CORAZON MINING LIMITED - Annual Report 2012

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Annual Report 2012

Corazon Mining Limited (ABN: 87 112 898 825) and Controlled Entities

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CORPORATE DIRECTORY	2
CHAIRMAN’S LETTER	3
DIRECTORS’ REPORT	4
AUDITOR’S INDEPENDENCE DECLARATION	21
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	24
CONSOLIDATED STATEMENT OF CASH FLOWS	25
NOTES TO THE FINANCIAL STATEMENTS	26
DIRECTORS’ DECLARATION	55
INDEPENDENT AUDITOR’S REPORT	56
ADDITIONAL INFORMATION FOR LISTED COMPANIES	58
CORPORATE GOVERNANCE	61

Corazon Mining Limited Annual Report 2012

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN

Clive Jones

EXECUTIVE MANAGING DIRECTOR

Brett Smith

NON-EXECUTIVE DIRECTORS

Adrian Byass Jonathan Downes

COMPANY SECRETARY

Robert Orr

PRINCIPAL & REGISTERED OFFICE

Level 1, 350 Hay Street SUBIACO WA 6008 Telephone: (08) 6142 6366 Facsimile: (08) 6210 1872

AUDITORS

PKF Mack & Co Level 4, 35 Havelock Street WEST PERTH WA 6005 Telephone: (08) 9426 8999 Facsimile: (08) 9426 8900

SHARE REGISTRAR

Advanced Share Registry Services 2/150 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871

SECURITIES EXCHANGE LISTINGS

Australian Securities Exchange (Home Exchange: Perth, Western Australia) Code: CZN

BANKERS

National Australia Bank Level 1, 1238 Hay Street WEST PERTH WA 6005

WEBSITE

www.corazon.com.au

Corazon Mining Limited Annual Report 2012

ChAIRmAN’S lETTER

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Dear Shareholder,

On behalf of the Board of Directors of Corazon Mining Limited, I am pleased to present the Annual Report for the Company for the 2011/2012 year.

It has been a year of exploration success for Corazon where, tempered against the financial market’s loss of momentum and decline in sentiment towards nickel, the Company has enjoyed a rewarding exploration season including the discovery of high grade nickel sulphides below the old mine at Lynn Lake. Highlights of the year include:

Completion of 12,781 metres of drilling at the EL Deposit
Discovery of three high-grade zones of sulphide mineralisation at depth, down to approximately 820 metres below surface with mineralisation remaining open at depth
Discovery of a possibly parallel zone of mineralisation 50 metres east of the main breccia lying within a broader 51 metre zone of sulphide mineralisation
Further definition of an exploration target for the EL Deposit

The encouraging exploration results from the past year substantiate the Company’s belief in the prospectivity of the nickel-copper sulphide asset it has at Lynn Lake, which holds great development opportunities for the future. The region, including Corazon’s extensive land holding, is rich in base and precious metal potential, with our location at Lynn Lake providing an excellent infrastructure from which to test this potential.

Corazon has kicked off the current year with the acquisition of additional ground around Lynn Lake, including the Lake Barrington Copper Deposit and the Beaucage Gold Project. Both are early stage exploration projects with defined and outcropping mineralisation that has not been tested by current exploration techniques and provide strong examples of the prospectivity we see in the region.

The Company also recently announced the favourable renegotiation of the Lynn Lake agreement, which extends the option to acquire full equity in the project until 2015 and a significant reduction in the purchase price.

Despite the challenges presented over the year, Corazon has advanced the Lynn Lake project and, going forward, we believe the opportunity Lynn Lake offers will be further realised and Beaucage Lake’s potential will be revealed, for the benefit of Corazon shareholders.

In closing I would like to thank our small team who continue to strongly focus on delivering value to the Company through their efforts in exploring the Lynn Lake mine district.

Yours faithfully,

Clive Jones Chairman

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Your Directors present their report on the Company and its controlled entities (together the “Consolidated Entity”) for the financial year ended 30 June 2012.

Directors

The names of Directors in office at any time during or since the end of the year are:

Clive Jones Non Executive Chairman Brett Smith Executive Managing Director Adrian Byass Non Executive Director Jonathan Downes Non Executive Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Company Secretary

Mr Robert Orr, CA holds the position of Company Secretary. Mr Orr has acted as Chief Financial Controller and Company Secretary for a number of ASX listed companies and has over 20 years’ experience in public practice and commerce. He has worked extensively in the resource industry with experience in capital markets, project developments, contract negotiations and mining operations.

Operating Results

The consolidated loss of the Consolidated Entity after providing for income tax and eliminating inter-company interests amounted to $5,734,913 (2011: $3,310,491).

Principal Activities and Significant Changes in Nature of Activities

The principal activity of the Consolidated Entity during the financial year has been exploration for nickel and development of nickel mining activities. There were no significant changes in the nature of the Consolidated Entity’s principal activities during the financial year.

Dividends Paid or Recommended

The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report.

Review of Operations

Corazon Mining Limited (ASX: CZN) (“the Company” or “Corazon”) is an Australian based company exploring for base and precious metals in Canada. The Company’s operations are centered at Lynn Lake in the central northern province of Manitoba. Lynn Lake is a metal rich region, and Corazon’s projects include:

The Lynn Lake nickel-copper sulphide project;
The Lynn Lake VMS (Cu, Pb, Zn, Ag, Au) Deposits
The Beaucage Lake Gold Project; and
The Barrington Lake Copper Deposit

Most of the Company’s field activities during the last year focused on its flagship nickel-copper sulphide project at Lynn Lake. Following on from the discovery in May 2011 of a high-grade nickel-copper sulphide breccia at depth below the EL Mine, highlights for the 2012 reporting year included:

Definition of an Exploration Target for the EL Deposit
Continued exploration of sulphide mineralisation at depth below the EL Mine
Defined to approximately 820 metres below surface and open at depth
o Deepest drill intercept (CRZ012) identified 3 high-grade zones, returning:
- 3.9m @ 2.8%Ni, 0.2%Cu & 0.07%Co from 773.9m
- 11.0m @ 2.3%Ni, 1.0%Cu & 0.06%Co from 784.9m
- 11.5m @ 2.4%Ni, 0.8%Cu & 0.06%Co from 807.2m

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

Discovery of a possibly parallel zone of mineralisation 50 metres east of the main breccia. Within a 51 metres zone of sulphide mineralisation, (CRZ017) returned:-
4.0m @ 1.8%Ni, 0.7% Cu & 0.05% Co from 679m
2.8m @ 1.7%Ni, 2.0% Cu & 0.05% Co from 687m
2.0m @ 2.5%Ni, 1.1% Cu & 0.06% Co from 728m

Events subsequent to the end of the reporting period have included:

Re-negotiation of the Lynn Lake earn in agreement, including
Extension of the option to acquire 100% of the Project to October 2015
Reduction of the final payment for the Project from CAD$2M to CAD$1M
Acquisition of new exploration ground in the Lynn Lake region, including:
South Plug
Barrington Lake Copper Deposit
Beaucage Lake Gold Project

Corazon remains committed to the exploration and development of its Lynn Lake nickel-copper sulphide project. In light of the weak financial markets, the Company’s strategy is to progress exploration at its Lynn Lake projects in a cost effective manner, and maintain and consolidate its position in the region. The Company remains committed to the Lynn Lake nickel-copper project, where it has spent more than CAD$3 million on exploration and in 2011 delineated a new nickel sulphide discovery. The Board believes that with improved metal prices there is good potential to re-establish mining at Lynn Lake.

The Lynn Lake Project

Corazon has an option to acquire 100% equity in the Lynn Lake Nickel Sulphide Project in the central Canadian province of Manitoba, which hosts the historic EL Nickel Mine.

The Company recently announced the successful renegotiation of the Earn-In and Option agreements to acquire the Lynn Lake nickelcopper sulphide project. The renegotiation of the agreement is in response to the current financial markets and depressed nickel metal prices. The new agreement provides a three year extension to the acquisition date and a reduced consideration. The renegotiated agreement is consistent with Corazon’s strategy to consolidate and expand its land holdings in the Lynn Lake district, a strategic and prospective position in a metal-rich region in the central northern part of Canada.

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Figure 1: Project Locations – Lynn Lake District

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

Renegotiated terms for the acquisition of the project include

Acknowledgement that existing earn-in obligations have been satisfied
Extension of the option period from 20 October 2012 to 20 October 2015
Payment of CAD$100,000 per annum for each annual extension period
Payment of CAD$1M (reduced from CAD$2M) to acquire 100% equity in the project at any time during the option period, plus
A deferred consideration of CAD$750,000 on the earliest of either:
Defining a JORC compliant resource greater than 30,000 tonnes of nickel metal
Completion of a positive feasibility study, or
The commencement of commercial mining

The Lynn Lake nickel camp is Canada’s third largest nickel mining region, which produced 22Mt of nickel/copper/cobalt ore between 1953 and 1976, at an average grade of 1% nickel and 0.5% copper. There has been minimal exploration in the region since this time. Mining at adjacent deposits has shown that mineralisation extended to more than 1,100 metres below surface.

Corazon is the largest land holder in the Lynn Lake Camp, and, in addition to the EL Mine, the project area contains several drill defined base metal deposits (nickel sulphide and VMS) and numerous un-tested geophysical anomalies.

The area is well serviced with mining infrastructure and support, offering rapid development potential. The Thompson Nickel Refinery is located only 320 kilometres from the project and is accessible by all-weather roads. In addition there is rail access (currently under care and maintenance) to the Flin Flon zinc-copper refineries approximately 250 kilometres to the south.

Corazon’s main exploration focus has been the EL Deposit. The EL Mine was the highest grade deposit at Lynn Lake and produced 1.9Mt @ 2.5% nickel and 1.15% copper (combined metal of approximately 3% nickel equivalent[(2)] ). Mining was conducted to a depth of 210 metres below surface, with development to 270 metres and drilling defined mineralisation to a depth to about 820 metres.

In May 2011 Corazon discovered a high-grade nickel-copper sulphide breccia zone at depth below the EL Mine. The discovery hole (XND001W1) returned:

23.75m @ 3.34% Ni, 1.54% Cu & 0.079% Co from 731.25m

Including 13m @ 4.27% Ni & 0.89% Cu

Corazon believes the EL Deposit has the potential to host a high-grade sulphide breccia, similar to that mined in the 1950’s and 1960’s.

During the year, Corazon completed 9 primary holes and 11 wedges for approximately 12,781 metres. Drilling at the EL Deposit to date has successfully intersected sulphide mineralisation to a depth of approximately 820 metres below surface, over a vertical extent of 120 metres from about 700 metres below surface (Figure 3). The deepest intercept to date is from hole CRZ012, which returned:

44.8m @ 1.6%Ni, 0.7%Cu & 0.04%Co from 773.9m

This mineralisation displays some of the strongest sulphide breccia textures drilled to date by Corazon, with higher grade zones including:

3.9m @ 2.8%Ni, 0.2%Cu & 0.07%Co from 773.9m 11.0m @ 2.3%Ni, 1.0%Cu & 0.06%Co from 784.9m 11.5m @ 2.4%Ni, 0.8%Cu & 0.06%Co from 807.2m

Recent drilling has also discovered a new zone of sulphide, approximately 50 metres to the east of the main breccia zone (Figure 4). Drill hole CRZ017 returned:

51m @ 0.8%Ni, 0.5% Cu & 0.02% Co

The mineralisation is fault bounded and has opened up the southeast margin of the intrusion as a prospective exploration target, with individual results ranging up to 3.5% (1m) nickel and 6.3% (0.6m) copper.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

Higher grade zones of both primary and remobilized massive sulphide included:

4.0m @ 1.8%Ni, 0.7% Cu & 0.05% Co from 679m

2.8m @ 1.7%Ni, 2.0% Cu & 0.05% Co from 687m 2.0m @ 2.5%Ni, 1.1% Cu & 0.06% Co from 728m

These zones may be coincident with a strong EM (geophysical) anomaly which was the primary target for this drilling.

CRZ017 is the first drill hole into the eastern margin of the EL Plug, an area recently highlighted as prospective by electromagnetic (EM) geophysics. It is extremely encouraging that this hole intersected such a broad zone of mineralisation proximal to a strong geophysical anomaly.

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Figure 2: EL Deposit Schematic Coss-Section and Significant Drill Results

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

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Figure 3: EL Deposit Discovery Zone – Drill Intercepts

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Figure 4: Mineralisation and Targets Projected to 2,000ft Level Mapped Geology

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

The EL Deposit Exploration Target

Corazon has established an Exploration Target for the EL Deposit. This target is summarized in the table below and is conceptual in nature, as there has been insufficient exploration (namely drilling of verifiable quality) to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource.

The Exploration Target has been estimated to a depth of 1,200 metres below surface. It follows the discovery of a high-grade nickel sulphide breccia at depth below the historic EL Mine, as well as the recognition in historical drilling of a substantial amount of near surface low-grade mineralisation.

