,160 was in respect of the joint venture companies established for holding the copper interests.

The Directors have now established that the joint venture companies were not effectively consummated, as mining licences were either not transferred, had expired or become invalid and, furthermore, the limited copper resource in the joint venture companies was of a low grade and not economic to process. While your Directors have concluded no value can be attributed to the copper assets at the present time, every attempt will be made to make future recoveries if possible. The sum of £197,160 represented payments to be made to the joint venture companies, capitalised as an asset and held in creditors to be paid when the transfer of the licences was completed. As this transfer was not completed, the Directors have decided not to make any such payments and, accordingly, creditors have also been reduced by £197,160.

As background, the Directors note that, in late 2013, African Mining Consultants Limited, a firm of geological, mining and engineering consultants operating in the Zambian copper belt since 1994 and regularly engaged by leading mining companies, reported to the then Directors on the status of the resources and licences of the five joint venture companies at Ndola and Chingola. The report stated Chingola "has the largest tonnage potential but the grades are estimated to be very low as this was a waste rock dump site for the main Nchanga open pit. When preliminary economics are reviewed it can be summarised that this project is not economically viable, if grade estimations are correct [at]

(ii) Bendu Transport £131,604

The sum represents monies that were paid to a company recorded in the books as Bendu Transport relating to the joint venture companies noted above and shown in debtors, further details relating to which the Directors have been unable to identify. As the joint venture companies are considered to be invalid or of no value, the Directors have decided to provide against this balance in full.

(iii) Copper leach plant £103,608 less depreciation of £44,602

The Company has recorded in its books a value of £103,608 attributed to the copper leach plant acquired from a Chinese company and items of equipment at Kabwe. In practice, there is no value that can be attributed to the plant as there are no economic copper interests to process at Kabwe and there is inadequate machinery for the plant to be used for effective copper processing. Furthermore, it is impractical to move the plant to Ndola for copper processing as the Company's copper interests there are considered to be invalid.

(iv) Large scale mining licence £1,251,366 (£2,137,372- Original value)

The large scale mining licence (ML1, number 6990-HQ-LML) runs until 1 November 2021 and was transferred from Alberg Mining & Minerals Exploration Ltd ("Alberg Mining") in 2012 for a consideration of $3 million which, taken with associated fees and legal costs, is equivalent to £2.137 million. This sum which has been written-off comprises £1.251 million of acquisition costs, depreciation of £445,000 and foreign exchange differences of £441,000.

The area covered by this licence, which was first issued upon the opening of the mine in 1904, is substantial and includes the Old Airfield, surface rights over the 703 hectares of the Kabwe lead and zinc mine, the Greenfield resource, and other ore bodies.

Historic reports suggested the Old Airfield land contained substantial low grade lead and zinc to a depth of 200 meters, but, even at 100 meters, the amount of water to pump out would be huge. Furthermore, there are a number of factories on the land which makes metal recovery virtually impossible, at least in the short-term.

The Greenfield area contains the remaining un-mined or partly-mined underground ore bodies at Kabwe, together with the existing mine shafts and other infrastructure located there. The majority of this area is effectively greenfield exploration acreage on-strike to the historic mine site. BMR has not yet investigated this resource and holds no reliable assessment of its value which would support a Directors' valuation. For the avoidance of doubt, this area is covered by the large-scale mining licence. BMR does not own the land itself but the underlying metal resource should it ever be practical or economic to mine.

In light of the above, the Directors have written down the whole cost of the large-scale mining licence.

(v) Acquisitions £1,811,112 (£2,621,648 Original Value)

Dump 57's lead and zinc tailings, acquired in 2008 from Zincorous Investments Limited, contained Waelz kiln slag which is both brittle and very hard to process. Dumps 21 and 22, acquired in 2009, contain Imperial Smelting furnace slag which is similarly both brittle and hard to process. Therefore, the Directors have written down the value of all these Dumps, 21, 22 and 57.

In addition, the Directors have written down 90% of the further tailings acquired from Silverlining Ventures Ltd in 2012, Stands 5203 and 5209, as only the small core of the tailings is considered by the Directors to contain recoverable value and, in the short term, it is not practicable to process the vast majority of these Stands.

Note: Dumps refer to tailings deposits; and Stands refer to areas where Dumps are held.

(vi) Payments to Dorset Solutions Limited £274,000 

Payments of £274,000 made by the Company to Dorset Solutions Limited ("Dorset"), the parent company of Alberg Mining, have been capitalised but there is no evidence of verifiable assets that can be audited in respect of Dorset. This has therefore been written-off.

(vii) NLL Facilitation Fee £250,000

BMR had acquired from NLL Minerals Limited in June 2011 Enviro Mining Limited, its Mauritius intermediate holding company which wholly owns its two Zambian subsidiaries and which hold the Company's assets in Zambia, for which a facilitation fee of £250,000 was paid. There are no verifiable assets that can be audited in respect of this fee. As a result, the Directors have decided to provide against this amount in full.

