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(st) December 2014.

Enquiries:

SOVEREIGN MINES OF AFRICA PLC

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

david.pearl@pearlcp.com

Nathan Steinberg - Finance Director +44 20 7269 7680

Nathan@munslows.co.uk

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

In my Statement last year I said that investors currently have little appetite for supporting exploration projects. At current gold prices there has been no change in sentiment and the Market remains risk averse to the microcap gold sector regardless of how compelling the exploration play. It is no consolation to your Board or our shareholders, particularly substantial shareholders like myself, that we have continued to suffer in line with our peers despite the major potential of our flagship gold project at Mandiana in Guinea.

During the last 14 months, our relentless search for sources of finance to continue our drilling programme at the Mandiana Gold Project has so far proved unsuccessful The situation was made more challenging by the ebola outbreak in Guinea which curtailed exploration activity throughout the country and made an already difficult task of finding a partner very challenging.

It remains, however, our view that Mandiana still has the potential to become a tier-one gold mine particularly with the addition in November 2013 of the Mandiana South exploration concession. We have a JORC-compliant inferred resource of 610,000 ozs of gold in very deep oxides averaging 1.2g/t (cut-off 0.3g/t gold), including 420,000 ozs having an average grade of 2.3g/ton (cut-off 1g/t gold) and the drilling so far has only covered less than 10% of the potential strike.

For the last eight months your Board has been seeking a strategic partner to fund the necessary and contingent expenditure to advance the project to a definitive feasibility study. Although a partnership deal has not yet been concluded, your Board remains hopeful that an acceptable transaction can be concluded in the near future. Bearing in mind this strategy, we have renewed the Mandiana permits this March in order to protect your company's assets.

The discussions we have had with potential partners have indicated to us that, due to the market conditions, the value of assets needs to be impaired. As a result, we will show a loss for the year of £3,879,625 compared to £923,075 in 2013, which includes an impairment of £3,694,352. This impairment reduces the net asset value of the Company's shares to just over 0.4p per share, which is significantly below our par value of 1p per share. As a result, the Board has decided that it is in the best interests of Shareholders to reduce the par value of the shares to 0.01p per share by carrying out a Deferred Share Scheme at the Annual General Meeting, full details of which will be included in the Notice to be sent to shareholders with the Accounts. The purpose of this will be to enable the Company to issue shares at a par value to refinance the company as appropriate at a price which reflects the current market value and net asset value of the shares.

The financial statements have been prepared on a going concern basis as set out in note 3. At 31 May the Company had cash resources in the order of £100,000. This is expected to provide sufficient funds until a refinancing can take place on the assumption that future exploration expenditure will be funded by a future partner. The Directors have also agreed to defer their outstanding fees either until the Company is refinanced or until settlement by capitalisation. However, shareholders should be aware that without a transaction with a suitable strategic partner being concluded and a refinancing in the short to medium term, the Company may not be able to incur the expenditure necessary to retain the exploration assets and continue in operation. Accordingly, there is an emphasis of matter paragraph in the Auditors' Report relating to going concern.

In view of the proposed deferred share scheme and the impairment of our exploration assets your board now considers that the company has lost more than 50 % of its issued share capital and accordingly, the Notice convening the Annual General Meeting will include a notice in accordance with section‎ 656 of the Companies Act 2006 to consider whether any, and if so, what steps should be taken to deal with the situation.

In the Notice convening the company's Annual General Meeting shareholders will note that the Company's Exploration Director, John Barry, has decided not to stand for re- election. Whilst John has provided considerable efforts in developing the Company's exploration assets, his decision reflects the current market conditions and will save the Company overheads. He has agreed to provide ongoing support to the Company in its future negotiations with potential partners. We thank John for his service and wish him every success in his future activities.

Finally, I would like to thank our shareholders and staff for their support at a time when we are experiencing the worst market conditions for gold exploration companies for many years.

David B Pearl FCA (Chairman)

5 June 2015

SOVEREIGN MINES OF AFRICA PLC

SOVEREIGN MINES OF AFRICA PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2013

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 2014

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 2014 or 2013 but is derived from those financial statements. Statutory financial statements for 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered in due course.

The auditors have reported on the financial statements for the year ended 31 December 2014; their report was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

But included the following emphasis of matter in respect of going concern:

"In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 3 regarding the Group's ability to continue as a going concern. The future operations of the Group are dependent on raising additional funding required to cover working capital and the assumption that future exploration expenditure will be funded by a future strategic partner to meet the operational needs of the Group's exploration activities. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company were not to continue as a going concern."

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 2014 and are consistent with those adopted in the financial statements for the year ended 31 December 2013.

The Directors do not recommend the payment of a dividend (2013: nil).

The Board approved this announcement on 5 June 2014.

2. GOING CONCERN POLICY

Although the Group's assets are not generating revenues and an operating loss has been reported, the Directors have formed the opinion that the Group will have sufficient funds to undertake its operations over the next 12 months from the date of signing these financial statements. This is based on cash flow projections prepared for that period, their ability to secure additional funding required to cover working capital and the assumption that future exploration expenditure will be funded by a future strategic partner.

The Group's ability to continue its exploration programme is a critical accounting assumption (as described further in note 3) and as a result the directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the company's ability to continue as a going concern and that, therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.

Nevertheless, after making enquiries and considering the uncertainties described above, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The Directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the going concern basis of preparation of the financial statements is not appropriate.

3. 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 2014 or 31 December 2013.

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

Year ended 31 December 2014

Year ended 31 December 2013

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 2014

4. 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 £521,914 (2013: £486,787). The asset would be recovered if the Group made taxable profits in future years.

5. 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.

6. 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.

The impairment losses brought forward of £118,853 represent exploration costs written-off in 2012 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.

7. 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.

8. 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 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.