BRD.L Regulatory News (BRD)

BlueRock Diamonds plc

Preliminary results for the period ended 31 December 2013

5 June 2014

Strategic Report

Chairman's Statement

I am pleased to present the first Chairman's report for the Company for the period from its incorporation on 11 October 2012 to 31 December 2013.

Following admission to AIM on 4 September 2013, your Company has made considerable progress during this period:

We have achieved this at a relatively minimal cost to the Company; the total cost of reaching production has been approximately £700,000. This is in large part due to the efforts of our team in Kimberley and our BEE partner, Willy van Wyk who has been responsible for the commissioning and upgrade of the plant.

In October 2013, immediately following the acquisition of the Kareevlei Tenements, excavation commenced using a contractor. Once the overburden of part of K1 and K2 (to a depth of approximately 10 metres) was removed, the contractor then excavated further to a depth of 20 metres. There is now a stockpile of weathered kimberlite at Kareevlei which is sufficient for at least 3 month's production. The contractor will be re-engaged for further excavation to replenish the stockpile when required.

Post the balance sheet date, following the initial refurbishment and commissioning of the plant in December 2013, over the last few months the Company has resolved initial teething problems and upgraded the plant and final recovery section where required. A decision was taken to purchase and install a cone crusher which has increased the efficiency of the dense medium separation plant ("DMS") and increased the recovery rate. Since the end of May 2014, the plant has been fully operational and is currently processing approximately 200 tonnes per day. We are now more than pleased with how the plant is operating.

The Company has recovered further diamonds since the announcement made on 5 March 2014. We are pleased with the results to date but we continue to assess recovery rates, grade and values per carat and once a sufficient parcel of diamonds is recovered, the Board will report its findings.

Rough diamond pricing improved during 2013, with rough and polished demand rising to levels last seen before the 2008 crisis and this has continued into 2014 where increases of 5 to 7% have been reported. Demand from China and India continued to grow, while demand from the US and Japan rose on the back of accelerating GDP growth. De Beers' and Alrosa's 1H13 results further demonstrate the recent increase in rough diamond prices. With demand forecast to grow further over the next decade, I believe BlueRock is well placed to take advantage of the improving market conditions.

BlueRock is committed to maintaining high health and safety, social and environmental standards. I am pleased to report that there were no accidents at Kareevlei during the period. The Company has actively engaged with the regional municipality and local community based 125km north-west of Kimberley and within 20km of the mine, from which Kareevlei draws its labour. In addition, our Social and Labour Plan has been submitted to the Department of Mineral Resources and Riaan Visser, Chief Executive Officer, has been appointed as a trustee of the Northern Cape Premiers' Education Trust.

I would like to thank Willy van Wyk our BEE partner for his hard work, commitment and expertise in commissioning and upgrading the plant. I am very pleased with progress to date. In less than a year since the acquisition of Kareevlei, thanks to our dedicated team in the Northern Cape, we are fully operational and producing diamonds.

We look forward to updating shareholders in the future.

I would like to thank our shareholders for their continued support.

Paul Beck

Chief Executive Officer's Review

During March 2013, the Company was admitted to trading on the ISDX Growth Market as an investment company and announced its investment strategy of acquiring underperforming or dormant diamond mines in South Africa and or sub Saharan Africa. I am pleased to update you on the significant progress made by BlueRock during 2013 in achieving this goal.

In April 2013, we acquired an option to purchase the Kareevlei assets from Diamond Resources, a subsidiary of ASX listed Tawana Resources NL. The Kareevlei assets are situated in the Northern Cape Province of South Africa and included the mining right over a known cluster of 5 kimberlite pipes and mining plant and equipment. The agreement provided for a six month option period to enable BlueRock to conduct due diligence on the Kareevlei assets. We appointed Z Star Mineral Resource Consultants ("Z Star") to assist us in evaluating the Kareevlei assets and after receiving their preliminary report decided to proceed with the acquisition and commissioned a Competent Person's Report ("CPR") on the assets.

The acquisition of the Kareevlei assets, together with BlueRock's application for admission to AIM as a trading company, capital restructuring, placing and withdrawal from the ISDX Growth Market, was put before and approved by shareholders at a general meeting on 3 September 2013. Following the successful capital restructuring and placing, the Company was admitted to trading on AIM on 4 September 2013.

The option over the Kareevlei assets was exercised on 3 September 2013 through our 74% owned South African subsidiary, Kareevlei Mining (Pty) Ltd. In accordance with South African law our Black Economic Empowerment partner, Ghaap Mining (Pty) Ltd., holds 26% of the shares in Kareevlei Mining. Ghaap Mining is wholly owned by William van Wyk, who is an experienced diamond mining plant engineer.

Transfer of the mining right over the Kareevlei Tenements to our subsidiary, Kareevlei Mining (Pty) Limited, is conditional on consent from the Minister of Mineral Resources in South Africa. We appointed a specialist consultant to assist with the process of transferring of the mining right and our application was lodged with the Department of Mineral Resources (DMR) in October 2013 shortly following Admission. As part of the application process, we developed a new Environmental Management Programme, Mining Works Programme and Social and Labour Plan, which were submitted, as requested, to the Department of Mineral Resources in March 2014. The Board will update shareholders as soon as practicable on progress on the transfer of the Mining Right.

In October 2013, we appointed an earthmoving contractor to begin development of two of the five kimberlite pipes, K1 and K2. We also engaged Kgalagadi Engineering & Mining Supplies (Pty) Limited (a company in which John Kilham (CTO) and Willy van Wyk are both directors and shareholders) as a contractor to refurbish and upgrade the existing mining plant acquired from Diamond Resources.

By early December 2013, the calcrete overburden covering the weathered kimberlite present in K1 and K2 had been removed and refurbishment of the processing plant had been largely completed. Following this, the first kimberlite feed was processed during December 2013.

Post balance sheet

During operation, a number of design flaws in the processing plant were identified and these were corrected during January and February 2014.

Trial mining continued in February 2014, with further processing during March and April 2014 and work to further upgrade the front end screening and crushing circuit was completed in early May 2014. I now expect operational capacity of 8,000 tonnes per month headfeed and 4,500 tonnes per month at the DMS level, using the existing plant.

Further to the announcement made on 5 March 2014, further diamonds have been recovered from processing. The Company will assess its recovery on a continuous basis and will report its findings. I am very satisfied with the quality of the diamonds recovered to date. I wish to thank our BEE partner, his team and the earthmoving contractor for getting the mine into production in such a short time and within the capex budget.

I believe that the Kareevlei tenements offer excellent growth opportunities for the Company, with the largest of the known kimberlite pipes being virtually unexplored. The focus of the Company is now to ensure that the processing plant is functioning optimally and we intend to further upgrade the plant to improve the crushing circuits and increase processing capacity.

In addition, we will continue to assess new investment opportunities as they arise and with two of the directors based in Kimberley, we are well positioned to evaluate opportunities. With new developments in the Southern African diamond industry, for example increased exploration in Botswana and Lesotho, the move of De Beers' marketing operations to Gaberone and the development of previously De Beers owned South African mines, there is increased interest in the diamond mining potential of the Northern Cape.

The outlook for the diamond market is good with an expected increase in demand coming from Asia resulting in demand exceeding supply. Diamond prices have improved in 2013 and I expect a further increase during 2014. I look forward to being able to update you on our progress after the first sale of our diamonds which we expect to occur during 2014.

Finally I would like to thank our Board of Directors, our shareholders and SP Angel for their support.

Riaan Visser

Operations Report

Introduction

The acquisition by BlueRock of the mineral assets included in the Mining Right area of the Kareevlei Tenements in the Northern Cape province of South Africa was completed, subject to DMR approval, on 4 September 2013.

The preceding option agreement with Diamond Resources, gave BlueRock access to a comprehensive set of advanced prospecting information - sufficient to allow a CPR to be produced and for grade, density and revenue estimates to be completed. Following a reasonable prospects for eventual economic extraction ("RPEEE") review, the Competent Person (Dr John Andrew Grills of Z Star Mineral Resource Consultants) was able to calculate an Inferred Mineral Resource in accordance with the SAMREC code for pipes K1, K2 and a portion of K3.

The Kareevlei project includes 5 diamondiferous kimberlite pipes which are in an easily accessible locality within the well known Kimberley diamond producing area of South Africa.

The Kimberlite intrusions

The five kimberlite pipes (namely K1, K2, K3, K4, and K5) within the Mining Right area range in size from approximately

The evaluation data reviewed in the CPR concluded that all 5 pipes are diamondiferous and 3D geological models have been created for pipes K1, K2 and K3 to depths of 65m, 125m and 125m respectively, from surface. Should additional funds be raised in future, it is expected that BlueRock may conduct further work on the K3, K4 and K5 kimberlites to refine the existing evaluation models with a particular emphasis on providing a more accurate revenue model.

Based on the CPR (which is reproduced in full in the Company's Admission Document dated 19 August 2013), inferred resources were declared totalling approximately 7.98 million tonnes and containing 359,000 carats in pipes K1, K2 and K3. This declaration is supported by the modelled RPEEE (Reasonable Prospects for Eventual Economic Exploitation) analyses reported in the CPR.

Trial mining of the K1 and K2 Kimberlite Pipes

Trial mining operations have focused on pipes K1 and K2. These 2 pipes are adjacent to each other and are intruded into competent dolomites. Excavation of the ore commenced by conventional open cast methods using a contracted earthmoving company. Following this work, the close proximity of pipes K1 and K2 became more apparent and the Board decided to mine pipes K1 and K2 simultaneously.

Site establishment to support the mining and processing activities took place during the final quarter of 2013; with the first ground being broken on 10 October 2013. The first phase of earthmoving focussed on the removal of the approximately 10 metre thick calcrete capping of the pipes to an overburden stockpile. Thereafter, towards the end of November 2013, by drilling and blasting, the weathered kimberlite was excavated and removed to a depth of approximately 20 metres and transferred to a head feed stockpile adjacent to the test plant.

First Treatment of Kimberlite through the DMS Test Plant

The purchase of mining equipment included an existing small test treatment plant comprising a scrubber, screens and a DMS module. Refurbishment of this facility took place in Q4 2013. BlueRock has used this test plant to commence with the treatment of the mined kimberlite from the initial open pits.

During the engineering refurbishment of this DMS treatment plant, some processing improvement opportunities were identified. The improvements will provide more efficient ground handling as well as enhancements to the liberation of diamonds from the harder kimberlite particles using the cone crusher. These plant modifications were implemented in a phased manner during March to May 2014.

Final Diamond Recovery by X-ray Processing

The recovery equipment was relocated to the Company's secure unit in Kimberley and re-commissioned. The final processing is completed using a two-stage FlowSort™ plant that was purchased together with the other mining equipment and plant.

John L C Kilham

Chief Technical Officer

The report and accounts for the period ended 31 December 2013, including the notice of Annual General Meeting ("AGM"), will be posted to shareholders today and will be available shortly for download from www.bluerockdiamonds.co.uk. The AGM will be held at the offices of SP Angel Corporate Finance LLP at 35-39 Maddox Street, London W1S 2PP on 30 June 2013 at 2.00p.m.

Enquiries:BlueRock Diamonds plcRiaan Visser, CEOwww.bluerockdiamonds.co.uk 

+27 (0) 84 431 0118

SP Angel Corporate Finance LLP

Nominated Adviser & BrokerDavid Facey/Katy Birkin/Liz Yong

+44 (0) 20 3463 2260

Earnings per share - from continuing activities

Accounting Policies

1. Publication of non-statutory accounts

In accordance with section 435 of the Companies Act 2006, the Directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the period ended 31 December 2013 , but is derived from these financial statements. The financial statements for the period ended 31 December 2013 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements for the period ended 31 December 2013 will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

The consolidated statement of financial position at 31 December 2013 and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended have been extracted from the Group's financial statements. Those financial statements have not yet been delivered to the Registrar.

