Kodal Minerals Regulatory News (KOD)

 4 September 2015

Kodal Minerals plc

("Kodal Minerals" or the "Company" or the "Group"")

Final results for the year ended 31 March 2015

HIGHLIGHTS

The year ended 31 March 2015 has been a one of mixed results for Kodal Minerals plc; operationally much has been achieved, however the capital markets were challenging places for most junior mining companies and the Company has been under pressure along with the rest of the sector. In addition the price of iron ore has continued to fall thus negatively impacting the potential of the Group's titanomagentite and phosphate deposit in southern Norway referred to as the Kodal Project. The Company has responded to the change of circumstances by pegging new exploration ground at very low cost and taking advantage of lower prices for exploration services.

Grimeli Project

· In July 2014, the Group was granted three exploration licences over 30 sq km and covering three historic copper mines. The Company refers to these licences as the Grimeli Project.

· A ground based geophysics programme (magnetics) was completed to support and expand upon results from a survey completed by the Norwegian Geological Survey ("NGU") in about 1980. In total the survey yielded 3,200 metres of anomalous results spread over multiple horizons.

· Underground channel sampling was carried out in the old underground mines. Very encouraging results were obtained including 7.24% copper over 1.74 metres.

· Given the positive results from the geophysics and channel sampling a 2,000 metre diamond drilling programme was started in February 2015.

· The highest grades returned were 8.39% Copper and 6.98% Zinc. This was the first time zinc mineralisation had been encountered.

Kodal Project

· The price of iron ore (62% Fe) halved from US$112 per tonne in March 2014 to US$57 per tonne in March 2015, and has continued to fall since, reaching a low of US$47 per tonne.

· In light of the fall in iron ore prices and in the absence of market expectations for it to recover significantly, the Company has decided to cease all major expenditure on the Kodal Project while continuing to expend very limited funds to progress the planning process.

· During the year work on the Kodal Project was focused on progressing the low cost environmental and planning processes. Environmental baseline studies were completed and public meetings were held in both Larvik and Andebu municipalities.

· The Company is currently working with the municipalities of Larvik and Andebu to approve the format of the Environmental and Social Impact Assessment ("ESIA").There is no prescribed duration for this process and so the timing of the approval is uncertain.

· In March 2014 the Group was granted 7 new exploration licences by the Norwegian Directorate of Mining covering an area of nearly 20 sq km around the Kodal Project, including an area in which a geophysical anomaly has historically been reported. Mapping of the entire exploration licence area was completed and two new areas of mineralised outcrop were identified.

Financial Highlights

· Following an impairment review triggered by the dramatic fall in the iron ore price, the carrying value of the Kodal Project was written off in full resulting in an impairment charge of £3,412,000.

· Including the Kodal Project impairment charge, for the year to 31 March 2015 the Group showed a loss of £3,960,000 (2014: loss of £231,000).

· At 31 March 2015, the Group had cash balances of £307,000 compared with £1,501,000 at 31 March 2014.

· After the end of the financial year, in May 2015, the Company raised £0.4 million (before expenses) by way of a placing of 222,222,222 ordinary shares at 0.18 pence.

STRATEGIC REPORT

In early 2014, the Board made the decision to acquire additional mineral exploration licences in Norway. This decision was based upon the realisation that the planning process for the continued development of the titanomagnetite and phosphate deposit in Southern Norway (referred to as the "Kodal Project") was going to be slower than anticipated coupled with a degree of apprehension about the future of the iron ore price. The decision to stay in Norway was relatively easy as the Company's operations were already established there and early research had identified possible areas of interest. The Company started a review of publicly available information and arrived at a shortlist of projects which were visited by the Company's technical staff in spring of 2014. An area in Western Norway covering former copper mines, referred to as the Grimeli Project, was identified as being the most prospective, and the Group applied to the Norwegian Directorate of Mining for three exploration licences covering this area. The licences were acquired in June 2014 at a cost of approximately £300.

By mid October 2014, the historic copper mines covered by these licences had been accessed, surveyed and channel sampled and a surface magnetic survey had been completed. The results from this were announced in early November 2014. The Company was excited to be able to announce a best channel result of 7.24% copper over 1.74 metres along with three other results between 4% and 5% copper. These excellent results were very encouraging and the Company committed to a 2,000 metre diamond drill programme to test a number of targets for possible mineralisation.

Kodal Project impairment

Unfortunately the price of iron ore has fallen dramatically during the year from US$112 per tonne (62% Fe) in March 2014 to US$57 per tonne in March 2015, reaching a low of US$47 per tonne. The preliminary design for the Kodal Project was for a mine producing six hundred thousand tonnes of titanomagnetite per year and, at the time of listing Kodal Minerals plc in December 2013, it was anticipated that revenue from iron ore sales would contribute approximately half of the project's revenue. The fall in price has eliminated this income stream and rendered the overall project uneconomic at current prices. Following an impairment review of the Kodal Project, the directors have determined to impair the carrying value of the project resulting in a charge to income in the year to 31 March 2015 of £3,411,664. The Group will not commit substantial further funds to the development of the Kodal Project given the current market conditions.

The extraction licences at Kodal do not expire until July 2023 and the Company may be able to renew them for a further 10 years. The Company will continue to monitor both iron ore and phosphate prices and will recommence development of the Kodal Project once conditions support that decision. In the meantime, the Company believes the Kodal Project remains one of the most significant and technically advanced phosphate resources in Europe.

Grimeli Project

The Grimeli Project was the focus of the majority of the Group's activity during the year and almost all of the exploration work.

In July 2014, the Group was granted three exploration licences by the Norwegian Directorate of Mining covering 30 sq km. The Company refer to these licences as the Grimeli Project.

Size and Location

The three contiguous licences (Grimeli 1 - 3) cover a total of 30 sq km and also cover three previously producing copper mines. The nearest substantial town is Førde, a municipality in the county of Sogn og Fjordane in western Norway which is approximately 50 km to the east of the project area. The licences are approximately 130 km north of Bergen.

The exploration licences are valid for seven years to July 2021.

Historic Production

The licence area covers three former copper mines:

a. Grimeli mine: The Grimeli copper mine was in production over three periods from 1759-1776, 1854-1883 and 1906 -1920. The underground workings extend over two areas, the first approximately 200m vertical by 200m horizontal and the second about half those dimensions according to a mine plan dated 1929. At this stage it is thought that the Grimeli mines produced a hand cobbled high grade copper ore which was exported to England for smelting.

b. Vågendal mine: Vågendal was in operation as an underground copper mine between 1871 and 1880.

The Grimeli and Vågendal historic copper mines are located on opposite sides of a long hill forming a peninsular. The Grimeli copper mines, the larger of the two mining areas, is located within three hundred metres of the coast while the smaller Vågendal mine is located 7 km away to the east. The Company has traced a surface gossan for 1.6 km east toward Vågendal from Grimeli, encountering several historic test pits in the process before losing the trace under superficial cover.

The Company explored all the accessible mine openings at Grimeli and Vågendal. It appears the mineralisation was typically 1.5 to 3.0 metres wide.

Previous Works and Reports

The Company has located a number of historic reports in Norwegian and German most of which have been translated. While of interest and of some help in approximating the location of some physical features, the reports were on the whole of limited use due to either their age and lack of relevant geological or engineering comment or the fact that the more recent ones were completed after production had ended. No credible grade or production figures were obtained.

Of more interest was work completed by the Norwegian Geological Survey (NGU) in 1979 and 1981. The NGU conducted geophysical surveys east from Grimeli and west from Vågendal but apparently did not connect the two surveys, with some 5 km of untested ground between them.

Geology

The mineralisation at Grimeli is hosted within the Solund-Stavfjord ophiolite complex and varies between massive sulphide and disseminated mineralisation along a number of closely associated stratiform horizons, with chalcopyrite, sphalerite and pyrite being the principal sulphides. At the time of acquiring the licences the Company believed there was potential for the recovery of both copper and zinc from the area although there was no evidence of zinc mineralisation in the mine spoil dumps.

Exploration Programme and Results

A ground based geophysics programme (magnetics) was completed over the most accessible parts of the Grimeli Project in September/October 2014. The results supported and expanded upon results from a survey completed by the Norwegian Geological Survey in about 1980. In total the survey yielded 3,200 metres of anomalous results spread over multiple horizons

Underground channel sampling was carried out in the old underground mines as announced in November 2014. Very encouraging results were obtained including:

Table 1: Channel sample results at Grimeli.

Given the positive results from the geophysics and channel sampling, a 2,000 metre diamond drilling programme was started in February 2015. The results of this programme were announced in March 2015 and August 2015. Zinc mineralisation was encountered for the first time and the highest grades returned were 8.39% Copper and 6.98% Zinc (included within the intersections below).

The results included the following intersections:

Table 2: Channel sample results at Grimeli

A total of 21 holes were drilled from two groups of locations. The first group are adjacent to the access road to the site. The second group are on a plateau approximately 200 vertical metres above the first location. The drilling positions were limited by rugged topography.

The results listed in Table 2 above represent a previously un-mined, vein-like massive sulphide occurrence which has been defined over 150 metres strike and remains open in all directions. This occurrence is positioned adjacent to the old mining areas and has no surface expression. This confirms the potential for blind ore bodies nearby the former mines.

As part of the drilling programme the Company re-established a vehicle track up the mountain and now has limited four wheel drive access to the plateau rising from about 200 metres above sea level.

Future Plans

The recently completed drill programme on the Grimeli Project was designed to test a number of horizons defined by historic geophysics and in the process provide the Company with information to guide future exploration efforts. Overall the programme was successful with the earlier holes locating a new high grade copper and zinc occurrence and the later drilling higher up the mountain returning wide intersections of iron sulphides which had negligible copper or zinc. However, the current geophysics does not appear to distinguish between the high grade copper zinc zones and the non-economic disseminated iron sulphides. The Company is currently assessing alternative techniques that may assist in targeting future drilling locations.

Kodal Project

Description of the Kodal Project

The Kodal Project is located in the Vestfold county of Norway and the boundary between the Andebu and Larvik municipalities crosses the project area. It is a phosphorus (P) and iron (Fe) project and is situated in the Lågen valley, 20 km north of Larvik. The Kodal Project forms part of the Vestfold-Ringerike Graben geological structure and is located approximately 85 km south-west of Oslo.

The Kodal Project area is covered by three contiguous extraction licences issued by the Norwegian Directorate of Mining which expire in July 2023.

The Kodal Project's mineralised zone has been subject to two phases of historic exploration and geological modelling since the 1960s. All historic exploration was undertaken by Norsk Hydro ASA ("Norsk Hydro"), a part state owned Norwegian energy and resources group.

The first phase was completed between 1960 and 1963 with 40 shallow (less than 50 metres) diamond drill holes over 20 profiles with subsequent follow-up drilling between 1974 and 1975 when an additional 20 diamond drill holes were drilled. These additional holes are deeper, with depths ranging from 110 to 550 metres.

More recently, Kodal Minerals drilled seven diamond drill holes in 2012, comprising 918 metres of drilling designed to verify historical drill data. A summary of drilling undertaken on the Kodal Project is set out in Table 3 below.

Table 3: Drill results at the Kodal Project

Subsequent to drilling, Kodal Minerals undertook re-logging of all available historic core in 2013 and captured geological, mineralogical, alteration and geotechnical characteristics including core preservation, sampling and core recovery.

Historic data has been validated in three ways:

· CSA Global (UK) Ltd ("CSA") has validated hard-copy grade data versus the digital data supplied by Kodal Minerals.

· Kodal Minerals has undertaken a twin drilling programme, the results of which have been assessed by CSA.

· Kodal Minerals has undertaken re-sampling and analysis of a portion of the available historic core using current methods. This data has been assessed by CSA.

Historical mineral processing and metallurgical test work has been completed on samples obtained from the Kodal Project and reported as part of historical feasibility study work completed by Norsk Hydro in the 1970s. In addition, preliminary test work was completed by Kodal Minerals in 2013 on a bulk composite sample (23kg) of drill core.

The Kodal Project has a JORC compliant total Indicated Resource of 14.6 million tonnes (Mt) at 2.26% P (5.18% P2O5) and 24.12% Fe with an Inferred Resource of 34.3 Mt at 2% P (4.59% P2O5) and 20.38% Fe. Table 4 below sets out a summary of the Kodal Project resource by status.

Table 4: Summary resources at the Kodal Project by status

Exploration Permits

The Group holds seven exploration permits covering a total land area of 19.795 sq km which surround the three Kodal Project extraction licences.

These licences include a reported positive magnetic and gravity anomaly identified by ground geophysics. The Company has three reports detailing geophysics in the project area dated 1973, 1976 and 1983 by various authors including the Norwegian Geological Survey ("NGU").

Kodal Minerals has completed geological mapping of the entire exploration licence during the year and followed up with a limited number of ground magnetic lines to check the response.

Exploration Results

The surface mapping identified two areas of anomalous mineralisation which were previously unknown. Grade data to date has been obtained by using a handheld X-Ray Fluorescence unit ("XRF") to test samples of surface outcrop taken from the anomalous areas. Outcrop is limited and so these grades cannot be regarded as anything more than indicative.

The XRF grade of the Western anomaly sample is 7.8% P2O5 which is substantially higher than the JORC compliant Indicated Resource grade of 5.18 %P2O5.

A preliminary ground magnetic survey over the Southern anomaly revealed a 300 metre long magnetic high which is open to the east. No detailed dimensions are available at this stage. A laboratory assay grade from the outcrop was 3.1% P2O5 .

Environmental Baseline Studies

Environmental baseline studies were completed during the year. These studies covered all areas thought to be required by the Norwegian planning process and legislation. The areas of study were aquatic ecology, social baseline, community perception, fauna, recreation, forestry/agriculture land use, flora and vegetation and insects. The results have broadly been within expectations.

Change of Land Use Application

In 2013, based on the advice of local planning consultants, the Group submitted applications to the Larvik and Andebu municipalities (the two local municipalities in which the Kodal Project is located) for change of land use permission to allow mining operations to be undertaken. This planning route is typically available for small projects. Given the scale of the Kodal Project, the municipalities advised the Company that a more extensive process was required. This step in itself did not constitute a delay. Subsequently, the Company has been engaging with both municipalities to agree the format of the ESIA prior to it being submitted to a public review. If accepted then post review the Company has a defined list of requirements which, if satisfied, may lead to the granting of operational permits. There is no prescribed duration for this process and so the timing of the approval is uncertain.

During the year the Company held two public meetings as part of the planning process, one in Larvik and one in Andebu. Both were very well attended.

Future Capital Requirements

The Group will not commit substantial further funds to the development of the Kodal Project given the current market conditions. The extraction licences at Kodal do not expire until July 2023 and the Company may be able to renew them for a further 10 years. The Company will continue to monitor both iron ore and phosphate prices and will recommence development of the Kodal Project once conditions support that decision. In the meantime the Kodal Project remains one of the most significant and technically advanced phosphate resources in Europe.

Given the fall in iron ore prices the Kodal Project is not currently economically viable. Should iron ore prices recover to approximately US$130 per tonne or above the Board will evaluate the project and may restart development. Until that time there is no capital requirement at the Kodal Project.

Future Plans

The Company intends to retain the Kodal extraction licenses as they represent a very good option on world phosphate prices. They have low holding costs and are well located.

Financing

Following the end of the financial year the Company raised £400,000 (before expenses) from the issue of 222,222,222 ordinary shares of £0.0003125 in the Company at a price of 0.18 pence per share. The shares were placed with new investors and existing shareholders of the Company. The net proceeds from the placing will be used to continue exploration work at the Grimeli Project and for general corporate purposes.

Going concern and funding

The Group has not earned revenue during the year to 31 March 2015 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.

As at 31 March 2015, the Group held cash balances of £307,000. In May 2015, the Group raised a further £400,000 by way of a placing of new shares. The Group's cash balances at 31 August 2015 were £293,000.

The Directors have prepared cash flow forecasts for the period ending 30 September 2016. The forecasts include the unavoidable running costs of the Group and limited discretionary exploration and development expenditure. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meets its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising. However, further fund raising will be required at an appropriate time in order to complete the Grimeli Project and the Kodal Project. Accordingly, the financial statements have been prepared on a going concern basis.

Utilising key performance indicators ("KPIs")

At this early stage of its exploration and development activities, Kodal Minerals does not consider KPIs to be a relevant performance metric.

Outlook

In the light of the broad commodity sell off, it appears there may be a prolonged period of challenging conditions ahead for the Group. The Board has reacted to this by diversifying its project risk and will continue cautiously to progress its projects whilst continuing to appraise further low cost opportunities to create value. In light of the initial success at Grimeli Project, for example, the Group may apply for additional exploration licences in Norway or elsewhere.

The results from the work completed at the Grimeli Project are very encouraging. Multiple high grade results from 4% to over 8% seem to confirm the historic mines were very high grade by current standards. More importantly the discovery of a massive sulphide body with up to over 8% copper and almost 7% zinc show the project has exploration potential. The Company will reassess the geophysical data in the light of the drill results and consider how best to move forward.

Luke Bryan

CEO

3 September 2015

The Company's Annual Report and Accounts will be posted to shareholders shortly, including notice of the Annual General Meeting of the Company ("AGM"). The AGM will be held at the offices of Field Fisher Waterhouse LLP, 9th Floor, Riverbank House, 2 Swan Lane, EC4R 3TT on 29 September 2015 at 1.00p.m.  The Annual Report and Accounts incorporating the notice of AGM will shortly be available to view and download on the Company's website at www.kodalminerals.com.

Contact details:

Kodal Minerals plcLuke Bryan, Chief Executive Officer Tel: 020 3470 0470

Allenby Capital Limited, Nominated Adviser Tel: 020 3328 5656

Jeremy Porter/Nick Harriss

SP Angel Corporate Finance LLP, Financial Adviser & Broker Tel: 020 3470 0470

John Mackay

KODAL MINERALS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2015

The loss for the current and prior years and the total comprehensive income for the current and the prior years are wholly attributable to equity holders of the parent company.

KODAL MINERALS PLC

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2015

KODAL MINERALS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2015

Attributable to the owners of the Parent

KODAL MINERALS PLC

PARENT COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2015

KODAL MINERALS PLC

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2015

Cash and cash equivalents comprise cash on hand and bank balances.

KODAL MINERALS PLC

PRINCIPAL ACCOUNTING POLICIES FOR THE YEAR ENDED 31 MARCH 2015

The Group has adopted the accounting policies set out below in preparation of the financial statements. All of these policies have been applied consistently throughout the period unless otherwise stated.

Basis of preparation

The consolidated financial statements of Kodal Minerals Plc are prepared in accordance with the historical cost convention and in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the European Union ("EU") and in accordance with the provisions of the Companies Act 2006. The Company's ordinary shares are quoted on AIM, a market operated by the London Stock Exchange.

Going concern

The Group has not earned revenue during the year to 31 March 2015 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.

As at 31 March 2015, the Group held cash balances of £306,843. In May 2015, the Group raised a further £400,000 by way of a placing of new shares.

The Directors have prepared cash flow forecasts for the period ending 30 September 2016. The forecasts include the unavoidable running costs of the Group and limited discretionary exploration and development expenditure. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meet all its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising. However, further fund raising will be required at an appropriate time in order to complete the Grimeli Project and the Kodal Project. Accordingly, the financial statements have been prepared on a going concern basis.

Basis of consolidation

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

Unrealised gains on transactions between the Company and its subsidiaries are eliminated on consolidation. 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.

Discontinued operations

The Group reports the results of discontinued operations in the period in which they occur separately within the consolidated statement of income as "discontinued operations". All prior period consolidated statements of income are adjusted to report the results of the component within discontinued operations. In the consolidated statement of cash flows the cash flows resulting from discontinued operations are presented separately from cash flows resulting from continuing operations with prior year presentation adjusted accordingly.

Foreign currency translation

Items included in the Group's consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates ("the functional currency"). The financial statements are presented in pounds sterling ("£"), which is the functional and presentational currency of the Parent Company and the presentational currency of the Group. End of year balances in the Group's Norwegian subsidiary undertakings were converted using an end of year rate of NOK 1 : £0.083780 (2014: NOK 1 : £0.099980).

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the reporting date and the gains or losses on translation are included in profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the original transactions. 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.

Deferred taxation

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax is realised or the deferred liability is settled.

Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the temporary differences can be utilised.

Cash and cash equivalents

Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand.

Other receivables

Other receivables are carried at amortised cost less provision made for impairment of these receivables. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets' carrying amount and the recoverable amount. Provisions for impairment of receivables are included in profit or loss.

Trade and other payables

Trade payables and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. These amounts are carried at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in profit or loss.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the costs of assets, over their estimated useful lives, using the straight line method, on the following basis:

Plant and machinery 4 years

Motor vehicles 4 years

Fixtures, fittings and equipment 4 years

Where property, plant and equipment are used in exploration and evaluation activities, the depreciation of the assets is capitalised as part of the cost of exploration and evaluation assets. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Investments in subsidiaries

Investments in subsidiaries are stated at cost less any provision for impairment. Where the recoverable amount of the investment is less than the carrying amount, an impairment is recognised.

Exploration and evaluation expenditure

In accordance with IFRS 6 (Exploration for and Evaluation of Mineral Resources), exploration and evaluation costs incurred before the Group obtains legal rights to explore in a specific area (a "project area") are taken to profit or loss.

Upon obtaining legal rights to explore in a project area, the fair value of the consideration paid for acquiring those rights and subsequent exploration and evaluation costs are capitalised as exploration and evaluation assets. The costs of exploring for and evaluating mineral resources are accumulated with reference to appropriate cost centres being project areas or groups of project areas.

Upon the technical feasibility and commercial viability of extracting the relevant mineral resources becoming demonstrable, the Group ceases further capitalisation of costs under IFRS 6.

Exploration and evaluation assets are not amortised prior to the conclusion of appraisal activities, but are carried at cost less impairment, where the impairment tests are detailed below.

Exploration and evaluation assets are carried forward until the existence (or otherwise) of commercial reserves is determined:

· where commercial reserves have been discovered, the carrying value of the exploration and evaluation assets are reclassified as development and production assets and amortised on an expected unit production basis; or

· where a project area is abandoned or a decision is made to perform no further work, the exploration and evaluation assets are written off in full to profit or loss.

Exploration and evaluation assets - impairment

Project areas, or groups of project areas, are determined to be cash generating units for the purposes of assessment of impairment.

With reference to a project area or group of project areas, the exploration and evaluation assets (along with associated production and development assets) are assessed for impairment when such facts and circumstances suggest that the carrying amount of the assets may exceed the recoverable amount.

Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 and include the point at which a determination is made as to whether or not commercial reserves exist.

The aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of the future net cash flows expected to be derived from production of the commercial reserves.

Intangible assets and impairment

Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives. Amortisation is charged so as to write off the costs of intangible assets, over their estimated useful lives, using the straight line method, on the following basis:

Software 3 years

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.

Equity settled transactions (Share based payments)

The Group has issued shares as consideration for services received. Equity settled share based payments are measured at fair value at the date of issue.

The Group has granted equity settled options. The cost of equity settled transactions is measured by reference to the fair value at the date on which they were granted and is recognised as an expense over the vesting period, which ends on the date the employee becomes fully entitled to the award. Fair value is determined by using the Black-Scholes option pricing model.

In valuing equity settled transactions, no account is taken of any service and performance (vesting conditions), other than performance conditions linked to the price of the shares of the Parent Company (market conditions). Any other conditions which are required to be met in order for the Director and an external consultant to become fully entitled to an award are considered to be non-vesting conditions. Market performance conditions and non-vesting conditions are taken into account in determining the grant value.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance or service conditions are satisfied.

At each reporting date before vesting, the cumulative expense is calculated; representing the extent to which the vesting period has expired and management's best estimate of the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous reporting date is recognised in the profit and loss, with a corresponding entry in equity.

Where the terms of the equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if the difference is negative.

Where an equity based award is cancelled (including when a non-vesting condition within the control of the entity or employee is not met), it is treated as if it had vested on the date of the cancellation, and the cost not yet recognised in profit and loss for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors, which has been identified as the Chief Operating Decision Maker. The Board of Directors is responsible for allocating resources and assessing performance of the operating segments in line with the strategic direction of the company.

Financial instruments

IFRS 7 (Financial Instruments: Disclosures) requires information to be disclosed about the impact of financial instruments on the Group's risk profile, how the risks arising from financial instruments might affect the entity's performance, and how these risks are being managed. 

Financial assets and financial liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

The Group's policies include that no trading in derivative financial instruments shall be undertaken.

The required disclosures have been made in Note 14 to the accounts.

Critical accounting judgements and estimates

The preparation of these consolidated financial statements in accordance with International Financial Reporting Standards requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the process of applying the Group's accounting policies.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year are addressed below.

Exploration and evaluation expenditure

The Group has capitalised all expenditure incurred in relation to exploration and evaluation of the Kodal Project and the Grimeli Project.

The Kodal Project is a phosphate and titanomagnetite deposit in southern Norway which the Group is treating as a project area in each period presented in the consolidated financial statements. The Company signed binding heads of terms in January 2012 to acquire the legal and beneficial ownership to licences which granted the right to explore and evaluate mineral resources in the Kodal Project area. Legal completion for this option agreement occurred in October 2012 and on 30 December 2013 the Company exercised its option to complete the licence acquisition. The Directors consider it appropriate to capitalise costs directly attributable to exploration and evaluation activities on the Kodal Project and has been doing so from January 2012 in accordance with the accounting policy for these costs. 

An economic model was prepared for the Kodal Project in 2013 based on a mine processing 1.6 million tonnes of ore per annum for the initial estimated 19 year life of the mine and using a discount rate of 10 per cent. Capital and operating costs were based on estimates and mine plans provided by third party consultants with levels of royalties and taxation based on current rates. Selling prices were based on prevailing market prices for each of the two products, iron ore and phosphate, adjusted for the specific properties of the sample Kodal Project ore. In the case of the iron ore, due to the presence of significant titanium in the ore, it was assumed that the realisable selling price would be at a very significant discount to the prevailing spot price, based on indications of the current selling price for similar ores in China and the additional transport cost that would be necessary. Under these assumptions, the economic model indicated that the project had a positive net present value ("NPV") of approximately US$250 million.

Since the model was prepared, the price of iron ore has fallen dramatically from a level of approximately US$112 per tonne in March 2014 to its current level of less than US$50 per tonne. As a result, the Board has undertaken an impairment review of the carrying cost of the Kodal Project by performing a value in use calculation.

The review identified that, although there are indications that would support the use of slightly lower capital and operating costs, the key sensitivity is to the fall in commodity prices and specifically the fall in the price of iron ore. Using iron ore and phosphate prices based on the prevailing prices, the model indicates that the project is uneconomic under current market conditions and accordingly the Board has determined to impair in full the carrying value of the Kodal Project. This has resulted in an impairment charge in the year to 31 March 2015 of £3,411,664 (2014: £nil). At 31 March 2015 the carrying value of the Kodal Project was £nil compared to £2,921,137 in 2014.

The Grimeli Project is an early stage exploration project which has generated positive initial drill results indicating the possible presence of further mineralisation. The carrying value of the project's exploration and evaluation assets at 31 March 2015 was £284,898 (2014: £nil) and the Board does not consider these assets to require impairment.

Going concern

The Group has not earned revenue during the year to 31 March 2015 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.

As at 31 March 2015, the Group held cash balances of £306,843. In May 2015, the Group raised a further £400,000 by way of a placing of new shares.

The Directors have prepared cash flow forecasts for the period ending 30 September 2016. The forecasts include the unavoidable running costs of the Group and limited discretionary exploration and development expenditure. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meet all its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising. However, further fund raising will be required at an appropriate time in order to complete the Grimeli Project and the Kodal Project. Accordingly, the financial statements have been prepared on a going concern basis.

Share based payments

The Group has recorded charges for share based payments of £88,555 (2014: £33,056).

For option based share based payments, management estimate certain factors used in the option pricing model, including volatility, exercise date of options and number of options likely to be exercised. If these estimates vary from actual occurrence, this will impact the charges and reserves.

Further detailed analysis of the critical judgements and estimates relating to share based payments is addressed in Note 5.

Tetra option agreement (see note 5)

An agreement between the Group and Tetra Minerals Oy ("Tetra"), granted to Tetra an option to subscribe for new shares in the Company. The maximum number of shares that are subject to the option is 714,285,714, corresponding to the number of shares that would be issued for a total amount of £5 million at 0.7 pence per share. The options vest and become exercisable only once the JORC indicated resource for phosphate minerals at the Kodal Project meets certain thresholds. Once vested, the options may be exercised by Tetra at a subscription price of 10p per share for a period of three years after the date on which each tranche vests. If Kodal Phosphate AS relinquishes or does not renew the Kodal Project extraction licences before any of the options vest then those options will lapse.

The Board has reviewed the Tetra option arrangements and determined that the fair value of the Tetra options is nil on the grounds that the option distribution is dependent on thresholds associated with the JORC phosphate mineral resources, the first of which, 90m tonnes, is well beyond the size of the current targeted ore body, which has a JORC mineral resource of 48.9m tonnes. Unless and until further exploration of the Kodal Project identifies a further potential ore body the likelihood of the thresholds being met is considered to be remote.

New standards and interpretations not applied

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

The Board anticipates that all of the pronouncements will be adopted in the Group's accounting policy for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Group's consolidated financial statements.

There are other standards in issue but not yet effective, which are not likely to be relevant to the Group which have therefore not been listed.

KODAL MINERALS PLC

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015

1. SEGMENTAL REPORTING

The operations and assets of the Group are focused in the United Kingdom and Norway and comprise one class of business: the exploration and evaluation of mineral resources. Management have determined that the Group has two operating segments being the Kodal Project and the Grimeli Project. The Parent Company acts as a holding company. At 31 March 2015, the Group had not commenced commercial production from its exploration sites and therefore had no revenue for the year.

The Group's accounting policy is to capitalise exploration and evaluation expenditure on the Kodal Project and the Grimeli Project in Norway. Consequently, the administrative expenses in the statement of comprehensive income reflect the administration costs necessary to run the Group and maintain its listing on the AIM market in the UK.

2. LOSS BEFORE TAX

 The loss before tax from continuing activities is stated after charging: