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Delrand Resources Limited - Managements Discussion & Analysis Of Financial Condition & Results Of Operations For The Year Ended 30 June 2014

Release Date: 30/09/2014 13:45:00      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")  

DELRAND RESOURCES LIMITED

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2014

The following management?s discussion and analysis of financial condition and results of
operations (the ?MD&A?) has been prepared by management and provides a review of the
activities, results of operations and financial condition of Delrand Resources Limited (the
?Company? or ?Delrand?) based upon International Financial Reporting Standards
(?IFRS?). This MD&A should be read in conjunction with the audited consolidated financial
statements of the Company as at and for the years ended June 30, 2014 and 2013 (the
?Financial Statements?) as well as the notes thereto. All amounts are expressed in
Canadian dollars unless otherwise stated.

This MD&A is dated September 29, 2014. Additional information relating to the Company,
including the Company?s annual information form, is available on SEDAR at
www.sedar.com.

FORWARD-LOOKING STATEMENTS

The following MD&A contains forward-looking statements. All statements, other than
statements of historical fact, that address activities, events or developments that the
Company believes, expects or anticipates will or may occur in the future (including, without
limitation, statements relating to exploration results, potential mineralization and future
plans and objectives of the Company) are forward-looking statements. These forward-
looking statements reflect the current expectations or beliefs of the Company based on
information currently available to the Company. Forward-looking statements are subject to
a number of risks and uncertainties that may cause the actual results of the Company to
differ materially from those discussed in the forward-looking statements, and even if such
actual results are realized or substantially realized, there can be no assurance that they will
have the expected consequences to, or effects on the Company. Factors that could cause
actual results or events to differ materially from current expectations include, among other
things, uncertainties relating to the availability and costs of financing needed in the future,
the possibility that future exploration results will not be consistent with the Company?s
expectations, changes in equity markets, changes in diamond markets, foreign currency
fluctuations, political developments in the Democratic Republic of the Congo (the "DRC"),
changes to regulations affecting the Company's activities, delays in obtaining or failure to
obtain required project approvals, the uncertainties involved in interpreting geological data
and the other risks involved in the mineral exploration business. Any forward-looking
statement speaks only as of the date on which it is made and, except as may be required
by applicable securities laws, the Company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information, future events or results
or otherwise. Although the Company believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking statements are not guarantees
of future performance and accordingly undue reliance should not be put on such statements
due to the inherent uncertainty therein.
                                             
COMPANY OVERVIEW

The Company is engaged in the acquisition and exploration of diamond properties in known
diamond producing areas in the DRC. The Company also has an iron ore exploration project
in the DRC. Also, reference is made to the Company?s press release dated September 15,
2014, announcing the proposed acquisition by the Company of all of the outstanding shares
of VoiceTrust Holding Inc. (see below for additional information).

For the year ended June 30, 2014, the Company reported a net loss of $3,487,552 (June
30, 2013: $283,776). The net asset value of the Company was $1,745,816 as at June 30,
2014 (June 30, 2013: $4,706,710).

The Company?s accumulated deficit as at June 30, 2014 was $123,542,174 (June 30, 2013
was $120,054,622). The Company had a working capital deficit of $587,641 as at June 30,
2014 (June 30, 2013: $429,967) and had a net decrease in cash of $70,154 during the year
ended June 30, 2014 (June 30, 2013: 338,942).

While the Company?s financial statements have been prepared on the basis of IFRS
accounting principles applicable to a going concern, adverse conditions may cast substantial
doubt upon the validity of this assumption. In the event the Company is unable to identify
recoverable resources, receive the necessary permitting, or arrange appropriate financing,
the carrying value of the Company?s assets could be subject to further material adjustment.
Furthermore, the volatile global economic environment and its impact on certain market
conditions may cast significant doubt upon the validity of this assumption.

The Company is in the exploration and evaluation stages of its mineral properties and the
Company?s ability to execute its work plan, meet its administrative overhead obligations,
discharge its liabilities and fulfill its commitments as they come due is dependent on its
success in obtaining additional equity or debt financing and ultimately, on attaining future
profitable operations. These conditions, along with the fact that the Company does not
currently have revenue-generating properties and has incurred a loss of $3,487,552 for the
year ended June 30, 2014 and the Company?s accumulated deficit was $123,542,174
indicate the existence of a material uncertainty that may cast significant doubt about the
Company?s ability to continue as a going concern.

In May 2014, Arnold T. Kondrat, a director of the Company, was appointed Chief Executive
Officer of the Company.

In May 2014, the Company consolidated its outstanding common shares on a three to one
basis. Immediately prior to the consolidation, the Company had 63,844,492 common shares
outstanding (June 30, 2013: 58,734,643). Upon effecting the consolidation, and as of June
30, 2014, the Company had 21,281,581 common shares outstanding (June 30, 2013:
19,578,214). All share numbers have been retroactively adjusted to reflect the share
consolidation to provide more comparable information.

During the year ended June 30, 2014, 1,036,617 warrants were exercised at a price of
$0.396 per share. This resulted in the issuance of 1,036,617 common shares of the
Company and gross proceeds to the Company of $410,500. 703,283 of the shares were
issued to a director of the Company (Mr. Kondrat). In April 2014, the Company closed a
non-brokered private placement of 666,667 common shares of the Company at a price of
$0.225 per share for gross proceeds of Cdn$150,000. A director of the Company (Mr.
Kondrat) was the purchaser of all of the shares. During the year ended June 30, 2013, the
Company issued 2,000,000 common shares in a private placement at a price of $0.135 per
share for gross proceeds of $270,000. 873,334 of these common shares were purchased by
directors and officers of the Company.

On July 23, 2014, the Company announced that it closed a non-brokered arm?s length
private placement of 500,000 units of the Company at a price of $0.50 per unit for proceeds
to the Company of $250,000. Each such unit is comprised of one common share of the
Company and one-half of one warrant of the Company, with each full warrant entitling the
holder to purchase one common share of the Company at a price of $0.75 for a period of
two years. The Company intends to use the proceeds from this financing for general
corporate purposes.

In a press release dated September 15, 2014, the Company announced it had entered into
a share exchange agreement where it has agreed to acquire all of the outstanding shares of
VoiceTrust Holding Inc. (VoiceTrust), a privately-held global provider of voice biometrics
solutions based in Toronto, from VoiceTrust Holding B.V., an indirect subsidiary of
Ramphastos Participaties Cooperatief U.A. The Company will acquire VoiceTrust for
aggregate consideration of $27,000,000 to be paid by the issuance of 36,000,000 common
shares in the capital of the Company subject to adjustment in certain circumstances (the
Acquisition). Concurrently with the closing of the Acquisition, the Company proposes to
complete a private placement of common shares in the capital of the Company for net
subscription proceeds of no less than $15,000,000.

DIAMOND PROJECTS

The Company?s present operations consist of the exploration and evaluation of several
mineral properties for diamonds in the DRC. The Company?s exploration programs in the
DRC are currently focused on the Coexco and Bomili exploration permit areas in the
Bafwasende region in the northern DRC, and on the selection of targets in the Kasai
provinces in the southern DRC.

Further interpretation of the results of the very large concentrates from the Coexco ground
and the new results from the Bomili ground detailed sampling has permitted the reduction
of the eight Coexco permits to two permits covering one target and the retention of the two
Bomili permits covering two targets. Applications for the renewal of the two Coexco permits
have been approved by the DRC Department of Mines (CAMI). In addition, the two Bomili
permits have been retained as a result of the detailed sampling results from the work that
the Company carried out in August and December 2013 and January 2014. The Company
has also completed the program to evaluate a large exploration dataset covering the Kasai
provinces.

Northern DRC Project (4 exploration permits)

Results from the 2009 reconnaissance stream samples, collected over the original 44
Coexco and two Bomili exploration permit areas, reported five ilmenites, 27 chrome spinels,
one eclogitic garnet and 15 micro-diamonds (i.e. less than 0.5 mm but larger than 0.4 mm
in size). The follow-up sampling program in 2011 over these positive areas was narrowed
down to 22 Coexco and the two Bomili exploration permits. Pursuant to the follow-up
sampling program, 490 and 97 follow-up stream samples were collected over the Coexco
and Bomili project areas, respectively, in 2012.

The number of positive samples from both the reconnaissance and follow-up stream
sampling were limited to five targets within the Coexco permit areas and two targets in the
Bomili permit areas. These seven blocks were earmarked for further detailed stream
sampling, that was conducted in Q3 of 2012. Additional detailed samples were collected
over the Bomili targets in August 2013 and more check samples were collected in December
2013 and January 2014. These samples were screened in the field, concentrated in
Kinshasa, DRC and sorted for kimberlitic minerals in South Africa. The results produced
ilmenite grains in 15 samples. Several samples reported up to five grains per sample. All
ilmenites were visually identified as being kimberlitic and have been submitted to the
microprobe laboratory for major element mineral chemistry with results are expected in the
next quarter.

The Coexco project area is dominated by almost horizontally bedded Neoproterozoic Lindian
Group sediments (shale, sandstone and conglomerate) overlying the Archaean Mbomou
Craton. A large part of the Coexco project area is covered by a thick and mature laterite
crust masking most of the rock formations of the area. These laterites have chemically
altered and etched, and hence depressed the occurrences of kimberlitic satellite minerals
significantly. Artisanal diamond diggings were observed along several rivers and its
tributaries within the target area. The 2012 follow-up program produced 48 diamonds, 12
kimberlitic ilmenites (picro-ilmenite), 21 chromites and 7 garnets that have a marginal
mantle signature (G3 and G5) over the reduced area all in the 0.4 to 0.7 mm fraction.
Although the follow-up work failed to focus on any specific targets, the depressed
distribution of the mantle minerals is due to the thick (at least 10 metres) laterite. The
abundance of diamonds which are not affected by the chemical etching of the laterite,
makes this a promising target. The conclusion from infra-red work on the initial micro-
diamonds recovered from the reconnaissance work suggests that there are two sources, one
in the north and one more to the south. Visual observations of the diamonds recovered from
the follow-up samples indicate that there is no obvious sign of wear or breakage. The infra-
red studies of the 48 diamonds recovered from the follow-up work show derivation from a
restricted number of sources. The detailed follow-up samples have returned very large
concentrates after Tetrabromoethane (SG 2.96 g/ml) treatment with an average weight of
234.61 grams per sample. Hence the sorting of these concentrates, by Afrid Laboratory in
South Africa, was only completed during Q1 of 2014. The results of those samples produced
eight diamonds in a relatively small area covering the two Coexco permits that have been
retained. These samples have been sent for further infra-red studies but at this stage no
results are available. An update of the environmental management report (PAR) is being
prepared as per legislation. The Company plans to submit this during the next quarter in
order to keep the permits in good standing.

In the Bomili project area there is no cover of Neoproterozoic sediments and the permit
areas are underlain by the same Archaean rocks of the Mbomou Craton. The follow-up
program produced no garnets, a few chromites but an abundance of ilmenite particularly in
respect of permit number PR 1774. The mineral chemistry suggests that these ilmenites
have defined two and possibly three separate kimberlite sources. These three targets on the
two Delrand permit areas were covered by detailed stream sampling in the second half of
2012. The results of these samples have highlighted the Daikwayi, Etale, Abanza and Ekoko
streams on PR 1774 as highly anomalous. Several samples contain more than 20 ilmenite
and these areas have been identified as priority and were covered by a detailed ?hammer?
prospecting mission carried out by the Company in August 2013. During this program eight
samples were collected and each contained ilmenite with ?SS? surface textures ? these are
sculptured surfaces and represent the mineral?s original surface indicating that these
ilmenites have not travelled. In December 2013 and January 2014, and based on the visual
results from the August mission, more detailed samples were collected over the high
ilmenite counts and a start was made with a ground magnetic survey over these high counts
on PR 1774. The sampling produced 21 ilmenites from 10 samples 16 of which had ?SS?
surfaces. Break down of the geophysical equipment meant that only 3 lines were surveyed
and these results were inconclusive. The magnetometers have been repaired and will be
returned as soon as the microprobe results from the January 2014 sampling have been
received. Although all the ilmenites have been identified visually as kimberlitic 28 ilmenites
from the two missions have been forwarded to the microprobe for major element analysis to
verify its paragenesis. However, based on the visual results alone the Company believes
that there are kimberlite source(s) in the Bomili PR 1774. Once the microprobe has
confirmed that these grains are indeed kimberlitic it is planned to complete the ground
geophysics over this permit area and identify suitable drill targets.

Southern DRC

Delrand negotiated an exploration agreement with Rio Tinto Minerals Development Limited
("Rio Tinto") in order to access and interpret a large diamond exploration dataset which
Rio Tinto acquired. Delrand has since recognized a regional background ?noise? of kimberlitic
indicator minerals which has complicated the recognition of residual mineral anomalies.
However, it has now highlighted several promising targets. The DRC Department of Mines
(CAMI) however remains closed for applications for new exploration permits (PR) and Rio
Tinto has therefore suspended the agreement until such time when it will be possible to
secure exploration permits over these promising targets.

At the same time, Delrand has reviewed its own dataset which it has built up since 2003
and has identified several promising targets which it hopes to secure once the CAMI is in a
position to accept new applications.

Tshikapa Project

Delrand has taken an impairment on the remaining six Acacia exploration permit areas
relating to the Tshikapa project. These are the remaining permits that were part of an
option agreement with Acacia SPRL and have been covered by a reconnaissance and follow-
up prospecting program. The Company recorded this impairment as a result of Acacia?s
wish to modify the option agreement and the Company not being able to resolve this
situation with Acacia over an extended period of time.

Security of Tenure

The Company has applied to reduce the Coexco ground from 22 permits to two permits
based on the results from the detailed follow-up stream sampling program from 2012
through to 2014. Two exploration permit applications are still at CAMI for consideration and
Delrand is looking to make additional applications as soon as CAMI opens for new
applications. Delrand holds the following exploration permits directly or by a partner
through an option agreement: Delrand (2) and Coexco (2).


Status of Exploration Permits in the DRC as of June 30, 2014

                                                           Permits at June 30 2014
    Company (Project)                PR Numbers            Permits           Km?
                                                                     
    Delrand (DRC North)              1774, 1775                  2           188
    Coexco (DRC North)               6898, 6906                  2           257
    Total                                                        4           445


IRON ORE PROJECT

In May 2011, the Company announced the discovery of high grade haematite (a form of
iron ore) in its exploration areas within Province Orientale, DRC, through its then joint
venture with Rio Tinto. Additional iron ore results were announced by the Company in
November 2011. The drilling results for 1,117 metres of diamond drill holes, which are
detailed below, revealed average grades from the mineralized intercepts ranging from
62.5% to 68.5% iron. The iron ore exploration was funded and operated by Rio Tinto.

Initial geological research and exploration had indicated that the exploration permit areas,
which hitherto had been largely unexplored using modern exploration methods, were highly
prospective for the discovery of iron ore deposits. This assessment is supported by these
initial drill results. Mapping and first pass drilling was completed on the Zatua 01 and 02
target areas with 11 diamond drill holes, one of which had to be abandoned, totaling 1,117
meters. Seven of these holes intercepted high grade haematite mineralization. The
mineralized package was not present in the remaining holes despite their central location.

The target areas had been selected after a regional airborne magnetic survey had identified
geophysical anomalies which subsequent ground follow up indicated to be associated with
outcropping haematite mineralization. Mineralized intervals, where intercepted by a drill
hole, range in thickness from 37 meters to 121 meters with both friable and massive
textures being observed.

Analytical results were received for all seven holes with values of 62.5%-68.5% for Fe;
0.56% to 4.78% for Al2O3; 0.48% to 6.36% for SiO2 and 0.040% to 0.148% for P, with the
elevated high phosphorous values appearing to be associated with recent weathering.
Despite limited thicknesses in some of the holes, the results give encouragement that high-
grade haematite is present in the area. No further work has been conducted at the iron ore
project since early 2012. Subsequently, Rio Tinto has withdrawn from the joint venture iron
ore project. Delrand has however maintained its interest in the project with a view to
realizing any potential value at a future date.

QUALIFIED PERSON

Dr. Michiel C. J. de Wit, the Company's President and a ?qualified person? as such term is
defined in National Instrument 43-101, has reviewed and approved the technical
information in this MD&A.

RESULTS OF OPERATIONS

For the year ended June 30, 2014, the Company reported a net loss of $3,487,552 (or
$0.16 per share), compared to a net loss of $283,776 (or $0.01 per share) incurred during
year ended June 30, 2013. The higher loss in the fiscal period ended June 30, 2014 is the
result of an impairment taken on the Acacia exploration permits in the amount of
$3,115,554 as well as higher general and administrative expenses relating to corporate
activities.

SELECTED ANNUAL INFORMATION

The following financial data is derived from the Company?s consolidated financial statements
for each of the two periods indicated. The Company?s presentation and functional currency
is the Canadian dollar. The following financial data is reported in accordance with IFRS.


                                         Year Ended            Year Ended
                                       June 30, 2014        June 30, 2013
    Net loss                              $3,487,552             $283,776
    Net loss per share                         $0.16                $0.01
    (basic and diluted)
    Headline loss per share1                   $0.01                $0.01
    (basic and diluted)
    Exploration and evaluation            $2,333,457           $5,142,097
    assets
    Total assets                          $2,370,539           $5,269,589
    Total non-current liabilities               $nil               $5,420

1. Headline loss per share excludes items such as impairment of property, plant, and equipment and
losses on disposal of assets.

SUMMARY OF QUARTERLY RESULTS

The following table sets out certain consolidated financial information of the Company for
each of the last eight quarters, beginning with the three months ended June 30, 2014. The
Company?s presentation and functional currency is the Canadian dollar. The financial
information is reported in accordance with IFRS.


                                 Three          Three         Three           Three
                                months         months        months          months
                                 ended          ended         ended           ended
                               June 30,         March      December       September
                                  2014       31, 2014      31, 2013        30, 2013

  Net loss ($'000)            $(3,311)          $(75)         $(56)           $(45)
  Net loss per share
  (basic and diluted)            $0.16          $0.00         $0.00           $0.00

                                 Three         Three          Three           Three
                                months        months         months          months
                                 ended         ended          ended           ended
                               June 30,     March 31,      December       September
                                  2013          2013       31, 2012        30, 2012

  Net loss ($'000)               $(72)         $(63)          $(75)           $(74)
  Net loss per share
  (basic and diluted)            $0.00         $0.00          $0.00           $0.00


During the three month period ended June 30, 2014, the Company recorded a net loss of
$3,311,169 compared to a net loss of $74,819 that was recorded during the three month
period ended March 31, 2014. The increase in the net loss was mainly due to impairment
of deferred exploration expenditures of $3,115,554 and an increase in audit fees related to
year end reporting as well as legal and consultant fees relating to corporate activities.

During the three month period ended March 31, 2014, the Company recorded a net loss of
$74,819 compared to a net loss of $55,783 that was recorded during the three month
period ended December 31, 2013. The increase in the net loss was mainly due to an
increase in filing fees relating to the TSX listing and tax consulting fees.

During the three month period ended December 31, 2013, the Company recorded a net loss
of $55,783 compared to a net loss of $45,781 that was recorded during the three month
period ended September 30, 2013. The increase in the net loss was mainly due to an
increase in both shareholder information costs and consulting fees.

During the three month period ended September 30, 2013, the Company recorded a net
loss of $45,781 compared to a net loss of $71,639 that was recorded during the three
month period ended June 30, 2013, mainly due to a reduction in consulting fees related to
the departure of a former director.

During the three month period ended June 30, 2013, the Company recorded a net loss of
$71,639 compared to a net loss of $62,839 that was recorded during the three month
period ended March 31, 2013 due to higher consulting and professional fees.

During the three month period ended March 31, 2013, the Company recorded a net loss of
$62,839 compared to a net loss of $75,064 that was recorded during the three months
ended December 31, 2012. The decrease was primarily due to lower consulting fees of
$22,548 which was offset by an increase in general and administrative expenses of $9,727.

During the three month period ended December 31, 2012, the Company recorded a net loss
of $75,064 which was consistent with the net loss of $74,234 that was recorded during the
three month period ended September 30, 2012.

LIQUIDITY AND CAPITAL RESOURCES

As at June 30, 2014, the Company had cash of $31,559 and a working capital deficit of
$587,641 compared to cash of $101,713 and a working capital deficit of $429,967 as at
June 30, 2013 .

During the year ended June 30, 2014, 1,036,617 warrants were exercised at a price of
$0.396 per share. This resulted in the issuance of 1,036,617 common shares of the
Company and gross proceeds to the Company of $410,500. 703,283 of the shares were
issued to Arnold T. Kondrat, a director of the Company.

In April 2014, the Company closed a non-brokered private placement of 666,667 common
shares of the Company at a price of $0.225 per share for gross proceeds of Cdn$150,000. A
director of the Company (Mr. Kondrat) was the purchaser of all of the shares.

In July 2014, the Company announced that it closed a non-brokered arm?s length private
placement of 500,000 units of the Company at a price of $0.50 per unit for proceeds to the
Company of $250,000. Each such unit is comprised of one common share of the Company
and one-half of one warrant of the Company, with each full warrant entitling the holder to
purchase one common share of the Company at a price of $0.75 for a period of two years.
The Company intends to use the proceeds from this financing for general corporate
purposes.

The Company has no operating revenues and is wholly reliant upon external financing to
fund its activities. There is no assurance that such financing will be available on acceptable
terms, if at all.

Rio Tinto had previously funded exploration at the Company?s DRC North diamond project
and all of the exploration at the DRC iron ore project.

In general, market conditions have limited the availability of funds. Given the Company?s
financial position and available resources, the Company currently expects a need to access
equity markets for financing over the next twelve months. In light of current conditions,
the Company has continued a series of measures to bring its spending in line with the
projected cash flows from its operations in order to preserve its balance sheet and maintain
its liquidity position. The Company believes that based on its current financial position and
liquidity profile, the Company will be able to satisfy its current and long-term obligations.
The audited consolidated financial statements of the Company as at and for the year ended
June 30, 2014 have been prepared in accordance with IFRS applicable to a going concern.

As at June 30, 2014 and 2013, there were no contractual obligations (that are not on the
statement of financial position) entered into by the Company.

In a press release dated September 15, 2014, the Company announced it had entered into
a share exchange agreement where it has agreed to acquire all of the outstanding shares of
VoiceTrust Holding Inc. (VoiceTrust), a privately-held global provider of voice biometrics
solutions based in Toronto, from VoiceTrust Holding B.V., an indirect subsidiary of
Ramphastos Participaties Cooperatief U.A. The Company will acquire VoiceTrust for
aggregate consideration of $27,000,000 to be paid by the issuance of 36,000,000 common
shares in the capital of the Company subject to adjustment in certain circumstances (the
Acquisition). Concurrently with the closing of the Acquisition, the Company proposes to
complete a private placement of common shares in the capital of the Company for net
subscription proceeds of no less than $15,000,000.