(viii) Swan Logistics Limited ("Swan") £487,515

The sum comprises £247,515 recorded as payments to Swan and recorded in debtors and £240,000 as a provision against transfers made to Swan following the year-end date of 30 June 2014. The Directors expect there to be no recovery from Swan which is a party to the Settlement Agreement (as defined below).

Reference to Swan is also given under 'Related party and share dealing disclosures' below.

(ix) VAT £268,491 

BMR is currently registered for VAT but HMRC, in a letter dated 11 August 2014, gave notice that BMR is to be de-registered on the basis there was no effective consideration for any services provided as no invoices had been raised by BMR and issued to its subsidiaries and that management services were not considered supplies for VAT purposes. While this situation could have been resolved by previous management, the Company has received an assessment for £268,491 in back VAT previously claimed including interest and this amount has been provided for in full. The Directors have now appealed and submitted the Company's case for continued registration after having sought professional advice.

Settlement agreement

On 18 February 2015, the Company entered into a settlement agreement ("Settlement Agreement") relating to the matters underlying certain of these write-downs of assets. The parties to the Settlement Agreement with the Company comprised Masoud Alikhani (former Chairman) through an interim deputy due to ill health, Mrs Barbara Alikhani (wife of Masoud Alikhani), Said Alikhani (a brother of Masoud Alikhani), Alberg Mining & Minerals Exploration Ltd (a vendor of assets sold to the Company), Dominion Energy PLC (a company in which Masoud Alikhani was interested), ESV Group PLC (a further company in which Masoud Alikhani was interested), Ms Anita Carr (a former contractor of the Company) and Swan Logistics Limited (a company controlled by Ms Anita Carr) (together, the "Settlement Parties"), and Heathley Limited (a company of which Masoud Alikhani's son is an authorised signatory).

Under the Settlement Agreement which is subject to confidentiality obligations and restrictive covenants:

· Mrs Alikhani paid to the Company on exchange of the agreement £960,000 in cash (the "Settlement Funds") and Heathley Limited waived repayment by the Company of a loan of £40,000;

· the Settlement Parties waived all of their rights under options and warrants exercisable over, in aggregate, 36,082,579 Ordinary Shares (representing approximately 2.7 per cent of the current issued share capital);

· Masoud Alikhani (in respect of 9,350,000 Ordinary Shares), Mrs Barbara Alikhani (in respect of 2,656,578 Ordinary Shares) and Swan Logistics Limited (in respect of 12,472,798 Ordinary Shares) agreed to such shares (representing approximately 1.8 per cent of the current issued share capital) being converted into deferred shares at the next general meeting of the Company, such deferred shares having no economic or voting rights, and being de-listed from trading on the AIM Market, with lock-in provisions until such date. The effective value of these shares was approximately £245,000 based on their par value; and

· the Settlement Parties released and discharged all and/or any actions, claims, demands, set-offs, rights (including the right to make complaint) whether in this jurisdiction or any other, whether under criminal or civil law, whether or not presently known to such signatories or to the law, and whether in law or equity, that it, or its related parties or any of them ever had, may have or hereafter can, shall or may have against the other signatories and/or their related parties relating to the aforementioned write down of certain of the Company's assets.

The Settlement Agreement represented a related party transaction in accordance with Rule 13 of the AIM Rules for Companies and the Directors considered, having consulted with the Company's nominated adviser, that the terms of the Settlement Agreement were fair and reasonable insofar as its shareholders were concerned.

The Directors believe that entering into the Settlement Agreement represented the most suitable course of action for the Company in the circumstances. The Directors understood significant costs would be incurred in pursuing potential claims against the Settlement Parties, and recovery of any funds and receipt of any damages (and costs) awarded, even if successful, could not, based on the Directors' current understanding of the available assets of the Settlement Parties, have been guaranteed and could have taken many years through the courts.

Following protracted negotiations with the Settlement Parties, the Directors believe that the terms of the Settlement Agreement were fair and reasonable and resulted in the Company being credited with £1.0 million at a critical point for working capital sufficiency, resulting in a current cash balance of approximately £1.0 million. The Settlement Funds facilitated completion of the audit for the year ended 30 June 2014 and will also enable the Company to progress with its plans for implementing the processing of its tailings assets at Kabwe in Zambia. The Company may, however, require additional funding to complete the financing of a new processing plant at Kabwe for the tailings.

The Directors continue to consider avenues where further monetary recoveries may be made by the Company having regard to the likelihood of recoveries, the cost of taking legal action and the opportunity for recovery within a reasonable timescale.

The Company's principal value lies in its asset base at Kabwe, Zambia, together with management's ability to realise value from entering into production. A key focus over recent months has been to assess the opportunity for realising value from this asset base and, in particular, to bring the tailings into production for zinc and lead concentrates.

