CORAZON MINING LIMITED — Interim / Quarterly Report 2007

Jan 29, 2007

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.eravnicmetals.com.au

Quarterly Report for December 2006

Highlights:

• Rich mineralisation confirmed at Quartz Circle including:
• $\circ$ 3m @ 5.08% Cu, 123 g/t Ag and 1.79 g/t Au Igloo Prospect
• o 11m @ 4.08% Zn, 66 g/t Ag and 0.6 g/t Au Emperor Prospect
• Another 3300m of RC drilling completed to further test Igloo chalcopyrite and Emperor Pb-Zn

Quartz Circle, Nullagine, WA (Graynic 80%)

Quartz Circle is a base metal project which is believed to be volcanic-hosted massive sulphide (VMS) in style. Drilling has focused on the Igloo Copper Prospect, which has copper oxides and primary copper sulphide at shallow depth, and at the Emperor Lead-Zinc Prospect which is part of a 3km-long Pb-Zn geochemical anomaly. Rich mineralization has previously been found in several drill holes at both of these prospects.

Drillina

A further 3300m of RC drilling has been completed at Quartz Circle including 1700m in December 2006 and the remainder in early January 2007. The program included 6 drill holes to test part of the Emperor lead-zinc prospect, 7 holes to further test the primary copper (chalcopyrite) mineralisation at Igloo, and 2 holes as an initial test an EM conductance anomaly to the south of Emperor. Assay results are expected to be received in February.

EM conductance anomaly

An EM survey flown over the project area in August revealed a large conductance anomaly about 1km in diameter. Conductance is a measure of conductivity times thickness, and the anomaly could represent an accumulation of weakly conductive sulphide such as disseminated pyrite and/or sphalerite. Two drillholes have been completed within the anomaly and the assay results are awaited. Pyrite content estimated at 1% to 10% was visible in both holes.

Reassays of 4m composites

The mineralized intersections previously reported as 4m composites have now been reassayed as 1m samples. Some of the intersections are slightly narrower in width but higher in grade as a result. The interval for IG 14 shown in the following table is one of three rich intersections in that hole, the others being 4m grading 7.18% Cu, 40 g/t Ag and 0.52 g/t Au from 42m downhole, and 3m arading 13.66% Cu. 146 a/t Ag and 5.52 alt Au from 50m. In some holes at Emperor significant gold and silver accompanies the zinc.

Hole ID.	Depth	Interval	.Cu $\%$	Рb $\%$	Zn $\%$	Ag g/t	Au g/t
Igloo Copper Prospect
IG 14	26-29m	3m	5.08			123	1.79
	Emperor Lead-zinc Prospect
GM 34	33-35m 39-44m	2m 5m			4.59 2.18
	53-64m	11m			4.08	66	0.6
	69-70m	1m			2.69
GM 36	177-180	3m			7.38
GM 38	98-100m	2m			1.27	32	0.36

Recent reassays at Igloo Prospect and Emperor Prospect

Gulf Creek, NSW (Graynic 100%)

Gulf Creek is a historic copper mining area north of Tamworth in NSW which has not been subject to modern exploration. The copper was mined from three welldefined sulphide lodes which averaged between 2% and 6% Cu. There was also a significant amount of zinc in some of these lodes which was not of interest to the miners at that time but which now would be a significant credit.

This project is ready to be drill tested and a drilling program will commence as soon as a heritage and cultural survey can be completed.

Wertago, NSW (Gravnic 100%)

This base metal project encompasses the Nutherangie Silver Fields and Wertago Copper Field adjacent to the Koonenberry Fault. Historic drilling has intersected up to 2m $@$ 4.6% Cu below some of the old workings and also 12.2m $@$ 4.6 g/t Au with no follow up. The target is a Cu-Zn-Au-Ag deposit adjacent to the large fault, which could have acted as a conduit for metal-bearing fluids.

Interpretation of an airborne EM survey has been completed and there are a number of EM conductors and magnetic anomalies to be followed up. Field work is planned during the quarter to identify suitable drilling targets for early drilling.

Yanco Glen, NSW (Wolf Minerals Limited 100% of Tin and Tungsten, Gravnic 100% all other minerals)

The Yanco Glen project consists of a large exploration licence which has potential for tungsten, gold and base metals. In March 2006 Graynic completed some RC drilling of one of the several known tungsten prospects, with encouraging results. Due to significant progress at its base project at Quartz Circle in WA it was decided to defer further exploration for tungsten for the time beina.

Gravnic has now transferred its interest in the tin and tungsten potential at Yanco Glen to a new float. Wolf Minerals Limited, in exchange for 2 million Wolf shares. The Graynic Board sees this deal as the best way for Graynic shareholders to derive an early benefit from their tungsten prospect. Wolf will be able to focus on these specialty metals in a time of buovant prices while Graynic continues to progress its base and precious metals interests in WA and NSW.

Ron Thom Managing Director 30 January 2007

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves 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.

Appendix 5B

$Rule 5.3$

Year to date

$(6$ 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")

31 December 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	(297)	(640)
	(b) development
	(c) production
	(d) administration	(102)	(193)
1.3	Dividends received
1.4	Interest and other items of a similar nature received	42	58
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	(357)	(775)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a)prospects
	(b) equity investments	(5)	(12)
	(c)other fixed assets	(4)	(4)
1.9	Proceeds from sale of:
	(a)prospects (b)equity investments	74	74
	(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	65	58
1.13	Total operating and investing cash flows
	(carried forward)	(292)	(717)

⁺ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows
	(brought forward)	(292)	(717)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.		1,105
1.15	Proceeds from sale of forfeited shares
1.16	Proceeds from borrowings		w
1.17	Repayment of borrowings
1.18	Dividends paid
1.19	Other - Capital raising costs	(13)	(50)
	Net financing cash flows	(13)	1,055
	Net increase (decrease) in cash held	(305)	338
1.20	Cash at beginning of quarter/year to date	2,040	1,397
1.21	Exchange rate adjustments to item 1.20
1.22	Cash at end of quarter	1,735	1,735

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

$4.2^{\circ}$	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 SA'000
5.1	Cash on hand and at bank	195	1,095
5.2	Deposits at call	1,540	945
5.3	Bank overdraft
5.4	Other	w
	Total: cash at end of quarter (item 1.22)	1,735	2,040

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	Nil.

⁺ 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 (description)
7.2	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
$7.5\,$	+ 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 2,000,000 250,000 1,000,000	12,220,514	Exercise price 20 cents 20 cents 30 cents 30 cents 30 cents 46 cents 30 cents	Expiry date 31/10/2007 28/03/2007 28/03/2008 30/04/2008 31/10/2008 24/10/2011 31/7/2009
7.8	Issued during quarter	250,000 1,000,000		46 cents 30 cents	24/10/2011 31/7/2009
7.9	Exercised during quarter
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.

Sign here:

(Company Secretary)

Date: 30 January 2007

Print name:

Kent Hunter

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.
• $\overline{3}$ 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.
• 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.

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⁺ See chapter 19 for defined terms.