RNS Number : 7199C

Zanaga Iron Ore Company Ltd

30 June 2016

Zanaga Iron Ore Company Audited Results for the Year to 31 December 2015

30 June 2016

Highlights 2015 and post balance sheet events to June 2016

· Mining Convention ratified by the Parliament of the Republic of Congo ("RoC"), promulgated by the President of the Republic as a law, and published in the Official Gazette of the RoC

· Work programme and budget for 2016, and 2016 Funding Agreement agreed with Glencore

· Additional cost reductions implemented at the Zanaga Project, as well as across ZIOC's corporate costs, to align the cost base with current market conditions

· Share of loss of Associate of US$14m due to a US$20m impairment of the carrying value of the Zanaga Project due to a reduction in global iron ore prices and continuing uncertainty in iron ore market supply and demand fundamentals

· Cash balance of US$7.6m as at 2015 year end, and a cash balance of US$6.9m at 31 May 2016

Clifford Elphick, Non-Executive Chairman of Zanaga Iron Ore Company Limited, commented:

"Despite the current challenges presented by continued uncertainty in the global iron ore industry, particularly as regards pricing and supply and demand dynamics, the Zanaga Project has made important progress during 2015. Importantly, the Project's Mining Convention has been ratified by the Parliament of the Republic of Congo, promulgated as a law, and published in the Official Gazette of the RoC on 28 June 2016; this establishes the fiscal and legal framework for the Project.

The slowdown in the Chinese economy has led to uncertainty in demand for iron ore, coupled with the negative impact on pricing through significant supply increases from the major diversified mining companies. These factors have led to the closure of a number of high cost iron ore mining operations globally and we expect the seaborne iron ore market will continue to be affected by this uncertainty.

Much needed support has come via reductions in operating costs across the sector, which have been achieved due to lower freight rates, lower oil prices, weaker domestic currencies versus the US dollar, and more competitive pricing from contractors.

It is necessary to understand that these developments are continuing to evolve and we have yet to see an equilibrium in iron ore markets, and input costs, being attained. Against this background, further steps have been taken in relation to the Project, including increased scrutiny and reduction of costs, as well as cost reductions at a corporate level.

While financing remains difficult in today's iron ore market, we are conscious of the need to prepare the Project for the market's eventual stabilisation and a stable price equilibrium, at which point we are confident that Zanaga will be at the forefront of development opportunities. However, given the level of continued market uncertainty, and lower forecast iron ore prices, a decision has been taken at the Jumelles level to recognise an impairment of the Project.

The Project remains underpinned by globally significant iron ore Reserves and Resources and is positioned as a project capable of delivering a high quality, premium-priced, iron ore product at very low operating cost. The capability of the Project, even in a low iron ore price environment, to compete with the major iron ore producers on the basis of 'cash margin per tonne', remains a key attribute of the Project's investment case."

The Company will post its Annual Report and Accounts for the year ended 31 December 2015 ("2015 Annual Report and Accounts"), together with the Notice of its Annual General Meeting ("AGM"), which will be held at Adelaide House, London Bridge, London EC4R 9HA, England on 16 August 2016 at 09.00 a.m. BST, the form of proxy and form of instruction for holders of Depositary Interests for use at the AGM to shareholders today.

A copy of the Notice of AGM and the 2015 Annual Report and Accounts will be available on the Company's website www.zanagairon.com.

For further information, please contact:

Zanaga Iron Ore

Corporate Development and Andrew Trahar

Investor Relations Manager +44 20 7399 1105

Liberum Capital Limited

Nominated Adviser, Financial Richard Crawley

Adviser and Corporate Broker and Neil Elliot

+44 20 3100 2000

Bell Pottinger

Financial PR Marianna Bowes

and Daniel Thole

+44 20 7861 3232

About us:

Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is the owner of 50% less one share in the Zanaga Iron Ore Project based in the Republic of Congo (Congo Brazzaville) through its joint venture partnership with Glencore. The Zanaga Iron Ore Project is one of the largest iron ore deposits in Africa and has the potential to become a world-class iron ore producer.

Chairman's Statement

Dear Shareholder,

Despite the numerous challenges facing the iron ore industry today, and the mining industry as a whole, the Zanaga Project has made significant progress through these challenging times and is ever closer to reaching its goal of securing all permitting and licences which would allow the Project to seek financing. The ratification of the Project's Mining Convention by the Parliament of the Republic of Congo is a major milestone and is a significant step forward for the Project.

Unfortunately, the iron ore industry continues to suffer from significant uncertainty. The substantial production expansions of the major iron ore miners have resulted in an unprecedented level of new supply entering the market alongside decelerating industrial growth in China. The fall of iron ore prices has inevitably impacted the ability of the Zanaga Project to secure financing and maintain the envisaged timeline to production. In order to progress towards a construction decision we will need to see a new equilibrium being achieved in the iron ore market. Once price equilibrium is achieved, which takes account of objective and longer term economic indicators, the Zanaga Project is likely to be very well placed as an attractive project for finance and development.

At the Zanaga Project we are determined to maintain progress and advance the Project, while maintaining a prudent level of project expenditure. We have significantly reduced the Project's ongoing costs as well as ZIOC's corporate costs, while ensuring the Project team is motivated to secure a number of key objectives. The establishment of port and power agreements with relevant developers remains a key objective, while significant progress is being made on securing the environmental permit. It has been critical for the Zanaga Project that the Mining Convention has now been ratified by the Parliament of the RoC, promulgated as a law, and published in the Official Gazette of the RoC. We are very pleased to now have this Convention confirmed as an act of law.

Mining Licence and Mining Convention for the Zanaga Project

With effect from 20 May 2016, the Zanaga Mining Convention has been promulgated as a law of the RoC (Law No 15-2016 of 29 April 2016), following ratification by the Parliament of the RoC and publication in the Official Gazette on 28 June 2016. The confirmation of the Mining Convention as a law further secures the stability the Project's fiscal and legal regime for the life of the mine. (For further details, and key terms of the Mining Convention please refer to ZIOC's announcement on 29 June 2016 and also to page 14 of the 2015 Annual Report which refers to the ratification of the Mining Convention.)

The ratification of the Mining Convention demonstrates the Government of the RoC's firm commitment to developing the country's mining sector and is testament to the Project's strong stakeholder relations.

Iron Ore Market

The iron ore market is currently transitioning through a period of significant change in supply and demand dynamics.

The substantial production expansions of the major iron ore miners have led to an unprecedented level of new supply entering the market. In addition, other expansions, from projects where capital was committed during a higher iron ore price environment will result in further supply entering the seaborne system during 2016 and 2017. This new supply has been counteracted to some extent by a number of producers reducing output or suspending production altogether. A number of marginal producers have however been rescued by lower freight rates, lower oil prices, and weaker foreign exchange rates (lowering operating costs in US dollar terms) which is allowing a number of producers to weather current weak iron ore pricing conditions. However, with iron ore prices trading around US$50-60/t, the expectation is that a number of marginal producers will exit the market as seen during 2015.

Regarding the demand for iron ore, the deceleration of economic growth in China, and impact of tighter pollution controls on steel mills, is having a negative impact on demand from the world's largest consumer of iron ore and driving a shift towards lump and pelletised iron ore. This market trend is expected to act in Zanaga's favour in the long term as the Zanaga product is well suited to higher quality steel production with lower environmental impact due to lower impurity levels.

Whilst the level at which price equilibrium is eventually reached is difficult to predict, we certainly feel confident that we are reaching a point of increased stability in the industry. Too much of the industry continues to operate at a loss or at unsatisfactory financial margins to sustain low long-term prices, and we continue to expect an increasing rate of mine closures which will serve to some degree to offset supply expansions.

As we consistently observe, the combination of Zanaga's competitive operating costs and high quality iron ore product, which is expected to attract a premium price, would allow the Project to compete with some of the lowest cost mining operations in the world. This is a key element to Zanaga's competitive advantage as a long term prospect for the iron ore industry.

Project Schedule

The fall of iron ore prices has inevitably impacted the ability to attract new finance and the envisaged timeline to production. Going forward the Zanaga Project team has been tasked with securing the final permitting and operational agreements during 2016. This will position the project to move into financing discussions to secure the required development finance once market conditions improve. The envisaged timeline to production from financial close is then expected to entail one year of Front End Engineering and Design (FEED), followed by three years of construction.

Impairment

The continuing low, and uncertain, iron ore price environment has impacted the Project's future financing which has resulted in Jumelles assessing the recoverability of the carrying value of the Zanaga Project (both as regards Stages One and Two). Based on an assessment of long term iron prices at the end of 2015 and persistent uncertainty in supply and demand dynamics in the iron ore market, the Zanaga Project was impaired down to US$80m, resulting in an impairment charge within Jumelles of US$20m, the Company's share being US$10m. The impairment does not have any impact upon the Group's cash flows.

Cost Reduction Programme, Cash Reserves and Project Funding

Cognisant of the current iron ore price environment, further cost reductions have taken place at the Zanaga Project which will allow the project to progress off a lower cost base. We are pleased to report that the project team is confident in its ability to progress the project through to the next phase of development utilising the lower cost base.

