Sovereign Mines of Africa Regulatory News (SMA)

29 May, 2014

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 31st December 2013.

Enquiries:

Sovereign Mines of Africa PLC:

David Pearl F.C.A. - Chairman +353 696 8961

David.pearl@pearlcp.com

John Barry - Exploration Director +353 8 7669 5608

Nathan Steinberg - Finance Director +44 20 7269 7680

Shore Capital - Nominated Adviser & Broker

Toby Gibbs / Bidhi Bhoma - Corporate Finance

Jerry Keen - Corporate Broking +44 20 7408 4090

SOVEREIGN MINES OF AFRICA PLC

CHAIRMAN'S STATEMENT

This time last year we were about to embark on the third phase of drilling with high hopes of being able to achieve an initial gold resource at our flagship property Mandiana Magana, which is held by Sovereign Mines of Guinea (SMG) the Company's operating subsidiary. In the event, our expectations were exceeded and in October the Company announced a maiden inferred resource of 600,000oz of gold in very deep oxides, including 420,000ozs having an average grade of 2.3g/per ton of gold. The potential of the property to produce a world class mine and the competence of our Geological team was evidenced by the total discovery cost of approximately $10/oz and a very impressive return on drilling of 40 ounces of gold per metre drilled.

In June, in order to assist in financing the phase of exploration which produced the inferred maiden resource, we took the opportunity to place the majority of our financial assets which, although producing a loss on disposal, proved to be fortuitous both in view of the subsequent further decline in their value to less than half of the proceeds realised, and the success of the drilling programme.

In November we acquired a new exploration concession to the south, covering the open strike extension of the mineralised trend, which forms the core of the Company's maiden resource. Based on the Company's current assumptions this newly acquired property doubles the potential strike of the mineralised corridor, by adding an additional 8kms and as such the existing drilling results only cover less than 10% of the potential strike.

In December 2013 the Company agreed to increase its equity holdings in SMG from 60% to 75% by capitalising £2.784m of the inter-company loan, which has been provided by the Company to SMG in order to fund the exploration activities and running costs of SMG since its incorporation. This transaction was completed in January 2014.

Our successes on the ground, however, failed to be reflected in our share price, because at a time when proven reserves can be acquired on extremely favourable terms, it is not surprising that investors currently have little appetite for supporting exploration projects. As a result, a year which had shown such promise, ended in very difficult and frustrating circumstances and despite the fact that our partners in the Guinean Government had agreed to give us every assistance in fast tracking a small scale mining operation based on our existing resource, we were forced into survival mode.

Our central overhead expenditure has always been extremely modest in comparison to similar companies on AIM and we were therefore able to restructure our finances so as to preserve our Guinean assets in the most cost effective way possible and, after raising £625,000 in March, we have over £600,000 in the bank which will provide sufficient working capital for at least 15 months.

Shareholders will be kept informed of any developments as they occur and if market conditions improve we will hopefully be able to resume operations at Mandiana in a more active fashion. In the meantime the Board is also looking at opportunities for involving a strategic partner at Mandiana and finding a complimentary acquisition.

David B Pearl FCA (Chairman)

28 May 2014

SOVEREIGN MINES OF AFRICA PLC

SOVEREIGN MINES OF AFRICA PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2012

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2013

SOVEREIGN MINES OF AFRICA PLC

 CONSOLIDATED STATEMENT OF CASH FLOWS

The financial assets at fair value were acquired in the year ended 31 December 2012 by the issue of Ordinary shares of 0.01p each with a total consideration of £1,100,000.

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 2013 or 2012 but is derived from those financial statements. Statutory financial statements for 2012 have been delivered to the Registrar of Companies, and those for 2013 will be delivered in due course.

The auditors have reported on the financial statements for the year ended 31 December 2013; 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 2013 and are consistent with those adopted in the financial statements for the year ended 31 December 2012.

The Directors do not recommend the payment of a dividend (2012: nil).

The Board approved this announcement on 28 May 2014.

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 2013 or 31 December 2012.

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

Year ended 31 December 2013

Year ended 31 December 2012

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 2013

At 31 December 2012

3. TAXATION

Reconciliation of the tax charge

A deferred tax asset has not been recognisedin 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 £486,787 (2012: £345,902). 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. Details of shares issued since the year end are set out in note 8 below.

5. INTANGIBLE ASSETS

Exploration activities are deferred until a reasonable assessment can be made of the existence or otherwise of economically recoverable reserves. No amortisation has been charged in the period. The directors have reviewed the carrying value of the exploration assets and consider them to be fairly stated and not impaired at 31 December 2013. The recoverability of the intangible assets is dependent upon the future realisation or disposal of the gold or other mineral resources.

The impairment losses brought forward of £118,853 represent exploration costs written-off where exploration licences lapsed and were not renewed as work carried out in these areas had not indicated obvious potential for major gold deposits.

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

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Amounts presented in respect of listed investments have been determined by reference to published price quotations on the London Stock Exchange.

7. 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) Share issues during the year

On 22 January 2013, the company raised additional working capital of £1,250,000

through a placing of 41,666,667 new ordinary shares of £0.01each with institutional and other investors at a price of 3p each. Following this placement the company's issued share capital is increased to 236,358,850 ordinary shares of £0.01.

On 20 December 2013, the company issued 12,000,000 new ordinary shares at a price of 2.9p each in exchange for 7.5% of the issued share capital of its subsidiary company, Sovereign Mines of Guinea Limited. Following this placement the company's issued share capital is increased to 248,358,850 ordinary shares of 0.01p.

8. EVENTS SINCE THE YEAR END

On 6 December 2013, the Company agreed to capitalise £2,784,000 of the inter-company loan to its subsidiary undertaking, Sovereign Mines of Guinea Limited (SMG), by the issue of 120 new shares in SMG to Sovereign Mines. The terms of the capitalisation are on the same basis as the exchange of shares in SMG for new shares in the Company announced on 20 December 2013. The effect of this transaction is to increase the Company's interest in the share capital of SMG from 60% to 75%. The remaining 25% is held by SOGUIPAMI, the Republic of Guinea's state-owned mining firm.

The transaction was not completed until 20 January 2014, and accordingly, is not reflected in the Company's balance sheet as at 31 December 2013.

On 25 March 2014, the company raised additional working capital of £625,000 through a placing of 62,500,000 new ordinary shares with institutional and other investors at a price of 1p each. Following this placement the company's issued share capital is increased to 310,858,850 ordinary shares of 0.01p.