Golden Saint Resources : Audited results for financial year ended 31Dec2016

27 June 2017

Golden Saint Resources Ltd

('GSR' or the 'Company')

Audited results for the financial year ended 31 December 2016

and Notice of AGM

The Board of Directors of Golden Saint Resources Ltd is pleased to announce the audited results for the financial year ended 31 December 2016.

Highlights within the 12 months to 31 December 2016

· All the Company's three exploration licences in Sierra leone (Baja, Tongo and Moa) were approved for renewal by the National Minerals Agency ('NMA') for another term of three years with first renewals due at the end of 2018 and early 2019 and provisional extensions to 2020 and 2021 provided annual licence payment obligations are fully met;

· Initial bulk sampling operations in Tongo were successfully completed on 22 Aug 2016 with a recovery of a total of 64 diamonds weighing 26.78 carats yielding a diamond grade of 9.1 carats per hundred tonnes to 21.2 carats per hundred tonnes. At the same time, the total gold recovered amounted to 8.49 grams yielding a gold grade of 0.04 to 0.05 grams per tonne;

· The building of vehicular road access to Baja site 2 was completed in October 2016 and after the transportation and commissioning of the local plant at Baja site 2, the alluvial bulk sampling operations on the Sewa River low terrace commenced in November 2016 through to December 2016;

· The bulk sampling operations at Baja site 2 yielded a total of 19 diamonds weighing 7.81 carats and ranging from 0.17 to 1.57 carats per stone and the total amount of alluvial gold recovered was 7.97 grams;

· With the newly created vehicular access at Baja, the Company was able to clear two additional localities at Baja site 3 and Baja site 4 to allow for the excavation of sample trenches to enable the Company to systematically develop the exploration targets in the selected alluvial terrace deposits along the Sewa River towards an inferred resource level of confidence;

· At Tongo site 1, the original bulk sample trench on the low terrace of the Woa River was extended for further extraction of gravels for processing by the Dove Explorer sampling plant;

· The Diamond Club generated approximately USD $16,000 (2015: USD $26,000) in confirmed sales during the financial year. Another USD $6,018 diamond sale was made on 1 February 2017

Highlights of operations post 31 December 2016

· During the months of February 2017 and March 2017, the washing operations at Tongo site 1 and Baja site 4 produced the following results:

· Following one of the site visits by the Company's technical consultants, Rock Forage Consulting Services ( 'Rock Forage') in December 2016, a report was released by the Company on 20 January 2017 that provided the estimated provisional alluvial diamond and gold inventories for the Baja and Tongo exploration targets based on Rock Forage's crtical analysis with proposed solutions to lift these targets to the required inferred resource level of confidence;

· The following tables setting out the diamond and gold estimates have been extracted from the detalied Rock Forage report which can be downloaded from the Company's website at www.goldensaintresources.com :

Baja Exploration Targets

The estimated tonnes of basal mineralized gravel are approximately 2,100,000 tonnes (range some 1,800,000 t to 2,400,000 t), which could host between 210,000 to 525,000 carats of diamonds and some 63 to 105 kg of alluvial gold. Please see table below for further details:

Sewa North & Sewa South Provisional Inventory (Exploration Targets)

Notes

1. The figures set out above are Exploration Targets and are merely guidelines for potential mineralisation. These figures are not to be regarded as any category of Resource under an AIM acceptable Standard.

2. Strip ratio expected to be in the range of 8:1 to 12:1.

Tongo Exploration Targets

The estimated tonnes of basal mineralized gravel are approximately 1,200,000 tonnes (range some 900,000 t to 1,500,000 t) which could host between 120,000 to 300,000 carats of diamonds and some 36 to 60 kg of alluvial gold. Please see table below for further details:

Tongo North & Tongo South Provisional Inventory (Exploration Targets)

Notes

1. The figures set out above are Exploration Targets and are merely guidelines for potential mineralisation. These figures are not to be regarded as any category of Resource under an AIM acceptable Standard.

2. Strip ratio expected to be in the range of 8:1 to 12:1.

· Rock Forage also conducted a site visit to the Company's field operations in the Tongo, Baja and Moa licences between 9 February 2017 and 4 March 2017. The primary objective was to investigate and review the best approaches to increase confidence in the two exploration targets, Baja and Tongo, moving them towards a resource status. On-site guidance was also provided for the implementation of a small, cost- effective kimberlite exploration programme over a high priority airborne magnetic target in the Tongo licence area.

· The site visit report submitted by Rock Forage (which includes a glossary of technical terms) can be downloaded from the Company's website at www.goldensaintresources.comand can also be accessed through the link on this announcement

http://www.rns-pdf.londonstockexchange.com/rns/3207J_1-2017-6-27.pdf

· Tongo Licence area - Alluvial Diamonds

· At Tongo site 1, with the bulk sampling operations carried out to 13 June 2017, the Company recovered 14 more diamonds weighing a total of 10.46 carats. The stones ranged from 0.25 to 2.15 carats per stone. In addition, some 23.62 grams of alluvial gold were also recovered from the gravels treated. The Company will provide further updates as the gravel extraction and washing operations progresses

· Baja Licence area

· At Baja site 4, operations were focused on relocating the stockpile of gravels to a higher and more secure location. This will reduce the risk of loss associated with the rising water table resulting from the impending wet season. Bulk sampling operations have resumed and are operating concurrently with the gravel relocation exercise.

A copy of the Annual Report and Accounts has been posted to Shareholders today together with a Notice of the Annual General Meeting ('AGM') to be held at Gledden Building, Level 3, 731 Hay Street, Perth, WA 6000 on 28 July 2016 at 11.00a.m. (WST) and copies of both documents are available on the Company's websitewww.goldensaintresources.com

Set out below are extracts of the Company's audited results for the year ended 31 December 2016.

For further information please contact:

Executive Chairman's Review

Overview

The Company's focus during the 2016 year has been on the further development of its ongoing exploration and bulk sampling operations particularly in Baja and Tongo. Working closely with the technical consultants, Rock Forage Consulting Services ('Rock Forage'), the Company was able to systematically develop its exploration targets in the selected alluvial terrace deposits along the Sewa and Woa River towards an inferred resource level of confidence. The estimated provisional inventories of the diamond and gold deposits in our Baja and Tongo licenced areas reported by Rock Forage, an extract of which was presented in the preceding section are very encouraging and going forward, we will consider the work necessary to establish that inferred resource within the Baja and Tongo licence areas. The early diamond and gold recoveries from both these areas during the 2016 year were also positive indicators of further diamond and gold mineralisation.

As the Company continued with the exploration work amidst a difficult mining climate in Sierra Leone, we were also pleased to report on 18 August 2016, the National Minerals Agency ('NMA') approved the renewal of the Company's three exploration licences (Baja, Tongo and Moa) for another three year term with a final expiry of 12 December 2018 for Baja, 24 November 2018 for Tongo and 27 January 2019 for Moa.

Financial review

The Group's total comprehensive loss of USD 1.880 million for the financial year ended 31 December 2016 was a reduction of USD 370,000 (16.4 %) compared to the previous financial year (2015: USD 2.25 million). Management will continue to review its operations and reduce operating costs where possible. Operating expenses comprise mainly exploration expenses and general administrative costs of a corporate and management level. The Group's mining operations during the year under review continue to be focussed on bulk sampling and exploration activities.

As at 31 December 2016, the Group had USD 376,000 cash available for continuing exploration and working capital purposes. However subsequent to the year end and up to the date of this report, the Group had managed to raise approximately USD 0.6 million in cash to continue to support its bulk sampling and exploration operations.

Board Changes

The Board has appointed Mr. Yohannes Adimas Prawiro to the role of Executive Director, Business Development which will be effective from 24 July 2017. Mr Prawiro has previously served as Project Manager for GSR.

In addition, the Board is now proposing to appoint Mr Pierre Fourie to the role of Chief Executive Officer. The appointment of Mr Fourie is subject to satisfactory due diligence and regulatory checks, which are currently in progress.

Mr. Pierre Fourie is a member of Rock Forage Consulting Services, which is currently engaged as the Company's technical consultants. Mr Pierre Fourie is a mining engineer with over 20 years' experience in the field of resource/reserve estimation, mineral economics, mine construction and operations. Mr. Fourie has a Bachelor of Accountancy Science and a B. Eng in mining with practical mining experience in both underground and open pit mining. He has significant experience of mining in Africa

Mr Keng Hock Seah has notified the Board of his intention to resign as Finance Director of the Company and Director of all subsidiary companies of GSR at the end of July 2017.

Change of Management in Sierra Leone

The Company appointed Mr Mohammed A.S. Deen ('Sallau Deen') as Geologist Manager with effect from 1 August 2016. Sallau Deen has been with the Company since September 2013 working as a senior geologist and prior to joining the Company, Sallau Deen held a number of in house geologist and consultancy positions, for both private and public companies. Sallau Deen has taken over the geological project responsibilities from Mr Ernest Gbappi who resigned as the Company's Chief Resident Geologist for personal reasons. Sallau Deen will work closely with the project manager in the Perth office and our technical consultants, Rock Forage Consulting Services. The Company would like to thank Mr Ernest Gbappi for his contributions and wish him well in his future endeavours.

Golden Saint is pleased to announce the appointment of Mr Hassan Abass Kargbo as Exploration Manager. Reporting to the Board, Hassan's key responsibilities include preparation of geological strategies and planning policies, supervision and coordination of all other geological work of the Company.

Corporate Update

SVS Securities was appointed as joint broker to the Company on 10 June 2016 and became the sole broker to the Company on 19 January 2017.

Outlook

We are grateful for the support of all shareholders who participated in the capital raising exercises during the course of the year. With the additional financial capacity and the dedicated efforts by the staff, technical consultants, management and the support of the National Minerals Agency, GSR was able to make significant progress in taking its exploration and bulk sampling operations to a higher level. We remain cautiously optimistic about GSR being able to deliver meaningful long term returns to all our stakeholders.

Audit opinion

The consolidated annual financial statements were audited by the Company's auditors, Greenwich & Co Audit Pty Ltd. The auditors' report contains an emphasis of matter with regard to the continuation as a going concern as follows:

Emphasis of matter - Inherent uncertainty regarding continuation as a going concern

Without modifying our opinion, we draw attention to the notes to the financial report, which describes that the ability of the company to continue as a going concern is dependent on the company's ability to raise additional equity finance and generate revenue from alluvial diamond and gold sales. As a result there is material uncertainty related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern, and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

David McDonald

Executive Chairman

27 June 2017

Operations Update 2016

LOCATIONS

Golden Saint Resources Limited (GSR) has three main projects in Sierra Leone; Tongo, Baja and Moa. All three projects, for which GSR has renewed its exploration licences, are located in the Bo and Kenema districts of the Southern and Eastern provinces of the country. The Tongo and Baja licence areas are located within the Tongo Diamond Field, which is considered highly prospective for diamonds. Within the Baja project, there is a section of the Sewa River, which is known to contain alluvial diamonds and gold and is locally worked by artisanal miners. The Moa project is also prospective for gold as well as diamonds as the licence area extends into the foothills of the Kambui Hills, which is part of the greenstone belt of Sierra Leone.

Tongo(Licence number EL86/2011) is located close to Lowoma Village, which is approximately 56km east of Kenema Town in the Lower Bambara Chiefdom of Kenema District and approximately 356km east of Freetown. From Freetown to Kenema there is approximately 300km of well paved bitumen surfaced road with an unmade but graded road between Kenema and the licence area.

Baja(Licence number EL87/2011) is located approximately 52km northeast of Bo in the Kando Lekpeama and Simbaru Chiefdoms in the Kenema District of the Eastern Province and in the Komboya, Badjia and Baoma Chiefdoms in the Bo District of the Southern Province. It is approximately 292km east of Freetown. From Freetown to Baoma is approximately 273km of well paved bitumen surfaced road. The distance from Baoma to the licence area is approximately 19km of unmade but graded road.

Moa(Licence number EL07/2012) is situated approximately 46km southwest of Kenema City in the Koya and Dama Chiefdoms in the Kenema District of the Eastern Province of Sierra Leone. It is approximately 316km east of Freetown. There is approximately 290km of bitumen road between Freetown and Blama and approximately 26km of unmade but graded lateritic road between Blama and the licence area.

In addition to the above three projects, until late 2015 GSR, through Golden Saint Diamonds (SL) Ltd (GSR's 75 per cent owned subsidiary), actively sponsored a number of artisanal mining operations in the Zimmi and Rowaka areas. The Zimmi project is located in the Southern Province close to the border with the Republic of Liberia. The Zimmi area has a history of diamond occurrences along the rivers and streams. The GSR Zimmi project area has produced a number of coloured diamonds to date although this does not necessarily reflect on their value.

GENERAL GEOLOGY OF PROJECT AREA

The three projects lie within the stable Man craton of West Africa, which covers two-thirds of Sierra Leone. The Man craton is geologically subdivided into the Leonean and Liberian events, which comprise tectonothermal events leading to the emplacement of synkinematic granites, the greenstone belts and other late kinematic events. The Tongo and Baja projects lie within the known diamond fields of Sierra Leone (P. K. Hall, 1960); these cover most of the Eastern Province and the eastern half of the Southern Province. Diamonds occur in the primary host rock of kimberlite pipes or dykes intruded along fissure shears, such as those of the Koidu mine kimberlite deposit. The Koidu kimberlite dykes and pipes have been dated to the Jurassic period.

Alluvial diamonds also occur in Sierra Leone as a result of the weathering and erosion of diamondiferous kimberlites, though the diamonds are usually smaller and in much lower concentration than those found in the kimberlites. Alluvial diamonds have been mined in both the Woa stream in the Tongo licence area and in the Sewa River that passes through the Baja licence area.

Hall (1968) noted that alluvial diamond deposits are almost invariably located on the river terraces (which he referred to as the coastal plains) and in the active channels of the rivers and stream; as per standard rules of deposition in alluvial environments, bends in rivers are also important sedimentary traps for alluvial diamonds.

The Moa project is located to the southern end of the Kambui hills, which is part of the Archaean greenstone belt. The greenstone belt is known to host gold deposits in Sierra Leone and across the Man Shield. These gold deposits are largely associated with ductile deformation and high strain zones adjacent to or within crustal scale shear zones and also at the contacts between the granite and the greenstones, such as found at the Baomahun deposit in the Kangari Hills - Sula Mountains greenstone belt of Sierra Leone.

Alluvial gold in Sierra Leone is found within the rivers and streams across the country, particularly in the watershed around the Kangari Hills - Sula Mountains and the Kambui Hills immediately to the northwest of the Moa licence area.

EXPLORATION WORK DURING REPORTING PERIOD UNDER REVIEW

Exploration continued to progress well throughout the reporting period.

The strategy of the ongoing exploration for both diamond and gold has always been to:

1. Identify the regional shear structures beneath the transported cover where potential diamondiferous kimberlites could be located.

2. Identify hard rock gold deposits in Archean terrain and in placer accumulations in alluvial deposits.

3. Identify target areas where artisanal workings are evident with a view to identifying economic alluvial deposits that could be worked in the near term thus generate a cash flow to support longer term exploration for hard rock gold and diamond deposits.

To achieve the above, the work plan was organised to include;

1. follow up on airborne magnetic survey targets through geological mapping;

2. recommendations by our technical consultants, Rock Forage Consulting Services ( Rock Forage);

3. loam sampling of kimberlite targets;

4. construction of access routes to enable us to carry out our work plan; and

5. bulk sampling.

FOLLOW UP ON AIRBORNE MAGNETIC SURVEY TARGETS THROUGH GEOLOGIC MAPPING

Aeromagnetic survey was completed by Geotech Airborne Ltd in November, 2013 over the three project areas of Tongo, Baja and Moa.

Core Geophysics Pty (Core) was commissioned by GSR to quality control, process image and generate a structural interpretation from the three aeromagnetic surveys completed over the projects.

The aeromagnetic surveys have greatly improved the geology and structural understanding of the projects. Within the Tongo and Baja projects, the processed data have identified strong ENE -WSW structural trends beneath transported cover, consistent with the regional structures hosting kimberlite dykes and known diamond resources located within the neighbouring tenements. At Moa, the data have identified a number of major structures and finer scale fabrics which may control or host gold mineralisation.

At Tongo, a total of 37 dyke targets, 14 pipe targets and 5 alluvial targets were selected from the processed data of which 12 dykes, 3 pipes and 2 alluvial targets have been given a high priority.

At Baja, 79 dyke targets, 4 pipe targets and 5 alluvial targets were selected from the processed data of which 17 dykes and 2 alluvial targets have been given a high priority.

At Moa 6 broad target areas for gold mineralisation have been defined, of which 2 are given a high priority along with 3 sites for alluvial diamonds selected along the Moa River.

A team of GSR geologists and geo technicians have been engaged in identifying and mapping of all geophysical targets. This mapping is in an effort to identify the various geological stratigraphy, structural controls and mineralisation of these target areas.

RECOMMENDATIONS BY OUR TECHNICAL CONSULTANTS, ROCK FORAGE CONSULTING SERVICES

With the objective of advancing GSR's work in the field, in July 2015, Rock Forage Mining Consultancy (A South Africa based consultancy) was appointed to work with the local team by integrating data previously generated by GSR from its soil sampling analysis and data from neighbouring licences in order to provide an ongoing work programme for its exploration operations.

Based on observations made by the Rock Forage Mining Consultancy during their site visits, the following recommendations were made;

· Bulk sampling campaign to be continued along the terraces of the Woa and Sewa Rivers at 500m intervals, preferably at aeromagnetic target points to quantify the amount of diamond and gold found per unit tonne.

· Loam sampling to be done in target areas in Tongo as a follow up to identifying kimberlitic dykes.

· Hand auguring be done along the terraces of the Woa and Sewa Rivers at 250m and 500m intervals, to quantify the amount of alluvial gravel per unit area.

· Further modification be done on the dove plant (reduction of the screen size) to increase the efficiency of the machine.

LOAM SAMPLING OF KIMBERLITE TARGETS

A loam sampling campaign was initiated within this reporting period. Targets of aeromagnetic survey are being loam sampled. The sampling is done through the establishment of a sample pit that measure 1m (length) by 1m (breadth) by 0.5m (depth). About 100kg of loam soil is collected from each pit for sampling. The sampling is being done at 25m interval from a referenced sample point. Loam samples have now been collected at 25 sample points (TD1 and its surrounding points) and are now awaiting sieving and further processing.

CONSTRUCTION OF ACCESS ROUTES TO ENABLE US CARRY OUT OUR WORK PLAN

GSR in this period embarked on creating access routes within the Baja Concession to enable us to carry out our different work plans and also to convey our equipment to the different sites of operation.

The building of theses access routes also contributed to the development of the community in the Baja Chiefdom.

About 15.1km access routes have been created in the Baja Concession Baja to Nomiama (4.65km), Nomiama to Baja Site 2 (4.54km), Baja Site 2 to Baja Site 3 (1.63km) and Baja Site 3 to Baja Site 4 (4.28km).

BULK SAMPLING OF ALLUVIAL GRAVELS

Bulk sampling of alluvial gravels continued in the Tongo and Baja licence areas during the reporting period. This programme was carried out in order to identify valuable alluvial resource with an economic grade for small scale mining as a faster means of income generation for the company.

The National Mineral Agency of Sierra Leone authorised the company to carry out the exercise as part of their exploration programme.

At Baja Site 2 casual labour was used to manually extract and stockpile the basal gravels, which was around 600 tonnes. The stockpile of gravels was processed using the local washer at Baja site2 and about 45% (270 tonnes) of the stockpile has already been washed. The processing rate of washing is about 1.2 tonnes per hour. Baja site 2 still holds a stockpile of gravel of about 330 tonnes, which will be processed once the local washer is relocated back from Baja site 4.

At Baja Site 4, gravels were extracted and put on stockpiles using D9 bulldozer and a 320 Cat excavator. About 1,900 tonnes of basal gravel is expected to be excavated, with an additional 7,300 tonnes of upper gravel. Washing of gravel at Baja Site 4 started on 26 February with the local washing plant, and by 30 March 2017, about 156 tonnes of gravel has been washed

At Tongo Site 1, gravels were extracted and put on stockpiles using D8 bulldozer and a 320 Cat excavator. About 950 tonnes of basal gravel is expected to be excavated at Tongo Site 1. Washing of gravel at Tongo Site 1 started on 14 February with the dove explorer, and by 30 March 2017, about 138 tonnes of gravels has been washed.

COMPETENT PERSON STATEMENT

The information in this release that relates to the general geology of the area is based upon information compiled by Dr John D. Ward (Pr. Sci. Nat; PhD) who is an Independent Consultant employed by Rock Forage Mining Limited and is a Fellow of The Geological Society of South Africa. Dr Ward has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and the activity in which he is undertaking to qualify as a Competent Person under the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Dr Ward consents to the inclusion in a release of the matters based on his information in the form and context in which it appears.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year 1 January 2016 to 31 December 2016

Consolidated Statement of Financial Position

As at 31 December 2016

Consolidated Statement of Cash Flow

For the year 1 January 2016 to 31 December 2016

Consolidated Statement of Changes in Equity

For the period 1 January 2016 to 31 December 2016

Notes to the Financial Statements

Accounting Policies

1.1 Corporate information

The consolidated financial statements of Golden Saint Resources Ltd for the financial year ended 31 December 2016 were authorised for issue in accordance with a resolution of the Directors on 27 June 2017.

The registered office of Golden Saint Resources Ltd, the ultimate parent of the Group, is 171 Main Street, Road Town Tortola VG 1110 British Virgin Islands.

The principal activity of the Group is early stage diamond and gold exploration with three Exploration Licenses in Sierra Leone.

1.2 Basis of preparation

The consolidated financial statements of Golden Saint Resources Limited and its controlled entities ('the Group') have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU) as they apply to the financial statements of the Group for the period 1 January 2016 to 31 December 2016.

The consolidated financial statements have been prepared on a historical cost convention basis, except for certain financial instruments that have been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand except when otherwise indicated.

1.3 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 December 2016, and for the period then ended.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance. A change ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Pooling of Interests on Incorporation of Parent Entity

On incorporation of the entity, subsidiaries have been consolidated using the pooling of interests method on the basis that the entities being combined are ultimately controlled by the same parties, both before and after the combination.

Under this method the assets and liabilities of the acquiree are recorded at book value and intangible assets and contingent liabilities are only recognised if they were previously recognised by the acquiree. No goodwill is recorded and expenses of the combination are written off immediately in profit or loss.

The excess of consideration over the value of the acquiree's net assets is recognised in the merger reserve, a negative reserve within equity.

Any non-controlling interest in the acquiree is recognised as the proportion of the assets and liabilities of the acquiree at the date of acquisition. From the date of acquisition forward, a proportionate share of profits, or losses, in the related subsidiary is then attributed to the non-controlling interest.

Subsequent Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is re-measured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

1.4 Significant accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes would differ from these estimates if different assumptions were used and different conditions existed.

In particular, the Group has identified the following areas where significant judgements, estimates and assumptions are required, and where actual results were to differ, may materially affect the financial position or financial results reported in future periods. Further information on these and how they impact the various accounting policies is located in the relevant notes to the consolidated financial statements.

1.4.1 Key Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements.

Going concern

This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

At 31 December 2016, the Group held cash reserves of $376,000.

The Directors are confident the Group will generate revenue from alluvial diamond and gold sales in into 2017 which will contribute to cash flow. In addition the Company intends to raise additional equity finance during the course of the year to contribute towards its working capital requirements.

On this basis, the Directors believe that there are sufficient funds to meet the Group's working capital requirements.

The Group recorded a loss of $1,833,000 for the year ended 31 December 2016 and had net assets of $1,691,000 as at 31 December 2016 (Dec 2015: loss of $2,063,000 and net assets of $1,354,000).

Should the Group be unable to obtain sufficient funding as advised above, there is a material uncertainty which may cast doubt as to whether or not the Group will be able to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

Accruals

Management have used judgement and prudence when estimating certain accruals for contractor claims. The accruals recognised are based on work performed but are before settlement.

Contingencies

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events. Please refer to Note 19 for further details.

Impairment of assets

The Group assesses each asset or cash generating unit (CGU) every reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell, or the value in use.

These assessments require the use of estimates and assumptions such as long-term commodity prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, closure and rehabilitation costs, exploration potential, reserves and operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs. Please refer to Note 10 for further details.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.

1.4.2 Key estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Exploration and evaluation expenditure

The application of the Group's accounting policy for exploration and evaluation expenditure requires judgement in determining whether future economic benefits will arise either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of estimation depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the consolidated statement of comprehensive income in the period when the new information becomes available. Exploration and evaluation assets are carried at historical cost less any impairment losses recognised. (Please refer to Note 11 for further details).

1.5 New standards and amendments and interpretations adopted by the Group

There are a number of new Accounting standards and interpretations issued by the AASB that are not yet mandatorily applicable to the Group and have not been applied in preparing these consolidated financial statements. The Group does not plan to adopt these standards early.

These standards are not expected to have a material impact on the Group in the current or future reporting periods.

1.6 Summary of significant accounting policies

Exploration and evaluation assets

It is the Group's policy to capitalise the cost of acquiring rights to explore areas of interest. All other exploration and evaluation expenditure is expensed to the statement of profit or loss and other comprehensive income.

The costs of acquisition are carried forward as an asset provided the rights to the areas of interest are current and one of the following conditions are met:

· Such costs are expected to be recouped through the successful development and exploitation of the area of interest, or alternatively, by its sale; or

· Exploration activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence of otherwise of recoverable reserves, and active and significant operations in relation to the area are continuing.

When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment.

Impairment

An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Any impairment losses are recognised in the statement of profit or loss and other comprehensive income.

The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash generating unit level whenever facts and circumstances (from an impairment review) suggest that the carrying amount of the asset may exceed its recoverable amount.

Impairment reviews for exploration and evaluation costs are carried out on a project-by-project basis, as each project has the potential to be an economically viable cash generating unit. An impairment review is undertaken when indicators of impairment arise but normally when one of the following conditions applies:

· unexpected geological occurrences render a deposit uneconomic

· title to an asset is compromised

· variations in commodity prices render the project uneconomic

· variations in the currency of operation

· variations to the fiscal and tax legislation in the country of operation.

Property, plant and equipment

Plant and equipment are shown at cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, any incidental cost of purchase, and associated borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Directly attributable costs include employee benefits, professional fees and costs of testing whether the asset is functioning properly. Capitalised borrowing costs include those that are directly attributable to the construction of mining and infrastructure assets.

Property, plant and equipment relate to plant, machinery, fixtures and fittings and are shown at historical cost less accumulated depreciation and impairment losses.

The depreciation rates applied to each type of asset are as follows:

Plant and machinery 10%

Motor Vehicles 15%

Fixtures and fittings 10-20%

Lease Improvements 5 years

Subsequent expenditure is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Assets that are replaced and have no future economic benefit are derecognised and expensed through profit or loss. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Gains/ losses on the disposal of fixed assets are credited/charged to income. The gain or loss is the difference between the net disposal proceeds and the carrying amount of the asset.

The asset's residual values, useful lives and methods of depreciation are reviewed at each reporting period, and adjusted prospectively if appropriate.

Inventories

Inventories are valued at the lower of cost and net realisable value.

Financial instruments: initial recognition and measurement

Trade and other receivables

Trade and other receivables are stated at amortised cost less provision for doubtful debts. Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Trade receivables are generally due for settlement between 30 and 90 days. They are presented as current assets unless collection is not expected for more than 12 months after reporting date. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date. Cash and cash equivalents comprise cash, cash at hand and short-term deposit amounts with original maturity of less than three months. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Impairment

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial asset is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

Trade and other payables

Trade and other payables are non-derivative financial liabilities that are not quoted in an active market. It represents liabilities for goods and services provided to the Group prior to the year end and which are unpaid. These amounts are unsecured and have 7-30 day payment terms. Trade and other payables are presented as current liabilities unless payment is not during within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest (EIR) method. The fair value implies the rate of return on the debt component of the facility. This rate of return reflects the significant risks attaching to the facility from the lenders' perspective.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds e.g. arrangement fees.

The Group capitalises borrowing costs for all eligible assets. Where funds are borrowed specifically to finance the project, the amount capitalised represents the actual borrowing costs incurred. Early repayment of borrowings, specifically for reasons of refinancing do not qualify for capitalising as borrowing costs under IAS 23 and are recognised as a loss on de-recognition in the statement of comprehensive income.

Fair value of financial instruments

The following methods and assumptions are used to estimate the fair values:

· Cash and short-term deposits, trade and other receivables, trade and other payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

· Initial fair value of interest-bearing borrowings is normally the transaction price, i.e. the fair value of the consideration received. When part of the consideration is for something other than the loan, the fair value is estimated using an appropriate valuation technique.

· For disclosure purpose only, the fair value of unquoted instruments, such as loans and other financial liabilities, is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

Provisions

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax amount that reflects current market assessments of the time value of money, and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Finance income

Interest income is made up of interest received on cash and cash equivalents.

Deferred taxation

Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised, except:

· In respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Foreign currencies

i) Functional and presentation currency

The consolidated financial statements are presented in US dollars, which is the Group's presentation currency.

ii) Transaction and Balances

Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. All differences are taken to the profit or loss, should specific criteria be met.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

iii) Group Companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· Assets and liabilities for each statement of financial position presented as translated at the closing rate at the date of the statement of financial position.

· Income and expenses for each income statement and statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transactions dates, in which case income and expenses are translated at the dates of the transactions), and

· All resulting exchange differences are recognised in other comprehensive income

Revenue Recognition

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

The Group recognises when the amount of revenue can be reliably measured, it is probably that future economic benefits will flow to the entity and specific criteria have been met as described below.

i) Interest Income

Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.

ii) Sale of Goods

Revenue from sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

2. Net Operating Expenses

3. Key Management Personnel

· Key Management personnel comprise the Directors.

4. Employee Costs

5. Earnings per share

6. Segment Information

The consolidated entity's operating segments have been determined with reference to the monthly management accounts used by the chief operating decision maker to make decisions regarding the consolidated entity's operations and allocation of working capital.

Due to the size and nature of the consolidated entity, the Board as a whole has been determined as the chief operating decision maker.

The consolidated entity operates in one business segment and one geographical segment, namely mineral exploration industry in Sierra Leone.

The revenues and results of this segment are those of the consolidated entity as a whole and are set out in the statement of profit and loss and other comprehensive income. The segment assets and liabilities of this segment are those of the consolidated entity and are set out in the Statement of Financial Position.

7. Cash and Cash Equivalents

There are no restrictions on the cash currently held by the Group.

8. Trade and Other Receivables

Prepayments relate to payments made in advance for services from the AIM Nomad and Broker as well as a legal retainer for GSR Africa.

9. Inventories

Inventories consist of 158.08 carats of cut, gem quality diamonds.

GSR also has an additional 125.37 carats of rough diamonds which have been shipped from Sierra Leone and arrangements are currently being made to send them to Mumbai for cutting and polishing and subsequently for sale in the GSR Diamond Club. After cutting and polishing the diamonds will be individually and objectively appraised for market value (reflected in its sale price) and then recorded at the lower of cost or market value.

10. Property, Plant and Equipment

11. Exploration and Evaluation Assets

The board of directors regularly assesses the potential of each mineral licence. There was no impairment during the 2016 Financial Year.

The board of directors regularly assesses the potential of each mineral licence. There was no impairment during the 2015 Financial Year.

12. Intangible Assets

There was no impairment recorded during the 2016 Financial Year.

13. Subsidiaries

Details of the Company's subsidiaries at 31 December 2016 are as follows:

14. Taxation

Unrecognised tax losses

Where the realisation of deferred tax assets is dependent on future taxable profits, losses carried forward are recognised only to the extent that business forecasts predict that such profits will be available to the companies in which losses arose.

The parent, GSR, is not liable to corporation tax in BVI, so it has no provision for deferred tax. However, GSR (Australia) Pty Ltd is liable to tax in Australia and GSR (Africa) is liable to tax in Sierra Leone, so potential deferred tax in respect of those companies is noted as follows:

As at 31 December 2016, GSR (Australia) Pty Ltd had losses of USD 2,714,382 (2015: USD 2,167,925), while GSR Africa had losses of USD 3,329,931 (2015: USD 2,457,261) upon which deferred tax assets are not recognised. These losses are available indefinitely for offset against future taxable profits.

15. Share Capital and Reserves

The share capital of the Company is denominated in Pounds Sterling. Each allotment during the period was then translated into the Group's functional currency, US Dollars at the spot rate on the date of issue.

16. Non-Controlling Equity Interest

On 1 July 2013, the Group acquired a 75% interest in GSR Africa. At this date, the Group recognised a non-controlling interest of USD 21,646, which represented the non-controlling interest's share of net assets in GSR Africa at that date.

For the year ended 31 December 2016, the non-controlling interest's share of losses in GSR Africa was USD 211,917 (2015: USD 171,575).

17. Trade and Other Payables

Trade payables are non-interest bearing and are normally settled on 7 - 30 day terms.

Accruals relate to end of the financial period audit and accounting services.

Other payables relate to superannuation and tax withheld from salaries payable to the tax office.

18. Financial liabilities

19. Commitments and Contingencies

Tenement expenditure minimum payments

The Group is subject to the following minimum expenditures commitments in the 2017 financial year under the three exploration licences: Tongo $USD 350,000; Moa $USD 250,000 and Baja $USD 350,000.

Future minimum lease payments

At 31 December 2016, the future minimum lease payments under non-cancellable leases were payable as follows.

Aside from those mentioned above, the Group is subject to no other commitments or contingent liabilities.

20. Subsequent Events

· The Company carried out capital raisings by way of issue of new Ordinary Shares of no par value on the following dates :

Date Capital raised Placement price No. of new Ordinary shares £ £ per share of no par value

28 Apr 2017 553,484 0.00021 2,635,638,097

· On 28 April 2017, the Company agreed with consultants to issue 351,561,904 new ordinary shares of no par value in lieu of services rendered and to be rendered ( totalling £73,828) up to 31 March 2018. The shares were issued at a price of 0.021 pence per share, being the same as the placing price given to other placees who participated in the Placing of £553,484 on the same date.

21. Related Party Transactions

During the financial year to 31 December 2016, no fees were invoiced from David McDonald Legal, a company controlled by Mr David McDonald, a Director of the Company, in relation to professional services rendered (2015: USD 1,203).

22. Financial risk management objectives and policies

The Group's activities expose it to a variety of financial risks. The Group's Board provides certain specific guidance in managing such risks, particularly as relates to credit and liquidity risk. Any form of borrowings requires approval from the Board and the Group does not currently use any derivative financial instruments to manage its financial risks. The key financial risks and the Group's major exposures are as follows:

Credit risk

The maximum exposure to credit risk is represented by the carrying amount of the financial assets. In relation to cash and cash equivalents, the Group limits its credit risk with regards to bank deposits by only dealing with reputable banks. In relation to sales receivables, the Group's credit risk is managed by credit checks for credit customers and approval of letters of credit by the Group's advising bank for offtake customers. The Group does not have any significant concentrations of credit risk.

Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The table below indicates the currencies to which the Group had significant exposure at 31 December 2016 on its monetary assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the currency rate against the US dollar, with all other variables held constant on the statement of comprehensive income. A positive amount in the table reflects a potential net increase in the consolidated statement of comprehensive income.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Numbers in the table below represent the gross, contractual, undiscounted amount payable in relation to the financial liabilities. The Group monitors its risk to a shortage of funds using a combination of cash flow forecasts, budgeting and monitoring of operational performance.

23. Capital management

Capital includes equity attributable to the equity holders of the parent. Refer to the statement of changes in equity for quantitative information regarding equity.

The Group's primary objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders. For details of the capital managed by the Group as at 31 December 2016, please see Note 15.

The Group is not subject to any externally imposed capital requirements.

24. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A sensitivity analysis is not presented, as all borrowing costs have been capitalised as at 31 December 2016; therefore profit or loss and equity would have not been affected by changes in the interest rate.

25. Parent Company Information (Golden Saint Resources Ltd)

A copy of the report and accounts is available on the Company's websitewww.goldensaintresources.com.

Glossary of Technical Terms

The following glossary of terms applies throughout this announcement, unless the context otherwise requires: