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Delrand Resources Limited - Condensed Consolidated Financial Statements

Release Date: 19/05/2014 17:35:00      Code(s): DRN     
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)
  March 31, 2014

  (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 nine month periods ended March 31, 2014 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
March 31, 2014
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. Subsidiary in the DRC and Investment in Associate.................................................................... 10
4. Exploration and Evaluation Assets ........................................................................................ 11
5. Related Party Transactions ................................................................................................ 11
6. Share Capital ................................................................................................................. 12
7. Share-Based Payments ...................................................................................................... 13
8. Segmented Reporting ....................................................................................................... 14
9. Financial Risk Management Objectives and Policies .................................................................. 15
10. Commitments and Contingencies....................................................................................... 18
11. Subsequent Events ........................................................................................................ 18




                                                             Page 3 of 18
  Delrand Resources Limited
 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 (Expressed in Canadian dollars) (unaudited)


                                                                        Notes         March 31, 2014             June 30, 2013
                                                                                      $                          $
Assets
Current Assets
Cash                                                                                                  33 516                 101 713
Due from related parties                                                          5   -                                          921
Prepaid expenses and other assets                                                                     13 501                  24 858
Total current Assets                                                                                 47 017                  127 492


Non-Current- Assets
Explortation abd evaluation                                                       4               5 371 718              5 142 097
Total Non-current Assets                                                                         5 371 718              5 142 097


Liabilities andshareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities                                                             442 591                 420 637
Income taxes payable                                                                                    5 420                 10 840
Due to related parties                                                            5                   29 897                 125 982
Total Current liabilities                                                                           477 908                  557 459


Non-Current Liabilities
Income taxes payable                                                                  -                                        5 420
Total Liabilities                                                                                            0                 5 420


Shareholder's equity
share capital                                                                     6            117 012 188             116 601 688
contributed surplus                                                                               8 159 644              8 159 644
deficit                                                                                       -120 231 005            -120 054 622
Total shareholders' equity                                                                       4 940 827              4 706 710
Total liabilitied and shareholders' equity                                                       5 418 735              5 264 169


Common shares
Authorised                                                              6a            Unlimited                  Unlimited
Issued and outstanding                                                                           61 844 492             58 734 643


 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
 (Expressed in Canadian dollars) (unaudited)

                                                                                      Three            Three               Nine          Nine
                                                                                      months           months             months        months
                                                                                      ended            ended              ended         ended
                                                                                     March 31,        March 31,          March 31,     March 31,
                                                                          Notes        2014             2014               2014          2014
                                                                                    $                $                  $             $
Expenses
Consulting and professional fees                                                           23 784              10 591        35 842        71 337
General and administrative                                                                 51 544              52 742       138 726       136 024
Foreign exchange loss/(gain)                                                                 -509                -494         1 815         4 776
Loss from operations                                                                     -74 819             -62 839      -176 383      -212 137

Net loss and comprehensive loss for the period                                           -74 819             -62 839      -176 383      -212 137

Basic and diluted loss per share                                          6c              -0.12            -0.12             -0.29         -0.40
Adjustment for headline loss per share                                    6c                  -                -                 -             -
Headline loss per share                                                   6c              -0.12            -0.12             -0.29         -0.40
Weighted average number of common shares oustanding                                  61 844 492       52 734 643        61 242 952    52 734 643



 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)



                                                       Number of                                                                  Total
                                                         shares                             Contributed                       Shareholder's
                                        Notes           (Note 6)          Amount              Surplus            Deficit         equity
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                            -                  -                     -                     -212 137         -212 137
Balance at March 31, 2013                              52 734 643      116 339 566              8 159 644    -119 982 983        4 516 227


Net loss for the year                              -                                                                -71 639        -71 639
Share issuance (net of costs)                            6 000 000             262 122                                             262 122
Balance at June 30, 2013                               58 734 643      116 601 688              8 159 644    -120 054 622        4 706 710


Net loss for the period                            -                  -                     -                     -176 383        -176 383
Warrants exercised                                       3 109 849             410 500      -                -                     410 500
Balanced at March 31, 2014                             61 844 492      117 012 188              8 159 644    -120 231 005        4 940 827


 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                           Nine        Nine
                                                                                       months                          months      months
                                                                          Three months ended                           ended       ended
                                                                          ended March March 31,                        March 31,   March 31,
                                                                    Notes 31, 2014     2014                            2014        2014
                                                                          $            $                               $           $
Cash flows from operating activities
Net loss for the period                                                                 -74 819              -62 839    -176 383     -212 137
Changes in non-cash working capital
- Prepaid expenses and other assets                                                      25 463              -3 767       11 357       30 865
- Bank indebtedness                                                            -                             26 017 -                  26 017
- Accounts payable and accrued liabilities                                               34 978              38 736       21 954      -53 885
- Taxes payable                                                                -                     -                   -10 840      -16 452
Net cash flows used in operating activities                                             -14 378               -1 853    -153 912     -225 592

Cash flows from investing activities
Expenditures on exploration and evaluation                                4             -78 492              -85 724    -286 891     -314 444
Funds received from Rio Tinto                                                  -                              38 234      57 270      208 859
Net cash provided by (used in) investing activities                                     -78 492              -47 490    -229 621     -105 585

Cash flows from financing activities
Warrants exercised                                                        6 -                        -                   410 500 -
Due to related parties                                                    5              26 576              25 488      -95 164      -88 517
Net cash provided by (used in) financing activities                                      26 576              25 488      315 336      -88 517

Net (decrease) increase in cash during the period                                       -66 294              -23 855     -68 197     -419 694
Cash, beginning of the period                                                            99 810               44 816     101 713      440 655
Cash, end of the period                                                                  33 516               20 961      33 516       20 961



 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 nine months ended March 31, 2014
(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 nine months ended March 31, 2014
include the accounts of the Company and of its wholly-owned subsidiaries incorporated in the DRC, Delrand Resources Congo
SPRL.

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 7070, 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 $176,383 during the nine months ended March 31, 2014 and, as of that date, the Company?s deficit was
$120,231,005. 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 nine month periods ended March
    31, 2014, 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.

c) Summary of significant accounting policies
    These interim condensed consolidated financial statements have been prepared using the same accounting policies and
    methods of computation as presented in Note 3 of the annual consolidated financial statements of the Company as at and
    for the year ended June 30, 2013, except for those newly adopted accounting standards noted below.

    The Company has applied the following new and revised IFRSs in these unaudited interim condensed consolidated
    financial statements: IFRS 10 Consolidated financial statements (?IFRS 10?), IFRS 13 fair value measurements (?IFRS




                                                         Page 8 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended March 31, 2014
(Expressed in Canadian dollars) (unaudited)
   13?), IAS 1 Presentation of financial statements (?IAS 1?), IAS 27 Separate financial statements (?IAS 27?), and IAS 28
   Investments in associates and joint ventures.

d) Use of estimates and judgments
   The preparation of these interim condensed consolidated financial statements in conformity with IFRS as issued by the
   IASB requires management to make judgments, estimates and assumptions that affect the application of accounting
   policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
   estimates.

e) Accounting Standards Issued But Not Yet Effective
   The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective
   and determined that the following may have an impact on the Company:


   IFRS 9, Financial instruments (?IFRS 9?) intends to replace IAS 39 Financial Instruments: Recognition and Measurement in
   its entirety with IFRS 9. IFRS 9 is intended to reduce the complexity for the classification and measurement of financial
   instruments. The mandatory effective date was previously January 1, 2015 and has since been removed with the effective
   date to be determined when the remaining phases of IFRS 9 are completed. Once it is complete, the Company will be
   evaluating the impact the final standard is expected to have on its consolidated financial statements.


   An amendment to IAS 32, Financial Instruments: presentation (?IAS 32?) was issued by the IASB in December 2011. The
   amendment clarifies the meaning of ?currently has a legally enforceable right to set-off?. The amendments to IAS 32 are
   effective for annual periods beginning on or after January 1, 2014. The Company does not expect the standard to have a
   material impact on its consolidated financial statements.

   An amendment to IAS 36, Impairment of Assets (?IAS 36?) was issued by the IASB in May 2013. The amendment reduces the
   circumstances in which the recoverable amount of assets or cash-generating units are required to be disclosed, clarifies
   the disclosures required, and introduces an explicit requirement to disclose the discount rate used in determining
   impairment. The amendments to IAS 36 are effective for annual periods beginning on or after January 1, 2014. The
   Company does not expect the standard to have a material impact on its consolidated financial statements.

   An amendment to IAS 39, Financial Instruments: recognition (?IAS 39?) was issued by the IASB in June 2013. The amendment
   clarifies that there is no need to discontinue hedge accounting if a hedging derivative is novated, provided certain criteria
   are met. A novation indicates an event where the original parties to a derivative agree that one or more clearing
   counterparties replace their original counterparty to become the new counterparty to each of the parties. The amendments
   to IAS 39 are effective for annual periods beginning on or after January 1, 2014. The Company does not expect the standard
   to have a material impact on its consolidated financial statements.

   In May 2013, IFRS Interpretation Committee (?IFRIC?) published IFRIC Interpretation 21, Levies (?IFRIC 21?), effective for
   annual periods beginning on or after January 1, 2014. IFRIC 21 provides guidance on when to recognize a liability for a levy
   imposed by a government. IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that
   triggers the payment of the levy in accordance with the relevant legislation. The Company does not expect the standard
   to have a material impact on its consolidated financial statements.




                                                       Page 9 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended March 31, 2014
(Expressed in Canadian dollars) (unaudited)


3. SUBSIDIARY IN THE DRC AND INVESTMENT IN ASSOCIATE
    The table below sets out certain information in respect of the Company?s DRC subsidiary:

                                                                          Proportion of Ownership
Name of Subsidiary                   Place of Incorporation                                           Principal Activity
                                                                                   Interest
Delrand Resources Congo SPRL         Democratic Republic of the Congo               100%              Mineral Exploration


The Company?s former investment in Rio Tinto Exploration DRC Oriental Limited (?DRC Orientale?), which met the definition
of an associate of the Company, is summarized as follows:


                                     As at June
                                      30, 2013
Portion of ownership interest            25.00%
Common shares held                           250
Total investment                               0


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. Under the Iron
Ore Agreement, which was in the form of a shareholders' agreement, the Company owned 25% and Rio Tinto Minerals owned
75% of the capital stock of DRC Orientale, which owned a DRC registered company called Rio Tinto Exploration RDC Orientale
SPRL. The Company?s investment in DRC Orientale was accounted for in the consolidated financial statements using the equity
method.

Rio Tinto subsequently withdrew from the iron ore project and, in connection with this withdrawal, Delrand surrendered all
of its shares in DRC Orientale. As part of the arrangements with respect to Rio Tinto's said withdrawal, Delrand has
maintained the iron ore rights in the exploration permits relating to the iron ore project.




                                                         Page 10 of 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2014
 (Expressed in Canadian dollars) (unaudited)


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




                                                                                         Northern DRC
                                                  Notes            Tshikapa Project         Project                  Total
Cost
Balance as at June 30, 2012                                                3 085 581            2 077 887               5 163 468
- Additions                                                                   29 973                85 517                   115 490
- Other adjustments                                            -                                  -139 080                -139 080
Balance as atr June 30, 2013                                               3 115 554            2 024 324               5 139 878
- Addiditons                                                   -                                   229 621                   229 621
Balance as at March 31, 2014                                               3 115 554            2 253 945               5 369 499




 There is $2,219 of intangible exploration and evaluation expenditures as at March 31, 2014 (June 30, 2013: $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 six exploration permits, covering an area of 1,043km?, held through an option agreement with the
            permit holder Acacia SPRL. Acacia SPRL has advised the Company of its wish to modify the option agreement. The
            Tshikapa project also includes a seventh exploration permit held by the Company through its wholly-owned DRC
            subsidiary and which covers an area of 212 km? to the west of the Tshikapa triangle.

