Bellzone Mining Regulatory News (BZM)

13 June 2016

BELLZONE MINING PLC

("Bellzone" or "the Company")

Results for the year ended 31 December 2015

Bellzone Mining plc ("Bellzone" or "the Company") (AIM:BZM) announces the audited results of the Company for the year ended 31 December 2015.

Results

· Loss for the year from continuing operations of $8.5 million (2014: $20.8 million)

· Variable operating costs comprised 25% of total operating costs

· Total assets of $20.2 million largely due to depreciation costs (2014: $22.6 million)

· Net cash of $598,000 (2014: $980,000) and Secured Loans of $10.7 million (2014: $3.5 million)

CHAIRMAN'S STATEMENT

2015 was a year of consolidation and positive transformation. The first loan from China Sonangol International (S) Pte Ltd ("China Sonangol") and China Sonangol's full subscription to the Company's equity placing at the end of 2014 created much-needed financial stability. This was built upon with a second loan from Hudson Global Group Limited ("Hudson"), to whom China Sonangol's shares were transferred as part of China Sonangol International Ltd Group's internal restructuring and a further full subscription to a second equity placing at the end of 2015, which brought Hudson's equity interest in the Company to 62%. China Sonangol International (S) Pte Ltd and Hudson Global Group Limited are both subsidiaries of China Sonangol International Ltd, a company incorporated in Hong Kong.

Our then-Acting CEO Kum Hon Tung oversaw a comprehensive cost review which resulted in substantial efficiency improvements and lowered the operational cost base. The winding up of the Forécariah Joint Venture, whose investment value had already been fully impaired, has enabled us to focus our human and financial resources solely on developing Kalia. Bellzone today is leaner and more resilient to see out the continuing difficult economic environment.

I am pleased to report that Bellzone is now in the position of being fully-funded operationally through 2016. It also has the financial capacity to undertake and complete a substantive Feasibility Study by the third quarter to define the first stage of iron ore production at Kalia as a ferronickel production project. Once this Feasibility Study work is complete, Bellzone expects to be in a position to seek suitable financing for the ferronickel project and aims to commence development of the project in 2017.

At the same time, as part of the audit process carried out by the CTRTCM (Comité Technique de Revue des Titres et Conventions Miniers), we are engaged with the Guinea government to update our Mining Convention which was ratified in 2010. This agreement was widely acclaimed as a benchmark for international investors and our aim is to update our commitments and align, where appropriate, the provisions of the Convention to more recent laws and regulations, in doing so maintaining the original balance as much as possible within the current environment. While the CTRTCM has now completed its work and handed further negotiations to the relevant authorities, we hope the continuing process will result in yet another path-finding example in Guinea and retain the confidence of foreign investors.

2016 promises to be an exciting year for Bellzone. We recently welcomed to our Board a new Executive Director and Acting CEO, Julian Cheong, and a new non-Executive Director, Angel Tong, both of whom will expand our collective capabilities given their financial and business backgrounds. We look forward to benefiting from their energy and commitment to drive the business forward. The completion of the Feasibility Study within the next few months should bring us ever closer to starting an economically attractive and financeable project. Commodity prices have been very volatile of late, with real demand drivers remaining unclear and supply continuing to be plentiful and fairly elastic. While business risks are still high, subject to the results of the Feasibility Study and appropriate funding, we are confident that a high-quality and cost- efficient ferronickel project can succeed if managed well.

On behalf of the Board, I would like to once again express our appreciation for the support of our shareholders, especially China Sonangol, which believes in the world-class quality of Bellzone's franchise and is committed to ensuring our success beyond the short-term.

We very much look forward to updating you with our optimised strategy for Kalia later in 2016.

MICHAEL FARROW

Chairman

OPERATIONS AND FINANCIAL REVIEW

Review of Business in the Year

Bellzone's operational cost base was substantially reduced over the last year to ensure the Company could continue in a more sustainable way following the trauma of 2014. The focus has been on basic care and maintenance operations. Unnecessary expenses have been identified and eliminated. Measures taken included relocating our Jersey and Guinea offices and a permanent-hire freeze was put into effect. In addition, sacrifices have been made by our employees in focusing on longer-term benefits.