1.1 Basis of preparation

The preliminary announcement is extracted from the consolidated financial statements of all the entities within the Group. The financial statements of the subsidiary is prepared for the same reporting date as the parent company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

The preliminary announcement has been prepared under the historical cost convention.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets or liabilities, are eliminated in full.

As at 31 December 2013, the Group had accumulated losses of £ (536 512) and that the Group's total assets exceed its liabilities by £ 971 084.

The Group consolidated cash balance at that date is £ 674 574 which is sufficient to meet the Group working capital requirements, administrative and operational expenses for at least 12 months from the date of approval of the Annual Report and Accounts.

In addition, during the period the Group raised £1.5m through two placings and given the positive and encouraging results of the mining operations, the directors believe that the Group will continue to have the ability to access sufficient levels of finance to fund future new developments or exploration projects.

On that basis the directors have adopted the going concern basis in preparing this Annual Report and Accounts which do not include any adjustment to the carrying amount or classification of assets and liabilities that would occur if the Group was unable to continue as a going concern.

The consolidated financial statements have been prepared using the significant accounting policies and measurement bases summarised below:

In the application of the Group's accounting policies the Directors are required to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Significant 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 current and future periods. The key areas are summarised below:

Provisions

Estimates and assumptions are made in determining the amount attributable to rehabilitation provision. These deal with uncertainties such as legal and regulatory framework, timing and future costs. The carrying value of the rehabilitation provision is disclosed in note 13.

Useful lives of property, plant and equipment

Depreciation rates detailed below are considered by management to fairly reflect the expected useful lives of the respective asset categories. The property, plant and equipment accounting policy provides further detail.

Judgements in applying the Group's accounting policies

In the process of applying the Group's accounting policies, management make various judgements that can significantly affect the amounts recognised in the financial statements. The critical judgements are considered to be the following:

Mining, exploration and development costs

During the exploration phase of operations, all exploration costs are expensed in profit or loss as incurred. The mining and exploration and development costs accounting policy provides further detail. The key judgement implicit in this policy is the determination of the date upon which development of the property is judged to be commercially viable and development commenced. During the period to 31 December 2013 exploration of the Kareevlei deposit commenced.

Deferred tax assets

No deferred tax assets are recognised in view of the timing of the ultimate recoverability of such amounts. Note 5 provides further detail. This is a key judgement in that the amounts potentially involved are uncertain of recovery.

Impairment of non-current assets

The outcome of ongoing exploration, and therefore whether the carrying value of the machinery and equipment and funds in trust will ultimately be recovered, is inherently uncertain.

The ability of the Group to realise the carrying values of these assets is contingent upon production or discovery of economically recoverable mineral reserves, the on-going title to the resource properties, the ability of the Group to finance the development of the properties and on the future profitable production or proceeds from the property. The success of the Group's mineral exploration properties is also influenced by significant risks, including legal and political risks and future diamond prices.

The directors make the judgements necessary to implement the Group's policy with respect to capitalisation of these assets and consider them for impairment at least annually with reference to indicators in IAS 36. If an indication exists, an assessment is made of the recoverable amount. The recoverable amount is the higher of value in use (being the net present value of expected future cash flows) and fair value less costs to sell. Value in use is estimated based on operational forecasts for advanced stage projects with key inputs that include diamond resources, diamond prices, production levels including grade and tonnes processed, production costs and capital expenditure. However, because of the above-mentioned uncertainties, actual future cash flows could materially differ from those estimated. The carrying value of property, plant and equipment are set out in note 6.

The cost of an item of property, plant and equipment is recognised as an asset when:

Ÿ it is probable that future economic benefits associated with the item will flow to the company; and

Ÿ the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.

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

The useful lives of items of property, plant and equipment have been assessed as follows:

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

During the exploration phase of operations, all costs are expensed in the consolidated statement of comprehensive income as incurred.

A subsequent decision to develop a mine property within an area of interest is based on the exploration results, an assessment of the commercial viability of the property, the availability of financing and the existence of markets for the product. Once the decision to proceed to development is made, development and other expenditures relating to the project are capitalised and carried at cost with the intention that these will be depreciated by charges against earnings from future mining operations over the relevant life of mine on a units of production basis. Expenditure is only capitalised provided it meets the following recognition requirements:

· completion of the project is technically feasible and the Group has the ability to and intends to complete it;

· the project is expected to generate future economic benefits

· there are adequate technical, financial and other resources to complete the project; and

· the expenditure attributable to the development can be measured reliably.

No depreciation is charged against the property until commercial production commences. After a mine property has been brought into commercial production, costs of any additional work on that property are expensed as incurred, except for large development programmes, which will be deferred and depreciated over the remaining life of the related assets.

In the Company's accounts, the investment in subsidiary is carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Company.

Financial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments.

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Management considers that the Group's financial liabilities fall under the 'financial liabilities measured at amortised cost' category.

Trade and other payables are not interest bearing and are recognised initially at fair value. Subsequently they are carried at amortised cost.

The Group classifies its financial assets under the definitions provided in International Accounting Standard 39 (IAS 39) Financial Instruments: Recognition and measurement, depending on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Management considers that the Group's financial assets fall under the 'loans and receivables' category.

This includes loans between the holding company and its subsidiary which are recognised initially at fair value plus direct transaction costs.

Loans to group companies are classified as loans and receivables.

Loans from group companies are classified as financial liabilities measured at amortised cost.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents consist of highly liquid instruments, such as bank deposits, certificates of deposit, time deposits, treasury notes and other money market instruments, which have maturities of less than three months.

Operating expenses are recognised in profit or loss upon utilisation of the service on an accruals basis.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Operating lease payments are recognised as an expense on a straight‑line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Where the effect of discounting is material, provisions are discounted. The discount rate used is a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability.

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end

exchange rates are recognised in profit or loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

In the Group's financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than Pounds are translated into Pounds upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period.

On consolidation, assets and liabilities have been translated into Pounds at the closing rate at the reporting date. Income and expenses have been translated into Pounds at the average rate over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognised as part of the gain or loss on disposal.

2. New Standards and Interpretations

The following new standards and amendments to standards are mandatory for the first time for the Group for financial period beginning 11 October 2012. The implementation of these standards is not expected to have a material effect on the Group.

Standard

· IFRS 7 (Amendment): Disclosures - Offsetting Financial Assets and Financial Liabilities

· IFRS 13: Fair Value Measurement

· IAS 1: Amendment relating to other comprehensive income

Standards, amendments and interpretations which are effective for reporting periods beginning after the date of these financial statements which have not been adopted early:

The implementation of these standards is not expected to have a material effect on the Group.

3. Segmental reporting

Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.

The Group's operations relate to the exploration for, and development of mineral deposits in the Kimberley region of South Africa and as such the Group has only one reportable segment. The non current assets in the Kimberley region are £265 918.

4. Parent company income statement

As permitted by Section 408 of the Companies Act 2006 the parent company's income statement has not been presented in these financial statements. The loss after taxation for the parent company for the period ended 31 December 2013 was £384,032.

5. Tax expense

The Group has gross tax losses and temporary differences of £204,357 for which no deferred tax asset has been recognised.

The most significant element of the Mining Charter is the ownership requirement which stipulates that mines must commit to obtaining 26 per cent effective ownership by Historically Disadvantaged South Africans ("HDSAs") (being the meaningful participation of HDSAs in the ownership, voting rights, economic interest and management control of mining entities) by 2014.BlueRock's subsidiary, Kareevlei Mining Proprietary Limited, is 26 per cent owned by Ghaap Mining Proprietary Limited, a Kimberley based company. Ghaap Mining Proprietary Limited is a South African private company wholly owned by Mr. William Alexander van Wyk who, in terms of South African legislation is considered to qualify as an HDSA.

The loan bears interest at the Nedbank Limited prime overdraft rate or unsecured loans to corporate customers and is repayable on demand.

The carrying value of all trade and other receivables is considered a reasonable approximation of fair value.

Cash and cash equivalents consist of:

On incorporation one Ordinary Share of 0.01p was issued fully paid to each of Jonathan Stuart Quirk, Paul John Beck and Paul Munday at nominal value.

On 8 November 2012 the Company issued fully paid for cash consideration 8 339 997 Ordinary Shares of 0.01p each at nominal value.

On 18 December 2012 the Company issued for cash consideration 1 500 000 Ordinary Shares of 0.01p each at an issue price of 10p per share.

On 8 January 2013 the Company issued for cash consideration 800 000 Ordinary Shares of 0.01p each at an issue price of 10p per share.

On 7 March 2013 the Company issued for cash consideration 2 149 338 Ordinary Shares of 0.01p each at 13p per share.

At a general meeting of the Company on 3 September 2013 shareholders approved a capitalisation and consolidation, pursuant to which 1 266 144 462 new Ordinary Shares of 0.01p were issued to shareholders pro‑rata to their shareholding, following which the 1 278 933 800 Ordinary Shares of 0.01p in issue were consolidated into 12 789 338 Ordinary Shares of 1p each.

Further to the capitalisation and restructuring on 3 September 2013, the Company issued for cash consideration 18 735 703 Ordinary Shares of 1p each at 7p per share.

Movements in the number of Ordinary Shares of the Company in issue during the period are summarised in the table below.

Pursuant to IAS 32, certain costs attributable to the issuance of new shares, and a portion of costs attributable to the admission to trading on both the ISDX Growth Market and AIM and the issuance of new shares have been deducted from the share premium account. The total amount deducted from the share premium account during the period was £261 860.

The carrying value of trade and other payables are considered to be a reasonable approximation of fair value.

Operating lease payments represent rentals payable by the Group for certain of its mining properties. Leases are negotiated for an average term of seven years and rentals are fixed for an average of three years. No contingent rent is payable.

There were no contingent liabilities as at 31st December 2013

During the year the Group comprised of two staff members, consisting of the Chief Executive Officer and director.

20. EPS (Earnings per share)

Share options granted to directors could potentially dilute EPS in the future but are not included in a dilutive EPS calculation because they are antidilutive for the period

The Group's objectives capital management objectives are:

· to safeguard the Group's ability to continue as a going concern and provide access to adequate funding for its exploration and development project, so that it continues to provide returns and benefits to shareholders;

· to support the Group's growth; and

· to provide capital for the purpose of strengthening the Group's risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group including planned exploration work and capital efficiency, projected profitability, projected operating cash flows and projected capital expenditures. Management regards total equity as capital and reserves, for capital management purposes. If additional equity funding should be required, the Group may issue new shares.

There are no externally imposed capital requirements and the Group does not have any external borrowings.

The Group's activities expose it to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk), credit risk and liquidity risk.

The Group's risk to liquidity is a result of the funds available to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities.

Credit risk consists mainly of cash deposits and cash equivalents. The Group only deposits cash with major banks with high quality credit standing and limits exposure to any one counter‑party.

At 31 December 2013, if the currency had weakened/strengthened by 11% against the South African Rand with all other variables held constant, post‑tax profit for the year would have been £ 999 higher/lower, mainly as a result of foreign exchange gains or losses on translation of South African Rand denominated trade receivables and intragroup borrowings.

Summary of assets and liabilities by category

The carrying amounts of the financial assets and liabilities as recognised at the statement of financial position date of the years under review may also be categorised as follows:

As described in the CEO and operations report, trial mining operations of the subsidiary commenced in December 2013, with further processing during March and April 2014 and work to further upgrade the front end screening and crushing circuit was completed in early May 2014.

Further to the announcement made on 5 March 2014, further diamonds have been recovered from processing. The Group will assess its recovery on a continuous basis and will report its findings.

Other than the above developments regarding the mining operations of the Subsidiary, the directors are not aware of any matter or circumstance arising since the end of the financial period.