CORAZON MINING LIMITED — Interim / Quarterly Report 2007

Mar 14, 2007

Graynic Metals Limited

And Controlled Entity

Condensed Consolidated Financial Report For the Half-Year Ended 31 December 2006

Company Directory
Directors' Report	$\mathfrak{2}$
Condensed Consolidated Income Statement	4
Condensed Consolidated Balance Sheet	5.
Condensed Consolidated Statement of Cashflows	6.
Condensed Consolidated Statement of Changes in Equity	7
Notes to the Condensed Consolidated Financial Statements	8
Directors' Declaration	10.
Independence Declaration	11
Independent Review Report	12.

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN Ivan Hoffman

MANAGING DIRECTOR Ronald Thom

NON-EXECUTIVE DIRECTORS Clive Jones Jonathan Downes

COMPANY SECRETARY Kent Hunter

PRINCIPAL & REGISTERED OFFICE

Level 2, 22 Oxford Close Leederville WA 6008 Telephone: (08) 9381 1436 Facsimile: (08) 9381 1068

AUDITORS

Ord Partners Chartered Accountants Level 2, 47 Colin Street WEST PERTH WA 6005

SHARE REGISTRAR

Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871

STOCK EXCHANGE LISTING

Australian Stock Exchange (Home Exchange: Perth, Western Australia) Code: GYN, GYNO

BANKERS

National Australia Bank 50 St Georges Terrace PERTH WA 6000

DIRECTORS' REPORT

Your directors submit the financial report of the Consolidated Entity for the half-year ended 31 December 2006. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

DIRECTORS

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

Ivan Hoffman Ron Thom Jonathan Downes Nathan McMahon (resigned 5 December 2006) Clive Jones

RESULT OF OPERATIONS

The net loss of the Consolidated Entity after providing for income tax for the half-year ended 31 December 2006 amounted to \$276,020 (2005: 282,190).

REVIEW OF OPERATIONS

The Company has extensive base metal interests in WA and NSW and a minor interest in diamonds in WA.

The Company's leading project is the Quartz Circle base metal project near Nullagine in the East Pilbara, WA. During the September quarter 10 diamond drill holes for a total of 500m and 400m of RC drilling were completed at the Igloo Copper Prospect to evaluate the copper mineralisation. At the same time 1600m of RC drilling was completed to further test the nearby Emperor Lead-Zinc Prospect. In December/January a total of 3300m of RC drilling was completed, about half each on the Igloo and Emperor prospects. A fixed loop ground EM (electromagnetic) survey and downhole EM surveys were carried out to seek extensions of the known chalcopyrite at Igloo. A large EM conductance anomaly about 1km in diameter situated on the southern edge of the Emperor Prospect was identified as an important exploration target for future drilling.

In NSW an airborne VTEM (electromagnetic) survey was flown over a large part of our Wertago base metal project and several future drilling targets have been provisionally identified. These will be inspected on the ground prior to drilling. Work on the Gulf Creek copper project is awaiting final heritage clearance from the Traditional Owners but this is expected soon. The exploration rights to tin and tungsten within our exploration licence at Yanco Glen were sold to newly-listed Wolf Minerals Limited ("Wolf") for 2 million Wolf shares. The Company retains the exploration rights for all other minerals within this licence.

In August the Company raised exploration funds of about \$1,100,000 in a private placement.

CORPORATE

On 1 September 2006 the Company issued 3,235,294 ordinary shares to various Brokers to raise \$1.100.000.

On 5 December 2006 Mr Nathan McMahon resigned as Non-Executive Director of Graynic Metals Limited.

On 22 December 2006, the Company issued 1,000,000 Directors Options as passed by the members at the Annual General Meeting on 29 November 2006.

On 12 February the Company received 2,000,000 fully paid shares in Wolf Minerals Limited as part of the agreement to divest its tin and tungsten rights at the Yanco Glen project. Wolf Minerals Limited listed on the ASX on 15 February 2007.

SUBSEQUENT EVENTS

On 12 February the Company received 2,000,000 fully paid shares in Wolf Minerals Limited (8.5% of issued capital) as part of the agreement to divest the tin and tungsten rights at the Yanco Glen project. Wolf Minerals Limited listed on the ASX on 15 February 2007.

Other than detailed above, no matters or circumstances have arisen since the end of the financial period which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

LEAD AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

The lead auditor's independence declaration as required under section 307C of the Corporations Act 2001 for the period ended 31 December 2006 has been received and can be found on page 11 of this report.

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

uld Flor

Ron Thom Managing Director

Perth, 15th March 2007

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE HALF-YEAR ENDED 31 DECEMBER 2006

	31 December 2006 \$	31 December 2005 S
Revenue from continuing operations	81,471	52,404
Administrative expense Employee benefits expense Finance costs Consultancy expenses Compliance and regulatory expenses Occupancy expenses Exploration write-off Depreciation expense Provision for diminution in value of shares Other expenses	(30, 123) (235,756) (571) (28, 682) (35,880) (15, 929) (4, 842) (5,708)	(33,023) (145, 914) (721) (26,066) (28,047) (9, 479) (51,993) (2,066) (27,500) (9,785)
Loss before income tax expense	(276, 020)	(282, 190)
Income tax expense
Loss after income tax expense Net loss attributable to members	(276, 020) (276, 020)	(282, 190) (282, 190)
Basic loss per share (cents per share)	(0.70)	(1.15)
Diluted loss per share (cents per share)	(0.44)	(0.92)

CONDENSED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006

		31 December 2006	30 June 2006
	Note	\$	\$
CURRENT ASSETS
Cash and cash equivalents		1,735,415	1,397,135
Trade and other receivables Exploration assets held for sale	3	49,508 223,744	33,377
TOTAL CURRENT ASSETS		2,008,667	1,430,512
NON CURRENT ASSETS
Other financial assets		40,680	64,458
Plant and equipment Exploration and evaluation expenditure		4,914 5,738,437	6,935 5,267,961
TOTAL NON CURRENT ASSETS		5,784,031	5,339,354
TOTAL ASSETS		7,792,698	6,769,866
CURRENT LIABILITIES
Trade and other payables Provisions		237,391	129,811
		12,330	16,456
TOTAL CURRENT LIABILITIES		249,721	146,267
TOTAL LIABILITIES		249,721	146,267
NET ASSETS		7,542,977	6,623,599
EQUITY
Issued capital		9,681,815	8,631,979
Option reserve		1,126,495	996,095
Asset revaluation reserve Accumulated losses		15,162 (3,280,495)	(3,004,475)
TOTAL EQUITY		7,542,977	6,623,599

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2006

	31 December 2006 \$	31 December 2005 \$
Cash Flows from Operating Activities
- Interest received	41,536	43,002
Other revenue	10,389	6,980
- Payments to suppliers and employees	(229, 140)	(272, 132)
- Payments for exploration and evaluation	(593, 638)	(305,788)
Net cash used in operating activities	(770, 853)	(527, 938)
Cash Flows From Investing Activities
- Purchase of investment securities	(12,057)	(113,910)
- Purchase of plant and equipment	(2,821)	(2, 457)
- Proceeds from sale of investment securities	74,175
Net cash provided by/(used in) investing activities	59,297	(116, 367)
Cash Flows from Financing Activities
Proceeds from issue of shares	1,105,000	122,501
Payment for costs of issue of shares	(55,164)	(10, 507)
Net cash provided by financing activities	1,049,836	111,994
Net increase/(decrease) in cash held	338,280	(532,311)
Cash and cash equivalents at beginning of the period	1,397,135	2,216,933
Cash and cash equivalents at end of the period	1,735,415	1,684,622

	Issued Capital S	Accumulated Losses \$	Option Reserve \$	Total \$
At the beginning of financial period 1 July 2005	4,371,565	(145, 362)	167,330	4,393,533
Loss for the period		(282, 190)		(282, 190)
Total recognised expense for the period		(282, 190)		(282,190)
Transactions with equity holders in their capacity as equity holders: Issue of share capital	122,501			122,501
Issue costs	(10, 507)			(10, 507)
Issue of options			72,664	72,664
	111,994		72,664	184,658
Balance at 31 December 2005	4,483,559	(427, 552)	239,994	4,296,001
	Issued Capital	Accumulated Losses	Option Reserve	Asset Revaluation Reserve	Total
	S	\$	S		$\mathbb S$
At the beginning of financial period 1 July 2006	8,631,979	(3,004,475)	996,095		6,623,599
Loss for the period		(276, 020)			(276,020)
Revaluation on the available for sale assets				15,162	15,162
Total recognised income and expense for the period		(276, 020)		15,162	(260, 858)
Transactions with equity holders in their capacity as equity holders:
Issue of share capital	1,105,000				1,105,000
Issue costs	(55, 164)				(55, 164)
Issue of options			130,400		130,400
	1,049,836		130,400		1,180,236

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER 2006

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2006

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES $1.$

Statement of Compliance

The half-year financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 "Interim Financial Reporting". Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 "Interim Financial Reporting".

Basis of Preparation

The condensed financial statements have been prepared on the basis of historical costs except where stated. Cost is based on the fair value of the consideration given in exchange of assets. All amounts are presented in Australian dollars, unless otherwise stated.

The half-year financial report does not include full disclosures of the type normally included in an annual financial report. Therefore it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Consolidated Entity as in the full financial report. It is recommended that this financial report be read in conjunction with the 2006 annual financial report any public announcements made by Graynic Metals Limited and its subsidiary during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

For the purpose of preparing the half-year report, the half-year has been treated as a discrete reporting period.

The accounting policies and methods of computation adopted in the preparation of the halfyear financial report are consistent with those adopted and disclosed in the company's 2006 annual financial report for the financial year ended 30 June 2006.

Adoption of new and revised Accounting Standards

In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2006. The adoption of these new and revised Standards and Interpretations has resulted in no changes to the Company's accounting policies.

ISSUANCES, REPURCHASES AND REPAYMENT OF EQUITY SECURITIES $2.$

During the period the Company completed the following transactions in its securities:

• Placement of 3,235,294 million shares at 34 cents per share on 1 September 2006 to sophisticated investors raising \$1,100,000.
• Exercise of 25,000 options at 20 cents on 5 September 2006, raising \$5,000
• Options
• Issue of 250,000 unlisted incentive options to employees exercisable at 46 cents each $\circ$ on or before 24 October 2011
• Issue of 1,000,000 unlisted incentive options to directors exercisable at 30 cents each $\circ$ on or before 31 July 2009

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2006

$\ddot{\mathbf{3}}$ . EXPLORATION ASSETS HELD FOR SALE

On 12 February 2007 the Company has entered into an agreement with Wolf Minerals Limited to dispose the Company's rights at Yanco Glen project to Wolf Minerals Limited. As such, the exploration assets are re-classified as current assets. Refer to note 4 for further details.

$\overline{4}$ . SUBSEQUENT EVENTS

On 12 February 2007 the Company received 2,000,000 fully paid shares in Wolf Minerals Limited (8.5% of issued capital) as part of the agreement to divest the tin and tungsten rights at the Yanco Glen project. Wolf Minerals Limited listed on the ASX on 15 February 2007.

Other than detailed above, no matters or circumstances have arisen since the end of the financial period which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods.

$\ddot{4}$ . CONTINGENT LIABILITIES

There has been no change in contingent liabilities since the last annual reporting date.

$5.$ SEGMENTAL REPORTING

The Company operates predominantly in one geographical segment, being Australia, and in one industry, mineral mining and exploration.

6. RELATED PARTIES

Arrangements with related parties continue to be in place. For details on these arrangements, please refer to the 30 June 2006 annual financial report.

Key management personnel continue to receive remuneration in the form of short term employee benefits, post employment benefits and share based payments.

$\overline{7}$ . COMMITMENTS

The Company notes that nothing material has changed since the 30 June 2006 annual financial report. For details on these commitments, please refer to the 30 June 2006 annual financial report.

GRAYNIC METALS LIMITED ABN 23 101 049 334

DIRECTORS' DECLARATION

For the Half Year Ended 31 December 2006

The Directors of the Company declare that:

• The financial statements and notes, as set out on pages 4 to 9 are in accordance with the $\mathbf{1}$ . Corporations Act 2001 and:
• (a) comply with Accounting Standards and the Corporations Regulations 2001; and

(b) give a true and fair view of the Company's financial position as at 31 December 2006 and its performance for the half-year ended on that date.

$2.$ 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.

mld Flor

Ron Thom Managing Director

PERTH Dated this 15th day of March 2007 15 March 2007

To the Board of Directors of Graynic Metals Limited

Dear Sirs

AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31^st December 2006 there have been:

• no contraventions of the auditor independence requirements as set out in the $\bullet$ Corporations Act 2001 in relation to the review; and
• no contraventions of any applicable code of professional conduct in relation to the review.

Yours faithfully ORD PARTNERS

Ian Keith Macpherson Partner

Ian K Macpherson CA

Robert W Parker CA

Craig A Vivian CA

a shi ne shekara ta 1979 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na sh

Level 2, 47 Colin Street West Perth WA 6005

PO Box 359 West Perth WA 6872

$\mathbf{F}$ +61 8 9321 3514 $\circledR$ +61893213523

ord@ordgroup.com.au www.ordgroup.com.au

Chartered Accountants

INDEPENDENT AUDITORS' REVIEW REPORT TO THE MEMBERS OF GRAYNIC METALS LIMITED

Scope

The financial report and directors' responsibility

We have reviewed the interim financial report of Graynic Metals Limited ('the Company') for the half year ended 31 December 2006, consisting of the condensed consolidated income statement, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows, accompanying notes, and the directors' declaration. The consolidated entity comprises the Company and the entities it controlled at the half year's end or from time to time during the half year.

The Company's directors are responsible for the preparation and fair presentation of the interim financial report in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the interim financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Company's financial position as at 31 December 2006 and its performance for the half year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of the Company, ASRE 2410 requires that we comply with the ethical requirements relevant to the review of the interim financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical or other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

Independence

In conducting our review, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Ian K Macpherson CA

Robert W Parker CA

Craig A Vivian CA

Level 2, 47 Colin Street West Perth WA 6005

PO Box 359 West Perth WA 6872

$\mathbf{2} + 61893213514$ $\equiv$ +61893213523

ord@ordgroup.com.au www.ordgroup.com.au

Chartered Accountants

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of the Company is not in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and of its performance for the half-year ended on that date; and
• (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

ORD PARTNERS

Chartered Accountants

Ian Macpherson Partner

Dated this 15 day of March 2007 Perth, WA