Strategic Report

STRATEGY AND OBJECTIVES

The principal activity of Orogen Gold plc ("Orogen" or the "Company") is the development of mineral exploration and production projects in Europe, with an emphasis on gold exploration and project development. Orogen's strategy is to acquire prospective early-stage growth opportunities at a low entry cost within the European arena. The three steps in the Orogen strategy are to:

(1)  Identify and secure low entry cost gold projects in underexplored and frontier locations in Europe,

(2)  Undertake an efficient cost controlled programme of project evaluation and appraisal,

(3)  Move to establish gold resources at an early stage.

Orogen currently operates two gold exploration projects.

The Mutsk Gold Project ("Mutsk") is located in the Syunik Province in southern Armenia 210km southeast of the capital city Yerevan at about 2,000m elevation.  Orogen has an exclusive Joint Venture agreement with Georaid CJSC ("Georaid"), an Armenia registered company, to earn an 80% interest in Mutsk by incurring a total of US$2.5m in exploration expenditure on the project by the end of August 2016. Limited historic exploration had been carried out until drilling by Georaid in 2011, which intersected low sulphidation epithermal-type pyrite-gold mineralisation in altered and brecciated tuffs. The presence of high level diatremes at Mutsk may be suggestive of low sulphidation gold occurrences which are analogous to Montana Tunnels (Montana - USA, approximately 44 million tonnes @ 0.55 g/t Au), Rosia Montana (Romania, 214.9 million tonnes @ 1.46 g/t Au) and Kelian (Indonesia, 55 million tonnes @ 2.0 g/t Au).

The Company's other gold exploration project, the Deli Jovan Gold Project ("Deli Jovan"), is located in the Zajecar municipality in eastern Serbia approximately 250 kilometres from Belgrade. Orogen holds a 60% interest in Deli Jovan with the remaining 40% interest held by Reservoir Minerals Inc. ("Reservoir"), a company listed on the TSX Venture Exchange (ticker: RMC).  Deli Jovan is an historic gold mining camp which was last in production prior to World War II with the major part of gold production taking place during the period from 1900 to 1912. There are two former gold mines within the Deli Jovan exploration permit area.

REVIEW OF BUSINESS

Mutsk Gold Project

In February 2014 Orogen signed a comprehensive Joint Venture Agreement (the "JV Agreement") with Georaid covering the Mutsk property. The JV Agreement incorporates the terms of the previous Memorandum of Understanding and sets out detailed terms for all work on the property, up to and including a Feasibility Study, if warranted.

The 2014 field work season commenced with the completion of a geophysical programme which comprised Induced Polarisation, Resistivity and Magnetic surveys.  The aim was to trace zones of pyritic sulphide mineralisation which can be gold-bearing, as well as zones of weak magnetism indicative of hydrothermal alteration associated with the wider transport and emplacement of gold within the property. The programme was completed across the 2.5 square kilometre core target area of the Mutsk project in June 2014. Follow up drilling focussed on delineation of both high grade and more extensive low-grade gold mineralisation, as well as follow-up of targets defined by the geophysical surveying. The magnetic survey data assisted considerably in the interpretation of fault structures which may exert control over distribution of mineralisation.

The 2014 diamond drilling programme commenced in July. A minimum programme of 3,000 metres was planned and was later extended to 4,000m following strong initial drilling results which included step out holes confirming the wide zones of gold mineralisation with intercepts up to 60m @ 1.21g/t Au, including 10m @ 3.11 g/t Au.

The drilling programme was completed in late November 2014 as winter snow set in. In all, a total of 4,120m was drilled in 27 holes. The results of the 2014 drilling programme have significantly increased our confidence in the continuity of the gold mineralisation within a 250m by 100m zone which has been drilled in some detail. Drilling along strike has continued to extend the limits of the hydrothermal system which has still not been closed off. A second mineralised zone has been identified and occurs about 200m to the north of the main zone. Drilling to date has been to depths of up to 200m and all mineralised targets remain open below the depths drilled.

Under the terms of the JV Agreement the Company has exercised its rights to continue exploration work on the project beyond 31 December 2014.

Deli Jovan Gold Project

The earn-in phase of the project has now been completed with Orogen holding a 60% interest in the project. Limited field work was completed in the current season.

Financial

The loss for the year amounted to £1,859,000 (2013: £4,176,000). The loss for the year comprises general and administrative expenses of £548,000 (2013: £493,000), impairment charge of £1,318,000 (2013: £3,702,000) and finance income of £7,000 (2013: £20,000). The impairment charge is as a result of a review performed on the carrying value of the exploration and evaluation assets related to the Deli Jovan Gold Project.

FUTURE DEVELOPMENTS

Mutsk Gold Project

An independent geological review report was received in early 2015. It concludes that gold mineralisation at Mutsk overlies a large hydrothermal system of which only a small portion has been explored to date. The independent geological overview report confirms our optimism regarding the potential scale of the discovery and points towards some additional drill targets, related to structural junctions and possible high grade gold zones at deeper levels. Analogies with other large-scale low-sulphidation epithermal deposits also help to highlight the potential of the project.

Orogen has used the winter months to compile all exploration data for the property and to develop a geological model which will drive the planning of future field work.  In addition the Company is reviewing options available for financing development of the project including the possibility of introducing a joint venture partner.

Deli Jovan Gold Project

The Deli Jovan exploration licence runs to 12 March 2016. No significant field work is currently planned on the project. Orogen in conjunction with our JV partner, Reservoir, are actively seeking a partner to advance the project.

KEY PERFORMANCE INDICATORS

The key indicators of performance for the Group is its success in identifying, acquiring and developing and divesting of investment in exploration projects so as to create shareholder value. The Group carries out its operations by way of execution of operational plans that are approved and budgeted in advance by the Board. Operational progress is reviewed by the Board on a regular basis and actual costs are compared to budgets.

Control of bank and cash balances is a priority for the Group and these are budgeted and monitored closely to ensure that the Group maintains adequate liquidity to meet financial commitments as they arise. At 31 December 2014 the Company held £1,118,000 of cash resources.

The Company initially secured an exclusive option to earn-in the Mutsk Gold Project in January 2013 and has subsequently signed a full joint venture earn-in agreement in February 2014. The Company was highly encouraged by the results received during project exploration in 2013 and 2014. During the current year the Company incurred £924,000 of exploration costs on Mutsk. The Company remains on track to complete the project earn-in by incurring US$2.5m of exploration expenditure on the project by 20 August 2016. At year-end 2014, approximately 70% of qualifying earn-in expenditure has been incurred.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group considers that the principal risks to the achievement of its business plans are as follows:

Operational

In common with other businesses operating in gold exploration, the Group's activities are speculative and are inherently subject to a high degree of risk.

The Group's operational work involves geological exploration and the implementation of geological work programmes. Interpretation of the results of these programmes is dependent upon judgements and assessments that by their very nature are speculative; these interpretations are applied in designing further work programmes to which the Group can commit significant resources. Work programmes often involve excavation of former mine workings, drilling operations and other geological work that present significant engineering challenges which are subject to unexpected operational problems. The actual cost of programmed operations can vary significantly from planned levels as a result of unexpected issues arising.

Climate

The Group's activities take place in remote locations that can be subject to severe climate events, particularly during the winter season. Severe winter weather can cause delays in implementation of planned programmes and can have cost consequences in recovering from damage caused by climatic events.

Political, economic, legal, regulatory and social

The Group operates in different countries where political, economic, legal, regulatory and social uncertainties are potential risk factors.  The Group has restricted its activities to Europe where such risks could be considered to be less than in many developing countries in other parts of the world.

Tax risk

The Group endeavours to be fully tax compliant and to manage its tax affairs efficiently in every jurisdiction in which it operates. In a complex and ever changing European tax and VAT environment, some uncertainty is inherent in estimating the Group's liabilities. The Group is exposed to changes in legislation and interpretation of existing policies across the countries in which operations take place. The Company is in discussions with HMRC in relation to the VAT recoverability position of Orogen Gold plc. The Company exercises judgement in assessing the required level of provision for risks identified.

Organisational

The Group is dependent on the experience and skills of the Directors and senior management to successfully execute its strategy; the loss of such key contributors would present a risk to the business.  Staffing levels and development of business processes and policies are kept under regular review to ensure that they are appropriate and adequate for the scale and growth of the Group's business.

Financial

The Group's projects are at an early stage and currently do not generate any cash flow to support the exploration activities. The valuation and future earnings of the Company are exposed to movements in the market price of gold which is sold in US$. Orogen is also subject to exchange rate risk with the Company's accounts in GBP while the Company's projects require funding in US$ and CAD$. The operating entities of the projects to which Orogen has earn-in agreements incur substantial costs in Armenian Dram and Serbian Dinar.

Insurance

The Group has in place insurance protection, including a directors and officers liability policy, to insure against risks of loss where management deems appropriate and cost effective; however in some cases risks cannot be effectively covered by insurance and the cover in place may not be sufficient to cover the extent of potential liabilities.

Health and safety

Health and safety of all those working in and visiting the Group's installations is a priority. The Group's operations can take place in dangerous environments particularly where underground mining and exploration activities are being pursued. The Group has in place a comprehensive health and safety policy alerting all concerned to the risks involved and to the required precautions that staff and visitors to the Group's operations must take. Staff and authorised visitors are only permitted access to underground facilities when safety inspection has been completed and certificates issued by the appropriate and competent authority.

Environment and community

The Company recognises its social responsibilities and seeks to adopt the best contemporary practice applicable to each country and region of operation.  To ensure this standard is met the Company aims to:

·     plan and conduct exploration activities in a manner that complies with legislation pertaining to the protection of the environment and employees;

·     in the absence of legislation, apply best contemporary practice relating to the  protection of the environment;

·     undertake internal environmental reviews associated with operational fieldwork;

·     train staff to apply best contemporary practices;

·     engage in research to study the impact of mining activities on the locality and implement technologies that are environmentally friendly;

·     participate in the development of environmental legislation to ensure a  balance is attained between protecting the environment and developing practical laws;

·     inform government, employees, local communities and other stakeholders of our activities, and encourage joint venture partners and suppliers to adopt the principles of this statement.

Ed Slowey                                                                                           Alan Mooney

Director                                                                                               Director

11 May 2015