       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. Rio Tinto Mining and Exploration Limited (?Rio Tinto?)
            was party to this agreement but has advised the Company that it no longer wishes to continue with this diamond
            project. Previously 22 exploration permits under option covered an area of 4,155 km? but based on ongoing
            exploration, application has been made to reduce these permits to the current total of 8 permits covering an area of
            557 km?. The two additional exploration permits held by the Company?s DRC subsidiary cover an area of 188 km? (after
            its obligatory 50% reduction) directly north of the optioned ground.

 5. 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 nine months
 ended March 31, 2014 and three and nine months ended March 31, 2013 was as follows:



                                                           Page 11 of 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2014
 (Expressed in Canadian dollars) (unaudited)


                                      Three months           Three months                                      Nine months
                                    ended March 31,        ended March 31,        Nine months ended           ended March
                                          2014                   2013               March 31, 2014               31, 2013
Salaries                            $        43 724        $        41 497        $         154 283          $       186 050
                                    $        43 724        $        41 497        $         154 283          $       186 050

      b)   Other Related Parties

 As at March 31, 2014, an amount of $25,000 (June 30, 2013 - $117,107) was owing to one director of the Company representing
 consulting fees.

 As at March 31, 2014, an amount of $1,013 was owed to Banro Corporation (?Banro?) related to common expenses (June 30,
 2013 - $921). Banro owns 17,716,994 common shares of the Company, representing a 28.65% interest in the Company.

 During the three and nine months ended March 31, 2014, the Company incurred common expenses of $865 and $3,222
 respectively (three and nine months ended March 31, 2013 - $603 and $3,982, respectively) in the DRC together with Loncor
 Resources Inc. (?Loncor?), a corporation with common directors. As at March 31, 2014, an amount of $3,884 (June 30, 2013 -
 $8,875) owing to Loncor was included in due to related parties in the consolidated statement of financial position.


                                                                March 31, 2014                        June 30, 2013
                                                                      $                                     $
Due from related parties                                                               -                                  921
Due to related party                                                              29 897                              125 982


 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.

 6. 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.

      During the nine month period ended March 31, 2014, 3,109,849 warrants were exercised at a price of $0.132 per share.
      This resulted in the issuance of 3,109,849 common shares of the Company and gross proceeds to the Company of $410,500.
      2,109,849 of the shares were issued to a director of the Company.
      As of March 31, 2014, the Company had 61,844,492 common shares issued and outstanding (June 30, 2013 ? 58,734,643).
 b)   Share purchase warrants
      As at March 31, 2014, the Company had outstanding warrants to purchase 5,000,000 (June 30, 2013: 11,969,698) common
      shares of the Company. The 5,000,000 are exercisable at a price of $0.22 per share until May 2014.




                                                        Page 12 of 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2014
 (Expressed in Canadian dollars) (unaudited)

 c)   Loss per share
      Loss per share was calculated on the basis of the weighted average number of common shares outstanding for three and
      nine months ended March 31, 2014, amounting to 61,844,492 and 61,242,952 (three and nine months ended March 31,
      2013: 52,734,643) common shares. Diluted loss per share was calculated using the treasury stock method. For the three
      and nine months ended March 31, 2014, total stock options of nil (three and nine months ended March 31 2013: 675,000)
      and warrants of 5,000,000 (March 31, 2013: 11,969,698) 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       Nine months ended        Nine months ended
                                      March 31, 2014           March 31, 2013           March 31, 2014           March 31, 2013
                                              $                        $                       $                       $
Loss for the period                               (74 819)                 (62 839)                (176 383)               (212 137)
- Adjustments for headline loss     -                        -                        -                        -
Headline loss for the period                      (74 819)                 (62 839)             (176 383)              (212 137)


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


 7. 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 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 March 31, 2014, the Company had outstanding under the Old Plan stock options to acquire nil (June 30, 2013 ?
      675,000) common shares of the Company at a weighted-average exercise price of nil (June 30, 2013 - $2.10) per share.
      There are currently no stock options outstanding under the New Plan.




