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Central Asia Metals PLC Proposed acquisition of -55-

22 Sep 2017 6:01 am
  capital............................................................................ 
  ..............................                                                                   -     173,454,015 
 Reduction of capital (Note                                                             (76,000,000)               - 
 21).............................................................................. 
                                                                                       -------------  -------------- 
 Net cash generated from financing 
  activities...................................................                            (614,987)     198,806,916 
 Net increase in cash and cash 
  equivalents........................................................                     22,002,197       7,292,004 
 Cash and cash equivalents at                                                              7,292,004               - 
  1 January............................................................. 
                                                                                       -------------  -------------- 
 Cash and cash equivalents at 
  31 December (Note 20).....................................                              29,294,201       7,292,004 
                                                                                       =============  ============== 
 Non-cash supplemental disclosure: 
 Deferred revenue exchange for 
  settlement of intercompany loan                                                         22,064,374               - 
  for silver stream (Note 
  23)................................................................................ 
  ...................... 
 

Lynx Resources Limited

Note to the Consolidated Financial Information for the periods ended 31 December 2016

(all amounts are in USD unless otherwise stated)
   1.         General information 

Lynx Resources Limited ("Lynx Resources"), was incorporated on 19 June 2015 under the Companies Act 1981 of Bermuda. The initial paid in capital amounted to $173,454,015. The registered office of Lynx Resources is located at Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda.

On 10 July 2015, Lynx Resources through its wholly owned subsidiary, Lynx Mining Limited, established Lynx Europe dooel Skopje. As at 3 November 2015, Lynx Europe dooel Skopje acquired 100% of the shares of the zinc and lead mine Rudnik SASA DOOEL Makedonska Kamenica (Sasa). The ultimate controlling party of the Lynx Group is Orion Fund JV Ltd., Hamilton, Bermuda.

The primary activity of Lynx Resources Limited and its subsidiaries (collectively, the "Lynx Group") includes the extraction of mineralized ores and the production and sale of zinc and lead concentrates.

As of 31 December 2016, the Lynx Group had 689 employees (2015: 680 employees).

The Management of the Lynx Group serving during the financial periods were:

Chris James-Chief Executive Officer

Stefan Peschke-Chief Financial Officer

Florian Dax-Chief Operating Officer

The activity of the Lynx Group is organized through the following organizational activities:
   --           Mine 
   --           Flotation 
   --           Laboratory 
   --           Machine workshop 
   --           General administration 
   --           Wholesale and trade of zinc and lead concentrates 
   2.         Summary of significant accounting policies 

The principal accounting policies adopted in the preparation of these consolidated financial information are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
   2.1       Basis of preparation 

This historical consolidated financial information presents the financial track record of Lynx Resources Limited for the year ending 31 December 2016 and the period from incorporation on 19 June 2015 to 31 December 2015 and is prepared for the purposes of the re-admission of CAML to AIM. This special purpose financial information has been prepared in accordance with the requirements of the AIM Rules for Companies and in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").

The financial information relating to the Lynx Group has been prepared in a form that is consistent with the accounting policies adopted in CAML's latest annual accounts.

This historical consolidated financial information is presented in United States Dollars. This historical consolidated financial information has been prepared on a going concern basis.

The preparation of the historical consolidated financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial information are disclosed in Note 4. Actual results may differ from those estimated.

In order to maintain consistency with the current year presentation, where appropriate certain items have been reclassified for comparative purposes. Such reclassifications, however, have not resulted in significant changes of the content and format of the financial information as presented herein.
   2.1.1    Standards, amendments and interpretations effective and adopted by the Lynx Group in 2016 

No standards, amendments and interpretation have been adopted by the Lynx Group in 2016 with significant impact on the consolidated financial information.

2.1.2 Standards, amendments and interpretations that are not yet effective and have not been early adopted by the Lynx Group

IFRS 9 "Financial Instruments: Classification and Measurement" (amended in July 2014 and effective for annual periods beginning on or after 1 January 2018).

Key features of the new standard are:

-- Financial assets are required to be classified into three measurement categories: those to be measured subsequently at amortized cost, those to be measured subsequently at fair value through other comprehensive income (FVOCI) and those to be measured subsequently at fair value through profit or loss (FVPL).

-- Classification for debt instruments is driven by the entity's business model for managing the financial assets and whether the contractual cash flows represent solely payments of principal and interest (SPPI). If a debt instrument is held to collect, it may be carried at amortized cost if it also meets the SPPI requirement. Debt instruments that meet the SPPI requirement that are held in a portfolio where an entity both holds to collect assets' cash flows and sells assets may be classified as FVOCI. Financial assets that do not contain cash flows that are SPPI must be measured at FVPL (for example, derivatives). Embedded derivatives are no longer separated from financial assets but will be included in assessing the SPPI condition.

-- Investments in equity instruments are always measured at fair value. However, management can make an irrevocable election to present changes in fair value in other comprehensive income, provided the instrument is not held for trading. If the equity instrument is held for trading, changes in fair value are presented in profit or loss.

-- Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The key change is that an entity will be required to present the effects of changes in own credit risk of financial liabilities designated at fair value through profit or loss in other comprehensive income.

-- IFRS 9 introduces a new model for the recognition of impairment losses-the expected credit losses (ECL) model. There is a 'three stage' approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities will have to record an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes operational simplifications for lease and trade receivables.

-- Hedge accounting requirements were amended to align accounting more closely with risk management. The standard provides entities with an accounting policy choice between applying the hedge accounting requirements of IFRS 9 and continuing to apply IAS 39 to all hedges because the standard currently does not address accounting for macro hedging.

The application of the new standard and its amendments is required for annual periods beginning on or after 1 January 2018. Earlier application is permitted. The adoption of the new standard and its amendments will likely result in changes in the consolidated financial information of the Lynx Group, the exact extent of which management are currently analyzing.

IFRS 15, Revenue from Contracts with Customers (issued on 28 May 2014 and effective for the periods beginning on or after 1 January 2018). The new standard introduces the core principle that revenue must be recognized when the goods or services are transferred to the customer, at the transaction price. Any bundled goods or services that are distinct must be separately recognized, and any discounts or rebates on the contract price must generally be allocated to the separate elements. When the consideration varies for any reason, minimum amounts must be recognized if they are not at significant risk of reversal. Costs incurred to secure contracts with customers have to be capitalized and amortized over the period when the benefits of the contract are consumed. The Lynx Group is currently assessing the impact of the new standard on its consolidated financial information.

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