The Directors are required to review all the assets and their values and to confirm those values both to shareholders and the Company's auditors which is facilitated when supported by reports prepared under the JORC Code, an industry standard derived from the Australian Joint Ore Reserves Committee which provides a mandatory system for the classification of mineral resources and ore reserves. For valuations, the Company has previously referred to historic JORC reports prepared for vendors or to JORC classifications and, at other times, to estimates made by consultants or even vendors without external reports.

The Company had acquired in 2011 the area known as Stand 5187 at Kabwe, where the original mine had high-grade zinc and lead and operated from 1904 until it was closed in 1994 due to the then depressed world prices for the metals. The area acquired includes the surface rights over the washplant and leachplant tailings on which verification was carried out and JORC compliant reports prepared. The Company had also applied for and received the necessary licences to process by gravity separation the tailings to produce a combined lead and zinc concentrate for sale. This area is covered by the small-scale mining licence (number 7081-HQ-SML) for the tailings stockpiles which is held by the Company's subsidiary, Enviro Processing Limited ("EPL"), and runs until October 2020.

Since acquiring the resources at Kabwe, BMR has commissioned testing by consultants of various alternative methods of processing the tailings. These metallurgical studies included leach tests, kiln tests and conceptual proposals. There are two major types of material to consider: the washplant tailings which originated from the washing the untreated primary ore feed to the plant at the former Kabwe mine; and the leachplant tailings derived from historic ore processing.

The Directors have focused on processing the washplant tailings initially in view of the much higher metal grades they contain and the prospect of achieving greater returns in the earlier years of production and therefore swifter monetisation. At Kabwe there are 573,458 tonnes of washplant tailings grading 10.66% zinc and 7.21% lead, a combined grade of 17.87%, totalling 61,147 tonnes of zinc metal and 41,345 tonnes of lead metal, all assayed and quantified to JORC standards.

For the purpose of determining asset valuations of the washplant and leachplant tailings, the Directors have relied upon a JORC compliant report dated March 2012, which contains the following aggregate estimates for the above ground stockpiles at the Kabwe Mine site:

While the current market value of zinc is at around $2,165 per tonne and of lead at around $1,944 per tonne, even after applying a discount of 20%, these dumps have substantial value to the Company. As a result, the Directors accept the cost value of these acquisitions and anticipate an upward valuation once production commences.

During the period under review, the Company commissioned a Definitive Feasibility Study ("DFS") for the beneficiation of the washplant resources which was delivered in September 2013. The Zambian Environmental Management Agency ("ZEMA") required BMR's beneficiation plans to undergo a full Environmental Social Impact Study ("EIS") which was complied with by the Company's Zambian subsidiary, EPL. This was accepted by ZEMA in February 2014 and approved by ZEMA in August 2014. The EIS was initially submitted in October 2013 and revised into its approved form in February 2014. ZEMA's approval was finally received in August 2014.

The Company announced on 11 December 2014 that the Directors were undertaking a peer review of the DFS for processing the washplant tailings ("WPT") at Kabwe. The Company subsequently announced on 2 February 2015 that related test work on the WPT was well advanced. It also announced on 2 February 2015 that preliminary metallurgical and mineralogical test work would start later that month on the leach plant residue tailings at Kabwe ("LPR"), the Company's largest JORC compliant resource.

Notwithstanding the Board's initial preference for multi-spiral gravity separation, the results of this test work ultimately did not replicate either the potential recoveries or grades of the zinc and lead in the final product claimed in the DFS, and metal recoveries were materially inferior to those reported in the DFS.

The Directors therefore concluded that the DFS, which had been commissioned in August 2013 and the results of which were accepted without sufficient challenge by the former Board, does not provide an acceptable basis for selecting an appropriate processing methodology for the Kabwe tailings.

Furthermore, the Directors resolved not to pursue gravity separation as a potential methodology for metal recovery.

The metallurgical and mineralogical test work on the LPR using leach processing, which was resurrected by the new Board earlier this year, has now advanced to mini-pilot stage.

The Directors were pleased to report that this proprietary process, which is being developed by the Company working with technical partners, provides a credible alternative for the recovery of zinc and lead from both the WPT and LPR tailings. Results to date are encouraging, in that the zinc and lead recoveries achieved are approximately 55% and 85%, respectively, each of which represents an improvement on the previously claimed recoveries from gravity processing in the DFS. Furthermore the process generates no toxic effluents.

The Directors therefore selected leach processing as the methodology for processing both the WPT and LPR tailings, and expect to finalise the design parameters for a pilot plant imminently.

Although the pilot plant is yet to be costed and ordered, the Directors are confident that BMR has sufficient resources to initiate pilot processing without recourse to BMR's shareholders.

Finally, the Directors have held preliminary discussions with the Director General of ZEMA to explore how best to seek permission for the establishment later this year of a leach processing pilot operation for both the WPT and LPR tailings at Kabwe. After an explanation of the potential change in process, ZEMA recommended that the Company submit a brief project description without delay and advised that sympathetic consideration would be given, with advice on the most expedient route to be taken, to gain ZEMA approval.

