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Delrand Resources Limited - Interim Condensed Consolidated Financial Statements (unaudited)

Release Date: 18/02/2013 12:16:00      Code(s): DRN     
DELRAND RESOURCES LIMITED
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: DRN    ISIN Number: CA2472671072
(?Delrand? or the "Company")




INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 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 and six month periods ended December 31, 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 18
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
CONTENTS
Interim Condensed Consolidated Statements of Financial Position.....................................................4
Interim Condensed Consolidated Statements of Comprehensive (Loss) Income............................................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 18
 Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian dollars) (unaudited)
                                                                  Notes        December 31, 2012          June 30, 2012
                                                                                             $                        $
Assets
Current Assets
     Cash                                                                                 44,816                440,655
     Prepaid expenses and other assets                                                    19,840                 54,472
Total Current Assets                                                                      64,656                495,127

Non-Current Assets
  Exploration and evaluation                                         5                 5,223,781              5,165,687
Total Non-Current Assets                                                               5,223,781              5,165,687


Total Assets                                                                           5,288,437              5,660,814

Liabilities and Shareholders' Equity
   Current Liabilities
     Accounts payable and accrued liabilities                                            552,953                645,575
     Income taxes payable                                                                     44                 16,496
     Due to related parties                                          6                   140,114                254,119
Total Current Liabilities                                                                693,111                916,190

Non-current
Income taxes payable                                                                      16,260                 16,260
Total Liabilities                                                                        709,371                932,450

Shareholders' Equity
  Share capital                                                      7               116,339,566            116,339,566
     Contributed surplus                                                               8,159,644              8,159,644
     Deficit                                                                        (119,920,144)          (119,770,846)
Total Shareholders' Equity                                                             4,579,066              4,728,364
Total Liabilities and Shareholders' Equity                                             5,288,437              5,660,814


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

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




                                                                  Page 4 of 18
    Delrand Resources Limited
   INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
   (Expressed in Canadian dollars) (unaudited)


                                                                      Notes   For the three      For the three         For the six        For the six
                                                                               months ended       months ended        months ended       months ended
                                                                               December 31,       December 31,        December 31,       December 31,
                                                                                       2012               2011                2012               2011

                                                                                      $                  $                   $                  $
Expenses
  Consulting and professional fees                                                   33,139             74,561              60,746           106,028
  General and administrative                                                         43,015             29,830              83,282            78,053
  Foreign exchange loss (gain)                                                       (1,090)             2,668               5,270            (7,810)
  Gain on dispoal of property, plant and equipment                                        -           (430,085)                  -          (430,085)
  Interest expense                                                                        -              8,000                   -             8,000
(Loss) income from operations before other income and income taxes                  (75,064)           315,026            (149,298)          245,814
Other income                                                                              -                  -                  -                  -
(Loss) income before income taxes                                                   (75,064)           315,026            (149,298)          245,814
Income tax expense                                                                        -            (21,909)                  -           (21,909)
Net (loss) income and comprehensive loss for the period                             (75,064)           293,117            (149,298)          223,905



Basic and diluted (loss) income per share                                7c              (0.00)              0.01               (0.00)          0.00
Adjustments for headline (loss) income per share                         7c                  -                  -                   -              -
Headline (loss) income per share                                         7c              (0.00)              0.01               (0.00)          0.00
Weighted average number of common shares outstanding                                52,734,643         47,855,026          52,734,643     47,855,026




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




                                                                     Page 5 of 18
 Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 (Expressed in Canadian dollars) (unaudited)


                                                   Common shares                Contributed                Total Shareholders'
                                  Notes                                                           Deficit
                                         Number of shares            Amount         Surplus                            equity
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                                 -                 -               -      (149,298)           (149,298)
Balance at December 31, 2012                   52,734,643       116,339,566       8,159,644  (119,920,144)          4,579,066


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




                                                                  Page 6 of 18
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Expressed in Canadian dollars) (unaudited)
                                                                              Three months ended  Three months ended    Six months ended    Six months ended
                                                                        Notes  December 31, 2012   December 31, 2011   December 31, 2012   December 31, 2011
                                                                                      $                   $                    $                  $


Cash flows from operating activities Net (loss) income for the period                    (75,064)            293,117           (149,298)             223,905
Adjustments to reconcile loss to net cash used in operating activities
   Interest expense                                                                             -              8,000                  -                8,000
   Interest paid - Note payable                                                                 -            (16,493)                 -              (16,493)
   Income taxes                                                                                 -             21,909                  -               21,909
   Income taxes paid                                                                            -            (12,247)                 -              (12,247)
   Gain on disposal of property, plant and equipment                                            -           (430,085)                 -             (430,085)
Changes in non-cash working capital
   Prepaid expenses and other assets                                                        7,282             (4,009)            34,632               (3,932)
   Other receivable                                                                        27,530            (26,145)                 -              (26,145)
   Taxes payable                                                                           (5,376)             6,127            (16,452)               6,127
   Accounts payable and accrued liabilities                                                30,047              4,880            (92,621)             (64,621)
Net cash flows used in operating activities                                               (15,581)          (154,946)          (223,739)            (293,582)


Cash flows from investing activities
Proceeds from disposal of capital asset                                                         -            430,085                    -            430,085
Expenditures on exploration and evaluation                                                (76,339)          (492,936)          (228,720)            (554,833)
Funds received from Rio Tinto                                                             (10,935)            26,146            170,625               62,921
Net cash used in investing activities                                                     (87,274)           (36,705)           (58,095)             (61,827)


Cash flows from financing activities
Notes payable                                                                                   -              8,493                  -                8,493
Due to related parties                                                                     49,834             49,652           (114,005)              95,032
Net cash provided by (used in) financing activities                                       49,834              58,145           (114,005)             103,525


Net decrease in cash during the period                                                    (53,021)           (133,506)         (395,839)            (251,884)
Cash, beginning of the period                                                              97,837            221,574           440,655               339,952
Cash, end of the period                                                                   44,816              88,068            44,816                88,068


Supplemental cash flow information (Note 11)

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




                                                                         Page 7 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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 and six months ended December 31, 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 $149,298 during the six months ended December 31, 2012 and, as of that date, the Company?s deficit
was $119,920,144. 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 and six months ended December 31,
    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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 2012
(Expressed in Canadian dollars) (unaudited)
                                                       As at December       As at June 30,
                                                             31, 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                                                                 29,293             31,020          60,313
Balance as at December 31, 2012                                          3,114,874          2,108,907       5,223,781


There is $2,219 of intangible exploration and evaluation expenditures as at December 31, 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 1,402 km?, which permits were recently
         reduced to eight through relinquishment of one of them. One of these eight permits is held by the Company?s
         wholly-owned DRC subsidiary and the other seven 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 option agreement permit relates to Caspian Oil &
         Gas.




                                                          Page 10 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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 10
           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 8 exploration permits cover an
           area of 556 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 and six months
ended December 31, 2012 and 2011 was as follows:


                   Three months ended            Six months ended
                December 31,  December 31,   December 31,  December 31,
                       2012          2011           2012          2011
Salaries        $    62,967   $    70,005    $    144,288  $   135,934
                $    62,967   $    70,005    $    144,288  $   135,934



    b)     Other Related Parties

As at December 31, 2012, a total of $133,140 (June 30, 2012 - $242,793) was owed to a director and a former director of the
Company representing consulting fees. During the three and six months period ended December 31, 2012, consulting fees of
$41,667 and $91,667, respectively were incurred to the said two individuals (three months and six months ended December
31, 2011- $50,000 and $100,000, respectively).

As at December 31, 2012, an amount of $1,204 (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

As at December 31, 2012 an amount of $8,178 was owed to a Company with common directors.

All amounts due to or from 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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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 December 31, 2012, the Company had 52,734,643 common shares issued and outstanding (June 30, 2012 ?
     52,734,643).

b)   Share purchase warrants
     As at December 31, 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 and
     six months ended December 31, 2012 and 2011 amounting to 52,734,643 (three and six months ended December 31,
     2011: 47,855,026) common shares. Diluted loss per share was calculated using the treasury stock method. For the three
     and six months ended December 31, 2012 and 2011, total stock options of 675,000 (three and six months ended
     December 31, 2011: 1,061,771) and warrants of 11,969,698 (December 31, 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 Six months ended     Six months ended
                                                    December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011



     Earnings/(loss) for the period                            (75,064)          (54,102)          (149,298)            223,905
      Adjustments for headline (loss) income                         -                 -                  -                   -
     Headline (loss) income for the period                     (75,064)          (54,102)          (149,298)            223,905

     Basic and diluted (loss) income per share                   (0.00)            (0.00)             (0.00)               0.00
     Headline (loss) income per share                            (0.00)            (0.00)             (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 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and six months ended December 31, 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 December 31, 2012, the Company had outstanding under the Old Plan stock options to acquire 675,000 (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 the six months ended December 31, 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            -               -               -          (125,000)             675,000                 0.66               675,000            -
        7.52 - 16.00            90,000            -               -         (90,000)                -                    -                    -                     -            -
                               890,000            -               -         (90,000)         (125,000)             675,000                    -               675,000            -
 Weighted Average
   Exercise Price        $        3.51      $     -       $       -         $     -       $         -      $          2.10                    -    $             2.10     $      -



 For the six months ended December 31, 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   $    -  $       -   $    -  $       -  $          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

                                                                                      Page 13 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 2012
(Expressed in Canadian dollars) (unaudited)
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
employees of Diamond Core to substitute for their stock options in Diamond Core. Diamond Core was subsequently disposed
of by the Company. As at December 31, 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 December 31, 2012
                                    Property, plant       Exploration and
                                      and equipment            evaluation        Total Assets
     DRC                                          -            $5,223,781          $5,223,781
     Canada                                       -                     -                   -
                                                  -            $5,223,781          $5,223,781

     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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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) income. 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 December 31,
    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 December 31, 2012.

                                                   U.S dollar           South African rand
                                                            $                          ZAR
    Cash                                                  450                            -
    Prepaids and other assets                               -                       79,823
    Accounts payable                                   (2,985)                     (46,511)
    Total foreign currency financial
    assets and liabilities                             (2,535)                      33,312
    Foreign exchange rate at
    December 31, 2012                                  0.9949                       0.1172

    Total foreign currency financial
    assets and liabilities in CDN $
                                                       (2,522)                       3,904
    Impact of a 10% strengthening
    or weakening of the CDN $ on
    net loss                                             (252)                         390

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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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 $552,953 and amounts due to related parties
    of $140,114 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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 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 six month period ended
   December 31, 2012.

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


                                       As at December 31, 2012       As at June 30, 2012

    Cash                               $                44,816       $           440,655
    Share capital                      $           116,339,566       $       116,339,566
    Deficit                            $          (119,920,144)      $      (119,770,846)
    Contributed surplus                $             8,159,644       $         8,159,644


11.     SUPPLEMENTAL CASH FLOW INFORMATION

During the three and six month periods ended December 31, 2012 and 2011, the Company undertook the following significant
non-cash transactions:

                                                 For the three  For the three    For the six   For the six
                                                  months ended   months ended   months ended  months ended
                                           Note   December 31,   December 31,   December 31,  December 31,
                                                          2012           2011           2012          2011


Depreciation included in exploration
and evaluation assets                         5   $          -   $        127   $          -  $      1,811


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 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 2012
(Expressed in Canadian dollars) (unaudited)


18 February 2013
Johannesburg

Sponsor
Arcay Moela Sponsors (Proprietary) Limited




                                         Page 18 of 18

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