Conroy Gold and Natural Resources plc Annual Report 2014

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FY2014 Annual Report · Conroy Gold and Natural Resources plc

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Annual Report and Financial Statements 2014

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

Contents

Chairman’s Statement

Company Information

Broker
Hybridan LLP
20 Birchin Lane
London EC3V 9DU
United Kingdom

ESM Adviser
IBI Corporate Finance
2 Burlington Plaza
Burlington Road
Dublin 2

Statutory Audit Firm
Deloitte & Touche Chartered
Accountants & Statutory Audit Firm
Deloitte & Touche House
Charlotte Quay
Limerick

Principal Banker
Allied Irish Bank
1 Lower Baggot Street
Dublin 2

Registrars
Capita Asset Services Shareholder
Solutions (Ireland)
2 Grand Canal Square
Dublin 2

www.capitaassetservices.ie

Legal Advisers
William Fry Solicitors
Fitzwilton House
Wilton Place
Dublin 2

Head Office
Conroy Gold and atural Resources plc
10 Upper Pembroke Street
Dublin 2

Tel: +353-1-661 8958
Fax: +353-1-662 1213

For further information visit
the Company’s website at:

www.conroygoldandnaturalresources.com

or contact:

Lothbury Financial Services
36 Old Jewry
London EC2R 8DD
UK

Tel: +44 20 3440 7620

Directors
Professor Richard Conroy
Chairman*

Seamus P. FitzPatrick
Deputy Chairman+§
Non-Executive Director

Maureen T.A. Jones
Managing Director*

James P. Jones FCA
Finance Director*

Dr. Sorċa Conroy
Non-Executive Director*

Louis J. Maguire
Non-Executive Director*+§

Michael E. Power
Non-Executive Director*§

C. David Wathen
Non-Executive Director+

Henry H. Rennison
Non-Executive Director*

* Member of the Executive Committee
+ Member of the Remuneration Committee
§ Member of the Audit Committee

Company Secretary
and Registered Office
James P. Jones FCA
10 Upper Pembroke Street
Dublin 2
Ireland

Nominated Adviser
Sanlam Securities UK Limited
10 King William Street
London, EC4N 7TW
UK

Standing, left-right:
Louis J. Maguire, Non-Executive Director;
C. David Wathen, Non-Executive Director;
Seamus P. FitzPatrick, Deputy Chairman;
Dr Sorċa Conroy, Non-Executive Director;
Michael E. Power, Non-Executive Director.

Seated, left-right:
Maureen T.A. Jones, Managing Director;
Professor Richard Conroy, Chairman;
James P. Jones, Finance Director;
Henry H. Rennison, Non-Executive Director.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc7

Report of the Directors

The Directors present their annual report,
together with the audited financial
statements of Conroy Gold and Natural
Resources plc for the year ended
31 May 2014.

Principal Activities and
Business Review
The Company’s exploration programme
in Ireland is focused on the Longford-
Down Massif. The Company is engaged
in active exploration there, which has
already led to the discovery of a series
of gold targets along a 30 mile (50 km)
area stretching from County Armagh
across Counties Monaghan and Cavan.

At the most advanced of these targets,
Clontibret in County Monaghan, a
Scoping Study prepared by independent
consultants Tetra Tech Wardrop
demonstrated that the project was
technically and financially viable with
a mine life of 11.2 years, a payback of
2 years, a net present value of US$72.3m
using a discount rate of 8%, and an
internal rate of return of 49.4% at a
gold price of US$1,372. The study was
completed on an area representing less
than 20% of the target. Drilling on the
remaining 80% of the Clontibret anomaly
is expected to further increase this
resource.

The Company has also acquired licences
in Finland’s Central Lapland Greenstone
Belt, which it believes to be highly
prospective for gold and has an ongoing
exploration programme there.

Further information concerning the
activities of the Company and its future
prospects is contained in the Chairman’s
Statement.

Future Development of
the Business
It is the intention of the Directors to
continue to develop the activities of the
Company. Further strategic opportunities
in mineral resources, both in Ireland and
abroad, will be sought by the Company.

Risks and Uncertainties
The Company’s activities are directed
towards the discovery, evaluation
and development of mineral deposits.
Exploration for and development of
mineral deposits is speculative. Whilst
the rewards can be substantial, there is
no guarantee that exploration on the
Company’s properties will lead to the
discovery of commercially extractable
mineral deposits. The directors recognise
that the future realisation of exploration
and evaluation assets is dependent on
the successful further development
and ultimate production of the mineral
reserves and the availability of sufficient
finance to bring the reserves to economic
maturity and profitability.

Going Concern
The Company made a loss of €380,305
(2013: €423,979) for the year ended 31
May 2014 and had net current liabilities
of €1,234,259 (2013: €712,282) at
that date. The Directors have confirmed
that they will not seek repayment of
amounts owed to them by the Company
of €1,062,485 within 12 months of
the date of approval of the financial
statements, unless the company has
sufficient funds to repay such amounts.

On 8 October 2014, 75,000,000 ordinary
shares of 1p were issued by the Company
at 1p sterling, raising additional share
capital of £750,000 sterling.

The Directors have considered the
proposed work programme for
exploration and evaluation assets and
on the basis of the cash balances on
hand, the equity raised subsequent to the
year-end, the very encouraging results
from the exploration programme and the
prospects for raising additional funds
as required, consider it appropriate to
prepare the financial statements on the
going concern basis.

Key Performance Indicator
Currently the Company’s main key
performance indicator is in relation
to the estimated resource potential
on the discovery and development of
economic deposits of gold in Ireland and
Finland. The details are set out in the
Chairman’s Statement. In addition, the
Company reviews expenditure incurred
on exploration projects together with
maintaining review of ongoing operating
costs.

Results for the Year and State
of Affairs at 31 May 2014
The statement of financial position as at
31 May 2014 and the income statement
for the year are set out on pages 15
and 16. The Company recorded a loss
for the financial year of €380,305
(2013: €423,979) which was transferred
to retained deficit. Taking account of the
current year loss and the share capital
issued during the year, equity increased
to €14,290,931 at 31 May 2014 from
€13,073,929 at 31 May 2013.

Important Events Since
the Year End
For important events which have
occurred since year end, refer to
Note 19 which accompanies these
financial statements.

Directors
The Directors who served during the year
are as follows:

R.T.W.L. Conroy

S.P. FitzPatrick

J.P. Jones

M.T.A. Jones

L.J. Maguire

M. E. Power

H.H. Rennison

C.D. Wathen

Dr. S.C. Conroy

In accordance with the Company’s Articles
of Association, Mr. Louis Maguire, Mr
Michael Power and Mr. C. David Wathen
will retire by rotation and, being eligible,
will offer themselves for re-election at the
Annual General Meeting.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc8

Report of the Directors continued

Miss Maureen Jones, Managing
Director, has over 20 years’ experience
at senior level in the natural resource
sector. She has been Managing Director
of Conroy Gold since 1998 and was a
founding director of the company. Also
a director of Karelian Diamond Resources
Plc, she joined Conroy Petroleum and
Natural Resources Plc on its foundation
in 1980 and was a director and board
member of Conroy Petroleum/ARCON
from 1986 to 1994. Ms. Jones has a
medical background and specialised
in the radiographic aspects of Nuclear
Medicine before becoming a manager
with International Medical Corporation
in 1977.

Mr. James Jones, Finance Director,
has been associated with the natural
resources industry for many years. A
Chartered Accountant, he was finance
director of Conroy Petroleum and Natural
Resources/ARCON from its formation
until 1994. He was a founding director
of Conroy Gold and Natural Resources
and has served as Finance Director
and secretary of the company since
its inception. He is also a director of
Karelian Diamond Resources Plc.

Dr. Sorċa Conroy, Non-executive
Director, was recruited to ING Bank in
2006 and whilst there was ranked second
in the Extel Survey for Biotechnology
Specialist Sales. She had previously
been specialist sales for life sciences
and institutional equities at Canaccord
Adams (2005-2006), where she ranked
fourth in the 2006 Extel survey and
Hoodless Brennan (2004-2005). A
medical graduate of The Royal College
of Surgeons in Ireland, she held a number
of clinical positions in between her
graduation in 1995 and joining Hoodless
Brennan.

Mr. Louis Maguire, Non-executive
Director, is an Auctioneer by profession
and land valuation expert with particular
expertise in the purchase of mineral
rights and in land acquisition for
mining. He is a founding director of
the Company.

Mr. Michael Power, Non-executive
Director, is a professional engineer
and Chartered Financial Analyst with
over 40 years experience in the mining
industry in Canada and internationally.
He was formerly Vice President of
Corporate Development at Hemlo
Gold Mines Inc. (now Newmont Gold
Corporation).

Mr. Henry Rennison, Non-executive
Director, is a geologist. He worked with
Burmah Oil for 30 years and later as
a consultant with the International
Petroleum Consultancy firm De Golyer
and McNaughton. He was a director of
Conroy Petroleum and Natural Resources
and its subsidiaries including ARCON
Mines Ltd for a number of years. He is
a founding director of Conroy Gold and
Natural Resources.

Mr. David Wathen, Non-executive
Director, has been involved in business
and finance throughout his career, most
recently as a stockbroker managing
private client portfolios for Redmayne-
Bentley Stockbrokers Sheffield. Recently
appointed as an independent Chairman
of the Skipton Business Improvement
District, he has also previously served as
a director of several quoted and private
companies in the UK, Ireland and the
United States, including a number of
natural resources companies.

Details of Directors
Professor Richard Conroy, Chairman
of the Board, has been involved in
natural resources for many years. He
established Trans-International Oil,
which was primarily involved in Irish
offshore oil exploration, and initiated
the Deminex Consortium (which included
Deminex, Mobil, Amoco and DSM).
Trans-International Oil was merged with
Aran Energy in 1979 (which was later
acquired by Statoil).

Professor Conroy founded Conroy
Petroleum and Natural Resources
which (as well as being involved in oil
production and exploration) in 1986
discovered the Galmoy zinc deposit in
Ireland. Conroy Petroleum was also a
founding member of the Stone Boy
consortium, an exploration group which
discovered the Pogo gold deposit in
Alaska, now a major producing gold
mine. Conroy Petroleum acquired Atlantic
Resources in 1992 and was renamed
ARCON International Resources.

Professor Conroy was Chairman and
Chief Executive of Conroy Petroleum/
ARCON from 1980 to 1994 before
founding Conroy Gold and Natural
Resources in 1995. An Emeritus Professor
of Physiology in the Royal College of
Surgeons in Ireland, Professor Conroy
served in the Irish Parliament as a
Member of the Senate and was at various
times front bench spokesman for the
government party in the Upper House
on Energy, Industry and Commerce;
Foreign Affairs; and Northern Ireland.

Mr. Séamus Fitzpatrick, Deputy
Chairman, has worked in both corporate
finance and private equity in London
and New York with Morgan Stanley,
JP Morgan and Banker’s Trust. In 1999
he co-founded CapVest of which
he is Managing Partner (which has
raised funds in excess of £2.0 billion).
He is Chairman of the Mater Private
Hospital and of Valeo Foods and is a
board member of Reno Norden. He is
also a director of Karelian Diamond
Resources Plc.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc9

Directors’ and Secretary’s Shareholdings and Other Interests
The interests of the Directors and Secretary, all of which were beneficially held, in the ordinary share capital of the Company
at 31 May 2014 and 1 June 2013 were as follows:

At 31 May 2014

At 1 June 2013

Ordinary Shares
of €0.01 each

Options

Warrants

Ordinary Shares
of €0.03 each

Options

Warrants

Professor R.T.W.L. Conroy

86,175,433

M.T.A. Jones

J.P. Jones

H.H. Rennison

S.P. Fitzpatrick

L.J. Maguire

M.E. Power

C.D. Wathen

Dr. S. Conroy

5,896,991

1,250,010

1,330,010

6,060,818

310,010

175,000

500,000

2,066,942

–

34,934,765

70,703,736*

22,507,028

13,188,420

2,457,288

359,593

2,457,288

1,307,893

507,641

1,180,010

1,250,010

1,330,010

6,060,818

310,010

175,000

223,500

–

1,500,905

600,000

450,000

275,000

–

34,934,765

22,507,028

13,188,420

2,457,288

359,593

2,457,288

1,307,893

507,641

–

* Of the 86,175,433 (2013: 70,703,736) ordinary shares beneficially held by Professor Richard Conroy, 19,294,286 (2013: 19,294,286) are held by Conroy Plc, a company
in which Professor Conroy has a controlling interest.

Details of warrants, all of which are exercisable currently, are as follows:

Directors

At 31 May 2014

Granted
During Year

At 1 June 2013

Professor R.T.W.L. Conroy

M.T.A. Jones

J.P. Jones

H.H. Rennison

S.P. Fitzpatrick

L.J. Maguire

M.E. Power

C.D. Wathen

22,814,920

12,119,845

13,839,858

8,667,170

8,058,129

5,130,291

1,450,427

1,006,861

359,593

1,450,427

1,006,861

301,032

1,006,861

507,641

–

22,814,920

12,119,845

13,839,858

8,667,170

8,058,129

5,130,291

1,450,427

1,006,861

359,593

1,450,427

1,006,861

301,032

1,006,861

507,641

Price €

0.037

0.0433

0.037

0.0433

0.037

0.0433

0.037

0.0433

0.037

0.0433

0.037

0.0433

Expiry Date

15 November 2015

16 November 2017

15 November 2015

16 November 2017

15 November 2015

16 November 2017

15 November 2015

16 November 2017

15 November 2015

16 November 2017

15 November 2015

16 November 2017

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc10

Report of the Directors continued

Details of options, all of which are exercisable currently, are as follows:

Directors

At 31 May 2014

Professor R.T.W.L. Conroy

M.T.A. Jones

J.P. Jones

–

Lapsed
During Year

(600,000)

(450,000)

(275,000)

At 1 June 2013

Price €

Expiry Date

600,000

450,000

275,000

0.10

26 November 2013

Except as disclosed above, neither the Directors nor their families had any beneficial interest in the share capital of the Company.
Apart from loans from shareholders, who are also directors (see Note 12 to the financial statements), and convertible debt, there have
been no contracts or arrangements entered into during the financial year in which a Director of the Company had a material interest
and which were significant in relation to the Company’s business.

Substantial Shareholdings
So far as the Board is aware, no person or company, other than the Directors’ interests disclosed above and the shareholders listed
below, held 3% or more of the issued ordinary share capital of the Company at 31 May 2014.

Name

Professor Conroy

Mr. Patrick O’Sullivan

Number of Ordinary Shares

86,175,433*

30,714,546

24.48

8.73

* Of the 86,175,433 Ordinary Shares beneficially held by Professor Conroy, 19,294,286 are held by Conroy Plc, a company in which Professor Conroy has a controlling
interest.

Political Donations
No political donations were made during
the year.

Books of Account
The measures which the Directors have
taken to ensure that proper books of
account are kept are the adoption
of suitable policies for recording
transactions, assets and liabilities, the
employment of appropriately qualified
staff and the use of computer and
documentary systems. The Company’s
books of account are kept at 10 Upper
Pembroke Street, Dublin 2.

Auditor
The auditor, Deloitte & Touche,
Chartered Accountants and Statutory
Audit Firm, continue in office in
accordance with Section 160 (2)
of the Companies Act, 1963.

Signed on behalf of the Board

R.T.W.L. Conroy
Director

J.P. Jones
Director

20 November 2014

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plcStatement Of Directors’ Responsibilities

Irish company law requires the directors
to prepare financial statements for each
financial year which give a true and
fair view of the state of affairs of the
company and of the profit or loss of the
company for that period. In preparing
those financial statements, the directors
are required to:

n select suitable accounting policies for
the Company Financial Statements
and then apply them consistently;

n make judgements and estimates that
are reasonable and prudent; and

n prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
company will continue in business.

The directors are responsible for keeping
proper books of account which disclose
with reasonable accuracy at any time the
financial position of the company and to
enable them to ensure that the financial
statements are prepared in accordance
with International Financial Reporting
Standards as adopted by the European
Union and comply with Irish statute
comprising the Companies Acts, 1963
to 2013. They are also responsible for
safeguarding the assets of the company
and hence for taking reasonable steps for
the prevention and detection of fraud
and other irregularities. The directors
are responsible for the maintenance and
integrity of the corporate and financial
information included on the Company’s
website.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc12

Corporate Governance Statement

Introduction
The Board of Directors is accountable to
the Company’s shareholders for good
corporate governance.

Board of Directors
The board supports standards in
corporate governance and endeavours to
implement such standards constructively
and in a sensible and pragmatic fashion
with the objective of enhancing and
protecting shareholder value.

Regular board meetings are scheduled to
take place throughout the year. During
the year five meetings were held. All
major policies are approved by the board.
All directors are subject to re-election.
A Statement of Directors’ Responsibilities
in relation to the annual financial
statements is set out at page 11.

Remuneration Committee
The remuneration committee comprises
Mr. Louis Maguire, Mr. Séamus Fitzpatrick
and Mr. David Wathen. It is responsible
for making recommendations to the
board on the company’s executive
remuneration. The committee determines
any contract terms, remuneration and
other benefits, including share options,
for each of the executive directors. The
board itself determines the remuneration
of the non-executive directors.

Audit Committee
The committee’s terms of reference
have been approved by the board.
The audit committee comprises
Mr. Louis Maguire, Mr. Michael Power
and Mr. Séamus Fitzpatrick. The audit
committee reviews the interim and
annual financial statements before they
are presented to the board, focusing in
particular on accounting policies and
areas of management judgement and
estimation. The committee is responsible
for monitoring the controls which are
in force to ensure the information
reported to the shareholders is accurate
and complete. The committee considers
internal control issues and contributes to

the board’s review of the effectiveness
of the Company’s internal control
and risk management systems. It also
considers the need for an internal audit
function, which it believes is not required
at present because of the Company’s
limited operations. The members of
the committee have agreed to make
themselves available should any member
of staff wish to make representations to
them about the conduct of the affairs
of the Company.

The committee advises the board on the
appointment of external auditors and
on their remuneration and discusses the
nature and scope of the audit with the
external auditors. It meets formally at
least once a year with the Company’s
external auditors. An analysis of the
fees payable to the external audit firm
in respect of audit services during the
year is set out in Note 4 to the financial
statements.

The audit committee also undertakes
a formal assessment of the auditors’
independence each year which includes:
a review of any non-audit services
provided to the Company; discussion
with the auditors of all relationships
with the Company and any other parties
that could affect independence or the
perception of independence; and a
review of the auditors’ own procedures
for ensuring the independence of
the audit firm and partners and staff
involved in the audit.

Executive Committee
The Executive Committee comprises of
Professor Richard Conroy, Miss Maureen
Jones, Mr. James P. Jones, Mr. H. H.
Rennison, Mr. Louis Maguire, Dr. Sorċa
Conroy and Mr. Michael Power. Its
purpose is to support the Managing
Director in carrying out the duties
delegated to her by the board. It also
ensures that regular financial reports are
presented to the board, that effective
internal controls are in place and
functioning, and that there is an effective
risk management process in operation
throughout the company.

Internal Control
The board of directors is responsible for,
and annually reviews, the Company’s
systems of internal control, financial
and otherwise. Such systems provide
reasonable but not absolute assurance
of the safeguarding of assets, the
maintenance of proper accounting
records and the reliability of financial
information.

There are inherent limitations in
any system of internal control and,
accordingly, even the most effective
system can provide only reasonable and
not absolute assurance with respect to
the preparation of financial information
and the safeguarding of assets.

Communication with
Shareholders
Extensive information about the
Company and its activities is given
in the annual report and financial
statements. Further information is
available on the Company’s website,
www.conroygold.com, which is promptly
updated whenever announcements or
press releases are made.

The Company encourages communication
with shareholders throughout the year
and welcomes their participation at
general meetings. All Board members
attend the Annual General Meeting
and are available to answer questions.
Separate resolutions are proposed on
substantially different issues and the
agenda of business to be conducted at
the Annual General Meeting includes a
resolution to receive and consider the
Annual Report and Financial Statements.
The chairmen of the Board’s committees
will also be available at the Annual
General Meeting. The Board regards the
Annual General Meeting as a particularly
important opportunity for shareholders,
directors and management to meet and
exchange views.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plcIndependent Auditors’ Report

To the Members of Conroy Gold and Natural Resources plc

We have audited the financial statements
of Conroy Gold and Natural Resources plc
for the year ended 31 May 2014 which
comprise the Statement of Financial
Position, the Income Statement, the
Statement of Comprehensive Income, the
Statement of Changes in Equity, the Cash
Flow Statement and the related notes 1
to 21. The financial reporting framework
that has been applied in their preparation
is Irish law and International Financial
Reporting Standards (IFRS) as adopted by
the European Union.

This report is made solely to the
company’s members, as a body, in
accordance with Section 193 of the
Companies Act, 1990. Our audit work has
been undertaken so that we might state
to the company’s members those matters
we are required to state to them in an
auditor’s report and for no other purpose.
To the fullest extent permitted by law, we
do not accept or assume responsibility
to anyone other than the company and
the company’s members as a body, for
our audit work, for this report, or for the
opinions we have formed.

Respective responsibilities
of directors and auditors
As explained more fully in the Statement
of Directors’ Responsibilities, the directors
are responsible for the preparation of the
financial statements giving a true and
fair view. Our responsibility is to audit
and express an opinion on the financial
statements in accordance with Irish law
and International Standards on Auditing
(UK and Ireland). Those standards require
us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.

Scope of the audit of the
financial statements
An audit involves obtaining evidence
about the amounts and disclosures
in the financial statements sufficient
to give reasonable assurance that
the financial statements are free
from material misstatement, whether
caused by fraud or error. This includes
an assessment of: whether the
accounting policies are appropriate
to the company’s circumstances and
have been consistently applied and
adequately disclosed; the reasonableness
of significant accounting estimates
made by the directors; and the overall
presentation of the financial statements.
In addition, we read all the financial
and non-financial information in the
Annual Report and Financial Statements
to identify material inconsistencies
with the audited financial statements
and to identify any information that
is apparently materially incorrect with
the knowledge acquired by us in the
course of performing the audit. If we
become aware of any apparent material
misstatements or inconsistencies we
consider the implications for our report.

Opinion on financial
statements
In our opinion the financial statements:

n give a true and fair view, in

accordance with IFRSs as adopted
by the European Union, of the state
of the affairs of the company as at
31 May 2014 and of the loss for the
year then ended; and

n have been properly prepared in

accordance with the Companies Acts,
1963 to 2013.

Emphasis of Matter – Realisation
of Intangible Assets and Going
Concern
In forming our opinion on the Financial
Statements, which is not modified, we
draw your attention to:

n the disclosures made in Notes 2

and 7 to the financial statements
concerning the realisation of
exploration and evaluation assets
included as intangible assets in the
statement of financial position of
€16,033,308. The realisation of these
assets is dependent on the successful
further development and ultimate
production of the mineral reserves
and the availability of sufficient
finance to bring the reserves to
economic maturity and profitability.
The financial statements do not
include any adjustments in relation to
these uncertainties and the ultimate
outcome cannot at present be
determined.

n the disclosures in Notes 2 and 11
to the financial statements which
indicate that the company incurred
a loss of €380,305 during the year
ended 31 May 2014 and had net
current liabilities of €1,234,259
at that date. The directors have
confirmed that they will not seek
repayment of amounts owed to them
by the company of €1,062,485 within
12 months of the date of approval
of the financial statements unless
the company has sufficient funds
to repay such amounts. In addition,
subsequent to year end the company
raised additional funds of £750,000
sterling. The directors have reviewed
the proposed work programme for
exploration and evaluation assets and
on the basis of the cash balances on
hand, the equity raised subsequent
to year end, the results obtained
from the exploration programme and
the prospects for raising additional
funds as required they consider it
appropriate to prepare the financial
statements on a going concern
basis. The Financial Statements do
not include any adjustments to the
carrying amount, or classification of
assets and liabilities, if the company
was unable to continue as a going
concern in the future.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc14

Independent Auditors’ Report continued

Matters on which we are
required to report by
exception
We have nothing to report in respect
of the provisions in the Companies
Acts, 1963 to 2013 which require us
to report to you if, in our opinion, the
disclosures of directors’ remuneration
and transactions specified by law are not
made.

Gerard Casey

For and on behalf of
Deloitte & Touche

Chartered Accountants
and Statutory Audit Firm

Limerick

20 November 2014

Matters on which we are
required to report by the
Companies Acts, 1963 to
2013
n We have obtained all the information
and explanations which we consider
necessary for the purposes of our
audit.

n In our opinion proper books of
account have been kept by the
company.

n The financial statements are in

agreement with the books of account.

n In our opinion the information given
in the directors’ report is consistent
with the financial statements.

n The net assets of the company, as

stated in the Statement of Financial
Positions are more than half of the
amount of its called-up share capital
and, in our opinion, on that basis
there did not exist at 31 May 2014
a financial situation which under
Section 40(1) of the Companies
(Amendment) Act, 1983 would require
the convening of an extraordinary
general meeting of the company.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plcStatement of Financial Position

As at 31 May 2014

Note

2014
€

2013
€

ASSETS

Non-current Assets

Intangible assets

Investment in subsidiary

Property, plant and equipment

Current Assets

Trade and other receivables

Cash and cash equivalents

Total Assets

EQUITY AND LIABILITIES

Capital and Reserves

Called up share capital

Called up deferred share capital

Share premium

Capital conversion reserve fund

Share based payments reserve

Retained losses

Total Equity

Non-current Liabilities

Convertible Loan

Financial Liabilities

Total non-current liabilities

Current Liabilities

Trade and other payables

Total Current Liabilities

Total Liabilities

Total Equity and Liabilities

16,033,308

14,824,846

7,854

7,138

16,041,164

14,831,986

59,358

78,372

137,730

163,139

71,864

235,003

16,178,894

15,066,989

3,520,000

6,135,597

8,447,949

30,617

1,034,760

(4,877,992)

8,737,547

–

7,917,717

30,617

969,735

(4,581,687)

14,290,931

13,073,929

324,952

191,022

515,974

1,371,989

–

1,045,775

947,285

1,887,963

1,993,060

16,178,894

15,066,989

The financial statements were approved by the Board of Directors on 20 November 2014 and signed on its behalf:

R.T.W.L. Conroy
Director

J.P. Jones
Director

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc16

Income Statement

For the year ended 31 May 2014

OPERATING EXPENSES

Finance income – bank interest receivable

Finance costs – interest on shareholder loan

LOSS BEFORE TAXATION

Taxation

LOSS FOR THE YEAR

Basic and diluted loss per share

Note

2014
€

(374,323)

–

(5,982)

2013
€

(411,020)

(12,971)

(380,305)

(423,979)

–

(380,305)

(423,979)

(€0.0012)

(€0.0015)

Statement of Comprehensive Income

For the year ended 31 May 2014

LOSS FOR THE YEAR

2014
€

2013
€

(380,305)

(423,979)

Total income and expense recognised in other comprehensive income

–

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(380,305)

(423,979)

The financial statements were approved by the Board of Directors on 20 November 2014 and signed on its behalf:

R.T.W.L. Conroy
Director

J.P. Jones
Director

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc17

Statement of Changes in Equity

For the year ended 31 May 2014

Share
Capital
€

Share
Premium
€

Capital
Conversion
Reserve Fund
€

Share-based
Payment
Reserve
€

Retained
Earnings/
(Deficit)
€

Total
Equity
€

8,112,257

7,872,573

30,617

880,709

(4,217,708)

12,678,448

625,290

–

45,144

–

149,026

–

625,290

45,144

149,026

–

(423,979)

(60,000)

60,000

–

At 1 June 2012

Share issue

Share premium

Share-based payments

Loss for the year

Transfer from share-based
payment reserve to retained
earnings/(deficit)

At 31 May 2013

8,737,547

7,917,717

30,617

969,735

(4,581,687)

13,073,929

At 1 June 2013

Share issue

Share premium

Share-based payments

Loss for the year

Transfer from share-based
payment reserve to retained
earnings/(deficit)

8,737,547

7,917,717

30,617

969,735

(4,581,687)

13,073,929

918,050

–

530,232

–

149,025

–

918,050

530,232

149,025

–

(380,305)

(84,000)

84,000

–

At 31 May 2014

9,655,597

8,447,949

30,617

1,034,760

(4,877,992)

14,290,931

Share Capital
The share capital comprises of the nominal value share capital issued for cash and non-cash consideration. On 26 February 2014,
the issued share capital at that date, €9,203,395, was restructured into ordinary share capital of €3,067,798 and deferred share
capital of €6,135,597.

Share Premium
The share premium reserve comprises of the excess consideration received in respect of share capital over the nominal value
of share issued.

Capital Conversion Reserve Fund
The ordinary shares of the Company were renominalised from €0.03174435 each to €0.03 each in 2001 and the amount by which
the issued share capital of the Company was reduced and transferred to capital conversion reserve fund.

Share Based Payment Reserve
The share based payment reserve represents the amount expensed to the income statement and the amount capitalised as part
of intangible assets of share-based payments granted which are not yet exercised and issued as shares.

Retained Earnings/(Deficit)
This reserve represents the accumulated losses absorbed by the Company to the Statement of Financial Position date.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc18

Cash Flow Statement

For the year ended 31 May 2014

Cash flows from operating activities

Cash generated by/(used in) operations

Net cash generated by/(used in) operating activities

Cash flows from investing activities

Investment in exploration and evaluation

Payments to acquire property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

Issue of share capital

Bank interest received

Interest paid on shareholder loan

Advances from shareholders

Amounts repaid to shareholders

Net cash generated from financing activities

Increase/(Decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Notes

2014
€

2013
€

186,680

(103,587)

(1,064,003)

(1,049,245)

(4,740)

–

(1,068,743)

(1,049,245)

812,621

–

(14,450)

205,000

(114,600)

888,571

6,508

71,864

78,372

495,037

–

491,000

–

986,049

(166,783)

238,647

71,864

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc19

Notes to the Financial Statements

For the year ended 31 May 2014

1. ACCOUNTING POLICIES

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by
the European Union and interpretations adopted by the International Accounting Standards Board. These financial statements
have also been prepared in accordance with the Companies Acts, 1963 to 2013. The financial statements are prepared under the
historical cost convention.

Adoption of New and Revised Standards

Standards and Interpretations not affecting the reported results nor the financial position
In the current year, the following new and revised Standards have been adopted. Their adoption has not had any material
impact on the amounts reported in these financial statements but they may affect the accounting for future transactions and
arrangements. The adoption of these Standards has not led to any changes in the Group’s accounting policies.

Amendments to IFRS 1 (March 2012) Government Loans (effective for accounting dates beginning on or after 1 January 2013)

Amendments to IFRS 7 (Dec 2011) Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities

(effective for accounting periods beginning on or after 1 January 2013)

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (effective for accounting periods beginning on or after
1 January 2013)

Amendments to IAS 1 (June 2011) Presentation of Items of Other Comprehensive Income (effective for accounting periods

beginning on or after 1 July 2012)

IAS 19 (revised June 2011) Employee Benefits (effective for accounting periods beginning on or after 1 January 2013)

IFRS 13 Fair Value Measurement (effective for accounting periods beginning on or after 1 January 2013)

Amendments to IAS 12 (Dec 2010) Deferred Tax: Recovery of Underlying Assets (effective for accounting periods beginning

on or after 1 January 2013)

Amendments to IFRS 1 (Dec 2010) Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (effective for

accounting periods beginning on or after 1 January 2013)

Annual Improvements to IFRSs: 2009-2011 Cycle (May 2012): Annual Improvements to IFRSs: 2009-2011 Cycle (effective

for accounting periods beginning on or after 1 January 2013)

Standards and Interpretations in Issue Not Yet Effective
At the date of authorisation of these financial statements, other than the Standards and Interpretations adopted by the Group
in advance of their effective dates, the following Standards were in issue but not yet effective and in some cases had not been
adopted by the European Union:

Amendments to IFRS 10 and IAS 28 (Sept 2014) Sale or Contribution of Assets between an Investor and its Associate or Joint

Venture (effective date to be confirmed)

Amendments to IAS 27 (Aug 2014) Equity Method in Separate Financial Statements (effective date to be confirmed)

IFRS 9 Financial Instruments (effective date to be confirmed)

Amendments to IAS 16 and IAS 41 (Jun 2014) Agriculture: Bearer Plants (effective date to be confirmed)

IFRS 15 Revenue from Contracts with Customers (effective date to be confirmed)

Amendments to IAS 16 and IAS 38 (May 2014) Clarification of Acceptable Methods of Depreciation and Amortisation

(effective date to be confirmed)

Amendments to IFRS 11 (May 2014) Accounting for Acquisitions of Interests in Joint Operations (effective date to be

confirmed)

IFRS 14 Regulatory Deferral Accounts (effective date to be confirmed)

Amendments to IAS 19 (Nov 2013) Defined Benefit Plans: Employee Contributions (effective date to be confirmed)

Amendments to IAS 39 (Jun 2013) Novation of Derivatives and Continuation of Hedge Accounting (effective for accounting

periods beginning on or after 1 January 2014)

Amendments to IAS 36 (May 2013) Recoverable Amount Disclosures for Non-Financial Assets (effective for accounting

periods beginning on or after 1 January 2014)

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

Notes to the Financial Statements continued

1. ACCOUNTING POLICIES continued

IFRIC 21 Levies (effective for accounting periods beginning on or after 17 June 2014)

Amendments to IFRS 10, IFRS 12 and IAS 27 (Oct 2012) Investment Entities (effective for accounting periods beginning

on or after 1 January 2014)

Amendments to IAS 32 (Dec 2011) Offsetting Financial Assets and Financial Liabilities (effective for accounting periods

beginning on or after 1 January 2014)

IFRS 12 Disclosure of Interests in Other Entities (effective for accounting periods beginning on or after 1 January 2014)

IFRS 11 Joint Arrangements (effective for accounting periods beginning on or after 1 January 2014)

IFRS 10 Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2014)

IAS 28 (revised May 2011) Investments in Associates and Joint Ventures (effective for accounting periods beginning
on or after 1 January 2014)

IAS 27 (revised May 2011) Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2014)

Annual Improvements to IFRSs: 2012-2014 Cycle: Annual Improvements to IFRSs: 2012-2014 Cycle (effective date to be confirmed)

Annual Improvements to IFRSs: 2011-13 Cycle (Dec 2013): Annual Improvements to IFRSs: 2011-13 Cycle (effective date

to be confirmed)

Annual Improvements to IFRSs: 2010-12 Cycle (Dec 2013): Annual Improvements to IFRSs: 2010-12 Cycle (effective date

to be confirmed)

Intangible Assets
The Company accounts for mineral expenditure in accordance with IFRS 6 – Exploration For and Evaluation of Mineral
Resources.

(i) Capitalisation

Certain costs (other than payments to acquire the legal rights to explore) incurred prior to acquiring the rights to explore
are charged directly to the income statement. Exploration, appraisal and development expenditure incurred on exploring,
and testing exploration prospects are accumulated and capitalised as intangible exploration and evaluation (E&E) assets.
Capitalised costs include geological and geophysical costs, and other direct costs of exploration (drilling, trenching, sampling
and technical feasibility and commercial viability activities). In addition, capitalised costs includes an allocation from operating
expenses, including share based payments, all such costs are directly related to exploration and evaluation activities. E&E costs
are not amortised prior to the conclusion of appraisal activities. At completion of appraisal activities if technical feasibility is
demonstrated and commercial reserves are discovered, then the carrying amount of the relevant E&E asset will be reclassified
as a development and production asset, once the carrying value of the asset has been assessed for impairment. If following
completion of appraisal activities in an area, it is not possible to determine technical feasibility and commercial viability, or
if the right to explore expires, then the costs of such unsuccessful exploration and evaluation is written off to the income
statement in the period in which the event occurred.

(ii) Impairment

If facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable amount, an impairment
review is performed. The following are considered to be the key indicators of impairment.

n The right to explore in an area has expired, or will expire in the near future, without renewal.

n No further exploration or evaluation is planned or budgeted for.

n A decision has been made to discontinue exploration and evaluation in an area, because of the absence of commercial

reserves.

n Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.

For E&E assets, where the above indicators exist, an impairment test is carried out. The E&E assets are categorised into Cash
Generating Units (“CGU”). The carrying value of the CGU is compared to its recoverable amount and the resulting impairment
loss is written off to the income statement. The recoverable amount of the CGU is assessed as the higher of its fair value, less
costs to sell, and its value in use.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

1. ACCOUNTING POLICIES continued

Transaction Costs
Transaction costs arising on the issue of equity securities are accounted for as a deduction from equity, against the share
premium account.

C. Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation
is provided on a straight line basis to write off the cost less estimated residual value of the assets over their estimated useful
lives as follows:

Motor vehicles
Plant and office equipment

5 years
10 years

D. Taxation

The tax expense represents the sum of the current and deferred tax charge.

The tax currently payable is based on taxable profits for the year. Taxable profit differs from net profit or loss as reported in
the income statement because it excludes items of income or expenditure that are taxable or deductible in other years and it
further excludes items that are not taxable or deductible. The company’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and
liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit and is accounted
for using the balance sheet liabilities method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also taken directly to equity.

E. Share Based Payments

For equity-settled share based payment transactions (i.e. the granting of share options and share warrants), the Company
measures the services and the corresponding increase in equity at fair value at the measurement date (which is the grant
date) using a recognised valuation methodology for the pricing of financial instruments (Binomial Lattice Model). Given
that the share options, and warrants granted do not vest until the completion of a specified period of service the fair value
is determined on the basis that the services to be rendered by employees as consideration for the granting of share options
and warrants will be received over the vesting period, which is assessed as the grant date.

The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis
over the vesting period, based on the company’s estimate of equity instruments that will eventually vest.

F. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

G. Trade and other receivables and payables

Trade and other receivables and payables are measured at initial recognition at fair value, and subsequently measured at
amortised cost.

H. Cash and cash equivalents

Cash and cash equivalents consist of cash at bank held by the Company and short term bank deposits with a maturity of three
months or less. Cash and cash equivalents are held for the purpose of meeting short term cash commitments.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc22

Notes to the Financial Statements continued

1. ACCOUNTING POLICIES continued

Pension costs
The Company provides for certain employees through defined contribution pension schemes. The amounts charged to the
income statement and statement of financial position is the contribution payable in that year. Any difference between amounts
charged and contributions paid to the pension scheme is included in receivables or payables in the statement of financial
position.

Foreign Currencies
Transactions denominated in foreign currencies relating to revenues, costs and non-monetary assets are translated into Euro
at the rates of exchange ruling on the dates on which the transactions occurred.

Monetary assets and liabilities denominated in foreign currencies are translated into Euro at the rate of exchange ruling at the
statement of financial position date. The resulting profits or losses are dealt with in the income statement.

K. Shareholder Loan

The shareholder loan is initially measured at fair value, net of transaction costs and subsequently measured at amortised cost
using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method
is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.
The effective interest rate is the rate exactly discounts estimated future cash payments through the expected life of the
financial liability, or, where appropriate, a shorter period, to the net carrying amount of initial recognition.

L. Critical accounting judgements and key sources of estimation uncertainty

Critical judgements in applying the Company’s accounting policies

In the process of applying the Company’s accounting policies above, management has identified the judgemental areas
that have the most significant effect on the amounts recognised in the financial statements (apart from those involving
estimations), which are dealt with below:

Exploration and evaluation

The assessment of whether general administration costs and salary costs are capitalised or expensed involves judgement.
Management consider the nature of each cost incurred and whether it is deemed appropriate to capitalise it within exploration
and evaluation assets. Given that the activity of management and the resultant operating costs are primarily focused on the
Company’s gold prospects, the directors consider it appropriate to capitalise a portion of such costs.

Impairment of intangible assets

As outlined in the Intangible Assets accounting policy, the exploration and evaluation assets need to be allocated into Cash
Generating Units (“CGU”). The determination of what constitutes a cash generating unit requires judgement. Once this is
decided, the carrying value of each cash generating unit is compared to its recoverable amount. The recoverable amount of the
CGU is assessed as the higher of its fair value less costs to sell and its value in use. The determination of value in use requires
the following judgements:

n Estimation of future cash flows expected to be derived from the asset.

n Expectation about possible variations in the amount or timing of the future cash flows.

n The determination of an appropriate discount rate.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc23

1. ACCOUNTING POLICIES continued

Going concern

The preparation of financial statements requires an assessment on the validity of the going concern assumption. The validity
of the going concern assumption is dependent on the successful further development and ultimate production of the mineral
reserves and the availability of sufficient finance to bring the reserves to economic maturity and profitability. The realisation
of intangible assets depends on the successful discovery and development of economic reserves. The directors have reviewed
the proposed programme for exploration and evaluation assets and on the basis of the cash balance on hand, the equity
raised subsequent to the year end, the very encouraging results from the exploration programme and the prospects for raising
additional funds as required, consider it appropriate to prepare the financial statements on the going concern basis. Should the
going concern basis not be appropriate, adjustments would have to be made to reduce the value of the Company’s assets, in
particular the intangible assets, to their realisable values.

Key sources of estimation uncertainty

The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts
reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the
year. The nature of estimation means that actual outcomes could differ from those estimates. The key sources of estimation
uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.

Share-based payments

The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to
the inputs necessary for the valuation model chosen. The Company has made estimates as to the volatility of its own shares,
the probable life of options granted and the time of exercise of those options. The model used by the Company is the Binomial
Lattice Model. In addition, the directors consider that 80% of their activity is primarily focused on the Company’s gold prospects
and therefore, the directors consider it appropriate to capitalise 80% of such costs to exploration and evaluation assets.

Deferred tax

No deferred tax asset has been recognised in respect of tax losses as it cannot be considered probable that future taxable profit
will be available against which the related temporary differences can be utilised.

2. GOING CONCERN

Exploration and evaluation costs capitalised as intangible assets amounted to €16,033,308 (2013: €14,824,846) (Note 7) at the
balance sheet date.

The Directors recognise that the future realisation of intangible assets is dependent on the successful further development and
ultimate production of the mineral reserves and the availability of sufficient finance to bring the reserves to economic maturity
and profitability.

The Company made a loss of €380,305 (2013: €423,979) for the year ended 31 May 2014 and had net current liabilities of
€1,234,259 (2013: €712,282) at that date. The directors have confirmed that they will not seek repayment of amounts owed
to them by the Company of €1,062,485 within 12 months of the date of approval of the financial statements, unless the
Company has sufficient funds to repay such amounts.

On 8 October 2014, 75,000,000 ordinary shares of 1p were issued by the company at 1p sterling, raising additional funds
of £750,000 sterling.

The Directors have reviewed the proposed work programme for exploration and evaluation assets and on the basis of the
cash balances on hand, the equity raised subsequent to year end, the very encouraging results obtained from the exploration
programme and the prospects for raising additional funds as required, they consider it appropriate to prepare the financial
statements on a going concern basis. The financial statements do not include any adjustments to the carrying amount, or
classification of assets and liabilities, if the Company was unable to continue as a going concern in the future.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc24

Notes to the Financial Statements continued

3. OPERATING EXPENSES

(a) Analysis of operating expenses

Operating expenses

Transfer to intangible assets (Note 7)

Operating expenses are analysed as follows:

Wages and salaries

Share based payments

Depreciation

Auditor remuneration

Other operating expenses

2014
€

1,039,432

(665,109)

374,323

2014
€

558,180

149,026

4,024

15,000

313,202

2013
€

1,119,205

(708,185)

411,020

2013
€

563,221

149,026

3,550

15,000

388,408

1,039,432

1,119,205

Of the above costs a total of €665,109 (2013: €708,185) is capitalised to intangible assets based on a review of the nature and
quantum of the underlying cost and the exercise of appropriate measurement across each cost category.

(b) Segmental reporting
Operating segments have been identified on the basis of internal reports about components of the Company that are regularly
reviewed by the Chief Operating Decision Maker, being the Board of Directors, in order to allocate resources to segments
and to assess their performance. The Company has one class of business, gold exploration and operates in two geographical
markets, Ireland and Finland. Costs that are directly attributable to Ireland and Finland have been capitalised to exploration
and evaluation assets (Note 7). All remaining operating expenses have been expensed through the Income Statement.

Wages and salaries

Social welfare costs

Pension costs

The average number of employees during the year was 9 (2013: 11).

2014
€

515,906

7,274

35,000

558,180

2013
€

513,821

14,075

35,325

563,221

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

3. OPERATING EXPENSES continued

(d) Directors’ remuneration
An analysis of remuneration for each director of the Company in the current financial year (prior to amounts transferred
to intangible assets) is as follows:

Professor R.T.W.L. Conroy

M.T.A. Jones

J.P. Jones

H.H. Rennison

L.J. Maguire

S.P. Fitzpatrick

M.E. Power

C.D. Wathen

Dr S.C. Conroy

Fees
€

22,220

9,523

Salary
€

178,378

113,350

70,250

–

Share based
payment
€

Pension
contributions
€

63,597

41,893

24,919

4,079

661

2,313

933

–

22,000

13,000

–

Total
€

264,195

186,766

117,692

13,602

10,184

11,836

10,456

9,523

98,404

361,978

142,474

35,000

637,856

An analysis of remuneration for each director of the Company in the prior financial year (prior to amounts transferred
to intangible assets) is as follows:

Professor R.T.W.L. Conroy

M.T.A. Jones

J.P. Jones

H.H. Rennison

L.J. Maguire

S.P. Fitzpatrick

M.E. Power

C.D. Wathen

Dr S.C. Conroy

Fees
€

22,220

9,523

Salary
€

175,000

110,000

70,417

–

Share based
payment
€

Pension
contributions
€

63,594

41,893

24,919

4,079

661

2,313

933

–

22,204

13,121

–

Total
€

260,814

183,620

117,980

13,602

10,184

11,836

10,456

9,523

98,404

355,417

142,471

35,325

631,617

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc
26

Notes to the Financial Statements continued

3. OPERATING EXPENSES continued

The total share based payment charge of €149,026 (2013: €149,026) is accounted for as shown below:

Share based payment charge expensed to income statement

Share based payment charge transferred to intangible assets

2014
€

28,494

120,532

149,026

2013
€

28,494

120,532

149,026

In the opinion of the directors, eighty per cent of the share based payment charge is directly related to exploration and
evaluation activities, and has been capitalised within intangible assets.

4. LOSS BEFORE TAXATION

The loss before taxation is arrived at after charging the following items, which are stated at amounts prior to the transfer
to intangible assets:

Directors’ remuneration

– Fees for services as directors

– Remuneration for management services

– Share-based payments

Depreciation

Auditor’s remuneration

– Audit of individual accounts

– Other assurance services

– Tax advisory services

– Other non-audit services

2014
€

2013
€

98,404

396,978

142,474

4,024

98,404

390,742

142,471

3,550

15,000

–

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc27

5. TAXATION

No taxation charge arises in the current or prior financial year due to losses incurred.

Factors affecting the tax charge for the year:
The total tax charge for the year is different to the standard rate of Irish corporation tax. This is due to the following:

Loss on ordinary activities before tax

Loss on ordinary activities multiplied by the standard
rate of Irish corporation tax of 12½% (2013: 12½%)

Effects of:

Losses carried forward for future utilisation

Tax charge for the year

2014
€

2013
€

(380,305)

(423,979)

(47,538)

(52,997)

47,538

–

52,997

–

No deferred tax asset has been recognised on accumulated tax losses as it cannot be considered probable that future taxable
profit will be available against which the deferred tax asset can be utilised. The deferred tax asset not recognised amounts to
€468,218 (2013: €420,680).

6. LOSS PER SHARE

The calculation of the basic and diluted loss per share of €0.0012 (2013: €0.0015) is based on the loss for the financial year
of €380,305 (2013: €423,979) and the weighted average number of ordinary shares in issue during the year of 309,922,413
(2013: 274,234,517).

The effect of share options and warrants is anti-dilutive.

INTANGIBLE ASSETS

Exploration and evaluation assets

Cost

At 1 June

Expenditure during the year

– licence and appraisal costs

– other operating expenses

– equity settled share based payments (Note 3)

– loan interest (Note 12)

2014
€

2013
€

14,824,846

13,603,186

519,425

544,577

120,532

23,928

461,592

587,653

120,532

51,883

At 31 May

16,033,308

14,824,846

Exploration and evaluation assets relate to expenditure incurred in the development of mineral exploration opportunities.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc
28

Notes to the Financial Statements continued

INTANGIBLE ASSETS continued
The directors have considered the proposed work programmes for the underlying mineral reserves. They are satisfied that there
are no indications of impairment, but nonetheless recognise that the realisation of the intangible assets, is dependent on
successful further exploration and appraisal activities, the subsequent development and ultimate economic production of the
mineral reserves and the availability of sufficient finance to bring the resources to economic maturity and profitability.

Mineral interests are categorised as follows:

Ireland

Cost

At 1 June

Expenditure during the year

– licence and appraisal costs

– other operating expenses

– equity settled share based payments

– loan interest

At 31 May

Finland

Cost

At 1 June

Expenditure during the year

– licence and appraisal costs

– other operating expenses

– equity settled share based payments

– loan interest

At 31 May

INVESTMENT IN SUBSIDIARY

Shares in subsidiary company
(Unlisted shares) at cost:

2014
€

2013
€

13,069,449

11,971,499

508,247

459,347

108,479

20,340

445,866

499,504

108,479

44,101

14,165,862

13,069,449

2014
€

2013
€

1,755,397

1,631,687

11,178

85,230

12,053

3,588

15,727

88,148

12,053

7,782

1,867,446

1,755,397

% Owned

2014
€

2013
€

Trans International Mineral Exploration Limited

100%

The registered office of the above non-trading subsidiary is 10 Upper Pembroke Street, Dublin 2.

The above subsidiary has not been consolidated on the basis that it is not trading, and the assets of the entity are €2.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc9. PROPERTY, PLANT AND EQUIPMENT

Cost

At 1 June 2013

Additions

At 31 May 2014

Accumulated Depreciation

At 1 June 2013

Charge for the year

At 31 May 2014

Cost

At 1 June 2012

Additions

At 31 May 2013

Accumulated Depreciation

At 1 June 2012

Charge for the year

At 31 May 2013

10. TRADE AND OTHER RECEIVABLES

VAT receivable

Other debtors

Total
€

130,821

4,740

135,561

123,683

4,024

127,707

7,854

Total
€

130,821

–

130,821

120,133

3,550

123,683

7,138

2013
€

34,220

128,919

163,139

Motor
Vehicles
€

Plant & Office
Equipment
€

17,754

–

17,754

10,616

3,550

14,166

3,588

113,067

4,740

117,807

113,067

474

113,541

4,266

Motor
Vehicles
€

Plant & Office
Equipment
€

17,754

–

17,754

7,066

3,550

10,616

7,138

113,067

–

113,067

–

113,067

–

2014
€

49,764

9,594

59,358

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc30

Notes to the Financial Statements continued

11. TRADE AND OTHER PAYABLES

Amounts falling due within one year

Accrued directors’ remuneration

– fees and other emoluments

– pension contributions

Other accruals

2014
€

2013
€

975,310

87,175

309,504

1,371,989

713,946

52,175

181,164

947,285

It is the Company’s normal practice to agree terms of transactions, including payment terms, with suppliers and provided
suppliers perform in accordance with the agreed terms, it is the Company’s policy that payment is made according to the
agreed terms. The Company has financial risk management policies in place to ensure that all payables are paid within the credit
timeframe. The carrying value of the trade and other payables approximates to their fair value.

The Directors have confirmed that they will not seek repayment of amounts owed to them by the Company of €1,062,485 within
12 months of the date of approval of the financial statements, unless the Company has sufficient funds to repay such amounts.

12. NON CURRENT FINANCIAL LIABILITIES

R.T.W.L. Conroy
2014
€

M. Jones
2014
€

Total
2014
€

(a) Shareholder loan

Opening balance

Advanced during year

Conversion to share capital

Conversion to convertible loan(b)

Loan interest paid

Loan amount repaid

Interest charge for the year

Closing balance

1,040,672

67,000

–

(812,095)

(14,450)

(114,600)

24,495

191,022

5,103

138,000

–

(148,518)

–

5,415

–

1,045,775

205,000

–

(960,613)

(14,450)

(114,600)

29,910

2013
€

665,318

491,000

(175,397)

–

64,854

191,022

1,045,775

The immediate funding requirements of the Company have been partly financed by advances from Professor R.T.W.L. Conroy
(executive chairman and major shareholder). Interest at a rate of 8.25% per annum is accrued on the outstanding principal. The
accrued principal and accrued interest at 31 May 2014 is €5,518 and €185,504 respectively (2013: €865,215 and €175,457
respectively).

Of the €29,910 interest charge for the year (2013: €64,854), €5,982 (2013: €12,971) has been expensed to the Income
Statement, with the remaining charge of €23,928 (2013: €51,883) being transferred to intangible assets (Note 7).

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc12. NON CURRENT FINANCIAL LIABILITIES continued

(b) Convertible Loan

Conversion from shareholder loan (a)

Subscription

Conversion

At 31 May 2014

2014
€

2013
€

960,613

17,816

(653,477)

324,952

–

On 30 September 2013 €960,613 of the shareholder loan was converted to a convertible loan. On that date, Dr. S. Conroy
subscribed for convertible debt of €17,816. The debt is convertible at the Company’s discretion into ordinary shares at the
higher of 2.65 pence sterling or the prevailing market price at the time of conversion. The debt is unsecured and does not
accrue interest.

On 3 February 2014 £235,000 of the convertible debt (R.T.W.L. Conroy £110,000, M. Jones £110,000, Dr. S. Conroy £15,000)
was converted at 2.65p into 8,867,925 ordinary shares and on 26 February 2014 a further £315,000 (R.T.W.L. Conroy £300,000,
M. Jones £15,000) was converted into 11,886,792 ordinary shares of €0.01 each. The balance at 31 May 2014 relates to amounts
subscribed for by R.T.W.L. Conroy.

13. CALLED UP SHARE CAPITAL AND SHARE PREMIUM

Authorised:

750,000,000 ordinary shares of €0.03 each

1,636,440,312 ordinary shares of €0.01 each

306,779,844 deferred shares of €0.02 each

2014
€

2013
€

–

22,500,000

16,364,403

6,135,597

–

22,500,000

Following approval at an Extraordinary General Meeting held on 26 February 2014, the Company reorganised its share capital by
subdividing and reclassifying each issued ordinary share of €0.03 as one ordinary share of €0.01 each and one deferred share
of €0.02 each.

The deferred shares do not entitle the holder to receive a dividend or other distribution, do not entitle the shareholder to
receive notice of or vote at any general meeting of the Company, and effectively do not entitle the shareholder to any proceeds
on a return of capital or winding up of the Company.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc32

Notes to the Financial Statements continued

13. CALLED UP SHARE CAPITAL AND SHARE PREMIUM continued

Issued and Fully Paid – Current Financial Year

Number

Share capital
€

Capital
conversion
reserve fund
€

Called up
deferred
share capital
€

Share premium
€

291,251,542

8,737,547

30,617

6,660,377

8,867,925

45,220,128

–

199,811

266,038

452,201

(6,135,597)

–

6,135,597

7,917,717

10,312

18,662

535,603

–

(34,345)

Start of year

Share issue (a)

Share issue (b)

Share issue (c)

Deferred shares (h)

Issue expenses

End of year

351,999,972

3,520,000

30,617

6,135,597

8,447,949

(a) On 30 September 2013, 6,660,377 ordinary shares of €0.03 each were issued at 2.65p sterling realising €0.031548 per

share resulting in a premium of €0.001548 per share.

(b) On 3 February 2014, £225,000 of the convertible debt was converted into 8,867,925 ordinary shares of €0.03 each at 2.65p

sterling (€0.0321) per share resulting in a premium of €0.0021 per share.

(c) On 26 February 2014, 33,333,336 ordinary shares of €0.01 each were issued at 1.5p sterling realising €0.01818 per share
resulting in a premium of €0.00818 per share and a further £315,000 of the convertible debt was converted into 11,886,792
ordinary shares of €0.01 each at 2.65p sterling (€0.03212) per share resulting in a premium of €0.02212 per share.
(d) At 31 May 2014 and 31 May 2013 warrants over 49,064,188 shares exercisable at €0.037 per share at any time up to

15 November 2015 were outstanding.

(e) At 31 May 2013 options had been issued over 2,960,000 shares. On 30 November 2013 options over 1,460,000 shares

exercisable at €0.08 lapsed. At 31 May 2014 the remaining 1,500,000 options are outstanding exercisable at prices ranging
from €0.048 to €0.0633 and expire between 13 April 2016 and 14 January 2018.

(f) At 31 May 2014 and 31 May 2013 warrants over 29,805,123 shares exercisable at €0.0433 per share at any time up to

16 November 2017 were outstanding.

(g) The share price at 31 May 2014 was 1.55p sterling. During the year the price ranged from 1.55p to 2.92p sterling.

(h) The share capital comprises of, the nominal value share capital issued for cash and non-cash consideration. On 26 February

2014, the issued share capital at that date €9,203,395, was restructured into ordinary share capital of €3,067,798
and deferred share capital of €6,135,597. The deferred shares do not entitle the holder to receive a dividend or other
distribution, do not entitle the holder to receive notice of, or vote in at any general meetings of the company and do not
entitle the holder to any proceeds on a return of capital on winding up of the company.

Issued and Fully Paid – Prior Financial Year

Start of year

Share issues

Issue expenses

End of Year

Number

270,408,542

20,843,000

–

Share capital
€

Capital conversion
reserve fund
€

Share premium
€

8,112,257

625,290

–

30,617

–

7,872,573

45,144

–

291,251,542

8,737,547

30,617

7,917,717

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

13. CALLED UP SHARE CAPITAL AND SHARE PREMIUM continued

(a) On 27 September 2011, 20,689,655 shares were issued at 3.625p sterling realising €0.0416858 per share resulting in a

premium of €0.016858 per share, together with 20,689,655 warrants, exercisable at 4.25p sterling during the two years
following admission of the share. However if the closing price of the ordinary shares remained at 5.5p sterling or higher
for five or more consecutive business days exercise of the warrants became mandatory. All of the 20,689,655 warrants
were outstanding at 31 May 2013 and 31 May 2012 and lapsed on 3 October 2013.

(b) On 25 March 2013, 20,843,000 shares were issued at 2.75p sterling realising €0.03215 per share resulting in a premium

of €0.00215 per share.

to 15 November 2015 were outstanding.

(d) At 31 May 2013 and 31 May 2012 options had been issued over 4,130,000 shares. On 14 March 2013 options over

1,170,000 shares exercisable at €0.10 lapsed. At 31 May 2013 the remaining 2,960,000 options are outstanding exercisable
at prices ranging from €0.048 to €0.10 and expire between 30 April 2013 and 14 January 2018.

(e) At 31 May 2013 and 31 May 2012 warrants over 29,805,123 shares exercisable at €0.0433 per share at any time up

to 16 November 2017 were outstanding.

(f) The share price at 31 May 2013 was 1.90p sterling. During the year the price ranged from 1.05p to 2.75p sterling.

14. NOTES TO THE CASH FLOW STATEMENT

Reconciliation of Operating Loss to Net Cash used in Operations:

Operating loss

Depreciation

Expense recognised in income statement in respect
of equity settled share based payments

Increase in creditors

Decrease/(increase) in debtors

Cash generated by/(used in) operations

2014
€

(374,323)

4,024

28,494

424,704

103,781

186,680

2013
€

(411,020)

3,550

28,494

364,588

(89,199)

(103,587)

15. COMMITMENTS AND CONTINGENCIES

Obligations under Mineral Interests
The Company has received prospecting licences under the Republic of Ireland Mineral Development Acts 1940 to 1995 for areas
in Monaghan and Cavan. It has also received licences in Northern Ireland for areas in Armagh in accordance with the Mineral
Development Act (Northern Ireland) 1969.

The Company has certain commitments in respect of these licences at year end which comprise total expenditure commitments
as follows:

Commitments for expenditure:

– due within one year

– due between two and five years

2014
€

2013
€

150,000

500,000

650,000

150,000

500,000

650,000

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

Notes to the Financial Statements continued

16. RELATED PARTY TRANSACTIONS

a) Details as to shareholder loans and share capital transactions with Prof. R.T.W.L. Conroy are outlined in Notes 11 and 12

to the financial statements.

For the year ended 31 May 2014, Conroy Gold and Natural Resources plc incurred costs totalling €205,768 (2013: €84,950)
on behalf of Karelian Diamond Resources Plc., which has certain common shareholders and directors. These costs were
recharged to Karelian Diamond Resources plc.

These costs are analysed as follows:

Office salaries

Rent and rates

Travel and subsistence

Legal and professional

Other operating expenses

Exploration costs

2014
€

28,713

13,463

17,805

40,906

42,329

62,552

205,768

2013
€

9,446

4,920

6,311

21,116

12,701

30,456

84,950

At 31 May 2014, Conroy Gold and Natural Resources plc owed €33,727 to Karelian Diamond Resources plc (2013: €119,308
was due from Karelian Diamond Resources plc). Amounts owed to Karelian Diamond Resources plc are included in “Other
accruals” within Trade and other Payables in the current year. In the prior year the equivalent amounts were included in
“Other debtors” within Trade and other Receiveables.

At 31 May 2014 Conroy plc owed €5,000 to Conroy Gold and Natural Resources plc. (2013: €5,000). Amounts owed by

Conroy plc are included in “Other debtors” within Trade and other Receivables.

b) Details of key management compensation which comprises directors remuneration including short term employee benefits
€460,382 (2013: €455,519), post employment benefits €35,000 (2013: €35,325), other long term benefits €Nil (2013:
€Nil), share based payment €142,474 (2013: €142,474) and termination benefits €Nil (2013: €Nil) are outlined in Note 3
to the financial statements.

17. SHARE BASED PAYMENTS

The Company operates a share option scheme for employees who devote a substantial amount of their time to the business of
the Company.

Options granted generally have a vesting period of ten years. An amount of €84,000 (2013: €60,000) was transferred from
share-based payment reserve to retained earnings/(deficit) as the options to which the initial charge relevant had lapsed. Details
of the share options outstanding during the year are as follows:

2014

2013

No. of
Share Options

Weighted Average
Exercise Price
€

No. of
Share Options

Weighted Average
Exercise Price
€

2,960,000

0.774

4,130,000

0.0782

–

(1,360,000)

–

(1,170,000)

–

1,600,000

0.666

2,960,000

0.0774

At 1 June

Granted during year

Exercised during year

Lapsed during year

At 31 May

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc

17. SHARE BASED PAYMENTS continued

Warrants granted generally have a vesting period of ten years. Details of the warrants outstanding during the year are as
follows:

2014

2013

No. of
Share Warrants

Weighted Average
Exercise Price
€

No. of
Share Warrants

Weighted Average
Exercise Price
€

78,869,311

0.0394

78,869,311

0.0394

–

78,869,311

0.0394

78,869,311

0.0394

At 1 June

Granted during year

Exercised during year

Lapsed during year

At 31 May

The Company estimated the fair value of employee stock options and warrants awards using the Binomial Lattice Model.
The determination of the fair value of share based payment awards on the date of grant using the Binomial Lattice Model
is affected by Conroy Gold and Natural Resources plc stock price as well as assumptions regarding a number of subjective
variables.

These variables include the expected term of the awards, the expected stock price volatility over the term of the awards, the risk
free interest rate associated with the expected term of the awards and the expected dividends.

The Company’s Binomial Lattice Model included the following weighted average assumptions for the Company’s employee stock
option and warrants.

2014
Stock Options

2014
Stock Warrants

2013
Stock Options

2013
Stock Warrants

Dividend yield

Expected volatility

Risk free interest rate

Expected life (in years)

90%

3.2%

90%

4.0%

This calculation results in a share based payments reserve movement of €149,026 (2013: €149,026).

18. SUBSTANTIAL SHAREHOLDINGS

Substantial shareholdings in Conroy Gold and Natural Resources plc are held by the following shareholders:

Name

Professor R.T.W.L. Conroy

Mr. Patrick O’Sullivan

Number of
ordinary shares

86,175,433*

30,714,546

90%

3.2%

24.48

8.73

* Of the 86,175,433 (2013: 70,703,736) ordinary shares held by Professor R.T.W.L. Conroy, 19,294,286 (2013: 19,294,286) are held by Conroy Plc, a company
in which Professor Conroy has a controlling interest.

19. POST BALANCE SHEET EVENTS

The following post balance sheet events have occurred:

On 8 October 2014, 75,000,000 ordinary shares of 1p were issued at 1p sterling, raising additional share capital of £750,000 sterling.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc36

Notes to the Financial Statements continued

20. FINANCIAL INSTRUMENTS

The company’s financial assets and liabilities stated at carrying amount and fair value are as follows at 31 May 2014:

Trade and other receivables

Cash and cash equivalents

Carrying Amount
2014
€

59,358

78,372

Fair Value
2014
€

59,358

78,372

Trade and other payables and financial liabilities

1,887,963

Carrying Amount/
Fair Value
2013
€

163,139

71,864

1,993,060

The following sets out the methods and assumptions used in estimating the fair value of financial assets and liabilities.

Trade and Other Receivables/Payables and Financial Liabilities
As both trade and other receivables and trade and other payables have a remaining life of less than one year, the carrying
value is deemed to reflect fair value. The Company has received confirmation that payment of the shareholder loan will not
be demanded for a period of 12 months from the date of approval of the financial statements. The directors consider that its
carrying value reflects its fair value.

Cash and Cash Equivalents
As cash and cash equivalents have a remaining maturity of less than three months, the nominal amount is deemed to reflect
the fair value.

Risk Management
The Company is exposed to a variety of financial risks as a result of its activities. These risks include credit risk, liquidity risk
and market risk (including interest rate risk).

Credit Risk
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.
The Company has a policy of dealing only with credit worthy counterparties. The Company’s exposure to credit risk relates to
the carrying value of cash and cash equivalents and trade and other receivables which at 31 May 2014 amounted to €137,730
(2013: €235,003).

At 31 May 2014 and 31 May 2013 all trade and other receivables were not past due.

Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company’s policy is to
monitor cash flow and consider whether available cash resources are sufficient to meet its ongoing exploration programme.

The nature of the Company’s activities can result in differences between actual and expected cash flows. This risk was managed
by the directors during the year by way of raising sufficient finance so that the Company has sufficient resources to carry out
its forthcoming work programme.

Market Risk – Interest Rate Risk

The Company’s exposure to changes in interest rates relates primarily to the shareholder loan balance. If the interest rate rose
by 1%, the Company’s loss would increase by €5,546. A decrease in the interest rate would result in a corresponding decrease
in the same amount.

21. APPROVAL OF FINANCIAL STATEMENTS

These financial statements were approved by the board on 20 November 2014.

Annual Report and Financial Statements 2014 Conroy Gold and Natural Resources plc