Other assets

As outlined under (v) Tailings Dumps above, the Company acquired further tailings from Silverlining Ventures Ltd, Stands 5203 and 5209, located close to EPL's buildings to which the Directors have attributed a value of 10% of its acquisition costs amounting to £201,235 included in 'Intangibles'.

Previous announcements and reports

A number of queries have been raised by shareholders over the extent to which reliance can be placed on the efficacy of previous announcements made and reports issued by the Company a number of which I have been unable to verify. While I do not intend to instigate an investigation into the validity of each communication, I would note that, while supported at the time by the then Board, a number of communications appear to have contained too optimistic a degree of expectation which, with the benefit of hindsight, was unrealistic.

By way of example, I note in particular that the Directors' Report for the 2013 accounts, signed on 29 November 2013, contained reference to:

(a) "Lead and zinc - Kabwe: The Group has in place a detailed Definitive Feasibility Study for Kabwe lead and zinc and the Company expects the positive cash flow for this to commence in the second quarter of 2014";

(b) "Copper - Kabwe: Based on internal analysis by technically qualified management, the copper processing at Kabwe, following ramping up to the plant nameplate capacity, is also expected to be cash positive at operating level at an annualised estimated rate of $3 million following the second quarter of 2014 with initial cash flow commencing earlier"; and

(c) "Copper - Ndola/Chingola: The Company is also putting in place plans for a modular facility to process the copper tailings in the Ndola/Chingola areas and expects this to become cash positive during the third quarter of 2014".

I would note for shareholders in relation to each of the above statements:

(a) there was a delay in receiving the necessary approvals and it was only on 19 August 2014 that the Company definitively announced that ZEMA had issued a written approval of the EIS for lead-zinc recovery and copper processing at Kabwe. Therefore, the expectation that cash flow could be generated in 2014 was unrealistic and no major progress was made towards processing the zinc and lead tailings during 2014;

(b) a pilot cementation plant was built at Kabwe and trial runs produced a small quantity of cement copper but the plant was not capable of being transformed into a full scale plant. There was no filtration facility to extract solution from the leach residue while the copper concentrate did not assay at an acceptable grade. The cementation process is the cheapest to establish but it runs at a high operating cost and a projected cash flow of $3 million per annum was extremely optimistic. Additionally, the quantities of raw copper required for processing could not be sourced locally and overall the project was not viable; and

(c) the Company did plan a pilot programme intending to produce copper cathode from the tailings at Ndola, although this was discontinued. The joint venture companies were set up in conjunction with the joint venture partners with a view to running the copper project as outlined in the 2013 accounts. The Directors have now concluded that there were very limited copper interests held within the five joint venture companies, they have very little value and they have now been fully written-down.

Shareholders should be able to evaluate the Company's asset base and potential from the communications made by the Company since my appointment which have been given careful consideration by the Board and, where relevant, by our advisers and are subject to rigorous verification.

Related party and share dealing disclosures

I am disappointed that, in the accounts for previous years which we have analysed, related party transactions have been inadequately disclosed. In particular, there are a number of transactions involving: (a) Swan, a company administered from the Company's offices at 6 Derby Street, a related party; and (b) Turner & Townsend (Pty) Limited, a related party because Mark Wainwright (non-executive Director and currently Acting Chief Executive) is part of the key management personnel of its parent company where he holds a position of the managing director of its Natural Resources division. These are disclosed in Note 24 to the accounts.

In addition, there were a number of dealings in the Company's shares by Swan in the four years ended 30 June 2014 which were not disclosed by the Company and not reported to the Company by Swan, as now analysed and set out in the Directors' Report.

Overheads

At the same time as carrying out an investigation into the assets of the Company, we have sought to limit the monthly expenditure in order to align the cost base with the operational requirements. Our initial findings of the London office were that it was over-staffed with a high level of remuneration paid to contractors and employees and that the lease held by the Company comprised excessive and unused space which was inappropriate for the Company's activities. Until recently, many companies were administered at 6 Derby Street on which the Company's staff were engaged, with substantial financial support having been provided to some of these by the Company.

The Company announced on 2 February 2015 that reductions in the UK headcount of three contractors and four employees had been made. One of the contractors was the financial controller who had previously been responsible for the preparation of the financial statements in recent years. The Company is also seeking to re-assign the lease of the premises at 6 Derby Street, with an annualised cost of around £190,000 for nearly 4,000 sq ft which includes a one-bedroom apartment, and to find alternative office space of a modest size of around 600 sq ft and at a much reduced cost.

Financial controls

There was a breakdown of the implementation of the Company's financial controls, illustrated by the independent investigation, which contributed in no small measure to the write-downs that have had to be made. In addition, there appears to have been limited due diligence on the acquisitions made by the Company. Reports to shareholders appear to have created unrealistic expectations which could have been avoided.

I have consequently made a number of changes. I have concentrated on establishing a solid management base with strong financial controls in order for the Company to be appropriate as a company traded on AIM, to ensure appropriate due diligence for all corporate transactions and to avoid any future material concerns over the valuation of its assets and also for thorough accountability of its working capital expenditure.

