Half-year Results

Nativo Resources plc (LON:NTVO), which has interests in precious metals mining and production in Peru, presents its half year report for the six month period ended 30 June 2024.

Year to date highlights

• Announced on 1 July 2024 the formation of a 50:50 joint venture in Peru with the founding partners of Boku Resources SAC ("Boku") to participate in gold and silver mining and the cleaning of known tailings deposits containing gold and silver in Peru

o Boku is initially in the process of establishing formalised artisanal and small mining operations on its 100% held Tesoro Gold Mine and in the medium-term aims to build a material resource base of gold and silver rich tailings for processing

o Boku is advancing Artisanal Mining on the "Bonanaza" vein. Significant mineralised vein material generated during preparation and appraisal of the stope will form a bulk sample that Boku intends to sell to a commercial processor - this will provide an indication of grade in the stope to be developed. Assuming favourable grades, Boku intends to commence mining the stope in December 2024. Production will be scaled with development of additional shafts and new vein exploitation.

• Announced on 15 July 2024 that Boku had also acquired the Ana Lucia polymetallic concession in the Ancash region of central Peru
• Announced on 31 July 2024 a placing raising gross proceeds of £418,245

o In conjunction, the Company announced it had terminated the convertible loan note deed announced on 6 June 2024

• Andrew Donovan appointed as Non-Executive Director on 26 September 2024

X (Twitter): https://x.com/nativoresources

Chairman and Chief Executive Officer's Statement

In June 2023, the Company completed the divestment of its majority share in the Santa Cruz Sur gas portfolio in Argentina. The Company transferred to the buyers the significant in-country creditors whilst greatly reducing the Company's cost base but still retained a 5% working interest in the portfolio and an equity position in the operator InterOil Exploration and Production ASA. Following the divestment, the Board refocussed, seeking opportunities to acquire new assets. This review of the business strategy has culminated in Nativo repositioning itself as a small-scale miner of precious metals in Peru via the formation in July 2024 of a 50:50 joint venture in Peru with experienced local partners, Boku Resources ("Boku"). Peru is one of the world's largest gold producers. An estimated 3.2Moz of gold was produced in 2023 of which artisanal small miners ("ASM") are estimated to have produced 640koz. Boku has a three-fold strategy:

• Primary mining of gold and silver, initially from the 100%-owned Tesoro Gold Mine
• Cleaning of known tailings deposits containing gold and silver with up to seven projects having been identified, and the potential to rapidly build a resource inventory
• Develop gold processing capability at scale

To reflect this transformation, the Company has rebranded as Nativo Resources plc ("Nativo"), a move that was approved at the GM on 28 August 2024.

The Company secured funding post period, in July 2024, to recommence production from the high-grade, Tesoro Gold Mine in the Arequipa region of Peru. Cash flow generated from Tesoro will be used to boost production, establish processing facilities and acquire and develop other similar projects in the region, for example the Ana Lucia polymetallic concession in the Ancash region of central Peru which the Company acquired in July 2024. Initially, Boku will sell vein material to a tolling plant; however, Boku plans in due course to install its own commercial processing facility to process vein material supplied by ASMs in the region on a fixed margin basis as well as its own production, thereby capturing greater value.

Using historical mine records, Nativo has also identified up to seven tailings deposits in central Peru that it believes host significant gold and silver resources. The vintage of these deposits means they do not comply with modern Peruvian mining legislation and present liabilities for their owners; however, with improved technologies and high gold prices, Nativo is investigating the possibility of reprocessing the tailings to recover the precious metals. Through this process, the tailings would be redeposited in accordance with modern environmental standards. The Board considers this approach to be a relatively low risk and low-cost form of exploration from which the Company could potentially build a significant resource inventory that can be brought swiftly into production and at a cost which makes it profitable, providing steady cashflow. Cleaning legacy tailings using modern techniques has been demonstrated to improve recovery rates to over 90% versus the historical 45-50%.

In March 2024, WH Ireland Limited (which subsequently had its Capital Markets Division acquired by Zeus Capital Limited in July 2024) became Nominated Adviser and Corporate Broker to the Company. Post period, in July 2024, the Company appointed Peterhouse Capital Limited as a joint Corporate Broker alongside Zeus.

The Board is excited by the potential to deliver growth for shareholders via the repositioning of the business as a small-scale miner in Peru. The prospect of near-term cash flow generation, initially from Tesoro, should, in due course, create opportunities to begin to address legacy balance sheet issues including loans and borrowings. We would like to thank shareholders for their continued support. Finally, the directors draw attention to the Accounting Policy notes regarding Going Concern, Estimates and the previous audit on pages nine and ten. As noted previously, Nativo's cash position remains tight and cash balances are being managed carefully. The Company is in discussions regarding seeking further funds which will need to be raised in the near term.

Consolidated Statement of Financial Position as at 30 June 2024

Consolidated Statement of Changes in Equity for the period ended 30 June 2024

Consolidated Statement of Cash Flows for the period ended 30 June 2024

ACCOUNTING POLICIES

GENERAL INFORMATION

These financial statements are for Nativo Resources plc ("the Company") and subsidiary undertakings ("the Group"). The Company is registered, and domiciled, in England and Wales and incorporated under the Companies Act 2006.

BASIS OF PREPARATION

The condensed and consolidated interim financial statements for the period from 1 January 2024 to 30 June 2024 and have been prepared in accordance with International Accounting Standards ("IAS") 34 Interim Financial Reporting, and on the going concern basis. They are in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2023 and are expected to be applied for the year ending 31 December 2024.

The comparatives shown are for the period 1 January 2023 to 30 June 2023, and for the year ended 31 December 2023, and do not constitute statutory accounts, as defined in section 435 of the Companies Act 2006, but are based on the statutory financial statements for the year ended 31 December 2023.

GOING CONCERN

The consolidated statement of financial position at 30 June 2024 showed a negative net asset position. The board made the difficult decision in late 2022 to divest of its operating assets in Argentina. This decision came to fruition in June 2023 when, apart from a small 5% retention holding, Nativo Resources (formerly Echo Energy) sold its interest in the Argentine assets to its joint venture partner and obtained a full, 100%, indemnity against any future costs arising from those operations. The cash received from that sale was sufficient to partly, but not fully, pay down backlog creditors.

The directors have raised additional funding to acquire a number of assets to replace the Argentine assets.

• Successfully raising sufficient funds.
• Finding an appropriate investment within a suitable timescale
• That investment being sufficiently cash-positive to fund the Group going forwards.

ESTIMATES

The preparation of the interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this condensed interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to consolidated financial statements for the year ended 31 December 2023. The key sources of uncertainty in estimates that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities, within the next financial year, are the Group's going concern assessment.

PREVIOUS AUDIT

For reasons set out therein, the auditors did not express an opinion in their report on the accounts for the year ended 31 December 2023. In addition to the December 2023 balance sheet forming the starting point for these accounts to 30 June 2024, similar difficulties have manifested themselves in obtaining information relating to the operations in Argentina for the preparation of the interim accounts to June 2024. As a result certain figures contained herein are necessarily based on estimates. Accordingly, the directors have taken a prudent view in evaluating certain figures, including but not limited to the assets and liabilities retained in Argentina, particularly trade debtors and tax assets and liabilities, following the completion of the sale of the majority of its interests there.

REVENUE RECOGNITION

Revenue comprises the invoice value of goods and services supplied by the Group, net of value added taxes and trade discounts. Revenue is recognised in the case of oil and gas sales when goods are delivered and title has passed to the customer. This generally occurs when the product is physically transferred into a pipeline or vessel. Nativo recognised revenue in accordance with IFRS 15. We have a contractual arrangement with our joint venture partner who markets gas and crude oil on our behalf. Gas is transferred via a metred pipeline into the regional gas transportation system, which is part of the national transportation system, control of the gas is transferred at the point at which the gas enters this network, this is the point at which gas revenue is recognised. Gas prices vary from month to month based on seasonal demand from customer segments and production in the market as a whole. Our partner agrees pricing with their portfolio of gas clients based on agreed pricing mechanisms in multiple contracts. Some pricing is regulated by government such as domestic supply. Nativo receive a monthly average of gas prices attained. Oil shipments are priced in advance of a cargo and revenue is recognised at the point at which cargoes are loaded onto a shipping vessel at terminal.

BUSINESS SEGMENTS

At the balance sheet date, there is only one business segment, being the company, its activity disclosed within continuing operations.

Activity in Argentina, being the Santa Cruz Sur operations, are set out within discontinued operations within note 5.

Activity within the group's Bolivian subsidiary is immaterial.

The analysis of the group's revenue for the year from continuing operations is as follows:

Revenue for 2023 all derives from discontinued operations held for resale

3 Taxation

The parent entity has tax losses available to be carried forward, and further tax losses are available in certain subsidiaries. With anticipated substantial lead times for the Group's projects, and the possibility that these may expire before their use, it is not considered appropriate to anticipate an asset value for them.

No amounts have been recognised within tax on the results of the equity-accounted joint ventures.

4 Loss per share

In November 2022 the company committed to selling virtually all of its interest in the Santa Cruz oil and gas operations in Argentina to its joint-venture partner Interoil. A term of the sale was for Nativo to relinquish any management and accounting in respect of the joint venture, instead receiving a profit share in proportion to the remaining 5% holding in the joint venture, effectively as investment income.

The sale was completed on 26 June 2023, satisfied by £825,000 in cash, shares to the value of £400,000 in Interoil and £75,000 investment in Nativo Resources PLC (formerly Echo Energy PLC) shares by Interoil. At 31 December 2022 the Argentinian operations were classified as a disposal group held for sale and as discontinued operations.

The results of the Argentinian operations for the period are presented below:

Issued, Called Up and Fully Paid

18,686,723,556 0.31¢ (June 2023: 5,560,618,550 0.31¢) ordinary shares.

The holders of the 0.31¢ (0.25p) ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

9 Share premium account