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ROYAL MINES & MINERALS CORP - 10-K - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

August 14, 2014

RESULTS OF OPERATIONS

Summary of Year End Results

Years Ended April 30, Percentage 2014 2013 Increase / (Decrease) Revenue $ - $ - n/a Operating Expenses (1,363,124 ) (1,239,454 ) 10.0% Other Items (81,098 ) (79,557 ) 1.9% Net Loss $ (1,444,222 )$ (1,319,011 ) 9.5% Revenues



During the years ended April 30, 2014 and 2013, we earned no revenues. We are currently in the exploration stage of our business. We can provide no assurances that we will be able to develop a commercially viable process or earn significant revenue from the processing of coal ash.

Operating Expenses

The major components of our operating expenses for the years ended April 30, 2014 and 2013 are outlined in the table below:

Percentage Year Ended Year Ended Increase / April 30, 2014 April 30, 2013 (Decrease) Mineral exploration and evaluation expenses $ 466,930$ 584,970 (20.2)% Mineral exploration and evaluation expenses - related party 60,000 5,000 1100.0% General and administrative 238,633 127,161 87.7% General and administrative - related party 497,666 204,000 144.0% Depreciation and amortization 99,895 103,995 (3.9)% Impairment of mineral properties - 63,400 (100.0)% Impairment of intellectual property - 150,000 (100.0)% Bad debt expense - 14,041 (100.0)% Gain on settlement of accounts payable - (1,613 ) (100.0)% Gain on sale of fixed asset - (11,500 ) (100.0)% Total Expenses $ 1,363,124$ 1,239,454 10.0%



Our operating expenses for the year ended April 30, 2014 increased as compared to the year ended April 30, 2013. The increase in our operating expenses primarily relates to an increase in mineral exploration and evaluation - related party expenses, and general and administrative expenses in fiscal 2014. The increase was partially offset by decreases in mineral exploration and evaluation expenses and the fact that we did not record any impairment of mineral or intellection properties or have any bad debt expense in fiscal 2014.

Mineral exploration and evaluation expenses primarily consisted of rent, leased equipment, extraction-processing costs, consulting fees and labor expenses in connection with our Scottsdale Facility and Phoenix Facility. The decrease in mineral exploration and evaluation expenses in fiscal 2014 was primarily due to the closure of our Phoenix Facility in November 2012 and a decrease in equipment rental and extraction processing costs due to reduced activities at our Scottsdale Facility in October 2012. The decrease was offset by $119,400 in compensation expense for stock options issued to consultants and contract labor in November 2013.

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Our general and administrative expenses primarily consisted of: (i) monthly consulting fees paid to our Chief Financial Officer, Mr. Mitchell and accrued for our Chief Executive Officer, Mr. Matheson (in fiscal 2013 only); (ii) legal and audit fees in connection with meeting our reporting requirements under the Exchange Act; and (iii) $452,572 in compensation expense for stock options issued to our executives, directors and consultants in November 2013.

Impairment of mineral properties relates to our decision not to renew the Smith Lease and BLM Claims. Impairment of intellectual property relates to the impairment of our thiourea lixiviation technology.

We anticipate that our operating expenses will increase significantly as we implement our plan of operation for our Scottsdale Facility.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Years Ended April 30 2014 2013 Net Cash Used In Operating Activities $ (584,014 )$ (751,499 )



Net Cash Provided By (Used In) Investing Activities (120,478 ) 11,810 Net Cash Provided By Financing Activities

758,777 682,717



Net Increase (Decrease) in Cash During Period $ 54,285$ (56,972 )

Working Capital Percentage At April 30, 2014 At April 30, 2013 Increase / (Decrease) Current Assets $ 76,250$ 25,243 202.1% Current Liabilities (1,166,591) (1,731,745) (32.6)% Working Capital $ (1,090,341)$ (1,706,502) (36.1)% Deficit



As at April 30, 2014, we had a working capital deficit of $1,090,341 as compared to a working capital deficit of $1,706,502 as at our year ended April 30, 2013. The decrease in our working capital deficit is primarily due to a decrease in accounts payable - related parties, and loans payable - related parties related to the issuance of stock and warrants in November 2013. The decrease was partially offset by increases in accounts payable, accrued interest - related parties and loans payable.

Financing Requirements

Currently, we do not have sufficient financial resources to complete our plan of operation for the next twelve months. As such, our ability to complete our plan of operation is dependent upon our ability to obtain additional financing in the near term.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned mining, development, and exploration activities.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to stockholders.

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CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 1 to our audited financial statements included in this Annual Report.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Mineral Property Rights - Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Exploration Costs - Mineral exploration costs are expensed as incurred.

Revenue Recognition - The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Revenue from licensing our technology is recognized over the term of the license agreement. Costs and expenses are recognized during the period in which they are incurred.

Research and Development - All research and development expenditures are expensed as incurred.

Stock-Based Compensation - The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective - Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. Compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

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