Patagonia Gold Regulatory News (PGD)

29 September 2016

Patagonia Gold Plc

("Patagonia" or the "Company")

Half Yearly Financial Statements

Patagonia Gold Plc (AIM:PGD), the mining company with gold and silver projects in the southern Patagonia region of Argentina, Chile and Uruguay, is pleased to announce its unaudited interim results for the six months ended 30 June 2016. The Company will host a webcast and presentation today at 2.00 p.m. UK time on the interim results. See below for details.

Financial Highlights

Gross revenues of US$21.6 million for H12016 (1H2015: US$14.0 million), driven by improved production at Lomada and increased gold price

Net profit attributable to the Company of US$2.2 million (1H2015: net loss of US$5.8 million) as operating costs at Lomada significantly reduced

Operating Highlights 

Mining operations at Lomada ceased at end of May, although leaching of gold continues and production will continue until the year end

- Production of 16,889 of Au to the end of June 2016 (1H2015: 9,944 oz / FY2015: 21,521 oz)

- Cash costs reduced significantly to US$591/oz (1H2015: US$1,165/oz)

Development of the initial open pit mine at Cap-Oeste completed on time and within budget

- First ore already loaded on to the pad and first gold sales expected during October 2016

- Initial 24 month life of mine with ability to increase project life with the development of the two underground projects at Cap-Oeste and COSE

- Continued evaluation of the Cap-Oeste and COSE underground projects, with a view to them being developed as one operation

At La Manchuria JV options are being evaluated to realise cash flow and advance exploration

Exploration work continues across the Company's property portfolio, with first exploration works commenced in Uruguay

Corporate Highlights

In February, Company entered into an Earn-in Agreement with Trilogy Mining Corporation to acquire a 100% interest in two gold exploration projects in Uruguay

US$10 million financing completed in May to fund the development of the Cap-Oeste open pit mine and heap leach pad and to provide ongoing working capital

Christopher van Tienhoven, CEO commented: "The improved political and economic environment in Argentina has had a very positive effect on our business and has enabled us to significantly reduce operating costs and improve efficiencies. We are delighted that the initial open pit mine at Cap-Oeste is coming into production on time and within budget and the outlook for the second half looks promising. Our pipeline of projects and exploration targets, coupled with the more favourable economic climate, stands us in good stead to continue to grow the Company and create value for our shareholders".

The unaudited interims report for the six months ended 30 June 2016 will also shortly be available on the Company's website at www.patagoniagold.com.

Webcast Details

The presentation will be made available on the Company's website (www.patagoniagold.com) immediately prior to the webcast.

DATE: Thursday, 29 September 2016

TIME: 14.00 BST

WEBCAST: http://webcasting.brrmedia.co.uk/broadcast/57e3bbf7c8dedf816611137b

A recording of the webcast will subsequently be made available on the Company's website - www.patagoniagold.com.

About Patagonia Gold

Patagonia Gold Plc is a mining company that seeks to grow shareholder value through exploration, development and production of gold and silver projects in the southern Patagonia region of Argentina. The Company is primarily focused on three projects: the flagship Cap-Oeste/COSE project, the La Manchuria project and the Lomada heap leach project. Patagonia Gold, indirectly through its subsidiaries or under option agreements, has mineral rights to over 220 properties in several provinces of Argentina and Chile, and is one of the largest landholders in the province of Santa Cruz.

For more information, please contact:

Christopher van Tienhoven, Chief Executive Officer

Patagonia Gold Plc

Tel: +54 911 5278 6950

Richard Tulloch / Ritchie Balmer

Strand Hanson Limited (Nominated Adviser and Broker)

Tel: +44 (0)20 7409 3494

This announcement contains inside information.

Chairman's introduction

I am pleased to present Patagonia Gold Plc's ("Patagonia" or the "Company") unaudited interim report for the six months ended 30 June 2016.

Patagonia Gold has had a good start to 2016 following the recent economic and political changes in Argentina. The removal of export royalties on doré and restriction on imports, a more competitive exchange rate and a higher than projected gold price have had a positive impact on the Company, with revenues of US$21.6 million (1H2015: US$14.0 million) and a net profit attributable to the Company of US$2.2 million (1H2015: Net loss of US$5.8 million) for the first six months of the year.

Having reached the end of its pit life, mining at Lomada de Leiva ("Lomada") was suspended, as planned, at the end of May 2016. However, leaching of gold continues and will continue at least until the end of the year. It is important to note that Lomada has exceeded production targets on a consistent basis since the start of the year.

In May, the Company successfully concluded a US$10.0 million financing to commence the development of the open pit mine at Cap-Oeste. The initial project consists of mining the oxide ore and treating it through a heap leach plant similar to that at Lomada. Total production from the initial project at Cap-Oeste, which has an expected life of mine of 24 months, is estimated to be 82,000 oz AuEq. Alternatives on how to mine and treat the sulphide ore at Cap-Oeste and COSE are currently being investigated and so far, encouraging results have been obtained.

The Company continues to seek to expand its resource base and exploration activities have commenced on its other properties in Santa Cruz Province namely El Bagual and Sarita.

In addition, as announced on 2 February 2016, the Company exercised its option to acquire, subject to certain milestones being achieved, up to 100% of Trilogy Mining Corporation's ("Trilogy") Carreta Quemada and Chamizo exploration gold projects in Uruguay ("Trilogy Option"). The Trilogy Option represents a good opportunity for the Company to acquire additional gold projects with good geological potential in a new jurisdiction, enabling the Company to diversify its regional operations and risks with initial exploration work having already commenced.

Details of the Company's other projects and activities in the year to date, are set out in more detail in the following Operations Report.

On 1 July 2016, the Company announced the resignation of Non-Executive Directors Ed Badida and Glenn Featherby. The Board has greatly appreciated the experience and support they have both contributed to the development of the Company.

These are exciting times for the Company with the changes being introduced in Argentina and the upturn in the gold sector. We are indebted to our shareholders for their continued support and our grateful thanks go also to our team for all their continued hard work and dedication. Our commitment to creating shareholder value through the development of our portfolio of properties remains our core focus going forward.

Carlos J Miguens

Non-Executive Chairman

28 September 2016

OPERATIONS REPORT

The following is a summary of the Company's operations, together with an update on exploration activities for the year to date.

Company's Properties

The Lomada de Leiva gold project (the "Lomada Project" or "Lomada") is located in the La Paloma property block approximately 120 kilometres to the north of the El Tranquilo property block. The Lomada pit mining operation ceased as of May 2016. Leaching of the heap leach stocks continues with production now forecast to carry on only until the end of the year as production has decreased faster than initially anticipated. However, as a result of the recent increases in the gold price and the removal of export royalties on doré, the Company is reassessing the viability of resources located in the southern end of the Lomada pit previously considered uneconomic.

The net profits obtained from production at Lomada are being utilised to meet a portion of the operating capital requirements for the construction of the open pit operations at Cap-Oeste and to fund ongoing exploration work across the Company's other projects. Patagonia's flagship project is the Cap-Oeste gold and silver project (the "Cap-Oeste Project") located in the El Tranquilo property block approximately 65 kilometres southwest of the town of Bajo Caracoles in Santa Cruz. Development of the Cap-Oeste open pit mine has now commenced with first gold sales from the project expected in October 2016.

Two kilometres along strike from the Cap-Oeste Project is the smaller but strategically vital Cap-Oeste South-East Project (the "COSE Project"). The Company plans to commence development and mining of the COSE Project in conjunction with the Cap-Oeste underground mine as one expanded project.

The La Manchuria property block is located approximately 50 kilometres to the southeast of the El Tranquilo property block and hosts the La Manchuria Project. JV options are currently being evaluated to realise cash flow and advance exploration on the block.

Exploration of the El Tranquilo block was halted in November 2015. First pass exploration of regional permits has been initiated together with first pass grass roots investigations at Las Lajas and Los Toldos. Follow-up work at La Manchuria and Sarita has also commenced.

Initial exploration work has also commenced across the Carreta Quemada and Chamizo projects in Uruguay. The first nine hole programme is now completed with assays pending and scheduled for October.

The JORC compliant resources delineated as at 31 December 2015 are listed in the table below:

*Lomada resource has not been depleted during 2016 to take account of production during the period, pending completion of third party estimation

** AuEq oz were calculated on the prevailing Au:Ag ratio at the date of publishing of the JORC/43-101 compliant resource reports for the individual projects

Argentina

Lomada de Leiva Project

2016 has seen a dramatic improvement in cash costs and production from the Lomada Project, with 16,889 ounces of gold produced to the end of June 2016 (1H2015: 9,944 ounces / FY2015: 21,521 ounces) at a cash cost of US$591/oz (1H2015: US$1,165/oz / FY2015: US$1,196/oz).

As a result of the improved production, increased gold price and reduced costs, in the first half of 2016 the Lomada Project achieved gross revenues of US$21.60 million (1H2015: US$14.05 million / FY2015: US$26.13 million) and a net profit of US$9.4 million (1H2015: Net loss of US$0.1 million / FY2015: Net loss of US$4.0 million).

The significant increase in production and reduction in costs experienced in the year to date, are predominantly a result of the dramatic improvement in machine availability. This is mainly due to import restrictions on spares having been lifted towards the end of 2015, which has enabled the Company to improve onsite maintenance and management of its plant, and thereby reduced the requirement to hire in equipment at significant additional cost.

As previously announced, operations at Lomada were suspended in May 2016 with the entire mining fleet relocated to the Cap-Oeste Project. The focus of the Company now is to reduce operating costs at Lomada.

As production from Lomada has decreased faster than originally expected, the heap leach pad will only continue to operate until the end of the year. Currently the main heap leach pad has received 85% of its design irrigation quota.

Exploration on the 40,000 hectare La Paloma block is ongoing and detailed ground magnetics together with a geochemical, trenching and drilling programme will be continuing throughout 2016. The objective is to replenish and expand the 30,000 ounces of production per annum and explore the previously under-explored La Paloma block. In addition, as stated above, following the recent increases in the gold price and the removal of export royalties, the Company is reassessing the viability of resources located in the Lomada pit previously considered uneconomic.

Cap-Oeste Project

The Cap-Oeste Project is the Company's flagship project and is located within a structural corridor extending six kilometres from the La Pampa prospect in the northwest to the Tango prospect in the southeast. To date, the Cap-Oeste deposit has an identified and delineated strike extent of 1.2 kilometres.

Following the updating of the Pre Feasibility Study (PFS) for Cap-Oeste funded by the US$10.0 financing completed in May 2016, the Company has now completed the construction of the initial low cost open pit mine at Cap-Oeste with a heap leach processing facility similar to that at Lomada. The optimised pit design, carried out on the existing JORC compliant Measured and Indicated Resources, contains a total of 5.6Mt of waste and 1.55Mt @ 2.3g/t Au and 85g/t Ag for a AuEq (69:1) of 3.53 g/t. The initial life of mine is expected to be 24 months, with forecast production estimated to be approximately 82,000 oz AuEq and an operating cost forecast to be within the range of US$800 to US$850 per oz, which includes the capital amortisation and working capital component of US$4.5 million.

Construction of the heap leach pad has now been completed and commissioned on time and within budget with the first ore now being irrigated and first gold sales expected during October 2016.

Underground mine development studies have been completed on the COSE and Cap-Oeste orebodies which contain deeper cyanide-leachable resources. Processing options remain either the possibility to agglomerate and heap leach the ore or assess third party treatment routes.

In respect of the underground mine at Cap-Oeste, metallurgical test work is continuing on the Arsenopyrite hosted mineralisation and recently completed flotation test work reported a 92.3% recovery of Au into a 62g/t cleaner concentrate with silver assays still pending. The concentrate will now be subjected to a series of leach tests with oxygen addition and fine grinding of the concentrate. Should the outcome of this test work show it to be economically viable, there is a potential to unlock high grade refractory ounces in the deeper section of the Cap-Oeste resource and thereby increase the project mine life to six years through the development of the two underground projects at Cap-Oeste and COSE.

COSE Project

Sourcing of used and new underground equipment for the development of the COSE and Cap-Oeste declines has commenced and a review of personnel available locally to develop an underground team for the mining of the projects is also under way. Full designs for both the COSE and Cap-Oeste projects have been completed and a renewal of the permit for the decline construction for COSE is in progress.

La Manchuria Project

PGSA is currently evaluating the possibility to JV the La Manchuria project with third parties in order to realise some cash flow from the deposit and to increase the exploration spend on existing targets within the Manchuria block. The block is highly prospective with over 145,000oz AuEq of JORC compliant Indicated and Inferred resources already delineated at La Manchuria.

To date no deal has been finalised and the market will be updated in due course.

Exploration Projects

Active greenfields and brownfields exploration has continued throughout the winter months on projects in Santa Cruz province, Argentina and in Uruguay in preparation for drill testing of priority targets before the end of the year.

Argentina

Regional geological mapping and surface sampling has been undertaken at the Los Toldos project in Santa Cruz, with particular attention to the El Bagual prospect that was inadequately drill tested by Barrick Gold Corporation during 2006 when drilling was curtailed prematurely due to budget constraints. A four hole diamond drilling programme is scheduled to test the prospect during November.

Mapping and surface sampling have been completed over the extensive Las Lajas project in central Santa Cruz.

Trenching and rotary air blast drilling at the Cerro Vasco prospect, located at the north of the La Paloma block, has confirmed the extension of the Brecha La Emilia fault zone to the south, beneath Quaternary gravels, as interpreted from ground magnetic and induced polarisation geophysical surveys completed at the prospect. A reverse circulation drilling programme is planned to test targets beneath the gravels before the end of the year.

At the El Tranquilo project, reverse circulation drilling is scheduled to commence at the beginning of October at the Monte Leon prospect, to delineate oxide gold mineralisation that may be scheduled into the Cap-Oeste heap-leach operation after the Cap-Oeste open pit reserves have been depleted.

Channel sampling of low sulphidation, silver bearing veins has been undertaken during the winter months at the Sarita project, located approximately 10 km north-west of Mina Martha silver mine. An induced polarisation geophysical survey is proposed to better define drill targets for a potential diamond drilling programme.

A thorough review of all the Company's projects in Chubut and Rio Negro provinces has been undertaken during 2016 to prioritise the tenure based on prospectivity and the possibility of improvements in the legislative situation for selected areas within these jurisdictions. New target areas have also been identified, with non-prospective areas likely to be relinquished as the Company seeks to rationalise its tenement portfolio in these provinces.

Uruguay

As a result of the Trilogy Option, the Company can acquire up to 100% of Carreta Quemada, which covers an area of 388km2, and Chamizo, which covers an area of 70km2, both located on the San José Greenstone Belt within the early Proterozoic Piedra Alta Terrane, approximately 100 kilometres from Montevideo, the capital of Uruguay.

Following the exercise of the option, exploration activity has escalated at the San José Gold Project in Uruguay. Geological mapping, soil and stream sediment geochemistry, ground magnetic and induced polarisation surveys have been, and continue to be conducted to define drill targets. Strong gold anomalism, reported from stream sediment and soil geochemical sampling has been reinforced by coincident anomalism in the geophysical surveys. Trenching and a nine-hole diamond drilling programme were completed at the Zona 13 prospect during August and September, with laboratory results anticipated in October. Subject to the results of the initial drilling and the requisite regulatory approvals being obtained, the Company will look to undertake further drilling in due course. Applications have been lodged for Prospecting Permits over two new project areas, Colla and Nueva Helvecia, located approximately 50km west of the Chamizo area. Sporadic exploration during the 1980s intersected ore-grade gold values in these very poorly exposed areas.

Social and economic responsibility

Patagonia maintains a strong awareness of its responsibilities towards the environment and existing social structures. Accordingly, attention is given to ensuring that all exploration and development work is carried out strictly within the guidelines of the relevant mining and environmental acts. Patagonia attempts, where possible, to hire local personnel and use local contractors and suppliers.

Matthew Boyes

Chief Operating Officer

28 September 2016

Condensed Consolidated Interim Statement of Comprehensive Income

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Financial Position

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Changes in Equity

(Unaudited)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Cash Flows

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

The financial information represents the results of the parent company Patagonia Gold Plc ("Patagonia Gold" or the "Company") and its subsidiaries, collectively known as the "Group".

1. Basis of preparation

Patagonia Gold Plc is a company registered in England and Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and with the Companies Act 2006 applicable to companies reporting under IFRS. The Group's unaudited condensed consolidated interim financial statements have also been prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"). This condensed consolidated financial information does not comprise statutory financial statements within the meaning of Section 434 of the Companies Act 2006. Statutory financial statements for the year ended 31 December 2015 were approved by the Board of Directors on 14 April 2016. These financial statements which contained an unqualified audit report under Section 495 of the Companies Act 2006, with an emphasis of matter paragraph on the carrying value of investments in subsidiary companies, did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006, and have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those used in the annual consolidated financial statements for the year ended 31 December 2015. These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements. There has been no change in critical accounting estimates from year-end.

2. Going concern

These condensed consolidated interim financial statements are prepared on a going concern basis, which the Directors believe to be appropriate.

Patagonia Gold has successfully transformed itself from a pure exploration company to fully fledged producer. Until Lomada de Leiva started commercial production in 2013 Patagonia Gold's focus was exploration work in its portfolio of properties in Chubut, Rio Negro and Santa Cruz. The Company started a small heap leach operation at Lomada de Leiva and to 30 June 2016 has produced a total of 81,647 ounces. Lomada had a relatively short life and in May 2016 the mining operation was suspended while exploration activity in the surrounding areas continues. Anticipating the end of the Lomada mine, the Company sought to advance the Cap-Oeste project through the construction of a heap leach operation similar to the one at Lomada. The capital cost of this project was estimated to be approximately $13.3 million, which has been funded from a successful fundraising of $10 million completed in May 2016 together with cash flow from Lomada and available credit lines. The development of the initial open pit mine at Cap-Oeste has been completed on time and within budget, with the first ore already having been loaded on to the pad and first gold sales expected during October 2016. The Directors believe that the cash flow generated from this project is considered sufficient to lower the Company's debt position while at the same time enabling it to continue with its exploration activities. In addition, the Company is looking into the development of COSE and the Cap-Oeste sulphide resources which would be financed through internal cash flow, supplier credit and other project financing alternatives.

3. Recent accounting pronouncements

The following IFRS standards and amendments to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after 1 January 2016 or later periods. The Company has not implemented early adoption:

· IFRS 11 'Accounting for Joint Arrangements', effective for annual periods beginning on or after 1 January 2016. The amendments to IFRS 11 provide specific guidance on accounting for the acquisition of an interest in a joint operation ('JO') that is a business, to address diversity in practice;

· IFRS 10, IFRS 12. IAS 28 ''Investment Entities: Applying the Consolidation Exception', effective for annual periods beginning on or after 1 January 2016. The amendments address issues that have arisen in the context of applying the consolidation exception for investment entities;

· IAS 27 'Separate financial statements', effective for annual periods beginning on or after 1 January 2016. The amendments reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements; and

· IAS 1 'Presentation of Financial Statements', effective for annual periods beginning on or after 1 January 2016. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports.

The effect of the new standards and interpretations have been considered by management and are not expected to result in a material adjustment to the consolidated financial statements.

4. Segmental analysis

Management do not currently regard individual projects as separable segments for internal reporting purposes with the exception of the Lomada Project, which commenced commercial production in Q3 2013 and the Cap-Oeste Project where construction work has been completed. All revenue in the period is derived from sales of gold and silver.

The Group's net profit and its geographic allocation of total assets and total liabilities may be summarised as follows:

(1) Segment represents other exploration projects.

(1) Segment represents other exploration projects.

(1) Segment represents other exploration projects.

The Group's geographic allocation of exploration costs is as follows:

(1) Segment represents exploration projects other than the Lomada Project, Cap-Oeste Project and the COSE Project.

From 1 September 2010 onwards, expenditures incurred at the Lomada Project are capitalised and disclosed as mineral properties - mining assets (See Note 8). From 1 April 2011 certain costs are included in inventory.

From 1 March 2011 onwards, expenditures incurred at the COSE Project are capitalised and disclosed as mineral properties - assets in the course of construction (See Note 8).

From 1 January 2016 onwards, expenditures incurred at the Cap-Oeste Project are capitalised and disclosed as mineral properties - assets in the course of construction (See Note 8).

Exploration costs incurred at all the other projects are written off to the statement of comprehensive income in the period they were incurred.

5. Other administrative costs

6. Remuneration of Directors and key management personnel

Parent company Directors' emoluments:

In the six months ended 30 June 2016, the highest paid Director received $125 thousand (six months ended 30 June 2015: $57 thousand). This amount does not include any share-based payments charge.

Key management personnel emoluments:

7. Profit / (Loss) per share

The calculation of basic and diluted earnings per share is based on the following data:

There is no difference between the diluted loss per share and the basic loss per share presented. Due to the profit (loss) incurred in the period the effect of the share options in issue is anti-dilutive.

At 30 June 2016, there were 94,958,000 (30 June 2015: 95,258,000; 31 December 2015: 95,158,000) share options and 24,705,000 warrants (30 June 2015 and 31 December 2015: 24,705,000) in issue, which would have a potentially dilutive effect on the basic profit per share in the future.

8. Mineral properties

Mining assets

The Lomada Project completed the trial heap leach phase and entered full commercial production in Q3 2013. From 1 September 2010 all development costs incurred in respect of the project have been capitalised as mineral properties - mining assets. The revenue received from the sale of gold and silver recovered from the Lomada trial heap phase was offset against the capitalised costs of Lomada Project development in compliance with IAS 16. Amortisation is charged based on the unit-of-production method.

Surface rights

The Company owns the surface rights to over 63,000 hectares of land encompassing the Estancia La Bajada, Estancia El Tranquilo and the Estancia El Rincon.

The Company has clear title and outright ownership over Estancia La Bajada and Estancia El Tranquilo. There is a back in right granted to the sellers under Estancia El Rincon's title deed whereby the Company irrevocably committed to resell the estancia to its former owner in the event that two consecutive years elapse without mining activities. Current activity on this estancia includes the Lomada de Leiva project.

Assets in the course of construction

From 1 March 2011, exploration costs on the COSE Project have been capitalised as mineral properties - assets in the course of construction, prior to the receipt of full permitting for extraction of the mineralisation.

From 1 January 2016, exploration costs on the Cap-Oeste Project have been capitalised as mineral properties - assets in the course of construction, prior to the receipt of full permitting for extraction of the mineralisation.

9. Property, plant and equipment

Improvements and advances at the year-end relate to the development and modification of software and plant, including advance payments.

10. Mining rights

On 14 October 2011, Patagonia Gold, PGSA and Fomicruz entered into a definitive strategic partnership agreement in the form of a shareholders' agreement ("Fomicruz Agreement") to govern the affairs of PGSA and the relationship between the Company, PGSA and Fomicruz. Pursuant to the Fomicruz Agreement, Fomicruz contributed to PGSA the rights to explore and mine approximately 100,000 hectares of Fomicruz's mining properties in Santa Cruz Province in exchange for a 10% equity interest in PGSA. The Fomicruz Agreement establishes the terms and conditions of the strategic partnership for the future development of certain PGSA mining properties in the Province. The Company will fund 100% of all exploration expenditures on the PGSA properties to the pre-feasibility stage, with no dilution to Fomicruz. After feasibility stage is reached, Fomicruz is obliged to pay its 10% share of the funding incurred thereafter on the PGSA properties, plus annual interest at LIBOR +1% to the Company. Such debt and interest payments will be guaranteed by an assignment by Fomicruz of 50% of the future dividends otherwise payable to Fomicruz on its shares. Over a five-year period, the Company through PGSA is required to invest $5.0 million in exploration expenditures on the properties contributed by Fomicruz, whose rights to explore and mine were contributed to PGSA as part of the Fomicruz Agreement. The Company will manage the exploration and potential future development of the PGSA properties.

Fomicruz contributed to PGSA certain mining rights in exchange for a 10% equity interest in PGSA. Pursuant to IFRS 2 Share-based Payment, the mining rights acquired have been measured by reference to the estimated fair value of the equity interest given to Fomicruz. Management has estimated the fair value of the 10% interest in PGSA acquired by Fomicruz, on or about 14 October 2011 at $4.0 million. In determining this fair value estimate, management considered many factors including the net assets of PGSA and the illiquidity of the 10% interest. This amount has been recorded as an increase in the equity of PGSA and as a mining right asset. In the consolidated financial statements, the increase in equity in PGSA has been recorded as non-controlling interest. The initial share of net assets of PGSA ascribed to the non-controlling interest amounted to $4.0 million.

Management do not consider there to be any indications of impairment and no review of the carrying value has been undertaken.

The mining rights acquired by PGSA are for a forty-year period from the date of the agreement. As indicated above, these mining rights have been recorded as an intangible asset and are amortised on a straight-line basis over forty years commencing in 2012.

11. Other receivables

Non-current assets

The Directors consider Recoverable VAT at 30 June 2016 to be recoverable in full based on post period-end approvals set by the Mining Secretary in Argentina.

The Directors have considered post year-end approvals set by the Mining Secretary in Argentina and consider the Recoverable VAT as at 30 June 2016 to be recoverable in full and no provision is considered necessary. The VAT balances receivable are normally due to the Group in less than one year, but these amounts have been classified as a non-current asset as management's on-going dialogue with the government indicate approval by the Mining Secretary and receipt of the funds may require a timeframe of more than one year.

12. Trade and other receivables

Current assets

(1) See Note 10.

All trade and other receivable amounts are short-term.

The carrying value of all trade and other receivables is considered a reasonable approximation of fair value.

There are no past due debtors.

13. Available-for-sale financial assets, finance income and Investments

Available-for-sale financial assets

The Company holds available-for-sale financial assets in listed equity securities that are publically traded on the AIM market. Fair values have been determined by reference to their quoted bid prices at the reporting date. The following unrealised losses are included in accumulated other comprehensive income.

The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows: