CORAZON MINING LIMITED — Interim / Quarterly Report 2014

Mar 12, 2014

AND ITS CONTROLLED ENTITIES (ABN 87 112 898 825)

HALF YEAR REPORT for the financial period ended 31 December 2013

Half Year Financial Report

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CONTENTS

Corporate Directory ................................................................................................................................................. 1
Directors' Report ..................................................................................................................................................... 2
1. Directors ...................................................................................................................................................... 2
2. Principal Activities ....................................................................................................................................... 2
3. Result of Operations ................................................................................................................................... 2
4. Review of Operations .................................................................................................................................. 2
5. Auditor’s Declaration .................................................................................................................................. 5
Auditor’s Independence Declaration ....................................................................................................................... 6
Independent Auditors’ Review Report ..................................................................................................................... 7
Condensed Consolidated Statement of Profit or Loss and other Comprehensive Income ...................................... 9
Condensed Consolidated Statement of Financial Position .................................................................................... 10
Condensed Consolidated Statement of Cash Flows............................................................................................... 11
Condensed Consolidated Statement of Changes in Equity .................................................................................... 12
Condensed Notes to the Financial Statements ...................................................................................................... 13
1. Statement of Significant Accounting Policies ............................................................................................13
2. Segment Information ................................................................................................................................15
3. Other Revenue ..........................................................................................................................................16
4. Disposal of Subsidiary ...............................................................................................................................17
5. Intangible Asset .........................................................................................................................................17
6. Exploration Expenditure ............................................................................................................................18
7. Issued Capital ............................................................................................................................................18
8. Contingent Liabilities .................................................................................................................................18
9. Events Subsequent to Reporting Date ......................................................................................................18
10. Dividends ...................................................................................................................................................19
11. Commitments ............................................................................................................................................19
12. Key Management Personnel .....................................................................................................................20
Director’s Declaration ........................................................................................................................................... 21

This interim 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 2013 and any public announcements made by Corazon Mining Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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Half Year Financial Report

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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) 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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Half Year Financial Report

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DIRECTORS' REPORT

Your Directors submit the financial report of Corazon Mining Limited (the Company) and controlled entities (the Consolidated Entity) for the half-year ended 31 December 2013.

1. 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.

2. PRINCIPAL ACTIVITIES

The principal activity of the Consolidated Entity during the half-year has been exploration for nickel and gold and the development of nickel and copper, gold mining activities.

3. RESULT OF OPERATIONS

The loss after tax for the half-year ended 31 December 2013 was $2,303,585 (2012: $680,086).

4. REVIEW OF OPERATIONS

Corazon’s strategy throughout the December 2013 half-year period was to progress its exploration activities at its Australian and Canadian projects in a cost effective manner whilst implementing measures to preserve cash. I am pleased to report the Company experienced encouraging success at its Top Up Rise Project (TUR), and closed the period in a sound financial position.

The half year highlights were derived from the Company’s activities at TUR, located in the Gibson Desert of Western Australia. The September quarter delivered the completion and results of the inaugural drilling programme at the TUR, which confirmed the project area to be a fertile environment for mineral deposits, and the subsequent successful capital raise of $3 million dollars to further advance exploration activities at TUR. In the December quarter, the Company focused on the completion of geophysics and phase two drilling at TUR to further test the source of the project’s gravity anomaly and define future drilling targets. Corazon also made a first in line application for the Kiwi North geochemical/geophysical anomaly, located in the same region as TUR.

TUR is a large residual gravity anomaly measuring 10 kilometres by 6 kilometres, located in a region believed prospective for intrusive related copper-gold mineralisation. To date, Corazon’s exploration at TUR has identified a geochemical anomaly coincident with the geophysical anomaly . Importantly, results to date indicate a robust base and precious metal association exists between copper, lead, zinc, cadmium, silver and gold .

