Golden Saint Resources Regulatory News (GSR)

20 May 2015

Golden Saint Resources Ltd

("GSR" or the "Company")

Audited results for the financial year ended 31 December 2014 and Notice of AGM

The Board of Directors of Golden Saint Resources Ltd is pleased to announce the audited results for the financial year ended 31 December 2014.

Highlights within the 12 months to 31 December 2014

· GSR continues to operate in Sierra Leone in most of its tenement and licensed areas despite the international emergency arising from the Ebola outbreak and continues to take every precaution to safeguard its employees;

· Golden Saint Diamond Club launched its first sales of polished diamonds in August 2014. To 31 December 2014, gross revenues of USD 52,049 have been generated from the sale of 13 diamonds totalling 13.38 carats;

· Appointment of London based Wardell Armstrong International Ltd to provide ongoing assistance and guidance for exploration in relation to the Company's diamond and gold projects in Sierra Leone;

· Sponsorship of new licence areas by Golden Saint Diamonds (SL) Limited in the villages of Gelehun, Mamie and Ngelehun (the "Zimmi" areas) and Rowaka for artisanal mining operations;

· Recovery of a 3.75 carat intense yellow diamond and four yellow stones from early stage exploratory work of approximate sizes 2.3 carats, 4.2 carats, 10.0 carats and 10.34 carats from Zimmi areas;

· Issue of first tranche of GBP 1,000,000 senior unsecured zero coupon convertible bonds ("Bonds") pursuant to an agreement signed with Darwin Strategic Limited ("Darwin") to issue up to GBP 2,000,000 for general working capital purposes and purchase of equipment for further exploration work;

· Appointment of Beaumont Cornish Limited and Cornhill Capital Limited as the Company's joint brokers;

· Total equity placings through the issue of a total of 60,124,397 ordinary shares of no par value at a price ranging between 0.5493p to 2.0p raised GBP 1,326,007 for general working purposes.

Highlights of operations post 31 December 2014

· Termination of agreement between Darwin and GSR to issue further convertible bonds ;

· 49 carats of polished gem quality diamonds returned to Perth office after being sent to Parikh Brothers in Mumbai in October 2014 for cutting and polishing;

· Soil samples from Baja and Moa licensed areas arrived at Diatech Heavy Mineral Services Laboratory in Perth, Australia for analysis;

· Recovery of two white diamonds 0.970 carats and 0.820 carats and two light coloured purple diamonds of 2.45 carats and 0.525 carats from the Baja bulk sampling concentrates;

· Recovery of 233 carats of diamonds from its bulk sampling program in Baja;

· Issue of a total 270,315,018 ordinary shares of no par value to Darwin pursuant to the conversion of GBP 100,000 Bonds at 0.546 pence and GBP 630,000 Bonds at 0.25 pence after the financial year but before the date of this report;

· Issue of 53,846,154 ordinary shares of no par value to Darwin pursuant to a share subscription agreement entered into for the raising capital for general working capital purposes;

· Authority granted by shareholders at a general meeting convened on 23 February 2015 for the Company to issue up to 500,000,000 ordinary shares of no par to investors at a price deemed reasonable or as otherwise specified in any executed instrument;

· Appointment of Cassiopeia Services Ltd as the Company's Investors/Public Relations Consultant with effect from 11 March 2015;

· Equity placings through the issue of 300,000,000 new ordinary shares of no par value at a price of 0.15 pence per share raised GBP 450,000 before expenses for general working capital purpose; and

· Subscription to raise GBP 23,678 through the issue of 15,785,600 new Ordinary shares of no par value in the Company at a price of 0.15 pence per share. Expenses of the subscription payable by the Company are GBP 1,183.92 in cash.

A copy of the Annual Report and Accounts has been posted to Shareholders today together with a Notice of the Annual General Meeting ("AGM") to be held at Royal Perth Golf Club, Labouchere Road, South Perth WA 6151 on 25 June 2015 at 11:00am (WST). Copies of both documents are available on the Company's website www.goldensaintresources.com.

Set out below are extracts of the Company's audited results for the financial year ended 31 December 2014.

For further information please contact:

Executive Chairman's Review

Overview

I am pleased to report that during the period under review, the Company has made early recoveries of diamonds from its bulk sampling program in Baja. This is in addition to the yellow diamonds recovered from the Zimmi areas where the Company has sponsored artisanal mining operations. The Golden Saint Diamond Club made its maiden sales of polished diamonds of USD 52,049 comprising 13 diamond pieces totalling 13.38 carats. Despite the challenges faced with the Ebola outbreak, the Company continued to advance its diamond and gold development strategy with considerable success in its three exploration sites in Tongo, Baja and Moa. Sediment samples from Baja and Moa licence areas have been shipped to a laboratory in Perth, Diatech Heavy Mineral Services ("Diatech") for further analysis to identify any diamonds and/or indicator minerals. Pending the full completion of the analysis expected in June 2015, Diatech's initial examination of the bulk samples recovered a 0.348 carat rough diamond. In terms of capital investment, the Company purchased a local diamond washing plant for USD 15,000 for use in the Zimmi licence areas.

Financial review

The audited financial results of the Group for the financial year ended 31 December 2014 reflect the early stages of the mining operations focused on alluvial mining and exploration activities.

The Group's financial loss of USD 3.735 million for the full financial year under review (2013: USD 2,874 million) comprise exploration and general administrative costs of a corporate and management level. Taking into account the prior year's loss of USD 2.874 million which was incurred over an approximate period of only 9 months from the date of incorporation of the Company, the financial result for the current financial year was not unexpected.

