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Central Asia Metals PLC Proposed acquisition of -74-

22 Sep 2017 6:01 am

The condensed consolidated interim financial information is presented in United States Dollars. The accounting policies, methods of computation and presentation used in the preparation of the interim financial information are the same as those used in the Lynx Group's audited financial information for the year ended 31 December 2016 except as described below:

-- A number of amendments to IFRS became effective for the financial year beginning 1 January 2017 however the Lynx Group did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these new standards.

-- Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

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 Lynx Group's accounting policies.

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.
   2.2.      Going concern 

After review of the Lynx Group's operations, financial position and forecasts, the Directors have a reasonable expectation that the Lynx Group has adequate resources to continue in operational existence for a period of at least twelve months. Accordingly, the Directors continue to adopt the going concern basis in preparing the unaudited interim financial information.
   3.         Financial risk management 
   3.1       Financial risk factors 

The group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

The condensed interim financial information does not include all financial risk management information and disclosures required in annual financial information; they should be read in conjunction with the Lynx Group's annual financial information as at 31 December 2016. There have been no changes in the risk management department or in any risk management policies since the year end.
   3.2.      Capital risk management 

The Lynx Group's objectives when managing capital are to safeguard the Lynx Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

There have been no changes in the capital risk management policies since the year end.
   3.3.      Fair value estimation 

Cash and cash equivalents, trade receivables and other financial receivables mainly have short term maturity. For this reason, their carrying amounts at the reporting date approximate their fair values.

The table below shows the categorization of financial assets and liabilities as at 30 June 2017 and 31 December 2016:
 
                                                        Cash 
                                                         and 
                                                        other       Carrying       Fair 
 30 June 2017                                        receivables     amount        value 
                                                   -------------  -----------  ----------- 
 Assets as per the statement 
  of financial position 
 Trade and other financial 
  receivables ..............................          21,288,000   21,288,000   21,288,000 
 Cash and cash equivalents 
  ..............................................      14,814,973   14,814,973   14,814,973 
                                                      36,102,973   36,102,973   36,102,973 
                                                   =============  ===========  =========== 
 
 
                                                                               Other 
                                                                              financial    Carrying       Fair 
                                                                             liabilities     amount       value 
                                                                            ------------  -----------  ----------- 
Liabilities as per the statement 
 of financial position 
Borrowings 
 ......................................................................... 
 ..                                                                           71,669,224   71,669,224   71,669,224 
Trade and other financial 
 receivables ...................................                               4,070,931    4,070,931    4,070,931 
                                                                            ------------  -----------  ----------- 
                                                                              75,740,155   75,740,155   75,740,155 
                                                                            ============  ===========  =========== 
 
 
 
                                                       Cash 
                                                     and other    Carrying       Fair 
31 December 2016                                    receivables     amount       value 
                                                   ------------  -----------  ----------- 
Assets as per the statement 
 of financial position 
Trade and other financial 
 receivables................................          6,904,540    6,904,540    6,904,540 
Cash and cash equivalents 
 ...............................................     29,294,201   29,294,201   29,294,201 
                                                   ------------  -----------  ----------- 
                                                     36,198,741   36,198,741   36,198,741 
                                                   ============  ===========  =========== 
 
 
                                                                               Other 
Liabilities as per the statement                                              financial    Carrying       Fair 
 of financial position                                                       liabilities     amount       value 
                                                                            ------------  -----------  ----------- 
Borrowings 
 ......................................................................... 
 ..                                                                           91,324,040   91,324,040   91,324,040 
Trade and other financial 
 receivables....................................                               5,406,047    5,406,047    5,406,047 
                                                                            ------------  -----------  ----------- 
                                                                              96,730,087   96,730,087   96,730,087 
                                                                            ============  ===========  =========== 
 

The fair value of borrowings has been calculated by discounting the expected future cash flows at contracted interest rates. The fair value of loan notes and other financial assets has been calculated using market interest rates. As at 30 June 2017 and 31 December 2016, the Lynx Group measured the fair value using techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly (Level 2). There have been no transfers between fair value hierarchy level as of 30 June 2017.

The different levels have been defined as follows:

-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
   4.         Gross Revenue 
 
                                                                                              30 June      30 June 
                                                                                                2017         2016 
                                                                                            -----------  ----------- 
 Revenue on domestic market-lead 
  and zinc concentrate.................................                                      54,084,815   35,644,648 
 Revenue on foreign market-lead 
  and zinc concentrate....................................                                       18,468       10,060 
 Revenue of                                                                                   2,054,166            - 
 silver................................................................................... 
 ................... 
                                                                                             56,157,449   35,654,708 
 
   5.         Operating segment 

Sales of lead and zinc concentrate and sales of silver are sold to customers in Europe.

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