Golden Saint Resources Regulatory News (GSR)

14 May 2014

Golden Saint Resources Ltd

("GSR" or the "Company")

Audited results for the period 19 March 2013 to 31 December 2013 and Notice of AGM

The Board of Directors of Golden Saint Resources Ltd is pleased to announce the audited results for the period 19 March 2013 to 31 December 2013.

Highlights

· Geophysical interpretation of our recently completed airborne surveys reinforces the prospectivity of our three project areas Baja, Moa and Tongo and allows us to focus on priority targets numbering in excess of 150 targets generated for investigation, with 38 targets ranked priority 1;

· From the first shipment of diamonds, 107 stones have been sent to GIA in Hong Kong for certification, grading and laser inspection with the process now expected to be completed by the end of May 2014; a second batch of rough diamonds from the first shipment was sent to Antwerp for assessment and the balance of the small melee rough will be held until we have a larger quantity to make manufacturing more cost efficient;

· Bulk sampling operations commenced on the Tongo and Baja projects where artisanal mining and exploration has identified areas with significant potential for alluvial diamonds within the Woa River and Sewa River drainage systems;

· Fulfilled ongoing corporate social responsibility by donating educational, building and recreational materials to the local communities within its area of operations;

· The Group's financial loss of USD 2.874 million for the financial period comprise non- recurring expenses of USD 1.267million related to the costs of Admission to AIM and USD 2.091 million related mainly to exploration and administrative costs. These costs were offset by foreign exchange gains of USD 0.322 million and the waiver of intercompany and director loan of USD 0.162 million;

· Initial capital investments amounting to USD 130,000 were made for the purchase of a diamond washing plant for its small scale alluvial mining projects.

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, Laboucher Road, South Perth WA6151 on 12 June 2014 at 11:00am (WST) and 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 period 19 March 2013 to 31 December 2013.

For further information please contact:

Executive Chairman's Review

Overview

I am pleased to report that since the listing of the Company on AIM of the London Stock Exchange in July 2013, the Company has continued to advance its diamond and gold development strategy with considerable success in its three exploration sites in Tongo, Baja and Moa.

The Company has achieved significant milestones in its exploration activities and with the results from the completed high resolution airborne magnetic and radiometric surveys, we have identified structural gold and kimberlite targets for future exploration programs.

 In line with our goal to achieve near term revenue, the Company in November 2013 made its first shipment of approximately 400 carats of uncut, gem quality diamonds from Sierra Leone to Perth. 107 diamonds from this shipment are near their completion of being cut, polished and certified and it is expected they will be offered for sale in the 2014 financial year. During the period under review, the Company also completed the renovation of its local office at Lumley Beach in Freetown and invested in a portable washing plant for its initial exploration in the identified areas within the Moa River and Sewa River drainage systems.

Financial review

The audited financial results of the Group for the period 19 March 2013 to 31 December 2013 reflect the early stages of the mining operations focused on alluvial mining and exploration activities, including the completion of the airborne surveys for its three exploration licence areas in Sierra Leone. 

The Group's financial loss of USD 2.874 million for the financial period comprise non- recurring expenses of USD 1.267 million related to the AIM listing expenses and USD 2.091 million related mainly to exploration and general administrative costs of a corporate and management level. These losses were offset by foreign currency exchange gains of USD 0.322 million resulting from the strength of the British Pound against the United States Dollar and the full waiver of intercompany and director loan of USD 0.162 million pursuant to the AIM listing document.

Initial capital investments amounting to USD 130,000 were made for the purchase of diamond washing equipment for small scale alluvial mining projects. As at the end of the financial period, the first shipment of diamonds were in the final process of being cut, polished and graded. They have been accounted for as inventory in the Group's financial statements as at 31 December 2013.

At 31 December 2013, the Group has USD $2.366 million available for continuing exploration and working capital purposes.

Board and Senior Management Changes post 31 December 2013

The Company appointed Mr Simon Marcus Lawton to the Board of Golden Saint Resources Ltd as an independent Non- Executive Director with effect from 28 February 2014. Mr Lawton will also chair each of the Audit Committee, the Remuneration Committee and the AIM Rules Compliance Committee. Mr Lawton 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 Anthony Hamilton for his contributions to the Company to 31 January 2014 when he resigned from the Board for personal reasons. 

The Company appointed Ms Mona Sulaiman as senior geologist with effect from 10 April 2014. Ms Sulaiman will report to the Board and will lead the geological team at Golden Saint to advance the exploration programme within the license areas.

Ernst Gbappi was appointed as chief resident geologist with effect from 3 April 2014. Mr Gbappi will look after geological project responsibilities and will work alongside Ms Sulaiman to advance the exploration programme within the license areas.

Mr Nicholas Burn, the group's CEO and Chief Geologist submitted his resignation on 2 April 2014 and his resignation was accepted by the board. The Board intends to appoint an appropriate replacement CEO in due course, in the interim, the CEO responsibilities will be taken over by the Executive Chairman Cyril D'Silva. He will be assisted on the ground by Mr Ernst Gbappi, the company's newly appointed chief resident geologist in Sierra Leone.

Corporate Social Responsibility

In its efforts to continually invest in the local communities within its area of operations, the Group, in partnership with one of the country's leading non- governmental organizations, Street Child of Sierra Leone, donated educational, building and recreational materials to the Baja schools community to boost quality education for the people. The gesture was not only well received by the Baja Chiefdom and the Ministry of Education in the Bo District but it made history in Sierra Leone as no mining company has previously fulfilled its corporate social responsibility when it was yet in the exploration stage.

Outlook

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. On 14 March 2014 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

Geology

The diamond fields of Sierra Leone cover most of the Eastern Province and eastern half of the Southern Province where the GSR exploration licences are located. Diamonds occur in their primary form in kimberlite pipes or dykes intruded along fissure shears, such as those worked at the Koidu kimberlite mine. The Koidu kimberlite dykes, blow outs 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 in much lower concentrations than primary or pipe diamonds, but are commonly larger and, in general, of considerably higher quality.

Identified Archaean hosted gold deposits, including known lode gold occurrences within the Man Shield, are largely associated with ductile deformation and high strain zones adjacent to or within crustal scale shear zones in highly deformed greenstone belts and at the contacts between the granite and greenstone, such as the nearby Baomahun deposit.

Gold mineralisation in Sierra Leone also occurs as alluvial gold, which is widespread within the river and stream courses across the country, particularly in the region of the Kangari Hills - Sula Mountains and the Kambui Hills, the southern extent of which fall within the Moa licence area.

Exploration

The ongoing exploration strategy for both diamonds and gold is to (1) identify the regional shear structures beneath the transported cover where potential diamondiferous kimberlite has been located, (2) identify hard rock gold deposits, in structures that may have acted as traps or conduits for hot, mineralising fluids within or associated with greenschist and amphibolite metamorphic facies lithologies , and (3) 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.

Exploration activities since listing in July 2013 have included acquisition of high resolution satellite imagery, desk top studies, mobilisation of airborne contractors to Sierra Leone, airborne magnetic and radiometric surveys over all three project areas , interpretation of geological data, geological mapping, geochemical sampling, sample processing, and upgrading access roads in preparation for further exploration and mining activities.

The 5,405 line km geophysical survey was completed over an area of approximately 340 km2 covering the three projects on a 100 metre line spacing and at a mean terrain clearance of 100m. Subsequent to period end, interpretation of this data by our independent geophysical consultant has highlighted the significant prospectivity of all titles and identified numerous targets for follow-up.

This Phase 1 exploration is continuing on through the West African 'dry season' over the three project areas .

Tongo

At the Tongo Project our high priority targets are (1) structural trends under transported cover consistent with the regional structures hosting kimberlite dykes in the Tongo NNE trending structural corridor, and (2) alluvial resources draining the Tongo kimberlite field.Exploration completed in 2013 over the tenement area included:

· Heavy Mineral ('HM') stream sediment samples on first and second order drainages

· trenches

· regional pit samples (1km x 1km spacing)

· regional scale mapping

· airborne magnetic/radiometric survey

Analytical results from this program are expected in the 2014 financial year. Indicator mineral sorting results from the preliminary and restricted pit sampling program (13 pits) undertaken in early 2013 have finally been received from SGS Laboratories ("SGS") /The MSA Group ("MSA) in South Africa, with indicator minerals recovered from four pits within the northern portion of the tenement. Kimberlitic ilmenite was recovered from one site and this area will be one focus of future exploration.

Baja

At Baja we are targeting (1) ) structural trends under transported cover consistent with the regional structures hosting kimberlite dykes in the NNE trending structural corridor that has extended from the neighbouring Tongo field, (2) unexplained historic diamond anomalies within the property, and (3) alluvial resources in the Sewa River and associated terraces.

First phase field exploration activities on the Baja project are ongoing with the exploration team undertaking regional stream sediment sampling, mapping and geochemical sampling within priority areas defined by these interpreted structures.

Moa

The Moa project covers a portion of the NE trending Kambui Hills greenstone belt and surrounding granite/gneiss terrain, and is considered highly prospective for gold mineralisation located in structural settings within the greenstone belt. Targets are (1) gold mineralisation associated with the Kambui Hills greenstone belt, (2) alluvial gold and diamond resources within the Moa river drainage.

Initial interpretation of the airborne magnetic data has identified strong WNW trending structures beneath the transported cover that crosscut the greenstone and gneissic lithologies to form potential sites for gold mineralisation as well as kimberlite intrusion. These structures appear to be part of a regional trend that extends from the known diamondiferous kimberlite region of Grand Cape of Liberia through to the Zimmi diamond fields of Sierra Leone.

The forthcoming Moa program will involve stream sediment sampling, mapping and soil sampling for gold within the Kambui Hills schist belt.

Plant

In December 2013, the Company acquired a portable diamond wash plant for USD 130,000 for bulk sampling on the Tongo and Baja projects where artisanal mining and exploration has identified areas with significant potential for alluvial diamonds within the Woa River and Sewa River drainage systems. The washing plant is currently in transit to Sierra Leone and will utilised on the prospective areas intepreted from the airborne survey and satellite imagery.

The washing plant is currently in Sierra Leone after clearing customs. The installation and commissioning of the plant by qualified technicians is expected to be completed by end May 2014. Once operational, it will be utilized on the prospective areas interpreted from the airborne survey and satellite imagery.

Diamond shipment

GSR's first shipment of approximately 400 carats of uncut, gem quality diamonds was exported from Sierra Leone to Solid Gold Jewellers Pty Ltd ("Solid Gold") in Perth. The uncut diamonds within the shipment vary in size from 1 carat up to 13.9 carats and comprise white diamonds, brown diamonds and yellow diamonds.

Solid Gold Jewellers is one of the most recognised jewellers in Western Australia with experience in all levels of the supply chain bringing rough diamonds through to the retail polished stone market, providing expertise in the valuation of rough diamonds; the assessment of rough diamonds for cutting and polishing, and the management of the processes to bring the rough to a marketable condition.

Solid Gold has advised that 94 Diamonds from this first shipment have been sent to GIA in Hong Kong for certification, grading and laser inspection and they are now expected to complete the process by the end of May 2014. The balance of the first shipment will be treated in two parts with the larger coloured stones going to Antwerp for assessment and the small melee rough to be retained until Golden Saint has a larger quantity to make the manufacturing more cost effective.

All technical information contained within the 'Operational Update' is as previously announced.

Note * - a glossary of technical terms below

Consolidated Statement of Comprehensive Income for the period 19 March 2013 to 31 December 2013

Consolidated Statement of Financial Position as at 31 December 2013

Consolidated Statement of Cash Flow for the period 19 March 2013 to 31 December 2013

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 period 19 March 2013 to 31 December 2013 were authorised for issue in accordance with a resolution of the Directors on 14 May 2014.

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 19 March 2013 to 31 December 2013.

The consolidated financial statements have been prepared on a historical cost 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 2013, 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 remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured 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.

The Directors believe that, with due consideration to the Group's future plans, 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 19 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 7 for further details).

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 7 for further details).

1.5 New and amended standards and standards issued but not effective

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

1. IAS 32 - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014)

2. IFRS 9 - Financial Instruments (effective for annual periods beginning on or after 1 January 2015)

3. Amendments to IFRS 9 - Mandatory Effective Date of IFRS 9 & Transition Disclosures (effective for annual periods beginning on or after 1 January 2015)

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of "currently has a legally enforceable right of set-off" and "simultaneous realisation and settlement."

The directors of the Company do not anticipate that the application of these amendments to IAS 32 will 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.

IFRS 9 Financial Instruments

IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial assets. IFRS 9 was amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for de-recognition.

Key requirements of IFRS 9:

- All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

- With regard to the measurement of financial liabilities designated as fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk or that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

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.

1.6 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 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; and

· 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.

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.

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.

 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 derecognition 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 recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

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

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

2. Net Operating Expenses

AIM listing fees related to the admission of GSR to the London Stock Exchange.

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

6. Segment Information

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

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.

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 400 carats of uncut, gem quality diamonds that have since been exported from Sierra Leone to Solid Gold Jewellers Pty Ltd in Perth. The uncut diamonds within the shipment vary in size from 1 carat up to 13.9 carats and comprise white diamonds, brown diamonds and yellow diamonds.

