CORAZON MINING LIMITED — Interim / Quarterly Report 2007

Oct 30, 2006

Level 2, 22 Oxford Close WEST LEEDERVILLE WA 6872 T: +61 8 9381 1436 F: +61 8 9381 1068 PO Box 1681 WEST PERTH WA 6872 www.graynicanetals.com.au

QUARTERLY REPORT FOR SEPTEMBER 2006

HIGHLIGHTS:

• 1. Quartz Circle Base Metal Project, Nullagine, WA
• High grade assay results from drilling at Igloo Copper Deposit, including:

5m @ 5.52% Cu, 9.03 g/t Au, and 244 g/t Ag 10m @ 8.5% Cu, 2.77 g/t Au, 140 g/t Ag 4m @ 7.18% Cu, 0.52 g/t Au, 40 g/t Ag 3m @ 13.66% Cu, 5.52 g/t Au, 146 g/t Ag 26m @ 2.4% Cu

Substantial intersections of zinc sulphide at Emperor Zinc-Lead Prospect: $\bullet$

44m @ 2.1% Zn, including 12m @ 3.7% Zn 4m @ 6.7% Zn and 39 g/t Ag

• VTEM survey of tenements completed $\bullet$
• Ground EM and downhole EM scheduled in two weeks at Igloo and Emperor
• 1. Wertago Base Metal Project, NSW
• o Final VTEM data now being processed
• 1. Yanco Glen Tungsten Project, NSW
• o Inferred resource estimate of 824,420t grading 0.172% W from first round of drilling
• 1. Placement completed in August, raising \$1.1 million

QUARTZ CIRCLE PROJECT, NULLAGINE, WA

Igloo Copper Prospect

1. Oxide resource

During the Quarter, assay results were received for 10 vertical diamond drill holes each drilled to about 51m depth in and around the Igloo copper oxide deposit at the Quartz Circle project near Nullagine. Six of the holes intersected the deposit as shown in the following table:

Hole ID	Depth	Interval	Cu %	Au g/t	Ag g/t
IG 3	28-30m	2m	1.34
	$31 - 32m$	1 m	1.55
IG 5	22-23m	1m	1.17	0.21	88
	42-47m	5m	5.52	9.03	244
IG 7	$21 - 22m$	1m	1.36		21
	$25 - 27m$	2m	3.96		62
	$30 - 44m$	14 m	$2.2\,$
IG 8	22-48m	26 m	2.40
IG 9	$25 - 31m$	6m	2.06
	$33 - 35m$	2m	2.44
	$41 - 45m$	4m	1.56
IG 10	27-28m	1m	1.25
	$32 - 35m$	3m	1.2

Most of the above results pertain to chalcocite, native copper and malachite, and core samples will be submitted to a laboratory for preliminary metallurgical testing.

2. Primary mineralisation

The interval 42-47m in hole IG 5 contains spectacular chalcopyrite mineralisation, with a maximum value of 13.5% over 1m from 45-46m. This 5m interval of primary copper sulphide is accompanied by very high gold and silver values. The first rich Cu-Aq-Au intersection was encountered at Igloo in 1992:

QCRC 17 27-30m 3m @ 47% Cu (in chalcopyrite), 1.5 g/t Au and 298 g/t Ag

An additional 4 RC holes were recently completed at Igloo to follow up on these rich chalcopyrite values. Two of these holes were drilled at a 60 degree angle directly towards IG 5 in an attempt to determine the geometry of the mineralization prior to a ground EM survey.

Drill hole IG 12, drilled at 60 degrees from the northwest, encountered a single zone of 10m @ 8.5% Cu, 140 g/t Ag and 2.77 g/t Au from 43m downhole. The other hole, IG 14 drilled at 60 degrees from the northeast, encountered two zones, 4m @ 7.18% Cu, 40 g/t Ag, 0.52 g/t Au from 42-46m downhole, and 3m @ 13.66% Cu, 146 g/t Ag, and 5.52 g/t Au from 50-53m downhole. These assays are based on 1m riffle split samples.

		ORTHROGHER COULD TROLL LOCUTE TRO-CHITELIN ULTURO
Hole ID	Deoth	Interval	Cu %	Au g/t	Ag g/t
IG 12	43-53m	10m	8.5%	2.77	140
IG 14	42-46m	4m	7.18%	0.52	40
IG 14	50-53m	3m	13.66%	5.52	146

Significant results from recent RC drilling at Igloo

The preliminary interpretation is that there are two rich zones of Cu-Ag-Au mineralization each about 3 or 4m thick and separated by about 5m of unmineralised material. The strike of these zones is believed to be about northwesterly and possibly they dip steeply to the northeast.

3. New zone of potential

These chalcopyrite-Au-Ag intervals at Igloo strongly resemble historic results from a prospect known as Miller's Vein about 250m to the south of the Igloo deposit:

Historic results from Millers Vein Prospect
----------------------------------------------------	--	--	--	--	--	--

.	.
Hole ID	Depth	Interval	Cu %	Au g/t	Ag g/t
QCRC 43	$26 - 30m$	4m	9.3	13.3	51
QCRC 45	56-60m	4m	1.96	11.6	32
QCRC 46	$42 - 44m$	2m	0.46

A VTEM survey has been completed over the tenement area and the final data is now being processed. A significant conductor over the Igloo copper deposit may correspond to the rich chalcopyrite-Au-Ag mineralization at that location, and the area between Igloo and Millers Vein will shortly be tested with ground EM and downhole EM to more accurately define a drilling target.

Hole ID	Easting	Northing	Total	Dip	Azimuth	Type of
	GDA 94	GDA 94	Depth			hole
IG01	208976	7601390	51m	Vert	N/a	Diamond
IG02	208958	7601382	51 m	Vert	N/a	Diamond
IG03	208972	7601371	51m	Vert	N/a	Diamond
IG04	208985	7601362	51 m	Vert	N/a	Diamond
IG05	208942	7601371	51m	Vert	N/a	Diamond
IG06	208932	7601366	51m	Vert	N/a	Diamond
IG07	208952	7601359	51m	Vert	N/a	Diamond
IG08	208937	7601351	51 m	Vert	N/a	Diamond
IG09	208958	7601349	51 m	Vert	N/a	Diamond
IG10	208972	7601342	51m	Vert	N/a	Diamond
IG12	208928	7601392	100m	60	150	RC
IG13	208923	7601392	100m	60	55	RC
IG14	208963	7601386	100m	60	235	RC
IG15	208902	7601341	150m	60	55	RC

Statistics for recent drill holes at Igloo

Emperor Zinc-Lead Prospect

An RC drilling program consisting of 8 holes GM 33 to GM 40 mostly to about 200m depth was completed during the quarter.

Drill hole GM 34 contained 44m @ 2.1% Zn from 32m downhole, including 12m @ 3.7% Zn from 52m, and 4m @ 3.3% Zn and 1.13 g/t Au from 68m.

Drill hole GM 36 returned 4m @ 6.67% Zn, 39 g/t Ag and 0.47 g/t Au from 176m downhole, and 1m @ 1.2% Zn from 184-185m. As GM 36 terminated in mineralization it should be deepened.

The mineralization in GM 36 lies approximately 100m east of the mineralization in GM 34 (44m $@$ 2.1% Zn including 12m @ 3.7% Zn), and about 150 east south east of the mineralization in GM 21 (cumulative 43 $m$ @ 4.5% Zn) although continuity of mineralization has not yet been demonstrated. Assays in GM 34 and 36 are based on 4m composite samples.

Hole ID	Depth	Interval	Zn%	Au g/t	Ag g/t
GM 21	49-65m	16m	3.5
	71-98m	27 m	4.94
GM34	$32 - 76m$	44m	2.1
	(inc $52-64m$	12 m	3.7
	68-72m	4m	3.3	1.13
GM 36	176-180m	4m	6.67	0.47	39
	184-185 (end of hole)	1 m	1.21

Significant results from recent RC drilling at Emperor

GM 21 and GM 34 were drilled from the same collar position, with GM 21 drilled at 60 degrees to the north and GM 34 drilled at 60 degrees to the southeast.

Bedding laminations in diamond drill hole GMD 21, a twin hole to GM 21, suggest that the mineralized interval in GM 21 is near true thickness, but there is no indication as to the true thickness of the mineralized intersections in GM 34 or GM 36.

A broad metal zonation is becoming evident at Emperor, with zinc mineralization occurring on its own in the northern part of the mineralized corridor, and lead occurring with zinc towards the south. Pyrite is also more abundant to the south. Drill holes GM 33 to GM 40 are part of ongoing drill-testing of a very large >3km long Pb-Zn anomaly.

Hole ID	Easting	Northing	Total	Dip	Azimuth
	GDA 94	GDA 94	Depth
GM 33	209473	7601011	200	60	90
GM 34	209534	7601069	193	60	130
GM 35	209555	7601150	191	60	120
GM 36	209667	7600942	185	60	360
GM 37	209657	7600920	191	60	270
GM 38	209402	7600741	200	60	225
GM 39	209614	7600869	200	60	270
GM 40	209622	7600873	170	60	360

Statistics for recent RC drill holes at Emperor

WERTAGO PROJECT, NSW

Final data for the VTEM survey over the eastern half of the exploration licence at Wertago is now being processed.

YANCO GLEN TUNGSTEN PROJECT, NSW

A resource estimate has now been completed by Ravensgate, consultants to the mineral industry. The estimate, based on our first round of drilling, is 828,420 tonnes grading 0.172% W in the Inferred category. This grade is equivalent to 0.21% WO3.

PLACEMENT

The Company arranged a private placement in August to raise gross proceeds of up to A\$1.1 million through the issue of approximately 3,235,294 ordinary fully paid shares in the capital of the Company at a price of A\$0.34.

Argonaut Securities Limited, Patersons Securities Limited and Melbourne based securities firm Cygnet Capital Limited acted as joint managers to the placement.

Ron Thom Managing Director 30 October 2006

The information in this report that relates to Exploration Results was compiled by R Thom, who is a Member of the AusIMM. R Thom has sufficient experience which 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'. R Thom, who is an employee of Graynic Metals Ltd, consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Mineral Resources or Ore Reserves was compiled by John Haywood of Ravensgate. Mr Haywood has sufficient experience which 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 Haywood consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Appendix 5B

$Rule 5.3$

Year to date

$(3$ months)

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

Graynic Metals Limited

ABN

87 112 898 825

Quarter ended ("current quarter")

30 September 2006

Current quarter

\$A'000

Consolidated statement of cash flows

Cash flows related to operating activities

			\$A'000
1.1	Receipts from product sales and related debtors
1.2	Payments for
	(a)exploration and evaluation	(343)	(343)
	(b) development
	(c) production
	(d) administration	(91)	(91)
1.3	Dividends received
1.4	Interest and other items of a similar nature	16	16
	received
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(418)	(418)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a)prospects
	(b) equity investments	(7)	(7)
	(c)other fixed assets
1.9	Proceeds from sale of:
	(a)prospects
	(b) equity investments
	(c)other fixed assets
1.10	Loans to other entities
1.11	Loans repaid to other entities
1.12	Other (provide details if material)
	Net investing cash flows
1.13	Total operating and investing cash flows (carried forward)	(425)	(425)

⁺ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought forward)	(425)	(425)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	1,105	1,105
1.15	Proceeds from sale of forfeited shares
1.16	Proceeds from borrowings
1.17	Repayment of borrowings
1.18	Dividends paid
1.19	Other - Capital raising costs	(37)	(37)
	Net financing cash flows	1,068	1,068
	Net increase (decrease) in cash held	643	643
1.20	Cash at beginning of quarter/year to date	1,397	1,397
1.21	Exchange rate adjustments to item 1.20
1.22	Cash at end of quarter	2,040	2,040

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter \$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	-68
1.24	Aggregate amount of loans to the parties included in item 1.10

^1.25 Explanation necessary for an understanding of the transactions 1.23 includes directors fees and salaries.

Non-cash financing and investing activities

• $2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
• $2.2$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available \$A'000	Amount used 1 \$A'000
3.1	Loan facilities	w
3.2	Credit standby arrangements	w

⁺ See chapter 19 for defined terms.

Estimated cash outflows for next quarter

4.1	Exploration and evaluation	\$A'000 300
4.2	Development
	Total	300

Reconciliation of cash

	Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter \$A'000	Previous quarter \$A'000
5.1	Cash on hand and at bank	1,095	303
5.2	Deposits at call	945	1,094
5.3	Bank overdraft
5.4	Other
	Total: cash at end of quarter (item 1.22)	2,040	1,397

Changes in interests in mining tenements

		Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
-6.1	Interests in mining tenements relinquished, reduced or lapsed	NIL.
6.2	Interests in mining tenements acquired or increased	EL45/2788	100%	NIL	100%

$+$ See chapter 19 for defined terms.

Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price per security (see note $3)$ (cents)	Amount paid up per security (see note 3) (cents)
7.1	Preference *securities
7.2	(description) Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions
7.3	+ Ordinary securities	40,264,901	37,370,333
7.4	Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs	3,235,294 25,000	3,325,294 25,000	34 cents 20 cents	34 cents 20 cents
7.5	+ Convertible debt securities (description)
7.6	Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7	Options (description and conversion factor)	12,220,514 2,000,000 2,000,000 6,000,000 2,000,000	12,220,514	Exercise price 20 cents 20 cents 30 cents 30 cents 30 cents	Expiry date 31/10/07 28/03/07 28/03/08 30/04/08 31/10/08
7.8	Issued during quarter
7.9	Exercised during quarter	25,000		20 cents	31/10/07
7.10	Expired during quarter
7.11	Debentures (totals only)
7.12	Unsecured notes (totals only)

⁺ See chapter 19 for defined terms.

Compliance statement

• $\mathbf{I}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

(Company Secretary)

Sign here:

Date: 26 October 2006

Kent Hunter Print name:

Notes

• $\mathbf{I}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $\overline{2}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
• $\overline{4}$ The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

---

⁺ See chapter 19 for defined terms.