Bellzone Mining Regulatory News (BZM)

30 September 2014

Bellzone Mining plc

("Bellzone" or "the Company")

Unaudited interim results for the six months ended 30 June 2014

Bellzone Mining plc (AIM: BZM) announces its unaudited interim results for the six months ended 30 June 2014 along with the following update on its activities.

Key points

· Placement of new ordinary shares of no par value with China Sonangol International (S) Pte Ltd ("China Sonangol") raising net proceeds of approximately £1.1 million in June 2014 to fund operations into August 2014 while funding discussions continued with China Sonangol and other parties

· Entered into an agreement with China Sonangol in August 2014 pursuant to which China Sonangol agreed to provide short-term finance to the Company (the "Loan") of up to US$4 million subject to security and other conditions being met

o Received US$1.5 million (Gross) of the Loan to date

o The parties have not yet reached agreement on the full satisfaction of the security conditions of the Loan and discussions are ongoing

· Suspension of the Company's ordinary shares from trading on AIM on 22 September 2014

· Discussions continue with potential short and long term finance providers

Financing activities

Kalia is a rarity in West Africa in that it has both a publicly announced JORC Reserve and an independent Bankable Feasibility Study ("BFS"). The Directors believe the project would be robust and profitable even at the current low iron ore price levels. The Directors are confident that the base case Kalia operation as set out in the BFS would hold significant upside potential over and above the profits from exporting the current target of 7million dry tonnes per annum, which would be realised when multi-user Guinean infrastructure is developed for Simandou allowing increased export capacity at an expected lower transport cost.

Over the past 15 months the Company has engaged with a wide range of parties, including commercial debt, government related development financiers, commodity traders, downstream customers, vendors and other mining organisations. The majority of interested parties recognise the potential of Kalia and after their own review processes support the BFS.

The availability of security in the financing discussions is not impacted by the security over assets provided as a condition of the Loan as provision has been made for this eventuality in Loan Agreement.

The Company remains in discussions with a smaller, more focused, number of parties for potential short and longer term financing.

Costs and funding

The Company recognised that the financing process could be lengthy with timing driven by potential providers of finance as well as being subject to the wider macro-economic environment. In order to facilitate the activities of the Bellzone through this process, management commenced cost reduction measures during the final phases of the BFS process. Key actions arising were:

· Drilling activities at Sadeka and Kalia were stopped;

· Equipment was placed on care and maintenance;

· Security was put in place to prevent theft and damage to assets;

· Minimised impact on Guinean national staff with no lay-offs;

· Personnel with deep technical knowledge of the Kalia asset were retained; and there was

· No compromise to statutory or regulatory compliance processes

The impact of the cost reductions is demonstrated by the 70% reduction in costs compared to the same period in 2013. Without these reductions the Company would not have had the opportunity to seek financing based on the BFS because funds would have expired before the end of 2013.

The current objective is to reduce ongoing monthly costs to below US$750,000 per month without impacting the Guinea staff or the ongoing financing processes.

The funding for the ongoing operations from June 2014 was obtained through the successful completion of the placing announced on 4 June 2014 (the "Placing"). A total of 51,321,263 new ordinary shares of no par value were placed with China Sonangol at a price of 2.5 pence per share, raising net proceeds of approximately £1.1 million. The proceeds of the Placing funded activities into August 2014.

On 18 August 2014 the Company announced that it had entered into an agreement with China Sonangol pursuant to which China Sonangol agreed to provide short-term finance to the Company of up to US$4 million that was expected to provide the Company with sufficient working capital to continue operations until late October 2014.

The Loan is subject to various conditions, including security over specified Company assets. An initial draw down of US$663,129, being the net of US$750,000 after deducting China Sonangol's legal fees, was received on 19 August 2014. The remaining US$3,250,000 was to become due upon the satisfaction of the security conditions.

The Company and China Sonangol have not yet reached agreement on the satisfaction of the conditions.

On 1 September 2014 the Company announced that it had been informed that China Sonangol would advance a further US$750,000 under the Loan announced on 18 August 2014. The Company received US$750,000 on 2 September 2014, providing funds to continue operations until mid-September 2014.

The Company required a further advance of financing under the Loan or some other source of funds early in the week of 22 September 2014 to continue operations. The funding was not received and in light of the current uncertainty surrounding the Company's ability to secure such an advance of financing under the Loan, Bellzone requested that its ordinary shares be suspended from trading on AIM on 22 September 2014 pending clarification of its financial position.

The Company continues discussions with potential short and long term finance providers, however, there can be no certainty that the required financing, either short or longer term, will be obtained.

Enquiries:

Bellzone Mining plc

Peta Baldwin, Corporate Affairs +44 (0) 1534 513 500

Investec Securities

Nominated Advisor and Broker

Chris Sim / George Price / Jeremy Ellis +44 (0) 20 7597 5970

Bell Pottinger

Financial Public and Investor Relations

Daniel Thole +44 (0) 20 3772 2500

INTERIM CONDENSED Consolidated Statement of financial position

at 30 jUNE 2014

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

INTERIM CONDENSED Consolidated Statement of Comprehensive Income

For the SIX MONTHS ended 30 JUNE 2014

INTERIM CONDENSED Consolidated Statement of CHANGES IN EQUITY

For the SIX MONTHS ended 30 JUNE 2014

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

INTERIM CONDENSED Consolidated Cash Flow Statement

For the six months ended 30 june 2014

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

Notes to THE INTERIM CONDENSED CONSOLIDATED Financial Statements

For the SIX MONTHS ended 30 JUNE 2014

1. corporate

Reporting Entity

The condensed consolidated interim financial statements of Bellzone Mining plc ("the Company") were authorised for issue in accordance with a resolution of the board of directors on 30 September 2014. Bellzone Mining plc is a public company listed on AIM of the London Stock Exchange, and incorporated and registered in Jersey, Channel Islands. The Company's registered office is located at Channel House, Green Street, St Helier, Jersey JE2 4UH, Channel Islands. The consolidated financial statements of the Company as at and for the period ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the "Group").

The principal activity of the Company and its subsidiaries (together referred to as "the Group") is the exploration and development of resources, primarily at its flagship Kalia Iron Project in Guinea, West Africa, with additional activities being undertaken at the Sadeka Nickel/Copper Project

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.

Basis of preparation

a. Statement of compliance

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

b. Early adoption of standards

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 interim condensed consolidated 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. Going concern

The interim results reflect the current nature of the Group's activities, being mineral exploration and project development.

The current nature of the Group's activities does not provide the Group with production or trading revenues.

The Group has historically met its working capital requirements by raising the required capital through the placing of shares with investors. The Company has raised US$329 million, after costs, since incorporation, including approximately £1.1 million (net) raised during the period through the issue of 51,321,263 new ordinary shares of no par value at a price of 2.5p per share with China Sonangol International (S) Pte Ltd ("China Sonangol"), pursuant to which China Sonangol agreed to either procure (as agent for the Company) placees for the Placing Shares or otherwise itself subscribe for the Placing Shares.

The proceeds of the Placing provided sufficient funds for Bellzone to continue operations into August 2014.

On 18 August 2014 the Company announced that it had entered into an agreement with China Sonangol pursuant to which China Sonangol agreed, subject to conditions, to provide short-term finance to the Company ("the Loan") of up to US$4 million. Under the terms of the Loan:

· The Company initially drew down US$750,000, less US$86,870.52 deducted by China Sonangol for legal expenses;

· China Sonangol advanced a further $750,000 on 1 September 2014 to fund operations through to mid-September 2014.

The drawdown of the remaining U$2,500,000 is subject to the satisfaction of certain further conditions. The Company and China Sonangol have not yet reached agreement on the satisfaction of the conditions and there can be no certainty that such conditions will be satisfied.

The Company and China Sonangol remain in discussion to reach agreement on the final satisfaction on all conditions of the Loan to enable Bellzone to access the remaining US$2,500,000 available through the Loan.

Notes to the INTERIM CONDENSED CONSOLIDATED Financial Statements continued

For the SIX MONTHS ended 30 JUNE 2014

1. corporate

Basis of preparation

e. Going concern (continued)

The Group remains in discussions to secure funding to enable it to both continue operations in the short term, and in the long term to develop the Kalia project. At present the Board is working to secure immediate funding to continue operations from one or more of the following sources:

· the placement of further securities;

· loan funds;

· the sale of assets; and/or

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

While the Directors believe that the Group will obtain sufficient funding from one or more of these funding opportunities, there can be no certainty that sufficient funding will be found. The Directors have concluded that the lack of committed funds represents a material uncertainty that may cast significant doubt upon the Company's ability to continue as a going concern, 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.

Nevertheless, after considering the uncertainties mentioned above, and based on the progress of discussions with various potential sources of finance, the Directors have a reasonable expectation that the Group will be able to obtain additional funding which will provide the Group with sufficient resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the condensed consolidated interim financial statements.

2. Mineral properties in the exploration and evaluation phase

The 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.

The Agreement with CIF of 2 August 2010 required certain actions to be fulfilled for the transfer of 50% of the defined Kalia II area (part of the Kalia permit) and 100% of the Faranah permit to be transferred to CIF. The prerequisite actions have not occurred and the transfers have not taken place.

The permitted areas remain 100% owned by Bellzone through the relevant subsidiaries and are subject to security for a loan facility announced on 18 August 2014 (see note 6).

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.

Notes to the INTERIM CONDENSED CONSOLIDATED Financial Statements continued

For the SIX MONTHS ended 30 JUNE 2014

The Company has a 50% interest in a joint venture entity, FHPL which is accounted for using the equity method. The long term receivable relates to expenditure incurred on behalf of, assets acquired for and cash advanced to FHPL in respect of the Joint Venture.

The limited JORC defined resources and unknown exploration potential do not permit the definition of a production profile and life of mine plan that result in either an economic return on the investment or the repayment of the receivable. Accordingly, the investment and the receivable have been fully impaired.

Consideration was given to retaining some value that could be attributed to the infrastructure assets. The status of the permits and the absence of alternative users of the infrastructure, which may derive an income, resulted in no change to the impairment decision.

Further resource definition and production profiling may result in a reversal of the impairment in future periods.

4. Issued capital

The Company is a no par value company. No share issued by the Company shall have a par value.

There is no limit on the number of shares which may be issued by the Company and if the share capital structure of the Company is at any time divided into separate classes of share there is no limit on the number of shares of any class which may be issued by the Company.

Notes to the INTERIM CONDENSED CONSOLIDATED Financial Statements continued

For the SIX MONTHS ended 30 JUNE 2014

4. Issued capital (continued)

Subject to the provisions of the Companies Law and the Articles of the Company and without prejudice to any rights attached to any existing shares or class of shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine or, subject to and in default of such determination, as the Board shall determine.

The Company may, pursuant to the Companies Law, issue fractions of shares and any such fractional shares shall rank pari passu in all respects with other shares of the same class issued by the Company.

The Company shall maintain a stated capital account in accordance with the Companies Law for each class of issued share. A stated capital account may be expressed in any currency determined by the Board from time to time.

Ordinary shares have no par value, carry one vote per share and carry the right to dividends. All shares have been fully paid.

The Group is in a project development stage and did not declare or pay any dividends during the period (2013: nil).

Notes to the INTERIM CONDENSED Financial Statements continued

For the SIX MONTHS ended 30 JUNE 2014

5. Reserves

6. Events occurring after the reporting period

a) On 18 August 2014 the Company announced that it had entered into an agreement with China Sonangol pursuant to which China Sonangol agreed, subject to conditions, to provide short-term finance to the Company ("the Loan") of up to US$4 million. Under the terms of the Loan:

· The Company initially drew down US$750,000, less US$86,870.52 deducted by China Sonangol for legal expenses;

· China Sonangol advanced a further $750,000 on 1 September 2014 to fund operations through to mid-September 2014 (see note 6 b).

The drawdown of the remaining U$2,500,000 is subject to the satisfaction of certain further conditions. The Company and China Sonangol have not yet reached agreement on the satisfaction of the conditions and there can be no certainty that such conditions will be satisfied.

The Company and China Sonangol remain in discussion to reach agreement on the final satisfaction on all conditions of the Loan to enable Bellzone to access the remaining US$2,500,000 available through the Loan.

b) The Company announced on 17 September 2014 that it has not yet been able to reach agreement with China Sonangol on the final satisfaction of all conditions of the Loan announced on 18 August 2014 and, as previously announced, the Company required a further advance of financing under the Loan or some other source of funds early in the week of 22 September 2014 to continue operations.

On 22 September 2014 the Company informed the market that in the context of the uncertainty surrounding the Company's ability to secure such an advance of financing under the Loan or from any other source that the Company requested that its ordinary shares be suspended from trading on AIM on 22 September 2014 pending clarification of its financial position.

The Company also remains in discussions with other potential providers of longer term financing. There can be no certainty that the required financing, either short or longer term, will be obtained.

Notes to the INTERIM CONDENSED CONSOLIDATED Financial Statements continued

For the SIX MONTHS ended 30 JUNE 2014

7. Reconciliation of loss after income tax to net cash inflow from operating activities