Phase one drilling intersected sulphide mineralisation including chalcopyrite (copper-sulphide) in all holes drilled, and defined a base and precious metal association over a large area. In line with the results of the phase one drilling, the drill chips from phase two drilling consistently demonstrated visual signs of disseminated sulphide mineralisation, including chalcopyrite and pyrite, across a broad area within the

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DIRECTOR’S REPORT (cont)

large gravity anomaly. These sulphides identified a low level of metal anomalism and as yet no economic tenors of grades or widths have been intersected.

In two phases of drilling completed at TUR, fourteen holes were drilled; five with core extensions, for a total of 3,545 metres reverse circulation and 1,420.8 metres core. This phase of drilling targeted a variety of environments to assist in the understanding of basement geology under cover, as well as interpretations generated from geophysical surveys such as gravity, magnetics and aerial Versatile Time Domain Electromagnetics (VTEM).

VTEM has been used extensively worldwide to identify both conductive units and massive sulphide bodies (base metal deposits). In November, Corazon completed a total of 765 line-kilometres of VTEM over the TUR gravity anomaly, which identified conductive features in both early time and late time. The final data for this survey was received just prior to Christmas, and the final analysis of this data was completed by consultants in early 2014. While the delay in receiving the data meant the results of the survey could not be used to target drilling completed in the 2013 programme, it will be used in the definition of future drilling targets at TUR.

The source of the TUR gravity anomaly remains unexplained and cannot be accounted for purely from the type of rocks intersected in the drilling completed to date. A very complex history of alteration and mineralisation has been observed. Multiple styles of mineralisation are apparent, with low levels of leadzinc-cadmium anomalism, coincident with lithic contacts, or as hydrothermal mineralisation, as well as mafic host rocks with potential to hose nickel-copper sulphide mineralisation. As yet, major structures such as faults and shear zones have not been targeted by drilling.

Mafic host units intersected in the drilling conducted to date have included amphibolite, gabbro and late dolerite dykes. All are variably mineralised, altered and deformed. The discovery of an intrusive mafic lithology identified as a Troctolite (a rare differentiated gabbroic rock which is considered an important host unit) presents the possibility of nickel-copper sulphide deposits as a target, as separate to the mineralisation observed to date.

Petrological analysis of sulphides within the Troctolite at TUR has identified lamellae of pentlandite (nickel sulphide) within pyrrhotite. The identification of the Troctolite and pentlandite is significant in that it identifies a fertile environment for formation of nickel-copper sulphide deposits.

To consolidate its presence in the region, Corazon has made a “first in line” application for the Kiwi North Project adjacent to the TUR Project. This project was previously owned by Toro Energy and includes the Kiwi North discovery made by Toro in 2011, and contains several promising geological features, including a discrete 10 mGal gravity anomaly, located on an intense linear magnetic anomaly, on the eastern side of the major northeast trending TUR Fault. In 2011, Toro Energy announced surface exploration sampling results that suggested the existence of Iron Oxide Copper-Gold (IOCG) type mineralisation. Corazon proposes to verify and qualify this work once this lease has been granted.

Throughout the half year, Corazon also continued to progress its Canadian projects, with mining/ development studies on-going for the Lynn Lake Nickel-Copper Sulphide Project (Lynn Lake), and the grant of a Work Permit for the Beaucage Lake Project (Beaucage).

Lynn Lake continues to represent a significant development opportunity for Corazon. The key target within the project area is the EL Deposit, historically the highest grade deposit at Lynn Lake, producing 1.9Mt at 2.5% nickel and 1.15% copper, has significant drill defined mineralisation from surface, surrounding the historical mine. Corazon’s 2010 discovery of a high-grade sulphide breccia at depth below the EL Mine confirmed the prospectivity of the Lynn Lake project area and the Company’s activities at Lynn Lake have remained focused on defining the EL Deposit’s benefits, and the goal is to eventually recommence mining operations in Lynn Lake.