Similar to the Supplemental Agreement for 2015 project expenditure, Glencore and ZIOC have agreed a 2016 Project Work Programme and Budget for the Project of US$2.3m plus US$0.6m of discretionary spend dependent on certain workstreams requiring capital. ZIOC has agreed to contribute towards such work programme and budget an amount comprising US$2.3m plus 49.99% of all discretionary items approved jointly with Glencore. Ignoring any entitlement to savings, ZIOC's potential contribution to the Project in 2016 is US$1.45m in total.

Separately, ZIOC has taken steps to reduce costs associated with the management of its own business. A number of savings initiatives have been actioned which are expected to achieve a significant cost reduction going forward, and the Company is expected to be in a better position to weather the current cycle as a result of these initiatives. Following the reduction of the cost base at the Zanaga Project, as well as the costs associated with the management of ZIOC, the Board is of the view that ZIOC has sufficient funds to meet its working capital requirements up to, and beyond, twelve months from the approval of these accounts.

We had cash reserves of US$6.9m as at 31 May 2016 and continue to be prudent with our cash.

Outlook

During the current period of price weakness and price volatility in the iron ore market, ZIOC and Glencore have chosen to continue to progress a number of key preliminary value-adding activities on the Project. These important preparatory steps will place the Project in a stronger position to seek financing once market conditions stabilise and become more favourable.

The value adding activities to be progressed will include the establishment of port and power agreements, and receipt of the environmental permit. ZIOC and Glencore continue to work closely with the RoC's government on the conclusion of these workstreams and are pleased to say that the Project continues to enjoy strong support.

The Project is underpinned by a globally significant, well-defined, resource and a Feasibility Study that demonstrates robust economics. The Project has also been substantially derisked through the ratification of the Project's Mining Convention by the Parliament of the RoC.

However, as mentioned above, developments in the global iron ore market have affected and continue to affect the raising of finance for the development of the Project. Once market conditions stabilise and become more favourable, it is our belief that the Zanaga Project is likely to be in a good position to attract the finance which is needed to enable a positive construction decision to be taken.

Clifford Elphick

Non-Executive Chairman

Strategic Report

Business Review

During 2015 a number of important milestones were achieved at the Zanaga Project. Furthermore, with effect from 20 May 2016, the Zanaga Mining Convention has been promulgated as a law of the RoC, following ratification by the Parliament of the RoC and publication in the Official Gazette. The confirmation of the Mining Convention as a law further secures the stability the Project's fiscal and legal regime for the life of the mine.

In addition, the Zanaga Project successfully transitioned to a significantly lower cost base which is expected to result in substantial savings going forward.

Port Infrastructure and Development

In March 2013, the RoC signed a Memorandum of Understanding with China Communications Construction Company ("CCCC"), and its subsidiary China Road and Bridge Corporation ("CRBC"), for the development of a new multi-user port facility 9km north of the existing port of Pointe-Noire at Pointe Indienne, including a deepwater bulk export facility for the iron ore industry. CRBC has conducted a significant amount of work on this major project, including a feasibility study on the port development. The Zanaga Project team continues to engage with CRBC with a view to ensuring technical compatibility with our operations as well as sustainable terms of usage. Advancing a port access agreement with the RoC is a key objective for the Project team and we will remain proactive in our engagement with CRBC.

Power

The Zanaga Project's strategy is to connect the Project to the national network. The Feasibility Study on the Project (the "FS"), for the Project's 12Mtpa Stage One is based upon a power offtake agreement being concluded directly with the government power agency ("SNE") or with an existing or new power provider in order to meet the Project's 100MW power requirement. Power would be supplied by existing and planned power generation capacity in the country, which is made possible today through the existence of more than 100MW of excess capacity.

Power would be delivered to the mine site through two connection points to the current 220kV transmission network within 160km and 200km of a proposed new transmission line to the east and south of the mine site respectively. The Zanaga Project team has been engaging with potential IPPs and Government departments in order to develop a power supply for the Project. The team will be conducting an increased amount of work during 2016 on the potential for a power solution to be defined.

The Project's Stage Two ramp up to 30Mtpa is expected to increase power demand to approximately 230MW at the mine site and 16MW for the Project's facilities at the proposed new port. The increased mine site demand is sufficient to support independent power generation from locally available energy sources and we will plan this development in coordination with other planned regional power infrastructure developments.

Permitting

The application for the Environmental Permit for the Project's first phase of development has been lodged with the RoC Ministry of Environment and the Project team believes that this is likely to be received during the second half of the 2016 fiscal year.

Next Steps

During 2016, the Project team will be progressing a number of important value-adding activities. These activities will be important next steps in allowing the Project to reach a position to seek financing and progress to development once market conditions stabilise. These activities include advancement of port and power agreements, and issuance of the environmental permit.

Financial Review

Results from operations

The financial statements contain the results for the Group's fifth full year of operations following its incorporation on 19 November 2009. The Group made a loss in the year of US$16.9m (2014: loss US$171.1m). The loss for the year comprised:

	2015 US$000	2014 US$000
General expenses	(2,143)	(3,531)
Net foreign exchange (loss)/gain	(534)	(747)
Share-based payments	(325)	(1,251)
Gain on part sale of associate	-	45,521
Share of loss of associate (including impairment by associate)	(14,608)	(94,731)
Additional impairment of Investment in Associate	-	(110,082)
Interest income	27	51
Loss before tax	(17,583)	(164,770)
Tax	(25)	(42)
Currency translation	15	(38)
Share of other comprehensive income of associate -foreign exchange	685	(6,221)
Total comprehensive income	(16,908)	(171,071)

General expenses of US$2.1m (2014: US$3.5m) consists of US$0.1m professional fees (2014: US$1.0m), US$0.5m Directors' fees (2014: US$0.6m) and US$1.5m (2014: US$1.9m) of other general operating expenses.

The share-based payment charge reflects the expense associated with the grant of share options to ZIOC's Directors and senior managers under ZIOC's long-term incentive plan ("LTIP") and to the expense associated with the grant of share options to three of ZIOC's consultants. Further details of the LTIP and share options granted can be found in the notes to the financial statements.

The share of loss of associate reflected above (100% to 30 April 2014, 50% less one share from 1 May 2014) relates to ZIOC's investment in the Project, through the Jumelles group, which, due to an impairment adjustment of US$20.0m (2014: US$189.3m) to the carrying value of its exploration asset, generated a loss of US$29.2m in the year to 31 December 2015 (2014: loss US$189.4m). During the year Jumelles spent a net US$9.2m (2014 US$2.4m) on exploration, net of a currency translation gain US$1.4m (2014: loss US$14.5m), before the impairment of US$20m (2014: US$189.3). The 2015 US$1.4m currency gain of associate Jumelles, results from the strengthening against the US$, of Jumelles subsidiary MPD Congo's local currency the CFA Franc (Symbol XAF - Euro tied currency), where the Project asset is held.

Financial Position

ZIOC's Net Asset Value (NAV) of US$45.7m (2014: US$62.3m) comprises of US$37.8m (2014: US$50m) investment in Jumelles, US$7.6m (2014: US$12.5m) of cash balances and US$0.3m (2014: US$0.2m net current liabilities) of other net current assets.

	2015	2014
	US$000	US$000
Investment in associate	37,809	50,000
Fixed Assets	3	8
Cash	7,602	12,480
Net current assets/(liabilities)	312	(179)
Net assets	45,726	62,309

Cost of investment

The investment in associate relates to the carrying value of the investment in Jumelles which as at 31 December 2015 continued to own 100% of the Project. During 2015, under the existing 2015 Funding Agreement between the Company and Glencore, the Company contributed a further US$1.7m (2014: US$7.0m). Though a long term project, in the light of currently forecast market conditions, the carrying value of the exploration asset has been impaired in Jumelles to US$80m (2014 US$100m). The Company accounts for 50% less one share of the Project since May 2014.

As at 31 December 2015, Jumelles had aggregated assets of US$84.0m (2014: US$108.4m) and aggregated liabilities of US$3.0m (2014: US$4.6m). After an exploration asset impairment of US$20.0m (2014: US$189.3), assets consisted of US$80.0m (2014: US$100m) of capitalised exploration assets, US$3.0m (2014: US$4.3m) of other fixed assets, US$0.9m cash (2014: US$3.4m) and US$0.2m other assets (2014: US$0.8m). Before the impairment, and net of a currency translation gain of US$1.9m (2014: loss US$14.5m) a net total of US$9.2m (2014: US$2.4m) of exploration costs were capitalised during the year.

Cash flow

Cash balances decreased by US$4.9m during 2015 (2014 decrease US$11.5m), net of interest income US$0.02m (2014 US$0.05m) and a foreign exchange loss of US0$.5m (2014 loss US$0.8m) on bank balances held in UK Sterling. Additional investment in Jumelles required under the 2015 Funding Agreement (outline details in Note 1 to the financial statements) utilised US$1.7m (2014: US$7.0m), operating activities utilised US$2.7m (2014: US$3.8m), and there were no share repurchases (2014: nil).

Fundraising activities

There were no fundraising activities during 2015 (2014: nil).

Reserves & Resource Statement

The Project has defined a 6.9bn tonne Mineral Resource and a 2.1bn tonne Ore Reserve, reported in accordance with the JORC Code (2012), and defined from only 25km of the 47km orebody identified.

Ore Reserve Statement

The Ore Reserve estimate (announced by the Company on 30 September 2014) was undertaken by independent consultants, SRK Consulting (UK) Ltd ("SRK") and is based on the 30Mtpa Feasibility Study and the 6,900Mt Mineral Resource (announced by the Company on 8 May 2014).

As stipulated by the JORC Code, Proven and Probable Ore Reserve are of sufficient quality to serve as the basis for a decision on the development of the deposit. Based on the studies performed, a mine plan has been determined that is technically achievable and economically viable.

Classification	Tonnes (Bt)	Fe (%)
Proved Ore Reserves	0.77	37.3
Probable Ore Reserves	1.29	31.8
Total Ore Reserves	2.07	33.9

Notes:

Long term price assumptions are based on a CFR IODEX 62% Fe forecast of 60 US$/dmt (97 US¢/dmtu at 62% Fe) with adjustments for quality, deleterious elements, moisture and freight.

Discount Rate 10%

Mining dilution ranging between 5% and 6%

Mining losses ranging between 1% and 5%

Note : The full Ore Reserve Statement is available on the Company's website (www.zanagairon.com)

Mineral Resource

Classification	Tonnes (Mt)	Fe (%)	SiO₂ (%)	Al₂O₃ (%)	P (%)	Mn (%)	LOI (%)
Measured	2,330	33.7	43.1	3.4	0.05	0.11	1.46
Indicated	2,460	30.4	46.8	3.2	0.05	0.11	0.75
Inferred	2,100	31	46	3	0.1	0.1	0.9
Total	6,900	32	45	3	0.05	0.11	1.05

Reported at a 0% Fe cut-off grade within an optimised Whittle shell representing a metal price of 130 USc/dmtu. Mineral Resources are inclusive of Reserves. A revised Mineral Resource, prepared in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition) was announced on 8 May 2014 and is available on the Company's website (www.zanagairon.com).

Note: The figures shown are rounded; they may not sum to the subtotals shown due to the rounding used.

The Mineral Resource was estimated as a block model within constraining wireframes based upon logged geological boundaries. Tonnages and grades have been rounded to reflect appropriate confidence levels and for this reason may not sum to totals stated.

Geological Summary

The Zanaga Iron Ore deposit is located within a North-South oriented (metamorphic) Precambrian greenstone belt in the eastern part of the Chaillu Massif in South Western Congo. From airborne geophysical survey work, and morphologically, the mineralised trend constitutes a complex elongation in the North-South direction, of about 48 km length and 0.5 to 3 km width.

The ferruginous beds are part of a metamorphosed, volcano-sedimentary Itabirite/BIF and are inter-bedded with amphibolites and mafic schists. It exhibits faulted and sheared contacts with the crystalline basement. As a result of prolonged tropical weathering the BIF has developed a distinctive supergene iron enrichment profile.

At surface there is sometimes present a high grade (+60% Fe) canga of apparently limited thickness (<5m) capping a discontinuous, soft, high grade, iron supergene zone of structure-less hematite/goethite of limited thickness (<7m). The base of the high grade supergene iron zone grades quickly at depth into a relatively thick, leached, well-weathered to moderately weathered friable hematite Itabirite with an average thickness of approximately 25 metres and grading 45-55% Fe.

The base of the friable Itabirite zone appears to correlate with the moderately weathered/weakly weathered BIF boundary, and fresh BIF comprises bands of chert and magnetite/grunerite layers.

Competent Persons

The statement in this announcement relating to Ore Reserves is based on information compiled by Mr Gabor Bacsfalusi who is a Chartered Professional Member of the Australasian Institute of Mining and Metallurgy. He is a mining engineer and Senior Consultant of SRK Consulting (UK) Ltd. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the JORC Code (2012). The Competent Person, Mr Gabor Bacsfalusi, has reviewed the Ore Reserve Estimate and has given his consent to the inclusion in the report of the matters based on his information in the form and context within which it appears.

The information in the announcement that relates to Mineral Resources is based on information compiled by Malcolm Titley, BSc MAusIMM MAIG, of CSA Global (UK) Ltd. Malcolm Titley takes overall responsibility for the Report as Competent Person. He is a Member of the Australasian Institute of Mining and Metallurgy ("AUSIMM") and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the JORC Code. The Competent Person, Mr Malcolm Titley, has reviewed this Mineral Resource statement and given his permission for the publication of this information in the form and context within which it appears.

Definition of JORC Code

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012) as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

Principal Risks & Uncertainties

The principal business of ZIOC currently comprises managing ZIOC's interest in the Zanaga Project, including the Jumelles group, and monitoring the development of the Project and engaging in discussions with potential investors. The principal risks facing ZIOC are set out below. Risk assessment and evaluation is an essential part of the Group's planning and an important aspect of the Group's internal control system.

Risks relating to the agreement with Glencore and development of the Zanaga Project

The Zanaga Project is majority controlled at both a shareholder and Director level by Glencore. The ability of the Company to control the Zanaga Project and its operations and activities, including the future development of the Project and the future funding requirements of Jumelles, is therefore limited.

The future development of the mine and related infrastructure will be determined by the Board of Jumelles. There can be no certainty that the Board of Jumelles will approve the construction of the mine and related infrastructure, including the taking of preparatory steps associated with the construction of the mine and related infrastructure, such as front end engineering and design.

Risks relating to future funding of the Zanaga Project

Under the amended JVA with Glencore, there is no obligation on the Company or Glencore to provide further funding to Jumelles. The Company and Glencore have reached agreement on a work programme and funding of the Zanaga Project for 2016. As such agreement relates to 2016, there is a risk that after 31 December 2016 Jumelles may be subjected to funding constraints and this could have an adverse impact upon the Project.

Risks relating to iron ore prices, markets and products

The ability to raise finance for the Project is largely dependent on movements in the price of iron ore. Iron ore prices have historically been volatile and are primarily affected by the demand for and price of steel and the level of supply of iron ore. Such prices are also affected by numerous other factors beyond the Company's and the Jumelles group's control, including the relative exchange rate of the U.S. dollar with other major currencies, global and regional demand, political and economic conditions, production levels and costs and transportation costs in major iron ore producing regions.

While it is anticipated that there will be a stabilisation of iron ore prices in the global market for iron ore, the timing of such stabilisation and the level of iron ore prices which eventually emerges is uncertain. Although the Feasibility Study completed in mid-2014 identifies the product from the Project and the potential demand for such product within a range of iron ore prices, there are no assurances that the demand for the Project's product will be sufficient in quantity or in price to ensure the economic viability of the Project or to enable finance for the development of the Project to be raised. Furthermore, the range of iron ore prices in the FS will need to be reviewed so as to reflect changed market conditions and changed expectations relating to the supply and demand for iron ore.

Risks relating to financing the Zanaga Project

Any decision of the Board of Jumelles to proceed with construction of the mine and related infrastructure is itself dependent upon the ability of Jumelles to raise the necessary debt and equity to finance such construction and the initial operation of the mine. Jumelles may be unable to obtain debt and/or equity financing in the amounts required, in a timely manner, on favourable terms or at all and should this occur, it is highly likely to pose challenges to the proposed development of the Zanaga Project and the proposed timeline for its development. Moreover, the global credit environment may pose additional challenges to the ability of Jumelles to secure debt finance or to secure debt finance on acceptable terms, including as to rates of interest.

Risks relating to financing of the Company

The Company will not generate any material income until the first stage of the Project has been constructed and mining and export of the iron ore has successfully commenced at commercial volumes. In the meantime the Company will continue to expend its cash reserves. Should the Company seek to raise additional finance, it may be unable to obtain debt and/or equity financing in the amounts required, in a timely manner, on favourable terms or at all.

If construction of the mine and related infrastructure proceeds (including any preparatory steps associated with the construction of the mine and related infrastructure), and ZIOC elects to fund its pro rata equity share of construction capital expenditure, there is no certainty as to its ability to raise the required finance or the terms on which such finance may be available.

If ZIOC raises additional funds (including for the purpose of funding the construction of the Project) through further issuances of securities, the holders of ordinary shares could suffer significant dilution, and any new securities that ZIOC issues could have rights, preferences and privileges superior to those of the holders of the ordinary shares.

If the Company fails to generate or obtain sufficient financial resources to develop and operate its business, this could materially and adversely affect the Company's business, results of operations, financial condition and prospects.

Risk relating to Ore Reserves estimation

Ore Reserves estimates include diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserve estimates are by their nature imprecise and depend, to a certain extent, upon statistical inferences and assumptions which may ultimately prove unreliable. Estimated mineral reserves or mineral resources may also have to be recalculated based on changes in iron ore or other commodity prices, further exploration or assessment or development activity and/or actual production experience.

Host country related risks

The operations of the Zanaga Project are located mainly in the RoC. These operations will be exposed to various levels of political, regulatory, economic, taxation, environmental and other risks and uncertainties. As in many other countries, these (varying) risks and uncertainties can include, but are not limited to: political, military or civil unrest; fluctuations in global economic and market conditions impacting on the economy; terrorism; hostage taking; extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; nationalisation; changes in taxation; illegal mining; restrictions on foreign exchange and repatriation. In addition, the RoC is an emerging market and, as a result, is generally subject to greater risks than in the case of more developed markets.

HIV/AIDS, malaria and other diseases are prevalent in the RoC and, accordingly, the workforce of the ZIOC group and of the Jumelles group will be exposed to the health risks associated with the country. The operating and financial results of such entities could be materially adversely affected by the loss of productivity and increased costs arising from any effect of HIV/AIDS, malaria and other diseases on such workforce and the population at large.

Weather conditions in the RoC can fluctuate severely. Rain storms, flooding and other adverse weather conditions are common and can severely disrupt transport in the region where the Jumelles group operates and other logistics on which the Jumelles group is dependent.

The host country related risks described above could be relevant both as regards day-to-day operations and the raising of debt and equity finance for the Project. The occurrence of such risks could have a material adverse effect on the business, prospects, financial condition and results of operations of the Company and/or the Jumelles group.

Risks relating to the Project's licences and the regulatory regime

The Project's Mining Licence was granted in August 2014 and a Mining Convention has been entered into. With effect from 20 May 2016, the Zanaga Mining Convention has been promulgated as a law of the RoC, following ratification by the Parliament of the RoC and publication in the Official Gazette.

The holder of a Mining Licence is required to incorporate a Congolese company to be the operating entity and the Congolese Government is entitled to a free participatory interest in projects which are at the production phase. This participation cannot be less than 10%. Under the terms of the Mining Convention, there is a contingent statutory 10% free participatory interest in favour of the Government of the RoC as regards the mine operating company and a contingent option for the Government of the RoC to buy an additional 5% stake at market price.

The granting of required approvals, permits and consents may be withheld for lengthy periods, not given at all, or granted subject to conditions which the Jumelles group may not be able to meet or which may be costly to meet. As a result, the Jumelles group may incur additional costs, losses or lose revenue and its business, result of operations, financial condition and/or growth prospects may be materially adversely affected. Failure to obtain, renew, enforce or comply with one or more required approvals, permits and consents could have a material adverse effect on the business, prospects, financial condition and results of operations of the Company and/or the Jumelles group. Mitigation of such risks is in part dependent upon the terms of the Mining Convention and compliance with its terms.

Transportation and other infrastructure

The successful development of the Project depends on the existence of adequate infrastructure and the terms on which the Project can own, use or access such infrastructure. The region in which the Project is located is sparsely populated and difficult to access. Central to the Zanaga Project becoming a commercial mining operation is access to a transportation system through which it can transport future iron ore product to a port for onward export by sea. In order to achieve this it will be necessary to access a port at Pointe-Indienne, which is still to be constructed. The nature and timing of construction of the proposed new port are still under discussion with the government of the RoC and other interested parties. In relation to the pipeline and Project facilities at the proposed new port and (to the extent needed) other infrastructure, the necessary permits, authorisations and access, usage or ownership rights have not yet been obtained.

Failure to construct the proposed pipeline and/or facilities at the proposed port and/or other needed infrastructure or a failure to obtain access to and use of the proposed port and/or other needed infrastructure or a failure to do this in an economically viable manner or in the required timescale could have a material adverse effect on the Project.

The availability of reliable and continuous delivery of sufficient quantity of power to the Project at an affordable price will also be a significant factor on the costs at which iron ore can be produced and transported to the proposed port and will impact on the economic viability of the Project.

Reliable and adequate infrastructure (including an outlet port, roads, bridges, power sources and water supplies) are important determinants which affect capital and operating costs and the ability of the Jumelles group to develop the Project. Failure or delay in putting in place or accessing infrastructure needed for the development of the Zanaga Project could have a material adverse effect on the business, prospects, financial condition and results of operations of the Company and/or the Jumelles group.

Risks associated with access to land

Pursuant to the laws of the RoC, mineral deposits are the property of the government with the ability to purchase surface rights. Generally speaking, the RoC has not had a history of native land claims being made against the state's title to land. There is no guarantee, however, that such claims will not occur in the future and, if made, such claims could have a deleterious effect on the progress of development of the Project and future production.

The Mining Convention envisages that the RoC will carry out a process to expropriate the land required by the Zanaga Project and place such land at the disposal of the holder of the Mining Licence in order to build the mine and the infrastructure, including the pipeline, required for the realisation of the Zanaga Project. This means that the rights of the Jumelles company which holds the Mining Licence to the relevant land will be subject to negotiation between the Congolese government and such company. Alternatively, if the land is not declared DUP then the Jumelles group will have to reach agreement with the local land owners which may be a more time consuming and costly process.

Risks relating to timing

Any delays in (i) obtaining rights over and access to land and infrastructure (ii) obtaining the necessary permits and authorisations (iii) the construction or commissioning of the mine, the pipeline or facilities at the port or power transmission lines or other infrastructure, or (iv) negotiating the terms of access to the port and supply of power and other infrastructure, or (v) raising finance to fund the development of the mine and associated infrastructure, could prevent altogether or impede the development of the Zanaga Project, including the ability of the Zanaga Project to export its future iron ore products whether on the anticipated timelines or at projected volumes and costs or otherwise. Such delays or a failure to complete the proposed infrastructure or the terms of access to infrastructure or to do this in an economically viable manner, could have a material adverse effect on the business, results of operations, financial condition and prospects of the Company and/or the Jumelles group.

Environmental risks

The operations and activities of the Zanaga Project are subject to potential risks and liabilities associated with the pollution of the environment and the disposal of waste products that may occur as a result of its mineral exploration, development and production, including damage to preservation areas, over-exploitation and accidental spills and leakages. Such potential liabilities include not only the obligation to remediate environmental damage and indemnify affected third parties, but also the imposition of court judgments, administrative penalties and criminal sanctions against the relevant entity and its employees and executive officers. Awareness of the need to comply with and enforcement of environmental laws and regulations continues to increase. Notwithstanding precautions taken by entities involved in the development of the Project, breaches of applicable environmental laws and regulations (whether inadvertent or not) or environmental pollution could materially and adversely affect the financial condition, business, prospects and results of operations of the Company and/or the Jumelles group.

Health and safety risks

The Jumelles group is required to comply with a range of health and safety laws and regulations in connection with its business activities and will be required to comply with further laws and regulations if and when construction of the Project commences and the mine goes into operation. A violation of health and safety laws relating to the Project's operations, or a failure to comply with the instructions of the relevant health and safety authorities, could lead to, amongst other things, a temporary shutdown of all or a portion of the Project's operations or the imposition of costly compliance measures. If health and safety authorities require the Project to shut down all or a portion of its operations or to implement costly compliance measures, whether pursuant to applicable health and safety laws and regulations, or the more stringent enforcement of such laws and regulations, such measures could have a material adverse effect on the financial condition, business, prospects, reputation and results of operations of the Company and/or the Jumelles group.

Risks relating to third party claims

Due to the nature of the operations to be undertaken in respect of the development of the Zanaga Project, there is a risk that substantial damage to property or injury to persons may be sustained during such development. Any such damage or injury could have a material adverse effect on the financial condition, business, prospects, reputation and results of operations of the Company and/or the Jumelles group.

Risks relating to outsourcing

The Feasibility Study envisages that certain aspects of the Zanaga Project will be carried out by third parties pursuant to contracts to be negotiated with such third parties. There is a risk that agreement might not be reached with such third parties or that the terms of any such agreement are more stringent than currently anticipated; this could adversely impact upon the Project and/or the proposed timescale for carrying out the Project.

Fluctuation in exchange rates

The Jumelles group's functional and reporting currency is the U.S. dollar, and most of its in country costs are and will be denominated in CFA francs and Euros. Consequently, the Jumelles group must translate the CFA franc and Euro denominated assets and liabilities into U.S. dollars. To do so, non-U.S. dollar denominated monetary assets and liabilities are translated into U.S. dollars using the closing exchange rate at the balance sheet date. Consequently, increases or decreases in the value of the U.S. dollar versus the Euro (and consequently the CFA franc) and other foreign currencies may affect the Jumelles group's financial results, including its assets and liabilities in the Jumelles group's balance sheets. These factors will affect the financial results of the Company. In addition, ZIOC holds the majority of its funds in Pounds Sterling, and incurs the majority of its corporate costs in Pounds Sterling, but its contributions to funding the Jumelles Group in 2016 are calculated in U.S. dollars. Consequently, any fluctuation in exchange rates between Pounds Sterling versus the U.S. dollar or the Euro, could also adversely affect the financial results of the Company.

Cash resources

The Company has limited cash resources. Although the Company has taken steps to conserve its cash resources, there is a risk that depletion of such cash resources will adversely affect the Company. Continuing volatile and uncertain economic conditions in the global iron ore market means that there can be no certainty as to when the Zanaga resource is likely to be developed. The difficult prevailing economic conditions also impact upon the ability of the Jumelles group to raise new finance for the project. The Company's cash resources will come under increasing pressure unless a more benign investment and trading climate materialises in the foreseeable future. As to when such a climate might materialise, there is still a lack of consensus.

Financial Statements

Consolidated statement of comprehensive Income

for year ended 31 December 2015

		2015	2014
	Note	US$000	US$000
Administrative expenses		(3,002)	(5,529)
Share of loss of associate (2015 including impairment by associate)	6b	(14,608)	(94,731)
Operating loss	4	(17,610)	(100,260)
Interest income		27	51
Gain on part sale of associate		-	45,521
Additional impairment of Investment in Associate	6b		(110,082)
Loss before tax		(17,583)	(164,770)
Taxation	5	(25)	(42)
Loss for the year		(17,608)	(164,812)
Foreign exchange translation - foreign operations		15	(38)
Share of other comprehensive income of associate - foreign exchange translation		685	(6,221)
Other comprehensive income/(loss)		700	(6,259)
Total comprehensive loss		(16,908)	(171,071)
Profit/(Loss) per share
Basic (Cents)	12	(6.4)	(60.0)
Diluted Cents)	12	(6.4)	(60.0)

The loss for the year is attributable to the equity holders of the parent company.

The notes form an integral part of the financial statements.

Consolidated statement of changes in equity

for year ended 31 December 2015

			Foreign
			currency
	Share	Retained	translation	Total
	capital	earnings	reserve	equity
	US$000	US$000	US$000	US$000
Balance at 1 January 2014	265,434	(42,282)	8,977	232,129
Consideration for share-based payments	1,251	-	-	1,251
Loss for the year	-	(164,812)	-	(164,812)
Other comprehensive income	-	-	(6,259)	(6,259)
Total comprehensive loss	-	(164,812)	(6,259)	(171,071)
Balance at 31 December 2014	266,685	(207,094)	2,718	62,309
Balance at 1 January 2015	266,685	(207,094)	2,718	62,309
Consideration for share-based payments	325	-	-	325
Loss for the year	-	(17,608)	-	(17,608)
Other comprehensive income	-	-	700	700
Total comprehensive loss	-	(17,608)	700	(16,908)
Balance at 31 December 2015	267,010	(224,702)	3,418	(45,726)

The notes form an integral part of the financial statements.

Consolidated balance sheet

for year ended 31 December 2015

		2015	2014
	Note	US$000	US$000
Non-current assets
Property, plant and equipment	6a	3	8
Investment in associate	6b	37,809	50,000
		37,812	50,008
Current assets
Other receivables	7	458	170
Cash and cash equivalents	8	7,602	12,480
		8,060	12,650
Total Assets		45, 872	62,658
Current liabilities
Trade and other payables	9	(146)	(349)
Net assets		45,726	62,309
Equity attributable to equity holders of the parent
Share capital	10	267,010	266,685
Retained earnings		(224,702)	(207,094)
Foreign currency translation reserve		3,418	2,718
Total equity		45,726	62,309

The notes form an integral part of the financial statements.

These financial statements were approved by the Board of Directors on 29 June 2016 and were signed on its behalf by:

Mr Clifford Elphick

Director

Consolidated cash flow statement

for year ended 31 December 2015

		2015	2014
	Note	US$000	US$000
Cash flows from operating activities
Total comprehensive income for the year		(16,908)	(171,071)
Adjustments for:
Depreciation		6	57
Interest receivable		(27)	(51)
Taxation expense		25	42
Decrease/(Increase) in other receivables		(288)	(5)
(Decrease)/Increase in trade and other payables		(217)	(238)
Net exchange gain/(loss)		535	747
Gain on part sale of project interest		-	(45,521)
Share of Total Comprehensive Income of associate		13,923	100,952
Impairment to share of impairment in associate		-	110,082
Share-based payments		325	1,251
Tax paid		(36)	(55)
Net cash from operating activities		(2,662)	(3,810)
Cash flows from financing activities
Cash flows from investing activities
Interest received		27	51
Acquisition of property, plant and equipment		(1)	(3)
Investment in associate		(1,732)	(7,000)
Net cash from investing activities		(1,706)	(6,952)
Net decrease in cash and cash equivalents		(4,368)	(10,762)
Cash and cash equivalents at beginning of year		12,480	24,009
Effect of exchange rate difference		(510)	(767)
Cash and cash equivalents at end of year	8	7,602	12,480

The notes form an integral part of the financial statements.

Notes to the financial statements

1 Business information and going concern basis of preparation

Background

Zanaga Iron Ore Company Limited (the "Company"), was incorporated on 19 November 2009 under the name of Jumelles Holdings Limited. The Company changed its name on 1 October 2010. The Company is incorporated in the British Virgin Islands ("BVI") and the address of its registered office, is situated at Coastal Building, 2nd Floor, Wickham's Cay II, Road Town, Tortola, BVI. The Company's principal place of business as an investment holding vehicle is situated in Guernsey, Channel Islands.

At 31 December 2010 the Company held 100% of the share capital of Jumelles Limited ("Jumelles") subject to the then Xstrata Call Option (as defined below).

On 14 March 2011 the Company incorporated and acquired the entire share capital of Zanaga UK Services Limited for US$2, a company registered in England and Wales which provides investor management and administration services.

In 2007, Jumelles became the special purpose holding company for the interests of its then ultimate 50/50 founding shareholders, Garbet Limited ("Garbet") and Guava Minerals Limited ("Guava"), in Mining Project Development Congo SAU ("MPD Congo") which, owns and operates 100% of the Zanaga Project (the "Project") in the RoC (subject to a minimum 10% free carried interest in MPD Congo in favour of the Government of the RoC).

In December 2009 Garbet and Guava contributed their then respective 50/50 joint shareholding in Jumelles to the Company.

Garbet is majority owned by Strata Limited ("Strata"), a private investment holding company based in Guernsey, which specialises in the investment and development of early stage natural resource projects in emerging markets, predominately Africa. Garbet owns approximately 41.49% of the share capital of the Company.

Guava is majority owned by African Resource Holdings Limited ("ARH"), a BVI company that specialises in the investment and development of early stage natural resource projects in emerging markets. Guava owns approximately 31.83% of the share capital of the Company.

Jumelles has three subsidiary companies, namely Jumelles M Limited, Jumelles Technical Services (UK) Limited and MPD Congo.

Xstrata Transaction

On 16 October 2009, Garbet and Guava and Jumelles entered into a transaction with Xstrata (Schweiz) AG (on 3 December 2009, Xstrata (Schweiz) AG was substituted by Xstrata Projects (pty) Limited ("Xstrata Projects"), comprising of two principal transaction agreements (together the "Xstrata Transaction"):

· a call option deed which gave Xstrata Projects an option to subscribe for 50% plus 1 share of the fully diluted and outstanding shares of Jumelles ("Majority Stake") in return for providing funding towards ongoing exploration of the Zanaga exploration licence area and a pre-feasibility study (the "PFS") subject to a minimum amount of US$50 million (the "Xstrata Call Option"). Under the terms of the Xstrata Call Option, the consideration payable by Xstrata Projects for the option shares that would be issued by Jumelles Limited would comprise (i) a commitment to fund all costs to be incurred by Jumelles Limited in completing an FS (provided such amount shall be greater than US$100 million) or to carry out such a feasibility study at its own cost and (ii) payment of an amount (up to a maximum of US$25 million) equal to the amount that Jumelles Limited owes to Garbet and Guava as loans which would be used to repay the latter; and

· a Joint Venture Agreement which regulated the respective rights of the Company, Jumelles and Xstrata Projects in relation to Jumelles following exercise of the Xstrata Call Option. Subsequently:

o Xstrata merged with Glencore on 2 May 2013 to form Glencore Xstrata which then took the role of JV partner in place of Xstrata, and has subsequently changed its name to Glencore plc.

o Under the terms of the Supplemental Agreement announced on 13 September 2013, the scope of the above mentioned FS was modified to a staged development basis, and the revised basis FS was completed in May 2014. The Supplemental Agreement also extended the work programme beyond the conclusion of the FS, up to December 2014 (towards which the Company contributed US$17m from existing resources), and the Glencore call option over the Company's remaining 50% less one share shareholding in Jumelles Ltd was deleted.

During 2010, the PFS progressed and following completion of Phase I of that study Xstrata Projects countersigned a further funding letter confirming in writing its agreement (subject to the provisions of the Xstrata Call Option) to contribute further funding and confirming its approval of the phase II work programme, budget and funding amount (up to US$56.49 million) as set out in that letter.

Xstrata Projects exercised the Xstrata Call Option on 11 February 2011 and the founding shareholder loans were repaid. The final elements of the call option price consideration were the completion of the Feasibility Study and costs thereof, and these were completed in April 2014.

Relationship between Jumelles and its shareholders after exercise of the Xstrata Call Option (Post February 2011)

The Company, Jumelles and Xstrata Projects agreed to regulate their respective rights in relation to the Project following exercise of the Call Option under the terms of the JVA. Under the terms of the JVA (as amended), all significant decisions regarding the conduct of Jumelles' business (other than certain protective rights which require the agreement of shareholders holding at least 95% of the voting rights in Jumelles) are made by the Board of Directors.

Glencore has the right to appoint three directors to the Board of Jumelles while ZIOC has a right to appoint two directors. At any Board meeting, the directors nominated by Glencore have between them such number of votes as represents Glencore's voting rights in the general meetings of Jumelles and the directors nominated by ZIOC have between them such number of votes as represents ZIOC's voting rights in the general meetings of Jumelles.

As a consequence of the provisions of the JVA (in its original version and as subsequently amended), following exercise of the Xstrata Call Option in February 2011, Xstrata's merger with Glencore to form Glencore Xstrata (May 2013) and the renaming of Glencore Xstrata to Glencore (May 2014), Glencore controls Jumelles at both a shareholder and director level and therefore controls what was the Company's sole mineral asset, the Zanaga Project. Going forward the Company has a strategic partnership in respect of the Project with Glencore.

Following exercise of the Xstrata Call Option, the principal business of the Company has been to manage its 50% less one share interest in the Project. Initially this involved the monitoring of both the finalisation of the pre-feasibility study and the preparation of the feasibility study. Going forward emphasis has been placed on progressing the key objectives of the Project team. These objectives include the establishment of port and power agreements with relevant developers, issue of the environmental permit, and ratification of the Zanaga Mining Convention by the Parliament of the RoC. These items form important milestones as the Project moves toward attracting the finance required for the implementation of Stage One.

Future funding requirements and going concern basis of preparation

In common with many exploration and development companies in the mining sector, the Company raises funding in phases as its project develops.

Pursuant to the JVA, as amended by the Supplemental Agreement, during 2014, the staged production FS prepared by Jumelles was completed, the Project's Mining Licence Application was issued and a Mining Convention was signed with the Government of the RoC.

Based on its management's own internal evaluation, Jumelles believes the proposed staged development of the Zanaga project offers high grade ore at competitive cost, thereby offering an attractive rate of return, at an acceptable level of risk, although substantial capital expenditure will be required both at the prospective mine site and in respect of transportation and other associated infrastructure. Revenues from mining are not forecast to be earned for several years.

Jumelles has a preferred development plan. In relation to such development plan, discussions commenced with several parties regarding investment through the raising of debt or the introduction of additional investors. It is believed that, given the attractiveness of the proposed staged development of the Project, the raising of debt or additional investment can be secured. During previous Project funding discussions, conducted jointly by ZIOC and Glencore, a number of entities expressed an interest in discussing an investment in the Project alongside the joint venture partners. Engagement with interested entities is expected to continue, however, it is believed that current iron ore market conditions need to stabilise before formal discussions can resume.

Current iron ore market conditions have also resulted in a scaled down work programme and a reduction in the cost base of the Project.

Similar to the Funding Agreement for 2015 project expenditure, Glencore and ZIOC have agreed a Funding Agreement to fund the 2016 Project Work Programme and Budget for the Project of US$2.3m plus US$0.6m of discretionary spend dependent on certain workstreams requiring capital. ZIOC has agreed to contribute towards such work programme and budget an amount comprising US$2.3m plus 49.99% of all discretionary items approved jointly with Glencore. Ignoring any entitlement to savings, ZIOC's potential contribution to the Project in 2016 is US$1.45m in total.

At 31 December 2015 the Company had cash reserves of US$7.6m, and in the light of iron ore market conditions, the Company has taken steps to further reduce its own cost base during 2016.

The Company's current cash reserves are sufficient to support both the Company's own operating costs and the agreed contribution to the Project set out above.

In the current circumstances, the Directors have a reasonable expectation that the Company has adequate financial resources to continue in operational existence for the foreseeable future. For these reasons, the financial statements of the Company have been prepared on a going concern basis.

In the event that a decision is taken to develop a mine at Zanaga, the Company and the Project will need to raise further funds.

2 Accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Basis of preparation

These financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union ("Adopted IFRS"). Adopted IFRS comprises standards and interpretations approved by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC") as adopted by the European Union.

The financial statements consolidate those of the Company and its subsidiary Zanaga UK Services Limited (together, the "Group") and the Company's investment in an associate which is accounted for using the equity method.

New standards, amendments and interpretations

The following Adopted IFRSs have been issued but have not been applied by the Group in these financial statements. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:

· IFRS 9 Financial Instruments (effective date 1 January 2018).

· Accounting for Acquisitions of Interests in Joint Operations - Amendments to IFRS 11 (effective date 1 January 2016).

· Equity Method in Separate Financial Statements - Amendments to IAS 27 (effective date 1 January 2016).

· Annual Improvements to IFRSs - 2012-2014 Cycle (effective date 1 January 2016).

· Investment entities: Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28 (effective date 1 January 2016).

· Disclosure Initiative - Amendments to IAS 1 (effective date 1 January 2016).

Measurement convention

These financial statements have been prepared on the historical cost basis of accounting.

The preparation of financial statements in conformity with Adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the financial statements from the date that control commences until the date that control ceases.

Associates

Investments in associates are recorded using the equity method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition changes in the Group's share of the net assets of the associate. The Group profit or loss and other comprehensive income includes the Group's share of the associate's profit or loss and other comprehensive income. The investment is considered for impairment annually. The Board agreed to impair the asset to the level of the Company's shareholding in the Jumelles impaired asset valuation.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from the intra-group transactions, are eliminated in preparing the financial statements.

Foreign currency

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.

Share-based payments

The Group makes equity-settled share-based payments to certain employees and similar persons as part of a long-term incentive plan ("LTIP"). The fair value of the equity-settled share-based payments is determined at the date of the grant and expensed, with a corresponding increase in equity, on a straight line basis over the vesting period, based on the Group estimate of the awards that will eventually vest, save for any changes resulting from any market-performance conditions.

Where awards were granted to employees of the Group's associate and similar persons, the equity-settled share-based payments were recognised by the Group as an increase in the cost of the investment with a corresponding increase in equity over the vesting period of the awards. In equity accounting for the Group's share of its associate, the Group has accounted for the cost of equity settled share-based payments as if it were a subsidiary.

The shares to be issued under the 2010 LTIP were acquired by an Employee Benefit Trust which has to date subscribed for the shares at zero value. These shares are held by the Employee Benefit Trust until the vesting conditions have been met and the share options are exercised.

Subsequent awards of share options have been structured as standard share options and did not involve the use of an employee benefit trust.

Information on the share awards is provided in Note 11 to these financial statements.

Share-based payments to non-employees

Where the Group received goods or services from a third party in exchange for its own equity instruments and the amount of equity instruments is fixed, the equity instruments and related goods or services are measured at the fair value of the goods or services received and are recognised as the goods are obtained or the services rendered. Equity instruments issued under such arrangements for the receipt of services are only considered to be vested once provision of services is complete. Such awards are structured as standard share options. No awards were issued in 2015.

Non-derivative financial instruments

Non-derivative financial instruments in the balance sheet comprise other receivables, cash and cash equivalents, and trade and other payables.

Other receivables

Other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

Trade and other payables

Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

Ordinary shares issued to the Employee Benefit Trust under the LTIP or to non-employees for services provided to the Company, are included within Share Capital.

When share capital recognised as equity is repurchased, the amount of consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are cancelled.

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment; a financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. If any such indication exists, the asset's recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Calculation of recoverable amount

The recoverable amount of the Group's investments and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e., the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.

The recoverable amount of other assets is the greater of their fair values less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Reversals of impairment

An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Expenses

Financing income and expenses

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.

Segmental Reporting

The Group has one operating segment, being its investment in the Project, held through Jumelles Limited. Financial information regarding this segment is provided in Note 6b.

Subsequent events

Post year-end events that provide additional information about the Group's position at the balance sheet date (adjusting events) are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes to financial statements when material.

3 Critical accounting estimates, assumptions and judgements

The Group makes estimates and assumptions concerning the future that are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

Impairment of investment in associate

The value of the Group's investment in Jumelles depends very largely on the value of Jumelles' interest in the Project. Jumelles assesses at least annually whether or not its exploration projects may be impaired. This assessment can involve significant judgement as to the likelihood that a project will continue to show sufficient commercial promise to warrant the continuation of exploration and evaluation activities.

Accounting for the Company's interest in Jumelles Limited

Significant judgement has been applied in arriving at the accounting treatment of the Group's interest in Jumelles. Though the exercise of the Xstrata Call Option on 11 February 2011 gave Xstrata Projects a shareholding of 50% plus one share, and then effective director level control of Jumelles, those shares were not considered to have vested until the Feasibility study had been completed at the end of April 2014. Up until that point in time the Group continued to account for a 100% interest in Jumelles. Further details at December 2014 may be found under 'Investment in associate' Note 6b.

From 1 May 2014 the Company accounted for the reduction in its interest in Jumelles to 50% less one share.

4 Note to the comprehensive income statement

Operating loss before tax is stated after charging/(crediting):

	2015	2014
	US$000	US$000
Share-based payments (see Note 11)	325	1,251
Net foreign exchange loss/(gain)	535	747
Directors' fees	503	611
Auditor's remuneration	56	65
Depreciation	6	56

Other than the Company Directors, the Group directly employed four staff in 2015 (2014: six). The six Directors received a total of US$502,600 remuneration for their services as Directors of the Group (2014: US$611,000). The amounts paid as Directors' fees are shown in the Directors' Remuneration Report in the 2015 Annual Report. The Directors' interests in the share capital of the Group are shown in the Directors' Remuneration Report in the 2015 Annual Report.

5 Taxation

The Group is exempt from most forms of taxation in the BVI, provided the Group does not trade in the BVI and does not have any employees working in the BVI. All dividends, interest, rents, royalties and other expense amounts paid by the Company, and capital gains are realised with respect to any shares, debt obligations or other securities of the Company, are exempt from taxation in the BVI.

The tax charge in the period relates to the Company's subsidiary, Zanaga UK Services Limited.

	2015	2014
	US$000	US$000
Recognised in other comprehensive income:
Current year	(25)	(42)
Reconciliation of effective tax rate
Profit/(Loss) before tax	(17,583)	(164,770)
Income tax using the BVI corporation tax rate of 0% (2012: 0%)	-	-
Effect of tax rate in foreign jurisdictions	(25)	(42)
	(25)	(42)

The effective tax rate for the Group is 0.17 % (2014: 0.03%).

6a Property, Plant and Equipment

	Leasehold property	Fixtures	Total
	improvements	and fittings
	US$000	US$000	US$000
Cost
Balance at 1 January 2015	-	42	42
Additions		1	1
Disposals	-		-
Balance at 31 December 2015	-	43	43
Depreciation
Balance at 1 January 2015	-	34	34
Charge for period		6	6
Balance at 31 December 2015	-	40	40
Net book value
Balance at 31 December 2015	-	3	3
Balance at 31 December 2014	-	8	8

There are no assets held under finance leases or hire purchase contracts.

6b Investment in associate

	US$000
Balance at 1 January 2014	208,513
Additions	7,000
Share of post-acquisition comprehensive loss	(100,952)
Change in investment carrying value from gain on dilution of shares	45,521
Impairment of investment in associate	(110,082)
Balance at 31 December 2014	50,000
Balance at 1 January 2015	50,000
Additions	1,732
Share of post-acquisition comprehensive loss	(14,608)
Share of post-acquisition currency translation reserve	685
Balance at 31 December 2015	37,809

At 31 December 2015, the investment represents a 50% less one share shareholding in Jumelles being 2,000,000 shares of the total share capital of 4,000,001 shares. The shares were acquired in exchange for shares in the Company. Originally recorded at fair value, the investment is now valued at the Company's share of the impaired value declared in the accounts of the associate.

The additions to the investment during the year were due to the additional US$1.7m of investment agreed in accordance with the 2015 Funding Agreement (2014 US$7m).

As the Company's investment in Jumelles did not represent an investment in a subsidiary due to the call option held by Glencore (previously Xstrata) described in Note 1 above, the Group's interest was, and continues to be, accounted for as an associate using the equity method of accounting. The Company accounted for 100% of post-acquisition comprehensive income up to the completion of the FS during H1 2014, and 50% less one share proportion thereafter.

The Group financial statements accounted for the Glencore Projects transaction as an in-substance equity-settled share-based payment for the provision of services by Glencore Projects to Jumelles in relation to the PFS and the FS. These services largely were provided through third party contractors, measured at the cost of the services provided.

As at 31 December 2015, Jumelles had aggregated assets of US$84.1m (201: US$108.4m) and aggregated liabilities of US$3.0m (2014: US$4.6m). For the year ended 31 December 2015 Jumelles implemented an impairment charge of US$20.0 (2014: US$189.3) and incurred a loss before tax of US$29.2m (2014: US$189.4m). There was no tax charge for 2015 (2014: US$nil). Currency translation of the underlying Congolese asset generated a translation gain of US$1.4m (201: loss US$14.5m). A summarised consolidated balance sheet of Jumelles Limited for the year ended 31 December 2015, including adjustments made for equity accounting, is included below:

	2015	2014
	US$000	US$000
Non-current Assets:
Property, plant and equipment	2,968	4,264
Exploration and other evaluation assets	100,000	289,310
Impairment of exploration asset	(20,000)	(189,310)
Total non-current assets	82,968	104,264
Current Assets	1,126	4,162
Current Liabilities	(2,954)	(4,608)
Net current liabilities	(1,828)	(446)
Net assets	81,140	103,818
Share capital	335,261	330,095
Translation reserve	(4,741)	(6,112)
Retained earnings	(249,380)	(220,165)
	81,140	103,818

7 Other receivables

	2015	2014
	US$000	US$000
Prepayments and receivables	118	132
Amounts receivable from the Jumelles group	343	38
Other receivables	458	170

8 Cash

	20154	2014
	US$000	US$000
Cash and cash equivalents	7,602	12,480

9 Trade and other payables

	2015	2014
	US$000	US$000
Accounts payable	121	307
UK corporation tax	25	42
	146	349

No amounts payable are due in more than 12 months (2014: US$nil).

10 Share capital

In thousands of shares	Ordinary Shares	Ordinary Shares
	2015	2014
On issue at 1 January - fully paid	278,777	278,777
Shares issued	-	-
Shares repurchased and cancelled	-
On issue at 31 December - fully paid	278,777	278,777

The Company is able to issue an unlimited number of no par value shares. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. No dividends have been paid or declared in the current year (2014: US$nil).

Share capital changes in 2015

There were no new shares issued in 2015, nor were there any share repurchases.

11 Share-based payments

Employees

As stated under Note 2 above the Group has implemented an LTIP in order to recruit and retain key officers and employees of the Group and the Group's associate. For all key management personnel, the 2010 LTIP is structured as a split interest scheme. On the date of the award, the employee and the Employee Trust enter into an agreement to acquire shares as joint owners with the employee's proportion of ownership of each share being 0.001% of the total value up to a given hurdle and 99.999% of the total value above the hurdle. The hurdle is determined on advice of the Remuneration Committee. The employee will pay the market value for his joint ownership of the shares. If the vesting conditions are not met, the employee forfeits joint ownership of the shares. If the award meets the vesting conditions, the employee has the right to exercise the option and become the sole owner of the shares. The Group also granted a number of awards of share options to middle management. Under these awards the employee was not required to pay an exercise price for the shares, which have all vested and the options exercised.

Three sets of separate awards were made on 18 November 2010, a fourth set of awards was made on 2 March 2012 and a fifth award was disclosed in 2013, applicable upon the appointment to the Board of Mr Alistair Franklin. All awards made after 2010 are issued as standard share options.

Replacing awards 3, 4 and 5, on 29 July 2014, the Board approved the grant of 9,027,274 share options to certain Directors, key employees and Consultants to the Company in recognition of the achievement of key corporate and project milestones since 2012, and to incentivise key employees and consultants to achieve certain new performance targets.

No awards were issued in 2015.

There are specific provisions that apply to all awards in respect of takeover and corporate transaction provisions and provisions relating to cessation of employment or ceasing to provide services.

Awards currently in operation are as follows:

Award 1 (fully vested)

These awards vested on the publication of the results of the VEE, which was achieved in October 2011.

Award 2 (fully vested)

These awards fully vested in 2012 on the expiry of two years following Admission.

Award 6 (partly vested)

These awards have partly vested.

Award 7 (fully vested)

These awards have fully vested.

Award 8 (fully vested)

These awards vested on the date of grant in July 2014.

Award 9 (fully vested)

These awards have fully vested.

The application of the vesting criteria is subject to the discretion of the Board of Directors.

Details of current awards are as follows:

Award 1 (2010)

Award 2 (2010)

Award 6 (2014)

Award 8 (2014)

Award 9 (2014)

Total

Weighted

Average

Exercise Price

(£)

Number

(£)

Number

(£)

Number

(£)

Number

(£)

Number

(£)

Number

At 1 January 2014 *

£0.02

2,727,345

£0.02

995,382

N/A

Nil

N/A

Nil

N/A

Nil

£0.02

3,722,727

(US$0.04)

Granted

N/A

Nil

N/A

Nil

0.01

1,204,619

0.01

1,013,418

0.01

4,000,000

0.01

6,218,037

Forfeited

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

Exercised

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

Lapsed

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

At 31 December 2014 *

£0.02

2,727,345

£0.02

995,382

0.01

1,204,619

0.01

1,013,418

0.01

4,000,000

£0.01

9,940,764

(US$0.04)

(US$0.01)

(US$0.02)

At 1 January 2015 *

£0.02

2,727,345

£0.02

995,382

0.01

1,204,619

0.01

1,013,418

0.01

4,000,000

£0.01

9,940,764

(US$0.04)

(US$0.02)

Granted

N/A

Nil

N/A

Nil

N/A

NIL

N/A

Nil

N/A

Nil

N/A

Nil

Forfeited

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

Exercised

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

Lapsed

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

N/A

Nil

At 31 December 2015 *

£0.02

2,727,345

£0.02

995,382

0.01

1,204,619

0.01

1,013,418

0.01

4,000,000

£0.01

9,940,764

(US$0.04)

(US$0.01)

(US$0.02)

	Award 1 (2010)	Award 2 (2010)	Award 6 (2014)	Award 8 (2014)	Award 9 (2014)	Total
Range of exercise prices *	£0.00-£0.02 (US$0.00-US$0.04)	£0.02 (US$0.04)	£0.00-£0.01 (US$0.00-US$0.02)	£0.01 (US$0.02)	£0.01 (US$0.02)	£0.00 - £0.02 (US$0.00-US$0.04)
Weighted average fair value of share awards granted in the period *	N/A	N/A	£0.18 ($0.31)	£0.18 ($0.31)	£0.18 ($0.31)	£0.18 ($0.31)
Weighted average share price at date of exercise (£)	N/A	N/A	N/A	N/A	N/A	N/A
Total share awards vested	2,727,345	995,382	1,137,338	1,013,418	4,000,000	8,337,685
Weighted average remaining contractual life (Days)	Nil	Nil	39	Nil	Nil	N/A
Expiry date	18 May 2021	18 May 2021	29 July 2024**	29 July 2024	29 July 2024	N/A

* Sterling amounts have been converted into US Dollars at the grant dates exchange rates of: Awards 1,2, US$1.547:£1.00, Subsequent awards US$ 1.6944:£1.00.

** Excepting 199,076 share options with expiry date 7 July 2023

The following information is relevant in the determination of the fair value of options granted during 2010 and 2014 which has applied option valuation principles during the year under the above equity-settled schemes:

	Award 1 (2010)	Award 2 (2010)	Award 6 (2014)	Award 8 (2014)	Award 9 (2014)
Option pricing model used	Black-Scholes	Black-Scholes	Black-Scholes	Black-Scholes	Black-Scholes

Weighted average share price at date of grant	£1.56 (US$2.41)	£1.56 (US$2.41)	£0.19 ($0.31)	£0.19 ($0.31)	£0.19 ($0.31)
Weighted average expected option life	0.7 years	1.0 years	5.0 years	4.0 years	4.6 years
Expected volatility (%)	50%	50% for less than	91%	91%	91%
		1 year expected life,
		55% for more than
		1 year expected life
Dividend growth rate (%)	Zero	Zero	Zero	Zero	Zero
Risk-free interest rate (%)	0.51% for	0.69% for	1.75% for	1.75% for	1.75% for
	6 month expected life	12 month expected life	12 month expected life	12 month expected life	12 month expected life
	0.69% for	1.12% for	2.25% in excess	2.25% in excess	2.25% in excess
	12 month expected life	24 month expected life	24 month expected life	24 month expected life	24 month expected life

* Sterling amounts have been converted into US Dollars at the grant dates exchange rates of: Awards 1,2, US$1.547:£1.00, Subsequent awards US$ 1.6944:£1.00.

The volatility assumption of awards 1 & 2 were measured by reference to the historic volatility of comparable companies based on the expected life of the option. Subsequent awards referenced the volatility of ZIOC's own history since the 2010 flotation.

Non-employees

Replacing awards made previously, or as new awards, on 29 July 2014 the Company also granted awards of share options in respect of consultancy services provided by Strata Capital UK LLP, Harris GeoConsult Ltd and Renroc International Ltd.

Consultancy	Weighted average share price at date of grant *	Weighted average fair value of share awards *	Weighted average expected life of option	Expiry date	Other LTIP terms, valuation model and assumptions applicable
Strata Capital	£0.19 (US$0.31)	£0.12 (US$0.20)	4 years	29 July 2024	Award 8 above
Harris GeoConsult	£0.19 (US$0.31)	£0.18 (US$0.31)	4 years	29 July 2024	Award 8 above
Renroc International	£0.19 (US$0.31)	£0.18 (US$0.31)	4 years	29 July 2024	Award 7 above

* Sterling amounts have been converted into US Dollars at the grant date exchange rate US$ 1.6944:£1.00.

The total equity-settled share-based payment expense recognised as an operating expense during the year was US$325,000 (2014: US$1,251,000), of which US$150,000 (2014: US$238,000) related to the Directors, US$176,000 related to employees of the group (2014: US$875,000), and US$nil (201: US$138,000) related to consultancy services provided by consultants. Further details of share-based payments awarded to Directors of the Group can be found in the Remuneration Report in the 2015 Annual Report.

The total charge during the year for equity-settled share-based payments awarded to employees of companies in which the Group has a significant interest totals US$nil (2014: US$nil).

12 Profit/(Loss) per share

	2015	2014
Profit/(Loss) (Basic and diluted) (US$,000)	(17,608)	(164,812)
Weighted average number of shares (thousands)
Basic
Issued shares at beginning of period	278,777	278,777
Effect of shares issued	-	-
Effect of share repurchase and cancellation	-	-
Effect of own shares	(3,842)	(3,956)
Effect of share split	-	-
Weighted average number of shares at 31 December - basic	274,935	274,821
Profit/(Loss) per share
Basic (Cents)	(6.4)	(60.0)
Diluted (Cents)	(6.4)	(60.0)

There are potential ordinary shares outstanding, refer to Notes 10 and 11 for details of these potential ordinary shares.

13 Financial instruments

Fair values of financial instruments

Other receivables

The fair value of other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material. The fair values approximate book values.

Trade and other payables

The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material. The fair values approximate book values.

Cash and cash equivalents

The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance sheet date.

Financial Risk Management

The Group's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (comprising currency risk and interest rate risk). The Group seeks to minimise potential adverse effects of these risks on the Group's financial performance. The Board has overall responsibility for managing the risks and the framework for monitoring and coordinating these risks. The Group's financial risk management policies are set out below:

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group receivables related parties. The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. At 31 December, the financial assets exposed to credit risk were as follows:

	2015	2014
	US$000	US$000
Cash and cash equivalents	7,602	12,480

(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due. The Group evaluates and follows continuously the amount of liquid funds needed for business operations, in order to secure the funding needed for business activities and loan repayments. The availability and flexibility of the financing is needed to assure the Group's financial position. The Group funding requirements are detailed in Note 1.

Details of the maturity of financial liabilities are provided in Note 9.

(i) Foreign currency risk

The foreign currency denominated financial assets and liabilities are not hedged, thus the changes in fair value are charged or credited to profit and loss.

As at 31 December 2015 the foreign currency denominated assets include cash balances held in Sterling of US$7,569,000 (2014: US$12,313,000), other receivables denominated in Sterling of US$115,000 (2014: US$169,000), and payables of US$116,000 (2014: US$303,000) denominated in Sterling.

The following significant exchange rates applied during the year:

		Reporting date		Reporting date
	Average rate	spot rate	Average rate	spot rate
	2015	2015	2014	2014
Against US Dollars	US$	US$	US$	US$
Pounds Sterling	1.5285	1.4736	1.6476	1.5557

Sensitivity analysis

A 10% weakening of the following currencies against the US Dollar at 31 December 2015 would have increased/(decreased) equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date.

This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant.

	Equity	Profit or loss	Equity	Profit or loss
	2015	2015	2014	2014
	US$000	US$000	US$000	US$000
Pounds Sterling	(757)	(757)	(1,218)	(1,218)

A 10% strengthening of the above currencies against the US Dollar at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor and market confidence. Capital consists of share capital and retained earnings.

The Directors do not intend to declare or pay a dividend in the foreseeable future but, subject to the availability of sufficient distributable profits, intend to commence the payment of dividends when it becomes commercially prudent to do so.

The Company has a share incentive programme which is now administered by the Board. The share incentive programme is discretionary and the Board will decide whether to make share awards under the share incentive programme at any time. Either the Group Employee Benefit Trust buys the shares in the Company to be issued under the LTIP split interest scheme or, share options awards are made direct to individuals as appropriate.

14 Commitments

The Group had no capital commitments or off-balance sheet arrangements at 31 December 2015 (31 December 2014: nil).

Related parties

The Group's relationships with Jumelles and Glencore are described in Note 1 above.

The following transactions occurred with related parties during the period:

	Transactions for the period		Closing balance (payable)/receivable
	2015	2014	2015	2014
	US$000	US$000	US$000	US$000
Associate Jumelles Limited	5	38	353	38
Harris GeoConsult Ltd	(110)	(174)	(9)	(12)
Funding:
To Jumelles Ltd	1,732	7,000	-	-

Transactions with key management personnel

	2015	2014
	US$000	US$000
Share-based payments *	150	238
Directors' fees *	502	611
Total	652	849

* Harris GeoConsult Ltd, a company in which Colin Harris has a controlling interest, was paid a total of £73,735 (US$110,000) for consultancy services provided by Colin Harris during 2015 (2014: £105,000 US$174,000).

The Directors' have no material interest in any contract of significance subsisting during the financial year, to which the Group is a party.

*** End of Financial Statements ***

Glossary

AL₂O₃	Alumina (Aluminium Oxide)
Fe	Total Iron
JORC Code	the 2004 or 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia
LOI	Loss on ignition
LOM	Life of mine
Mineral Resource	a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories
Mn	Manganese
Ore Reserve	the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves. A Probable Ore Reserve has a lower level of confidence than a Proved Ore Reserve but is of sufficient quality to serve as the basis for a decision on the development of the deposit.
P	Phosphorus
PFS	Pre-feasibility Study
SiO2	Silica

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR SELFAUFMSEIM

Become a member today, It's free!

2015 Final Results

Highlights 2015 and post balance sheet events to June 2016

Chairman's Statement

Strategic Report

Business Review

Financial Review

Reserves & Resource Statement

Principal Risks & Uncertainties

Glossary

Related News

@ the Bell: TSX and S&P 500 reach new highs

@ the Bell: TSX hits new high, Wall Street breaks for Thanksgiving

Featured News Links

Debt-Free Cannabis Company Set for Next Stage of Growth

Rig Count Soars as Utilization Surpasses Industry Averages

Learn How this Company is Disrupting Point-of-Care Testing

Unique Battery Metals opportunity in Quebec

Discover Options Trading Strategies to Minimize your Tax Burden

Become a member today, It's free!

Sign In

Send my password

Become a member today, It's free!

2015 Final Results

Highlights 2015 and post balance sheet events to June 2016

Chairman's Statement

Strategic Report

Business Review

Financial Review

Reserves & Resource Statement

Principal Risks & Uncertainties

Glossary

Related News

@ the Bell: TSX and S&P 500 reach new highs

@ the Bell: TSX hits new high, Wall Street breaks for Thanksgiving

Featured News Links

Debt-Free Cannabis Company Set for Next Stage of Growth

Rig Count Soars as Utilization Surpasses Industry Averages

Learn How this Company is Disrupting Point-of-Care Testing

Unique Battery Metals opportunity in Quebec

Discover Options Trading Strategies to Minimize your Tax Burden