As the Company's financial situation stabilised, the Board was able to conduct a strategic review of options to begin exploitation at Kalia in the second half of 2015. Preliminary conclusions that the nickel laterite mineralisation potential merited further study were announced in July. The result of a maiden nickel Mineral Resource Estimate reported by CSA Global Pty Ltd in accordance with JORC was announced in October. The next step was the preparation of a preliminary business plan which included commissioning additional mineralisation and metallurgical analyses on both existing data as well as a limited number of fresh samples from the Kalia ore body. Subsequent requests for proposals to lead a more substantive Feasibility Study to define an optimised and economically attractive ferronickel / nickel pig iron project were sent out and evaluation of the responses has culminated in the recent appointment of Tenova Minerals Pty Ltd as our main contractor.

Financially, Bellzone's operating costs which exclude amortisation, depreciation and loss on disposal of fixed assets fell from $15.05 million in 2014 to $5.78 million in 2015, giving a 62 per cent. reduction in overall operating cost. The annual loss narrowed to $8.5 million, a reduction of 59 per cent. over the previous year, and no new significant impairments to the balance sheet or significant provisions have been necessary. For now, Bellzone is still completely reliant on our major shareholder Hudson Global Group Limited ("Hudson") for all financial support. The Company obtained a $6.5 million secured loan from Hudson in December 2015 to meet its budgeted working capital obligations for 2016. At 31 December 2015, no amounts had been drawn down under this facility. An equity placing of $2 million in January 2016 entirely taken up by Hudson also enabled the pre-funding of the planned Feasibility Study costs. Successful completion of both the Feasibility Study and subsequent project financing should provide the Company with greater private and public market financing options.

Outlook and Strategy

Base line operations will continue in 2016 and a little more can still be done to trim costs, including the final consolidation of our offshore operations into Singapore and the closure of certain dormant subsidiaries.

It is envisaged that the completion of the Feasibility Study, which will include further work on JORC resource/reserve assessment, optimal production parameters and mine planning should be completed by the end of the third quarter of 2016. This would facilitate concrete project financing discussions by the end of the year and enable plans for production sometime in 2017 to be formulated.

Bellzone's flagship asset remains a strong iron ore development project at Kalia. The fully independent BFS on the first phase of Kalia's proposed production ("Kalia Project 1" or "KP1") led by Fluor Australia Pty Limited and published in September 2013 demonstrated the robust financial business case for KP1. The Company believes KP1 would be broadly viable on an operating basis even based on available broker medium-term forecasts of relatively low iron ore prices. Positive cash flows from the potential viable ferronickel / nickel pig iron project will only add to Kalia's overall economic attractiveness.

Accounting Policies

There have been no changes to the accounting policies adopted by the Group in 2015.

Presentation of Financial Statements

The financial statements are presented in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"), and are presented in US Dollars ("$") with all values being rounded to the nearest thousand ($000) unless otherwise stated.

Dividends

As the Group is in a project-development stage and generates no revenue, no dividends have been declared (2014: nil).

Treasury and Cash Flow Management

At 9 June 2016, funds on hand and available amounted to $2.8 million.

The Board has a Treasury Committee consisting of the Chairman and the Chief Financial Officer. The structuring of the Company's treasury reduces exposure to currency fluctuations by holding the bulk of the funds in the currency used for budgeted expenditure. The expenditure in Guinean Francs is the only currency which is not managed through this mechanism and is converted on a monthly basis for actual funding requirements.

JULIAN CHEONG

Executive Director

This announcement and the financial information and accompanying notes to the financial statements do not constitute audited financial statements but are derived from audited financial statements. A copy of the Company's full audited results for the year ended 31 December 2015 is contained in its audited financial statements, which are being posted to shareholders together with a notice of the Company's Annual General Meeting to be held on 1 July 2016 at 11.00am in the Boardroom, Consortia Secretaries Limited, 3rd Floor, Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ, Channel Islands. The audited financial statements will be made available on the Company's website at www.bellzone.com and should be read in conjunction with the above.

Enquiries:

FINANCIAL STATEMENTS

The following financial information for the year ended 31 December 2015 has been extracted from the audited financial statements of Bellzone Mining plc.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2015

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BELLZONE MINING PLC

We have audited the financial statements of Bellzone Mining plc for the year ended 31 December 2015 which comprise the Consolidated Statement of Financial Position, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes 1 to 30. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards ("IFRS") as adopted by the European Union.

This report is made solely to the company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. 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 set out on page 15, 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 group'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 nonfinancial 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

Forécariah JV

The Company held a 50% interest in the Forécariah Joint Venture, a company that has invested in an iron ore project located in Guinea. This investment was fully impaired during the year ended 31 December 2013 and the Joint Venture was liquidated in December 2015.

With respect to the disclosure of Bellzone's share of unrecognised losses for the year ended 31 December 2014 and cumulatively to that date and Bellzone's share of the 2014 profit or loss and comprehensive income, the evidence available to us was limited. The Company has continued to experience difficulty in obtaining timely or accurate financial reporting from the joint venture which is necessary to enable Bellzone to prepare its own financial statement disclosures. Our audit opinion on the financial statements for the year ended 31 December 2014 was qualified accordingly. Our opinion on the current period's financial statements is also qualified because of the possible effect of this matter on the comparability of the current period's figures and the corresponding figures.

Qualified opinion

In our opinion, except for the effects of matters described above in the Basis for qualified opinion paragraph, the financial statements:

· give a true and fair view of the Group's state of affairs as at 31 December 2015 and of the Group's loss for the period then ended; and

· have been properly prepared in accordance with IFRS as adopted by the European Union.

· have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Emphasis of matter - going concern

In forming our opinion, which is not modified in this respect, we have also considered the adequacy of the disclosures made in note 2(f) to the financial statements concerning the company's ability to continue as a going concern. The conditions described in note 2(f) indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

Matters on which we are required to report by exception

Except as noted in the 'Basis for qualified opinion' above, we have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

· proper accounting records have not been kept, or proper 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

· we have not received all the information and explanations we require for our audit.

Steven Dobson

for and on behalf of Ernst & Young LLP

London

10 June 2016

Notes to the Financial Statements For the year ended 31 December 2015

1. Reporting Entity

The consolidated financial statements of Bellzone Mining plc ("the Company") for the year ended 31 December 2015 were authorised for issue in accordance with a resolution of the board of directors on 10 June 2016.

Bellzone Mining plc is a public company listed on the AIM Market of the London Stock Exchange, and incorporated and registered in Jersey, Channel Islands. The Company's registered office is located at Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ. The consolidated financial statements of the Company as at and for the year ended 31 December 2015 comprise the Company and its subsidiaries (together referred to as the "Group").

The nature of the principal activities of the Group is described in the Directors' Report. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied unless otherwise stated.

2. Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted for use in the European Union ("IFRS").

b. Adoption of new standards

The Group has adopted new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2015. Although these new standards and amendments apply for the first time in 2015, they do not have a material impact on the consolidated financial statements of the Group.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

c. Basis of measurement

The financial statements have been prepared on the historical cost basis except where indicated otherwise in the notes to the financial statements.

d. Functional and presentation currency

The functional currency of the Company and all of its subsidiaries is the United States Dollar ("US Dollar"), which is the currency of the primary economic environment in which the entities operate. All amounts are expressed in US Dollar and all values are rounded to the nearest thousand ($000) unless otherwise stated.

e. Critical accounting estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRS as adopted for use in the European Union requires management to make judgements, estimates and form assumptions that affect the reported amounts of assets, liabilities, expenses and the disclosure of contingent liabilities at the date of the financial statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future and the resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the financial results or the financial position reported in future periods are disclosed below.

Exploration and evaluation expenditure

This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether extraction operations are economically viable where reserves have been discovered and whether indications of impairment exist. Any such estimates and assumptions may change as new information becomes available.

Property, plant and equipment - useful lives and recoverable amount

The calculation of the recoverable amount and useful life of an asset requires significant judgements, estimates and assumptions, including future demand, technological changes, exchange rates, interest rates and others.

Impairment of assets

The Group assesses each cash generating unit/investment (CGU) annually to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as future commodity prices, discount rates, future capital requirements, exploration potential and operating performance. Fair value is determined as management's best estimate of the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. Fair value for mine assets is generally determined as the present value of estimated future cash flows arising from the continued use of the asset using assumptions that an independent market participant may take into account. Cash flows are discounted by an appropriate discount rate to determine the net present value.

f. Going concern

The nature of the Group's current activities does not provide the Group with production or trading revenues and the cash and committed funds available at year end are only sufficient to see the Group's activities through to December 2016. The Group will therefore require further financing to be made available beyond December 2016 to enable it to continue to meet its liabilities as and when they fall due.

Bellzone's current funding is wholly reliant on its majority shareholder Hudson Global Group Limited (previously China Sonangol International (S) Pte Ltd). China Sonangol has provided loan financing to the Company since August 2014 to date, totalling a principal amount of US$10.2 million and rising to US$16.7 million by the end of 2016 pursuant to two separate loan agreements. Furthermore, Hudson has confirmed in a letter to the Directors its current intention to continue making funds available to support the Group's working capital requirements for a period of 12 months from the date of signing the financial statements on a basis that allows them to change that intention. The Directors have no reason to believe, given its past support, that Hudson Global Group Limited will withdraw its support while the feasibility of the Kalia development is being determined.

The Group is currently undertaking a preliminary feasibility study on its proposed nickel pig-iron project within the Kalia licence area and has raised sufficient funding to complete this study which is expected to complete in Q3 2016. While the Directors believe, based on available information, that the study will be successfully concluded, a positive outcome is uncertain and in any event additional funding would be required to advance the project to a bankable feasibility stage. Furthermore, to commence development, significant funding would be required from external parties which is not committed at the date of this report. Should the preliminary feasibility study yield inconclusive or adverse results, there is a risk that the Group will not be able to obtain the necessary funding to continue as a going concern for 12 months from the date of this report in addition to the impairment risk related to the carrying value of the $16 million capitalised in relation to the Kalia licence.

The Group is evaluating its strategy and its ability to secure funding that would enable it to both continue operations for the short term, and in the long term to develop the Kalia licence area; however, at present there are no committed funds beyond December 2016. Additional funding may be sourced from one or more of the following sources:

· further short-term loan facilities from the majority shareholder;

· placement of further securities;

· loan funds secured against assets of the Group;

· the sale of assets; and/or

· funding in exchange for an interest in the Group's projects or future production from the projects.

Taking the above factors into account, the Directors have determined that the Group will obtain sufficient funding from one or more of the aforementioned funding opportunities and have continued to adopt the going concern basis of accounting in preparing the Consolidated Financial Statements. However, the Directors have also concluded that there is a material uncertainty in relation to the availability of committed funding that may cast significant doubt on the ability for Bellzone to continue as a going concern beyond 2016, and therefore the Group and Company may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

3. Segment information

The Group determines and presents operating segments based on the information that is internally provided to the Group's chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors. The Board currently considers the project level (previously the internal reporting was done on a consolidated level) and has identified four reportable segments:

· Kalia segment represents the exploration activities undertaken at the Kalia Mine;

· Forécariah segment represents the 50:50 joint venture between Bellzone and China International Fund Ltd (CIF) to fully fund exploration and development of a mine and infrastructure;

· Sadeka segment represents exploration activities for nickel and copper in south-east Guinea; and

· Technical & Support Services represents funding, shared services, treasury and technical support delivered from Jersey, Perth and the Conakry office in Guinea.

· Transfer prices between operating segments are made on an arm's length basis.

4. property, plant and equipment

Transfer to other intangible asset

- cost - (343) - - - (343)Transfer to other intangible asset

- accumulated amortisation  - 11 - - - 11

Opening net book value

5. Mineral properties in the exploration and evaluation phase

The above asset values relate to the mineral properties in the exploration and evaluation phase and are based on the cost of acquiring 100% of the companies holding the Kalia, Faranah and Sadeka exploration permits.

In addition to the costs of acquiring the exploration permits through the acquisition of the subsidiaries, the statutory fees paid on the issue of the Mining Concessions (Permits) for the Kalia and Faranah areas are included.

6. Investment accounted for using the equity method

The Company previously had a 50% interest in a joint venture entity, FHPL which was accounted for using the equity method. This entity entered liquidation in December 2015 and the liquidation process is expected to be completed by June 2016. No distributions are currently expected by the Company.

The long term receivable relates to expenditure incurred on behalf of, assets acquired for and cash advanced to FHPL in respect of the Forécariah Joint Venture "FJV". Due to the liquidation proceedings, the recoverable amount is expected to be nil and therefore the receivable is fully impaired.

During 2015 prior to the date of liquidation, the Group recharged certain expenses to the FJV in accordance with the joint venture agreement resulting in an increase in the long term receivable from FHPL of $0.53 million (2014: $0.77 million) and corresponding increase in impairment for the reasons noted above.

7. Events occurring after the reporting period

On 15 January 2016 the Company announced that agreement had been reached with its majority shareholder Hudson Global Group Ltd to participate in a non-pre-emptive placing to raise £1.35 million through the issue of 339,198,000 new ordinary shares of no par value at a price of 0.398113 pence per share. The proceeds of the placing are expected to provide Bellzone with sufficient funds to finance feasibility study work on the proposed Kalia North West Nickel Project.