                                                          Page 13 of 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2014
 (Expressed in Canadian dollars) (unaudited)

     The following tables summarize information regarding outstanding stock options:

 For nine months ended March 31, 2014:

                                      During the Year
                                                                                               Weighted
                                                                                                average
Exercise                                                                                       remaining
 Price                                                                                        contractual
 Range       Opening                                                                Closing        life      Vested &
  ($)        Balance      granted      Exercised     Expired        Forfeited       Balance      (years)    Exercisable      Unvested
       2.
10 - 7.51     675,000             -             -   (675,000)               -             -             -               -             -


              675,000             -             -   (675,000)               -             -             -               -             -
Weighted
Average
Exercise
Price           $2.10             -             -               -           -             -             -               -             -

 For nine months ended March 31, 2013:

                                      During the Year
                                                                                               Weighted
                                                                                                average
Exercise                                                                                       remaining
  Price                                                                                       contractual
  Range      Opening                                                                Closing        life      Vested &
   ($)       Balance      granted      Exercised    Expired         Forfeited       Balance      (years)    Exercisable      Unvested
       2.
10 - 7.51     800 000             -             -                   -1 250 000      675 000          0.66        675 000              -
       7.
52 -
16.00          90 000                                -90 000
              890 000            0              0    -90 000        -1 250 000      675 000                      675 000              0
Weighted
Average
Exercise        $3.51             -             -           -                   -     $2.10             -                -            -
 Price
 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.

 8. 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:



                                                          Page 14 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended March 31, 2014
(Expressed in Canadian dollars) (unaudited)

As at March 31, 2014
                                        Exploration and
                                          evaluations            Total Assets
DRC                                            $5 371 718             $5 418 735
Canada                                                   -                       -
                                              $5 371 718             $5 418 735


As at June 30, 2013
                                        Exploration and
                                          evaluations            Total Assets
DRC                                            $5 142 097             $5 269 589
Canada                                                   -                       -
                                              $5 142 097             $5 269 589


9. 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.

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


                                                          Page 15 of 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2014
 (Expressed in Canadian dollars) (unaudited)
       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 and South African Rand. 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 March 31, 2014.
       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 March 31, 2014.


                                                                     U.S. Dollar               South African Rand
                                                                     $                         ZAR
Cash                                                                                 26 377                                     7 695
Prepaids and other assets                                            -                                                         79 823


Accounts payable and accrued liabilities                                           -109 500                                  -197 480


Total foreign currency financial assets and liabilities                            -83 123                                  -109 961


Foreign exchange rate at March 31, 2014                                              1.1055                                    0.1050
Total foreign currency financial assets and liabilities
in CDN $                                                                           -91 892                                   -11 546


Impact of a 10% strengthening or weakening of the
CDN $ on net loss                                                                    -9 189                                    -1 155


 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, credit facilities and equity capital markets. 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 $442,591 and amounts due to related parties of $29,897 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.




                                                             Page 16 of 18
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended March 31, 2014
(Expressed in Canadian dollars) (unaudited)



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 any 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;

        ? to maintain a sufficient capital base so as to maintain investor, creditor and market confidence and to sustain future
          development of the business;


                                                          Page 17 of 18
 Delrand Resources Limited
 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the three and nine months ended March 31, 2014
 (Expressed in Canadian dollars) (unaudited)
          ? 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 nine month period ended
    March 31, 2014.

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


                                           As at March 31, 2014                           As at June 30, 2013
Cash                                                                           $33 516                                      $101 713
Share capital                                                            $117 012 188                                   $116 601 688
Deficit                                                                 -$120 231 005                                   -$120 054 622
Contributed surplus                                                        $8 159 644                                     $8 159 644


 10.      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.

 11.      SUBSEQUENT EVENTS
 In April 2014, the Company closed a non-brokered private placement of 2,000,000 common shares of the Company at a price
 of $0.075 per share for proceeds to the Company of $150,000. The Company intends to use the proceeds from this financing
 for general corporate purposes. Arnold T. Kondrat, a director of the Company, was the purchaser of all of the said shares and
 now holds 14,359,700 (or 22.49%) of the outstanding common shares of the Company. Mr. Kondrat was appointed Chief
 Executive Officer of the Company in May 2014.




                                                           Page 18 of 18

Date: 19/05/2014 05:35:00 Supplied by www.sharenet.co.za                     
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