CORAZON MINING LIMITED — Annual Report 2013

Sep 23, 2013

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Annual Report 2013 Corazon Mining Limited (ABN: 87 112 898 825) and Controlled Entities

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CONTENTS

CORPORATE DIRECTORY	2
CHAIRMAN’S LETTER	3
DIRECTORS’ REPORT	4
AUDITOR’S INDEPENDENCE DECLARATION	21
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER 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	57
INDEPENDENT AUDITOR’S REPORT	58
ADDITIONAL INFORMATION FOR LISTED COMPANIES	60
CORPORATE GOVERNANCE	63

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CORPORATE DIRECTORY

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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) 9322 2798 Facsimile: (08) 9481 2019

SHARE REGISTER

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 Limited 50 St Georges Terrace PERTH WA 6000

WEBSITE

www.corazon.com.au

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Corazon Mining Limited Annual Report 2013 2

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 Company’s Annual Report for the financial year ending 30 June, 2013.

Corazon experienced a very active year, enjoying success in both project acquisition and in securing capital to fund its exploration activities. Despite challenging financial markets throughout the reporting period, Corazon was able to raise $3 million to fund its activities in Australia and Canada and secure the option over two large and potentially valuable exploration assets.

The Top Up Rise Project (TUR) is a “new frontier” style exploration-play on our doorstep in Western Australia. The TUR Project presents the Company with a unique opportunity to test and explore for a large, world-class style of deposit. Corazon executed a Binding Heads of Agreement under which the Company will earn up to 75% equity interest in Border Exploration Pty. Ltd (100% owner of the Top Up Rise Project) subject to a number of Conditions Precedent and via a three stage earn-in process.

What was originally a geophysical anomaly, under the sand cover on the edge of the Gibson Desert, has developed into a coincident geophysical and geochemical anomaly of significant size. Corazon is conducting the very first exploration of this ground and with each phase of exploration the Project has continued to improve in prospectivity. It’s with considerable excitement that we look forward to the future development of this potentially high impact project.

Further away from home, the Lynn Lake Nickel-Copper Sulphide Project in Canada continues to represent a significant development opportunity for Corazon. The renegotiated Option Agreement provides a three year extension to the acquisition date, a reduced consideration and addition mineral claims within the project area. The key target at Lynn Lake is the EL Deposit, historically the highestgrade deposit at Lynn Lake, which had its prospectivity confirmed by Corazon’s 2010 discovery of a high-grade sulphide breccia at depth below the EL Mine. Our current activities at Lynn Lake are focused on defining the EL Deposit’s benefits towards the recommencement of a mining operation in Lynn Lake.

In summary, I can confidently say on behalf of Corazon’s Board of Directors and Management team that we are proud of the Company’s achievements during this reporting period. We look forward to continuing our high levels of corporate and exploration activities, and our primary focus going forward will be on intersecting economic mineralisation at the Top Up Rise Project.

The Company was pleased to recently announce it had resolved to raise a further $3 million to primarily fund the next phase of exploration at TUR; the Placements were strongly overbid, which provides a very encouraging validation of the prospectivity of the TUR Project.

I thank all of Corazon’s supporters for their loyalty and patience to date and I hope you are each as excited as our team is by the Company’s prospects for success in the New Year.

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Sincerely,
Clive Jones
Chairman
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Corazon Mining Limited Annual Report 2013 3

DIRECTOR’S REPORT

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Your Directors present their report on Corazon Mining Limited (the Company or Corazon) and its controlled entities (together the “Consolidated Entity”) for the financial year ended 30 June 2013.

1. 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.

2. Company Secretary

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

3. Operating Results

The consolidated loss of the Consolidated Entity after providing for income tax and eliminating inter-company interests amounted to $3,515,908 (2012: $5,734,913)

4. 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, copper and gold and development of mining activities. There were no significant changes in the nature of the Consolidated Entity’s principal activities during the financial year.

5. 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.

6. Review of Operations

Corazon Mining Limited (ASX: CZN) is an Australian based company exploring its Top Up Rise Project, an exciting potential base and precious metal deposit in remote Western Australia, and developing its Lynn Lake Nickel-Copper Sulphide Project in Canada.

CORPORATE ACTIVITIES

Corazon experienced a successful year in both project acquisition and securing capital to fund its exploration activities. The highlight of the year was the Company’s acquisition and subsequent exploration of the Top Up Rise Project (TUR) in Western Australia, which presents a unique opportunity to test and explore for a large, world-class style of deposit.

Despite difficult financial markets throughout the reporting period, Corazon was able to raise $3 million to fund its exploration activities in Australia and Canada. Corazon was pleased to recently announce it had resolved to raise a further $3 million to primarily fund the next phase of exploration at the Top Up Rise Project. The Placements were strongly overbid, providing a very encouraging validation of the prospectivity of the TUR Project.

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Corazon Mining Limited Annual Report 2013 4

DIRECTOR’S REPORT

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6. Review of Operations (continued)

Corazon’s activities during the reporting period were not limited to its Australian project. The Company’s focus was also committed to executing its strategy for its projects in Canada, which is to consolidate and expand its land holding in the Lynn Lake district. In response to the financial markets and depressed nickel metal prices, Corazon successfully renegotiated the Earn-In and Option Agreements for its Lynn Lake Project, which provides a three year extension to the acquisition date and a reduced consideration. During the reporting period, the Company also made the strategic acquisition of the Beaucage Lake Gold Project.

Cash available to the Company at the end of the financial year ending 30 June 2013 was approximately $1,800,000.

Acquisition of Top Up Rise Project: Binding Heads of Agreement with Border Exploration

Corazon executed a Binding Heads of Agreement under which Corazon will earn up to 75% equity interest in Border Exploration Pty. Ltd (Border) (100% owner of Top Up Rise Project) via a three stage earn-in process.

Completion was subject to a number of Conditions Precedent, including the granting of a Ministerial Entry Permit, parties obtaining all necessary consents and approvals (including all necessary shareholder approvals) and Corazon completing due diligence to its satisfaction.

Stage 1 of the earn-in agreement permitted Corazon to earn 10% in Border via the issue of 15 million Corazon shares and 15 million Corazon options (3 year expiry date, at a price 134% of the 5 day VWAP at issue) and cash consideration to Border for costs (of up to $250,000).

Stages 2 and 3 of the earn-in agreement, respectively, allow Corazon to earn a further 41% (total 51%) in Border and a further 24% (total 75%) in Border. Both stages are subject to a number of conditions and the vendors of Border will be free carried until a decision to mine is made. Upon Corazon making a decision to mine the TUR Project, the vendors and Corazon will form a formal production joint venture. A pre-emptive right will exist between the parties to the joint venture

During the reporting period, all conditions precedent along with Stage 1 of the earn-in agreement were met by Corazon.

$3M Capital Raise

At the commencement of the March quarter, Corazon announced it had resolved to raise up to $3 million dollars to fund exploration expenditure and working capital, via a placement for $1.5 million dollars, and a Share Purchase Plan (SPP) for $600,000 and the placement of SPP shortfall for $900,000 (subject to shareholder approval).

The Company held a General Meeting of Shareholders on January 25th, 2013, to seek approval for the staged acquisition of up to 75% of Border, and the issue of securities to a related party and acquisition of a substantial asset of a related party. All resolutions put to the meeting were unanimously passed by a show of hands.

In accordance with the approval given by the Company’s Shareholders at the General Meeting, the Company issued 20,870,000 fully paid ordinary shares as a placement to fund exploration expenditure and working capital. The Company also issued to Border 15,000,000 fully paid ordinary shares and 15,000,000 options as acquisition consideration to acquire an interest in the Top Up Rise Project.

The Company held a second General Meeting of Shareholders on February 27th, 2013, to seek approval to issue the second tranche of the Placement and for the Board to place any shortfall in the SPP to sophisticated investors (Shortfall Placement). Again, all resolutions put to the meeting were unanimously passed by a show of hands.

Subsequent to this second meeting, the Company issued 47,330,000 fully paid ordinary shares in accordance with Shareholder Meeting approval and issued 27,272,698 fully paid ordinary shares in accordance with the Shareholder Purchase Plan.

A further 40,909,000 fully paid ordinary shares were issued by the Company in accordance with Shareholder Meeting approval obtained on 27 February, 2013, as a placement to fund exploration expenditure and working capital.

$3M Capital Raise (subsequent to reporting period)

Corazon recently announced it had resolved to raise up to $3 million dollars at 2.8 cents per share to primarily fund the next phase of exploration at its Top Up Rise Project in Western Australia.

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Corazon Mining Limited Annual Report 2013 5

DIRECTOR’S REPORT

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6. Review of Operations (continued)

The proceeds of the Placement will be primarily used for exploration and drilling activities at Corazon’s TUR Project, studies and exploration at its Canadian gold and nickel projects and for general working capital purposes.