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Half Year Financial Report

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DIRECTOR’S REPORT (cont)

At Beaucage, the Company worked on collating and interpreting historical data to assist with target generation for future drilling. Information acquired to date indicates a number of significant untested high grade gold anomalous zones, and Corazon believes the high tenor of gold mineralisation, over a large area near Beaucage Lake, may be indicative of a large scale mineralised system. The grant of a Work Permit by the Manitoba conservation authorities will enable the Company to undertake a program of field exploration activities to further consolidate data and define drill target locations.

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 of relevance to the styles of mineralisation and the types of deposits under consideration, and to the activities undertaken, to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Smith consents to the inclusion in this report of the matters based on information in the form and context in which it appears.

CORPORATE ACTIVITIES

On 13 July 2013 the Company announced that 2,970,000 options with an exercise price of $0.07 cents per option expired.

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

On 21 September 2013, the Company announced that it had issued 3,970,233 fully paid shares with a total valuation of $150,869 to Wallis Drilling Pty Ltd in partial payment of drilling expenditure incurred at the Company’s Top-Up Rise Project.

On 10 September 2013, the Company resolved to raise approximately $3 million at 2.8 cents per share pursuant to a placement. The placement was completed in two tranches, with 61,160,555 shares issued on 19 September 2013 in Tranche One and 45,982,302 shares issued on 15 October 2013 in Tranche Two.

The successful capital raising was used to fund the Company’s drilling program at its Top-Up Rise Project in Western Australia, and to also fund further exploration at the Company’s Canadian gold and nickel projects.

On 8 November 2013 the Company issued 7,500,000 share options with an exercise price of $0.10 and an expiry of 10 October 2013 to Hartley’s Limited. The share options were issued in consideration of fees for the facilitation of the Company’s September/October placement. The allotment had a total valuation of $138,111.

On 2 December 2013 the Company announced that 2,000,000 options with an exercise price of $0.12 per option expired.

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DIRECTOR’S REPORT (cont)

5. AUDITOR’S DECLARATION

The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 6 for the half-year ended 31 December 2013.

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

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Brett Smith Managing Director Dated this day 13 March 2014

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AUDITOR’S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF CORAZON MINING LIMITED

In relation to our review of the financial report of Corazon Mining Limited for the half year ended 31 December 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

13 MARCH 2014 WEST PERTH, WESTERN AUSTRALIA

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INDEPENDENT AUDITOR’S 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 (the Company) which comprises the condensed consolidated statement of financial position as at 31 December 2013, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, condensed 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 2013, or during the half year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the Company 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 internal controls as the directors determine is necessary to enable the preparation of the halfyear 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 Standard 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 half-year 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 2013 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporation Regulations 2001. As the auditor of Corazon Mining Limited, 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.

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.

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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 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 2013 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.

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PKF MACK & CO

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SHANE CROSS PARTNER

13 MARCH 2014 WEST PERTH, WESTERN AUSTRALIA

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Half Year Financial Report

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the half year ended 31 December 2013

Note Other revenue 3 Administrative expense Compliance and regulatory expense Consultancy expense Depreciation and amortisation expense Directors fees Employee benefits expense Exploration expense Fair value movements on available for sale financial assets Finance costs Impairment of intangible asset Insurance expense Occupancy expense Realised loss on sale of financial asset Travel expense Loss for the period before income tax expense Income tax benefit/(expense) Loss for the period from continuing operations Discontinuing operations Loss for the period from discontinuing operations 4 Loss for the period Other comprehensive income/(loss), net of income tax Items that may be reclassified subsequently to profit or loss Net change in fair value of available for sale financial asset Total comprehensive loss for the period Loss per share Basic and diluted loss per share (cents) calculated on loss for continuing and discontinuing operations for the period	31-Dec-13 $ 133,850 (44,940) (85,255) (91,170) (3,380) (90,891) (11,735) (1,931,188) 14,301 (902) (135,840) (15,499) (27,761) - (12,467) (2,302,877) - (2,302,877) (708) (2,303,585) - (2,303,585) (0.67)	31-Dec-12 $ 84,523 (52,763) (157,816) (57,493) (4,605) (115,053) 8,789 (135,457) 62,804 (1,950) (178,070) (12,958) (67,109) (33,368) (19,560)
		(680,086) -
		(680,086) -
		(680,086) -
		(680,086)
		(0.49)