The convertible debt of USD 1.05 million as at 31 December 2014 was the result of the issue of unsecured convertible loan notes to Darwin Strategic Limited as mentioned below ("Funding") however we are pleased to report that the entire debt has been extinguished when the agreement with Darwin Strategic Limited was terminated on 5 March 2015.

In line with the Company's strategy to not invest heavily in machinery during the early stage of exploration, during the financial year, the Company purchased equipment comprising of a local diamond washing plant, diesel generators, pumps and chainsaws for its mining operations.

 At 31 December 2014, the Group has USD 0.856 million (2013: USD 2.366 million) available for continuing exploration and working capital purposes.

Funding

During the financial year, the challenges associated with raising capital for a junior mining company like GSR were exacerbated by the outbreak of the Ebola virus in the first half of the 2014. Against the backdrop of the Ebola situation in which some large listed mining companies operating in Sierra Leone were placed under administration and the producing mines were put under care and maintenance owing to the lack of funding, GSR was successful in entering an agreement with Darwin Strategic Limited to provide a facility of up to GBP 2 million through the issue of unsecured zero coupon convertible bonds ("Bonds"). Funds raised under the agreement were intended for general working capital and eventually the purchase of a 20 tonne wash plant and ancillary plant and equipment to conduct further exploration work on each of its licence areas. As a result of having this facility in place, GSR was able to initially raise gross funds of GBP 1,000,000 when the conditions in the capital markets were extremely tight. With this facility in place, GSR was able to continue its operations during the difficult period and at the same time also explore other better capital raising options. The agreement with Darwin was terminated on 5 March 2015 when the Company was confident of securing alternative financing to meet its working capital needs as well as deliver a better expected outcome for its shareholders. On 31 March 2015, the Company, together with its joint broker and placing agent, Cornhill Capital Limited raised GBP 450,000 before expenses by way of a placing to institutional and other investors of 300,000,000 new ordinary shares of no par value in the Company at a placing price of 0.15 pence per share. Proceeds of the placing are being used for general working capital purposes.

Board and Senior Management Changes

The Company appointed Mr Keng Hock Seah as Finance Director and Mr Steve Ledger as Non- Executive Director to the Board of Golden Saint Resources Ltd with effect from 29 July 2014 and 14 November 2014 respectively. Mr Ledger will also chair each of the Audit Committee, the Remuneration Committee and the AIM Rules Compliance Committee. Mr Ledger brings a wealth of experience to the Board, in terms of his financial qualifications and broad business background. The Company would also like to thank Mr Simon Lawton for his contributions to the Company to 28 February 2015 when he resigned from the Board for personal reasons.

The Company appointed Mr Gerard Hooi as Business Development Consultant for Asia with effect from 5 February 2015. Mr Hooi will report to the Board.

Corporate Social Responsibility

In September 2014, the Company donated USD 5,800 (Le 25,000,000) to help the Sierra Leone Government continue their fight to eradicate Ebola in the country. The funds went towards the provision of medical treatment for those affected by the Ebola virus and also raise awareness in the communities on the prevention and transmission of the virus. The gesture was well received by the President of Sierra Leone.

Outlook

The last twelve months have proven to be a very challenging period dominated by the outbreak of the Ebola virus and the instability of the share price resulting from the funding arrangement entered into with Darwin Strategic Limited. Notwithstanding, with the dedicated commitment and hard work of management and staff, we were able to make early diamond recoveries and grow our operations through new licenses sponsored for artisanal mining operations. With the Board's decision to terminate and replace the Darwin transaction with alternative funding, we were also able to regain investor confidence in the Company. On behalf of the Board, I am confident to report that our vision and focus is on the right track and going forward, we expect to deliver the result that will enhance shareholder value to our loyal shareholders who have continued to show strong support for the Company.

The Company is encouraged by the exploration results to date and this note of confidence is reinforced by the recent renewal of the existing three exploration licences by the local Sierra Leone Government National Minerals Agency. Between December 2014 and February 2015, the exploration project licenses were renewed as follows:

Finally, I wish to thank my fellow Directors, shareholders, business associates and staff for their unstinting support and I look forward to the further development and expansion of our business over the coming years.

Cyril D'Silva

Executive Chairman

Operations Update

LOCATIONS

Golden Saint Resources (GSR) has three main projects in Sierra Leone; Tongo, Baja and Moa. All three projects, for which GSR holds an exploration licence, are located in the Bo and Kenema districts of the Southern and Eastern provinces of the country. The Tongo and Baja licence areas are located within the Tongo Diamond Field, which is considered highly prospective for diamonds. Within the Baja project, there is a section of the Sewa River, which is known to contain alluvial diamonds and gold and is locally worked by artisanal miners. The Moa project is also prospective for gold as well as diamonds as the licence area extends into the foothills of the Kambui hills, which is part of the greenstone belt of Sierra Leone.

Tongo (Licence number EL86/2011) is located close to Lowuma Village, which is approximately 56km east of Kenema Town in the Lower Bambara Chiefdom of Kenema District and approximately 356km east of Freetown. From Freetown to Kenema there is approximately 300km of well paved bitumen surfaced road with an unmade but graded road between Kenema and the licence area.

Baja (Licence number EL87/2011) is located approximately 52km northeast of Bo in the Kando Lekpeama and Simbaru Chiefdoms in the Kenema District of the Eastern Province and in the Komboya, Badjia and Baoma Chiefdoms in the Bo District of the Southern Province. It is approximately 292km east of Freetown. From Freetown to Baoma is approximately 273km of well paved bitumen surfaced road. The distance from Baoma to the licence area is approximately 19km of unmade but graded road.

Moa (Licence number EL07/2012) is situated approximately 46km southwest of Kenema City in the Koya and Dama Chiefdoms in the Kenema District of the Eastern Province. It is approximately 316km east of Freetown. There is approximately 290km of bitumen road between Freetown and Blama and approximately 26km of unmade but graded lateritic road between Blama and the licence area.

In addition to the above three projects, GSR, through Golden Saint Diamonds (SL) Ltd (Golden Saint's 75 per cent owned subsidiary), has entered into an agreement with holders of an artisanal and small scale mining licence in the Zimmi and Rowaka area and intends to continue to develop these projects. The Zimmi project is located in the Southern Province close to the border with the Republic of Liberia. The Zimmi area has a history of diamond occurrences along the rivers and streams. The GSR Zimmi project area has produced a number of coloured diamonds to date although this does not necessarily reflect on their value.

GENERAL GEOLOGY OF PROJECT AREA

The three projects lie within the stable Man craton of West Africa, which covers two-thirds of Sierra Leone. The Man craton is geologically subdivided into the Leonean and Liberian events, which comprised of tectonothermal events leading to the emplacement of synkinematic granites, the greenstone belts and other late kinematic events. The Tongo and Baja projects lie within the known diamond fields of Sierra Leone (P. K. Hall, 1960); these cover most of the Eastern Province and the eastern half of the Southern Province. Diamonds occur in the primary host rock of kimberlite pipes or dykes intruded along fissure shears, such as those of the Koidu mine kimberlite deposit. The Koidu kimberlite dykes and pipes have been dated to the Jurassic period.

Alluvial diamonds also occur in Sierra Leone as a result of the weathering and erosion of diamondiferous kimberlites, though the diamonds are usually smaller and in much lower concentration than those found in the kimberlites. Alluvial diamonds have been mined in both the Woa stream in the Tongo licence area and in the Sewa River that passes through the Baja licence area.

Hall (1968) noted that alluvial diamond deposits are almost invariably located on the river terraces (which he referred to as the coastal plains) and in the active channels of the rivers and stream; as per standard rules of deposition in alluvial environments, bends in rivers are also important sedimentary traps for alluvial diamonds.

The Moa project is located to the southern end of the Kambui hills, which is part of the Archaean greenstone belt. The greenstone belt is known to host gold deposits, in Sierra Leone and across the Man Shield. These gold deposits are largely associated with ductile deformation and high strain zones adjacent to or within crustal scale shear zones and also at the contacts between the granite and the greenstones, such as found at the Baomahun deposit in the Kangari Hills - Sula Mountains greenstone belt of Sierra Leone.

Alluvial gold in Sierra Leone is found within the rivers and streams across the country, particularly in the watershed around the Kangari Hills - Sula Mountains and the Kambui Hills immediately to the northwest of the Moa licence area.

EXPLORATION WORK

Exploration continued through the reporting period despite the ongoing Ebola outbreak. In some operational areas, work was limited as there was restricted access to communities to prevent spread of the disease. However, much was still achieved.

The corporate strategy for both diamond and gold opportunities remains as follows:

1. To undertake exploration for regional structures beneath the transported cover where potential diamondiferous kimberlites could be located;

2. To undertake exploration for hard rock gold deposits potentially associated with shear structures within the greenstone belt or at the granite/greenstone boundaries; and

3. To target areas where artisanal workings are evident with a view to identifying economic alluvial deposits that could be worked in the near term to generate cash flow to support longer term exploration for hard rock gold and diamond deposits.

To achieve the above, the work plan was organised to include:

1. geological mapping;

2. airborne magnetic survey;

3. stream sediment sampling;

4. trenching; and

5. pitting.

GEOLOGICAL MAPPING

Regional geological mapping continued in Baja and Moa during this exploration period in an effort to identify stratigraphic and structural controls along with uncover any mineralisation within the project area.

In Tongo, no additional geological mapping was undertaken during the reporting period to that done in the previous year.

In Baja, nine transect lines were traversed running from west to east at 2km spacing and outcrops were mapped at 50m intervals where exposure allowed. A total of 580 rock samples were collected and are stored in Perth for petrographic analysis as required. Based on the preliminary assessment, most of the rocks were ultramafic, including tremolite-chlorite schist, talc-chlorite schist and anthophyllite schist interceded with amphibolite and rarely with metasediments. The mafic group was represented mainly by amphibolite.

In Moa, the licence area has been mapped to a scale of 1:10,000 along a 10km baseline with a total of 10km of transects cross cutting the baseline. During the course of the geological mapping, 57 surface samples of stream sediment for gold and diamond were taken and these have been sent to Diatech Heavy Mineral Services (Diatech), Perth, Western Australia for analysis.

AEROMAGNETIC SURVEY

An aeromagnetic survey was completed by Geotech Airborne Ltd in November 2013 over the three project areas of Tongo, Baja and Moa. Core Geophysics Pty was commissioned by GSR to provide quality control, process imagery and structural interpretation of the three aeromagnetic surveys.

The aeromagnetic surveys have greatly improved understanding of the geology and structure of the region for the projects. Within the Tongo and Baja projects, the processed data has identified strong ENE-WSW structural trends beneath transported cover, consistent with the regional structures known to host kimberlite dykes and known diamond occurrences located within the neighbouring tenements.

In Moa, six broad target areas for gold mineralization have been identified, of which two have been given high priority along with three sites for alluvial diamonds selected along the Moa River. A number of major structures and fine scale fabrics were also interpreted from the data; that warrant further investigation with respect to potential gold mineralization.

In Tongo, a total of 37 dyke targets, 14 pipe targets and five alluvial targets have been selected from the processed data of which 12 dykes, three pipes and two alluvial targets have been given high priority.

In Baja, 79 dyke targets, four pipe targets and five alluvial targets have been selected from the processed data. From these findings 17 dykes and two alluvial targets have been given high priority for exploration.

STREAM SEDIMENT SAMPLING

A programme of stream sediment sampling commenced just after the aeromagnetic survey in all three project areas. The aim of this sampling was to locate kimberlite path finder minerals if present, including picro-ilmenite, pyrope-garnet, chrome-diopside and any gold mineralisation.

The process involved collecting stream sediment samples at regular intervals along 2nd and 3rd order streams in the project areas. Geologists were instructed to collect samples at trap sites where they exist. Average sample density was one sample per two square kilometres.

The project geologist walked each stream to determine the best trap sites and, the trained sampling crew then selected a sample and all sample points were plotted on 1:50,000 topographic sheet of the project area. Within Tongo, 25 stream sediment samples were collected and sent to Diatech for laboratory analysis. These underwent analysis as follows:

1. Quarantine heat treat (DRS).

2. TBE (SG 2.96) separate the entire sample as received (DRS).

3. Rollmag separate.

4. Screen at +0.85m and -0.85mm. Ultrasonic clean the -0.85mm.

5. Screen at +0.4mm and observe for diamonds and key minerals.

The results have been received and are contained in the table below. The three suspected picro-ilmenite grains were confirmed as being picro-ilmenite, though the low yield indicates some distance from source. Many of the 'B' type Cr-spinel have been downgraded to 'C' types, though some have remained assessed as 'B' types and are therefore still of interest.

Figure 1.1: Table summary of status for stream samples collected

A total of 78 stream sediment samples from Baja and Moa licenses were sent to Diatech in February 2015. Analysis is expected to be completed in June 2015 with result issued to GSR shortly thereafter.

The results for all samples are expected from Diatech by June 2015. The process for analysing the probe data is as below:

1. Quarantine heat treat (DRS).

2. TBE (SG 2.96) separate the entire sample as received (DRS).

3. Rollmag separate.

4. Screen at +0.85m and -0.85mm. Ultrasonic clean the -0.85mm.

5. Screen at +0.4mm and observe for diamonds and key minerals.

PIT SAMPLING 

Pitting on a regional scale of one pit per kilometre squared was undertaken during the period August 2013 to February 2014 across the Tongo licence area. A total of 46 pits were excavated and the samples collected were sent to Diatech in February 2014. Full lab analysis of the Tongo pit samples was completed in August 2014. Analysis confirmed the suspected picroilmenite as such and resulted in many, but not all, of the 'B' type Cr-spinel being downgraded to 'C' types and therefore were of no interest to the exploration. Three samples have remained classified as 'B' types and therefore still of interest.

Pitting on a larger scale took place on two sites in each of the Tongo and Baja project areas to collect bulk samples; these sites were selected based on known artisanal workings. This programme was carried out to identify any alluvial deposits considered economic for small scale mining as a faster means of cash flow generation for GSR and to improve shareholder value. To undertake this bulk sampling programme, GSR applied to the National Minerals Agency (NMA) for an amendment to their work plan to include bulk sampling.

In Tongo, bulk sampling at Tongo Pit 1 commenced in February 2014 in collaboration with the communities in the vicinity of the sampling area. Tongo Pit 1 comprises a small section of the Woa stream, a tributary of the Male River that runs through Tongo, was undertaken to evaluate the quantity of gravels in the terrace being sampled and to further check the grade within the gravels.

Excavation and extraction of gravel from the two pits in the Tongo licence area (Tongo Pit 1 and Tongo Pit 2) was undertaken by hand and mechanically with a D8 Bull Dozer (Caterpillar) and an excavator.

Two stockpiles from Tongo Pit 1 were created; stockpile one and two. Excavation at Tongo Pit 2 was interrupted by the heavy rains and the breakdown of the excavator. The gravels were washed using a Dove Explorer 100 purchased by GSR in January 2014. An access route is being created to both pits in Tongo to make provision for further washing of gravels through the wet season (May to October).

Within Baja, gravels were extracted from two pits, Baja Pit 1 and Baja Pit 2 and also stockpiled; gravels from Baja Pit 1 were also washed using the Dove Explorer washing plant. Washing of gravels from Baja Pit 2 was not possible owing to the heavy rains causing access restrictions.

Approximately 195 tonnes of gravel have been washed to date from the Baja Pit 1. Four diamonds have been recovered with weights ranging from 0.82 to 2.45 carats with varying colours from whites to yellows.

Yields are shown in the table below.

Figure 2.1: Table summary of gravel processed and recoveries

Samples of washed concentrate were collected from the Dove Explorer at Baja Pit 1 and a composite sample of 24kg has been sent to Diatech for analysis. These results are expected in June 2015.

GSR continues to make positive strides in the exploration and bulk sampling programmes, despite the Ebola outbreak. This was achieved not only because of its capable country management, but also the strong relationships with the local communities. As the Ebola situation has diminished to more manageable levels, bulk sampling operations at Tongo have resumed, as well as the completion of the work previously initiated at Baja.

APPOINTMENT OF WARDELL ARMSTRONG INTERNATIONAL LIMITED.

