Final Results

Ovoca Resources plc Chairman's Letter to Shareholders The last eighteen months has been exciting for the company, and I am looking forward to a very busy future. Firstly I would like to thank the out-going Chairman Mr. Paul Smithwick for his contribution to Ovoca over the past years. Up to the time of my appointment, and particularly over the time covered by this Annual Report ending February 2005, Ovoca had already begun to change its focus with the acquisition of gold and zinc exploration properties in Sweden. In this regard I would also like to thank the out going Chief Executive, Mr. Richard O'Shea, who played a major part in such acquisitions and also in the acquisition of the 78% interest in Norplat Limited with the option to acquire the remaining 22%. The Norplat acquisition took place on May 10th 2005. In June the company raised €1,690,000 through a placing and on June 30th 2005 we added London's AIM market to the Irish Enterprise Exchange quote. Ovoca is now going forward as a gold and platinum exploration and mine development company. Norplat Limited is a private company that has exploration properties in the Kola Peninsula in Russia across the boarder from Finland. The property covers some 152 square kilometres along the 'Kolmozero-Voroninsky Greenstone Belt' of the Baltic Shield. This licence hosts at least eight gold prospects and copper molybdenum gold porphyry with recently discovered platinum group element potential and rare earth deposits. Two of the prospects have been sufficiently explored to outline a resource of 900,000 ounces of gold based on the Russian Resource classification as P1 and P2. Geochemical and geophysical surveys, trenching and diamond drilling programmes are ongoing to upgrade and increase these resources. Recent drill assay results gave a gold grade of 211 grams per tonne (6.5 ounces) over a 2 metre intersection and a number of other drill holes have returned gold grades of over 80 grams per tonne (2.5 ounces). To put this in perspective the lowest grade which could be economically mined is in the 5 to 10 grammes per tonne gold range for these types of deposits depending on the true vein thickness, ground conditions and the most appropriate mining method, metallurgy and scale of operations. In addition to these exceptional gold grades the presence of platinum group metals on the licence is proving exciting. We believe the potential for a major deposit is excellent and the results to-date have been very encouraging. At the end of 2005 the resources will be updated and an initial feasibility study is planned for early 2006 while, at the same time, drilling will continue to increase and enhance the resources. The objective is to arrive at a production decision at the earliest possible date. This project has been led by Dr Barrie Oakes, Ovoca's new CEO, over the last few years and more details are given in the operations report. In Sweden we have added new licences to our existing interests along the 'Gold Line' and these will be outlined later in the operations report. Following a ground magnetic survey and sampling programme exciting anomalies have been identified on three of our gold exploration licence areas in Vasterbotten County in Sweden. Two of these, Krokliden and Sjoliden, adjoin the licence area of the recently commissioned open pit Svartliden Mine owned by Dragon Mining of Australia with reported head grades of 4.5 grams per tonne gold. Krokliden is 500 metres along strike from this open pit and the ground magnetic survey indicates that the Svartliden ore body may extend into Ovoca's Krokliden licence. Further positive results on Ovoca's Nottjarn concession, where quartz veins with values of 12.8 grams per tonne gold, 26 grams per tonne silver and 1.1% copper, have been found. The next stage work programmes in Sweden will be funded from the proceeds of the latest financing. Ovoca has recently commissioned an independent geologist to review the Newcastle West zinc exploration licences in Ireland with a view to defining specific targets for future exploration. The report from this review is expected later this summer. I would like to welcome Guy Pas to the Ovoca Board of Directors. I worked with Guy when he was on the Board of Oxus Resources plc, now Oxus Gold plc. I welcome his experience in the resource sector worldwide, but particularly his experience in Russia. He is also a major shareholder in Ovoca and his appointment as a Non-Executive Director on July 7th will increase and diversify the Boards strengths. The fundamentals for an increase in the price of gold are good. Over the past 12 months the price has ranged between $370 and $450 per ounce and is currently $420 per ounce. Platinum has ranged from $800 to $900 per ounce during the year and is currently $864 an ounce. We believe that the current properties in Russia and Sweden provide a sound basis for the new gold and platinum focus for your Company. Over the coming months we will mobilize programmes in Sweden and we have already made plans to increase activities in Kola. We believe the Kola licence has the potential to host a major gold deposit and we will announce ongoing results from both Russia and Sweden as they become available. We will also update the web site where more detailed information will be made available on www.ovoca.ie. The Board would like to take this opportunity of thanking you for your continued support and to thank management, staff and advisors for their hard work over the past year. We look forward to bringing you news of progress towards achieving our objective, building a major precious metal mining company. Yours sincerely Roger Turner. Chairman 29 July 2005 Consolidated profit and loss account for the year ended 28 February 2005 As restated 2005 2004 Note € € Administrative expenses (391,005) (235,811) Other operating income 4 22,326 - Operating loss - continuing operations (368,679) (235,811) Share of operating profit/(losses) of joint venture undertaking (37,489) 14,765 Interest (payable)/ receivable (net) 2 (180) 27 Loss on ordinary activities (406,348) (221,019) Taxation 6 16,523 (16,523) Loss for the financial year (389,825) (237,542) Profit and loss account at beginning of year (5,746,886) (5,509,344) Profit and loss account at end of year (6,136,711) (5,746,886) Basic loss per ordinary share 7 (0.73)c (0.68)c There were no gains or losses in the period other than those recognised in the Profit & Loss Account. The accompanying notes are an integral part of these financial statements. Richard O'Shea John O'Connor Director Director 29 July 2005 Note of Historical cost profits and losses for the year ended 28 February 2005 As restated 2005 2004 Note € € Retained loss on ordinary activities before tax (406,348) (221,019) Realisation of property revaluation gains of previous years 4 78,514 77,296 Historical cost loss on ordinary activities before taxation (327,834) (143,723) Historical cost loss on ordinary activities after taxation (311,311) (160,245) The accompanying notes are an integral part of these financial statements. Richard O'Shea John O'Connor Director Director 29 July 2005 Consolidated balance sheet at 28 February 2005 2005 2004 Note € € € € Fixed assets Intangible assets 8 4,482,304 4,335,288 Tangible assets 9 21,205 119,572 Financial Assets Investment in joint venture undertaking Share of gross assets 10 - 15309 Share of gross liabilities 10 - (90,041) - (74,732) 4,503,510 4,380,128 Current assets Debtors 11 108,962 166,919 Cash at bank and in hand 16,389 96,812 125,352 263,731 Creditors: Amounts falling due within one year 12 (214,283) (167,472) Net current assets / (liabilities) (88,931) (96,259) Net assets 4,414,579 4,476,387 Financed by: Capital and reserves Called-up share capital 13 1,331,542 1,236,629 Share premium account 14 9,035,379 8,802,477 Other reserves 15 11,681 11,482 Revaluation reserve 16 16,874 95,387 Profit and loss account 17 (5,980,898) (5,669,588) Shareholders' funds - equity 4,414,579 4,476,387 The accompanying notes are an integral part of these financial statements. Richard O'Shea John O'Connor Director Director 29 July 2005 Consolidated cash flow statement for the year ended 28 February 2005 2005 2004 Note € € € € Net cash (outflow)/inflow from operating activities 20 (370,389) (433,719 Returns on investments and servicing of finance Interest received - net (180) 27 Sale of tangible asset 112,855 85,000 Net cash inflow from returns on investments and servicing of finance 112,675 85,027 Tax paid - - Capital expenditure and financial investment Purchase of tangible assets (3,509) - Purchase of intangible assets (147,016) (1,161,824) Net cash outflow from capital expenditure and financial investment (150,525) (1,161,824) Acquisition and disposals Investment in joint venture undertaking - - Net cash outflow from acquisitions and disposals - - Net cash outflow before financing and management of liquid resources (408,239) (1,510,516) Financing and management of liquid resources Proceeds received from issue of share capital 327,815 1,554,792 Net cash transferred from liquid resources 22 - - Net cash inflow from financing and use of liquid resources 327,815 1,554,792 (Decrease)/Increase in cash in the year 21 (80,424) 44,276 Notes (forming part of the consolidated financial statements) 1 Basis of preparation The group financial statements consolidate the financial statements of Ovoca Resources plc and its subsidiary undertakings and joint ventures for the year ended 28 February 2005. The company uses the full cost method of accounting for exploration costs. Under this method all costs associated with exploration, whether or not productive, are capitalised until the results of the projects, which are based on geographical areas, mainly countries, are known. The recovery of exploration costs is dependent on the successful production of economic quantities of base metals and other minerals. If commercial production is achieved, the unit of production basis will be used to amortise all remaining balances in the proportion that current production in a year bears to total estimated recoverable reserves. Provision for impairment is made where a project is abandoned or considered to be of no further interest to the group or its anticipated income potential is less than carrying value of the project on the balance sheet. The directors have reviewed the current state of the group's finances, taking into account resources currently available to the group. At 28 February 2005 the group had cash balances of approximately € 19,000. The group had a deficit on its working capital of approximately € 45,000 at that date. At 27 July 2005 the group had cash balances of approximately € 1,378,000. The directors forecast that the group will require up to €787,000 to finance the ongoing mineral exploration programme and the forecast working capital needs of the business in the period from 27 July 2005 to 31 December 2005. Taking all of the above into account the directors are satisfied that sufficient funding will be available to the group to enable it to trade at its projected level of operations for the foreseeable future. On this basis the directors consider that it is appropriate to prepare the financial statements on the going concern basis. The directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. The financial statements do not include any adjustments that would result if the directors' plans were not successful. 2 Interest receivable (net) 2005 2004 € € Deposit interest receivable 39 250 Interest payable and similar charges (219) (223) (180) 27 3 Statutory and other information 2005 2004 € € Auditors' remuneration - audit 16,000 12,000 - non audit services 2,905 3,000 Depreciation of tangible fixed assets 10,937 14,106 Rentals payable under operating leases Land and buildings - 1,108 Directors' remuneration Fees - 12,500 Other remuneration - - Consultancy fees 62,710 81,554 Details of directors' consultancy services are set out in Note 26. 4 Other Operating Income Albannach Limited, a subsidiary company, made a profit before tax of €100,839 through the sale of a portion of its land which was surplus to its requirements.€78,514 of this profit referred to the realisation of previous revaluations and is therefore reported in the note of historical cost profits and losses on page 20, while the remaining profit of €22,326 represents the profit when comparing the net sales proceeds, to the revalued carrying value of the assets and is reported as 'Other Operating Income' on page 19. 5 Employees The group has one full time employee (2004: one). The aggregate payroll cost was as follows: 2005 2004 € € Wages and salaries 75,000 12,500 Social welfare costs 8,277 1,344 83,277 13,844 Staff costs capitalised - Net staff costs 83,277 13,844 6 Taxation 2005 2004 € € Corporation tax - current year - - Capital Gains Tax - current year - 16,235 Capital Gains Tax - overprovision last year (16,523) - (16,523) 16,523 Loss on ordinary activities before tax (406,348) (221,019) Loss on ordinary activities multiplied by the standard rate of corporation tax of 12.5% (2004 12.5%) (50,793) (27,627) Effects of Tax Losses forward 50,793 50,793 7 Loss per share Basic 2005 2004 € € Loss after taxation €(389,825) €(237,542) Weighted average number of ordinary shares outstanding 53,261,631 234,659,050 Basic loss per share (0.73)c (0.68)c Basic loss per share is calculated by dividing the weighted average number of ordinary shares in issue into the loss after taxation for the year. Diluted loss per share is not shown as the assumed conversion of potential ordinary shares is antidilutive. 8 Intangible assets Group Company € € Exploration costs: Movements during year At 1 March 2004 4,335,288 2,919,661 Additions 147,016 90,276 At 28 February 2005 4,482,304 2,995,768 The Group balances at 28 February 2005 above include €1,288,680 relating to assets in Sweden. The remainder of the balances relate to Irish assets. The Company has completed it's renewal application of the Irish licences and is awaiting formal receipt of the licences from the Department of Communications, Marine and Natural Resources. 9 Tangible assets Office Land Mining furniture & Group equipment equipment Total € € € € Cost or valuation At 1 March 2004 108,635 70,528 22,387 201,550 Additions/(disposals) during year (90,529) - 3,508 (87,021) At 28 February 2005 18,106 70,528 25,895 114,529 Depreciation At 1 March 2004 - 59,591 22,387 81,978 Charged during year - 10,937 409 11,346 At 28 February 2005 - 70,528 22,796 93,324 Net book value: At 28 February 2005 18,106 - 3,099 21,205 At 29 February 2004 108,635 10,937 - 119,572 The historical cost of the land prior to the disposal was €13,189, and €1,227 subsequent to the disposal in the financial year. The remaining land, a plot of approximately 4 acres, was sold after the year end for €22,000 before expenses. 10 Financial assets At 1 March Movements At 28 2004 during year February 2005 € € € Group Joint venture undertaking Share of gross assets 15,309 (15,309) - Share of gross liabilities (90,041) 90,041 - (74,732) 74,732 - 11 Debtors Group Company 2005 2004 2005 2004 € € € € Amounts falling due within one year: Prepayments and other debtors 20,959 121,642 16,195 117,489 Value added tax 88,003 45,277 77,611 45,277 Called up share capital unpaid - - - - 108,962 166,919 93,806 162,766 Amounts falling due after one year: Due from subsidiary undertaking - - 785,851 902,539 108,962 166,919 879,657 1,065,305 There were no loans advanced to directors at any time during the year. 12 Creditors: Amounts falling due within one year Group Company 2005 2004 2005 2004 € € € € Trade creditors 73,107 38,662 73,106 26,017 Accruals 62,067 50,516 62,068 50,516 Due to subsidiary undertakings - - 85,499 99,668 Due to joint venture undertaking - - Other creditors 79,109 78,294 - - 214,283 167,472 220,673 176,201 13 Share capital 2005 2004 € € Authorised: 100,000,000 ordinary shares of 2.5c each 2,500,000 2,500,000 Issued, called up and fully paid: 49,465,111 (2003: 49,465,111) ordinary shares of 2.5c each 1,236,629 1,236,629 Shares issued during the year 94,913 - 53,261,631 (2004: 49,465,111) ordinary shares of 2.5c each 1,331,542 1,236,629 14 Share premium account 2005 2004 € € At beginning of year 8,802,477 7,757,235 Premium arising on shares issued for cash during the year 284,739 1,161,369- Share issue expenses payable (51,837) (116,127) At end of year 9,035,379 8,802,477 15 Other reserves 2005 2004 € € Capital conversion reserve at beginning of year 11,482 11,482 Foreign currency movement 199 - Balance at end of year 11,681 11,482 16 Equity reserves Group Share Profit premium Revaluation and loss Other Total account Reserve account reserves € € € € € At 29 February 2004 as previously stated (5,746,886) Prior year adjustment 77,298 _________ _________ _________ _________ _________ At 1st March 2004 8,802,477 95,387 (5,669,588) 11,482 3,239,758 Retained profit/(loss) for the year (389,825) (389,825) Other movements 232,902 (78,513) 78,513 199 233,101 _________ _________ _________ _________ _________ At 28 February 2005 9,035,379 16,874 (5,980,898) 11,681 3,083,036 _________ _________ _________ _________ _________ 17 Profit and loss account Of the consolidated loss for the year ended 28 February 2005, €419,005 (2004: €233,400) is dealt with in the accounts of the company. The company has availed of the exemption in Section 3(2) of the Companies (Amendment) Act, 1986 from the requirement to prepare a separate profit and loss account. 18 Reconciliation of shareholders' funds - Group 2005 2004 € € Shareholders' funds at beginning of year 4,476,387 3,159,137 Total recognised losses for year (389,623) (237,541) 4,086,764 2,921,596 Transactions with shareholders: Par value of share capital issued 94,913 509,550 Share premium on shares issued in year 284,739 1,161,369 Share issue costs recovered/(payable) (51,837) (116,127) Shareholders' funds at end of year 4,414,579 4,476,387 Issue of Shares - Company On 1 March 2004, 3,769,520 new ordinary shares of €0.025 were issued in a placing at €0.10 each. 19 Share options At 1 March 2004 options over 4,530,000 ordinary shares were outstanding. Options over 850,000 ordinary shares were granted, options over 125,000 were exercised and options over 1,525,000 ordinary shares lapsed during the year. At 28 February 2005 options over 3,730,000 ordinary shares were outstanding. After the year end options over 2,000,000 ordinary shares were granted to the Board and senior employees. 20 Reconciliation of operating loss to net cash outflow from operating activities 2005 2004 € € Operating loss (368,679) (235811) Depreciation 11,346 14,106 Other operating profit (22,326) Decrease/(Increase) in debtors 57,956 (126,984) Increase/(Decrease) in creditors (48,689) (85030) Net cash outflow from operating activities (370,386) (433,719) 21 Reconciliation of net cash flow to movement in net funds 2005 2004 € € Increase/(decrease) in cash in the year (80,423) 44,276 (Decrease) in liquid resources - - Movement in net funds in the year (80,423) 44,276 Net funds at beginning of year 96,812 52,536 Net funds at end of year 16,389 96,812 22 Analysis of net funds At 1 March Cash At 28 2004 Flow February 2005 € € € Cash 96,812 (80,423) 16,389 Liquid resources - - - Total 96,812 (80,423) 16,389 Liquid resources comprise bank deposits with maturity periods of greater than one day. 23 Subsidiary and joint venture undertakings Subsidiary undertakings Group Country of Registered Company Holding Incorporation Activity Office Albannach Limited 100% Ireland Mineral York House exploration Rear 176 Rathgar Road in Ireland Dublin 6 Barnagapal Limited 100% Ireland Dormant York House, Rear 176 Rathgar Road Dublin 6. X-Ore Limited 100% Ireland Dormant York House, Rear 176 Rathgar Road Dublin 6. Klippen Guld AB 100% Sweden Mineral Bjorkdalsgruvan, exploration Skelleftea, in Sweden Sweden. Joint venture undertaking Optimum Energy Limited 50% Ireland Dormant York House, Rear 176 Rathgar Road Dublin 6. All of the shares held in subsidiaries and the joint venture comprise ordinary shares and are held directly by the parent company. In the opinion of the directors, the recoverable amount of the unlisted investments included above is not less than their net book value. 24 Pensions The company does not operate a pension scheme. 25 Capital commitments Capital commitments at 28 February 2005 amounted to €nil.(2004 €nil) 26 Related party transactions Mr Paul Smithwick, a director, is a principal of Smithwick & Co, to whom €30,900 (2004 : €12,594) net of VAT was payable by the group during the year for the provision of legal services. The amount is analysed between fees of €25,000 (2004: €4,165) and reimbursed costs of €5,900 (2004: €8,429). 26 Related party transactions (continued) Ms Mary Molloy, wife of Richard O'Shea, a director, is a principal of Molloy & Co, Solicitors, to whom €15,089 (2004 : €nil) net of VAT was payable by the group during the year for legal services. Mr Jeremy Martin, a director, was paid €7,382 (2004 : €nil) net of VAT by the group during the year for legal services, analysed between consulting fees of €3,710 (2004: €nil) and reimbursed costs of €3,672 (2004: €nil). Mr John O'Connor, a director and secretary, is a principal of F.R. O'Connor & Co, Chartered Accountants, to whom €34,000 (2004 : €28,692) net of VAT was payable by the group during the year, analysed between fees for accounting and company secretarial services of €35,242 (2004: €13,667) and reimbursed costs of €1,242 (2004: €15,025). He is also a director of TravelEdge Limited, to whom €11,955 (2004:€5,144) was payable during the year for travel costs. The Minmet group, holder of 20.65% of the ordinary shares in the Company until December 2004, was payable €55,128 (2004 : €2,759) net of VAT for reimbursable costs incurred during the year on behalf of the Company. The balances owed to/(by) these parties at the year end were as follows: 2005 2004 € € Smithwick & Co (2,083) - Molloy & Co - - Jeremy Martin - - F.R. O'Connor & Co (841) - Traveledge Ltd. - - Minmet plc - 2,759 27 Financial instruments The group finances the business from the proceeds of issuing share capital. It has no external borrowings and no undrawn borrowing facilities. Therefore its financial instruments are comprised of only cash on short-term deposit and short-term non-interest bearing debtors and creditors. The group does not enter into derivative transactions and it does not undertake trading activity in any financial instruments. The group manages its liquidity risk by regularly monitoring its cash flow requirements, and the amount and maturity profile of its cash deposits. The group's surplus cash is placed on short term deposit with financial institutions. At 28 February 2005 there were no funds on short term deposit (2004: €nil). The group has no significant financial assets or liabilities which are denominated in foreign currencies. 28 Subsequent events On 22 April 2005, Albannach Limited completed a contract to sell it's remaining 4 acres of land for €22,000. On 10 May 2005, the Company issued 39,500,000 shares to acquire a 78% interest in Norplat Limited, a company with gold and platinum interest in the Kola Peninsula in Northern Russia. The company has an option to purchase the remaining shares in Norplat Limited within two years of the original purchase. On 13 June 2005, the Company placed 16,900,000 New Ordinary Shares at a price of €0.10 per share to raise €1,690,000 before expenses. The funds raised are being used to finance the Group's ongoing exploration activities on its base metal targets and to cover the Group's overheads. On 30 June 2005 the Company's shares were admitted to trading on the Alternative Investment Market (AIM) of the London Stock Exchange. 29 Operating lease commitments Annual commitments exist under non-cancellable operating leases for land and buildings as follows: Group and company 2005 2004 € € Expiring: Between one and five years 16,667 - 30 Approval of financial statements These financial statements were approved by the directors on 29 July 2005.

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