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

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2013

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other assets Financial assets Plant and equipment Exploration and evaluation expenditure 6 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 7 Reserves Accumulated losses TOTAL EQUITY	31-Dec-13 $ 2,120,227 104,109 2,224,336 35,000 119,764 30,399 - 185,163 2,409,499 345,232 1,013 346,245 346,245 2,063,254 26,539,318 1,466,346 (25,942,410) 2,063,254	30-Jun-13 $ 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

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

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Half Year Financial Report

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the half year ended 31 December 2013

CASH FLOWS FROM OPERATING ACTIVITIES Interest received Payments to suppliers and employees Payments for exploration and evaluation Proceeds from exploration grants Proceeds from exploration refunds NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial asset NET CASH FROM 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-Dec-13 $ 26,707 (412,543) (2,195,816) 110,000 - (2,471,652) - - 3,000,000 (204,543) 2,795,457 323,805 1,796,422 2,120,227	31-Dec-12 $ 22,111 (462,346) (307,080) - 72,851
		(674,464)
		3,797
		3,797
		- -
		-
		(670,667) 810,876
		140,209

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

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Half Year Financial Report

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the half year ended 31 December 2013

Balance at 1 July 2013 Loss for the period Total comprehensive income for the period Transactions with owners, recorded directly in equity Issue of share capital Transaction costs of share issue Lapse of option on expiry Share based payment Total transactions with owners Balance at 31 December 2013 Balance at 1 July 2012 Loss for the period Total comprehensive income for the period Transactions with owners, recorded directly in equity Share issued Lapse of option on expiry Total transactions with owners Balance at 31 December 2012	Issued Capital Option Reserves Share Based Payment Reserves Other Reserves Accumulated Losses Total $ $ $ $ $ $ 23,731,103 - 1,307,225 303,750 (23,921,565) 1,420,513
	- - - - (2,303,585) (2,303,585)
	- - - - (2,303,585) (2,303,585)
	3,150,869 - - - - 3,150,869 (342,654) - - - - (342,654) - - (282,740) - 282,740 - - - 138,111 - - 138,111
	2,808,215 - (144,629) - 282,740 2,946,326
	26,539,318 - 1,162,596 303,750 (25,942,410) 2,063,254
	20,756,081 240,339 999,390 303,750(20,745,996) 1,553,564
	- - - -(680,086) (680,086)
	- - - - (680,086) (680,086)
	32,500 - - - - 32,500 - - (100,000) - 100,000 -
	32,500 - (100,000) - 100,000 32,500
	20,788,581 240,339 899,390 303,750(21,326,082) 905,978

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

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CONDENSED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2013

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Corazon Mining Limited (the Company) is a public company, limited by shares, domiciled and incorporated in Australia and listed on the Australian Securities Exchange. The consolidated half-year financial report of the Company for the six months ended 31 December 2013, comprise the Company and its subsidiaries (the “Consolidated Entity” or “Group”).

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 as appropriate for profit orientated companies. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting .

The half-year consolidated financial 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 2013 and any public announcements made by Corazon Mining Limited and its controlled entities during the half-year reporting period in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 .

These consolidated half year financial statements were authorised for issue in accordance with a resolution of the Board of Directors on 13 March 2014.

Basis of preparation

The half-year consolidated financial 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 2013 annual financial report for the financial year ended 30 June 2013. Those accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period.

Any significant impact on the accounting policies of the Consolidated Entity from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Account Standards and Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity.

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

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 Group but are not yet effective. This assumes the following have not been adopted in preparation of the financial statements at the reporting date.