Wardell Armstrong International Limited (WAI) was appointed in July 2014 to work with both GSR Corporate and the in-country team, to provide guidance on the ongoing work programme of exploration, and to assist with the interrogation of data previously generated by GSR from its soil sampling analysis and other information available in the public domain. WAI continues to provide support and assistance with the broader exploration of the Tongo, Moa and Baja projects, in line with the exploration strategy points 1 and 2 as detailed above. WAI has not been involved with targeting artisanal workings and the generation and washing of stockpiles as per exploration strategy point 3 and neither has WAI been engaged on the Zimmi project at any stage. Owing to the Ebola outbreak, WAI has been unable to visit the licence areas during the reporting period and as such is taking information and data provided by GSR in good faith.

Competent Person Statement

The information in this release that relates to the general geology of the area is based upon information compiled by Wardell Armstrong International Ltd. Liv Carroll, Technical Director of Wardell Armstrong International Ltd, is a Chartered Geologist (CGeol), a Fellow of the Geological Society of London (FGS) and a Fellow of The Institute of Materials, Minerals and Mining (FIMMM). Ms Carroll has sufficient experience relevant to the style of mineralisation and type of deposit under consideration at exploration stage to qualify as a Competent Person under the JORC Code (2012). Ms Carroll consents to the inclusion in this release of the matters based on her information in the form and context in which it appears.

SPONSORSHIP OF NEW LICENCES.

In addition to the existing three exploration licences at Baja, Tongo, and Moa, GSR, through its 75% owned subsidiary company Golden Saint Diamonds (SL) Ltd ("GSD"), successfully concluded talks over the sponsorship of five areas of artisanal and small scale licensed operations in the Pujehun District, collectively referred to as the Zimmi project.

Under the terms of the agreement, GSD will be responsible for providing machinery, tools, food, fuel and lubricants for the smooth running of the artisanal mining operation. In return, the total value of all diamonds recovered within the licence are to be shared between GSD and the local land owner 70% and 30% respectively. To date, the Zimmi project has been worked and washed on a small scale by Sierra Leone nationals and machinery. Excavation pits have been created for extraction, and site preparation undertaken for easier access and operations. With washing equipment purchased locally, nine stones have been recovered with weights ranging from 0.39 carats to 10.34 carats.

Yields from the gravel washed are shown in in table below:

Figure 3.1: Table summary of gravel processed and recoveries

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year 1 January 2014 to 31 December 2014

Consolidated Statement of Financial Position

As at 31 December 2014

Consolidated Statement of Cash Flow

For the year 1 January 2014 to 31 December 2014

Consolidated Statement of Changes in Equity

For the period 1 January 2014 to 31 December 2014

Consolidated Statement of Changes in Equity

For the period 19 March 2013 to 31 December 2013

Notes to the Financial Statements

Accounting Policies

1.1 Corporate information

The consolidated financial statements of Golden Saint Resources Limited for the financial year ended 31 December 2014 were authorised for issue in accordance with a resolution of the Directors on 20 May 2015.

The registered office of Golden Saint Resources Limited, the ultimate parent of the Group, is 171 Main Street, Road Town Tortola VG 1110 British Virgin Islands.

The principal activity of the Group is early stage diamond and gold exploration with three Exploration Licenses in Sierra Leone.

1.2 Basis of preparation

The consolidated financial statements of Golden Saint Resources Limited and its controlled entities ("the Group") have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU) as they apply to the financial statements of the Group for the period 1 January 2014 to 31 December 2014.

The consolidated financial statements have been prepared on a historical cost convention basis, except for certain financial instruments that have been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand except when otherwise indicated.

1.3 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 December 2014, and for the period then ended.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance. A change ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Pooling of Interests on Incorporation of Parent Entity

On incorporation of the entity, subsidiaries have been consolidated using the pooling of interests method on the basis that the entities being combined are ultimately controlled by the same parties, both before and after the combination.

Under this method the assets and liabilities of the acquiree are recorded at book value and intangible assets and contingent liabilities are only recognised if they were previously recognised by the acquiree. No goodwill is recorded and expenses of the combination are written off immediately in profit or loss.

The excess of consideration over the value of the acquiree's net assets is recognised in the merger reserve, a negative reserve within equity.

Any non-controlling interest in the acquiree is recognised as the proportion of the assets and liabilities of the acquiree at the date of acquisition. From the date of acquisition forward, a proportionate share of profits, or losses, in the related subsidiary is then attributed to the non-controlling interest.

Subsequent Business Combination

Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is re-measured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

1.4 Significant accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes would differ from these estimates if different assumptions were used and different conditions existed.

In particular, the Group has identified the following areas where significant judgements, estimates and assumptions are required, and where actual results were to differ, may materially affect the financial position or financial results reported in future periods. Further information on these and how they impact the various accounting policies is located in the relevant notes to the consolidated financial statements.

1.4.1 Key Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements.

Going concern

This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

At 31 December 2014, the Group held cash reserves of USD 856,000. Subsequent to year end, the Group raised USD 972,265 (GBP 648,678) via placement of equity instruments, and converted USD 1,195,000 (GBP 800,000) of convertible debt into shares. 

The Directors are confident the Company will generate revenue from alluvial diamond and gold sales in second half 2015 and into 2016 which will contribute to cashflow. In addition the Company intends to raise additional equity finance during the course of the year to contribute towards its working capital requirements.

On this basis, the Directors believe that there are sufficient funds to meet the Group's working capital requirements.

Accruals

Management have used judgement and prudence when estimating certain accruals for contractor claims. The accruals recognised are based on work performed but are before settlement.

Contingencies

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events. Please refer to Note 20 for further details.

Impairment of assets

The Group assesses each asset or cash generating unit (CGU) every reporting period 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, or the value in use. These assessments require the use of estimates and assumptions such as long-term commodity prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, closure and rehabilitation costs, exploration potential, reserves and operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs. Please refer to Note 11 for further details.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.

1.4.2 Key estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Exploration and evaluation expenditure

The application of the Group's accounting policy for exploration and evaluation expenditure requires judgement in determining whether future economic benefits will arise either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of estimation depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the consolidated statement of comprehensive income in the period when the new information becomes available. Exploration and evaluation assets are carried at historical cost less any impairment losses recognised. (Please refer to Note 12 for further details).

1.5 New standards and amendments and interpretations adopted by the Group

The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2014 and have a material impact on the Group:

· Amendment to IAS 32 - 'Financial instruments: Presentation' on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant impact on the Group's consolidated financial statements as the Group does not have any financial assets and financial liabilities that qualify for offset.

· Amendments to IAS 36 - 'Impairment of assets', on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.

· Amendment to IAS 39 - 'Financial instruments: Recognition and measurement' on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to 'over-the-counter' derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The group has applied the amendment and there has been no significant impact on the group financial statements as a result.

· IFRIC 21 - 'Levies', sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material.

· Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the group.

1.6 New standards and amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:

· IFRS 9 - 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for risk management purposes. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The group is yet to assess IFRS 9's full impact. At this stage, the directors of the Company have not evaluated the impact of the changes to IFRS 9 on their financial statements going forward. They will do so at an appropriate time in the future.

· IFRS 15 - 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The group will be assessing the impact of IFRS 15.

· There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

1.7 Summary of significant accounting policies

Exploration and evaluation assets

It is the Group's policy to capitalise the cost of acquiring rights to explore areas of interest. All other exploration and evaluation expenditure is expensed to the statement of profit or loss and other comprehensive income.

The costs of acquisition are carried forward as an asset provided one of the following conditions are met:

· Such costs are expected to be recouped through the successful development and exploitation of the area of interest, or alternatively, by its sale; or

· Exploration activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence of otherwise of recoverable reserves, and active and significant operations in relation to the area are continuing.

When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment.

Impairment

An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Any impairment losses are recognised in the statement of profit or loss and other comprehensive income.

The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash generating unit level whenever facts and circumstances (from an impairment review) suggest that the carrying amount of the asset may exceed its recoverable amount.

Impairment reviews for exploration and evaluation costs are carried out on a project-by-project basis, as each project has the potential to be an economically viable cash generating unit. An impairment review is undertaken when indicators of impairment arise but normally when one of the following conditions applies:

· unexpected geological occurrences render a deposit uneconomic

· title to an asset is compromised

· variations in commodity prices render the project uneconomic

· variations in the currency of operation

· variations to the fiscal and tax legislation in the country of operation.

Property, plant and equipment

Plant and equipment are shown at cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, any incidental cost of purchase, and associated borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Directly attributable costs include employee benefits, professional fees and costs of testing whether the asset is functioning properly. Capitalised borrowing costs include those that are directly attributable to the construction of mining and infrastructure assets.

Property, plant and equipment relate to plant, machinery, fixtures and fittings and are shown at historical cost less accumulated depreciation and impairment losses.

The depreciation rates applied to each type of asset are as follows:

Plant and machinery 10%

Motor Vehicles 15%

Fixtures and fittings 10-20%

Lease Improvements 5 years

Subsequent expenditure is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Assets that are replaced and have no future economic benefit are derecognised and expensed through profit or loss. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Gains/ losses on the disposal of fixed assets are credited/charged to income. The gain or loss is the difference between the net disposal proceeds and the carrying amount of the asset.

The asset's residual values, useful lives and methods of depreciation are reviewed at each reporting period, and adjusted prospectively if appropriate.

Inventories

Inventories are valued at the lower of cost and net realisable value.

Convertible Note

Convertible Notes issued by the Group comprise of convertible notes that can be converted to share capital at the option of the holder and a convertible note derivative whose fair value changes with the Company's underlying share price. The convertible note liability and corresponding discounts are removed from the Statement of Financial Position when the obligations specified in the contract are discharged, this can occur upon the option holder exercising their option or the option period lapses requiring the company to discharge the obligation.

Financial instruments: initial recognition and measurement

a. Financial assets

The Group's financial assets include trade and other receivables, and cash and cash equivalents.

Trade and other receivables

Trade and other receivables are stated at amortised cost less provision for doubtful debts. Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Trade receivables are generally due for settlement between 30 and 90 days. They are presented as current assets unless collection is not expected for more than 12 months after reporting date. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date. Cash and cash equivalents comprise cash, cash at hand and short-term deposit amounts with original maturity of less than three months. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Impairment

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial asset is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

 b. Financial liabilities

The Group's financial liabilities include trade and other payables and interest-bearing loans and borrowings. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, less directly attributable transaction costs.

Trade and other payables

Trade and other payables are non-derivative financial liabilities that are not quoted in an active market. It represents liabilities for goods and services provided to the Group prior to the year end and which are unpaid. These amounts are unsecured and have 7-30 day payment terms. Trade and other payables are presented as current liabilities unless payment is not during within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

 Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest (EIR) method. The fair value implies the rate of return on the debt component of the facility. This rate of return reflects the significant risks attaching to the facility from the lenders' perspective.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds e.g. arrangement fees.

The Group capitalises borrowing costs for all eligible assets. Where funds are borrowed specifically to finance the project, the amount capitalised represents the actual borrowing costs incurred. Early repayment of borrowings, specifically for reasons of refinancing do not qualify for capitalising as borrowing costs under IAS 23 and are recognised as a loss on de-recognition in the statement of comprehensive income.

c. Fair value of financial instruments

The following methods and assumptions are used to estimate the fair values:

· Cash and short-term deposits, trade and other receivables, trade and other payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

· Initial fair value of interest-bearing borrowings is normally the transaction price, i.e. the fair value of the consideration received. When part of the consideration is for something other than the loan, the fair value is estimated using an appropriate valuation technique.

· For disclosure purpose only, the fair value of unquoted instruments, such as loans and other financial liabilities, is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

d. Other accounting policies

Provisions

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax amount that reflects current market assessments of the time value of money, and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Finance income

Interest income is made up of interest received on cash and cash equivalents.

Deferred taxation

Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised, except:

· In respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Foreign currencies

i) Functional and presentation currency

The consolidated financial statements are presented in US dollars, which is the Group's presentation currency.

ii) Transaction and Balances

Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. All differences are taken to the profit or loss, should specific criteria be met.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

iii) Group Companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· Assets and liabilities for each statement of financial position presented as translated at the closing rate at the date of the statement of financial position.

· Income and expenses for each income statement and statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transactions dates, in which case income and expenses are translated at the dates of the transactions), and

· All resulting exchange differences are recognised in other comprehensive income

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable.

The Group recognises when the amount of revenue can be reliably measured, it is probably that future economic benefits will flow to the entity and specific criteria have been met as described below.

i) Interest Income

Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.

2. Net Operating Expenses

AIM listing fees related to the admission of GSR to the London Stock Exchange in the 2013 Financial Year.

3. Key Management Personnel

· Key Management personnel comprise the Directors.

· Detailed disclosures of the Directors remuneration and interests over the Company's shares are shown in the report of the Remuneration Committee.

4. Employee Costs

5. Earnings per share

The convertible notes outstanding are not included in the calculation of diluted earnings per share because they are anti-dilutive for the year ended 31 December 2014.

6. Segment Information

The consolidated entity's operating segments have been determined with reference to the monthly management accounts used by the chief operating decision maker to make decisions regarding the consolidated entity's operations and allocation of working capital.

Due to the size and nature of the consolidated entity, the Board as a whole has been determined as the chief operating decision maker.

The consolidated entity operates in one business segment and one geographical segment, namely mineral exploration industry in Sierra Leone.

The revenues and results of this segment are those of the consolidated entity as a whole and are set out in the statement of profit and loss and other comprehensive income. The segment assets and liabilities of this segment are those of the consolidated entity and are set out in the Statement of Financial Position.

7. Cash and Cash Equivalents

There are no restrictions on the cash currently held by the Group.

8. Trade and Other Receivables

Prepayments relate to payments made in advance for services from the AIM Nomad and Broker as well as legal retainer for GSR Africa.

Other receivables include deposits made for the purchase of plant and machinery for use in Sierra Leone.

9. Deposits Paid

Current Deposits relate to mining equipment leased in Sierra Leone to be used for gold and diamond exploration and production.

10. Inventories

Inventories consist of 113 carats of cut, gem quality diamonds. Of the 184 carats that had been exported from Sierra Leone, 64 carats were cut by Solid Gold Jewellers Pty Ltd in Perth and the remaining 49 carats cut by Parikh Brothers in Mumbai.

GSR also has an additional 70 carats of diamonds which have been deemed for industrial use. Arrangements are currently being prepared for the gem quality stones to be sold in the GSR Diamond Club. Each stone has been individually and objectively appraised for its market value (reflected in its sale price) and then recorded at the lower of cost or market value.

11. Property, Plant and Equipment

12. Exploration and Evaluation Assets

The board of directors regularly assesses the potential of each mineral licence. There was no impairment during the 2014 Financial Year.

The board of directors regularly assesses the potential of each mineral licence. There was no impairment during the 2013 Financial Year.

13. Intangible Assets

There was no impairment recorded during the 2014 Financial Year.

14. Subsidiaries

Details of the Company's subsidiaries at 31 December 2014 are as follows:

15. Taxation

Unrecognised tax losses

Where the realisation of deferred tax assets is dependent on future taxable profits, losses carried forward are recognised only to the extent that business forecasts predict that such profits will be available to the companies in which losses arose.

The parent, GSR, is not liable to corporation tax in BVI, so it has no provision for deferred tax. However, GSR (Australia) Pty Ltd is liable to tax in Australia and GSR (Africa) is liable to tax in Sierra Leone, so potential deferred tax in respect of those companies is noted as follows:

As at 31 December 2014, GSR (Australia) Pty Ltd had losses of USD 910,833 (2013: USD 581,202), while GSR Africa had losses of USD 1,240,697 (2013: USD 469,083) upon which deferred tax assets are not recognised. These losses are available indefinitely for offset against future taxable profits.

16. Share Capital and Reserves

The share capital of the Company is denominated in Pounds Sterling. Each allotment during the period was then translated into the Group's functional currency, US Dollars at the spot rate on the date of issue.

17. Non-Controlling Equity Interest

On 1 July 2013, the Group acquired a 75% interest in GSR Africa. At this date, the Group recognised a non-controlling interest of USD 21,646, which represented the non-controlling interest's share of net assets in GSR Africa at that date.

As at 31 December 2014, the non-controlling interest's share of losses in GSR Africa was USD 310,174.

18. Trade and Other Payables

Trade payables are non-interest bearing and are normally settled on 7 - 30 day terms.

Accruals relate to end of the financial period audit and accounting services.

Other payables relate to superannuation and tax withheld from salaries payable to the tax office.