EXPLORATION AND EVALUATION EXPENDITURES

The following table provides a breakdown of the Company's exploration and evaluation
expenditures in the DRC for the year ended June 30, 2014 and the year ended June 30,
2013:

 
                                        Tshikapa        Northern DRC               Total


 Balance June 30, 2013           $     3,115,554      $    2,024,324     $     5,139,878


 Operating expenses
 Funds Received from Rio Tinto                 -            (57,269)            (57,269)
 Exploration office expenses                   -              24,034              24,034
 Salaries                                      -             152,610             152,610
 Consulting fees                               -              33,934              33,934
 Field camp expenses                           -               8,742               8,742      
 Geochemistry                                  -              12,300              12,300
 Professional fees                             -              11,334              11,334  
 Travel                                        -              40,135              40,135
 Permits and surface taxes                     -              85,635              85,635
 Foreign exchange                              -             (4,541)             (4,564)
 Impairment                          (3,115,554)                   -         (3,115,554)   
 Total Operating Expenses            (3,115,554)             306,914         (2,808,640)
 Balance June 30, 2014            $            -     $     2,331,238      $    2,331,238


                                        Tshikapa        Northern DRC               Total


 Balance June 30, 2012           $     3,085,581      $    2,077,887     $     5,163,468


 Operating expenses
 Funds Received from Rio Tinto                 -           (265,577)           (265,577)
 Admin and office support                 19,920             127,179             147,099
 Amortization                                  -                   -                   -
 Field camp expenses                       5,153              20,542              25,695
 Remote sensing                                -                   -                   -
 Drilling                                      -                   -                   -
 Geology                                       -                   -                   -
 Professional fees                             -              11,416              11,416
 Business promotion                            -                   -                   -
 Travel                                    4,148              47,432              51,580
 Stock based compensation                      -                   -                   -
 Permits and surface taxes                     -               4,692               4,692
 Foreign exchange                            753                 752               1,505
 Total Operating Expenses                 29,974            (53,564)            (23,590)
 Balance June 30, 2013            $    3,115,554     $     2,024,323       $   5,139,878

OUTSTANDING SHARE DATA

The authorized share capital of the Company consists of an unlimited number of common
shares. As at September 29, 2014, the Company had outstanding 21,781,581 common
shares and 250,000 common share purchase warrants.

RELATED PARTY 

a) Key Management Remuneration

The Company?s related parties include key management. Key management includes
executive directors. The remuneration of the key management of the Company as defined
above, during the years ended June 30, 2014, and June 30, 2013, was as follows:
                                            
                                      Year ended         Year ended
                                        June, 30           June, 30     
                                            2014               2013

 Salaries                         $      229,534     $      229,534
                                  $      229,534     $      229,534 


b) Other Related Parties

As at June 30, 2014, an amount of $56,462 was owed to a director of the Company
representing consulting fees (June 30, 2013: $117,107). For the year ended June 30, 2014,
consulting fees of $100,000 was incurred to one director (June 30, 2013: $100,000).

During the year ended June 30, 2014, the Company incurred common expenses of $nil
(year ended June 2013: $8,875) in the DRC together with Loncor Resources Inc.
(?Loncor?), a corporation with common directors. As at June 30, 2014, an amount of
$3,750 (June 30, 2013: $8,875) owing to Loncor was included in due to related parties in
the consolidated statement of financial position.

As at June 30, 2014, Banro Corporation (?Banro?) owed the Company an amount of $1,588
(June 30, 2013: $921 Banro owed the Company). Banro owns 1,538,998 common shares
of the Company, representing a 7.23% interest in the Company.

FUTURE ACCOUNTING STANDARDS

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, 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.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company?s consolidated financial statements in conformity with
IFRS 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. Estimates and underlying
assumptions are reviewed on an ongoing basis. Information about critical judgments in
applying accounting policies that have the most significant effect on the amounts
recognized in the financial statements included the following:

Provisions and contingencies

The amount recognized as provision, including legal, contractual and other exposures or
obligations, is the best estimate of the consideration required to settle the related liability,
including any related interest charges, taking into account the risks and uncertainties
surrounding the obligation. In addition, contingencies will only be resolved when one or
more future events occur or fail to occur. Therefore assessment of contingencies inherently
involves the exercise of significant judgment and estimates of the outcome of future events.
The Company assesses its liabilities and contingencies based upon the best information
available, relevant tax laws and other appropriate requirements.

Exploration and evaluation expenditure

The application of the Company?s accounting policy for exploration and evaluation
expenditure requires judgment in determining whether it is likely that future economic
benefits will flow to the Company, which may be based on assumptions about future events
or circumstances. Estimates and assumptions made may change if new information
becomes available. If, after expenditure is capitalized, information becomes available
suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off
in the statement of comprehensive loss during the period the new information becomes
available.

Share-based payment transactions

The Company measures the cost of equity-settled transactions with employees by reference
to the fair value of the equity instruments at the date at which they are granted.
Estimating fair value for share-based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determining the most appropriate inputs to the valuation model
including the expected life of the share option, volatility and dividend yield and making
assumptions about them.

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. Under IFRS, the
Company is required to estimate the number of forfeitures likely to occur on grant date and
reflect this in the share-based payment expense revising for actual experiences in
subsequent periods.

Decommissioning and environmental provisions

The Company?s operations are subject to environmental regulations in the DRC. Upon any
establishment of commercial viability of a site, the Company will estimate the cost to
restore the site following the completion of commercial activities and depletion of reserves.
These future obligations are estimated by taking into consideration closure plans, known
environmental impacts, and internal and external studies which estimate the activities and
costs that will be carried out to meet the decommissioning and environmental obligations.
Amounts recorded for decommissioning and environmental provisions are based on
estimates of decommissioning and environmental costs which may not be incurred for
several years or decades. The decommissioning and environmental cost estimates could
change due to amendments in laws and regulations in the DRC. Additionally, actual
estimated decommissioning and reclamation costs may differ from those projected as a
result of an increase over time of actual remediation costs, a change in the timing for
utilization of reserves and the potential for increasingly stringent environmental regulatory
requirements. The Company is currently in the exploration stage and as such, there are no
decommissioning and environmental reclamation costs as at June 30, 2014.

Income taxes

The Company is subject to income taxes in various jurisdictions and subject to various rates
and rules of taxation. Significant judgment is required in determining the provision for
income taxes. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Company
recognizes liabilities for anticipated tax audit issues based on the Company?s current
understanding of the tax law. Where the final tax outcome of these matters is different from
the amounts that were initially recorded, such differences will impact the current and
deferred tax provisions in the period in which such determination is made.
In addition, the Company has not recognized deferred tax assets relating to tax losses
carried forward. Future realization of the tax losses depends on the ability of the entity to
satisfy certain tests at the time the losses are recouped, including current and future
economic conditions, tax law, production rates and production costs.

Functional and presentation currency

Judgment is required to determine the functional currency of each entity. These judgments
are continuously evaluated and are based on management?s experience and knowledge of
the relevant facts and circumstances.

Impairment

Judgment is involved in assessing whether there is any indication that an asset or cash
generating unit may be impaired. This assessment is made based on the analysis of,
amongst other factors, changes in the market or business environment, events that have
transpired that have impacted the asset or cash generating unit, and information from
internal reporting.

Going Concern

As described in the continuation of business note in the Financial Statements, management
uses its judgment in determining whether the Company is able to continue as a going
concern. Refer to Note 1 of the Financial Statements.

RISKS AND UNCERTAINTIES

The Company is subject to a number of risks and uncertainties that could significantly
impact on its operations and future prospects. The following discussion pertains to certain
principal risks and uncertainties but is not, by its nature, all inclusive.

The only sources of future funds for further exploration programs which are presently
available to the Company are the sale of equity capital, or the offering by the Company of
an interest in its properties to be earned by another party carrying out further exploration.
There is no assurance that such sources of financing will be available on acceptable terms, if
at all. In the event that commercial quantities of minerals are found on the Company's
properties, the Company does not have the financial resources at this time to bring a mine
into production.

The current financial climate is characterized by volatile and uncertain times. The
uncertainty of forward looking statements is therefore greater. Diamond prices were
reduced significantly as a result of the economic downturn and the recovery could be
accompanied by volatility.

All of the Company's projects are located in the DRC The assets and operations of the
Company are therefore subject to various political, economic and other uncertainties,
including, among other things, the risks of war and civil unrest, hostage taking, military
repression, labor unrest, illegal mining, expropriation, nationalization, renegotiation or
nullification of existing licenses, permits, approvals and contracts, taxation policies, foreign
exchange and repatriation restrictions, changing political conditions, international monetary
fluctuations, currency controls and foreign governmental regulations that favor or require
the awarding of contracts to local contractors or require foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. Changes, if any, in mining
or investment policies or shifts in political attitude in the DRC may adversely affect the
Company's operations. Operations may be affected in varying degrees by government
regulations with respect to, but not limited to, restrictions on production, price controls,
export controls, currency remittance, income taxes, foreign investment, maintenance of
claims, environmental legislation, land use, land claims of local people, water use and mine
safety. Failure to comply strictly with applicable laws, regulations and local practices
relating to mineral rights could result in loss, reduction or expropriation of entitlements. In
addition, in the event of a dispute arising from operations in the DRC, the Company may be
subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting
foreign persons to the jurisdiction of courts in Canada. The Company also may be hindered
or prevented from enforcing its rights with respect to a governmental instrumentality
because of the doctrine of sovereign immunity. It is not possible for the Company to
accurately predict such developments or changes in laws or policy or to what extent any
such developments or changes may have a material adverse effect on the Company's
operations.

The DRC is a developing nation emerging from a period of civil war and conflict. Physical
and institutional infrastructure throughout the DRC is in a debilitated condition. The DRC is
in transition from a largely state controlled economy to one based on free market principles,
and from a non-democratic political system with a centralized ethnic power base, to one
based on more democratic principles. There can be no assurance that these changes will be
effected or that the achievement of these objectives will not have material adverse
consequences for the Company and its operations. The DRC continues to experience
violence and significant instability in parts of the country due to certain militia and criminal
elements. While the government and United Nations forces are working to support the
extension of central government authority throughout the country, there can be no
assurance that such efforts will be successful.

All of the Company's properties are in the exploration stage only and none of the properties
contain a known body of commercial ore. The Company currently operates at a loss and does
not generate any revenue from operations. The exploration and development of mineral
deposits involve significant financial risks over a significant period of time which even a
combination of careful evaluation, experience and knowledge may not eliminate. Few
properties which are explored are ultimately developed into producing mines. Major
expenditures may be required to establish reserves by drilling and to construct mining and
processing facilities at a site. It is impossible to ensure that the Company's exploration
programs will result in a profitable commercial mining operation.

The Company is exposed to currency risk as its principal business is conducted in foreign
currencies. Unfavorable changes in the applicable exchange rate may result in a decrease
or increase in foreign exchange gains or losses. The Company does not use derivative
instruments to reduce its exposure to foreign currency risk.

The Company's exploration and, if such exploration is successful, development of its properties
is subject to all of the hazards and risks normally incident to mineral exploration and
development, any of which could result in damage to life or property, environmental damage
and possible legal liability for any or all damage.

The natural resource industry is intensely competitive in all of its phases, and the Company
competes with many companies possessing greater financial resources and technical
facilities than itself.

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 their 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.

The following presents the fair value and carrying value of the Company's financial
instruments:
Fair value hierarchy
The following table provides an analysis 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).


There were no transfers between Level 1 and 2 during the reporting periods. The fair values of
financial assets and liabilities carried at amortized cost are approximated by their carrying
values.

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. Different portions of the Company?s transactions are
   denominated in United States dollars, Congolese francs and South African rand. The
   Company is also exposed to the impact of currency fluctuations on its monetary assets
   and liabilities. The Company?s functional currency is the Canadian dollar. The majority
   of major expenditures are transacted in US dollars. The Company maintains the
   majority of its cash in Canadian dollars but it does hold balances in US dollars.
   Significant foreign exchange gains or losses are reflected as a separate component of
   the consolidated statement of comprehensive loss. The Company does not use derivative
   instruments to reduce its exposure to foreign currency risk. See Note 11(c) of the
   Financial Statements for additional details.

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.

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, a changing fiscal regime and by DRC?s underdeveloped
   industrial and economic infrastructure.

   The Company?s operations in the DRC may be affected 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 common shares and warrants 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 an
       acceptable level of 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;
     - 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 year ended June 30, 2014.

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

SEGMENTED INFORMATION

  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 June 30, 2014
                        Exploration and     Non-Current
                             evaluation          Assets
  DRC                        $2,333,457      $2,333,457
  Canada                              -               -
                             $2,333,457      $2,333,457

  As at June 30, 2013
                        Exploration and     Non-Current
                             evaluation          Assets
  DRC                        $5,142,097      $5,142,097
  Canada                              -               -
                             $5,142,097      $5,142,097

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all
relevant information is gathered and reported to senior management, including the
Company?s Chief Executive Officer and Vice President, Finance, on a timely basis so that
appropriate decisions can be made regarding public disclosure. As at June 30, 2014, the
Company's Chief Executive Officer and Vice President, Finance evaluated or caused to be
evaluated under their supervision the effectiveness of the Company?s disclosure controls
and procedures as required by Canadian securities laws. Based on that evaluation, the
Chief Executive Officer and Vice President, Finance have concluded that, as of June 30,
2014, the Company's disclosure controls and procedures were effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Internal controls have been designed to provide reasonable assurance regarding the
reliability of the Company?s financial reporting and the preparation of financial statements
together with the other financial information for external purposes in accordance with IFRS.
As at June 30, 2014, the Company?s Chief Executive Officer and Vice President, Finance
evaluated or caused to be evaluated under their supervision, the effectiveness of the
Company?s internal control over financial reporting as required by Canadian securities laws.
Based on that evaluation, the Chief Executive Officer and Vice President, Finance have
concluded that, as of June 30, 2014, the Company?s internal control over financial reporting
was effective.

The Company is required under Canadian securities laws to disclose herein any change in
the Company?s internal control over financial reporting that occurred during the Company?s
most recent interim period that has materially affected, or is reasonably likely to materially
affect, the Company?s internal control over financial reporting. No changes were identified
in the Company?s internal control over financial reporting during the year ended June 30,
2014, that have materially affected, or are reasonably likely to materially affect, the
Company?s internal control over financial reporting.

It should be noted that a control system, including the Company?s disclosure and internal
controls and procedures, no matter how well conceived can provide only reasonable, but
not absolute, assurance that the objective of the control system will be met and it should
not be expected that the disclosure and internal controls and procedures will prevent all
errors or fraud.

30 September 2014
______________________________________________________________________________________________
Sponsors
Arcay Moela Sponsors Proprietary Limited
(t/a Arbor Capital Sponsors Proprietary Limited)

Date: 30/09/2014 01:45:00 Supplied by www.sharenet.co.za                     
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