AASB No. Title AASB 9 Financial Instruments AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities AASB 2013-3 Amendments to AASB 136 – Recoverable amount disclosures for non-financial assets AASB 2013-4 Amendments to Australian Accounting Standards – notation of derivatives and continuation of hedge AASB 2013-5 Amendments to Australian Accounting Standards – Investment entities AASB 2013-6 Amendments to AASB 136 arising from Reduced Disclosure Requirements AASB 2013-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities - Control and Structured Entities [AASB 10, AASB 12 & AASB 1049] Interpretation 21 Levies

Application date of standard Issue date 01-01-15 01-12-10 01-01-14 01-06-12 01-01-14 01-06-13 01-01-14 01-07-13 01-01-14 01-08-13 01-01-14 01-09-13 01-01-14 01-10-13 01-01-14 01-05-13

Going Concern Basis

The financial statements have been prepared on the going concern basis. As at 31 December 2013 the Consolidated Entity had net assets of $2,063,254 (30 June 2013: $1,420,513) and continues to incur expenditure on its exploration tenements drawing on its cash balances. As at 31 December 2013 the Consolidated Entity had $2,120,227 (30 June 2013: $1,796,422) in cash and cash equivalents.

The ultimate recoupment of costs carried forward for exploration and evaluation is dependent on the successful development and commercial exploitation or sale of the respective areas of interest. Ultimate exploitation of the assets will depend on raising necessary funding in the future. As at 31 December 2013 there has been no adjustment in the financial report relating to the recoverability and classification of the asset carrying amounts, or the amounts and classification of liabilities that might be necessary, should the Consolidated Entity be unable to raise capital as and when required, and the exploitation of the areas of interest not be successful, or the Consolidated Entity not continue as a going concern.

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

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 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.

(iii) Impairment of exploration and evaluation assets

The ultimate recoupment of the value of exploration and evaluation assets 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 and Beaucage Gold project. 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 the impairment test and considered it is appropriate that the option should be impaired as at 31 December 2013.

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

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

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.

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 2013 Revenue Total segment revenue Segment net operating profit after tax Interest revenue Depreciation As at 31 December 2013 Segment assets Segment Liabilities For the period ended 31 December 2012 Revenue Total segment revenue Segment net operating profit after tax Interest revenue Depreciation As at 30 June 2013 Segment assets Segment liabilities	Australia Canada Unallocated Total $ $ $ $ 110,000 - 23,850 133,850
	110,000 - 23,850 133,850
	(1,566,177) (255,011) (482,397) (2,303,585)
	- - 23,850 23,850 - - (3,380) (3,380) - - 2,409,499 2,409,499
	232,659 - 113,586 346,245
	Australia Canada Unallocated Total $ $ $ $ - 72,851 11,672 84,523
	- 72,851 11,672 84,523
	(4,904) (193,542) (481,640) (680,086)
	- - 11,672 11,672 - (4,605) - (4,605) 10,829 - 2,061,215 2,072,044
	(2,228) (569,727) (79,576) (651,531)

The accounting policies of the reportable segment are the same as the Group accounting policies.

3.	OTHER REVENUE Operating activities Interest received Other revenue – exploration grant Total Other Revenue	31 December 2013 $ 23,850 110,000 133,850	31 December 2012 $ 11,672 72,851
			84,523

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

4. DISPOSAL OF SUBSIDIARY

On 14 August 2013 the Company deregistered its subsidiary Graynic Metals (Guatemala) Pty Ltd. The total value of the subsidiaries net assets as at date of disposal was $708, which was attributable to an intercompany loan. The amount was recognized as a loss on disposal of Graynic Metals (Guatemala) Pty Ltd.

5. INTANGIBLE ASSET

Balance at the beginning of the period Option payments Impairment of intangible asset Balance at the end of the period	31 December 2013 $ - 135,840 (135,840) -	30 June 2013 $ - 1,026,210 (1,026,210)
		-

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

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.

The Consolidated Entity has spent approximately $6.4 million on exploration and evaluation at Lynn Lake Project. On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire 100% equity in 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 11 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 Consolidated Entity has spent approximately $233,000 on exploration and evaluation at Beaucage Lake Gold Project.

Please refer to note 11 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 the impairment test and considered it is appropriate that the Lynn Lake Project and the Beaucage Lake Gold Project be impaired as at 31 December 2013.

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

6. 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 2013 $ - 1,931,188 (1,931,188) -	30 June 2013 $ - 1,232,628 (1,232,628)
		-

Exploration expenditure includes expenditure on the Top Up Rise, Lynn Lake and Beaucage Lake Gold Projects.

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.

7. ISSUED CAPITAL (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 during the financial period - Wallis Drilling – Drilling expense : 1,000,000 fully paid shares - Placement: 107,142,857 fully paid shares Less capital raising costs Balance at the end of period	31 December 2013 $ 28,343,928 (1,804,610) 26,539,318 Number of shares 290,523,113 3,970,233 107,142,857 - 401,636,203	30 June 2013 $ 25,193,059 (1,461,956)
		23,731,103
		$ 23,731,103 150,869 3,000,000 (342,654)
		26,539,318

8. CONTINGENT LIABILITIES

There has been no change to contingent liabilities since the last annual reporting date, refer to Note 11.

9. EVENTS SUBSEQUENT TO REPORTING DATE

No matter or circumstance has arisen subsequent to 31 December 2013 that has significantly affected, or may significantly affect, the state of affairs or operations of the reporting entity in future financial periods.

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

10. DIVIDENDS

No dividends have been declared or paid during the half-year ended 31 December 2013.

11. COMMITMENTS

In order to maintain current rights of tenure to exploration tenements the Consolidated Entity is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations can be reduced by selective relinquishment of exploration tenure or renegotiation.

LYNN LAKE

On 13 July 2010, the Consolidated Entity acquired a subsidiary entity Manitoba Nickel Pty Ltd which holds an option to acquire a 100% interest in the Lynn Lake project for approximately $3 million in expenditure over 3 years, followed by a $2 million vendor payment.

On 9 August 2012, the Consolidated Entity renegotiated the terms of its option to acquire 100% equity in project. The option to acquire the project has been extended from 20 October 2012 to 20 October 2015. The Consolidated Entity 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.

As at 31 December 2013, the Consolidated Entity has spent approximately $6.4 million on exploration and evaluation at Lynn Lake Project. The Company has the discretion to exercise the option to acquire Lynn Lake project by paying $1 million before 21 October 2015.

Subject to Manitoba Nickel Pty Ltd 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 vendors a further 4,500,000 shares.

• Exploration and evaluation expenditure payable in the event option to Lynn Lake is exercised. - Not longer than 12 months

• $105,340

• $1,053,400

• Longer than one year but not longer than five

BEAUCAGE 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 Consolidated Entity 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:

• 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 C$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

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2013 (cont)

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 C$1,000,000.

• Exploration and evaluation expenditure payable in the event option to Beaucage Lake Gold is exercised. - Not longer than 12 months $79,005

$79,005 $210,680

• Longer than one year but not longer than five

TOP UP RISE PROJECT

On 25 January 2013, a General Meeting of Shareholders was held and obtained approval for the staged acquisition of up to 75% of Border Exploration (Border Exploration) Pty Ltd, 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 to 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;

On 10 June 2013, the Company registered a new subsidiary Top Up Rise Pty Ltd and completed Stage 1 acquiring 10% of Border Exploration. 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.

Exploration and evaluation expenditure payable in the event option to Top Up Rise Project is exercised. Not longer than 12 months $111,000 Longer than one year but not longer than five $1,159,204

$111,000 $1,159,204

12. KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report.

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DIRECTOR’S DECLARATION

The Directors of the Company declare that:-

1. The financial statements and notes, as set out on pages 9 to 20 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 2013 and of its performance for the half-year ended on that date.

4. 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 directors made pursuant to s.303 (5) of the Corporations Act 2001 .

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_____ Brett Smith Managing Director

Dated this day 13 March 2014

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