Sovereign Mines of Africa Regulatory News (SMA)

 Sovereign Mines of Africa PLC

("SMA" or "the Company")

Sovereign Mines of Africa PLC (AIM:SML), the gold mining exploration Company with properties in the Republic of Guinea in West Africa, today announces its audited results for the year ended 31 December 2015.

Enquiries:

SOVEREIGN MINES OF AFRICA PLC

Giles Clarke - Chairman c/o Billy Clegg +44 20 3757 6983

Nathan Steinberg - Finance Director +44 20 7269 7680

SHORE CAPITAL - NOMINATED ADVISER & BROKER

Toby Gibbs/Bidhi Bhoma - Corporate Finance

Jerry Keen - Corporate Broking +44 207 408 4090

CAMARCO

Billy Clegg / Gordon Poole +44 20 3757 6983

SOVEREIGN MINES OF AFRICA PLC

CHAIRMAN'S STATEMENT

In the Chairman's Statement last year, my predecessor announced that the Board had been seeking a strategic partner to fund the necessary and contingent expenditure to advance the Mandiana Gold Project to a definitive feasibility study. Although the discussions continued throughout the whole of the last financial year, unfortunately nothing came to fruition. The Board is still continuing discussions with potential partners but to date no agreement has been concluded.

As a result, due to the potential uncertainty your Board has considered it prudent to impair the value of the Group's exploration assets in full.

There will be a loss in the year of £1,417,875 compared with £3,879,625 in 2014, which includes an impairment of £1,278,059.

On 30 December 2015 Rupert Fraser and I joined the Board and invested in the business to provide it with additional funding. We are currently conducting a strategic review on the company's assets and activities with a view to enhancing shareholder value and will outline our vision and strategy for the business when a suitable opportunity arises. As we stated on 30 December 2015 our plans for the business may well involve the pursuit of an acquisition which would trigger a reverse takeover under the AIM Rules.

As a result of the recent fundraising, the company had cash resources of approximately £477,000 at 30 April 2016 which will provide sufficient finance to cover the company's ongoing expenditure for the foreseeable future.

C G Clarke

(Chairman)

20 May 2016

SOVEREIGN MINES OF AFRICA PLC

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SOVEREIGN MINES OF AFRICA PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2014

The Reconstruction Reserve represents the difference between the investment in the subsidiary and the share capital in the subsidiary on acquisition.

SOVEREIGN MINES OF AFRICA PLC

(registered in England & Wales with company number 07139678)

 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2015

SOVEREIGN MINES OF AFRICA PLC

 CONSOLIDATED STATEMENT OF CASH FLOWS

SOVEREIGN MINES OF AFRICA PLC

Notes to the final results

1. BASIS OF PREPARATION

The financial information set out in this announcement does not constitute the Group's statutory financial statements for the years ended 31 December 2015 or 2014 but is derived from those financial statements. Statutory financial statements for 2014 have been delivered to the Registrar of Companies, and those for 2015 will be delivered in due course.

The auditors have reported on the financial statements for the year ended 31 December 2015; their report was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

While the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as endorsed for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.

The principal accounting policies adopted in the preparation of the financial information in this announcement are set out in the Company's full financial statements for the year ended 31 December 2015 and are consistent with those adopted in the financial statements for the year ended 31 December 2014.

The Directors do not recommend the payment of a dividend (2014: nil).

The Board approved this announcement on 20 May 2016.

2. OPERATING SEGMENTS

Operating Segments are based on internal reports about components of the Group, which are regularly reviewed by the Chairman being the Chief Operating Decision Makers ("CODM") for strategic decision making and resource allocation in order to allocate resources to the segment and to assess its performance.

The group undertakes only one business activity as described in the Director's report. All transactions between each reportable segment are accounted for using the same accounting policies as the Group uses, as set out in note 3. Accordingly, the Group's operating segments have been determined based on geographical areas.

The Group has not generated revenue during the either of the years ended 31 December 2015 or 31 December 2014.

The Group's results by reportable segment are as follows:

Year ended 31 December 2015

Year ended 31 December 2014

All transactions between each reportable segment are accounted for using the same accounting policies as the Group uses, as set out in note 3. The Group's assets and liabilities by reportable segment are as follows:-

At 31 December 2015

At 31 December 2014

3. TAXATION

Reconciliation of the tax charge

A deferred tax asset has not been recognised in respect of deductible temporary differences relating to losses carried forward at the year end, as there is insufficient evidence that taxable profits will be available in the foreseeable future against which the deductible temporary difference can be utilised. The amount of the asset not recognised is £547,306 (2014: £521,914). The asset would be recovered if the Group made taxable profits in future years.

4. LOSS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Due to there being a loss during the period there are no dilutive transactions and therefore no diluted loss per share has been presented.

5. INTANGIBLE ASSETS

Exploration activities are deferred until a reasonable assessment can be made of the existence or otherwise of economically recoverable reserves. The directors have reviewed the carrying value of the exploration assets and an impairment provision has been made to reflect their expected recoverable value, in the light of discussions with potential strategic partners. 

Impairment costs are included under "Administrative expenses" in the Consolidated Statement of Comprehensive Income.

6. SHARE CAPITAL

a) Share Capital

The Company has one class of ordinary shares which carry no right to fixed income nor have any preferences or restrictions attached.

Issued and fully paid:

b)

b) Share issues during the year

On 30 June 2015, the company's share capital was subdivided from 310,858,850 ordinary shares of £0.01 each into 310,850,858 ordinary shares of £0.0001 each and 310,858,850 deferred shares of £0.099 each.

The ordinary shares carry no right to fixed income nor have any preferences or restrictions attached. The deferred shares carry no voting or dividend rights. Deferred shareholders are entitled to receive the amount paid up or credited as paid up on their respective holdings of deferred shares only after there has been paid on each ordinary share the nominal amount paid up on such share plus a further £1 per ordinary share. The holders of the deferred shares shall not be entitled to participate further in any distribution of the assets or the capital of the Company.

On 30 December 2015, the company raised additional working capital of £550,000 through a placing of 550,000,000 new ordinary shares with new and existing investors at a price of 0.1p each.

7. SHARE-BASED PAYMENTS

The Company has an unapproved share option scheme under which options to subscribe for the Company's shares have been granted to two directors. The vesting condition is the number of years' service. The share options currently in existence were granted and are exercisable as follows:

At the year-end the market value of the Company's shares was 0.29p per share. The highest price during the year was 1.29p and the lowest price was 0.14p.

The number and weighted average exercise prices of share options are as follows:

The share-based payment charge relating to the share options granted to directors amounted to £10,976 (2014: £10,976).

The estimated fair values of options which fall under IFRS 2, and the inputs used in the Black-Scholes model to calculate those fair values, are as follows:

Expected volatility was determined by calculating the standard deviation of daily continuously compounded returns of the Company's share price calculated back from the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioral considerations.

8. TRANSACTIONS WITH RELATED PARTIES

N A Steinberg, part-time Finance Director, is a partner in Munslows LLP, a firm of Chartered Certified Accountants. That firm charged fees of £20,000 (2014: £30,000) excluding VAT to the Group in respect of professional services in the period. Of the fees charged, £10,000 (2014: £15,000) was outstanding at year end and has been included in trade and other payables.

Payments of £15,533 (2014: £64,826) in respect of exploration costs were made to Irus Consulting Limited, a company in which a director of the company, J P Barry is a director and shareholder.

Payments of £nil (2014: £10,000) in respect of secretarial and office costs were made to Pearl Capital Partners Limited, a company in which a director of the company, D B Pearl is a director and shareholder.