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Delrand Resources Limited - Interim Condensed Consolidated Financial Statements (unaudited) September 30, 2012

Release Date: 16/11/2012 16:32:00      Code(s): DRN     
(Unaudited)
September 30, 2012

DELRAND RESOURCES LIMITED
(formerly BRC DIAMONDCORE LTD.)
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: DRN    ISIN Number: CA2472671072
(?Delrand? or the "Company")



INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2012

(Expressed in Canadian dollars)
                                     NOTICE TO READER

These interim condensed consolidated financial statements of Delrand Resources Limited (the
?Company?) as at and for the three month period ended September 30, 2012 have been prepared by
and are the responsibility of the Company?s management. These interim condensed consolidated
financial statements have not been audited or reviewed by the Company?s auditors.




                                          Page 2 of 17
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2012
CONTENTS
Interim Condensed Consolidated Statements of Financial Position................................................................. 4
Interim Condensed Consolidated Statements of Comprehensive Loss................................................................. 5
Interim Condensed Consolidated Statements of Changes in Equity.................................................................. 6
Interim Condensed Consolidated Statements of Cash Flow.......................................................................... 7

1. Corporate Information and Continuation of the Business....................................................................... 8
2. Basis of Preparation ........................................................................................................ 8
3. Summary of Significant Accounting Policies .................................................................................. 8
4. Investment in Associate...................................................................................................... 9
5. Exploration and Evaluation Assets .......................................................................................... 10
6. Related Party Transactions.................................................................................................. 11
7. Share Capital .............................................................................................................. 12
8. Share-Based Payments ....................................................................................................... 12
9. Segmented Reporting ........................................................................................................ 14
10. Financial Risk Management Objectives and Policies ......................................................................... 14
11. Supplemental Cash Flow Information ........................................................................................ 17
12. Commitments and Contingencies ............................................................................................. 17




                                                             Page 3 of 17
 Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian dollars) (unaudited)
  As at                                                        Notes             September 30, 2012                 June 30, 2012

                                                                                                  $                             $
 Assets
 Current Assets
       Cash                                                                                  97,837                       440,655
       Other receivables                                         5b                          27,530                             -
       Prepaid expenses and other assets                                                     27,122                        54,472
 Total Current Assets                                                                       152,489                       495,127

 Non-Current Assets
       Exploration and evaluation                                 5                       5,136,509                     5,165,687
 Total Non-Current Assets                                                                 5,136,509                     5,165,687


 Total Assets                                                                             5,288,998                     5,660,814

 Liabilities and Shareholders' Equity
       Current Liabilities

       Accounts payable and accrued liabilities                                             522,908                       645,575
       Income taxes payable                                                                   5,420                        16,496
       Due to related parties                                     6                          90,280                       254,119
 Total Current Liabilities
                                                                                            618,608                       916,190

 Non-current
 Income taxes payable                                                                        16,260                        16,260
 Total Liabilities                                                                          634,867                       932,450

 Shareholders' Equity
       Share capital                                              7                     116,339,566                   116,339,566
       Contributed surplus                                                                8,159,644                     8,159,644
       Deficit                                                                         (119,845,080)                 (119,770,846)
 Total Shareholders' Equity                                                               4,654,130                     4,728,364
 Total Liabilities and Shareholders' Equity
                                                                                          5,288,998                     5,660,814


 Common shares
     Authorized                                                                           Unlimited                     Unlimited
     Issued and outstanding                                       7a                     52,734,643                    52,734,643


The accompanying notes are an integral part of these interim condensed consolidated financial statements.




                                                                  Page 4 of 17
 Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in Canadian dollars) (unaudited)


                                                                 Notes             Three months ended           Three months ended
                                                                                   September 30, 2012           September 30, 2011
                                                                                             (Note 2a)                    (Note 2a)
                                                                                                    $                            $
   Expenses
       Consulting and professional fees                                                         27,607                      31,467
       General and administrative                                                               40,267                      48,223
       Foreign exchange loss (gain)                                                              6,360                     (10,478)
   Loss from operations before other income and income taxes                                   (74,234)                    (69,212)
   Other income                                                                                      -                           -
   Loss before income taxes                                                                    (74,234)                    (69,212)
   Income tax expense                                                                                -                           -
   Net loss and comprehensive loss for the period                                              (74,234)                    (69,212)



   Basic and diluted loss per share                                7c                            (0.00)                      (0.00)
   Adjustments for headline loss per share                         7c                                -                           -
   Headline loss per share                                         7c                            (0.00)                      (0.00)
   Weighted average number of common shares outstanding                                     52,734,643                  47,245,529




The accompanying notes are an integral part of these interim condensed consolidated financial statements.




                                                                  Page 5 of 17
     Delrand Resources Limited
    INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
     (Expressed in Canadian dollars) (unaudited)


                                                         Common shares
                                                                               Contributed                   Total Shareholders'
                                    Notes Number of shares                                          Deficit
                                                                    Amount         Surplus                               equity
                                                   (Note 8)
Balance at January 1, 2011                      44,704,320     115,457,876       7,815,398      (119,408,103)         3,865,171
Net loss for the year                                    -               -               -          (123,314)          (123,314)
Share issuance (net of costs)                    5,000,000         481,690               -                 -            481,690
Warrant issuance (net of costs)                          -               -         344,246                 -            344,246
Fractional shares due to consolidation                  21               -               -                 -                  -
Balance at December 31, 2011                    49,704,341     115,939,566       8,159,644      (119,531,417)         4,567,793
Net loss for the period                                  -               -               -          (239,429)          (239,429)
Warrant exercise                                 3,030,302         400,000               -                 -            400,000
Balance at June 30, 2012                        52,734,643     116,339,566       8,159,644      (119,770,846)         4,728,364


Net loss for the period                                  -               -               -           (74,234)           (74,234)
Balance at September 30, 2012                   52,734,643     116,339,566       8,159,644      (119,845,080)         4,654,130




    The accompanying notes are an integral part of these interim condensed consolidated financial statements.




                                                                      Page 6 of 17
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Expressed in Canadian dollars) (unaudited)
                                                                                       Three months ended     Three months ended
                                                                                       September 30, 2012     September 30, 2011
                                                                           Notes                 (Note 2a)              (Note 2a)
                                                                                                        $                      $


   Cash flows from operating activities
   Net loss for the period                                                                        (74,234)               (69,212)
   Changes in non-cash working capital
       Prepaid expenses and other assets                                                           27,350                     77
       Other receivable                                                                           (27,530)                     -
       Taxes payable                                                                              (11,076)                     -
       Accounts payable and accrued liabilities                                                  (122,668)               (69,501)
   Net cash flows used in operating activities                                                   (208,158)              (138,636)


   Cash flows from investing activities
   Expenditures on exploration and evaluation                                                    (152,381)               (61,897)
   Funds received from Rio Tinto                                                                  181,560                 36,775
   Net cash (used in) provided by investing activities                                             29,179                (25,122)


   Cash flows from financing activities
   Due to related parties                                                                         (163,839)               45,380
   Net cash provided by financing activities                                                      (163,839)               45,380


   Net increase (decrease) in cash during the period                                              (342,818)             (118,378)
   Cash, beginning of the period                                                                   440,655               339,952
   Cash, end of the period                                                                          97,837               221,574


Supplemental cash flow information (Note 11)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.




                                                                  Page 7 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
1. CORPORATE INFORMATION AND CONTINUATION OF THE BUSINESS
Corporate Information

The principal business of Delrand Resources Limited (?Delrand? or the ?Company?) is the acquisition and exploration of
mineral properties in the Democratic Republic of the Congo (?the DRC?).

These interim condensed consolidated financial statements as at and for the three months ended September 30, 2012 include
the accounts of the Company and of its wholly-owned subsidiaries incorporated in the DRC, Delrand Resources Congo SPRL,
and in South Africa, BRC Diamond South Africa (Proprietary) Limited.

The Company is a publicly traded company whose outstanding common shares are listed for trading on the Toronto Stock
Exchange and the JSE Limited in Johannesburg, South Africa. The head office of the Company is located at 1 First Canadian
Place, 100 King Street West, Suite 707O, Toronto, Ontario, M5X 1E3, Canada.


Continuation of the business

These interim condensed consolidated financial statements are prepared on a going concern basis, which assumes that the
Company will continue in operation for a reasonable period of time and will be able to realize its assets and discharge its
liabilities in the normal course of operations. The Company has not generated revenues from operations. The Company
incurred a net loss of $74,234 during the three months ended September 30, 2012 and, as of that date, the Company?s deficit
was $119,845,080. These conditions along with other matters indicate the existence of material uncertainties that may cast
significant doubt about the Company?s ability to continue as a going concern. As such, the Company?s ability to continue as a
going concern depends on its ability to successfully raise additional financing for development of the mineral properties.
Although the Company has been successful in the past in obtaining financing and subsequently raised financing, there is no
assurance that it will be able to obtain adequate financing in the future or that such financing will be available on acceptable
terms.

2. BASIS OF PREPARATION
a) Statement of compliance
    These interim condensed consolidated financial statements as at and for the three months ended September 30, 2012,
    including comparatives, have been prepared in accordance with International Accounting Standards (?IAS?) 34 ?Interim
    Financial Reporting? (?IAS 34?) using accounting policies consistent with the International Financial Reporting Standards
    (?IFRS?) issued by the International Accounting Standards Board (?IASB?). Accordingly, certain information and footnote
    disclosure normally included in the annual financial statements prepared in accordance with IFRS, have been omitted or
    condensed.

b) Basis of measurement
    These interim condensed consolidated financial statements have been prepared on a going concern basis, under the
    historical cost convention, except for certain financial assets and liabilities which are presented at fair value.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim condensed consolidated financial statements have been prepared using the same accounting policies and
methods of computation as the consolidated financial statements of Delrand for the six month period ended June 30, 2012.
The disclosure contained in these interim condensed consolidated financial statements does not include all the requirements
in IAS 1 Presentation of Financial Statements (?IAS 1?). Accordingly, these interim condensed consolidated financial
statements should be read in conjunction with the Company?s consolidated financial statements for the six month period
ended June 30, 2012.


                                                          Page 8 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
The accounting policies set out below have been applied consistently to all periods presented in these interim condensed
consolidated financial statements.

a) Basis of Consolidation
 i.     Subsidiaries

        Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
        indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. This
        control is evidenced through owning more than 50% of the voting rights or currently exercisable potential voting
        rights of a company?s share capital. The financial statements of subsidiaries are included in the interim condensed
        consolidated financial statements of the Company from the date that control commences until the date that control
        ceases. Consolidation accounting is applied for all of the Company?s wholly-owned subsidiaries.

 ii.    Associate

        Where the Company has the power to significantly influence but not control the financial and operating policy
        decisions of another entity, it is classified as an associate. Associates are initially recognized in the consolidated
        statements of financial position at cost and adjusted thereafter for the post-acquisition changes in the Company?s
        share of the net assets of the associate, under the equity method of accounting. The Company's share of post-
        acquisition profits and losses is recognized in the consolidated statement of comprehensive loss, except that losses
        in excess of the Company's investment in the associate are not recognized unless there is a legal or constructive
        obligation to recognize such losses. If the associate subsequently reports profits, the Company?s share of profits is
        recognized only after the Company?s share of the profits equals the share of losses not recognized.

        Profits and losses arising on transactions between the Company and its associates are recognized only to the extent
        of unrelated investor?s interests in the associate. The investor's share in the associate's profits and losses resulting
        from these transactions is eliminated against the carrying value of the associate.

        Any premium paid for an associate above the fair value of the Company's share of the identifiable assets, liabilities
        and contingent liabilities acquired is capitalized and included in the carrying amount of the Company?s investment in
        an associate. Where there is objective evidence that the investment in an associate has been impaired, the carrying
        amount of the investment is tested for impairment in the same way as other non-financial assets.

iii.    Transactions eliminated on consolidation

        Inter-company balances, transactions, and any unrealized income and expenses, are eliminated in preparing the
        interim condensed consolidated financial statements.

        Unrealized gains arising from transactions with associates are eliminated against the investment to the extent of the
        Company?s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only
        to the extent that there is no evidence of impairment.

4. INVESTMENT IN ASSOCIATE
The Company?s investment in Rio Tinto Exploration DRC Oriental Limited (?Holdco?), which meets the definition of an
associate of the Company, is summarized as follows:




                                                         Page 9 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
                                                       September 30,            June 30,
Holdco
                                                               2012                2012


Portion of ownership interest                                 25.00%              25.00%
Common shares held                                              250                 250
Total investment                                      $           -      $            -


On January 26, 2010, the Company entered into an agreement (the ?Iron Ore Agreement?) with Rio Tinto Minerals
Development Limited ("Rio Tinto Minerals") for the exploration for iron ore in areas within the Orientale Province of the DRC.
These areas are covered by exploration permits (the "Permits") which had been controlled by the Company. Under the Iron
Ore Agreement, which is in the form of a shareholders' agreement, the Company owns 25% and Rio Tinto Minerals owns 75% of
the capital stock of Holdco, which owns a DRC registered company called Rio Tinto Exploration RDC Orientale SPRL. The
registered company holds the Permits.       The Company?s investment in Holdco is accounted for in the consolidated financial
statements using the equity method. Holdco is an inactive company which did not have any significant assets or liabilities and
had no significant balances in the statement of comprehensive income. As such, there has been no change in the value of the
investment since the date of acquisition.

5. EXPLORATION AND EVALUATION ASSETS
The following table summarizes the Company?s tangible exploration and evaluation expenditures with respect to its
properties in the DRC:


                                                              Tshikapa     Northern DRC
                                                  Notes                                            Total
                                                               Project          Project
      Cost

      Balance as at December 31, 2011                    $   3,039,854    $   2,079,413     $   5,119,267
         Additions                                              45,727           (1,526)           44,201
      Balance as at June 30, 2012                            3,085,581        2,077,887         5,163,468
         Additions                                               9,243          (38,421)          (29,178)
      Balance as at September 30, 2012                        3,094,824       2,039,466         5,134,290



There is $2,219 of intangible exploration and evaluation expenditures as at September 30, 2012 (June 30, 2012: $2,219).
There have not been any additions or disposals to intangible assets since January 1, 2010.

    a.    Tshikapa Project
          The Tshikapa project is located in the south-western part of the Kasai Occidental province of the DRC near the town
          of Tshikapa. The Tshikapa project is located within the so-called Tshikapa triangle, bordering the Kasai River in the
          east, the Loange River in the west and the Angolan border in the south. The properties also lie within the broader
          kimberlite emplacement corridor which extends from known kimberlite pipes located in Angola. The Tshikapa
          diamond field has been extensively mined by alluvial diamond companies and small-scale miners, and it is estimated
          that it has produced over 100 million carats of diamonds since 1912. The Company has focused its attention on the
          Tshikapa triangle through nine exploration permits covering an area of 1,429 km?. One of these permits is held by
          the Company?s wholly-owned DRC subsidiary and the other eight permits are controlled through option agreements
          with the permit holders. Six of the option agreement permits relate to Acacia SPRL, which has advised the Company
          of its wish to modify the option agreement with the Company. The remaining two option agreement permits relate
          to Caspian Oil & Gas.




                                                          Page 10 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)

    b.     Northern DRC Project
         The Company's northern DRC diamond project is located in Orientale Province of the DRC and consists of 24
         exploration permits, two of which are held by the Company directly through its DRC subsidiary and the balance of
         which are held through an option agreement with the holder of the permits. The 22 exploration permits under
         option cover an area of 4,155 km?. The two additional exploration permits held by the Company?s DRC subsidiary
         cover an area of 749 km? directly north of the optioned ground.

6. RELATED PARTY TRANSACTIONS
    a)     Key Management Remuneration

The Company?s related parties include key management. Key management includes executive directors and non-executive
directors. The remuneration of the key management of the Company as defined above, during the three months ended
September 30, 2012 and three months ended September 30, 2011 was as follows:


                                   Three months ended
                             September 30,      September 30,
                                     2012               2011
Salaries                    $      66,411   $         65,930
                            $      66,411   $         65,930



    b)     Other Related Parties

As at September 30, 2012, an amount of $91,473 (June 30, 2012 - $242,793) was owed to two directors of the Company
representing consulting fees. During the three months ended September 30, 2012, consulting fees of $50,000 were incurred
to the two directors (three months ended September 30, 2011- $50,000 to the two directors).

As at September 30, 2012, an amount of $1,193 (June 30, 2012 - $11,326 owed to Banro) was owed from Banro Corporation
(?Banro?). Banro owns 17,716,994 common shares of the Company, representing a 33.6% interest in the Company

All amounts due to related parties are unsecured, non-interest bearing and due on demand. All transactions are in the normal
course of operations and are measured at the exchange value.




                                                       Page 11 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
7. SHARE CAPITAL
a)   Authorized
     The Company's authorized share capital consists of an unlimited number of common shares with no par value.

     The holders of the common shares are entitled to receive notice of and to attend all meetings of the shareholders of the
     Company and shall have one vote for each common share held at all meetings of the shareholders of the Company. The
     holders of the common shares are entitled to (a) receive any dividends as and when declared by the board of directors,
     out of the assets of the Company properly applicable to the payment of dividends, in such amount and in such form as
     the board of directors may from time to time determine, and (b) receive the remaining property of the Company in the
     event of any liquidation, dissolution or winding-up of the Company.

     As of September 30, 2012, the Company had 52,734,643 common shares issued and outstanding (June 30, 2012 ?
     52,734,643) and no preference shares issued and outstanding.

b)   Share purchase warrants
     As at September 30, 2012, the Company had outstanding warrants to purchase 11,969,698 (June 30, 2012: 11,969,698)
     common shares of the Company. Of the 11,969,698 warrants outstanding, 6,969,698 are exercisable at a price of $0.132
     per share until November 2013 and the remaining 5,000,000 are exercisable at a price of $0.22 per share until May 2014.

c)   Loss per share
     Loss per share was calculated on the basis of the weighted average number of common shares outstanding for three
     months ended September 30, 2012, amounting to 52,734,643 (three months year ended September 30, 2011: 47,245,529)
     common shares. Diluted loss per share was calculated using the treasury stock method. For the three months ended
     September 30, 2012, total stock options of 800,000 (three months ended September 30 2011: 1,040,000) and warrants of
     11,969,698 (September 30, 2011: 15,000,000) were excluded from the calculation of diluted loss per share as their effect
     would have been anti-dilutive. Items that are adjusted in the reconciliation between loss per share and headline loss per
     share to arrive at the Company?s headline loss per share include impairment of property, plant, and equipment and
     losses on disposal of assets, however they have no effect on the Company?s headline loss per share.

                                                          Three months ended          Three months ended
                                                          September 30, 2012          September 30, 2011



     Loss for the period                                             (74,234)                   (69,212)
       Adjustments for headline loss                                       -                          -
     Headline loss for the period                                    (74,234)                   (69,212)

     Basic and diluted loss per share                                  (0.00)                     (0.00)
     Headline loss per share                                           (0.00)                     (0.00)

8. SHARE-BASED PAYMENTS
     In August 2011, the Company?s board of directors established a new stock option plan for the Company (the "New Plan").
     In establishing the New Plan, the Board of Directors also provided that no additional stock options may be granted under
     the Company?s other stock option plan (the "Old Plan") and terminated the Old Plan effective upon the exercise, expiry,
     termination or cancellation of all of the currently outstanding stock options that were granted under the Old Plan.

     Under the New Plan, non-transferable options to purchase common shares of the Company may be granted by the
     Company?s Board of Directors to any director, officer, employee or consultant of the Company or any subsidiary of the
     Company. The New Plan contains provisions providing that the term of an option may not be longer than ten years and
     the exercise price of an option shall not be lower than the last closing price of the Company?s shares on the Toronto
     Stock Exchange prior to the date the stock option is granted. Unless the Board of Directors makes a specific


                                                        Page 12 of 17
  Delrand Resources Limited
  NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  For the three months ended September 30, 2012
  (Expressed in Canadian dollars) (unaudited)
        determination otherwise, stock options granted under the New Plan and all rights to purchase Company shares pursuant
        thereto shall expire and terminate immediately upon the optionee who holds such stock options ceasing to be at least
        one of a director, officer or employee of or consultant to the Company or a subsidiary of the Company, as the case may
        be. Stock options granted pursuant to the New Plan vest as follows: 75% of the stock options vest on the 12 month
        anniversary of their grant date and the remaining 25% of such stock options vest on the 18 month anniversary of their
        grant date. The total number of common shares of the Company issuable upon the exercise of all outstanding stock
        options granted under the New Plan shall not at any time exceed 12% of the total number of outstanding common shares
        of the Company, from time to time.

        As at September 30, 2012, the Company had outstanding under the Old Plan stock options to acquire 800,000 (June 30,
        2012 ? 890,000) common shares of the Company at a weighted-average exercise price of $2.10 (June 30, 2012 - $3.51)
        per share. There are currently no stock options outstanding under the New Plan.


        The following tables summarize information regarding outstanding stock options:

  For three months ended September 30, 2012:

                                           During the Period                                                       Weighted average
                                                                                                                          remaining
Exercise Price  Range Opening Balance                                                          Closing Balance                          Vested & Exercisable     Unvested
                                        Granted    Exercised     Expired          Forfeited                        contractual life
                                                                                                                             (years)

  2.10 - 7.51                800,000          -            -           -                  -            800,000                 0.91                 800,000            -
 7.52 - 16.00                 90,000          -            -     (90,000)                 -                  -                    -                       0            -
                             890,000          -            -     (90,000)                 -            800,000                    -                 800,000            -
 Weighted Average
 Exercise Price    $            3.51 $        -    $       -    $      -       $          -    $          2.10                 0.91    $               2.10     $      -



  For the three months ended September 30, 2011:

  Exercise Price Range                                    During the Period                                         Weighted average
                        Opening Balance                                                         Closing Balance                         Vested & Exercisable    Unvested
  (Cdn$)                                 Granted   Exercised      Expired          Forfeited                               remaining
   2.10 - 5.00                  800,000        -           -            -                  -            800,000                 1.91                 800,000           -
   7.52 - 16.00                 240,000        -           -            -                  -            240,000                 0.64                 240,000           -
                              1,040,000        -           -            -                  -          1,040,000                                    1,040,000           -
  Weighted Average
  Exercise Price (Cdn$) $          2.10  $     -     $     -     $   7.50 $                -    $          4.59                         $               4.59    $      -

  The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise
  price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
  underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The contractual life
  of all options on the date of grant is 5 years.

  The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any
  expected changes to future volatility due to publicly available information.

  Replacement options

  In connection with the acquisition by the Company of all of the outstanding shares of Diamond Core Resources Limited
  (?Diamond Core?) on February 11, 2008, 617,710 (the ?Replacement Options?) stock options were issued by the Company to


                                                                                               Page 13 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
employees of Diamond Core to substitute for their stock options in Diamond Core. Diamond Core was subsequently disposed
of by the Company. As at September 30, 2012, there were no replacement options outstanding (June 30, 2012: 21,771).

9. SEGMENTED REPORTING
The Company has one operating segment: the acquisition, exploration and development of mineral properties located in the
DRC. The operations of the Company are located in two geographic locations, Canada and the DRC. Geographic segmentation
of non-current assets is as follows:


     As at Sept. 30, 2012
                                   Property, plant       Exploration and
                                     and equipment            evaluation      Total Assets
     DRC                                         -            $5,136,509        $5,136,509
     Canada                                      -                     -                 -
                                                 -            $5,136,509        $5,136,509
     As at June 30, 2012
                                   Property, plant       Exploration and
                                     and equipment            evaluation      Total Assets
     DRC                                         -            $5,165,687        $5,165,687
     Canada                                      -                     -                 -
                                                 -            $5,165,687        $5,165,687




10.      FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
a)   Fair value of financial assets and liabilities

     The consolidated statements of financial position carrying amounts for cash, prepaid expenses and other assets and
     accounts payable and accrued liabilities approximate fair value due to their short-term nature. Due to the use of
     subjective judgments and uncertainties in the determination of fair values these values should not be interpreted as
     being realizable in an immediate settlement of the financial instruments.

     Fair value hierarchy
     The following provides a description of financial instruments that are measured subsequent to initial recognition at fair
     value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

     ?   Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
         assets or liabilities;

     ?   Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that
         are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

     ?   Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
         liability that are not based on observable market data (unobservable inputs).

     The fair values of financial assets and liabilities carried at amortized cost are approximated by their carrying values.
     Cash is ranked level 2 as it is based on similar loans in the market.




                                                            Page 14 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
b) Risk Management Policies

    The Company is sensitive to changes in commodity prices and foreign-exchange. The Company?s Board of Directors has
    overall responsibility for the establishment and oversight of the Company?s risk management framework. Although the
    Company has the ability to address its price-related exposures through the use of options, futures and forward contacts,
    it does not generally enter into such arrangements.

c) Foreign Currency Risk

    Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar and United States dollar
    or other foreign currencies will affect the Company?s operations and financial results. A portion of the Company?s
    transactions are denominated in United States dollars, Congolese francs and South African rand. The Company is also
    exposed to the impact of currency fluctuations on its monetary assets and liabilities. The Company?s functional currency
    is the Canadian dollar. The majority of major expenditures are transacted in US dollars. The Company maintains the
    majority of its cash in Canadian dollars but it does hold balances in US dollars. Significant foreign exchange gains or
    losses are reflected as a separate component of the consolidated statement of comprehensive loss. The Company does
    not use derivative instruments to reduce its exposure to foreign currency risk.

    The following table indicates the impact of foreign currency exchange risk on net working capital as at September 30,
    2012. The table below also provides a sensitivity analysis of a 10 percent strengthening of the Canadian dollar against
    foreign currencies as identified which would have increased (decreased) the Company?s net loss by the amounts shown in
    the table below. A 10 percent weakening of the Canadian dollar against the same foreign currencies would have had the
    equal but opposite effect as at September 30, 2012.

                                                       South
                                       U.S dollar    African
                                                        rand
                                                $        ZAR
    Cash                                   80,381          -
    Prepaids and other assets                         79,823
    Accounts payable                       (7,500)   (36,831)
    Total foreign currency
    financial assets and liabilities       72,881     42,992
    Foreign exchange rate at
    September 30, 2012                     0.9832     0.1186
    Total foreign currency
    financial assets and liabilities
    in CDN $                               71,657      5,099
    Impact of a 10% strengthening
    or weakening of the CDN $ on
    net loss                                7,166        510
 

d) Credit Risk

    Financial instruments which are potentially subject to credit risk for the Company consist primarily of cash. Cash is
    maintained with several financial institutions of reputable credit in Canada, the DRC and South Africa and may be
    redeemed upon demand. It is therefore the Company?s opinion that such credit risk is subject to normal industry risks
    and is considered minimal.

e) Liquidity Risk

    Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The
    Company attempts to ensure that there is sufficient cash to meet its liabilities when they are due and manages this risk
    by regularly evaluating its liquid financial resources to fund current and long-term obligations and to meet its capital
    commitments in a cost-effective manner. The key to success in managing liquidity is the degree of certainty in the cash
    flow projections. If future cash flows are fairly uncertain, the liquidity risk increases. The Company?s liquidity
    requirements are met through a variety of sources, including cash, existing credit facilities and equity capital markets.


                                                            Page 15 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
    In light of market conditions, the Company initiated a series of measures to bring its spending in line with the projected
    cash flows from its operations and available project specific facilities in order to preserve its financial position and
    maintain its liquidity position. Accounts payable and accrued liabilities of $522,908 and amounts due to related parties
    of $90,280 are due within one year and represent all significant contractual commitments, obligations, and interest and
    principal repayments on financial liabilities. Please refer to Note 1, Continuation of the Business.

f) Mineral Property Risk

    The Company?s operations in the DRC are exposed to various levels of political risk and uncertainties, including political
    and economic instability, government regulations relating to exploration and mining, military repression and civil
    disorder, all or any of which may have a material adverse impact on the Company?s activities or may result in
    impairment in or loss of part or all of the Company's assets.

g) Market Risk

   Market risk is the potential for financial loss from adverse changes in underlying market factors, including foreign-
   exchange rates, commodity prices, interest rates and stock based compensation costs.

h) Interest rate risk

   Interest rate risk is the potential impact on any Company earnings due to changes in bank lending rates and short term
   deposit rates. The Company is not exposed to significant interest rate risk other than cash flow interest rate risk on its
   cash. The Company does not use derivative instruments to reduce its exposure to interest rate risk. A fluctuation of
   interest rates of 1% would not affect significantly the fair value of cash.

i) Title risk

   Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain
   claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of
   many mining properties. Although the Company has investigated title to all of its mineral properties for which it holds
   concessions or other mineral licenses, the Company cannot give any assurance that title to such properties will not be
   challenged or impugned and cannot be certain that it will have valid title to its mineral properties. The Company relies
   on title opinions by legal counsel who base such opinions on the laws of countries in which the Company operates.

j) Country risk

   The DRC is a developing country and as such, the Company?s exploration projects in the DRC could be adversely affected
   by uncertain political or economic environments, war, civil or other disturbances, and a changing fiscal regime and by
   DRC?s underdeveloped industrial and economic infrastructure.

   The Company?s operations in the DRC may be effected by economic pressures on the DRC. Any changes to regulations or
   shifts in political attitudes are beyond the control of the Company and may adversely affect its business. Operations may
   be affected in varying degrees by factors such as DRC government regulations with respect to foreign currency conversion,
   production, price controls, export controls, income taxes or reinvestment credits, expropriation of property,
   environmental legislation, land use, water use and mine safety.

   There can be no assurance that policies towards foreign investment and profit repatriation will continue or that a change
   in economic conditions will not result in a change in the policies of the DRC government or the imposition of more
   stringent foreign investment restrictions. Such changes cannot be accurately predicted.

k) Capital Management

   The Company manages its cash, common shares, warrants and stock options as capital. The Company?s main objectives
   when managing its capital are:

        ? to maintain a flexible capital structure which optimizes the cost of capital at acceptable risk while providing an
          appropriate return to its shareholders;



                                                        Page 16 of 17
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30, 2012
(Expressed in Canadian dollars) (unaudited)
        ? to maintain a sufficient capital base so as to maintain investor, creditor and market confidence and to sustain
          future development of the business;

        ? to safeguard the Company?s ability to obtain financing; and

        ? to maintain financial flexibility in order to have access to capital in the event of future acquisitions.

   The Company manages its capital structure and makes adjustments to it in accordance with the objectives stated above,
   as well as responds to changes in economic conditions and the risk characteristics of the underlying assets.

   There were no significant changes to the Company?s approach to capital management during the three month period
   ended September 30, 2012.

   Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.


                                     As at September 30, 2012         As at June 30, 2012

    Cash                             $                 97,837         $           440,655
    Share capital                    $            116,339,566         $       116,339,566
    Deficit                          $           (119,845,080)        $      (119,770,846)
    Contributed surplus              $              8,159,644         $         8,159,644


11.      SUPPLEMENTAL CASH FLOW INFORMATION

During the three month periods ended September 30, 2012 and September 30, 2011, the Company undertook the following
significant non-cash transactions:

                                                          September        September 30,
                                                Note
                                                           30, 2012                2011


Depreciation included in exploration and
                                                  5
evaluation assets                                         $       -       $         511




12.      COMMITMENTS AND CONTINGENCIES
Six of the exploration permits comprising part of the Company?s Tshikapa project in the DRC are held through an option
agreement with Acacia SPRL. Acacia SPRL has advised the Company of its wish to modify the option agreement. The
Company continues its discussions with Acacia SPRL and believes it can reach an agreement that is satisfactory for both
parties.

The Company and its subsidiaries are subject to routine legal proceedings and tax audits. The Company does not believe that
the outcome of any of these matters, individually or in aggregate, would have a material adverse effect on its consolidated
losses, cash flow or financial position.
Labour disputes
The Company is involved in litigation with a former director and officer of the Company relating to a settlement agreement
pertaining to his departure. The former director and officer is claiming that he is owed payment of 1.2 million South African

rand plus interest, and the Company has instituted counterclaims against him. A trial date for this litigation, which is before
the South Gauteng High Court in South Africa, has been set for May 20, 2013.



                                                         Page 17 of 17

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