The Placement will be completed in two tranches. Approximately 31.2 million shares will be issued in Tranche One, pursuant to the Company’s capacity under ASX Listing Rules 7.1 and 7.1A. The balance of up to approximately 45.9 million shares will be issued in Tranche Two, subject to shareholder approval at a General Meeting proposed to be held in mid-October 2013. A Notice of Meeting has been sent to all shareholders.

- Scrip Part Payment to Drilling Contractor

Subsequent to the close of the 2012/2013 financial year, the Company reached an agreement with Wallis Drilling Pty Ltd (Wallis) to issue shares in lieu of cash payment of approximately $160,000 for drilling costs from the first stage drilling programme. The Company recently issued 3,970,233 fully paid ordinary shares as a placement to offset against drilling expenditure completed by Wallis.

Issue of Shares in relation to the Lynn Lake Project, Canada

In October 2012, Corazon issued 1.25 million fully paid ordinary shares as consideration for the extension of the option to acquire the Lynn Lake Nickel-Sulphide Project in Canada and as consideration to acquire an option over the Beaucage Lake Gold Project in Canada.

Acquisition of the Beaucage Lake Gold Project, Canada

In the September quarter, the Company was pleased to announce it had secured an option to acquire the Beaucage Lake Gold Project (Beaucage )in Canada. The acquisition is in line with the Company’s strategy of expanding its strategic exploration ground holding in the Lynn Lake district, and Corazon believes the high tenor of gold mineralisation over a large area near Beaucage may be indicative of a large-scale mineralised system.

The Company negotiated terms which minimised the up-front cash impact of the acquisition. Corazon has the right to acquire 100% equity in Beaucage 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. Corazon is also required to issue 250,000 new Corazon shares to the vendor and pay a sum 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.

Expiry of Options

During the June quarter, the Company notified that 48,067,710 listed options (ASX:CZNO) with an exercise price of 20 cents per option expired on 30 April 2013.

Subsequent to the close of the 2012/2013 financial year, the Company advised that 2,970,000 options with an exercise price of 07 cents per option expired on 13 July 2013.

EXPLORATION ACTIVITIES

TOP UP RISE COPPER-GOLD PROJECT, AUSTRALIA

Corazon was pleased to announce it had secured the option to acquire up to 75% of the Top Up Rise Project (TUR), located in the Gibson Desert region of Western Australia. TUR presents a unique opportunity to test and explore for a large world-class style of deposit. Corazon achieved its targets of commencing work programmes at TUR early in 2013, and commenced the inaugural drilling programme in the second quarter of 2013.

Activities at TUR dominated the second half of the Company’s 2012/2013 year. Key achievements included the signing of a Land Access Agreement with the Traditional Owners, the completion of a highly successful ground gravity survey and the commencement of drilling activities which confirmed the TUR gravity feature as a significant geophysical anomaly with an associated geochemical base metal anomalism.

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Corazon Mining Limited Annual Report 2013 6

DIRECTOR’S REPORT

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6. Review of Operations (continued)

TUR Project Highlights (reporting period)

• Ground exploration commenced

• Gravity survey expanded the size and amplitude of TUR anomaly

• Multiple drill targets confirmed

• Gravity range variation of up to 18mGals

• Large peak residual gravity anomaly of 8mGals

• Target expanded to 10km x 6km in area (at +4mGals residual)

• Drilling intersected massive sulphides, including copper

• All core drill holes to date have intersected copper sulphides

• Assays returned to date identified a robust base metal signature (Cu-Pb-Zn-Cd-Ag)

TUR Project Highlights (subsequent to reporting period)

• Further base and precious metal mineralisation defined over a large area

• Visible copper, lead and zinc sulphides

• Associated gold and silver anomalism

• Nickel sulphide (pentlandite) identified in petrology of intrusive mafic units

• Geochemistry and rock petrology analysis underway to assist in target generation for ongoing exploration

• Assays pending from completed drilling programme; approvals process underway for additional drilling exploration

• Drill rig remaining on site for next phase of drilling, targeting gravity and structural features within the project area

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Drilling equipment arriving onsite at Top Up Rise

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Corazon Mining Limited Annual Report 2013 7

DIRECTOR’S REPORT

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6. Review of Operations (continued)

Gravity Survey Expands Size and Amplitude of the TUR Anomaly

Corazon successfully completed a high-resolution ground gravity survey over the TUR gravity anomaly which increased the size of the anomaly to 10km x 6km. The results of this work confirmed the TUR gravity feature as a significant geophysical anomaly, consisting of numerous sharply defined dense bodies on a regionally significant dense geophysical feature.

The overall TUR target has a background residual gravity value of approximately 4mGals, peaking in several locations at up to 8mGals. There are extreme variations in readings over small distances, with the overall range for all readings reaching 18mGals.

Interpretation of geophysical data suggests:

• The gravity anomaly appears fault bounded and structurally controlled.

• There is no correlation between gravity highs and magnetic trends; gravity highs may both conform to or cross-cut geological features interpreted from the magnetics.

• The gravity anomaly extends to the west and overlaps a major magnetic feature.

• The highest residual gravity anomalies are located in magnetic lows.

Successful Completion of Inaugural Drilling Programme

The Company recently completed its inaugural drilling programme at the TUR Project. A total of 2,475.5 metres of RC and diamond core drilling was completed (Table 1). All holes drilled to date intersected sulphide mineralisation including chalcopyrite (coppersulphide). The Company is extremely encouraged by these early results which have confirmed the TUR Project as a fertile environment for mineral deposits.

Exploration by Corazon at the TUR Project has identified a coincident geochemical anomaly associated with the geophysical anomaly. Importantly, there is a precious and base metal association between copper, lead, zinc, cadmium, silver and gold. The Company has completed drilling in four separate areas at TUR (Figure 1), which are up to several kilometres apart from each other by virtue of the significant size of the gravity anomaly.

At this stage, the source of the TUR gravity anomaly remains unexplained. Rocks of a density significant enough to generate the TUR gravity anomaly have not been intersected by the drilling completed to date. Although it is accepted that the density of these materials may be increased via significant and substantial alteration and/or mineralisation, the Company has yet to intersect such rock in a scale substantial enough to explain the anomaly.

Initial interrogation of assay results received to date has identified the possibility of both a mafic and granite (porphyry) source for the mineralising fluids.

Mafic host units intersected in the drilling have included amphibolite, gabbro and late dolerite hole. All are variably mineralised, altered and deformed. Preliminary petrology of one intrusive mafic lithology (gabbro) intersected in DD003 identified the lithology as a Troctolite. A Troctolite is a rare differentiated mafic/ultramafic rock which is considered an important host unit at the large Voisey’s Bay nickel deposit in Canada and is found in other large, layered mafic terrains such as the Bushveld Igneous Province in South Africa.

Petrological analysis of sulphides within the Troctolite at TUR identified chalcopyrite and lamellae of pentlandite (nickel sulphide) hosted within pyrrhotite. The identification of the Troctolite and pentlandite is significant in that it opens up the possibility of nickel-copper sulphide deposits within differentiated mafic rocks as a target deposit, as separate to the mineralisation observed to date.

The granitic rocks intersected to date are extremely altered and deformed and, as such, are difficult to identify. These units appear to host lesser quantities of sulphide mineralisation than the mafic amphibolites, however it is common for quartz veining (within or marginal to these units) to be mineralised.

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Corazon Mining Limited Annual Report 2013 8

DIRECTOR’S REPORT

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6. Review of Operations (continued)

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Figure 2: TUR Drill core showing chalcopyrite

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Figure 3: Drilling at TUR

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Figure 1: Residual Gravity Image (colour) over Digital Terrain Model (shadow) with interpreted faults and drill hole locations.

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Hole # Drill Method North (MGA52) East (MGA52) Av Dip Azimuth Total Depth
RC001 Aircore/RC 7,499,773 337,335 -90 090 196
DD001 RC/Core 7,499,769 337,513 -70 090 279.7
DD002 RC/Core 7,497,800 339,400 -60 090 328.4
DD003 RC/Core 7,497,798 339,159 -60 090 631.9
DD004 RC/Core 7,503,072 338,397 -90 000 669.8
DD005 RC/Core 7,499,179 340,064 -60 090 369.7
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Table 1: Top Up Rise - Drill Hole Collar Details (Hole Prefix = TUR13)

Ongoing Exploration

The first phase of drilling at Top Up Rise has been completed. The Company is now collating and reviewing all information gathered during this initial drilling programme and determining the best approach to continue exploration of the TUR anomaly. The Company will focus ongoing exploration on identifying the source of the widespread sulphide mineralisation consistently observed throughout the large project area. Based on results to date, more than one style of mineralisation is evident at TUR.

Recent reconnaissance geophysics has highlighted the effectiveness of electrical geophysical techniques in the TUR region and several methods are under consideration for future use. The next phase of drilling will target areas specifically for mineralisation; in addition to these target areas, hole DD004 may be extended as a further test of the gravity anomaly.

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Corazon Mining Limited Annual Report 2013 9

DIRECTOR’S REPORT

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6. Review of Operations (continued)

Strategies and Prospects for Future Financial Years

The Top Up Rise Project continues to offer significant potential and the Company’s focus will be continued drilling exploration to define the source of the TUR gravity anomaly and to intersect economic mineralisation within the TUR project area.

From a risk management perspective, volatility of financial markets and making an economic discovery pose the primary risks to the TUR Project. TUR is highly speculative with many unknowns including but not limited to the size and the nature of the geophysical target, depth of target and the potential for mineralisation. There is a considerable risk that no economic mineralisation will be intersected. Large targets such as TUR typically require significant exploration budgets to achieve discovery and the risk exists that Corazon will not be able to be able to adequately raise funds to further the drilling exploration of TUR.

LYNN LAKE NICKEL-SULPHIDE PROJECT, CANADA

The Lynn Lake Nickel-Sulphide Project (Lynn Lake) in the Manitoba region of Canada continues to represent a significant development opportunity for Corazon. The key target within the project area is the EL Deposit, which was historically the highest-grade deposit at Lynn Lake, producing 1.9Mt at 2.5% nickel and 1.15% copper. In 2010, Corazon discovered a high-grade sulphide breccia at depth below the EL Mine, a discovery which confirmed the prospectivity of the Lynn Lake Project area.

The EL Deposit has significant drill-defined mineralisation from surface surrounding the historical mine; Corazon’s activities at Lynn Lake throughout the 2012/2013 year were focused on defining the EL Deposit’s benefits towards the recommencement of a mining operation in Lynn Lake.

3 Year Extension of Terms to Acquire 100% of the Lynn Lake Project

The renegotiation of the Earn-In and Option Agreements were made in response to current financial markets and depressed nickel metal prices. The new agreements provide a three year extension to the acquisition date and a reduced consideration. The renegotiated agreements are consistent with Corazon’s strategy to consolidate and expand its land holding in the Lynn Lake district.

The original agreement provided Corazon with an option to acquire 100% ownership of the Lynn Lake Project by spending CAD$3 million on exploration and paying CAD$2 million in cash prior to the 20th October, 2012.

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

• 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

• The commencement of commercial mining

Payments to the owner for the extension of terms are CAD$3,000 in cash and one million Corazon shares. Under the renegotiated terms, the owner of the Lynn Lake Project also provided addition mineral claims to the project area to be acquired by Corazon, as outlined below.

Acquisition of Additional Exploration Ground

The below prospects were added to the Corazon’s Lynn Lake Project, providing incremental value to Lynn Lake’s exploration prospectivity.

The South Plug nickel-copper target: 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, but there is enough evidence to support the prospectivity of this area for such deposits.

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Corazon Mining Limited Annual Report 2013 10

DIRECTOR’S REPORT

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6. Review of Operations (continued)

The Barrington Lake copper deposit: 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.

BEAUCAGE LAKE GOLD PROJECT, CANADA

During the year, Corazon secured an option to acquire the Beaucage Lake Gold Project (Beaucage) in the Lynn Lake mining district of central Canada. Beaucage is located 45 kilometres south-east of Corazon’s core Canadian asset, the Lynn Lake Nickel-Copper Sulphide Project, and the acquisition further expanded Corazon’s strategic exploration ground holding in the Lynn Lake district.

Corazon’s activities to date at Beaucage have centred on the continued collation and interpretation of all existing exploration data to assist in target generation for future drilling. Information acquired to date indicates previous exploration has been focused on small areas of outcrop within the project area. Geophysics has been useful in identifying favourable trends and Corazon has identified numerous targets.

An annual Work Permit has been applied for and granted by the Manitoba conservation authorities; this will enable the Company to undertake a programme of field exploration activities to further consolidate data and define drill target locations

Corazon believes the high tenor of gold mineralisation over a large area near Beaucage Lake may be indicative of a large-scale mineralised system and the acquisition of Beaucage provides the Company with an additional exploration focus in the Lynn Lake mining district.

Strategies and Prospects for Future Financial Years

At the Lynn Lake Nickel-Copper-Sulphide Project, the Company will remain focused on continuing the definition of the EL Deposit’s benefits, with the view towards recommencing a mining operation in Lynn Lake. The EL Deposit has significant drill defined mineralisation from surface surrounding the historical mine. This mineralisation is not included in the current interim Inferred Resource, but is defined by the “Upper-Zone Exploration Target” and may be exploitable by open-pit mining methods.

The Company will also focus on defining the potential of the Beaucage Lake Gold Project. Corazon will aim to undertake a programme of field exploration activities to further consolidate data and define drill target locations.

From a risk management perspective, volatility of financial markets and making economic discoveries pose the primary risks to the continued development of the Company’s Canadian projects. With regards to the Lynn Lake Project, nickel price assumptions and the large amount of capital required to get into production pose the highest risks to the project’s future. At the Company’s other Canadian projects, there is a considerable risk that no economic mineralisation will be intersected.

Disclosure Statements and Important Information

Competent Persons Statement (Top Up Rise Project)

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.

Competent Person (Lynn Lake Project - Mineral Resources)

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Andrew John Thompson, B.Sc Hons (Geol), Member AusIMM an employee of 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.

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Corazon Mining Limited Annual Report 2013 11

DIRECTOR’S REPORT

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7. Discussion and Analysis of Operations and the Financial Position

The net assets of the Consolidated Entity decreased from $1,553,564 at 30 June 2012 to $1,420,513 at 30 June 2013.

As at 30 June 2013 the Consolidated Entity had $1,796,422 cash on hand. The Consolidated Entity will require further funding during the 2014 financial year in order to meet day to day obligations as they fall due and progress its exploration projects. 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.

The Consolidated Entity has three main exploration projects, these being: Lynn Lake Project, Beaucage Lake Project and the Top Up Rise Project. All three projects are presently staged options to acquire the respective project. Accordingly, in the consolidated financial statements, such transactions are accounted for as Intangible assets.

An intangible asset which is not ready for use is required to be tested for impairment annually. The Consolidated Entity has performed impairment testing and considered it is appropriate that the Lynn Lake Project, Beaucage Lake Project and Top Up Rise Project options be impaired as at 30 June 2013. Accordingly the Consolidated Entity has recorded impairment expense of $1,026,210.

Exploration and evaluation expenditure is capitalised as an exploration and evaluation asset 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 profit or loss and other comprehensive income. All three projects are presently staged options to acquire the respective project with no current full legal right to the project. Accordingly, the Consolidated Entity recorded exploration expense of $1,232,628 in the statement of profit or loss and other comprehensive income.

The Consolidated Entity continues to ensure that administration and overhead costs are kept to a minimum through a shared office, administration and accounting costs arrangement. The Consolidated Entity continually reviews the overhead associated with fees, consultants, corporate compliance and maintaining the listed entity and seeks to keep these costs to a minimum without compromising the entities commitment to appropriate corporate governance principles.

The Company holds several available for sale listed shares. It is the Company’s intention to realise the assets when liquidity in the shares allows. The impairment expenditure of $382,514 reflects the drop in value of the assets during the year.

8. Significant Changes in State of Affairs

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

• i) On 9 August 2012, the Company 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 Company 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

• The commencement of commercial mining

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

• ii) On 4 September 2012, the Company secured an option over Beaucage Lake Gold 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

• Paying a sum 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 completion of 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.

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Corazon Mining Limited Annual Report 2013 12

DIRECTOR’S REPORT

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8. Significant Changes in State of Affairs (continued)

• iii) On 17 October 2012 the Company issued 1.25 million fully paid ordinary shares as consideration for the extension of the option to acquire the Lynn Lake Nickel-Copper Sulphide Project in Canada, and as consideration to acquire an option over the Beaucage Lake Gold Project in Canada.

• iv) On 15 January 2013, in relation to the Border Exploration Pty Ltd (Border) acquisition the ASX granted the Company a waiver from ASX Listing Rule 10.13.3 to permit the issue to a related party of an entitlement to stage 1 consideration securities, stage 2 option shares, stage 2 consideration shares and stage 3 consideration shares (together the “Deferred Consideration Securities”) pursuant to the binding heads of agreement (HOA) between the Company and the shareholders of Border Exploration.

• v) On 25 January 2013, a General Meeting of Shareholders was held and obtained approval for the staged acquisition of up to 75% of Border, the 100% owners of the Top Up Rise Project.

The acquisition will progress in three stages with details of the earn-in agreement is as follows:

• Stage 1 – The Company to earn 10% in Border through the issue of 15 million shares and 15 million options (3 year expiry date, at a price 134% of the 5 day VWAP at issue) and cash consideration to Border for costs (of up to $250,000);

• Stage 2 – At its election, the Company will earn a further 41% (total of 51%) in Border by paying the vendors $200,000 in cash, and either defining a JORC compliant Mineral Resource and completing a Scoping Study on the Top Up Rise Project or spending a minimum of $4 million on exploration; and then subsequently issuing Border with 33,000,000 shares or cash and shares equal to the value of 33,000,000 shares.;

• Stage 3 – At its election, the Company will earn a further 24% (total of 75%) in Border by completing a definitive feasibility study on the Top Up Rise Project (if the vendors decide not to contribute towards development at this stage). Consideration for the Stage 3 interest will be calculated with reference to a sliding scale, based on the Company’s market capitalisation at the time. The maximum consideration payable will be $6 million (payable in either cash or shares or combination of both, at the election of the Company) should the Company’s market capitalisation be greater than $500 million;

• vi) On 26 January 2013, the Company issued the following securities to Border for the acquisition of the Top Up Rise Project:

• 15,000,000 shares at the issue price of $0.024 for a total consideration of $360,000

• 15,000,000 options at an exercise price of $0.03 expiring on 31 January 2016, with a valuation of 1.62576 cents each for a total consideration of $244,140

• vii) On the same date, the Company issued 20,870,000 shares at an issue price of $0.022 raising a total of $459,140 via a placement. The placement is for Tranche 1 (of 2) of a share placement to raise a total of $1,500,400.

viii) On 4 March 2013, the Company issued 47,330,000 shares at an issue price of $0.022 raising a total of $1,041,260 via a placement.

• ix) On the same date, the Company issued 27,272,698 shares at an issue price of $0.022 raising a total of $599,999 via a Shareholder Share Purchase Plan (SPP).

• x) On 8 March 2013, the Company issued 40,909,000 shares at an issue price of $0.022 raising a total of $899,998. These funds are attributable to the SPP Shortfall which was placed with broking firm Hartleys Limited. The proceeds of the Placement and SPP were used primarily for exploration and drilling activities at the Company’s Top Up Rise Project, studies and exploration on the Company’s Canadian projects and for general working capital purposes.

• xi) On 10 June 2013, the Company registered a new subsidiary Top Up Rise Pty Ltd. This entity will hold the investment in Border Exploration, and the option to acquire another 65% of Border Exploration.

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Corazon Mining Limited Annual Report 2013 13

DIRECTOR’S REPORT

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9. After Balance Date Events

On 13 July 2013 the Company advised that 2,970,000 options with an exercise price of 7 cents per option expired.

On 14 August 2013, Graynic Metals (Guatemala) Pty Ltd a subsidiary of the Company was deregistered.

On 10 September 2013, the Company resolved to raise approximately $3 million at 2.8 cents per share through a placement, which will fund the next phase of exploration at the Top Up Rise Project in Western Australia.

The placement will be completed in two tranches, with up to approximately 61.2 million shares issued in Tranche One, pursuant to the Company’s capacity under ASX Listing Rules 7.1 and 7.1A. The balance of up to approximately 45.9 million shares will be issued in Tranche Two, subject to shareholder approval at a General Meeting proposed to be held in mid-October 2013.

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.

10. 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.

11. 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.

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Corazon Mining Limited Annual Report 2013 14

DIRECTOR’S REPORT

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12. Information on Directors

Mr Clive Jones	Non-Executive Chairman
Qualifcations	B App Sc (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 and has 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 and a Director of Bannerman Resources Ltd. All of these companies are currently
	listed on the Australian Securities Exchange whilst Bannerman is also jointly listed on the Toronto and
	Namibian Stock Exchanges.
Interest in Shares and	2,453,969 fully paid ordinary shares and 2,000,000 options in Corazon Mining Ltd
Options
Directorships held in	Unity Mining Limited from 9 January 2013 to present
other listed entities in the last three years	Bannerman Resources Ltd from 12 January 2007 to present
	Cortona Resources Ltd from 17 March 2006 to 9 January 2013
	Cazaly Resources Ltd from 15 September 2003 to present
Mr Brett Smith	Executive Managing Director
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 and has acquired broad industry experience in
	exploration and development. Mr Smith is currently a director of the ASX companies Cauldron Energy
	Ltd, Jacka Resources Ltd and Metals of Africa Ltd.
Interest in Shares and	5,806,818 fully paid ordinary shares and 7,000,000 options in Corazon Mining Ltd
Options
Directorships held in	Cauldron Energy Ltd from June 2009 to present
other listed entities in the last three years	Jacka Resources Ltd from July 2009 to present
	Metals of Africa Ltd from 1 August 2012 to present
	Jackson Minerals Ltd from May 2006 to June 2009
	Blackham Resources Ltd from July 2007 to 7 June 2013
	Eclipse Uranium Ltd from March 2010 to 11 November 2011

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Corazon Mining Limited Annual Report 2013 15

DIRECTOR’S REPORT

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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 a
	Director of Sabre Resources Ltd and Waratah Resources Ltd and a Managing Director of Ironbark Zinc Ltd.
Interest in Shares and	1,653,202 fully paid ordinary shares and 2,000,000 options in Corazon Mining Ltd
Options
Directorships held in	Ironbark Zinc Ltd from 18 April 2006 to present
other listed entities in
the last three years	Sabre Resources Ltd from 14 December 2007 to present
	Waratah Resources Ltd from 17 July 2008 to present
	Wolf Minerals Ltd from 20 September 2006 to 11 June 2013

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 Executive Director of Ironbark Zinc Ltd Non-
	Executive Director of Fertoz Limited and Managing Director of Plymouth Minerals Limited.
Interest in Shares and	4,029,514 fully paid Ordinary Shares and 2,000,000 options in Corazon Mining Ltd.
Options
Directorships held in	Ironbark Zinc Ltd from 18 April 2006 to present
other listed entities in
the last three years	Plymouth Minerals Limited from 17 June 2010 to present
	Fertoz Limited from 4 September 2013 to present
	Wolf Minerals Ltd from 20 September 2006 to 27 June 2013

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Corazon Mining Limited Annual Report 2013 16

DIRECTOR’S REPORT

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13. Remuneration Report (audited)

This report details the nature and amount of remuneration for 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:

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
Robert Orr	Company Secretary

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 2013. 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 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.

The key management personnel receive a superannuation guarantee contribution required by the government, which is currently 9.25%, and do not receive any other retirement benefits.

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 non-executive 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’).

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.

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Corazon Mining Limited Annual Report 2013 17

DIRECTOR’S REPORT

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13. Remuneration Report (audited) (continued)

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 2013 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
			%	%	%	%	%
Clive 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
Robert Orr	CompanySecretary	No Fixed 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.

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Corazon Mining Limited Annual Report 2013 18

DIRECTOR’S REPORT

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13. 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 Options
Cash and Salary Superannuation
$ $ $ $
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2013 Clive Jones Adrian Byass Brett Smith Jonathan Downes 2012 Clive Jones Adrian Byass Brett Smith Jonathan Downes	50,007 - - 50,007 40,000 - - 40,000 207,100 - - 207,100 40,000 3,600 - 43,600
	337,107 3,600 - 340,707
	50,841 - - 50,841 40,000 - - 40,000 207,100 - - 207,100 40,000 3,600 - 43,600
	337,941 3,600 - 341,541

B. COMPENSATION OPTIONS GRANTED DURING THE YEAR

No options granted to directors or employees during the 2013 financial year.

C. SHARES ISSUED ON EXERCISE OF COMPENSATION OPTIONS

No shares were issued on exercise of compensation options during the financial year ended 30 June 2013.

14. Meetings of Directors

During the financial year, eight meetings of directors were held. Attendances by each director during the year were as follows:

	Directors’ Meetings	Directors’ Meetings
	Number eligible to attend	Number attended
Clive Jones	8	8
Brett Smith	7	7
Adrian Byass	8	8
Jonathan Downes	8	8

15. 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 $7,000 and extends to cover the following directors:-

• Clive Jones

• Brett Smith

• Jonathan Downes

• Adrian Byass

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Corazon Mining Limited Annual Report 2013 19

DIRECTOR’S REPORT

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16. Options

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

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

Grant Date Date of Expiry Exercise Price Number under Option
----- End of picture text -----

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 26/1/2013 31/1/2016 $0.03 23/04/2013 23/04/2016 $0.06	2,000,000 8,500,000 5,000,000 15,000,000 7,500,000
	38,000,000

17. 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.

18. 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 2013:

Taxation compliance service

$3,630

19. Auditor’s Independence Declaration

The lead auditor’s independence declaration for the year ended 30 June 2013 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 24th day of September 2013

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Corazon Mining Limited Annual Report 2013 20

HEADING

subheading

AUDITOR’S INDEPENDENCE DEClARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF CORAZON MINING LIMITED AND CONTROLLED ENTITIES

In relation to our audit of the financial report of Corazon Mining Limited for the year ended 30 June 2013, 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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Shane croSS Partner 24 SePteMber 2013 WeSt Perth, WeStern auStralia

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Corazon Mining Limited Annual Report 2013 21

CONSOlIDATED STATEmENT OF PROFIT OR lOSS AND OThER COmPREhENSIVE INCOmE FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

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

Note 2013 2012
$ $
----- End of picture text -----

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 Realised loss on sale of fnancial asset Fair value movements on available for sale fnancial assets 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/(loss), net of income tax Items that may be reclassifed subsequently to proft and loss 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	104,810 (168,551) 3,920 - (9,161) (261,419) (140,510) (117,836) (223,202) (25,664) (1,026,210) - (1,232,628) (36,943) (382,514) - (3,515,908) - (3,515,908) - (3,515,908) (3,515,908) 1.84 1.84	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)
		(5,734,913) -
		(5,734,913)
		(5,459)
		(5,459)
		(5,740,372)
		4.72 4.68

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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Corazon Mining Limited Annual Report 2013 22

CONSOlIDATED STATEmENT OF FINANCIAl POSITION

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AS AT 30 JUNE 2013

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

Note 2013 2012
$ $
----- End of picture text -----

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 assets 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 TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 16 Reserves 17 Accumulated losses TOTAL EQUITY	1,796,422 101,380 1,897,802 35,000 105,463 - 33,779 - 174,242 2,072,044 651,531 - 651,531 651,531 1,420,513 23,731,103 1,610,975 (23,921,565) 1,420,513	810,876 280,721
		1,091,597
		35,000 534,490 - 42,940 -
		612,430
		1,704,027
		135,074 15,389
		150,463
		150,463
		1,553,564
		20,756,081 1,543,479 (20,745,996)
		1,553,564

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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Corazon Mining Limited Annual Report 2013 23

CONSOlIDATED STATEmENT OF ChANGES IN EQUITY

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FOR YEAR ENDED 30 JUNE 2013

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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 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 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 Lapse of options on expiry Share based payment Balance at 30 June 2013	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
	- - - - - (3,515,908) (3,515,908) - - - - - - -
	- - - - - (3,515,908) (3,515,908) 3,386,897 - - - - - 3,386,897 (411,875) - - - - - (411,875) (240,339) (100,000) 340,339 - - - - 407,835 - - 407,835
	23,731,103 - - 1,307,225 303,750 (23,921,565) 1,420,513

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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Corazon Mining Limited Annual Report 2013 24

CONSOlIDATED STATEmENT OF CASh FlOWS

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FOR YEAR ENDED 30 JUNE 2013

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Note 2013 2012
$ $
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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 exploration prospects 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	(957,326) 72,851 202,953 38,095 (736,709) (1,380,136) 9,034 (395,570) - - (386,536) 3,000,397 (248,179) 2,752,218 985,546 810,876 1,796,422	(1,229,801) - 130,000 86,595 (3,609,837)
		(4,623,043)
		- - (1,811) (96,993)
		(98,804)
		4,320,000 (265,726)
		4,054,274
		(667,573) 1,478,449
		810,876

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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Corazon Mining Limited Annual Report 2013 25

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report of Corazon Mining Limited for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of directors on 24 September 2013.

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 complies 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 2013 the Consolidated Entity had net assets of $1,420,513 (2012: $1,553,564) and $1,796,422 (2012: $810,876) in cash and cash equivalents. The Group recorded a loss of $3,515,908 (2012: $5,734,913) and had a net working capital surplus of $1,246,271 (2012: $941,134).

The Consolidated Entity will require further funding during the 2014 financial year in order to meet day to day obligations as they fall due and progress its exploration projects.

In the event that the Consolidated Entity 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.

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Corazon Mining Limited Annual Report 2013 26

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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

As the ownership in the Lynn Lake, Beaucage Lake and Top Up Rise Projects are options to acquire and considered to be intangible assets, 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.

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Corazon Mining Limited Annual Report 2013 27

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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 profit or loss and other 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 profit and loss and other 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 Corazon’s 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 profit or loss and other 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

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Corazon Mining Limited Annual Report 2013 28

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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.

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Corazon Mining Limited Annual Report 2013 29

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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 profit or loss and other 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 profit or loss and other comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings

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Corazon Mining Limited Annual Report 2013 30

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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 profit or loss and other 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 profit or loss and other 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 profit or loss and other comprehensive income. Impairment losses recognised in the statement of profit or loss and other comprehensive income on equity instruments are not reversed through the statement of profit or loss and other comprehensive income.

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Corazon Mining Limited Annual Report 2013 31

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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 profit or loss and other 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.

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Corazon Mining Limited Annual Report 2013 32

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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 profit or loss and other 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 profit or loss and other 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 profit or loss and other 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 profit or loss and other comprehensive income in the period in which the operation is disposed.

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Corazon Mining Limited Annual Report 2013 33

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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.

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.

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.

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Corazon Mining Limited Annual Report 2013 34

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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. Comparative Figures

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

u. 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 entity 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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Corazon Mining Limited Annual Report 2013 35

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2013

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Application
Reference Title date of Issue Date
standard
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Reference	Title	Application date of standard*	Issue Date
AASB 9	Financial Instruments	1 January 2015	December 2010
AASB 10	Consolidated Financial Statements	1 January 2013	August 2011
AASB 11	Joint Arrangements	1 January 2013	August 2011
AASB 12	Disclosure of Interests in Other Entities	1 January 2013	August 2011
AASB 13	Fair Value Measurement	1 January 2013	September 2011
AASB 119	Employee Benefts	1 January 2013	September 2011
AASB 127	Separate Financial Statements (revised)	1 January 2013	August 2011
AASB 128	Investment in associates and joint venture (revised)	1 January 2013	August 2011
AASB 1053	Application of Tiers of Australian Accounting Standards	1 January 2013	June 2010
AASB 2011-4	Amendments to Australian Accounting Standards to Remove Individual KeyManagement Personnel Disclosure Requirements [AASB 124]	1 July 2013	July 2011
AASB 2012-2	Amendments to Australian Accounting Standards – disclosure offsetting fnancial assets and fnancial liabilities	1 January 2013	June 2012
AASB 2012-3	Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities	1 January 2014	June 2012
AASB 2012-5	Amendments to Australian Accounting Standards arising from annual improvements 2009-2011 cycle	1 January 2013	June 2012
AASB 2012-9	Amendment to AASB 1048 arising from the withdrawal of Australian Interpretation 1039	1 January 2013	December 2012
AASB 2013-3	Amendments to AASB 136 – Recoverable amount disclosures for non- fnancial assets	1 January 2014	June 2013
AASB 2013-4	Amendments to Australian Accounting Standards – notation of derivatives and continuation of hedge accounting	1 January 2014	July 2013
AASB 2013-5	Amendments to Australian Accounting Standards – Investment entities	1 January 2014	August 2013
Interpretation 20	Stripping Costs in the Production Phase of a Surface Mine	1 January 2013	November 2011
Interpretation 21	Levies	1 January 2014	May 2013

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Corazon Mining Limited Annual Report 2013 36

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2013

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2. OTHER REVENUE Operating activities: Proft on sale of exploration assets Interest received Grant Other Total Other Revenue 3. LOSS FOR THE YEAR Losses for the year are arrived at after charging the following: Impairment of intangible asset Impairment of capitalised exploration expenditure Exploration expenses Fair value movements on available-for-sale fnancial assets Superannuation expenses Signifcant Revenue and Expenses The following signifcant revenue and expense items are relevant in explaining the fnancial performance: Employee beneft expense 4. INCOME TAX EXPENSE 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% (2012: 30%)	2013 $	2012 $
	- 31,959 72,851 - 104,810 1,026,210 - 1,232,628 382,514 4,032 (3,920) - - - (1,054,772)	820,680 82,154 - 30,000
		932,834
		1,445,190 314,719 3,588,945 - 3,600 206,304 - -
		-
		(1,720,473)

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Corazon Mining Limited Annual Report 2013 37

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2013

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4. INCOME TAX EXPENSE (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 − Capital losses realised − Foreign tax losses not recognised − Property, plant and equipment − Revenue losses not recognised Less: Tax effect of: − 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 not been recognised: Deferred Tax Assets at 30% : Carry forward revenue losses Foreign tax losses Impairment of investments Capital raising costs Capital losses Provisions and accruals	2013 $	2012 $
	1,841 1,345 - - 422,617 159,004 11,083 73,397 2,174 402,520 1,073,981 15,403 3,806 19,209 - 0% 3,115,868 1,834,618 2,441,957 60,076 11,381 5,311 7,469,211	1,332 3,876 - 2,494 512,514 92,449 - 1,081,133 2,927 33,506
		1,730,231
		9,758 -
		9,758
		- 0% 2,713,779 1,761,222 1,859,857 1,025 - 9,117
		6,345,000

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

(c) No change in income tax legislation adversely affects the Company in utilising the benefits.

Deferred tax liabilities at 30% : Exploration and evaluation expenditure Property, plant and equipment Accrued income	- 8,652 1,506 10,158	- 10,827 3,347
		14,174

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.

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Corazon Mining Limited Annual Report 2013 38

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2013

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2013 $ 2012 $ 5. LOSS PER SHARE a. Loss used in the calculation of basic and diluted EPS (3,515,908) (5,734,913) b. Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 191,139,943 121,540,475 c. Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS 191,139,943 122,449,683 6. CASH AND CASH EQUIVALENTS Cash at bank and in hand 296,422 110,876 Short-term bank deposits 1,500,000 700,000 1,796,422 810,876 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 1,796,422 810,876 The effective interest rate on short-term deposits was 3.15% (2012: 5.8%); these deposit have an average maturity of 30 days. 7. TRADE AND OTHER RECEIVABLES CURRENT Other receivables 101,380 280,721 101,380 280,721 Refer to note 24 Financial Instruments for further details. 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. 9. FINANCIAL ASSETS NON-CURRENT Available-for-sale fnancial assets 105,463 534,490 105,463 534,490 Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous fnancial year are set out below: Opening fair value 534,490 84,800 Additions 3 720,680 Disposals (46,516) - Revaluation increments/(decrements) (382,514) (270,990) Closing fair value 105,463 534,490	2013 $	2012 $
		(5,734,913)
		121,540,475 122,449,683 110,876 700,000
		810,876
		810,876
		280,721
		35,000
		35,000
		534,490
		534,490
		84,800 720,680 - (270,990)
		534,490

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.

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Corazon Mining Limited Annual Report 2013 39

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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10. CONTROLLED ENTITIES

Subsidiaries of Corazon Mining Ltd: Graynic Metals (Guatemala) Pty Ltd (a) Resource Investment Group Pty Ltd Manitoba Nickel Pty Ltd Manitoba Nickel Inc Top Up Rise Pty Ltd (b)	Country of Incorporation	Percentage Owned(%)*	Percentage Owned(%)*
		2013	2012
	Australia Australia Australia Canada Australia	100 100 100 100 100 100 100 100 100 -

* Percentage of voting power is in proportion to ownership

• a) On 14 August 2013 Graynic Metals (Guatemala) Pty Ltd was de-registered.

• b) Top Up Rise Pty Ltd was registered on the 10th June 2013.

11. INTANGIBLE ASSET Balance at the beginning of the period Option payments Impairment of intangible asset Balance at the end of the period	2013 $	2012 $
	- 1,026,210 (1,026,210) -	1,348,197 96,993 (1,445,190)
		-

LYNN LAKE PROJECT

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 in Manitoba Canada, held by Manitoba Nickel Pty Ltd (Manitoba).

The only asset of the acquired subsidiary is an option to acquire an exploration tenement. 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.

The Consolidated Entity has spent approximately $6.2 million on exploration and evaluation at the Lynn Lake Project. On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire the project. The renegotiated option agreement extended the option period from 20 October 2012 to 20 October 2015 and acknowledges that the existing earn in obligation has been satisfied, refer note 18 for details.

BEAUCAGE LAKE GOLD PROJECT

In September 2012, the Consolidated Entity entered into an option agreement to acquire a 100% interest in the Beaucage Lake Gold Project in Manitoba, Canada, which will be held in the Consolidated Entity’s subsidiary Manitoba Nickel Pty Ltd (Manitoba) which also holds the Lynn Lake Project.

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.

Please refer to note 18 for details on the terms of this option agreement.

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Corazon Mining Limited Annual Report 2013 40

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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11. INTANGIBLE ASSET (continued)

BORDER EXPLORATION PTY LTD - TOP UP RISE PROJECT

In January 2013, a General Meeting of Shareholders approved a staged acquisition of up to 75% of Border Exploration Pty Ltd, the 100% owners of the Top Up Rise Project. Pursuant to stage one of the acquisition being 10% of Border Exploration Pty Ltd the Consolidated Entity formed a new subsidiary Top Up Rise Pty Ltd to hold this investment and the option to acquire the remaining 65% of Border Exploration Pty Ltd.

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.

Please refer to note 18 for details on the terms of this option agreement.

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 impairment testing and considered it is appropriate that the Lynn Lake Project, Beaucage Lake Project and Border Exploration Pty Ltd options be impaired as at 30 June 2013.

12. PLANT AND EQUIPMENT Plant and equipment: At cost Accumulated depreciation Offce furniture and equipment At cost Accumulated depreciation Total Plant and Equipment	2013 $	2012 $
	127,405 (94,345) 33,060 2,713 (1,994) 719 33,779	127,405 (85,341)
		42,064
		2,713 (1,837)
		876
		42,940

Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below:

Reconciliation Balance at 1 July 2011 Additions Depreciation expense Balance at 30 June 2012 Additions Depreciation expense Balance at 30 June 2013	Plant and Equipment	Offce Furniture and Equipment	Total
	$	$	$
	52,287 1,811 (12,034)	1,069 - (193)	53,356 1,811 (12,227)
	42,064	876	42,940
	- (9,004)	- (157)	- (9,161)
	33,060	719	33,779

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Corazon Mining Limited Annual Report 2013 41

NOTES TO ThE FINANCIAl STATEmENTS

FOR THE YEAR ENDED 30 JUNE 2013

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13. EXPLORATION AND EVALUATION EXPENDITURE NON-CURRENT Exploration expenditure capitalised − exploration and evaluation phases Accumulated impairment losses Total exploration expenditure Movement in carrying value: Brought forward Exploration expenditure capitalised during the year Impairment of exploration expenditure At reporting date	2013 $	2012 $
	- - - - 1,232,628 (1,232,628) -	- -
		-
		308,164 6,555 (314,719)
		-

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.

14. TRADE AND OTHER PAYABLES CURRENT Trade payables Sundry payables and accrued expenses	2013 $	2012 $
	133,331 518,200 651,531	115,654 19,420
		135,074

Refer to note 24 Financial Instruments for further details.

15. PROVISIONS Current Non-current 16. ISSUED CAPITAL 290,523,113 (2012: 137,891,415) fully paid ordinary shares Less: Capital raising costs	2013 $	2012 $
	- - -	15,389 -
		15,389
	2013 $	2012 $
	25,193,059 (1,461,956) 23,731,103	21,806,162 (1,050,081)
		20,756,081

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Corazon Mining Limited Annual Report 2013 42

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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16. ISSUED CAPITAL (continued) a. Ordinary shares At the beginning of reporting period Shares issued during the year − Placement − Consideration for acquisition At reporting date At the beginning of reporting period Shares issued during the year - Placement - Consideration for acquisition Less: capital raising costs At reporting date	2013 No.	2012 No.
	137,891,415 136,381,698 16,250,000 290,523,113	101,891,415 36,000,000 -
		137,891,415
	2013 $	2012 $
	20,756,081 3,000,397 386,500 (411,875) 23,731,103	16,851,806 4,320,000 - (415,725)
		20,756,081

a. Ordinary shares

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 shares 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.

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.

17. RESERVES

Balance 1 July Movement during the year Balance 30 June Balance 1 July Movement during the year Balance 30 June			2013	2013
	Option reserve		Fair value reserve	Contingent reserve	Total
	1,239,729 67,496		- - -	303,750 - 303,750	1,543,479 67,496
	1,307,225				1,610,975
			2012
	Option reserve		Fair value reserve	Contingent reserve	Total
	1,089,729 150,000		5,459 (5,459) -	303,750 - 303,750	1,398,938 144,541
	1,239,729				1,543,479

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Corazon Mining Limited Annual Report 2013 43

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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17. RESERVES (continued)

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.

18. CAPITAL COMMITMENTS

In order to maintain current rights of tenure to exploration tenements the Company 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.

LYNN LAKE NICKEL-COPPER SULPHIDE PROJECT

On 13 July 2010, the Company 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 Company 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 Company 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 was 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

As at 30 June 2013, the Company has spent approximately $6.2 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.

Payable: − Not longer than one year − Longer than one year and not longer than 5 year	2013 $	2012 $
	103,870 1,921,595	100,000
		1,950,000

Subject to Manitoba Co. subsequently completing the acquisition of title to the Lynn Lake Project in accordance with the terms of the Lynn Lake Project Option Agreement, the Company will allot and issue to the original shareholders of Manitoba Nickel a further 4,500,000 Shares.

BEAUCAGE LAKE GOLD PROJECT

In September 2012, the Company entered into an option agreement to acquire a 100% interest in the Beaucage Lake Gold Project in Manitoba, Canada, which will be held in the Company’s subsidiary Manitoba Nickel Pty Ltd (Manitoba) which also holds the Lynn Lake Project.

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Corazon Mining Limited Annual Report 2013 44

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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18. CAPITAL COMMITMENTS (continued)

The Company has the right to acquire 100% equity in the Beaucage Lake Gold Project by:

• Issuing 250,000 Corazon shares to vendor

• Paying a sum of CAD$40,243 in-lieu of exploration on the mineral claims.

• Cash consideration of CAD$300,000 to the vendor in staged payments including:

• CAD$25,000 payable commencement of year 2

• CAD$75,000 payable at commencement of year 3

• CAD$100,000 payable at commencement of year 4

• CAD$100,000 payable at completion date at the end of year 4

The owner will retain a royalty on the project of 2.5%, reducing to 1.5% following the payment of CAD$1,000,000.

	2013 $	2012 $
Exploration and evaluation expenditure payable in the event option to acquire
Beaucage Lake Gold is exercised
Not longer than 12 months	$25,968	-
Longer than one year but not longer than fve	$285,643	-

TOP UP RISE COPPER-GOLD PROJECT

On 25 January 2013, a General Meeting of Shareholders was held and approval was obtained for the staged acquisition of up to 75% of Border Exploration Pty Ltd (“Border Exploration” or “the vendors”), 100% owners of the Top Up Rise Project.

The acquisition will progress in three stages with details of the earn-in agreement being as follows:

• Stage 1 – The Company to earn 10% in Border Exploration through the issue of 15 million shares and 15 million options (3 year expiry date, at a price 134% of the 5 day VWAP at issue) and cash consideration to Border Exploration for costs (of up to $250,000);

• Stage 2 – At its election, the Company can earn a further 41% (total of 51%) in Border Exploration by paying the vendors $200,000 in cash, and either defining a JORC compliant Mineral Resource and completing a Scoping Study on the Top Up Rise Project or spending a minimum of $4 million on exploration; and then subsequently issuing Border Exploration with 33,000,000 shares or cash and shares equal to the value of 33,000,000 shares.;

• Stage 3 – At its election, the Company to earn a further 24% (total of 75%) in Border Exploration by completing a definitive feasibility study on the Top Up Rise Project (if the vendors decide not to contribute towards development at this stage). Consideration for the Stage 3 interest will be calculated with reference to a sliding scale, based on the Company’s market capitalisation at the time. The maximum consideration payable will be $6 million (payable in either cash or shares or combination of both, at the election of the Company) should the Company’s market capitalisation be greater than $500 million;

The Company issued the following securities to the vendors for the acquisition of the Top Up Rise Project:

• 15,000,000 shares at the issue price of $0.024 for a total consideration of $360,000 and;

• 15,000,000 options at an exercise price of $0.03 expiring on 31 January 2016, with a valuation of 1.62576cents each for a total consideration of $244,140.

On 10 June 2013, the Company registered a new subsidiary Top Up Rise Pty Ltd and completed Stage 1, acquiring 10% of Border Exploration Pty Ltd. This entity will hold the investment in Border Exploration, and the option to acquire the remaining 65% of Border Exploration on achieving the required earn in commitments.

	2013 $	2012 $
Exploration and evaluation expenditure payable in the event option to acquire
Top Up Rise is exercised
Not longer than 12 months	$1,125,000	-
Longer than one year but not longer than fve	$2,875,000	-

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Corazon Mining Limited Annual Report 2013 45

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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.

30 June 2013 Revenue Total segment revenue Segment net operating loss after tax Interest revenue Depreciation Segment assets Segment liabilities 30 June 2012 Revenue Total segment revenue Segment net operating loss after tax Interest revenue Depreciation Segment assets Segment liabilities	Canada $	Australia $	Unallocated $	Total $
	(72,851)	-	(31,959)	(104,810)
	(72,851)	-	(31,959)	(104,810)
	(386,530)	(1,803,368)	(1,326,010)	(3,515,908)
	- 3,911 10,829	- - -	(31,959) 5,250 2,061,215	(31,959) 9,161 2,072,044
	(2,228)	(569,727)	(79,576)	(651,531)
	-	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

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Corazon Mining Limited Annual Report 2013 46

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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:

Issue to Key Management Personnel Outstanding at the beginning of the year Granted Exercised Expired Outstanding at year-end Exercisable at year-end Issue to vendors Outstanding at the beginning of the year Granted Exercised Expired Outstanding at year-end Exercisable at year-end Issue to consultant Outstanding at the beginning of the year Granted Exercised Expired Outstanding at year-end Exercisable at year-end	2013	2013	2012	2012
	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 15,000,000 0.03 - - (5,000,000) 0.02		7,970,000 0.15 - - - - - -
	17,970,000 0.04		7,970,000 0.15
	17,970,000 0.04		7,970,000 0.15
	5,000,000 0.20 7,500,000 0.06 - - - -		- - 5,000,000 0.20 - - - -
	12,500,000 0.12		5,000,000 0.20
	12,500,000 0.12		5,000,000 0.20

No compensation options were exercised or forfeited during the year ended 30 June 2013.

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Corazon Mining Limited Annual Report 2013 47

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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20. SHARE BASED PAYMENTS (continued)

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

Options series	Number	Number	Grant date	Grant date	Expiry date	Expiry date	Exercise Price $	Exercise Price $	Fair value at grant date $	Fair value at grant date $
Acquisition of Manitoba 2,970,000 07/07/2010 13/07/2013 0.07 0.042 Key management personnel 2,000,000 16/12/2010 30/11/2013 0.12 0.079 Key management personnel 8,500,000 04/03/2011 25/02/2014 0.15 0.055 Consultant 5,000,000 15/12/2011 01/12/2014 0.20 0.030 Acquisition of Border Exp. 15,000,000 26/1/2013 31/1/2016 0.033 0.016 Consultants 7,500,000 23/4/2013 23/4/2016 0.06 0.022
Inputs into the model	Series (i)	Series (ii)		Series (iii)		Series (iv)		Series (v)		Series (vi)
Grant date share price $0.065 $ 0.12 $ 0.115 $ 0.10 $0.024 $0.031 Exercise price $0.07 $ 0.12 $ 0.145 $ 0.20 0.033 $0.06 Expected volatility 105% 105% 100% 100% 123% 140% Option life 3 years 3 years 3 years 3 years 3 years 3 years Risk-free interest rate 4.45% 5.27% 5.16% 3.13% 2.7% 2.66%

The options outstanding at 30 June 2013 had a weighted average exercise price of $0.09 and a weighted average remaining contractual life of 1.88 years. The options were valued using a Black and Scholes option pricing model.

2013 $ 21. CASH FLOW INFORMATION Reconciliation of Cash Flow from Operations with Net Loss Loss after income tax (3,515,908) Non-cash fows in proft Depreciation 9,161 Proft on sale of tenements - Impairment of available-for-sale fnancial assets 382,514 Equity compensation payment - Proft on disposal of investment 37,480 Impairment of exploration expenditure - Impairment of intangible asset 1,026,210 Write down of receivables 2,486 Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries (Increase)/decrease in receivables and prepayments 176,853 (Increase)/decrease in exploration and evaluation expenditure - Increase/(decrease) in trade and other payables 516,457 Increase/(decrease) in provisions (15,389) Cashfow from operations (1,380,136)	2012 $
	(5,734,913) 12,227 (720,680) 263,191 - - 314,719 1,445,190 - (140,473) (6,554) (62,049) 6,299
	(4,623,043)

Please refer to Note 18 for information relating to non-cash investing and finance activities.

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Corazon Mining Limited Annual Report 2013 48

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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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

2013	Balance 1.7.2012	Granted as Compensation	Options Exercised	Options Expired	Net Change Other	Balance 30.06.2013	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 -		- - - - -	(1,151,985) - (1,398,849) (245,771) -	- 2,000,000 5,000,000 7,000,000 - 2,000,000 - 2,000,000 - 500,000		2,000,000 7,000,000 2,000,000 2,000,000 500,000
	11,296,605 -		-	(2,796,605)	5,000,000 13,500,000		13,500,000

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

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Corazon Mining Limited Annual Report 2013 49

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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22. KEY MANAGEMENT PERSONNEL COMPENSATION (continued)

b. Shareholdings of key management personnel

2013	Balance 1.7.2012	Received as Compensation	Options Exercised	Net Change Other*	Balance on Resignation / Appointment	Balance 30.6.2013
Clive Jones Brett Smith Adrian Byass Jonathan Downes	2,453,969 - - - - 2,453,969 125,000 - - 5,681,818 - 5,806,818 3,347,696 - - 681,818 - 4,029,514 1,325,930 - - 327,272 - 1,653,202
	7,252,595 - - 6,690,908 - 13,943,503

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

2012	Balance 1.7.2011	Received as Compensation	Options Exercised	Net Change Other*	Balance on Resignation / Appointment	Balance 30.6.2012
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.

c. Key management personnel compensation

ey management personnel compensation
The key management personnel compensation comprised: Short term employment benefts Post-employment benefts Share based payments	2013 $	2012 $
	337,107 3,600 - 340,707	337,941 3,600 -
		341,541

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.

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Corazon Mining Limited Annual Report 2013 50

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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22. KEY MANAGEMENT PERSONNEL COMPENSATION (continued)

f. Other

Border Exploration Pty Ltd – Brett Smith

On 25 January 2013, a General Meeting of Shareholders approved the acquisition of 10% of Border Exploration Pty Ltd, a company with whom Brett Smith is a director. Border Exploration Pty Ltd is the 100% owner of the Top Up Rise Project. As per shareholder approval the Consolidated Entity issued the following securities to Border Exploration Pty Ltd:

• 15,000,000 shares at the issue price of $0.024 for a total consideration of $360,000 and;

• 15,000,000 options at an exercise price of $0.03 expiring on 31 January 2016, with a valuation of 1.62576 cents each for a total consideration of $244,140.

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.

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2013 2012
$ $
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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	54,300 3,630 57,930	61,000 4,150
		65,150

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 Entity 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.

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Corazon Mining Limited Annual Report 2013 51

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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24. FINANCIAL RISK MANAGEMENT (continued)

iii. Financial Risk Exposures and Management (continued)

(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 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.

(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.

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Corazon Mining Limited Annual Report 2013 52

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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24. FINANCIAL RISK MANAGEMENT (continued)

iii. Financial Risk Exposures and Management (continued)

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	2013 $	2012 $
	1,796,422 101,380 35,000 105,463 2,038,265 651,531 651,531 651,531 - 651,531	810,876 280,721 35,000 534,490
		1,661,087
		135,074
		135,074
		135,074 -
		135,074

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	105,463 - - 105,463
	105,463 - - 105,463

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.

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Corazon Mining Limited Annual Report 2013 53

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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24. FINANCIAL RISK MANAGEMENT (continued)

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 2013, 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:

		2013 $	2012 $
Change in proft (Post-tax)
—	Increase in interest rate by 1%	12,820	5,921
—	Decrease in interest rate by 1%	(12,820)	(5,921)
Change in Equity (Post-tax)
—	Increase in interest rate by 1%	12,820	5,921
—	Decrease in interest rate by 1%	(12,820)	(5,921)

(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% (2012: 10%) with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation with the index.

		2013 $	2012 $
Change in proft (Post-tax)
—	Increase in ASX All Ordinaries Index by 10%	7,382	37,414
—	Decrease in ASX All Ordinaries Index by 10%	(7,382)	(37,414)
Change in equity (Post-tax)
—	Increase in ASX All Ordinaries Index by 10%	7,382	37,414
—	Decrease in ASX All Ordinaries Index by 10%	(7,382)	(37,414)

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

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.

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Corazon Mining Limited Annual Report 2013 54

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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26. EVENTS AFTER THE REPORTING DATE

On 13 July 2013 the Company advised that 2,970,000 options with an exercise price of 07 cents per option expired.

On 14 August 2013 Graynic Metals (Guatemala) Pty Ltd a subsidiary of the Consolidated Entity was deregistered.

On 10 September 2013, the Company resolved to raise approximately $3 million at 2.8 cents per share through a placement, which will fund the next phase of exploration at its Top Up Rise Project in Western Australia.

The placement will be completed in two tranches, with up to approximately 61.2 million shares to be issued in Tranche One, pursuant to the Company’s capacity under ASX Listing Rules 7.1 and 7.1A. The balance of up to approximately 45.9 million shares will be issued in Tranche Two, subject to shareholder approval at a General Meeting proposed to be held in mid-October 2013.

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.

27. DIVIDENDS

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

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 Accumulated losses Total equity Financial performance Proft/(loss) for the year Other comprehensive income/(loss) Total comprehensive income/(loss)	2013 $	2012 $
	1,889,334 174,243 2,063,577 651,531 - 651,531 1,412,046 23,731,103 1,307,225 303,750 (23,930,032) 1,412,046 (3,297,390) - (3,297,390)	864,609 612,433
		1,477,042
		150,463 -
		150,463
		1,326,579
		20,756,081 1,239,729 303,750 (20,972,981)
		1,326,579
		(5,876,183) (5,459)
		(5,881,642)

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Corazon Mining Limited Annual Report 2013 55

NOTES TO ThE FINANCIAl STATEmENTS FOR THE YEAR ENDED 30 JUNE 2013

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29. COMPANY DETAILS

The registered office 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

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Corazon Mining Limited Annual Report 2013 56

DIRECTORS’ DEClARATION

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The Directors of the Company declare that:

1. 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:

2. a. comply with Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001;

3. b. give a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the Company and Consolidated Group; and

4. c. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

5. The Chief Executive Officer and Chief Finance Officer have each declared that:

6. 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;

7. b. the financial statements and notes for the financial year comply with the Accounting Standards;

8. c. the financial statements and notes for the financial year give a true and fair view; and

9. 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.

10. 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 24th day of September 2013

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Corazon Mining Limited Annual Report 2013 57

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 statement of financial position as at 30 June 2013, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement 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.

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58

Corazon Mining Limited Annual Report 2013

HEADING

subheading

Independence

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

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 consolidated entity’s financial position as at 30 June 2013 and of its 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.

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 2013. 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 2013, complies with section 300A of the Corporations Act 2001.

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PKF MacK & co

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Shane croSS Partner

24 SePteMber 2013 WeSt Perth, WeStern auStralia

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Corazon Mining Limited Annual Report 2013 59

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

294,493,336 fully paid shares are held by 1,789 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

38,000,000 unquoted options are held by 10 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
----- End of picture text -----

1 – 1,000	82	-
1,001 – 5,000	119	-
5,001 – 10,000	126	-
10,001 – 100,000	880	-
100,001 – and over	582	10
	1,789	10

20 Largest Shareholders — Ordinary Shares

A record of the 20 largest shareholders as at 6 September 2013 is as follows:

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

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

1 DAEM NOMINEES PTY LTD 2 UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 3 SPANGLED INVESTMENTS PTY LTD 4 SPANGLED INVESTMENTS PTY LTD 5 SPANGLED INVESTMENTS PTY LTD 6 BLACK PRINCE PTY LTD 7 ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD 8 MR BRIAN JAMES HOWARD + MRS PENELOPE ANN HOOD FUND A/C> 9 MR MERVYN IAN LEO BASSETT + MRS SHIRLEY ETHEL BASSETT 10 MR MATTHEW IAN SVENSSON 11 VALIANT EQUITY MANAGEMENT PTY LTD 12 MR ANTON TJANDRA 13 KIJENIA PTY LTD 14 COMSEC NOMINEES PTY LIMITED 15 MILESTONE NOMINEES PTY LTD 16 BT PORTFOLIO SERVICES LIMITED 17 MR TOBY CHANDLER 18 DR JOHN CLIFFORD PHILPOTT 19 MR KEITH STUART LIDDELL + MRS SHELAGH JANE LIDDELL 20 MR ADRIAN BYASS + MRS MEGAN RUTH BYASS

7,970,223 2.7 7,657,475 2.6 5,000,000 1.7 5,000,000 1.7 5,000,000 1.7 4,000,000 1.36 2,945,495 1 2,890,000 0.98 2,663,636 0.9 2,500,000 0.85 2,468,076 0.84 2,375,412 0.81 2,335,909 0.79 2,088,200 0.71 2,000,000 0.68 2,000,000 0.68 2,000,000 0.68 1,881,818 0.64 1,830,000 0.62 1,561,438 0.53

66,167,682 22.47

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Corazon Mining Limited Annual Report 2013 60

ADDITIONAl INFORmATION FOR lISTED PUBlIC COmPANIES

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20 Largest Options holders —

Unquoted equity security holdings greater than 20% as at 6 September 2013 is as follows:

Option exercised at $0.12, expiring at 30/11/2013 1. Brett Smith Option exercised at $0.145, 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 Option exercised at $0.33, expiring at 30/01/2016 1. SPANGLED INVESTMENTS PTY LTD 2. SPANGLED INVESTMENTS PTY LTD 3. SPANGLED INVESTMENTS PTY LTD Option exercised at $0.06, expiring at 23/04/2016 1. Zenix Nominees Pty Ltd	Number of Options Held	% Held of Options in an unquoted class
	2,000,000 100% 2,000,000 23.53% 2,000,000 23.53% 2,000,000 23.53% 2,000,000 23.53% 5,000,000 100% 5,000,000 33.33% 5,000,000 33.33% 5,000,000 33.33% 7,500,000 100%

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Corazon Mining Limited Annual Report 2013 61

ADDITIONAl INFORmATION FOR lISTED PUBlIC COmPANIES

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Schedule of Interests in Mining Tenements

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

Project Location of tenements % of interest
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1.	Lynn Lake	Canada	100%*
2.	Beaucage Lake	Canada	100%*
3.	Top Up Rise	Australia	75%*

*Option to acquire 100% of Lynn Lake, Beaucage Lake and 75% of the Top Up Rise projects.

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

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Corazon Mining Limited Annual Report 2013 62

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.

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Corazon Mining Limited Annual Report 2013 63

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

Comply

Yes

• 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.

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 directors.	Yes
	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 two employees. The Company currently has no female employees or females 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.

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Corazon Mining Limited Annual Report 2013 64

CORPORATE GOVERNANCE

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Principle 4 : Safeguard integrity in financial reporting

• 4.1 The Board should establish an audit committee.

Comply

No

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

Comply

• 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.

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CORPORATE GOVERNANCE

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Principal 7 : Recognise and manage risk

• 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 Yes 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.

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 Yes 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.

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. No

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.

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