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 2013.

13. Intangible Assets

There was no impairment during 2013.

14. Subsidiaries

Details of the Company's subsidiaries at 31 December 2013 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:

GSR (Australia) Pty Ltd has losses of $581,202, while GSR Africa has losses of $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.

The share based payment was made to a related party - Mr Cyril D'Silva. Of the 378,750,000 ordinary shares issued at £0.12 on 1st July 2013, 145,068,099 of those shares (valued at £14.5m at the Placing Price when GSR was admitted to trading on AIM) which were issued at no par value to Aital System(s) Pte Ltd, a company wholly owned by Executive Chairman Cyril D'Silva and his nominees. The share award was as compensation for services rendered by Mr D'Silva in connection with the Company issuing £3.4m of new shares, net of expenses, on admission to AIM. There is a corresponding amount included in Costs of Capital.

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 $21,646, which represented the non-controlling interest's share of net assets in GSR Africa at that date.

In the subsequent half-year, the non-controlling interest's share of the losses of GSR Africa was $117,189.

These are the two components of the period end non-controlling interest position.

18. Trade and Other Payables

Trade payables are non-interest bearing and are normally settled on 60 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. Commitments and Contingencies

There are no commitments or contingencies.

20. Subsequent Events

On 19 November 2013, Golden Saint's first shipment of approximately 400 carats of uncut, gem quality diamonds was exported from Sierra Leone to Solid Gold Jewellers Pty Ltd ('Solid Gold') in Perth. The uncut diamonds within the shipment vary in size from 1 carat up to 13.9 carats and comprise white diamonds, brown diamonds and yellow diamonds.

Solid Gold has advised that 107 Diamonds from this first shipment have been sent to GIA in Hong Kong for certification, grading and laser inspection and they are now expected to complete the process by the end of May 2014. The balance of the first shipment will be treated in two parts with the larger coloured stones going to Antwerp for assessment and the small melee rough to be retained until Golden Saint has a larger quantity to make the manufacturing more cost effective.

21. Related Party Transactions

During the period to 31 December 2013, Golden Saint Australia Limited ("GSA"), a company related to GSR by virtue of common control, paid expenses totalling $671,693 on behalf of the Group. These were paid during GSR's start-up phase as a new company, before its operations were fully established, to facilitate GSR's listing on AIM, the Group's exploration activities in Sierra Leone, and ongoing overhead expenses. As at 31 December 2013, there is no balance owing from the Group to GSA.

On 1 July 2013, GSR acquired 75% of the share capital of GSR (Africa) from GSA. GSR provided equity consideration to GSA's shareholders] in the form of 378,750,000 GSR shares. 233,681,901 ordinary shares were consideration to Shareholders and 145,068,099 were consideration to Aital Systems Pte Ltd. Each of the shares issued had an assigned value of 0.12 pounds sterling, valuing the company acquired at 28,041,828 pounds sterling (or $42,647,134).

As part of the transaction to acquire the controlling interest of GSR (Africa) from GSA, a loan owed by GSR (Africa) to GSA was forgiven. This loan totalled $161,881.

During the period to 31 December 2013, a share based payment valued at $26,475,000, comprising 145,068,099 ordinary shares, was made to Aital Systems Pte Ltd, a company controlled by Mr Cyril D'Silva, a director of the company, and his nominees. This share based payment was compensation for Mr D'Silva's services in connection with the Company issuing new shares to raise operating capital.

During the period to 31 December 2013, fees totalling $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.

Fees of $10,229 were paid during the period to 31 December 2013 to CMIH Enterprises Pty Ltd, a company controlled by Mr Anthony Hamilton, a non-executive director of the Company during the period, in relation to professional services rendered.

During the period to 31 December 2013, fees totalling $17,110 were paid to David McDonald Legal, a company controlled by Mr David McDonald, a director of the Company, in relation to professional services rendered.

22. 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.

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 2013 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 (due to the fair value of currency sensitive non-trading monetary assets and liabilities). A positive amount in the table reflects a potential net increase in the consolidated statement of comprehensive income.

23. 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 2013, 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 2013; therefore profit or loss and equity would have not been affected by changes in the interest rate.

26. Parent Company Information

27. GSR (Africa) prior year information

28. Period Results

The financial report has been prepared for the period 19 March 2013 to 31 December 2013. Golden Saint Resources Limited was listed 19 July and the consolidated results reflect the operations for the period from incorporation to 31 December 2013. As a result there will be no comparatives available for the current period.

Glossary of Technical Terms

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