Kemin Resources Regulatory News (KEM)

6 August 2012

GMA Resources plc

("GMA" or the "Company")

Final Results for the year ended 31 December 2011

CHAIRMAN'S STATEMENT

A key decision was made in April of 2011 by the Board of Directors to conduct an independent geological review of the exploration results to date, at its Algerian subsidiary Enterprise d'Exploitation des Mines d'Or Spa ("ENOR") operating the Tirek-Amesmessa Concession in south-west Algeria.

This decision was taken after successive disappointing quarters of falling production. The most significant reasons for this were diminishing tonnes of higher grade ore plus falling recovery rates from the 'heap leach' ore. Poorer quality ore was compounded by increasing stripping ratios; the increasing amount of waste material required to be mined to access remaining gold ore at depth.

These operational issues caused great concern to the Board of Directors who took the view that unless there was a good probability of exploration success, the Tirek-Amesmessa Concession was not economically viable even at current relatively high gold prices.

Mr Phil Fillis, Principal Geologist (MSc, FAusIMM), Fillis Geological Services, at the request of the Directors undertook an independent geological review of the concession and concluded that:

·; GMA's systematic programme of exploration was appropriate and warranted due to wide zones of metasomatic alteration identified around the quartz veins.

·; The alteration zones were auriferous at low grades and indicated that the gold mineralising system was large and widespread over great widths and a strike length of at least 80kms.

·; The exploration programme at Amesmessa has been well defined and executed for the type of mineralisation.

·; Identification of alteration zones, followed by soil sampling and trenching identified new zones of gold mineralisation in the substrate. These methods worked well and this phase of the programme may be considered successful.

·; Follow-up reverse circulation drilling was appropriate given the results of the geographical size and amplitude of the soil geochemistry over the Aster anomalies.

·; The amount of drilling carried out has allowed GMA to build up a very clear picture of the style of mineralisation at Amesmessa.

·; To date drilling of the wide zones of metasomatic alteration has not identified economic mining widths of sufficient gold grades.

In summary, Mr Fillis confirmed that while there remains some probability that a substantial gold resource could be present at Tirek - Amesmessa, the likelihood of delineating such a resource is not obvious, nor indicated by the exploration results generated to date. Continued exploration within the Tirek - Amesmessa belt for a large tonnage gold resource of greater than 10 million tonnes he concluded must be considered a high risk venture.

Mr Fillis advised the Board to refocus exploration activities on opportunities that may offer a realistic chance of delineating small, shallow, low tonnage opportunities in the existing quartz veins similar to those currently mined as a higher priority.

By October 2011 it was evident that the grade of the mined ore at Amesmessa which had been falling considerably and consistently since 2009, together with an increasing strip ratio, had caused mining costs to rise. The revenue generated by the operation was unlikely to be sufficient to meet the obligations of ENOR, even taking into account current relatively high gold prices. GMA has invested £33 million in total in ENOR since inception and the Directors concluded that GMA could not continue to sustain the financial burden of this loss-making operation; with no confidence that there was an economic justification to continue without good exploration results.

By 31 December 2012, bond holders will be due principal and interest totalling approximately £6.9 million at the last balance sheet date. This future liability therefore gave little incentive for third parties to be attracted to GMA for current or future investment.

As a consequence of the Board's deliberations, an agreement in principle was reached with Sonatrach in December 2011 for the disposal of the Company's shares in ENOR to Sonatrach, subject only to approval by shareholders at a general meeting. By April 2012, GMA had completed the transfer of all its shares in ENOR, to Sonatrach RCH, the Algerian minority shareholder, for a symbolic 'one Dinar' of the Algerian currency. The Agreement with Sonatrach resulted in the complete withdrawal of GMA Resources from Algeria and in return Sonatrach and ENOR indemnified GMA against any past or future liabilities in regards to the mining operations at the Tirek-Amesmessa Concession. Following the disposal of the ENOR interest and the approval of the Company's investing policy at the general meeting of the Company held on 6 January 2012, the Company was classified as an investing company in accordance with Rule 15 of the AIM Rules for Companies and as such is obliged to make an acquisition(s) which constitutes a reverse takeover or otherwise have implemented its investing policy within 12 months from the date of the disposal, being 17 April 2013.

On 4 May 2012, the Company announced that it had signed a non-binding heads of agreement with a third party to acquire a company which, if completed, would result in a reverse takeover under the AIM Rules. In conjunction with the heads of agreement the same parties have also signed a loan agreement under which the vendor has agreed to advance up to £400,000 on an unsecured basis to provide ongoing working capital for the Company to cover day-to-day costs and certain of the costs of the proposed reverse takeover transaction. Interest of LIBOR plus 5% will accrue on the outstanding balance, payable on repayment of the loan, which will be on 27 May 2013 unless the directors of GMA withdraw from the transaction or breach certain covenants, whereupon the loan becomes repayable on demand.

Trading in the Company's ordinary shares was suspended pending completion of the reverse takeover transaction on 29 May 2012.

For the purposes of concluding the proposed reverse takeover transaction Ken Crichton and I are the only remaining directors of the Company. It is our belief that the counterparty with which GMA has signed the non-binding heads of agreement and loan agreement represents the best option available to protect and enhance GMA bond holders' and shareholders' interests.

Ralph Browning

Non-Executive Chairman

ENQUIRIES:

Consolidated statement of comprehensive income for the year ended 31 December 2011

Consolidated statement of financial position as at 31 December 2011

Consolidated statement of changes in equity for the year ended 31 December 2011

Consolidated cash flow statement for the year ended 31 December 2011

Cash and cash equivalents at end of period comprise:

Principal accounting policies

Nature of operations and general information

The Group's principal activity was that of gold mining, exploration and mine development in Algeria. GMA Resources plc is the Group's ultimate parent Company and as set out below, it reached an agreement to dispose of its only trading subsidiary during the year after which it became an investing company. It is incorporated in England and has its registered office at One America Square, Crosswall, London EC3N 2SG and its business address at Tower Business Center, Tower Street, Swatar BKR 3013, Malta. The shares of GMA Resources plc are quoted on the AIM market which is operated by the London Stock Exchange.

The financial statements for the year ended 31 December 2011 (including the comparatives for the year ended 31 December 2010) were approved by the Board of Directors on 3 August 2012.

Basis of preparation

General

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting. The Company's Auditors have reported on the 2011 financial statements. Their report on the group financial statements includes a disclaimer of opinion and an emphasis of matter in respect of going concern. Their opinion on the parent company financial statements includes an emphasis of matter in respect of going concern. The Auditor's reports are reproduced at the end of this document.

The Company's going concern position is described below.

The Group's consolidated financial statements are for the year ended 31 December 2011. They have been prepared in accordance with the accounting policies set out in the Report and Accounts.

The Group prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

The consolidated financial statements have been prepared under the historical cost basis. They are presented in UK Sterling and are rounded to the nearest thousand (£'000) except where otherwise noted.

Basis of preparation - disposal of interest in ENOR spa

On 19 October 2011, the board of directors announced that it had advised Sonatrach, the Algerian shareholder in ENOR Spa (ENOR), that it had taken the decision to withdraw from its participation as a shareholder of ENOR, the operator of the Amesmessa Gold Mine within the Tirek Amesmessa concession in Algeria.

On 7 December 2011, the Company confirmed that it was in discussions regarding the sale of its holding in ENOR to Sonatrach for a nominal consideration.

Further details of the agreement with Sonatrach were provided on 21 December 2011 when the Company announced that it had agreed in principle the terms of the disposal of its interest in ENOR to Sonatrach (the Disposal).

Pursuant to the Disposal, the Company, through its wholly-owned subsidiary, Gold Mines of Algeria Pty Ltd (GMA Australia), agreed to transfer its interest in ENOR to Sonatrach for one dinar (less than £1). The Disposal would be effected by way of a formal transfer and settlement agreement to be entered into by the Company, GMA Australia, Sonatrach and ENOR. The transfer and settlement agreement included the following additional agreed terms relating to the Disposal:

a. the parties agreed to formally terminate the shareholders' agreement relating to ENOR;

b. the Company and GMA Australia agreed to comply with all Algerian laws and regulations in force relating to the withdrawal of its operations from Algeria;

c. the Company and GMA Australia agreed to release ENOR and Sonatrach from any liability in relation to amounts owed to them by ENOR; and

d. Sonatrach and ENOR agreed to release the Company and GMA Australia from any historic and future liabilities arising under the shareholders' agreement and any guarantees such companies may have previously provided.

ENOR was the only trading asset of the Group, accounting for all its revenues in the year ended 31 December 2011. Consequently, the Disposal constituted a fundamental change of business under the AIM Rules and was conditional on the approval of Shareholders at a General Meeting of the Company held on 6 January 2012.

Kenneth Crichton and David Netherway (both directors of the Company) and Sahara Gold Limited gave irrevocable undertakings to vote in favour of the proposed at the General Meeting, in respect of their beneficial holdings totalling 170,781,624 Ordinary Shares in aggregate, which represented approximately 27.63 per cent of the Company's issued Ordinary Shares.

The resolution was duly passed at the General Meeting and the parties formally executed the transfer and settlement agreement on 17 April 2012.

The reasons for the Disposal are set out in the Chairman's Statement and include the falling grades of ore at Amesmessa and an expectation that the revenue generated by the operation would be insufficient to meet the obligations of ENOR.

The directors consider that the net assets of ENOR which are attributable to the Company meet the criteria of a disposal group as at 31 December 2011 ( Note 4 ). The disposal group has a net negative valuation of £6.3 million which will give rise to a gain of this amount in the next financial year, at the point control was lost.

In preparing the consolidated financial statements, the directors have had limited financial information with respect to ENOR. In the parent company balance sheet, the directors have fully impaired the investments in subsidiaries of £525,000 and all amounts due from subsidiaries on the basis that their recoverable amounts are deemed to be zero following the disposal of ENOR.

After the disposal of ENOR, the Company had principal and interest outstanding on Unsecured Convertible Loan Stock amounting to approximately £6.9 million, which is repayable on 31 December 2012 if it is not converted into Ordinary Shares before that date. These amounts have been classified as current liabilities.

Going concern

As at 20 July 2012, the Company had cash on hand of less than GBP 1,000, being the Company's only asset. At the balance sheet date the Group's liabilities exceeded its assets by £12,030,000 and those of the parent company by £5,699,000.

The Directors have signed a non-binding heads of agreement with a third party to acquire a company which, if completed, would result in a reverse takeover under the AIM Rules. In conjunction with the heads of agreement, the same parties have also signed a loan agreement under which the vendor has agreed to advance up to £400,000 on an unsecured basis to provide ongoing working capital for the Company to cover day-to-day costs and certain of the costs of the proposed reverse takeover transaction. Interest of LIBOR plus five per cent. will accrue on the outstanding balance, payable on repayment of the loan, which will be on 27 May 2013 unless the directors of GMA withdraw from the transaction or breach certain covenants, whereupon the loan becomes repayable on demand.

Although the reverse takeover transaction will not complete until after approval of these financial statements, the board continues to consider it appropriate to prepare the financial statements on the going concern basis. However, it acknowledges that at the time of approval of these financial statements, there remains a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern, namely the ability of the Company to complete the reverse takeover and to service its financial obligations (including loan stock repayment) as they fall due for at least the next 12 months.

New Accounting Standards and amendments

The Group has adopted the following new interpretations, revisions and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Group's financial statements:

·; IAS 24 "Related Party Disclosures" (amended) effective from 1 January 2011, adopted by the EU on 19 July 2010;

·; Annual improvements to IFRSs, containing amendments to IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 21, IAS 28, IAS 31, IAS 34, and IFRIC 13.

The adoption of these new requirements did not have any impact on the financial position or the performance of the Group.

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards applicable to the Group have been published but are not yet effective, and have not been adopted early by the Group.

IFRS 10 "Consolidated Financial Statements" effective from 1 January 2013, is not yet adopted by the EU. It introduces a new, principle-based definition of control which will apply to all investees to determine the scope of consolidation.

IFRS 13 "Fair Value Measurement" effective from 1 January 2013, is not yet adopted by the EU. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Standard clarifies that fair value is based on a transaction taking place in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. The principal market is the market with the greatest volume and level of activity for the asset or liability.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's consolidated financial statements once adopted :

IFRS 7 "Financial Instruments: Disclosures" - Derecognition, effective from 1 July 2011, not yet adopted by the EU

IFRS 9 "Financial Instruments" effective from 1 January 2015, not yet adopted by the EU

IFRS 11 "Joint Arrangements" effective from 1 January 2013, not yet adopted by the EU

IFRS 12 "Disclosure of Interests in Other Entities" effective from 1 January 2013, not yet adopted by the EU

IAS 1 "Financial Statement Presentation" - Other Comprehensive Income, effective from 1 July 2012, not yet adopted by the EU

IAS 19 "Employee Benefits" effective from 1 January 2013, not yet adopted by the EU

IAS 27 "Separate Financial Statements" (Revised) effective from 1 January 2013, not yet adopted by the EU

Summary of significant accounting policies

The principal accounting policies adopted by the Group are as follows:

Consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 31 December 2011. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies.

The assets and liabilities of subsidiaries comprising a disposal group at the balance sheet date and held for sale are reported separately in the balance sheet at the lower of carrying amount and fair value less costs to sell. Results for the year are reported in the consolidated statement of comprehensive income as a single line item as discontinued operations.

Segmental reporting

In identifying its operating segments, management follows the Group's core business. In the opinion of the Directors, the Company had one operating segment, being the exploration for, development of and production of gold in Algeria and the Group's Chief Operating Decision Maker, reviews financial information on this basis. After disposal of ENOR, the segment was that of investing.

The entity wide disclosure, and the actual segment disclosure in respect of revenue, profit and net assets are not presented as the directors have not had access to sufficient information from ENOR.

Foreign currency translation

Functional and presentational currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Company's functional currency and the Group's presentational currency is Sterling.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at the balance sheet date rates of exchange of monetary assets and liabilities denominated in foreign currencies, are recognised in profit or loss.

Group companies

The results and financial position of Group entities that have a functional currency different from the presentation currency are translated as follows:

·; Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;

·; Income and expenses are translated at average exchange rates where these approximate actual rates; and

·; All resulting exchange differences are recognised as a separate component of equity.

·; On disposal of a foreign operation the cumulative translation differences are transferred to the profit or loss as part of the gain or loss on disposal.

Revenue recognition

Revenue is the total amount receivable in the ordinary course of business from outside customers for the sale of precious metals when the significant risks and rewards of ownership have been transferred to the buyer, excluding VAT and local equivalents, when all of the following criteria have been met:

·; the product is in a form suitable for delivery and no further processing is required by or on behalf of the Group;

·; the quantity and quality of the product can be determined with reasonable accuracy;

·; the selling price can be determined with reasonable accuracy; and

·; the product has been despatched to a refiner and is no longer under the physical control of the Group.

Interest income is accrued on a time basis by reference to the principal outstanding and effective interest rate.

Impairment of assets

If indicators of impairment arise, an impairment review is performed. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. If the carrying value exceeds the recoverable amount the carrying value is reduced to its recoverable amount with the impairment recognised in the profit or loss.

Property, plant and equipment - mining assets

When it has been established that a mineral deposit has development potential, all directly attributable costs (direct and overhead) incurred in connection with the exploration and development of the mineral deposits are capitalised until either technical feasibility and commercial viability of extracting a mineral resource are demonstrable or the project is not considered economically viable. In the event of technical feasibility and commercial viability being ascertained, the capitalised costs are amortised over the expected life of the ore reserves on a unit of production basis. No amounts are included in inventory. Other pre-trading expenses are written off as incurred. Where a project is abandoned or is considered to be of no further interest the related costs are written off.

Property, plant and equipment - other

Property, plant and equipment is recorded at cost net of accumulated depreciation and any provision for impairment. Depreciation is provided to write off the cost of such assets other than land over their useful economic lives. The periods generally applicable are:

Buildings 12 years

Production machinery and equipment 3 to 10 years

Other equipment 3 to 5 years

Assets under construction are allocated to other depreciable asset categories and are amortised in accordance with the policy set out above, from the date that they are deemed to be complete or in respect of "mining assets", the date that commercial production is deemed to have been achieved. Land is held at cost and is not depreciated.

Leases

Finance leases are recognised as being those that transfer substantially all the risks and rewards of ownership. Assets held under finance leases are capitalised and the outstanding future lease obligations are shown in finance lease liabilities. The asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee. They are depreciated over the term of the lease or their useful economic lives, whichever is the shorter. The interest element (finance charge) of lease payments represents a constant proportion of the capital balance outstanding and is charged to the profit or loss over the period of the lease.

All other leases are regarded as operating leases and the payments made under them are charged to the profit or loss in the period on a straight line basis over the lease term. The Company does not act as a lessor.

Inventories

Consumables (Mine stores) are valued at the lower of cost and net realisable value less provision for obsolescence. Cost includes all expenditure incurred in bringing the product to its present location and condition and comprises the aggregate cost of direct consumables, direct labour and the attributable proportion of direct production overheads on a first-in first-out basis. Net realisable value is based on normal estimated selling prices less further costs expected to be incurred to completion and disposal.

Work-in-progress (the extractable gold contained on the heap leach pads) and the Bullion inventory are valued at the estimated net realisable value, being the estimated value of gold that can be extracted from the ore on the heap leach pads, less the remaining costs required to realise that value.

Financial assets

Financial assets of the Group consist of prepayments and receivables.

All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are recognised at fair value plus transaction costs.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade and other receivables and cash are classified as loans and receivables. Loans and receivables are measured subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in profit or loss.

Derecognition of financial instruments occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a Group of financial assets is impaired.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Financial liabilities

The Group's financial liabilities include bank loans, finance lease liabilities, convertible loan stock, bank overdrafts, trade and other payables.

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net of direct issue costs.

Subsequently, all financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in profit or loss. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to profit or loss on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in 'Finance costs' in profit or loss.

Trade payables are recognised initially at their fair value net of transaction costs and subsequently measured at amortised costs less settlement payments.

The unsecured convertible loan stock comprises both a liability and an equity component. The elements are classified in accordance with their contractual provisions. At the date of issue, the liability component is recorded at fair value, which is estimated using the prevailing market interest rate for a similar debt instrument without the equity feature. Thereafter, the liability component is accounted for as a financial liability in accordance with the above.

The residual is the equity component, which is accounted for as an equity instrument.

Upon conversion of loan note debt, a number of ordinary shares will be issued corresponding to the value of the loan note being converted and the agreed conversion value of the loan note. The corresponding carrying value of loan note liability and loan stock reserve are released, and the difference between these and the nominal value of the shares issued on conversion is recognised as share premium. Where the terms of the instrument are revised, the instrument is accounted for as a new instrument.

Income taxes

Current income tax assets and liabilities comprise those obligations to fiscal authorities in the countries in which the Group carries out its operations. They are calculated according to the tax rates and tax laws applicable to the fiscal period and the country to which they relate provided they are enacted or substantively enacted by the balance sheet date. All changes to current tax liabilities are recognised as a component of tax expense in the profit or loss.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amount of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

VAT

VAT that is recoverable is included to the extent it is considered recoverable by off-set against current and future tax liabilities calculated according to the tax rates and tax laws applicable to the fiscal period and the country to which they relate.

Equity

Equity comprises the following:

·; "Share capital" represents the nominal value of equity shares.

·; "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

·; "Share based payments reserve" represents equity-settled share-based employee remuneration until such share options are exercised.

·; "Loan stock reserve" represents the equity element of the Unsecured convertible loan stock 2009.

·; "Currency translation reserve" represents the differences arising from translation of investments in overseas subsidiaries.

·; "Retained earnings" represents retained profits and losses.

·; "Non-controlling interests" represent equity advances from the non-controlling shareholder together with its share of the profits or losses of the Group.

Provisions

Provisions, including mine restoration costs, are recognised and expensed when the present obligations arising from legal or constructive commitment resulting from past events, will probably lead to an outflow of economic resources from the Group which can be estimated reliably.

Share based employee compensation

The Group operates equity settled share based compensation plans for remuneration of its employees.

Directors, employees and consultants services received in exchange for the grant of any share based compensation are measured at their fair values. These are indirectly determined by reference to the share option awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (e.g. profitability or sales growth targets).

All share based compensation is ultimately recognised as an expense in profit and loss with a corresponding credit to other reserves - share based payments. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of shares options expected to vest. Non market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if fewer than originally estimated share options are ultimately exercised.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, up to the nominal value of the shares issued are reallocated to share capital with any excess being recorded as share premium.

Use of accounting estimates and judgements

Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgements and estimation is contained in the accounting policies and/or the Notes to the financial statements.

The disposal of the company's interest in ENOR is considered to give rise to a disposal group at the balance sheet date on the basis that the sale was highly probable at that date (Note 1).

Notes to the consolidated financial statements

1 Discontinued operations

The single line entry in the income statement for the post tax loss for the disposal group consists of the post-tax loss of ENOR for the year ended 31 December 2011.

The total assets and liabilities comprising the disposal group are as follows :

Cash flows attributable to the operating, investing and financing activities of the disposal group are not presented due to the directors not having access to sufficient financial information on ENOR.

2 Loss per share

The diluted loss per share does not differ from the basic loss per share as neither the exercise of share options, nor the conversion of the loan stock, would have the effect of reducing the loss per share and are therefore not dilutive under the terms of IAS 33.

3 Intangible assets

4 Property, plant and equipment

Included in production machinery and equipment are assets held under a finance lease arrangement.

5 Inventories

6 Trade and other receivables

7 Trade and other payables

8 Loans and borrowings

The current portion of the unsecured convertible loan stock together with accrued interest is repayable in full on 31 December 2012, if not converted before that date. Conversion is at the option of the holder at any time prior to 31 December 2012. The conversion price on the loan notes is between 2.25p and 5p.

The finance leases covered mining and power generation equipment in use at the Amesmessa mine and were secured on the relevant assets. Minimum lease payments under the finance leases and the present value of such lease payments are as follows:

9 Non-Sterling monetary assets and liabilities

The amounts below show the extent to which Group companies have monetary assets and liabilities denominated in functional currencies other than Sterling. The only significant non-sterling denominated monetary assets and monetary liabilities related to ENOR Spa whose functional currency is the Algerian Dinar.

10 Financial risk management objectives and policies

The Group's principal financial liabilities comprise unsecured convertible loan stock and other payables which are measured at amortised cost or fair value. Its principal financial assets comprise cash deposits in banks and other receivables which are all categorised as loans and receivables. These instruments arise from the Group's investing and borrowing activities. The Group is exposed to market risk by virtue of holding financial liabilities and assets. The Board reviews and agrees policies for managing the risks arising from the holding of these instruments, such as changes in interest rates and liquidity risks. The Group does not:

·; actively engage in trading of financial assets for speculative purposes,

·; buy or sell derivative securities or contracts, or

·; execute financial instruments or contracts to hedge its exposure to exchange rates or interest rates. The most significant financial risks to which the Group is exposed are described below.

a) Liquidity risk

The Group had £22,000 of net bank balances at the year-end (2010: £182,000). The Directors monitor cash flow on a monthly basis and at Board meetings. The ability of the Group to raise cash is discussed in detail in the "basis of preparation" section in respect of its impact on the going concern assumption and an expected reverse takeover transaction.

The table below summarises the maturity profile of the Group's financial liabilities at 31 December 2011 based on contractual undiscounted payments:

b) Interest rate risk

The Group has no floating rate obligations and thus the sensitivity of the Group to changes in base rate is minimal.

c) Credit risk

The Group's Sterling cash deposits are held with UK regulated financial institutions.

d) Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Management considers as part of its capital, the financial sources of funding from shareholders and third parties with an equity investment in the Group. These are analysed as set out below:

11 Fair value of financial assets and liabilities

A comparison by category of carrying values and fair values of the Group's financial instruments is set out below:

A deemed market interest rate of 20% per annum has been applied to the convertible unsecured loan stock in determining the fair value of embedded equity elements. The deduced value of the debt elements has then been discounted at 5% (deemed to be the risk free rate at the year end) to determine the present value of future outflows required to settle the obligations. As such, the carrying amount of the loan note liability is effectively the isolated debt element discounted to its fair values to take account of its maturity date.

12 Non-controlling interests / related party transactions

Movements on the balance with non-controlling shareholders are given below:

13 Cash flow adjustments and changes in working capital

The following non-cash flow adjustments and adjustments for changes in working capital have been made to the loss for the year to arrive at operating cash flow:

14 Events after the balance sheet date

On 7 December 2011, the Company confirmed that it was in discussions regarding the sale of its holding in ENOR spa to the Algerian minority shareholder, Sonatrach, for a nominal consideration.

Further details of the agreement with Sonatrach were provided on 21 December 2011 when the Company announced that it had agreed in principle the terms of the disposal of its 52 per cent interest in ENOR to Sonatrach (the Disposal).

Pursuant to the Disposal, the Company, through its wholly-owned subsidiary, Gold Mines of Algeria Pty Ltd (GMA Australia), agreed to transfer its interest in ENOR to Sonatrach for one dinar (less than £1). The Disposal would be effected by way of a formal transfer and settlement agreement to be entered into by the Company, GMA Australia, Sonatrach and ENOR.

ENOR was the only trading asset of the Group, accounting for all its revenues in the year ended 31 December 2011. Consequently, the Disposal constituted a fundamental change of business under the AIM Rules and was conditional on the approval of Shareholders at a General Meeting of the Company held on 6 January 2012.

On 17 April 2012, GMA had completed the transfer of its shares in ENOR, to Sonatrach RCH, its former joint venture partner. Following the disposal of the ENOR Interest and the approval of the Company's investing policy at the general meeting of the Company held on 6 January 2012, the Company is now classified as an investing company in accordance with Rule 15 of the AIM Rules for Companies and as such is obliged to make an acquisition(s) which constitutes a reverse takeover or otherwise have implemented its investing policy within 12 months from the date of the disposal.

15 Availability of report and accounts

Hard copies of the accounts will be posted to shareholders shortly and will be available from the Company's registered office, One America Square, Crosswall, London EC3N 2SG and for download from the Company's website www.gmaresources.co.uk in due course.

Parent Company balance sheet