Arrangements have been made for both Jeremy Hawke and myself to join the Boards of the Company's Zambian subsidiaries which we expect to be in place in the near future.

I would expect that shareholders will appreciate and have confidence in the considered content of announcements made subsequent to my appointment.

Results for the year

The Company reported a loss before taxation for the year ended 30 June 2014 of £9.269 million (2013 restated: £2.51 million) after adjusting for impairment write-downs and provisions of £4.57 million (2013 restated: £984,000). Administrative expenses amounted to £3.044 million (2013 restated: £1.532 million) and adjustments for share-based payments were £1.651 million (2013 restated: £Nil). Loss per ordinary share was 0.77p (2013 restated: 0.23p. The principal reasons for the increase in the level of administrative expenses for the year comprise: (i) an increase in foreign exchange differences of £790,000; (ii) an increase in depreciation and amortisation of £353,000; (iii) payment for separate broking services of £215,000; and (iv) settlement of £120,000 on the departure in early 2011 of a former Director.

Consolidated net assets at 30 June 2014 amounted to £8.087 million following the impairment write-downs and provisions (2013 restated: £13.44 million). Prior year adjustments have been made against the previously stated consolidated net assets at 30 June 2013 of £17.955 million. Cash balances at the year end amounted to £751,000 (2013 restated: £297,000).

Current cash balances amount to approximately £950,000 and the level of monthly cash burn is approximately £40,000. The Directors expect to apply part of the available cash resources in the establishment of a pilot plant at Kabwe for commencement of the processing of the tailings.

The Company expects to announce unaudited interim results for the six months ended 31 December 2014 later in April 2015, following the announcement of which the Directors expect that the suspension of the trading of the shares on AIM will be lifted and dealings on AIM will re-commence.

Directors, management and consultant

I was pleased to announce on 2 February 2015 the appointment, as our Mining and Operations Director, of Jeremy Hawke, a chartered engineer with significant mining expertise, who has made an immediate impact on the prospects for production of our tailings in Kabwe. In addition, Norman Lott ACA joined the Company as chief financial officer and he has provided valuable input to the accounting systems and the preparation of the accounts.

Horacio Furman, non-executive Director, and Mark Wainwright, Acting Chief Executive, have independently decided not to stand for re-election at the Annual General Meeting. They were each appointed in 2011 as non-executive Directors. It appears that they placed an over-reliance on the former management which was with hindsight misplaced. They have selected not to take their remuneration from 1 July 2014 and have sacrificed their options. However, I have found them to be helpful and I am grateful to them for having acted appropriately in their respective capacities since my appointment, challenging my proposals and supporting my actions.

I note my thanks to the management and staff in Zambia who have maintained and protected the Company's interests at Kabwe, after having had limited direction from the former management in previous years.

I would also like to thank in particular Dennis Bailey, a senior consultant to the Company following my appointment, who has worked tirelessly in the Company's and shareholders' best interests, providing me with valuable support, assistance and advice.

The Directors intend to announce the appointment of an additional director immediately following the conclusion of the forthcoming Annual General Meeting.

AGM resolutions

I have considered carefully the resolutions that are being proposed for approval by shareholders at the forthcoming Annual General Meeting summarised in the Directors' Report within the report and accounts for 2014. These resolutions are contained in a separate circular (with a proxy card for shareholders to complete, to be despatched shortly), for the meeting to be held at 10.30am on Thursday 28 May 2015 at The Courthouse Hotel, 19-21 Great Marlborough Street, London W1F 7HL, and will also be available on the Company's website.

The Directors strongly recommend that shareholders vote in favour of all the resolutions which include: a change of name of the Company to BMR Mining PLC to reflect a separation from the past; a share re-organisation to reduce the par value of the shares in order that any new equity funds can be raised by the Company in due course as the market price on the commencement of trading when the suspension is lifted is likely to be below the par value; and a limited share consolidation to restore the likely market price to a level above one pence per share.

Outlook

Note:

This release has been reviewed by Geoff Casson, B.Sc. (Hons), PhD, R Eng (Zambia), Member Engineering Institute of Zambia (Metallurgy), General Manager of the Company's Zambian subsidiary, Enviro Processing Ltd, who is a Qualified Person in accordance with the guidance note for Mining, Oil & Gas Companies issued by the London Stock Exchange in respect of AIM Companies. 

TRANSACTIONS WITH DIRECTORS AND RELATED PARTIES

Swan Logistics Limited ("Swan") was engaged in the purchase and sale of shares in the Company which were not disclosed by SLL and its holding, held through WB Nominees, was 34,475,975 shares in the Company as at 11 October 2011. As at 18 February 2015, Swan agreed to the conversion of 12,472,798 shares in the Settlement Agreement into deferred shares at the next general meeting of the Company, such deferred shares having no economic or voting rights, and being de-listed from trading on the AIM Market, with lock-in provisions until such date. Swan currently holds approximately 5 million shares.

Our records indicate the following transactions took place over at least the previous three financial years:

* this figure is based on information available since November 2010 only

The purchase of BMR shares by Swan was financed by transfers from BMR and the proceeds of disposals repaid to BMR.

Transfers by the Company to Swan and from Swan to the Company are noted in the table below:

Further detail in relation to related party transactions is provided in Note 24.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BERKELEY MINERAL RESOURCES PLC

We have audited the financial statements of Berkeley Mineral Resources plc for the year ended 30 June 2014 which comprise the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Comprehensive Income, the Consolidated and Company Cash Flow Statements, the Consolidated and Parent Company Statement of Changes in Equity and the related notes numbered 1 to 27.

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report

Basis for qualified opinion on financial statements

As set out in note 9 (prior period adjustments) and note 24 (related parties) certain accounting irregularities in relation to transactions entered into by the company were identified during the period. Due to the nature of these matters the audit evidence available to us was limited due to their nature and also because the directors, employees and consultants of the Group involved in these transactions are no longer employed by the Group. We consider that the current directors have taken all available steps to satisfy themselves that these transactions have been appropriately included and disclosed in the financial statements. Nevertheless, the nature of the issues, as disclosed, are such that there remains uncertainty over the correct statement of the Statement of Financial Position at 30 June 2013 and the application of Group funds and any associated liabilities during the period.

Qualified opinion on financial statements

In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraph:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 June 2014  and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

In respect solely of the limitation on our work as described above:

· we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

· we were unable to determine whether adequate accounting records had been kept.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

· returns adequate for our audit have not been received from branches not visited by us; or

· the financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made.

Leo Malkin

Senior Statutory Auditor

For and on behalf of

Crowe Clark Whitehill LLP

Statutory Auditor

St Bride's House

10 Salisbury Square

London EC4Y 8EH

14 April 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 30 June 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2014

Company No. 02401127

The financial statements were approved by the Board of Directors and authorised for issue on 14 April 2015 and were signed on its behalf by

M A Borrelli

CONSOLIDATED STATEMENT OF CASH FLOW

Year ended 30 June 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 30 June 2014

Reserves Description and purpose

• Share capital - amount subscribed for share capital at nominal value

• Share premium - amounts subscribed for share capital in excess of nominal value

• Warrant reserve - amount arising on the issue of warrants during the year

• Merger reserve - amount arising from the issue of shares for non-cash consideration

• Translation reserve - amounts arising on re-translating the net assets of overseas operations into the presentational currency

• Retained earnings - cumulative net gains and losses recognised in the consolidated income statement

COMPANY STATEMENT OF FINANCIAL POSITION

As at 30 June 2014

Company No. 02401127

COMPANY CASH FLOW STATEMENT

for the year ended 30 June 2014

COMPANY STATEMENT OF CHANGES IN EQUITY

Year ended 30 June 2014

Reserves Description and purpose

• Share capital - amount subscribed for share capital at nominal value

• Share premium - amounts subscribed for share capital in excess of nominal value

• Warrant reserve - amount arising on the issue of Warrants during the year

• Merger reserve - amount arising from the issue of shares for non-cash consideration

• Translation reserve - amounts arising on re-translating the net assets of overseas operations into the presentational currency

• Retained earnings - cumulative net gains and losses recognised in the consolidated income statement

NOTES TO THE ACCOUNTS

Year ended 30 June 2014

1. GENERAL INFORMATION

Berkeley Mineral Resources PLC (the 'Company') is incorporated and domiciled in the United Kingdom. The address of the registered office is 6 Derby Street, London W1J 7AD.

The nature of the Group's operations and its principal activity is that of the acquisition, evaluation and development of mineral stockpiles in particular tailings. The Group's projects are located in Zambia.

2. ADOPTION OF NEW AND REVISED STANDARDS

The accounting policies adopted by the Group are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of IFRS that are effective for annual periods beginning on or after 1 July 2013. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.

The following Standards and Interpretations which have not been applied in the financial statements were in issue but not yet effective (and in some cases had not yet been endorsed by the EU). The Directors do not expect that the adoption of these Standards or Interpretations in future periods will have a material impact on the financial statements of the Company or the Group.

Issued but not yet EU adopted

Amendment to IFRS 9 - Financial instruments

Issued and EU adopted

IFRS 10 - Consolidated Financial Statements

IFRS 11 - Joint Arrangements

IFRS 12 - Disclosure of Interest in Other Entities

IFRS 14 - Regulatory Deferral Accounts

IFRS 15 - Revenue from Contracts with Customers

IFRIC 21 - Levies

Amendment to IAS 19 - Defined Benefit Plans: Employee Contributions

Amendment to IAS 27 - Equity Method in Separate Financial Statements

Amendment to IAS 36 - Recoverable Amount Disclosures for non-Financial Assets

Amendment to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting

Amendment to IFRS 11 - Accounting for Acquisitions of Interests in Joint Operations

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

3.(a) SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union ('EU') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The principal accounting policies adopted are set out below.

The Group financial information is presented in Pounds Sterling ("£"). For reference the year end exchange rate from Pounds Sterling to US Dollar was 1.7048 (2013: 1.52) and Pounds Sterling to Zambian Kwacha was 10.5483 (2013: 8.4213).

As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its Income Statement for the year. The Company reported a loss for the financial year ended 30 June 2014 of £11,112,242 (2013: £2,047,405).

Going concern

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources through its cash balances to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

The operational requirements of the Company comprise maintaining a Head Office in the UK with executive and non-executive Directors for, amongst other things, determining and implementing strategy and managing operations; and a team in Kabwe, Zambia for establishing facilities for the processing of the Company's tailings into zinc and lead concentrates. The Directors have considered the current level of cash balances and the operational requirements of the Company in both the UK and Zambia over the next 12 months and the expected establishment of a pilot plant following successful completion of preliminary metallurgical and mineralogical test work on the leach plant residue tailings. The proprietary process being developed by the Company working with technical partners provides a creditable alternative process for the recovery of zinc and lead for both the wash plant tailings and the leach plant residue tailings. The Directors have already held preliminary discussions with the Director General of the Zambia Environmental Management Agency ("ZEMA") to seek permission for the establishment a 30 tonne per hour pilot operation at Kabwe later this year for the new process which generates no toxic effluents. After an explanation of the process, ZEMA recommended that the Company submit a brief project description without delay and advised that sympathetic consideration would be given, with advice on the most expedient route to be taken, to gain ZEMA approval. The Directors believe that the current cash resources which include £960,000 received in the Settlement Agreement are sufficient for the Group's current operations and for establishing the pilot plant in order to be able to commence production of zinc and lead concentrates from the wash plant and leach plant residue tailings.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries acquired of or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Segmental 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 has been identified as the Board of Directors.

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency).

For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in £, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the functional currency of each Group company ('foreign currencies') are recorded in the functional currency at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated into the functional currency at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in the income statement in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in the income statement on disposal of the net investment.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates f luctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally 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. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, 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.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and any recognised impairment loss.

Depreciation and amortisation is charged so as to write off the cost or valuation of assets, other than land, over their estimated useful lives, using the straight-line method, on the following bases:

Motor vehicles 25% Other 25%

The gain or loss arising on disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

Impairment of property, plant and equipment

At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash f lows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash f lows are discounted to their present value using a pre-tax discount rate that ref lects current market assessments of the time value for money and the risks specific to the asset for which the estimates of future cash f lows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Intangible exploration and evaluation assets

Intangibles exploration and evaluation assets comprise of land use rights, mining licences and Exploration and Evaluation ("E&E") costs.

The land use rights and mining licences are stated at cost less accumulated amortization and impairment losses. They are amortised using the straight line basis over the unexpired period of the rights.

The Group applies the full cost method of accounting for E&E costs, having regard to the requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources. Under the full cost method of accounting, costs of exploring for and evaluating mineral resources are accumulated by reference to appropriate cost centres being the appropriate licence area, but are tested for impairment on a cost pool basis as described below.

E&E assets comprise costs of (i) E&E activities that are ongoing at the balance sheet date, pending determination of whether or not commercial reserves exist and (ii) costs of E&E activities associated with adding to the commercial reserves of an established cost pool, did not result in the discovery of commercial reserves.

Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statement as they are incurred.

Exploration and evaluation costs

All costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right to explore, costs of technical services and studies, seismic acquisition, exploratory drilling and testing are capitalised as intangible E&E assets.

Such costs include directly attributable overheads, including the depreciation of property, plant and equipment utilised in E&E activities, together with the cost of other materials consumed during the exploration and evaluation phases.

Treatment of E&E assets at conclusion of appraisal activities

Intangible E&E assets related to each exploration licence/prospect are carried forward, until the existence (or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on a cost pool basis as set out below and any impairment loss, of the relevant E&E assets is the reclassified as development and production assets.

Impairment of E&E assets

E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial reserves exist.

Where there are indications of impairment, the E&E assets concerned are tested for impairment. Where the E&E assets concerned fall within the scope of an established full cost pool, the E&E assets are tested for impairment together with all development and production assets associated with that cost pool, as a single cash generating unit.

The aggregate carrying value is compared against the expected recoverable amount of the pool, generally by reference to the present value of the future net cash f lows expected to be derived from production of commercial reserves. Where the E&E assets to be tested fall outside the scope of any established cost pool, there will generally be no commercial reserves and the E&E assets concerned will generally be written off in full.

Any impairment loss is recognised in the income statement as additional depreciation and amortisation, and separately disclosed.

The Group considers the whole of Zambia to be one cost pool and therefore aggregates all Zambian assets for the purpose of determining whether an impairment of E&E assets has occurred.

Investment in subsidiaries

In the Company's financial statements, investment in subsidiaries are stated at cost and reviewed for impairment if there are any indications that the carrying value may not be recoverable.

Related party transactions

IAS 24, 'Related Party Disclosures', requires the disclosure of the details of transactions between the reporting entity and related parties which are disclosed in Note 24. In the consolidated financial statements, all transactions between Group companies are eliminated.

Financial instruments

Recognition of financial assets and financial liabilities

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

De-recognition of financial assets and financial liabilities

The Group derecognises a financial asset only when the contractual rights to cash f lows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for the amount it June have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. The Group derecognises financial liabilities when the Group's obligations are discharged, cancelled or expired.

Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost less any provision for impairment.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash with three months or less remaining to maturity and are subject to an insignificant risk of changes in value.

The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of a financial asset classified as available for sale, a significant or prolonged decline in the fair value of the financial asset below its cost is considered as an indicator that the financial asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on financial assets are not reversed through the income statement.

Trade and other payables

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

Assets under hire purchase

Assets acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out as above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are recognised in profit or loss over the period of the respective hire purchase agreements.

Hire purchases are classified as finance leases as the terms of the lease transfer substantially all of the risk and rewards of ownership to the lessee

Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outf low of economic resource will result and that outf low can be reliably measured.

Rehabilitation

Provisions are made for the estimated rehabilitation costs relating to areas disturbed during exploration activities up to reporting date but not yet rehabilitated. Changes in estimate are dealt with on a prospective basis as they arise.

Share-based payments

The Group has applied IFRS 2 Share-based Payment for all grants of equity instruments.

The Group issues equity-settled share-based payments to its employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.

Fair value is measured using the Black Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The inputs to the model include: the share price at the date of grant, exercise price expected volatility, risk free rate of interest.

Share capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Groups ordinary shares are classified as equity instruments.

For the purposes of the disclosures given in note 20, the Group considers its capital to be total equity. There have been no changes in what the Group considers to be capital since the previous period.

The Group is not subject to any externally imposed capital requirements.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both the current and future periods.

The following are the critical judgements and estimations that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

i) Recoverability of exploration and evaluation assets

Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of the Group's exploration and evaluation assets at the balance sheet date was £9,829,462 (2013: £14,631,896). Impairments of £3,586,479 relating to specific areas detailed in the Chairman's report were made during the year.

The fair value adjustment of £7,135,175 arising from the acquisition of the EML group as outlined in note 12(a) has been impaired by £250,000 in relation to the NLL facilitation fee paid as part of the cash consideration at the time of the acquisition. The value now included in the exploration and evaluation assets amounts to £6,885,175. On the basis of third party reports incorporating values derived from JORC classifications and internal evaluation of future income streams allied with the associated production costs, net present values, using conservative discount rates, have been generated which are well in excess of this figure and the overall costs capitalised as intangible assets in the balance sheet.

The recoverable amount is determined from value in use calculations based on cash flow projections from revenue and expenditure forecasts covering a 5 year period to 2020, the expiry date of the small scale license. The key assumptions used are as follows:

** Prevailing metal prices extracted from London Metal Exchange as at 27 February 2015

ii) Going concern

As disclosed in note 3 (a) the Directors have a reasonable expectation that the Company has adequate resources through its cash balances to continue in operational existence for the foreseeable future. For this reason, the Company continues to adopt the going concern basis in preparing the financial statements.

iii) Provisions for liabilities

As a result of exploration activities the Group is required to make provision for rehabilitation. Significant uncertainty exists as to the amount of rehabilitation obligations which may be incurred due to the impact of possible changes in environmental legislation. Due to the early stage of exploration activity no significant damage has been caused and, therefore, no provision has been recognised at 30 June 2014 (2013: £nil) in the Group and the Company balance sheets.

iv) Share based compensation

In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates principally relating to the assumptions used in its option-pricing model as set out in note 19.

5. SEGMENTAL 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 and making strategic decision, has been identified as the Board of Directors. The Board of Directors considers there to be only one operating segment, the exploitation and development of mineral resources and only two geographical segments being Zambia and the UK.

The geographical split of loss and assets and liabilities are as follows:

6. LOSS FOR THE YEAR

The loss for the year has been arrived at after charging / (crediting)

7. AUDITORS' REMUNERATION

Amounts payable in respect of audit of the Company's annual accounts were £30,000 (2013: £14,000).

8. STAFF COSTS

Included within staff costs £162,511 (2013: £137,148) relates to amounts in respect of Directors.

9(a). PRIOR PERIOD ADJUSTMENT (GROUP) 2013

The nature of the prior period adjustments are detailed in notes 12(a), 12(b), 14 and 17.

9(b). PRIOR PERIOD ADJUSTMENT (GROUP 2012)

The nature of the prior period adjustments are detailed in notes 12(a), 12b), 14 and 17.

9(c). PRIOR PERIOD ADJUSTMENT (COMPANY) 2013