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Tonnes Grade Contained Metal
Base Case
Ni% Cu% Co% Tonnes Ni Tonnes Cu Tonnes Co
Upper Zone (0-200m) 2,200,000 0.7 0.3 0.01 15,000 6,000 200
Mid Zone (200-800m) 2,100,000 0.8 0.4 0.02 16,000 8,000 500
Lower Zone (800-1200m) 900,000 2.4 0.9 0.06 21,000 8,000 500
Total 5,200,000 1.0 0.4 0.02 52,000 23,000 1,200
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Tonnes Grade Contained Metal
Upper Case
Ni% Cu% Co% Tonnes Ni Tonnes Cu Tonnes Co
Upper Zone (0-200m) 2,600,000 0.7 0.3 0.01 17,000 7,000 300
Mid Zone (200-800m) 2,100,000 0.8 0.4 0.02 16,000 8,000 500
Lower Zone (800-1200m) 2,800,000 3.8 1.4 0.11 106,000 40,000 3,200
Total 7,400,000 1.9 0.7 0.05 139,000 55,000 3,900
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Table 1: Exploration Target ranges for the EL Deposit, Lynn Lake Nickel-Copper Sulphide Project. The numbers within the table have been rounded. Some rounding errors may occur. This target is conceptual in nature, as there has been insufficient exploration (namely drilling of verifiable quality) to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource.

The basis for this target for the EL Deposit includes:

Historical mining at the deposit to a depth of 210 metres below surface
Historical mine development to at least 270 metres below surface
Underground exploration drilling, sampling and mapping to a depth of approximately 600 metres below surface
The regional mining and development depth for the Lynn Lake camp is approximately 1,200 metres
There has been approximately 72,300 metres of historical surface and underground drilling complete
At the date of definition of the Exploration Target, Corazon Mining Limited had completed in excess of 10,700 metres of surface core drilling
Good continuity and predictability of geology down-plunge
Geological evidence for a deep-seated, explosive mineralising event

Past exploration and mining records for the EL Mine are extensive and reflect high standards of work. Mining and processing was conducted at Lynn Lake for approximately 23 years.

The zones defined in the Exploration Target include the Upper, Mid and Lower Zones. The Upper Zone includes lower grade material that has the potential to be exploited from lower cost mining methods such as open pit mining. This zone extends to 200 metres below surface. The Mid Zone covers an area defined predominantly by the current Inferred Resource (reported at a 0.6% Ni equivalent[(2) ] bottom cut-off grade), between 200 and 800 metres below surface. The Lower Zone extends from 800 metres to 1,200 metres below surface, the latter being the maximum depth at which historical underground development was conducted.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

EL Deposit - Resource Statement

Exploration by Corazon at the EL Deposit has established an initial inferred resource. The resource is considered a conservative estimate based on limited drill density, and the potential remains to extend the resource with further drilling.

This resource has not been upgraded following recent drilling by Corazon, which has indicated there is considerable scope for growth.

At a cut-off grade of 0.6% Ni equivalent[(2)] , the resource defines 1.8 Mt at 1% Ni equivalent[(2)] , including contained metal of 14,000t nickel, 9,000t copper and 400t cobalt (Table 1).

Corazon has yet to complete mining studies or metallurgical/processing analysis on the EL Mine mineralisation. However, Lynn Lake is a historical nickel, copper and cobalt mining camp which operated for more than 20 years; reported historical mine base cut-off grades were between 0.5% and 0.7% nickel, and metal recoveries reported were approximately 85% for nickel, 93% for copper and 80% for cobalt.

Past mining utilized very simple open stope with sublevel mining methods. The historical EL Mine main stope is up to 100 metres in diameter, plus 200 metres in depth, and provided a large tonnage - low cost mining opportunity.

Whilst the defined boundary of the mineralised host unit is well established, drilling in areas of the resource has not been of sufficient density to accurately define the distribution of high-grade sulphide mineralisation. For this reason, the influence of the high-grade material within the resource has been restricted and consequently the resource is categorised as inferred. This resource provides a very good base from which to focus ongoing exploration, and it is the Company’s opinion that it is conservative in terms of the full potential of the deposit and that additional drilling will provide a more accurate model particularly for the distribution of high-grade mineralisation.

Mineral Resources have been estimated using standard accepted industry practices. All Resources have been estimated via Block Ordinary Kriging using 2 metre composite samples. No top cuts have been applied which was considered appropriate for the nature and style of the mineralization. Directional Variography was modeled for all zones based on 2 metre composites. Geological and mineralization modeling has been achieved by 3D modeling of the inner and outer core of the intrusive mafic/ultramafic plug and the mined voids. A Block model was developed for the deposit incorporating a suitable parent and sub block dimension to allow adequate volume resolution of modeled geology and mineralization. Grade interpolation (via Block Ordinary Kriging) was then undertaken using a multiple estimation pass strategy.

Mineral Resources are classified on a basis of drill-hole spacing, geological continuity and predictability, sampling, analytical, spatial and density QAQC criteria.

Where quoted, Mineral Resource and Ore Reserve tonnes, pounds or ounces are rounded to appropriate levels of precision.

Table 2

EL Deposit, Lynn Lake, Manitoba CA Inferred Mineral Resource, October 2010

COG	Tonnes	Grade	Grade	Grade	Grade	Contained Metal	Contained Metal	Contained Metal
Ni% Equiv(2)	k tonnes	Ni%	Cu%	Co%	Ni% equiv(2)	Tonnes Ni	Tonnes Cu	Tonnes Co
0.5	2,300	0.7	0.4	0.02	0.9	16000	9000	500
0.6	1,800	0.8	0.4	0.02	1.0	14000	7000	400
0.7	1,300	0.9	0.4	0.03	1.1	12000	6000	340
0.8	900	1.0	0.5	0.03	1.3	9000	4000	260
0.9	700	1.1	0.5	0.03	1.3	8000	4000	230
1.0	600	1.2	0.5	0.03	1.4	7000	3000	200

(2) Ni Equiv = Nickel equivalent which has been estimated within the Block Model using the formula:-

Ni Equiv = Ni%+(Cu%[(2)] (3/8.75))+(Co%[(2)] (18/8.75)) where Ni = 8.75$ US/lb Cu = 3.00 $US/lb Co = 18.00 $US/lb

Nickel equivalent grades are provided as an indicator of value in a multi-metallic deposit. Lynn Lake has a long history as a nickel, copper and cobalt mining camp. It is the Company’s opinion that all elements included in the metal equivalent calculation have a reasonable potential to be recovered.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

150 Nickel Sulphide Prospect

IP geophysical surveys identified the 150 Prospect as a priority drill target, with subsequent work by the Company defining sulphides over a strike of approximately 250 metres. The style of mineralisation looks similar to that of the disseminated mineralisation which surrounds the massive sulphide (high-grade) mineralisation at the EL Deposit, located 1.2 kilometres to the northeast.

Results of drill hole CRZ005A confirmed the above observations. This hole intersected two broad zone of mineralisation, the first being approximately 18 metres down hole in width and the second 41 metres in width. The grades of these intercepts are summarized as:-

18m @ 0.58% Ni, 0.38% Cu & 0.013% Co from 14m Including:
9.07m @ 0.81% Ni, 0.53% Cu & 0.016% Co from 14m
41m @ 0.42% Ni, 0.34% Cu & 0.011% Co from 59m Including:
6.00m @ 0.64% Ni, 0.61% Cu & 0.016% Co from 78m

The 150 Prospect provides the Company with an additional exploration front at Lynn Lake. The shallow nature of the defined mineralisation, as well as the significant widths and strike length of the sulphide mineralisation is very encouraging. The proximity of the 150 Prospect to the high-grade EL Deposit suggests the area has good potential for high-grade nickel sulphide mineralisation.

Lynn Lake VMS Deposits

The VMS deposits within Corazon’s project area include Francis Lake, Eldon Lake East, Nicoba, Y Deposit, Z Deposit and Gods Lake (FL). These deposits were mostly discovered in the 1940’s and since then have only undergone intermittent exploration in the 1970’s and 1990’s. They are predominantly zinc/copper mineralisations with variable amounts of lead, silver and gold. Not all metals have been historically reported.

Highlights from past drilling within the main zones of the three better defined VMS deposits include:

Francis Lake • 6.5m @ 13.8% Zn, 0.7% Cu, 0.9% Pb, 22.2g/t Ag & 3.7g/t Au • 1.2m @ 10.6% Zn, 0.2% Cu, 6.1% Pb, 135.1g/t Ag & 8.7g/t Au • 1.3m @ 9.6% Zn, 0.7% Cu, 1.4% Pb, 59.5g/t Ag & 0.9g/t Au • 13.7m @ 4.0% Zn, 0.2% Cu, 0.6% Pb, 23.7g/t Ag & 0.4g/t Au • 5.8m @ 5.5% Zn, 0.6% Cu, 3.3g/t Ag & 0.9g/t Au Eldon Lake East • 26.1m @ 4.2% Zn, 0.8% Cu & 6.2g/t Ag • 16.9m @ 3.9% Zn, 1.0% Cu & 9.3g/t Ag Nicoba • 0.3m @ 12.3% Zn, 2.3% Cu, 44.6g/t Ag & 16.3g/t Au • 0.5m @ 22.5% Zn, 0.7% Cu, 17.1g/t Ag & 0.3g/t Au • 0.9m @ 21.8% Zn, 1.1% Cu, 6.9g/t Ag & 0.6g/t Au.

Corazon completed drilling at the Francis Lake VMS (zinc-copper-lead-silver-gold) Deposit, located 5 kilometres to the west of the EL Deposit. Frances Lake is possibly the most explored of the VMS deposits at Lynn Lake. The deposit outcrops, with drilling defining good mineralisation over a strike of 400 metres, to depths of approximately 300 metres, and widths of between 1.2 and 13.7 metres down hole.

This deposit has not been extensively tested down plunge or along strike, and it was believed historical drilling had defined the extents to the mineralisation. Corazon drilled one hole to test the concept of a differing plunge to the mineralisation (than that previously interpreted). Drilling by Corazon intersected mineralisation of a similar sulphide content to the main VMS body at Francis Lake. Results returned include:

• 5.0m @ 2.15% Zn, 0.20% Cu, 0.08% Pb, 18.0g/t Ag & 0.30g/t Au

While these results are encouraging, they do suggest the drill hole has intersected the margin of the high-grade Francis Lake mineralisation.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

South Plug

The South Plug nickel-copper target is located immediately south of Corazon’s land holding and contains a differentiated mafic/ ultramafic intrusion similar to those hosting the nickel-copper deposits in the Lynn Lake mining camp. The main target includes a large geophysical anomaly coincident with extensive sulphide mineralisation. Exploration to date is yet to locate economic nickel-copper mineralisation, however there is enough evidence to support the prospectivity of this area for such deposits.

Barrington Lake Copper Deposit

The Barrington Lake copper deposit is located 43 kilometres east-northeast of Lynn Lake. Exploration activities, including drilling, in the early 1990’s defined copper mineralisation in structures, plus numerous geophysical anomalies which are yet to be followed up with drilling. The main focus of past work is an outcropping zone of approximately 107 metres in strike and 4.6 metres in width, with an average grade of 2.63% copper. There is also another copper showing, believed to be the same zone, outcropping approximately 900 metres to the west.

The Beaucage Lake Gold Project

Corazon announced its acquisition of the Beaucage Lake Gold Project (“Beaucage”) in September 2012.

Beaucage is located in the Lynn Lake mining district of central Canada, and is situated approximately 45 kilometres southeast of Corazon’s core asset, the Lynn Lake nickel-copper sulphide project, providing the Company with an additional exploration focus and complementing Corazon’s Lynn Lake nickel-copper project and Barrington Lake copper deposit.

Corazon believes the high tenor of gold mineralisation over a large area near Beaucage Lake may be indicative of a large scale mineralised system.

The Company has negotiated terms which minimise the up-front cash impact of the acquisition. The Company has the right to acquire 100% equity in the Beaucage Lake Gold Project by:

Payment of C$300,000 to the vendor in staged payments, including C$25,000 payable at the commencement of year 2, C$75,000 to be paid in year 3, C$100,000 to be paid in year 4 with an additional C$100,000 payable before the completion date at the end of year 4
Issuing 250,000 new CZN shares to the vendor, and
Payment of C$40,243 in-lieu of exploration on the mineral claims

The C$40,243 payment will be reimbursed to Corazon by the provincial government of Manitoba, subsequent to exploration on the project. The owner will retain a royalty on the project of 2.5%, reducing to 1.5% following the payment of C$1,000,000.

The Beaucage Lake Gold Project is underlain by Proterozoic volcanic island arc and oceanic deposits which form the south-eastern portion of the Churchill Structural Province. Host rock types for gold mineralisation include diorite, amphibolite (metabasalts), chemical sediments (iron formations), arkosic and volcanic metasediments. While much of the gold mineralisation is associated with quartz veining and silica alteration, the chemical sediments are typically anomalous in gold and base metal mineralisation.

High-grade gold mineralisation at Beaucage has been defined over an extensive area. Little physical exploration has been completed since the early 1990’s, with most of the historical work completed by Homestake Mineral Development Company in the mid-1980’s.

Drilling at the project has been limited, predominantly focusing on the Sky-Beatty (eastern) trend and on outcropping areas highlighted by surface sampling exploration in the early 1980’s. Much of this drilling was completed in two campaigns, first in 1985 by Homestake Mineral Development Company and then in 1990-1991 by Manitoba Mineral Resources Ltd.

Historical documentation since discovery in the 1940’s indicates that only 27 drill holes have been completed at the project, for a total of 3,456 metres.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Review of Operations (continued)

The proximity of the Beaucage Project to the Lynn Lake Project allows the Company to optimise its field activities in the region, providing cost reducing benefits for any future exploration work. Initial work on the Beaucage project will involve the digital capture and interpretation of all historical exploration activity. Much of this work has been summarised in historical reports.

Information acquired to date suggests exploration has focused on small areas of outcrop scattered throughout the project. Geophysics has been useful in identifying favourable trends, identifying numerous targets, many of which have yet to be followed up with drilling. Corazon is of the view that modern geophysical techniques will be beneficial in additional target generation at Beaucage.

Review of Operations - Disclosure Statements, Important Information and Notes

(1) Competent Persons

The information in this report that relates to mineral Resources or Reserves at Corazon’s Lynn Lake Project is based on information compiled by Mr Andrew John Thompson, B.Sc Hons (Geol), Member AusIMM and a consultant to Corazon Mining Limited. Mr Thompson has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Thompson consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

The information in this report that relates to Exploration Results and Targets is based on information compiled by Mr Brett Smith, B.Sc Hons (Geol), Member AusIMM, Member AIG and an employee of Corazon Mining Limited. Mr Smith has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Smith consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

(2) Nickel Equivalent

Ni Equiv = Nickel equivalent which has been estimated within the Block Model using the formula:-

Ni Equiv = Ni%+(Cu%[(2)] (3/8.75))+(Co%[(2)] (18/8.75)) where Ni = 8.75$ US/lb Cu = 3.00 $US/lb Co = 18.00 $US/lb

Financial Position

The net assets of the Consolidated Entity have decreased from $3,239,661 at 30 June 2011 to $1,553,564 at 30 June 2012. This is as a result of impairment of intangible asset arisen from acquisition of subsidiary during the year.

As at 30 June 2012 the Consolidated Entity had $810,876 cash on hand.

The Directors are confident that the Company will raise capital through the issue of additional shares as and when required.

Significant Changes in State of Affairs

The following significant changes in the state of affairs of the parent entity occurred during the financial year:

On 9 November 2011, Corazon Mining Limited announced it had resolved to raise up to approximately $4,320,000 through the placement of up to approximately 36 million shares at an issue price of $0.12 per share. The funds raised to be utilised for the exploration of its high-grade nickel sulphide Lynn Lake project in Canada.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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After Balance Date Events

(i) On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire 100% equity in the Lynn Lake project. The option to acquire the project has been extended from 20 October 2012 to 20 October 2015. The Consolidated Entity has to make a payment of CAD$100,000 per annum for each annual extension. The cash consideration has been reduced from CAD$2 million to CAD$1 million, plus CAD$750,000 deferred consideration to be paid on the earliest of either:
Defining a JORC compliant resource greater than 30,000 tonnes of nickel metal
Completion of a positive feasibility study, or
The commencement of commercial mining

Payments to the owner for the extension of the option are CAD$3,000 in cash and one million Corazon shares. The owner of the Lynn Lake Project has also provided additional mineral claims to the project area to be acquired by Corazon.

(ii) On 4 September 2012, the Consolidated Entity secured an option over Beaucage Lake Gold project located near its Lynn Lake nickel-copper project in Canada. The Company has negotiated terms which minimise the up-front cash impact of the acquisition. The Company has the right to acquire 100% equity in the Beaucage Lake Gold Project by:
Payment of C$300,000 to the vendor in staged payments, including C$25,000 payable at the commencement of year 2, C$75,000 to be paid in year 3, C$100,000 to be paid in year 4 with an additional C$100,000 payable before the completion date at the end of year 4
Issuing 250,000 new CZN shares to the vendor, and
paying a sum of C$40,243 in-lieu of exploration on the mineral claims

Apart from the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity in future financial years.

Future Developments, Prospects and Business Strategies

The Consolidated Entity will continue its mineral exploration activity at and around its exploration projects with the object of identifying commercial resources.

Environmental Issues

The Consolidated Entity is aware of its environmental obligations with regards to its exploration activities and ensures that it complies with all regulations when carrying out any exploration work.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Information on Directors

Mr Clive Jones	Non Executive Chairman
Qualifcations	B AppSc (Geol)
Experience	Mr Jones has been involved in the minerals industry for over 25 years and has worked on the exploration
	and development of a range of commodities including gold, base metals, uranium, mineral sands, iron ore
	and industrial minerals both in Australia and overseas, with a history of corporate and technical successes.
	Aside from his role as Chairman of Corazon, Mr Jones is currently joint managing Director of Cazaly
	Resources Ltd., Director of Bannerman Resources Ltd and is Chairman of Cortona Resources Ltd. All of
	these companies are currently listed on the Australian Securities Exchange; Bannerman is also jointly listed
	on the Toronto and Namibian Stock Exchanges.
Interest in Shares and	2,453,969 fully paid ordinary shares and 3,151,985 options in Corazon Mining Ltd
Options
Directorships held in	Bannerman Resources Ltd from 12 January 2007 to present
other listed entities in	Cortona Resources Ltd from 17 March 2006 to present
the last three years	CazalyResources Ltd from 15 September 2003 topresent
Mr Brett Smith	Executive ManagingDirector
Qualifcations	BSc Hons, MAusIMM, MAIG, MAICD
Experience	Mr Smith has been involved in the mining and exploration industry for over 25 years as a geologist,
	Manager and Director of publicly listed companies. Mr Smith has acquired broad industry experience in
	exploration and development and is currently a Director of the ASX companies Couldron Energy Ltd, Jacka
	Resources Ltd and Blackham Resources Ltd. The Board is confdent that Mr Smith brings the right mix of
	energyand experience required to advance the assets of the Company.
Interest in Shares and	125,000 fully paid ordinary shares and 2,000,000 options in Corazon Mining Ltd
Options
Directorships held in	Jackson Minerals Ltd from May 2006 to June 2009
other listed entities in	Cauldron Energy Ltd from June 2009 to present
the last three years	Blackham Resources Ltd from July 2007 to present
	Jacka Resources Ltd from July 2009 to present
	Eclipse Uranium Ltd from March 2010 to October 2011

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Information on Directors (continued)

Mr Jonathan Downes	Non Executive Director
Qualifcations	B Sc Geol, MAIG
Experience	Mr Downes has over 15 years experience in the minerals industry and has worked in various geological and
	corporate capacities. Mr Downes has experience in nickel, gold and base metals and has been intimately
	involved with numerous private and public capital raisings. Mr Downes was a founding director of Hibernia
	Gold (now Moly Mines Ltd) and Siberia Mining Corporation Ltd. Mr Downes is currently Managing Director
	of Ironbark Zinc Ltd.
Interest in Shares and	1,325,930 fully paid ordinary shares and 2,245,771 options in Corazon Mining Ltd
Options
Directorships held in	Ironbark Zinc Ltd from 18 April 2006 to present
other listed entities in	Wolf Minerals Ltd from 20 September 2006 to present
the last three years	Sabre Resources Ltd from 14 December 2007 to present
	Waratah Resources Ltd from 17 July2008 topresent
Mr Adrian Byass	Non Executive Director
Qualifcations	B Sc Hon (Geol), B Econ, FSEG, MAIG
Experience	Mr Byass has over 15 years experience in the mining and minerals industry. This experience has principally
	been gained through mining, resource estimation, and mine development roles for several gold and
	nickel mining and exploration companies. Through his experience in resource estimation and professional
	association membership, Mr Byass is a competent person for reporting to the ASX for certain minerals. Mr
	Byass has also gained experience in corporate fnance and fnancial modelling during his employment with
	publicly listed mining companies. Mr Byass was a founder of Siberia Mining Corporation Ltd and Hibernia
	Gold (now Moly Mines Ltd). Mr Byass is currently a Non-Executive Director of Wolf Minerals Ltd, Executive
	Director of Ironbark Zinc Ltd and was appointed Interim Managing Director of Corazon Mining Ltd on 3
	September 2009 through to 1 July2010.
Interest in Shares and	3,347,696 fully paid Ordinary Shares and 3,398,849 options in Corazon Mining Ltd.
Options
Directorships held in	Ironbark Zinc Ltd from 18 April 2006 to present
other listed entities in	Wolf Minerals Ltd from 20 September 2006 to present
the last three years	Plymouth Minerals Limited from 17 June 2010 topresent

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Remuneration Report (audited)

This report details the nature and amount of remuneration for each key management personnel of Corazon Mining Limited.

Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial year are:

Key Management Personnel

Position

Clive Jones Non Executive Chairman Brett Smith Executive Managing Director Adrian Byass Non Executive Director Jonathan Downes Non Executive Director

Remuneration Policy (audited)

This remuneration report, which forms part of the Directors’ Report, sets out information about the remuneration of Corazon Mining Limited’s key management personnel, comprising the directors of the Company, for the financial year ended 30 June 2012. Disclosures required under AASB 124 Related Party Disclosures have been transferred from the financial report and have been audited. The additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 have not been audited.

The remuneration policy of Corazon Mining Limited has been designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Consolidated Entity’s financial results. The Board of Corazon Mining Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the Consolidated Entity, as well as create goal congruence between directors, executives and shareholders.

The Board’s policy for determining the nature and amount of remuneration for key management personnel of the Consolidated Entity is as follows:

The remuneration policy, setting the terms and conditions for the key management personnel, was developed and approved by the Board.
All key management personnel receive a base salary (which is based on factors such as length of service and experience) and their package may include superannuation, fringe benefits, options and performance incentives.
The Board reviews key management personnel packages annually by reference to the Consolidated Entity’s performance, executive performance and comparable information from industry sectors.

The Board’s remuneration policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.

Key management personnel are also invited to participate in employee option arrangements.

Shares given to key management personnel are valued as the difference between the market price of those shares and the amount paid by the key management personnel. Options are valued using the Black-Scholes option pricing model.

The Board policy is to remunerate Non-Executive Directors at market rates for time, commitment and responsibilities. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to NonExecutive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for Non-Executive Directors are not linked to the performance of the Consolidated Entity. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in the employee incentive scheme (‘EIS’).

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Remuneration Report (audited) (continued)

Performance-based remuneration

The Company is an exploration entity and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives are paid market rates associated with individuals in similar positions, within the same industry. The Board does not endorse the use of bonus payments for directors and senior executives at this point in time. Performance incentives will be issued in the event that the entity moves from an exploration to a producing entity, and key performance indicators such as growth and profits will be used as measurements for assessing Board performance.

Company performance, shareholder wealth and director and executive remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives by the issue of options to some directors and key executives to encourage the alignment of personal and shareholder interests.

Key terms of employment contracts

The contracts for service between the Company and its directors are on a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement key management personnel are paid employee benefit entitlements accrued to date of retirement.
The employment contract states a three month resignation notice period. The Company may terminate an employment contract without cause by providing three months’ written notice or making payment in lieu of notice based on the individual’s annual salary component.

Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial year are:

Company Key Management Personnel	Position held as at 30 June 2012 and any change during the year	Contract details	Proportion of elements of remuneration related to performance	Proportion of elements of remuneration related to performance	Proportion of elements of remuneration related to performance	Proportion of elements of remuneration not related to performance	Proportion of elements of remuneration not related to performance
			Non- Salary cash- based incentives %	Shares/ Units %	Options/ Rights %	Fixed salary/ Fees %	Total %
Clives Jones	Non Executive Chairman	No fxed term.	-	-	-	100	100
Brett Smith	Executive Managing Director	No fxed term. 3 months notice required to terminate.	-	-	-	100	100
Adrian Byass	Non Executive Director	No fxed term.	-	-	-	100	100
Jonathan Downes	Non Executive Director	No fxed term.	-	-	-	100	100

This report details the nature and amount of remuneration for each key management person of Corazon Mining Limited, and for the executives receiving the highest remuneration.

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Remuneration Report (audited) (continued)

A. DETAILS OF THE NATURE AND AMOUNT OF COMPENSATION PAID, PAYABLE OR OTHERWISE MADE AVAILABLE TO DIRECTORS (audited)

Key Management Personnel Remuneration

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Key Management Personnel Short Term Post Employment Share Based Total
Employee Benefits Benefits Payments
Cash and salary Superannuation Options
$ $ $ $
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2012 Clive Jones Adrian Byass Brett Smith Jonathan Downes 2011 Clive Jones Adrian Byass Brett Smith Jonathan Downes	50,841 - - 50,841 40,000 - - 40,000 207,100 - - 207,100 40,000 3,600 - 43,600
	337,941 3,600 - 341,541
	34,102 - 109,800 143,902 26,666 - 109,800 136,466 205,675 1,425 158,000 365,100 19,200 1,728 109,800 130,728
	285,643 3,153 487,400 776,196

B. COMPENSATION OPTIONS GRANTED DURING THE YEAR

No options granted to directors or employees during the financial year ended 30 June 2012.

C. SHARES ISSUED ON EXERCISE OF COMPENSATION OPTIONS

No shares were issued on exercise of compensation options, during the financial year ended 30 June 2012.

	Directors’ Meetings	Directors’ Meetings
	Number eligible to attend	Number attended
Clive Jones	6	6
Brett Smith	6	6
Adrian Byass	6	6
Jonathan Downes	6	6

Indemnifying Officers

During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows:

The Company has paid premiums to insure each of the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium was $2,000 and extends to cover the following Directors:

Clive Jones
Brett Smith
Jonathan Downes
Adrian Byass

Corazon Mining Limited Annual Report 2012

DIRECTOR’S REPORT

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Options

At the date of this report, the unissued ordinary shares of Corazon Mining Limited under option are as follows:

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Grant Date Date of Expiry Exercise Price Number under Option
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Grant Date Date of Expiry Exercise Price	Number under Option
16/12/2010 30/11/2013 $0.12 04/03/2011 25/02/2014 $0.15 15/12/2011 01/12/2014 $0.20 09/03/2010 30/04/2013 $0.20 29/04/2010 30/04/2013 $0.20	2,000,000 8,500,000 5,000,000 19,101,870 28,965,840
	63,567,710

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Non-Audit Services

The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and the objectivity of the auditor; and
the nature of the services provided to not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

The following fees were paid out to PKF Mack & Co Chartered Accountants for non-audit services provided during the year ended 30 June 2012:

Taxation compliance service $4,150

Auditor’s Independence Declaration

The lead auditor’s independence declaration for the year ended 30 June 2012 has been received and can be found on page 21 of the Directors’ Report.

Signed in accordance with a resolution of the Board of Directors.

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Brett Smith Executive Managing Director

Dated this 21st day of September 2012

Corazon Mining Limited Annual Report 2012

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AUDITOR’S INDEPENDENCE DEClARATION TO THE MEMBERS OF CORAZON MINING LTD

In relation to our audit of the financial report of Corazon Mining Ltd for the year ended 30 June 2012, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

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PKF MacK & co

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SiMon FerManiS Partner 21 SePteMber 2012 WeSt Perth, WeStern auStralia

CONSOlIDATED STATEmENT OF COmPREhENSIVE INCOmE FOR YEAR ENDED 30 JUNE 2012

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Note 2012 2011
$ $
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Other revenue 2 Administrative expense Employee benefts expense Equity compensation payment Depreciation and amortisation expense Consultancy expense Compliance and regulatory expense Occupancy expense Directors fees Insurance expense Impairment of intangible asset Impairment of capitalised exploration expenditure Exploration expense Cumulative loss reclassifed from equity on impairment of available-for-sale fnancial assets Loss before income tax 3 Income tax expenses 4 Loss for the year Other comprehensive income Net changes in fair value of available for sale fnancial assets Other comprehensive loss (net of tax) Total comprehensive loss for the year Basic loss per share (cents per share) 5 Diluted loss per share (cents per share) 5	932,834 (271,973) (206,304) - (12,227) (239,526) (121,660) (48,644) (130,844) (24,524) (1,445,190) (314,719) (3,588,945) (263,191)	300,069 (86,316) (229,362) (624,650) (16,060) (73,187) (118,169) (40,149) (79,968) (10,479) - - (2,332,220) -
	(5,734,913) -	(3,310,491) -
	(5,734,913)	(3,310,491)
	(5,459)	(134,435)
	(5,459)	(134,435)
	(5,740,372)	(3,444,926)
	4.72 4.68	4.13 4.09

The accompanying notes form part of these financial statements.

Corazon Mining Limited Annual Report 2012

CONSOlIDATED STATEmENT OF FINANCIAl POSITION

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AS AT 30 JUNE 2012

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Note 2012 2011
$ $
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CURRENT ASSETS Cash and cash equivalents 6 Trade and other receivables 7 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other assets 8 Financial assets 9 Intangible asset 11 Plant and equipment 12 Exploration and evaluation expenditure 13 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 14 Provisions 15 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities 4 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 16 Reserves 17 Accumulated losses TOTAL EQUITY	810,876 1,478,449 280,721 140,247
	1,091,597 1,618,696
	35,000 35,000 534,490 84,800 - 1,348,197 42,940 53,356 - 308,164
	612,430 1,829,517
	1,704,027 3,448,213
	135,074 197,122 15,389 9,090
	150,463 206,212
	- 2,340
	- 2,340
	150,463 208,552
	1,553,564 3,239,661
	20,756,081 16,851,806 1,543,479 1,398,938 (20,745,996) (15,011,083)
	1,553,564 3,239,661

The accompanying notes form part of these financial statements.

Corazon Mining Limited Annual Report 2012

CONSOlIDATED STATEmENT OF ChANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2012

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Issued Option Fair Value Share Contingent Accumulated Total
Capital Reserve Reserve Based Reserves Losses
Payments
Reserve
$ $ $ $ $ $ $
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Balance at 1 July 2010 Loss for the year Other comprehensive income Available for sale asset movement Total other comprehensive income Transactions with owners, recorded directly in equity Issue of share capital Transaction costs on share issue Share option exercised Equity compensation beneft Contingent consideration Balance at 30 June 2011 Loss for the year Other comprehensive income Available for sale asset movement Total other comprehensive income Transactions with owners, recorded directly in equity Issue of share capital Transaction costs on share issue Share based payment Balance at 30 June 2012	12,817,304 240,339 139,894 - - (11,700,592) 1,496,945
	- - - - - (3,310,491) (3,310,491) - - (134,435) - - - (134,435)
	- - (134,435) - - (3,310,491) (3,444,926) 4,256,700 - - - - - 4,256,700 (223,458) - - - - - (223,458) 1,260 - - (1,260) - - - - - - 850,650 - - 850,650 - - - - 303,750 - 303,750
	16,851,806 240,339 5,459 849,390 303,750 (15,011,083) 3,239,661
	- - - - - (5,734,913) (5,734,913) - - (5,459) - - - (5,459)
	- - (5,459) - - (5,734,913) (5,740,372) 4,320,000 - - - - - 4,320,000 (415,725) - - - - - (415,725) - - - 150,000 - - 150,000
	20,756,081 240,339 - 999,390 303,750 (20,745,996) 1,553,564

The accompanying notes form part of these financial statements.

Corazon Mining Limited Annual Report 2012

CONSOlIDATED STATEmENT OF CASh FlOWS

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FOR YEAR ENDED 30 JUNE 2012

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Note 2012 2011
$ $
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CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Exploration grant Other income Interest received Payments for exploration and evaluation Net cash used in operating activities 21 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of shares Payment for term deposit for credit card Purchase of plant and equipment Purchase of investments Net cash generated from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payments for costs of issue of shares Net cash generated from fnancing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of fnancial year 6 Cash and cash equivalents at end of fnancial year 6	(1,229,801) (661,453) - 59,419 130,000 67,983 86,595 30,881 (3,609,837) (2,369,412)
	(4,623,043) (2,872,582)
	- 586,917 - (35,000) (1,811) (4,044) (96,993) (350,947)
	(98,804) 196,926
	4,320,000 3,799,200 (265,726) (223,458)
	4,054,274 3,575,742
	(667,573) 900,086 1,478,449 578,363
	810,876 1,478,449

The accompanying notes form part of these financial statements.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report of Corazon Mining Limited for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of Directors on 21 September 2012.

This financial report includes the consolidated financial statements and notes of Corazon Mining Limited (‘the Company’) and controlled entities (‘Consolidated Entity’ or ‘Group’).

Corazon Mining Limited is a listed public company, trading on the Australian Securities Exchange, limited by shares, incorporated and domiciled in Australia.

The financial report of the Consolidated Entity complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS).

The following is a summary of the material accounting policies adopted by the Consolidated Entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

Statement of Compliance

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) issued by the Australian Accounting Standard Board (AASB) and the Corporations Act 2001 as appropriate for profit oriented entities. The consolidated financial report of the Group comply with International Financial Reporting Standards (IFRSs) and interpretations as issued by the International Accounting Standards Board (IASB).

Basis of Measurement

The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Going Concern basis

The financial statements have been prepared on the going concern basis. As at 30 June 2012 the Group had net assets of $1,553,564 (2011: $3,239,661) and $810,876 (2011: $1,478,449) in cash and cash equivalents. The Group recorded a loss of $5,734,913 (2011: $3,310,491) and had a net working capital surplus of $941,134 (2011: $1,412,484).

The Group will require further funding during the 2013 financial year in order to meet day to day obligations as they fall due and progress its exploration projects.

In the event that the Group is not successful in raising funds from the issue of new equity there exists significant uncertainty as to whether the Group will be able to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The Directors anticipate that future financing for exploration and mining activities will be secured in a reasonable timeframe and accordingly the directors consider it appropriate to prepare the financial statements on a going concern basis.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

a. Significant accounting estimates, judgments and assumptions

The preparation of financial statements requires management to make judgments and estimates relating to the carrying amounts of certain assets and liabilities. Actual results may differ from the estimates made. Estimates and assumptions are reviewed on an ongoing basis.

The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next accounting period are:

(i) Share based payment transactions

The Consolidated Entity measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of share options is determined by an external valuer using an appropriate valuation model. Refer to note 20 for further details.

(ii) Impairment of exploration and evaluation assets and investments in and loans to subsidiaries

The ultimate recoupment of the value of exploration and evaluation assets, the Company’s investment in subsidiaries, and loans to subsidiaries is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.

Impairment tests are carried out on a regular basis to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.

The key areas of judgement and estimation include:

Recent exploration and evaluation results and resource estimates;
Environmental issues that may impact on the underlying tenements;
Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities. Refer to note 13 for further details.

(iii) Income tax expenses

Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised. Refer to note 4 for further details.

(iv) Classification of investments

The Group has decided to classify investments in listed securities as available for sale. These securities are accounted for at fair value. Any increments or decrements in their value at year end are charged or credited to the revaluation reserves, unless they are impaired, of which any accumulated losses are reclassified to the statement of comprehensive income for the current year. Refer to note 9 for further details.

(v) Intangible assets

Intangible assets represent the cost of acquisition of an option to acquire Lynn Lake Nickel project. As the ownership in Lynn Lake is an option to acquire, exploration and evaluation expenditure has been expensed in the statement of comprehensive income until such time that the Company converts its option to an ownership interest. Refer to note 11 for further details.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

b. Exploration and Evaluation Assets

Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Consolidated Entity has obtained the legal rights to explore an area are recognised in the statement of comprehensive income.

Exploration and evaluation assets are only recognised if the rights of interest are current and either:

The expenditures are expected to be recouped through successful development and exploitation of the area of interest; or
Activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

An impairment exists when the carrying amount of capitalised exploration and evaluation expenditure relating to an area of interest exceeds its recoverable amount. The asset is then written down to its recoverable amount. Any impairment losses are recognised in the statement of comprehensive income.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from exploration and evaluation expenditure to mining property and development assets within property, plant and equipment and depreciated over the life of the mine.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Where applicable, such costs are determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

c.

Principles of Consolidation

The consolidated financial statements incorporate the financial statements of Corazon Mining Limited and entities controlled by Corazon Mining Limited(its subsidiaries). A list of subsidiaries is contained in Note 10. All controlled entities have a 30 June financial year-end. Control is achieved where Corazon Mining Limited has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of the subsidiaries acquired or disposed of during the year are included in consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measure in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively;
Liabilities or equity instruments related to share-based payment arrangement of the acquiree or share-based payments of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

c. Principles of Consolidation (continued)

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisitiondate amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified.

Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasure at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

d. Income Tax

The charge for current income tax expense is based on the profit or loss for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on either accounting profit or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Tax Consolidation

Corazon Mining Limited and its wholly-owned Australian subsidiaries have not formed an income tax consolidated group under tax consolidation legislation.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

e. Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

f. Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a diminishing value basis over the asset’s useful life to the Consolidated Entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset	Depreciation Rate
Plant and equipment	30-40%
Offce furniture and equipment	18%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g. Financial Instruments

The Consolidated Entity classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss

This category has two sub-categories; financial assets held for trading, and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the reporting date.

(ii) Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Consolidated Entity provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position.

(iii) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date.

Purchases and sales of investments are recognised on trade-date being the date on which the Consolidated Entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Consolidated Entity has transferred substantially all the risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available-for-sale investments revaluation reserve are recognised in equity in the “available for sale revaluation reserve”. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Consolidated Entity establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing methods refined to reflect the issuer’s specific circumstances.

The Consolidated Entity assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss, is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

h. Fair value

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-forsale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Consolidated Entity is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Consolidated Entity uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Consolidated Entity for similar financial instruments.

i. Impairment

(i) Financial Assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised either in the statement of comprehensive income or revaluation reserves in the period in which the impairment arises.

(ii) Exploration and Evaluation Assets

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount at the reporting date.

Exploration and evaluation assets are tested for impairment in respect of cash generating units, which are no larger than the area of interest to which the assets relate.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i. Impairment (continued)

(iii) Non-financial Assets other than Exploration and Evaluation Assets

The carrying amounts of the Consolidated Entity’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, then to reduce the carrying amount of the other assets in the unit on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exits. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

j. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of comprehensive income.

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the Goup’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

k. Employee Benefits

a. Wages, salaries and annual leave

Liabilities for wages, salaries and annual leave expected to be settled within one year of the reporting date are recognised in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

b. Employee benefits payable later than one year

Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

c. Superannuation

Contributions are made by the Consolidated Entity to superannuation funds as stipulated by statutory requirements and are charged as expenses when incurred.

d. Employee benefit on costs

Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

e. Options

The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date.

The fair value at grant date is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the nontradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

Equity-settled compensation

The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

l. Provisions

Provisions are recognised when the Consolidated Entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

m. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 12 months or less, and bank overdrafts.

n. Revenue and Other Income

Interest revenue is recognised as it accrues. Dividend revenue is recognised when the right to receive a dividend has been established.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

o. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flow on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

p. Receivables

Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment is raised when some doubt as to collection exists.

q. Earnings per share (EPS)

Basic earnings per share

Basic earnings per share is determined by dividing the net profit after income tax attributable to members of the Consolidated Entity, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

r. Contributed Equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

s. Investments

Interests in listed and unlisted securities are initially brought to account at cost.

Controlled entities are accounted for in the consolidated financial statements as set out in note 1(c).

Other securities are included at fair value at reporting date. Unrealised gains/losses on securities held for short term investment are accounted for as set out in Note 1 (g) (i) financial assets at fair value through profit or loss. Unrealised gains/losses on securities held for long term investment are accounted for as set out in Note 1 (g) (iii) available for sale financial assets.

t. Acquisition of Assets

The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition.

u. Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

v. New standards and interpretations not yet adopted

The following Australian Accounting Standards have been issued or amended and are applicable to the annual financial statements of the parent company and consolidated group but are not yet effective. This assumes the following have not been adopted in preparation of the financial statements at the reporting date.

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----- Start of picture text -----

AASB No. Title Issue Date Operative Date
(Annual reporting
periods beginning
on or after)
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AASB No.	Title	Issue Date	Operative Date (Annual reporting periods beginning on or after)

9	Financial Instruments	Dec 2010	1 Jan 2015
10	Consolidation	Aug2011	1 Jan 2013
11	Joint Arrangements	Aug2011	1 Jan 2013
12	Disclosure of Interests in Other Entities	Aug2011	1 Jan 2013
13	Fair Value Measurement	Sep2011	1 Jan 2013
1053	Application of Tiers of Australian AccountingStandards	Jun 2010	1 Jul 2013
2010 – 2	Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements	Jun 2010	1 Jul 2013
2010 – 7	Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127]	Dec 2010	1 Jan 2013
2010 – 8	Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112]	Dec 2010	1 Jan 2012
2010 – 10	Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB 2009-11 & AASB 2010-7]	Dec 2010	1 Jan 2013
2011 - 4	Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124]	Jul 2011	1 Jul 2013
2012 - 2	Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities [AASB 7 & AASB 132]	Jun 2012	1 Jan 2013
2012 - 3	Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities [AASB 132]	Jun 2012	1 Jan 2014
2012 - 5	Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle [AASB 1, AASB 101, AASB 116, AASB 132 & AASB 134 and Interpretation 2]	Jun 2012	1 Jan 2013
20 (Australian Interpretations)	Stripping Costs in the Production Phase of a Surface Mine	Nov 2011	1 Jan 2013

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 2: OTHER REVENUE Operating activities: Proft on sale of exploration assets Proft on sale of shares Interest received Grant Other Total Other Revenue NOTE 3: LOSS FOR THE YEAR Losses for the year are arrived at after charging the following: Equity compensation payment Impairment of intangible asset Impairment of capitalised exploration expenditure Exploration expenses Superannuation expenses Foreign exchange loss Signifcant Revenue and Expenses The following signifcant revenue and expense items are relevant in explaining the fnancial performance: – Employee beneft expense – Equity compensation payment NOTE 4: INCOME TAX EXPENSES a. The components of tax expense comprise: Current tax Deferred tax b. The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax payable on loss from ordinary activities before income tax at 30% (2011: 30%)	2012 $	2011 $
	820,680 - 82,154 - 30,000	- 186,735 43,180 59,419 10,735
	932,834	300,069
	- 1,445,190 314,719 3,588,945 3,600 - 206,304 - - -	624,650 - - 2,332,220 2,441 1,605 229,362 624,650 - -
	- (1,720,473)	- (993,147)

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 4: INCOME TAX EXPENSES (continued) b. Add: Tax effect of: - Accrued income - Other non-allowable items - Share based payments - Provisions and accruals - Impairment of investments - Exploration and evaluation expenditure - Foreign tax losses not recognised - Property, plant and equipment - Revenue losses not recognised Less: Tax effect of: - Exploration and evaluation expenditure - Capital raising costs - Accrued income Income tax expense/(beneft) The applicable average weighted tax rates are as follows: c. The following deferred tax balances have been recognised: Deferred tax liabilities at 30% : Asset revaluation reserve The following deferred tax balances have not been recognised: Deferred Tax Assets at 30% : Carry forward revenue losses Foreign tax losses Impairment of investments Capital raising costs Provisions and accruals	2012 $	2011 $
	1,332 3,876 - 2,494 512,514 92,449 1,081,133 2,927 33,506	- 1,988 187,395 4,919 - - 680,088 3,972 134,002
	1,730,231	1,012,364
	- 9,758 -	2,449 13,079 3,689
	9,758	19,217
	- 0% - 2,713,779 1,761,222 1,859,857 1,025 9,117	- 0% 2,340 2,680,273 680,088 1,297,631 10,783 6,623
	6,345,000	4,675,398

The tax benefits of the above Deferred Tax Assets will only be obtained if:

(a) The Company derives future assessable income of a nature and an amount sufficient to enable the benefits to be utilised; and

(b) The Company continues to comply with the conditions for deductibility conditions imposed by the law; and

Deferred tax liabilities at 30% :

Exploration and evaluation expenditure Property, plant and equipment Accrued income	- 92,449 10,827 13,754 3,347 4,679
	14,174 110,882

The above Deferred Tax Liabilities have not been recognised as they have given rise to the carry forward revenue losses for which the Deferred Tax Assets have not been recognised.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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2012 $ 2011 $ NOTE 5: LOSS PER SHARE a. Loss used in the calculation of basic and diluted EPS (5,734,913) (3,310,491) b. Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 121,540,475 80,085,075 c. Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS 122,449,683 80,958,987 NOTE 6: CASH AND CASH EqUIVALENTS Cash at bank and in hand 110,876 478,449 Short-term bank deposits 700,000 1,000,000 810,876 1,478,449 Reconciliation of cash Cash at the end of the fnancial year as shown in the Statement of cash fow is reconciled to items in the statement of fnancial position as follows: Cash and cash equivalents 810,876 1,478,449 The effective interest rate on short-term deposits was 5.8% (2011: 6.0%); these deposit have an average maturity of 90 days. NOTE 7: TRADE AND OTHER RECEIVABLES CURRENT Other receivables 280,721 140,247 280,721 140,247 Refer to note 24 Financial Instruments for further details. NOTE 8: OTHER ASSETS NON-CURRENT Term deposit for credit card 35,000 35,000 35,000 35,000 Refer to note 24 Financial Instruments for further details. NOTE 9: FINANCIAL ASSETS NON-CURRENT Available-for-sale fnancial assets 534,490 84,800 534,490 84,800 Reconciliation of cash Reconciliation of the fair values at the beginning and end of the current and previous fnancial year are set out below: Opening fair value 84,800 687,033 Additions 720,680 - Disposals - (600,000) Revaluation increments/(decrements) (270,990) (2,233) Closing fair value 534,490 84,800	2012 $	2011 $
	(5,734,913)	(3,310,491)
	121,540,475 122,449,683 110,876 700,000	80,085,075 80,958,987 478,449 1,000,000
	810,876	1,478,449
	810,876	1,478,449
	280,721 140,247
	35,000 35,000
	35,000 35,000
	534,490 84,800
	534,490 84,800
	84,800 687,033 720,680 - - (600,000) (270,990) (2,233)
	534,490 84,800

Available-for-sale financial assets comprise of investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments. The consolidated entity’s exposure to credit, market and liquidity risk related to financial assets is disclosed in Note 24.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 10: CONTROLLED ENTITIES

Subsidiaries of Corazon Mining Ltd: Graynic Metals (Guatemala) Pty Ltd Resource Investment Group Pty Ltd Manitoba Nickel Pty Ltd Manitoba Nickel Inc	Country of Incorporation	Percentage Owned(%)*	Percentage Owned(%)*
		2012	2011
	Australia Australia Australia Canada	100 100 100 100 100 100 100 100

Percentage of voting power is in proportion to ownership

NOTE 11: INTANGIBLE ASSET

In July 2010, the Consolidated Entity has entered into an option agreement to acquire a 100% interest in the Lynn Lake nickel copper sulphide project (Project) in Manitoba Canada, held by Manitoba Nickel Pty Ltd (Manitoba).

ulphide project (Project) in Manitoba Canada, held by Manitoba Nickel Pty Ltd (Manitoba).
Balance at the beginning of the period Consideration transferred Option payment to Peter Dunlop Impairment of intangible asset Balance at the end of the period	2012 $	2011 $
	1,348,197 - - 1,348,197 96,993 - (1,445,190) -
	- 1,348,197

The only asset of the acquired subsidiary is an option to acquire an exploration tenement. Therefore, the acquisition is in substance an acquisition of an option to a project. Accordingly, in the consolidated financial statements, such transaction is accounted for in accordance with AASB138, Intangible assets .

In accordance with AASB136 Impairment of assets , an intangible asset which is not ready for use shall be tested for impairment annually. The Company has performed the impairment test and considered it is appropriate that the option should be impaired totalling $1,495,190.

The Consolidated Entity has spent approximately $5.9 million on exploration and evaluation at the Lynn Lake Project to reporting date. On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire 100% equity in project. The renegotiated option agreement acknowledges that the existing earn in obligation has been satisfied, refer note 18 for details.

NOTE 12: PLANT AND EqUIPMENT Plant and equipment: At cost Accumulated depreciation Offce furniture and equipment At cost Accumulated depreciation Total Plant and Equipment	2012 $	2011 $
	127,405 (85,341)	125,594 (73,307)
	42,064	52,287
	2,713 (1,837)	2,713 (1,644)
	876	1,069
	42,940	53,356

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 12: PLANT AND EqUIPMENT (continued)

Plant and Equipment	Offce Furniture and Equipment	Total
$	$	$
64,069 4,044 (15,826)	1,303 - (234)	65,372 4,044 (16,060)
52,287	1,069	53,356
1,811 (12,034)	- (193)	1,811 (12,227)
42,064	876	42,940

	2012 $	2011 $
	- -	308,164 -
	-	308,164
	308,164 6,555 (314,719)	300,000 8,164 -
	-	308,164

The value of the exploration expenditure is dependent upon:

The continuance of the rights to tenure of the areas of interest;
The results of future exploration; and
The recoupment of costs through successful development and exploitation of the areas of interest or alternatively by their sale.

The Consolidated Entity has disposed of the Australia tenements to a third party. Hence, the carrying amount of the assets is fully written off to the Statement of Comprehensive Income.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2012

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2012 $	2012 $	2011 $
115,654 19,420		182,217 14,905
135,074		197,122
15,389 -		9,090 -
15,389		9,090

	Employee benefts $
		9,090 6,299
		15,389

2012 $		2011 $
21,806,162 (1,050,081)		17,486,162 (634,356)
20,756,081		16,851,806

2012 No.		2011 No.
101,891,415 36,000,000 - -		55,485,415 41,876,000 4,500,000 30,000
137,891,415		101,891,415

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. These fully paid ordinary where have no par value.

At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 16: ISSUED CAPITAL (continued)

b. Options

For information relating to the Corazon Mining Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 20 Share-based Payments.

c. Capital Management

The Directors’ primary objective is to maintain a capital structure that ensures the lowest cost of capital to the Group. At reporting date the Group has no external borrowings. The Directors are confident that the Company will raise capital through the issue of additional shares when and as required. The Group is not subject to any externally imposed capital requirements

NOTE 17: RESERVES

	2012	2012	2012
Option reserve	Fair value reserve	Contingent reserve	Total
1,089,729 150,000	5,459 303,750 1,398,938 (5,459) - 144,541
1,239,729	- 303,750 1,543,479

	2011
Option reserve	Fair value reserve	Contingent reserve	Total
240,339 849,390	139,894 - 380,233 (134,435) 303,750 1,018,705
1,089,729	5,459 303,750 1,398,938

a. Fair Value Reserve

The fair vale reserve is used to recognise increments and decrements in the fair value of available-for-sale financial assets.

b. Option Reserve

This reserve is used to record the value of share based payments made to the employees and directors and other parties.

c. Contingent Reserves

This reserve is used to record the contingent consideration that relates to the issue of a further 4,500,000 shares in Corazon on the completion of acquisition of the title to the Lynn Lake Project in accordance with the terms of the Lynn Lake option agreement.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 18: CAPITAL COMMITMENTS

Capital Expenditure Commitments

In order to maintain current rights of tenure to exploration tenements the Consolidated Entity is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various Governments. These obligations can be reduced by selective relinquishment of exploration tenure or renegotiation.

On 13 July 2010, the Consolidated Entity acquired a subsidiary entity Manitoba Nickel Pty Ltd which holds an option to acquire a 100% interest in the Lynn Lake project for approximately CAD$3 million in expenditure over 3 years, followed by a CAD$2 million vendor payment.

On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire 100% equity in project. The option to acquire the project has been extended from 20 October 2012 to 20 October 2015. The Consolidated Entity has to make a payment of CAD$100,000 per annum for each annual extension. The cash consideration has been reduced from CAD$2 million to CAD$1 million, plus CAD$750,000 deferred consideration to be paid on the earliest of either:

Defining a JORC compliant resource greater than 30,000 tonnes of nickel metal;
Completion of a positive feasibility study; or
The commencement of commercial mining.

As at 30 June 2012, the Consolidated Entity has spent approximately $5.9 million on exploration and evaluation at the Lynn Lake Project. The renegotiated option agreement acknowledges that the existing earn in obligation has been satisfied. The Company has the discretion to exercise the option to acquire Lynn Lake project on or before 21 October 2015.

iscretion to exercise the option to acquire Lynn Lake project on or before 21 October 2015.
Payable: – Not longer than one year – Longer than one year and not longer than 5 year	2012 $	2011 $
	100,000	700,000
	1,950,000	2,000,000

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 19: OPERATING SEGMENTS

Identification of reportable segments

The Consolidated Entity has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.

Operating segments are identified by Management based on the mineral resource and exploration activities in Australia and Canada. Discrete financial information about each project is reported to the chief operating decision maker on a regular basis.

The reportable segments are based on aggregated operating segments determined by the similarity of the economic characteristics, the nature of the activities and the regulatory environment in which those segments operate.

The Consolidated Entity has two reportable segments based on the geographical areas of the mineral resource and exploration activities in Australia and Canada. Unallocated results, assets and liabilities represent corporate amounts that are not core to the reportable segments.

Canada $	Australia $	Unallocated $	Total $
-	820,680	112,154	932,834
-	820,680	112,154	932,834
(5,038,748)	(314,719)	(381,446)	(5,734,913)
- 4,613 26,142	- - -	82,154 7,614 1,677,885	82,154 12,227 1,704,027
48,669	-	101,794	150,463

Canada $	Australia $	Unallocated $	Total $
59,419	-	240,650	300,069
59,419	-	240,650	300,069
(2,329,989)	(7,658)	(972,844)	(3,310,491)
- 5,427 1,378,953	- - 308,164	43,180 10,633 1,761,096	43,180 16,060 3,448,213
16,633	-	191,919	208,552

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 20: SHARE BASED PAYMENTS

Options are issued to key management personnel as part of their compensation under the Company’s Employee Share Option Plan. The options issued may be subject to performance criteria and are issued to key management personnel of Corazon Mining Limited to increase goal congruence between key management personnel and shareholders.

Number and weighted average exercise prices of share options

The following table illustrates the number and weighted average exercise prices (WAEP) of and movements in share options issued under Share Based Payment Scheme during the year:

2012	2012	2011	2011
Number of Options	Weighted Average Exercise Price $	Number of Options	Weighted Average Exercise Price $
10,500,000 - - -	0.14 - - -	- 10,500,000 - -	- 0.14 - -
10,500,000	0.14	10,500,000	0.14
10,500,000	0.14	10,500,000	0.14
7,970,000 - - -	0.15 - - -	- 8,000,000 (30,000) -	- 0.15 0.07 -
7,970,000	0.15	7,970,000	0.15
7,970,000	0.15	7,970,000	0.15
- 5,000,000 - -	- 0.20 - -	- - - -	- - - -
5,000,000	0.20	-	-
5,000,000	0.20	-	-

No compensation options were exercised or forfeited during the year ended 30 June 2012.

Included under employee benefits expense in the statement of comprehensive income is $Nil (2011: $624,650), and relates, in full, to equity-settled share-based payment transactions.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 20: SHARE BASED PAYMENTS (continued)

The following share-based payment arrangements were in existence during the current and prior reporting periods:

Options series	Number	Grant date	Expiry date	Exercise Price $	Fair value at grant date $
(i) Acquisition of Manitoba 2,970,000 07/07/2010 13/07/2013 0.07 0.042 (ii) Acquisition of Manitoba 5,000,000 07/07/2010 13/07/2013 0.20 0.020 (iii) Key management personnel 2,000,000 16/12/2010 30/11/2013 0.12 0.079 (iv) Key management personnel 8,500,000 04/03/2011 25/02/2014 0.15 0.055 (v) Consultant 5,000,000 15/12/2011 01/12/2014 0.20 0.030
Inputs into the model	Series (i)	Series (ii)	Series (iii)	Series (iv)	Series (v)
Grant date share price $0.065 $0.065 $ 0.12 $ 0.115 $ 0.10 Exercise price $0.07 $0.20 $ 0.12 $ 0.145 $ 0.20 Expected volatility 105% 105% 105% 100% 100% Option life 3 years 3 years 3 years 3 years 3 years Risk-free interest rate 4.45% 4.42% 5.27% 5.16% 3.13%

The options outstanding at 30 June 2012 had a weighted average exercise price of $0.16 and a weighted average remaining contractual life of 1.52 years.

The options were valued using a Black and Scholes option pricing model.

NOTE 21: CASH FLOW INFORMATION Reconciliation of Cash Flow from Operations with Net Loss Loss after income tax Non-cash fows in proft Depreciation Proft on sale of tenements Impairment of available-for-sale fnancial assets Equity compensation payment Proft on disposal of investment Impairment of exploration expenditure Impairment of intangible asset Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries (Increase)/decrease in receivables and prepayments (Increase)/decrease in exploration and evaluation expenditure Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Cashfow from operations	2012 $	2011 $
	(5,734,913) 12,227 (720,680) 263,191 - - 314,719 1,445,190 (140,473) (6,554) (62,049) 6,299	(3,310,491) 16,060 - - 624,650 (186,735) - - (61,215) (8,164) 48,273 5,040
	(4,623,043)	(2,872,582)

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 22: KEY MANAGEMENT PERSONNEL COMPENSATION

The names of Directors and officers in office at any time during or since the end of the year are:

Clive Jones Non Executive Chairman Brett Smith Executive Managing Director Adrian Byass Non Executive Director Jonathan Downes Non Executive Director Robert Orr Company Secretary

Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report.

a. Option holdings of key management personnel

2012	Balance 1.7.2011	Granted as Compensation	Options Exercised	Net Change Other	Balance 30.06.2012	Total Vested and Exercisable
Clive Jones Brett Smith Adrian Byass Jonathan Downes Robert Orr	3,151,985 2,000,000 3,398,849 2,245,771 500,000	- - - - -	- - - - -	- - - - -	3,151,985 2,000,000 3,398,849 2,245,771 500,000	3,151,985 2,000,000 3,398,849 2,245,771 500,000
	11,296,605	-	-	-	11,296,605	11,296,605

2011	Balance 1.7.2010	Granted as Compensation	Options Exercised	Net Change Other	Balance 30.06.2011	Total Vested and Exercisable
Clive Jones Brett Smith Adrian Byass Jonathan Downes Robert Orr	1,151,985 - 1,398,849 245,771 -	- - - - -	- - - - -	2,000,000 2,000,000 2,000,000 2,000,000 500,000	3,151,985 2,000,000 3,398,849 2,245,771 500,000	3,151,985 2,000,000 3,398,849 2,245,771 500,000
	2,796,605	-	-	8,500,000	11,296,605	11,296,605

b. Shareholdings of key management personnel

2012	Balance 1.7.2011	Received as Compensation	Options Exercised	Net Change Other*	Balance on Resignation / Appointment	Balance 30.6.2011
Clive Jones Brett Smith Adrian Byass Jonathan Downes	2,453,969 - - - - 2,453,969 - - - 125,000 - 125,000 3,022,696 - - 325,000 - 3,347,696 925,930 - - 400,000 - 1,325,930
	6,402,595 - - 850,000 - 7,252,595

Net Change Other refers to shares purchased or sold during the financial year.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 22: KEY MANAGEMENT PERSONNEL COMPENSATION (continued)

b. Shareholdings of Key Management Personnel (continued)

2011	Balance 1.7.2010	Received as Compensation	Options Exercised	Net Change Other*	Balance on Resignation / Appointment	Balance 30.6.2011
Clive Jones Brett Smith Adrian Byass Jonathan Downes	2,303,969 - - 150,000 - 2,453,969 - - - - - - 2,767,696 - - 255,000 - 3,022,696 575,930 - - 350,000 - 925,930
	5,647,595 - - 755,000 - 6,402,595

Net Change Other refers to shares purchased or sold during the financial year.

c. Key management personnel compensation

The key management personnel compensation comprised: Short term employment benefts Post-employment benefts Share based payments	2012 $	2011 $
	337,941 285,643 3,600 3,153 - 487,400
	341,541 776,196

d. Individual directors’ and executives’ compensation disclosure

Information regarding individual directors’ and executives’ compensation and some equity instruments disclosures as required by Corporation Regulation 2M.3.03 is provided in the remuneration report section of the Directors’ Report.

Apart from the details disclosed in this note, no director has entered into a material contract with the Group since the end of the previous financial year and there were no material contracts involving Directors’ interest existing at the year end.

e. Wholly-owned group transactions

Loans to key management personnel

There were no loans to key management personnel at the end of the year.

f. Other

Transactions between other related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. These transactions include payments for rent and shared occupancy and staff costs. At 30 June 2012, the Company owed $13,408 to Ironbark Zinc Ltd for rent and shared occupancy costs.

NOTE 23: AUDITORS’ REMUNERATION During the fnancial year the following fees were paid or payable for services provided by PKF Mack & Co, the auditor of the Group: Audit or review of fnancial statements Preparation of tax return Total remuneration for audit services	2012 $	2011 $
	61,000 63,000 4,150 3,850
	65,150 66,850

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 24: FINANCIAL RISK MANAGEMENT

Financial Risk Management Policies

The Consolidated Entity’s financial instruments consist mainly of deposits with banks, local money market instruments, equity investments, accounts receivable and payable.

i. Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Consolidated Entity defines as net operating income divided by total shareholders’ equity.

ii. Treasury Risk Management

The Board of Directors meet on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

The Board’s overall risk management strategy seeks to assist the Consolidated Group in meeting its financial targets, whilst minimising potential adverse effects on financial performance.

Risk management policies are approved and reviewed by the Board on a regular basis. These include the use of credit risk policies and future cash flow requirements.

iii. Financial Risk Exposures and Management

The main risks the Consolidated Entity is exposed to through its financial instruments are liquidity risk, market risk, credit risk and price risk.

(a) Liquidity risk

Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The Consolidated Entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Consolidated Entity’s reputation.

The Consolidated Entity currently does not have major funding in place. However, the Consolidated Entity continuously monitors forecasts and actual cash flows and the maturity profiles of financial assets and liabilities to manage its liquidity risk. Surplus funds are generally only invested in short term bank deposits.

Typically the Consolidated Entity ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 90 days; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Directors are confident that the Company will raise capital through the issue of additional shares when and as required.

The decision on how the Consolidated Entity will raise future capital will depend on market conditions existing at that time.

(b) Market Risk

Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Consolidated Entity’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 24: FINANCIAL RISK MANAGEMENT (continued)

iii. Financial Risk Exposures and Management (continued)

(c) Credit risk

Credit risk arises from the financial assets of the Consolidated Entity, which comprise cash and cash equivalents, other receivables and available-for-sale financial assets. Receivable balances are monitored on an ongoing basis with the result that the Consolidated Entity’s exposure to bad debts is not significant. The Consolidated Entity has adopted the policy of only dealing with credit worthy counterparties.

The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.

The Consolidated Entity does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Consolidated Entity.

(d) Equity Price risk

The Group is exposed to equity securities price risk from investments held that are classified on the statement of financial position as available for sale. Material investments are managed on an individual basis and all buy and sell decisions are approved by the Board.

The Consolidated Entity holds the following financial instruments:

Financial Assets: Cash and cash equivalents Receivables Other assets Investments Total Financial Assets Financial Liabilities: Trade and sundry payables Total Financial Liabilities Trade and sundry payables are expected to be paid as followed: Less than 1 month Greater than 1 year	2012 $	2011 $
	810,876 280,721 35,000 534,490	1,478,449 140,247 35,000 84,800
	1,661,087	1,738,496
	135,074	197,122
	135,074	197,122
	135,074 -	197,122 -
	135,074	197,122

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 24: FINANCIAL RISK MANAGEMENT (continued)

iv. Fair value of financial instruments

The following tables details the Group’s fair values of financial instruments categorized by the following level:

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

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

Level 3: Inputs for asset or liability that are not based on observable market data (Unobservable inputs)

Assets	Level 1 $	Level 2 $	Level 3 $	Total $
Ordinary shares Total assets	534,490 - - 534,490
	534,490 - - 534,490

There were no transfers between levels during the financial year.

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade receivables and trade payable are assumed to approximate their fair values due to their short-term nature.

v. Sensitivity Analysis

Interest Rate Risk and Price Risk

The Consolidated Entity has performed sensitivity analysis relating to its exposure to interest rate risk at reporting date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

(a) Interest Rate Sensitivity Analysis

At 30 June 2012, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

Change in proft (Post-tax) — Increase in interest rate by 1% — Decrease in interest rate by 1% Change in Equity (Post-tax) — Increase in interest rate by 1% — Decrease in interest rate by 1%	2012 $	2011 $
	5,921 10,594 (5,921) (10,594) 5,921 10,594 (5,921) (10,594)

(b) Price Risk Sensitivity Analysis

The majority of the Consolidated Entity’s equity investments are publicly traded and are included in the ASX. The table below summarises the impact of increases/decreases of this index on the Consolidated Entity’s post tax profit for the year and on equity. The analysis is based on the assumption that equity indexes had increased/decreased by 10% (2011: 10%) with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation with the index.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 23: FINANCIAL RISK MANAGEMENT (continued)

v. Sensitivity Analysis (continued)
(b) Price Risk Sensitivity Analysis

rice Risk Sensitivity Analysis
Change in proft (Post-tax) — Increase in ASX All Ordinaries Index by 10% — Decrease in ASX All Ordinaries Index by 10% Change in equity (Post-tax) — Increase in ASX All Ordinaries Index by 10% — Decrease in ASX All Ordinaries Index by 10%	2012 $	2011 $
	37,414 - (37,414) - 37,414 5,936 (37,414) (5,936)

The above interest rate and price risk sensitivity analysis has been performed on the assumption that all other variables remain unchanged.

NOTE 25: CONTINGENT ASSETS AND LIABILITIES

The Consolidated Entity is unaware of any contingent assets or liabilities that that may have a material impact on the company’s financial position.

NOTE 26: EVENTS AFTER THE REPORTING DATE

(i) On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire 100% equity in the Lynn Lake project. The option to acquire the project has been extended from 20 October 2012 to 20 October 2015. The Consolidated Entity has to make a payment of CAD$100,000 per annum for each annual extension. The cash consideration has been reduced from CAD$2 million to CAD$1 million, plus CAD$750,000 deferred consideration to be paid on the earliest of either:
Defining a JORC compliant resource greater than 30,000 tonnes of nickel metal
Completion of a positive feasibility study, or
The commencement of commercial mining

(ii) On 4 September 2012, the Consolidated Entity secured an option over Beaucage Lake Gold project near its Lynn Lake nickel-copper project in Canada. The Company has negotiated terms which minimise the up-front cash impact of the acquisition. The Company has the right to acquire 100% equity in the Beaucage Lake Gold Project by:
Payment of C$300,000 to the vendor in staged payments, including C$25,000 payable at the commencement of year 2, C$75,000 to be paid in year 3, C$100,000 to be paid in year 4 with an additional C$100,000 payable before the completion date at the end of year 4
Issuing 250,000 new CZN shares to the vendor, and
paying a sum of C$40,243 in-lieu of exploration on the mineral claims

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity in future financial years.

Corazon Mining Limited Annual Report 2012

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2012

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NOTE 27: DIVIDENDS

There were no dividends paid or declared during the financial year.

NOTE 28: PARENT ENTITY DISCLOSURES Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Option reserves Contingent reserves Investment reserves Accumulated losses Total equity Financial performance Proft/(loss) for the year Other comprehensive income/(loss) Total comprehensive income/(loss) NOTE 29: COMPANY DETAILS The registered offce of the Company is: Suite 5, Level 1 350 Hay Street SUBIACO WA 6008 The principal place of business is: Suite 5, Level 1 350 Hay Street SUBIACO WA 6008	2012 $	2011 $
	864,609 612,433	1,532,979 1,829,521
	1,477,042	3,362,500
	150,463 -	206,213 2,340
	150,463	208,553
	1,326,579	3,153,947
	20,756,081 1,239,729 303,750 - (20,972,981)	16,851,807 1,089,729 303,750 5,459 (15,096,798)
	1,326,579	3,153,947
	(5,876,183) (5,459)	(3,396,205) (134,435)
	(5,881,642)	(3,530,640)

Corazon Mining Limited Annual Report 2012

DIRECTORS’ DEClARATION

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The Directors of the Company declare that:

The financial statements, notes and additional disclosures included in the Directors’ Report and designated as audited, are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001;
b. give a true and fair view of the financial position as at 30 June 2012 and of the performance for the year ended on that date of the Company and Consolidated Group; and
c. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
The Chief Executive Officer and Chief Finance Officer have each declared that:
a. the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001 ;
b. the financial statements and notes for the financial year comply with the Accounting Standards;
c. the financial statements and notes for the financial year give a true and fair view; and
d. any other matters that are prescribed by regulations for the purposes of Section 295A(2) in relation to the financial statements and notes for the financial year are satisfied.
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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Brett Smith Executive Managing Director

Dated this 21st day of September 2012

Corazon Mining Limited Annual Report 2012

hEADING

subheading

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CORAZON MINING LTD

Report on the Financial Report

We have audited the accompanying financial report of Corazon Mining Ltd, which comprises the statements of financial position as at 30 June 2012, the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of Corazon Mining Ltd (the company) and the consolidated entity. The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Corazon Mining Limited Annual Report 2012

hEADING

subheading

Opinion

In our opinion:

(a) the financial report of Corazon Mining Ltd is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial positions as at 30 June 2012 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Emphasis of Matters

Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicated that the consolidated entity incurred a net loss after tax of $5,734,912 during the year ended 30 June 2012. These conditions, along with other matters as set for in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the company and consolidated entity’s ability to continue as a going concern and therefore, the company and consolidated entity maybe unable to realise its assets and discharge its liabilities in the normal course of business.

The financial report of the consolidated entity does not include any adjustments in relation to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company and/or the consolidated entity not continue as going concerns.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 17 to 19 of the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Corazon Mining Ltd for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001.

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PKF MacK & co

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SiMon FerManiS Partner

21 SePteMber 2012 WeSt Perth, WeStern auStralia

Corazon Mining Limited Annual Report 2012

ADDITIONAl INFORmATION FOR lISTED COmPANIES

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The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public companies only.

Ordinary share capital

137,891,415 fully paid shares are held by 990 individual shareholders.

There were no shareholdings held in less than marketable parcels.

Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.

Options

48,067,710 quoted options are held by 207 individual option holders. 23,470,000 unquoted options are held by 23 individual option holders. Options do not carrying a right to vote.

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Distribution of holders of equity securities Number
Category (size of holding)
Fully paid ordinary shares Options
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Category (size of holding)	Fully paid ordinary shares Options
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over	76 11 120 26 95 19 441 74 258 77
	990 207

20 Largest Shareholders – Ordinary Shares

A record of the 20 largest shareholders as at 7 September 2012 is as follows:-

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----- Start of picture text -----

Ordinary shareholders Number of Ordinary % Held of Issued
Fully Paid Shares Ordinary Capital
Held
----- End of picture text -----

1. UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 2. MACQUARIE BANK LIMITED 3. KATRINA PETA DOWNES 4. MACQUARIE BANK LIMITED 5. VALIANT EQUITY MANAGEMENT PTY LTD 6. KESLI CHEMICALS PTY LTD 7. NATIONAL NOMINEES LIMITED 8. MR MERVYN IAN LEO BASSETT + MRS SHIRLEY ETHEL BASSETT 9. BULLSEYE GEOSERVICES PTY LTD 10. MR BRIAN JAMES HOWARD & MRS PENELOPE ANN HOOD 11. MRS DEBRA LEE MCMAHON 12. PYLARA PTY LTD 13. MR CLIVE BRUCE JONES 14. MR CHARLES ROBERT WALTON 15. MR RICHARD GRANT MANNERS HILL + MRS FLEUR LESLEY SCHELL 16. SKYMIST ENTERPRISES PTY LTD 17. COCOMOMO PTY LTD 18. MR MICHAEL CHARLES MANN & MRS NADA MANN 19. 522 INVESTMENTS PTY LTD 20. MARGARET ANNE MULLINS	4,554,072 3.30 3,575,359 2.59 3,401,637 2.47 2,969,179 2.15 2,468,076 1.79 2,250,000 1.63 1,900,000 1.38 1,800,000 1.31 1,800,000 1.31 1,640,000 1.19 1,611,308 1.17 1,550,000 1.12 1,507,802 1.09 1,500,000 1.09 1,400,000 1.02 1,333,334 0.97 1,250,000 0.91 1,200,000 0.87 1,200,000 0.87 1,159,706 0.82
	40,070,473 29.06

1.
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
2.
MACQUARIE BANK LIMITED
3.
KATRINA PETA DOWNES
4.
MACQUARIE BANK LIMITED
5.
VALIANT EQUITY MANAGEMENT PTY LTD
6.
KESLI CHEMICALS PTY LTD
7.
NATIONAL NOMINEES LIMITED
8.
MR MERVYN IAN LEO BASSETT + MRS SHIRLEY ETHEL BASSETT
9.
BULLSEYE GEOSERVICES PTY LTD
10.
MR BRIAN JAMES HOWARD & MRS PENELOPE ANN HOOD
11.
MRS DEBRA LEE MCMAHON
12.
PYLARA PTY LTD
13.
MR CLIVE BRUCE JONES
14.
MR CHARLES ROBERT WALTON
15.
MR RICHARD GRANT MANNERS HILL + MRS FLEUR LESLEY SCHELL
16.
SKYMIST ENTERPRISES PTY LTD
17.
COCOMOMO PTY LTD
18.
MR MICHAEL CHARLES MANN & MRS NADA MANN
19.
522 INVESTMENTS PTY LTD
20.
MARGARET ANNE MULLINS

4,554,072
3.30
3,575,359
2.59
3,401,637
2.47
2,969,179
2.15
2,468,076
1.79
2,250,000
1.63
1,900,000
1.38
1,800,000
1.31
1,800,000
1.31
1,640,000
1.19
1,611,308
1.17
1,550,000
1.12
1,507,802
1.09
1,500,000
1.09
1,400,000
1.02
1,333,334
0.97
1,250,000
0.91
1,200,000
0.87
1,200,000
0.87
1,159,706
0.82

40,070,473
29.06

Corazon Mining Limited Annual Report 2012

ADDITIONAl INFORmATION FOR lISTED PUBlIC COmPANIES

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20 Largest Options holders – Options

A record of the 20 largest option holders as at 7 September 2012 is as follows:-

Option holders	Number of Options Held	% Held of Issued Options
1. CANGU PTY LTD 2. JACOS CORPORATION PTY LTD 3. MR KEITH STUART LIDDELL + MRS SHELAGH JANE LIDDELL 4. KATRINA PETA DOWNES 5. MR PAUL ROBERT BASTER + MS CATHERINE BELLEMORE 6. VALIANT EQUITY MANAGEMENT PTY LTD 7. MRS AMANDA HARGREAVES 8. MR BRENDAN TIMOTHY EDE 9. MRS MARGARET ANNE DOWNES 10. ALASTAIR R BROWN PTY LTD 11. MR RICHARD GRANT MANNERS HILL + MRS FLEUR LESLEY SCHELL 12. ZIMBALI NOMINEES PTY LTD 13. MR FRANCIS HOWARD 14. MR PAUL ANTHONY GILLETT 15. MR TERRY JAMES GARDINER + MR TREVOR JAMES GARDINER 16. MR CLIVE BRUCE JONES 17. SMALL VIEW PTY LTD 18. MRS DEBRA LEE MCMAHON 19. BENBECCA PTY LTD 20. JETOSEA PTY LTD Unquoted equity security holdings greater than 20% Option exercised at $0.07, expiring at 07/07/2013 1. Bullseye Geoservices Pty Ltd Option exercised at $0.12, expiring at 30/11/2013 1. Brett Smith Option exercised at $0.15, expiring at 25/02/2014 1. Clive Jones 2. Jonathan Downes 3. Andy Thompson 4. Adrian Byass Option exercised at $0.20, expiring at 01/12/2014 1. Zenix Nominees Pty Ltd	4,430,280 3,678,000 3,000,000 1,700,819 1,500,000 1,384,039 1,325,750 1,167,000 1,104,853 1,000,000 1,000,000 1,000,000 900,000 800,000 800,000 753,901 750,000 730,654 715,744 640,000	9.22 7.65 6.24 3.54 3.12 2.88 2.76 2.43 2.30 2.08 2.08 2.08 1.87 1.66 1.66 1.57 1.56 1.52 1.49 1.33
	28,381,040	59.04

	Number of Options Held	% Held of Options in an unquoted class
	1,800,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 5,000,000	60% 100% 23.53% 23.53% 23.53% 23.53% 100%

Corazon Mining Limited Annual Report 2012

ADDITIONAl INFORmATION FOR lISTED PUBlIC COmPANIES

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Schedule of Interests in Mining Tenements

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Project Location of tenements % of interest
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1.	Lynn Lake	Canada	100%*
2.	Beaucage Lake	Canada	100%*
3.	Barrington Lake Copper	Canada	100%*
4.	Gulf Creek	Australia	100%

*Option to acquire 100% of Lynn Lake, Beaucage project and Barrington Lake project.

Company secretary

Mr Robert Orr

Principal registered office

Suite 5, Level 1 350 Hay Street SUBIACO WA 6008 Telephone +61 (0) 8 6142 6366 Facsimile +61 (0) 8 6210 1872

Share registry

Advanced Share Registry Services 2/150 Stirling Highway NEDLANDS WA 6009 Telephone +61 (0) 8 9389 8033

Corazon Mining Limited Annual Report 2012

CORPORATE GOVERNANCE

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Corazon Mining Limited and its controlled entities (“the Consolidated Entity”) are committed to high standards of corporate governance. Policies and procedures which follow the “Principles of Good Corporate Governance and Best Practice Recommendations” issued by the Australian Securities Exchange (“ASX”) Corporate Governance Council, to the extent they are applicable to the Consolidated Entity, have been adopted.

Principle 1 : Lay solid foundations for management and oversight

1.1 Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.

Comply

Yes

The role of the Board is formally set out in the Board Charter. This charter summarizes the role and responsibility of the Board of the Consolidated Entity. The disclosure of the role and responsibility of the Board is designed to assist those affected by corporate decisions to better understand the respective accountabilities and contributions of the Board and management of the Consolidated Entity.

The roles and responsibilities of the Board will evolve as the Consolidated Entity moves forward. As such, a regular review of the balance of responsibilities will ensure that the division of the functions remains appropriate to the needs of the Consolidated Entity.

The key responsibilities of the Board include:

Appointing, evaluating, rewarding and if necessary, the removal of the Managing Director and senior management;
Development of corporate objectives and strategy with management and approving plans, new investments, major capital and operating expenditures and major funding activities proposed by management;
Monitoring actual performance against defined performance expectations and reviewing operating information to understand at all times the state of the health of the Consolidated Entity;
Overseeing the management of business risks, safety and occupational health, environmental issues and community development;
Satisfying itself that the financial statements fairly and accurately set out the financial position and financial performance of the Consolidated Entity for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that proper operational, financial, compliance, risk management and internal control process are in place and functioning appropriately. Further, approving and monitoring financial and other reporting;
Assuring itself that appropriate audit arrangements are in place, when considered appropriate by the Board;
Ensuring that the Consolidated Entity acts legally and responsibly on all matters and assuring itself that the Company has adopted, and that it’s practice is consistent with, a number of guidelines, being:
- Directors and Executive Officers Code of Conduct;
- Dealings in Company Securities; and
- Reporting and Dealing with Unethical Practices
Reporting to and advising shareholders.
1.2 Companies should disclose the process for evaluating the performance of senior executives.

Yes

The process and outcomes of the evaluation is disclosed in the Remuneration Report contained in the Directors’ Report.

Corazon Mining Limited Annual Report 2012

CORPORATE GOVERNANCE

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Principle 2 : Structure the board to add value

2.1 A majority of the Board should be independent directors.

Comply

The Consolidated Entity has not complied with this recommendation. The following Directors are not considered to be independent:

Brett Smith – Executive Managing Director

The independent directors are:

Clive Jones
Jonathan Downes
Adrian Byass

The Board considers that the interests of the Group are best served by appointing directors with the relevant skills and expertise to enhance the Group’s performance. The Board believes each director bring an independent, objective judgment to the deliberations of the Board.

	The Board considers that the interests of the Group are best served by appointing directors with the relevant skills and expertise to enhance the Group’s performance. The Board believes each director bring an independent, objective judgment to the deliberations of the Board.
2.2	The Chair should be an independent director.	Yes
	The Consolidated Entity complies with this recommendation. Mr. Clive Jones, an independent director, is the Chair.
2.3	The roles of Chair and Chief Executive Offcer should not be exercised by the same individual.	Yes
	The Consolidated Entity complies with this recommendation. Mr. Brett Smith is the Chief Executive Offcer.
2.4	The Board should establish a nomination committee.	No
	The Consolidated Entity does not have a nomination committee. The Board believes that due to the Group’s relatively
	small size, a nomination committee is not necessary as the Board can undertaken all functions normally delegated
	to a nomination committee. The Corporate Governance Board Charter contains procedures for the appointment and
	resignation of Directors.
2.5	Companies should disclose the process for evaluating the performance of the Board, its committees and individual	Yes
	directors.

The Corporate Governance Board Charter contains the details of the procedures for the performance reviews and evaluation.

Principle 3 : Promote ethical and responsible decision-making

3.1	Companies should establish a code of conduct and disclose the code or a summary of the code.	Yes
	A formal Directors and Executive Offcers’ code of conduct forms part of the Corporate Governance Charter.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy.	No
	The Company does not have a formal policy concerning diversity. Given the small size of the Company workforce, the
	Board has determined that it is not currently practicable to implement a policy concerning diversity. The Board will
	further consider the establishment of a diversity policy as the Company grows.
3.3	Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the	N/A
	board in accordance with the diversity policy and progress towards achieving them.
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation,	Yes
	women in senior executive positions and women on the board.
	The Company has no employee. The Company currently has no female on the Board.
3.5	Companies should provide an explanation of any departures from Recommendations 3.1 to 3.5 in the corporate	Yes
	governance statement in the annual report.
	Refer comments on 3.2.

Corazon Mining Limited Annual Report 2012

CORPORATE GOVERNANCE

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Principle 4 : Safeguard integrity in financial reporting

4.1 The Board should establish an audit committee.

Comply

The Consolidated Entity does not have an audit committee. The Board believe that due to the modest size of the Group, an audit committee is not necessary as the Board can undertaken all functions normally delegated to an audit committee.

The full Board is responsible to review the financial report of the Group. The financial report is prepared on a sound system of risk management and internal compliance which implements the policies and procedures approved by the Board and that these systems work effectively and efficiently.

The external auditor is also invited to attend Board of meeting when the financial report are submitted for review and approval.

4.2 The audit committee should be structured so that it: N/A
Consists only of Non-Executive Directors
Consists of a majority of independent directors
Is chaired by an independent chair, who is not chair of the Board
Has at least three members
4.3 The audit committee should have a formal charter.

N/A

Principal 5 : Make timely and balanced disclosure

5.1 Companies should promote timely and balanced disclosure of all material matters concerning the Company. Yes

The Board has adopted a Disclosure Policy, which sets out the key obligation of the Managing Director and Company Secretary to ensure that the Consolidated Entity complies with its disclosure obligations under the ASX Listing Rules and The Corporations Act 2001 (Cth).

Principal 6 : Respect the rights of shareholders

6.1 Companies should design a communications policy for promoting effective communication with shareholders and Yes encouraging their participation at general meetings and disclose their policy or a summary of that policy.

The Board has adopted a Communication Strategy. The Directors of the Company recognise the importance of forthright communication. The Consolidated Entity posts all the report, ASX announcements, media release, business presentation and Group information on the Group’s website.

Corazon Mining Limited Annual Report 2012

CORPORATE GOVERNANCE

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Principal 7 : Recognise and manage risk

Comply

7.1 Companies should establish policies for the oversight and management of material business risks and disclose a Yes summary of those policies.

The Board has adopted a Risk Management and internal Control Policy. Procedures have been established at the Board and executive management levels which are designed to safeguard the assets and interests of the Consolidated Entity, and to ensure the integrity of reporting.

7.2 The Board should require management to design implement the risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.

Yes

The Board is responsible for identifying the risks facing the Company, assessing the risks and ensuring that there are controls for these risks, which are to be designed to ensure that any identified risk is reduced to an acceptable level. Management is required to report on material business risks at each Board of Director’s meeting.

7.3 The Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Yes

The Chief Executive Officer and Chief Financial Officer have provided the written statements required by 7.3.

Principal 8 : Remunerate fairly and responsibly

8.1 The Board should establish a remuneration committee.

The Consolidated Entity does not have a remuneration committee. The Board believe that due to the modest size of the Group, a remuneration committee is not necessary as the Board can undertaken all functions normally delegated to a remuneration committee. The full Board of the Group is responsible for determining and reviewing compensation arrangement for Managing Director, Executive Director and Non-executive Director.

8.2 The remuneration committee should be structured so that it: N/A

Consists of a majority of independent directors
Is chaired by an independent chair
Has at least three members
8.3 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive N/A directors and senior executives.

Corazon Mining Limited Annual Report 2012

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Level 1, 350 Hay Street Subiaco WA 6008

T: +61 8 6142 6366 F: +61 8 ~~6~~ 210 1872 W: www.corazon.com.au E: [email protected]

AI assistant

CORAZON MINING LIMITED — Annual Report 2012

64747_rns_2012-09-20_db1b2b29-37ee-41ad-98db-732930bc7dbc.pdf

Annual Report 2012

CONTENTS

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN

EXECUTIVE MANAGING DIRECTOR

NON-EXECUTIVE DIRECTORS

COMPANY SECRETARY

PRINCIPAL & REGISTERED OFFICE

AUDITORS

SHARE REGISTRAR

SECURITIES EXCHANGE LISTINGS

BANKERS

WEBSITE

ChAIRmAN’S lETTER

Dear Shareholder,

DIRECTOR’S REPORT

Directors

Company Secretary

Operating Results

Principal Activities and Significant Changes in Nature of Activities

Dividends Paid or Recommended

Review of Operations

DIRECTOR’S REPORT

Review of Operations (continued)

The Lynn Lake Project

DIRECTOR’S REPORT

Review of Operations (continued)

23.75m @ 3.34% Ni, 1.54% Cu & 0.079% Co from 731.25m

Including 13m @ 4.27% Ni & 0.89% Cu

44.8m @ 1.6%Ni, 0.7%Cu & 0.04%Co from 773.9m

3.9m @ 2.8%Ni, 0.2%Cu & 0.07%Co from 773.9m 11.0m @ 2.3%Ni, 1.0%Cu & 0.06%Co from 784.9m 11.5m @ 2.4%Ni, 0.8%Cu & 0.06%Co from 807.2m

51m @ 0.8%Ni, 0.5% Cu & 0.02% Co

DIRECTOR’S REPORT

Review of Operations (continued)

DIRECTOR’S REPORT

Review of Operations (continued)

DIRECTOR’S REPORT

Review of Operations (continued)

The EL Deposit Exploration Target

DIRECTOR’S REPORT

Review of Operations (continued)

EL Deposit - Resource Statement

This resource has not been upgraded following recent drilling by Corazon, which has indicated there is considerable scope for growth.

Table 2

DIRECTOR’S REPORT

Review of Operations (continued)

150 Nickel Sulphide Prospect

Lynn Lake VMS Deposits

DIRECTOR’S REPORT

Review of Operations (continued)

South Plug

Barrington Lake Copper Deposit

The Beaucage Lake Gold Project

DIRECTOR’S REPORT

Review of Operations (continued)

Review of Operations - Disclosure Statements, Important Information and Notes

(1) Competent Persons

(2) Nickel Equivalent

Financial Position

Significant Changes in State of Affairs

DIRECTOR’S REPORT

After Balance Date Events

Future Developments, Prospects and Business Strategies

Environmental Issues

DIRECTOR’S REPORT

Information on Directors

DIRECTOR’S REPORT

Information on Directors (continued)

DIRECTOR’S REPORT

Remuneration Report (audited)

Key Management Personnel

Position

Remuneration Policy (audited)

DIRECTOR’S REPORT

Remuneration Report (audited) (continued)

Performance-based remuneration

Company performance, shareholder wealth and director and executive remuneration

CORAZON MINING LIMITED Annual Report 2012