19. Convertible Note

On the 20th October 2014, Golden Saint Resources had entered into an agreement with Darwin Strategic Limited (Darwin) where the Company had agreed to issue Darwin up to GBP 2,000,000 of senior unsecured zero coupon convertible bonds. Please refer to Note 21 for further information.

The value of the convertible note liability has been recorded at its fair value therefore, there is no difference between its fair value and its carrying value.

20. Commitments and Contingencies

The Group is subject to the following commitments in the 2015 financial year on their exploration sites: Tongo USD 60,680; Baja USD 98,020; Moa USD 59,290.

Aside from those mentioned above, the Group is subject to no commitments or contingent liabilities.

21. Subsequent Events

On 30 December 2014, the Company had approved and authorised to issue and allow shares in accordance with the Darwin Convertible Note as per a validly received notice of conversion for 18,315,018 shares at 0.5460 pence per share. The shares were not allotted until 2 January 2015.

On 3 March 2015, the Company had announced that it will not draw down further on the GBP 2,000,000 of senior convertible bonds with Darwin Strategy Limited. Upon issue of the bonds, Darwin was to pay an amount equal to 90% of the face value of the bonds. As at the date of this report, Golden Saint owed Darwin GBP 700,000, which remained redeemable on the existing terms although it had been agreed a small discount on any early repayment. The remaining outstanding bonds were to mature on 20 October 2016.

On 5 March 2015, the Company agreed that through the issue of 252,000,000 ordinary shares of no par value, the outstanding debt of GBP 700,000 (being amounts on the senior convertible bonds) owed by the Company to Darwin would be fully repaid. The agreement announced between Darwin and the Company on 20 October 2014 is now terminated. Application was made for the shares, which ranked pari passu with the Company's existing issued Ordinary Shares to be admitted to trading on AIM.

On 27 January 2015, Golden Saint entered into a subscription agreement with Darwin Strategic Limited to raise GBP 175,000 by the issue of 53,846,154 ordinary shares or no par value in the capital of the Company at a price of 0.325 pence per Subscription Share. Application has been made for the shares, which ranked pari passu with the Company's existing issued Ordinary Shares to be admitted to trading on AIM.

On 31 March 2015, the Company announced that it has raised GBP 450,000 before expenses by way of a placing to institutional and other investors of 300,000,000 new Ordinary Shares of no par value in the Company at a placing price of 0.15 pence per share. Expenses of the Placing payable by the Company are GBP 30,327 in cash and warrants over 25,000,000 new Ordinary Shares exercisable at 0.15 pence until 9 April 2018. The warrants represent a value of GBP 37,500.

On 12 May 2015, the Company announced it had raised GBP 23,678 by way of a subscription to an investor of 15,785,600 new Ordinary shares of no par value in the Company at a price of 0.15 pence per share. Expenses of the subscription payable by the Company are GBP 1,183.92 in cash.

22. Related Party Transactions

During the period of appointment for Mr Nick Burn (from 1 January 2014 to 30 June 2015), no fees (2013: USD 52,505) were paid to Lucas Resources, a company controlled by Mr Nick Burn, a director of the Company during the period, in relation to professional services rendered.

During the financial year to 31 December 2014, fees totalling USD 7,913 (2013: USD 17,110) were invoiced from David McDonald Legal, a company controlled by Mr David McDonald, a director of the Company, in relation to professional services rendered.

During the period of appointment for Mr Steve Ledger (covering the period 14 November 2014 to 31 December 2014), fees totalling USD 8,788 were invoiced from Ledger Corporate in relation to professional services rendered. Ledger Corporate is an entity controlled by Mr Steve Ledger, a director of the Company.

23. Financial risk management objectives and policies

The Group's activities expose it to a variety of financial risks. The Group's Board provides certain specific guidance in managing such risks, particularly as relates to credit and liquidity risk. Any form of borrowings requires approval from the Board and the Group does not currently use any derivative financial instruments to manage its financial risks. The key financial risks and the Group's major exposures are as follows:

Credit risk

The maximum exposure to credit risk is represented by the carrying amount of the financial assets. In relation to cash and cash equivalents, the Group limits its credit risk with regards to bank deposits by only dealing with reputable banks. In relation to sales receivables, the Group's credit risk is managed by credit checks for credit customers and approval of letters of credit by the Group's advising bank for offtake customers. The Group does not have any significant concentrations of credit risk.

Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The table below indicates the currencies to which the Group had significant exposure at 31 December 2014 on its monetary assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the currency rate against the US dollar, with all other variables held constant on the statement of comprehensive income. A positive amount in the table reflects a potential net increase in the consolidated statement of comprehensive income.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Numbers in the table below represent the gross, contractual, undiscounted amount payable in relation to the financial liabilities. The Group monitors its risk to a shortage of funds using a combination of cash flow forecasts, budgeting and monitoring of operational performance.

24. Capital management

Capital includes equity attributable to the equity holders of the parent. Refer to the statement of changes in equity for quantitative information regarding equity.

The Group's primary objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders. For details of the capital managed by the Group as at 31 December 2014, please see Note 16.

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

25. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A sensitivity analysis is not presented, as all borrowing costs have been capitalised as at 31 December 2014; therefore profit or loss and equity would have not been affected by changes in the interest rate.

26. Parent Company Information (i.e. Golden Saint Resources Ltd)

A copy of the report and accounts is available on the Company's website www.goldensaintresources.com and has been posted to shareholders today, 20 May 2015.

Glossary of Technical Terms

The following glossary of terms applies throughout this document, unless the context otherwise requires: