Kemin Resources Regulatory News (KEM)

18 June 2015

Kemin Resources Plc

('Kemin" or the "Company')

Preliminary Results for the Year Ended 31 December 2014

Kemin (AIM: KEM), a molybdenum and tungsten exploration and development company with substantial interests in Kazakhstan, today announces its preliminary results for the Year Ended 31 December 2014.

Highlights

· Completion of £2.05m fundraising in June 2014 to advance the work programme, and supportive strategic shareholder in place to support ongoing activities

· Drozhilovskoye and Smirnovskoye supported locally and included in State Programme on Accelerated Industrial Innovative Development (SPAIID)

· Progression of Competent Persons Report (CPR) to establish resources under JORC (2012). The final CPR results for both deposits are expected to be released in Q3 2015

· Investigation underway as to the possibility of a one million tonne per year pilot plant as a quick route to cash flow

· The company has also reviewed its ongoing cost commitments and as one of the cost-cutting measures undertaken it was decided that it was not in the Company's interests to retain the services of the joint broker Peat and Co. at the current time

The accounts for the year ended 31 December 2014 will shortly be available at the Company's website, www.keminresources.com, in accordance with AIM Rule 20.

The Annual General Meeting of the Company will be held at the offices of Gowlings LLP 15th Floor, 125 Old Broad Street, London, EC2N 1AR on 29 June 2015 at 11.30 am.

Commenting on the results, Sanzhar Assaubayev, the CEO of Kemin, said:

"Due to changing world demand and declining trends in the pricing of tungsten and molybdenum, the Company carried out a strategic review to ascertain the optimal approach to maximise returns from the development of its resources. This led to a delay in the previously anticipated timetable; however, we believe this approach will achieve better results in the long run.

"With the CPR in the final draft stages and anticipated for release in Q3 2015 the Company aims to move forward with a definitive feasibility study for Drozhilovskoye. This will enable the Company to look at a range of funding options prior to the development of the production plant anticipated to be completed to its first stage in 2016."

For further information, please visit http://www.keminresources.com or contact:

Chairman's Statement

2014 was a challenging year for the development of Kemin's molybdenum and tungsten deposits, Drozhilovskoye and Smirnovskoye, which are both located in North West Kazakhstan.

Molybdenum, which is primarily used for strengthening steel, has been hit hard by the lower demand for steelmaking by China and other large steel producers. At the beginning of 2013, the price for molybdenum oxide was $26,400/t and had fallen to $22,500/t by the commencement of 2014. This subsequently fell in early May 2015, to $17,500/t - a reduction of 34% since January 2013.

Similarly, from January 2013 to May 2015 the price of ferrotungsten has also fallen by 22%. Although both Kemin's deposits are predominately molybdenum ore, the potential tungsten concentrate's revenues add a major positive financial impact to the deposits.

Importantly, both Drozhilovskoye and Smirnovskoye have molybdenum grades that are superior to many other mines and the tungsten credits strengthen the economics of the deposits further. In addition to this, the Company will also benefit from the support of the Kazakhstan government, as both Drozhilovskoye and Smirnovskoye are included within its State Programme on Accelerated Industrial Innovative Development (SPAIID). We expect that this will lead to assistance in the construction of infrastructure and aid the Company with tax related incentives.

The Board expect molybdenum and tungsten prices to recover in the longer term given an improvement in the world economy. Overall, we remain confident that the demand for high quality steels (using molybdenum) will continue and much of that demand will come from China, the neighbour and trading partner of Kazakhstan. Kazakhstan and China already have well established railway networks that link both countries for cross border trading.

In order to gauge the options available to the Company, the Board has opened preliminary discussions directly with potential partners in China on how best to develop the projects and how to access markets for our molybdenum and tungsten concentrates. This work remains ongoing and further updates will be reported as progress is made. The Board has noted some encouraging early interest from Chinese participants in the molybdenum and tungsten industries.

The Board and I agree that the Drozhilovskoye and Smirnovskoye deposits provide a very compelling development opportunity with good grades, simple low strip ratio open pit mining and well located to the largest market for molybdenum and tungsten concentrates. The drop in the molybdenum and tungsten prices has encouraged us to make changes to the cut off grade we use in estimating our JORC resources, with a view to how the projects may be developed. However, our overall view of these projects has not waivered - Drozhilovskoye and Smirnovskoye are exceptional, long life deposits with significant exploration potential beyond the reserves and resources already identified. The Board are keen to progress the projects and are working closely with the Government of Kazakhstan on the financing of a potential pilot plant of 1Mtpa at Drozhilovskoye.

Finally, I would like to thank our staff and consultants who have worked diligently in progressing the technical work required to advance both Drozhilovskoye and Smirnovskoye deposits.

Chief Executive Officer's statement

Background to strategic review

A strategic review was considered prudent during a time of falling demand for steel and the inevitable fall in price of the commodities used to make specialty steels. The outcome of the strategic review resulted in a revision of Kemin's reserve and resource estimates using a higher cut-off grade. This was to ensure that the reserve and resource base provided a robust financial outcome in a time of low commodity prices. In addition, the cost base of the Company was reviewed to conserve cash resources during this developmental stage of the Company.

The intention of the strategic review was to prepare a reserve and resource statement that would ensure both deposits would remain profitable even with low commodity prices well into the future. This strategy is supported by known exploration targets, which indicate that with more drilling significant resources and ultimately reserves can be added to the current reserves and resources. This will extend the life of both deposits well beyond the current resource base.

Both the Drozhilovskoye and Smirnovskoye deposits are large, near surface ore bodies that allow simple open pit mining at low strip ratios. The Drozhilovskoye deposit is intended to be developed well before the Smirnovskoye deposit because the molybdenum and tungsten grades are higher than Smirnovskoye plus there is significantly more drilling and metallurgical test work completed at Drozhilovskoye.

The impact of the strategic review has delayed the development time line but this work was critical in ensuring a robust development strategy was put in place. The impact of remodelling the geological data of both deposits to reflect lower commodity prices and the development of supporting mining options has delayed the development time line by 9 months. Although this is disappointing, this work has been crucial in ensuring Kemin develops the deposits to maximise the value for its shareholders in a time of expected lower prices for molybdenum and tungsten.

As part of the finalisation of the strategic review Kemin engaged Venmyn Deloitte to prepare an independent Competent Persons Report (CPR) for Drozhilovskoye and Smirnovskoye deposits. As part of this process, Venmyn Deloitte also assisted Kemin by coordinating with both Datamine Pty and Eurus Mineral Consultants with studies relating to the mine plan and metallurgical test work. Datamine provided investigations into the optimum mining scenarios for both the Drozhilovskoye and Smirnovskoye deposits aimed at maximizing Net Present Values. Eurus Mineral Consultants completed an independent review of the metallurgical test work and proposed flow sheets for the mineral processing plants at Drozhilovskoye.

Mineral resource statement

The full CPR is currently in the final stages and is expected to be published in Q3 2015. This is expected to reclassify the resources under the JORC (2012) code from the previously reported GKZ classifications reproduced below.

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ('the JORC Code') is a professional code of practice that sets minimum standards for Public Reporting of minerals Exploration Results, Mineral Resources and Ore Reserves. The JORC Code provides a mandatory system for the classification of minerals Exploration Results, Mineral Resources and Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations in Public Reports. The current edition of the code was published in 2012, and moving to a JORC based classification is expected to have a number of benefits and is expected to much more clearly define the targets to be developed.

GKZ Resources for the Drozhilovskoye and Smirnovskoye deposits at the cut-off grade of 0.05% Mo were;

When Kemin's deposits are benchmarked against other molybdenum mining operations, our grades and large tonnages are superior to many other existing open pit molybdenum mines and deposits that are highlighted for future development.

Local support for our projects

During 2014, Kemin was also able to announce that its Smirnovskoye and Drozhilovskoye deposits have been approved for inclusion in the State Program on Accelerated Industrial Innovative Development (SPAIID). These assets have been identified as strategic mineral developments for Kazakhstan, and the Government will:

· Build infrastructure to connect Kemin's planned processing plant to the Bukhara-Ural gas pipeline, and will provide electricity, water and transportation networks

· Ensure regulatory approvals are issued in a timely manner. Additionally, the Government of Kazakhstan has enacted broad legislative changes that will further increase state support for key mineral development projects including:

o Income tax exemptions for 10 years;

o Land tax exemptions for 10 years;

o Property tax exemptions for 8 years;

o Reimbursement of up to 30 per cent of project capital expenditures;

o Guarantees to keep tax rates and state tariffs unchanged for period of 10 years

o Policies to allow investors to hire foreign staff for the period of construction without applying for labour quotas.

The impact of this support by the Government of Kazakhstan and the proposed legislative changes has further strengthened the investment case for both deposits and considerably reduced the risk and should aid the Company in receiving the necessary development permits in a timely manner. This is an important step forward for both deposits development prospects.

Looking forward

Following the conclusion of the CPR in Q3 2015, management expects to commission a definitive feasibility study for the Drozhilovskoye deposit initially, and anticipate that this will be completed during early 2016.

With the support of the Government of Kazakhstan, the Board is continuing to review the option of a pilot processing plant and mine of 1 million tonne per annum ("Mtpa") capacity as an initial early, quick start, investment option prior to the major investment required at the 5Mtpa operation at Drozhilovskoye and then Smirnovskoye. This provides a unique opportunity to:

· Test and improve enrichment technology;

· Establish a customer base;

· Define an efficient logistics chain to customers.

These discussions, whilst ongoing, were delayed during 2014 as part of the strategic review to ensure that a robust development scenario is in place for the 1 Mtpa prior to any finalisation of financing.

During 2014, Kemin investigated a number of options to work with Chinese companies involved in the molybdenum and tungsten industries. China is the largest consumer and processor of molybdenum and tungsten concentrates.

China offers a variety of options to Kemin in terms of off take agreements, potential joint venture partners who wish to supplement their access to molybdenum and tungsten concentrates and metals and mining companies producing molybdenum and tungsten. At this early stage, Kemin has conducted an initial scoping study to better understand its options in China and the interest of Chinese companies in doing business with Kemin. Kemin has been pleased by the initial interest shown by Chinese companies and looks forward to further discussions in due course.

Timeframe of development

Funding

To finance working capital, in June 2014, the Company completed a fundraising of £2.05m, gross, via a placement of 22,804,304 new ordinary shares. In addition, the Company continues to benefit from the support being provided by Amrita Investments Limited, which has provided a facility to draw funding to meet liabilities as they fall due.

The Company has sufficient cash flow facilities to meet its current obligations; it will assess its future funding requirements on finalisation of its plans, and is considering a number of options.

Financial performance review

The Consolidated loss attributable to Kemin Resource's shareholders in the twelve months ended 31 December 2014 was £818,000 (FY 2013: £3,092,000 loss), these costs relate to the ongoing administrative costs and capital costs in developing the projects. In 2013, the costs were much higher as they principally related to higher legal and professional costs associated with the reverse takeover. In addition a non-recurring adjustment was made for the share based payment arising as part of the reverse takeover of £2.6m. The strategic review conducted during 2014 as led to a significant reduction in ongoing head office costs.

Cash spend is tightly monitored against budgets and the limited capital expenditure program. The Company is continuing to spend resources on capital development and aiming to control all costs within tight financial limits. In the current year £1.16m was spent on development of the projects, resulting in total capital spent to date on both projects of £2.8m.

Principal risks & uncertainties

The principal risks exposed to the Company are:

The key statistic is the level of resources, which has been measured by an independent consultancy.

Sanzhar Assaubayev

Chief Executive Officer

Notes

5. Intangible Assets