CORAZON MINING LIMITED — Interim / Quarterly Report 2011

Mar 3, 2011

CORAZON MINING LTD A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

HALF YEAR FINANCIAL REPORT

31 DECEMBER 2010

CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

31 DECEMBER 2010

CONTENTS

CORPORATE DIRECTORY ............................................................................................................. 1 DIRECTORS’ REPORT ..................................................................................................................... 2 AUDITORS INDEPENDENCE DECLARATION ............................................................................ 5 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME............................................ 6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ..................................................... 7 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...................................................... 8 CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................... 9 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS .................... 10 DIRECTORS’ DECLARATION ...................................................................................................... 17 INDEPENDENT AUDITORS’ REVIEW REPORT ....................................................................... 18

This half year financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2010 and any public announcements made by Corazon Mining Limited during the half year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN Clive Jones

EXECUTIVE MANAGING DIRECTOR

Brett Smith

NON-EXECUTIVE DIRECTORS

Adrian Byass Jonathan Downes

COMPANY SECRETARY

Robert Orr

PRINCIPAL & REGISTERED OFFICE

Level 1, 350 Hay Street SUBIACO WA 6008 Telephone: (08) 6364 0518 Facsimile: (08) 6210 1872

AUDITORS

Mack & Co Level 2, 35 Havelock Street WEST PERTH WA 6005

LAWYERS

Steinpreis Paganin Level 4, 16 Milligan Street PERTH WA 6000 Telephone: (08) 9321 4000 Facsimile: (08) 9321 4333

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

WEBSITE

www.corazon.com.au

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

DIRECTORS’ REPORT

Your Directors submit the financial report of Corazon Mining Limited and its subsidiary (the Consolidated Entity) for the half-year ended 31 December 2010. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

DIRECTORS

The names of Directors who held office during or since the end of the half year are:-

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

Directors have held office for the entire period and to the date of this report unless otherwise stated.

PRINCIPAL ACTIVITIES

During the half-year the principal activities of the Consolidated Entity consisted of exploration and evaluation of the group’s base metal projects in Western Australia and New South Wales and the evaluation of new projects.

RESULT OF OPERATIONS

The loss after tax for the half year ended 31 December 2010 was $1,236,956 (2009: $1,290,364).

REVIEW OF OPERATIONS

The last six months has set Corazon on a new path, nickel sulphide exploration in Canada. Lynn Lake is an abandoned mining area, but remains the third largest nickel producing camp in Canada. The Company believes there is good potential to develop existing resources and make new discoveries in what is an extremely metal rich region.

Highlights for this period include:-

• Company changes name to Corazon Mining Limited, with new ASX code of CZN.

• Corazon purchased an option over the Lynn Lake Nickel Sulphide Project in Canada.

• Drilling at Lynn Lake commenced immediately, with results confirming and extending the defined mineralisation at the high-grade EL Mine.

• Highlights of the drilling included;

• 95.07m @ 0.78% Ni, 0.33% Cu & 0.024% Co

• 19.85m @ 1.58% Ni, 0.54% Cu & 0.04% Co.

• A maiden inferred resource of 1.8Mt at 1.0% Ni equivalent[(1)] (0.6% Ni equiv[(1)] cut-off) was determined for the EL Mine.

• EL Mine resource includes 14,000t nickel, 9,000t copper and 400t cobalt contained metal.

• Full potential of the EL Mine is defined by an Exploration Target[(2)] of between 3.5Mt and 4.6Mt with target grade ranges of between 0.8% and 1.45% nickel, 0.4 and 0.7% copper, along with 0.01% and 0.03% cobalt.

• Exploration Target[(2)] equates to contained metal of between 28,100t & 66,000t nickel, 14,000t & 31,400t copper and 770t to 1,730t cobalt.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

DIRECTORS’ REPORT

• Corazon established as the largest landholder in the metal rich Lynn Lake camp, which includes at least six drill defined zinc-copper VMS deposits in addition to the flagship nickel/copper sulphide assets.

• Company accelerates exploration at Lynn Lake in 2011, with proposed work programs to include:-

• 5,000 metres of drill core and down-hole EM geophysics

• 420 line km of aerial VTEM and magnetic geophysics

• 40 line km of ground IP geophysics

Project coverage with detailed ground gravity geophysics Preliminary mining studies on the EL Nickel Sulphide Deposit.

This phase of exploration has commenced and is expected to be completed by the end of April 2011.

On the corporate side, the company completed two placements (July 2010 and December 2010) to raise approximately $1.4M and recently offered shareholders the opportunity to participate in a Share Purchase Plan for an additional $2,300,000. The Share Purchase Plan is fully underwritten by Barclay Wells Limited.

Nickel Equivalent [(1)]

Ni% Equiv (1) = Nickel equivalent has been estimated within the Resource Block Model and in other instances using the formula:-

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

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

Exploration Target [ (2)]

This exploration target is conceptual in nature, there has been insufficient exploration (namely drilling) to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource. The basis for this target includes:-

• Historical mining at the deposit to a depth of 210 metres below surface

• Historical mine development to at least 270 metres below surface

• Exploration drilling to a depth of approximately 600 metres below surface

• An inferred resource has been calculated to approximately 600 metres below surface

• Good continuity and predictability of geology down-plunge

• Geological evidence for a deep-seated, explosive mineralising event.

Past exploration and mining records for the EL Mine are extensive and reflects high standards of work.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

DIRECTORS REPORT

Competent Person

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.

AUDITOR’S DECLARATION

The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 5 for the half year ended 31 December 2010.

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

___ Brett Smith Managing Director

Dated this 4 day of March 2011.

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AUDITORS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF CORAZON MINING LIMITED AND CONTROLLED ENTITIES

I declare that to the best of my knowledge and belief, during the half year ended 31 December 2010 there has been:

• a. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• b. no contraventions of any applicable code of professional conduct in relation to the review.

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MACK & CO

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N A CALDER PARTNER WEST PERTH

DATE: 4 MARCH 2011

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Note Revenue 3 Employee benefits expense Directors fees Depreciation and amortisation expenses Finance costs Regulatory expenses Consultancy expenses Occupancy expenses Administrative expenses Exploration expenditure Loss for the period before income tax expense Income tax benefit/(expense) Loss for the period Other comprehensive income/(loss) Net change in fair value of available for sale financial asset recognised directly in equity Total comprehensive loss for the period Loss per share Basic and diluted loss per share (cents) calculated on loss for the period	31 December 2010 $ 207,116 (258,282) (34,000) (7,828) - (70,335) (32,069) (18,378) (44,674) (978,506) (1,236,956) - (1,236,956) (131,775) (1,368,731) (1.82)	31 December 2009 $ 55,053 (16,944) (25,531) (7,300) (10) (34,382) (23,129) (25,556) (42,429) (1,170,136)
		(1,290,364) -
		(1,290,364) (228,056)
		(1,518,420)
		(2.33)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables Financial assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets Intangible assets 4 Plant and equipment Exploration and evaluation expenditure 5 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 6 Reserves Accumulated losses TOTAL EQUITY	31 December 2010 $ 846,795 63,946 - 910,741 88,600 1,348,196 61,588 306,073 1,804,457 2,715,198 61,089 3,330 64,419 3,480 3,480 67,899 2,647,299 14,648,639 936,208 (12,937,548) 2,647,299	30 June 2010 $ 578,363 79,032 600,000
		1,257,395
		87,033 - 65,372 300,000
		452,405
		1,709,800
		148,850 4,050
		152,900
		59,955
		59,955
		212,855
		1,496,945
		12,817,304 380,233 (11,700,592)
		1,496,945

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

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Balance at 1 July 2009 Loss for the period Loss on available for sale instruments Total comprehensive income for the period Transactions with owners, recorded directly in equity Prior period adjustment to retained earnings Options lapsed Total transactions with owners Balance at 31 December 2009 Balance at 1 July 2010 Loss for the period Loss on available for sale instruments Total comprehensive income for the period Transactions with owners, recorded directly in equity Share issued Capital raising cost Contingent consideration (note 4) Equity compensation benefits Total transactions with owners Balance at 31 December 2010	Issued Capital Accumulated Losses Revaluation Reserves Option Reserves *Other Reserves Total $ $ $ $ $ 12,825,841 (9,424,623) 580,127 2,109,111 - 6,090,456
	- (1,290,364) - - - (1,290,364) - - (228,056) - - (228,056)
	- (1,290,364) (228,056) - - (1,518,420)
	- (11,737) - - - (11,737) - 2,109,111 - (2,109,111) - -
	- 2,097,374 - (2,109,111) - (11,737)
	12,825,841 (8,617,613) 352,071 - - 4,560,299
	12,817,304 (11,700,592) 139,894 240,339 - 1,496,945
	- (1,236,956) - - - (1,236,956) - - (131,775) - - (131,775)
	- (1,236,956) (131,775) - - (1,368,731)
	1,920,400 - - - - 1,920,400 (89,065) - - - - (89,065) - - - - 303,750 303,750 - - - 384,000 - 384,000
	1,831,335 - - 384,000 303,750 2,519,085
	14,648,639 (12,937,548) 8,119 624,339 303,750 2,647,299

*Other reserve relate to contingent consideration issued as part of the asset acquisition, please refer to note 4 for more detail.

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

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Payments for exploration and evaluation Interest received Other revenue NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Proceed from sale of tenements Proceed from sale of financial asset Loan to related party Payments for property, plant and equipment Payments for investment in subsidiaries NET CASH FROM/(USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payment for costs of issue of shares NET CASH FROM FINANCING ACTIVITIES Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the reporting period Cash and cash equivalents at the end of the reporting period	31 December 2010 $ (366,668) (1,048,729) 10,782 10,734 (1,393,881) 57,249 586,917 (697) (4,044) (350,947) 288,478 1,462,900 (89,065) 1,373,835 268,432 578,363 846,795	31 December 2009 $ (257,762) (220,591) 15,053 40,000
		(423,300)
		- - - - (192,539)
		(192,539)
		- -
		-
		(615,839) 1,284,531
		668,692

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

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION OF HALF YEAR FINANCIAL REPORT

Statement of Compliance

Corazon Mining Limited is a public company, limited by shares, domiciled and incorporated in Australia and listed on the Australian Securities Exchange. The consolidated interim financial report of the company for the six months ended 31 December 2010, comprise the Company and its subsidiaries (the “consolidated entity”).

The half year consolidated financial report is a general purpose financial report 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 Standard IAS 34 Interim Financial Reporting .

The half year report does not include full disclosures of the type normally included in an annual financial report. Accordingly, it is recommended that this half year financial report be read in conjunction with the annual report for the year ended 30 June 2010 and any public announcements made by Corazon Mining Limited and its controlled entities during the interim reporting period in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 .

These consolidated interim financial statements were approved by the Board of Directors on 4 March 2011.

Basis of preparation

The half year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. The presentation and functional currency is Australian Dollars.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company’s 2010 annual financial report for the financial year ended 30 June 2010, except for the impact of the Standards and Interpretations described below. Those accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

New and revised Standards and amendments thereof and Interpretations effective for the current reporting period that are relevant to the Group include:

• Amendments to AASB 5, 8, 101, 107, 117, 118, 136 and 139 as a consequence of AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

The adoption of these amendments has not resulted in any changes to the consolidated entity’s accounting policies and has no effect on the amounts reported for current and prior periods.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION OF HALF YEAR FINANCIAL REPORT (CONT)

Going Concern Basis

The financial statements have been prepared on the going concern basis. As at 31 December 2010 the Consolidated Entity had net assets of $2,647,299 (30 June 2010: $1,496,945) and continues to incur expenditure on its exploration tenements drawing on its cash balances. As at 31 December 2010 the Consolidated Entity had $846,795 (30 June 2010: $578,363) in cash and cash equivalents.

The ability of the Company and the Group to continue to pay its debts as and when they fall due is dependent upon the Company successfully raising additional share capital and ultimately developing one of its mineral properties.

The Directors believe it is appropriate to prepare these accounts on a going concern basis because:

• The Directors have an appropriate plan to raise additional funds as and when it is required. In light of the Group’s current exploration projects, the Directors believe that the additional capital required can be raised in the market; and

• The Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable.

The accounts have been prepared on the basis that the entity can meet its commitments as and when they fall due and can therefore continue normal business activities, and the realisation of assets and liabilities in the ordinary course of business.

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.

• (ii) Income tax expenses Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the balance sheet. 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.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION OF HALF YEAR FINANCIAL REPORT (CONT)

• (iii) 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.

• (iv) Classification of investments

The Consolidated Entity 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.

• (v) Intangible assets

• Intangible assets represent the cost of acquisition of an option to acquire Lynn Lake Nickel project. Upon acquisition of Lynn Lake project, recognised intangible asset is classified as capitalised exploration expenditure. In the event, the Company decide not to exercise the option, the intangible asset will be recognised in the income statement immediately.

Subsequent measurement

Intangible assets are measured at cost less accumulated amortisation losses.

NOTE 2: SEGMENT INFORMATION

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. Discrete financial information about each project is reported to the chief operating decision maker on a regular basis.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 2: SEGMENT INFORMATION (CONT)

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.

For the period ended 31 December 2010 Revenue Total segment revenue Segment net operating profit after tax Interest revenue Depreciation Equity compensation benefit As at 31 December 2010 Segment assets Segment Liabilities For the period ended 31 December 2009 Revenue Total segment revenue Segment net operating profit after tax Interest revenue Depreciation As at 30 June 2010 Segment assets Segment Liabilities	Australia Canada Unallocated Total $ $ $ 10,735 - 196,381 207,116
	10,735 - 196,381 207,116
	- (978,506) (258,450) (1,236,956)
	- - 9,647 9,647 - (2,714) (5,114) (7,828) - - (158,000) (158,000) 306,073 1,381,666 1,027,459 2,715,198
	- - 67,899 67,899
	40,000 - 15,053 55,053
	40,000 - 15,053 55,053
	(1,170,136) - (120,228) (1,290,364)
	- - 15,053 15,053 - - (7,300) (7,300) 300,000 - 1,409,800 1,709,800
	- - 212,855 212,855

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 3: OTHER REVENUE Operating activities Profit on sale of exploration assets Profit on disposal of available for sale financial asset Interest received Other Total Other Revenue	31 December 2010 $ - 186,735 9,646 10,735 207,116	31 December 2009 $ 40,000 - 15,053 -
		55,053

NOTE 4: ACQUISITION OF SUBSIDIARY

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

Details of the purchase consideration are as follows:

Consideration transferred Cash paid Issue of 5,500,000 fully paid shares in Corazon Issue of 3,000,000 class A options in Corazon Issue of 5,000,000 class B options in Corazon *Contingent consideration	$ 360,946 457,500 126,000 100,000 303,750
	1,348,196

*Contingent consideration relates to issue of further 4,000,000 shares in Corazon at the completion of title to the Lynn Lake Project in accordance with the terms of the Lynn Lake option agreement.

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

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 5: EXPLORATION EXPENDITURE Balance at the beginning of the period Exploration expenditure capitalised during the year Impairment of exploration expenditure Balance at the end of the period	31 December 2010 $ 300,000 6,073 - 306,073	30 June 2010 $ 3,800,023 476,580 (3,976,603)
		300,000

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.

NOTE 6: CONTRIBUTED EQUITY (a) Issued and fully paid shares Fully paid ordinary shares Less: capital issue costs net of tax (b) Movements in issued and fully paid shares Balance at the beginning of the period Shares issued Less: capital issue costs Balance at the end of the period	31 December 2010 $ 15,148,602 (499,963) 14,648,639 Number of shares 55,485,415 23,034,000 - 78,519,415	30 June 2010 $ 13,228,202 (410,898)
		12,817,304
		$ 12,817,304 1,920,400 (89,065)
		14,648,639

NOTE 7: CONTINGENT LIABILITIES

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

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

NOTE 8: EVENTS SUBSEQUENT TO REPORTING DATE

On 25 January 2011, the Company has offered eligible shareholders to participate in a Shareholder Share Purchase Plan to acquire additional shares at 10 cents per share. The plan is fully underwritten by Barclay Wells Limited and will raise $2,300,000 for the exploration of Lynn Lake Nickel Sulphide Project in Canada.

Other than the above, no matter or circumstance has arisen subsequent to 31 December 2010 that has significantly affected, or may significantly affect, the state of affairs or operations of the reporting entity in future financial periods.

NOTE 9: DIVIDENDS

No dividends have been declared or paid during the half year ended 31 December 2010.

NOTE 10: COMMITMENTS

In order to maintain current rights of tenure to mining tenements, the Consolidated Entity has the following discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to recognition upon expiry of the leases, are not provided for in the financial statements and are payable:

Exploration and evaluation expenditure payable not longer than 12 months

$ 250,000

If the Consolidated Entity decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the balance sheet may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations

NOTE 11: KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report. In addition, during the interim period, 2,000,000 options with a weighted average exercise price of $0.12 and a contractual life of 3 years, valued at $158,000 were issued to the Managing Director, Mr Brett Smith.

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CORAZON MINING LIMITED A.B.N. 87 112 898 825 AND CONTROLLED ENTITIES

DIRECTORS’ DECLARATION

The Directors of the Company declare that:-

1. The financial statements and notes, as set out on pages 6 to 16 are in accordance with the Corporations Act 2001, including:

2. (a) complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporation Regulations 2001; and

3. (b) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2010 and of its performance for the half year ended on that date; and

4. (c) the half year financial statements are in compliance with International Financial Reporting Standards, as stated in Note 1 to the financial statements.

5. 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:

___ Brett Smith Managing Director

Dated this 4 day of March 2011.

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INDEPENDENT AUDITORS’ REVIEW REPORT TO THE MEMBERS OF CORAZON MINING LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Corazon Mining Limited and its controlled entities (the consolidated entity) which comprises the statement of financial position as at 31 December 2010, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at 31 December 2010, or during the half year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of Corazon Mining Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for such controls as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standards on Review Engagements ASRE 2410 Review of a 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 financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Corazon Mining Limited and its controlled entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and 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.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. In accordance with the Corporations Act 2001, we have given the directors’ of the company a written auditor’s independence declaration.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Corazon Mining Limited and its controlled entities 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 2010 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Going Concern

Without qualification to the conclusion expressed above, attention is drawn to the following. As noted in Note 1 Going Concern, the Directors of the company and the Consolidated Entity are of the opinion that the Company and Consolidated Entity are able to continue as going concerns and be able to pay their debts as and when they fall due and realise their assets and extinguish their liabilities in the normal course of business and at amounts stated in the half year financial report. The half year financial report of the Consolidated Entity does not include any adjustments in relation to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company and/or the Consolidated Entity not continue as going concerns.

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MACK & CO

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N A CALDER

PARTNER WEST PERTH

DATE: 4 MARCH 2011

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