CORAZON MINING LIMITED — Interim / Quarterly Report 2018

Mar 12, 2018

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HALF YEAR REPORT FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2017

CORAZON MINING LIMITED AND ITS CONTROLLED ENTITIES (ABN 87 112 898 825)

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. Events Subsequent To Reporting Date ....................................................................................... 10
6. Significant Changes In The State Of Affairs ................................................................................. 10
7. Auditor’s Declaration .................................................................................................................. 10
Auditor’s Independence Declaration ........................................................................................ 11
Independent Auditors’ Review Report ...................................................................................... 12
Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income .... 14
Condensed Consolidated Statement Of Financial Position ....................................................... 15
Condensed Consolidated Statement Of Cash Flows ................................................................. 16
Condensed Consolidated Statement Of Changes In Equity ...................................................... 17
Condensed Notes To The Financial Statements ........................................................................ 18
1. Statement Of Significant Accounting Policies ....................................................................................... 18
2. Segment Information ............................................................................................................................. 20
3. Other Revenue ....................................................................................................................................... 21
4. Intangible Asset ..................................................................................................................................... 21
5. Exploration Expenditure ........................................................................................................................ 22
6. Issued Capital ......................................................................................................................................... 22
7. Fair Value Measurement ........................................................................................................................ 23
8. Contingent Liabilities ............................................................................................................................. 23
9. Events Subsequent To Reporting Date .................................................................................................. 23
10. Dividends .............................................................................................................................................. 23
11. Commitments ........................................................................................................................................ 23
12. Key Management Personnel ................................................................................................................. 25
Director’s Declaration ............................................................................................................. 26

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 2017 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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CORPORATE DIRECTORY

NON-EXECUTIVE CHAIRMAN Clive Jones

EXECUTIVE MANAGING DIRECTOR Brett Smith

NON-EXECUTIVE DIRECTORS

Jonathan Downes Mark Qiu

COMPANY SECRETARY Robert Orr

PRINCIPAL & REGISTERED OFFICE

Level 1, 329 Hay Street SUBIACO WA 6008 Telephone: (08) 6142 6366 Facsimile: (08) 6210 1872

AUDITORS

PKF Mack Level 5, 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

The Directors present their report, together with the financial statements, on the Consolidated Entity (referred to hereafter as the 'Consolidated Entity') consisting of Corazon Mining Limited (referred to hereafter as the 'Company' or 'Parent Entity') and the entities it controlled at the end of the half-year ended 31 December 2017.

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 Jonathan Downes Non-Executive Director Mark Qiu Non-Executive Director (appointed 18 August 2017) Adrian Byass Non-Executive Director (resigned 23 November 2017)

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 and evaluation of the Consolidated Entity’s ground holdings.

3. RESULT OF OPERATIONS

The loss after tax for the half-year ended 31 December 2017 was $797,513 (2016: $1,853,340).

4. REVIEW OF OPERATIONS

Post half-year end, the Company announced it had raised $3.4 million (before costs) at the issue price of $0.015 per share ( Placement ) to advance the Company’s cobalt and nickel assets (ASX Announcement 24 January 2018).

The strong demand for the heavily oversubscribed Placement reflects the significant prospectivity of Corazon’s cobalt and nickel assets. Funds raised pursuant to the Placement are being used to progress both the Mt Gilmore Cobalt-Copper-Gold Project ( Mt Gilmore ) in N.S.W. and the Lynn Lake Nickel-Copper-Cobalt Project ( Lynn Lake ) in Canada, including:

• A significant cobalt exploration and project development program at Mt Gilmore, which will be focused on the Cobalt Ridge sulphide mineralisation, including geophysics, geochemistry, drilling and potentially maiden resource estimation.

• Drilling of newly defined priority targets at Lynn Lake’s Fraser Lake Complex, confirmed from detailed targeting work conducted in the 2017 field season; and

• A significant upgrade at Lynn Lake, including resource definition drilling and conversion of the additional drill defined mineralisation to JORC 2012 compliance, as well as the completion of mining studies.

The continued successful exploration and analysis of results at both the Mt Gilmore and Lynn Lake projects continues to provide Corazon with exciting opportunities and the potential to deliver significant valueappreciation for shareholders, and Corazon is looking forward to accelerating the exploration of its cobalt and nickel assets.

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DIRECTOR’S REPORT (cont)

AUSTRALIA

Mt Gilmore Cobalt Project, N.S.W.

The Cobalt Ridge prospect within the Mt Gilmore Cobalt-Copper-Gold Project (Figure 1) hosts one of the highest-grade cobalt deposits in Australia. Corazon believes this rare cobalt-dominant sulphide deposit has the potential to supply a quality cobalt product, suitable for use in lithium-ion batteries and the emerging rechargeable battery sector.

Mt Gilmore is located 35 kilometres from the major mining centre of Grafton in north-eastern New South Wales. Corazon owns a 51% interest in, and the exclusive right to earn up to an 80% interest, in Mt Gilmore.

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Figure 1: Mt Gilmore project location map

Corazon’s maiden reverse circulation and core drilling program at Mt Gilmore targeted the high-grade Cobalt Ridge prospect, with final assay results further validating Mt Gilmore as a unique, high-grade, cobalt-dominant deposit (ASX announcement 16[th] January, 2017). Preliminary metallurgical testwork completed on RC chip samples from Cobalt Ridge delivered excellent results (ASX announcement 7[th] March, 2017), such that any future processing-route is anticipated to be simple and inexpensive, utilising tried and tested methods.

- Cobalt Ridge Metallurgical Testwork Delivers Outstanding Results

During the December quarter, Corazon announced highly positive results from its recently completed Phase 2 metallurgical testwork program at Mount Gilmore. Testwork was conducted on a composited sample of drill core from the Company’s drilling program at Cobalt Ridge, following the highly successful Phase 1 metallurgical testwork results (ASX announcement 7[th] March, 2017).

Phase 2 testwork targeted lower grade material than that tested in Phase 1 and delivered exceptional results. Simple flotation processing yielded recoveries of 93.6% cobalt and 98.4% copper. The concentrate mass represented only 5% of the initial mass feed, with the concentrate grading at 2.02% cobalt and 5.18% copper.

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DIRECTOR’S REPORT (cont)

Initial sighter-gravity concentration testwork indicated that a high-grade cobalt concentrate could be obtained from a small fraction of the feed mass, with results suggesting that a 12.2% cobalt grade concentrate can be produced from only 1.31% of the initial mass. This has the potential to significantly reduce downstream equipment size and reagent consumption, improving both the Project’s CAPEX and OPEX.

Mineralisation tested included what is considered to be the “background” grade for the main lode within the Cobalt Ridge Deposit. The assayed grade of the sample was 0.14% cobalt, 0.32% copper and 0.09ppm gold, providing a variation to the previously tested high-grade mineralisation in the first phase metallurgical testwork.

Cobalt is present as cobaltite, the copper presents as chalcopyrite and the gold is predominantly associated with the sulphide minerals. The similar nature of the sulphide minerals, together with the gold association, has provided the opportunity for a very simple beneficiation process and production of a bulk concentrate.

Grind liberation testing indicated the mineralisation is not overly sensitive to grind size. As such, the rougher floatation can be conducted at a coarse grind size, with subsequent re-grinding of a lower mass concentrate. This delivers lower power and regent costs, as well as the option to significantly de-risk and reduce capital costs associated with down-stream processing options.

As evidence of this, a rougher floatation test was completed at a coarse grind size of P80 212µm, followed by a regrind of the concentrate and subsequent cleaner flotation. The concentrate produced from the cleaner flotation had grades of 3.27% cobalt and 8.67% copper, with total recoveries of 85.2% for cobalt and 92.7% for copper.

On-going testwork for the Cobalt Ridge Deposit is focused on defining the down-stream concentrate processing options and detailed process engineering studies. Results to date suggest excellent potential for the production of a concentrate for hydrometallurgical processing.

The testwork is managed by internationally recognised metallurgical consultants METS Engineering (see competent person statement below) (appointed in the September quarter) and independently carried out at ALS laboratories in Perth, Western Australia.

Drilling Results

Post-half-year end, Corazon announced it had received assay results from the final two holes of its recently completed 18 hole 3,189m drilling program (2,426m of RC and 763m of core) at Cobalt Ridge. Drill hole MGRCD036, which tested the Main Cobalt Lode, returned significant results of 5m @ 0.53 % Co, 0.16 % Cu, 0.08 g/t Au from 224 m, within a broader zone of 42m @ 0.11% Co (Figure 2) (ASX announcement 17 January 2018).

Drilling has highlighted multiple cobalt, copper and gold mineralised trends in what Corazon interprets as a long-lived, multiphase alteration and mineralising event. The Main Cobalt Lode was the primary target of the Company’s recent drilling (and much of the historical drilling). This lode is up to 25 metres in true width and contains multiple narrow zones of higher-grade mineralisation.

Drilling has identified the Main Cobalt Lode mineralisation to be open in all directions, and there is considerable scope to define extensions to this feature as well as define additional parallel lodes.

The results of Corazon’s drilling programs to date have continued to validate and strengthen the Company’s exploration model for the Cobalt Ridge as a potentially significant Cobalt-Copper-Gold development asset. The next phase of work will include geophysical and geochemical surveys to test for

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Half Year Financial Report

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DIRECTOR’S REPORT (cont)

significant potential extensions to the Mt Gilmore project area, as well as the continuation of Corazon’s highly successful metallurgical testwork programs.

Testing Extensions To Mineralisation

To date, a small area of outcrop that defines Cobalt Ridge has been the focus for drilling. The Company believes there is good potential for the mineralisation to extend under thin cover to the east, and prospecting to the south has identified multiple untested lodes very similar in character to the Cobalt Ridge mineralisation.

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Figure 2: Geological cross-section in line for drill hole MRGC036

Cobalt intercept calculation parameters: Greater than or equal to 0.3m down hole thickness, greater than or equal to 0.05% Co, greater than or equal to 0.05% Co cut-off and less than or equal to 3m internal dilution. The results for MGRCD027 are an exception to this rule and have been included due to the value of the copper intersection. Assay values at “lower than” detection limits are attributed a value of 50% of that detection limit for interval calculations. Copper equivalents: The composited value of the cobalt-copper-gold mineralisation is presented as percentage copper equivalents (CuEq%). These metals have been historically extracted from small-scale mining at Mt Gilmore and it is the

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Half Year Financial Report

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DIRECTOR’S REPORT (cont)

Company’s belief that the cobalt, copper and gold is recoverable. Metallurgical test work currently underway is expected to underpin these assumptions. CuEq% = Cu% + (Co% * 9.19) + (ppm Au * 0.63). Metal prices used are Cu US$7,113/t, Co US$75,506/t and Au US$1,318/oz.

Geophysics is expected to be useful in tracing the Cobalt Ridge mineralisation under cover to the east. Geophysical consultants have been engaged and the Company is expecting to complete both aerial and ground geophysical surveys in the near term, with the intention of defining drill targets for the second quarter of 2018.

Work is underway to use soil sampling (geochemical survey) to test prospective outcropping areas to the south of Cobalt Ridge. To date, soil sampling has been very effective in identifying mineralised trends at Cobalt Ridge (Figure 2). The results of this work are expected in March 2018.

CANADA

Lynn Lake Nickel-Copper-Cobalt Project, Manitoba

Post half-year end, Corazon was pleased to announce that its current phase of drilling at the Fraser Lake Complex ( FLC ), located just five kilometers south of its 100% owned Lynn Lake Nickel-Copper-Cobalt Mining Centre ( Lynn Lake ) in Canada (Figure 3), had commenced (ASX Announcement 15[th] February 2018). Exploration by Corazon at the FLC has resulted in the discovery of a large magmatic sulphide system that has the potential to host significant nickel-copper sulphide deposits.

Corazon has systematically explored the FLC since December 2016 and is of the view that the FLC has the potential to host significant nickel-copper-cobalt sulphide deposits. Corazon’s activities include drilling, ground geophysics, downhole geophysics and geochemistry. The large amount of data generated by Corazon’s targeted exploration to date has produced geophysical and geochemical models that have further refined the focus of the upcoming drilling at the FLC.

A small drilling program was completed at Lynn Lake in early 2018, post the Half-year reporting period. In total five holes were drilled for 1,415 metres of core. Targets included geophysical anomalies at the FLC (three holes), as well as targets closer to the Mining Centre at Flag Lake (two holes). Results from this work are pending.

Half-year exploration at Lynn Lake was focused on the detailed analysis and interpretation of geochemical and geophysical results for the on-going exploration targeting within the FLC, where the Company believes the discovery of the mineralised Feeder Zone is significant. Prior to the current drilling program, work to date included only 10 holes within an anomaly over 1.7 kilometres in strike. Exploration completed to date has enabled a clearer understanding of the magmatic history of the intrusion, which can be used to vector towards higher-grade, more massive accumulations of sulphide mineralisation.

The FLC has physical and chemical characteristics that suggest it is prospective for hosting Lynn Lake style magmatic nickel-copper-cobalt deposits. Corazon’s drilling has confirmed this potential, consistently intersecting Lynn Lake mine-grade nickel-copper-cobalt mineralisation.

Three phases of drilling completed within the FLC in 2017 included ten holes into the Matrix Trend, a 1.7 kilometre long Induced Polarisation chargeability anomaly, interpreted as the feeder zone for the intrusive complex. Phase 3 drilling included four core holes for 1,857 metres, targeting the interpreted “neck” of the feeder zone to the FLC, and delivered significantly higher sulphide content than previously identified.

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DIRECTOR’S REPORT (cont)

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Figure 3: Lynn Lake Project Location and Interpreted Geology. Emslie, R.R. and Moore, J.M. 1961. Datum UTM Zone 14 (NAD83).

Drilling within the Matrix Trend indicated multiple pulses of sulphide-rich magma have been injected into the FLC. The Ni-Cu-Co mineralisation within the Matrix Trend is significant in that it identifies the feeder zone of the FLC as a long-lived, multi-phase, well mineralised magmatic system with the potential to develop high-grade sulphide deposits.

– Interpretation of Assay Data Targets Defined

Significant nickel, copper and cobalt assay results for Phases 1, 2 and 3 of drilling are presented in Table 1, below. All holes drilled within the Matrix Trend, across all programs, were extensively mineralised for their entire lengths, with background nickel content predominantly between 0.2% and 0.3%. The intensity of the iron-nickel-copper (Fe-Ni-Cu) magmatic sulphide mineralisation intersected varied from weakly disseminated to strongly disseminated, matrix to semi-massive and massive styles. Nickel and copperbearing sulphides are observed throughout the drill core.

The Company’s drilling of the Matrix Trend defined a stratified feeder dyke and sulphide mineralisation within a horizontal flow of more than 925 metres. Analysis of more than twenty geochemical variables has defined at least three significant nickel-copper-cobalt enriched magmatic cycles, each supporting narrow, higher-grade metal content (1.3%Ni to 2.9%Ni).

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DIRECTOR’S REPORT (cont)

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Table 1: Significant Drill Hole Intercepts at +0.7% NiEq for all drilling completed in 2017. Maximum internal dilution of 1.5m <0.7% NiEq.

Nickel equivalents ( NiEq % ) are used as an indicator of value, with there being reasonable expectations for the recovery of all metals reported. NiEq % = Ni%+((Cu% x (Cu$/Ni$))+((Co% x (Co$/Ni$)) where Ni$ = $US 11,263.50/t Cu$ = $US 6,551.25/t Co$ = $US 60,296.00/t.

Geochemistry has defined the base of the Matrix Trend, with all holes drilling into un-mineralised units of the gabbro. The dyke is not a bottomless feature and the base of the channel itself provides a very good target for the accumulation of sulphides.

The source of these “pulses” of magmatism and mineralisation has yet to be identified; however, it provides the opportunity for intrusive sulphidic breccias similar to those found at the high-grade EL Mine at Lynn Lake, a vertical pipe-like body. There is a disruption on the horizontal flow (geochemical correlation) between the two best holes drilled into the Matrix Trend - holes FLC-2017-014 and FLC-2017016. These holes are 250 metres apart and separated by a gravity high anomaly that defines a possible vertical massive feature and a significant exploration target.

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DIRECTOR’S REPORT (cont)

Competent Persons Statement

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 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Smith consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

The information in this report that relates to the Processing and Metallurgy for the Mount Gilmore project is based on and fairly represents information and supporting documentation compiled by Damian Connelly who is a Member of The Australasian Institute of Mining and Metallurgy and a full time employee of METS Engineering (METS). Damian Connelly has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Damian Connelly consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Canadian geologist Dr Larry Hulbert has been engaged by Corazon to manage the collation of past exploration information and the definition of new targets at Lynn Lake. Dr Hulbert has extensive knowledge of the Lynn Lake district and over 40 years’ experience in Ni-Cu-PGM exploration and research. Dr Hulbert is one of North America's foremost experts on magmatic sulphide deposits and would qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

Dr. Hulbert has authored numerous professional papers, was the recipient of the Barlow Medal from CIM in 1993, a Robinson Distinguished Lecturer for the Geological and Mineralogical Association of Canada for 2001-2002, and in 2003 received the Earth Sciences Sector Merit Award from Natural Resources Canada.

CORPORATE ACTIVITIES

On 18 August 2017, Dr Mark Qiu of Hanking Australia Investments Pty Ltd was appointed to the Company’s Board of Directors.

On 22 August 2017 the Company issued 139,856,665 fully paid ordinary shares at an issue price of $0.014. The share issue was comprised of:

• an issue of 120,000,000 shares to Hanking Australia Investments Pty Ltd under a Subscription Agreement for a $1,680,000 investment in the Company;

• an issue of 7,356,665 to sophisticated investors to raise $102,993; and

• an issue of 12,500,000 shares to Providence Gold and Minerals Pty Ltd pursuant to the Company’s Earn-in Agreement with Providence in respect of the Mt Gilmore Project. Under this Agreement, the Company has the exclusive right to earn up to an 80% interest in the Project. The shares have a total valuation of $150,000.

On the same date, the Company also issued 85,000,000 options to Hanking Australia Investments Pty Ltd following their investment in the Company. The options were issued with an exercise price of $0.03 and an expiry of 22 August 2019.

On 23 November 2016, the Company held its Annual General Meeting of Shareholders (AGM). All resolutions put to the meeting were unanimously passed by a show of hands.

On the same date Mr Adrian Byass resigned from the Board of Directors.

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DIRECTOR’S REPORT (cont)

5. EVENTS SUBSEQUENT TO REPORTING DATE

On 31 January 2018 the Company announced the placement of 226,000,000 fully paid ordinary shares with sophisticated professional investors. The shares were valued at $0.015 per share and raised $3,390,000 for Company exploration programs and working capital purposes.

Other than the above event no matters or circumstances have arisen subsequent to 31 December 2017 that has significantly affected, or may significantly affect, the state of affairs or operations of the reporting entity in future financial periods.

6. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no other significant changes in the state of affairs of the Consolidated Entity during the financial half-year.

7. AUDITOR’S DECLARATION

The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 11 for the half-year ended 31 December 2017.

This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the Directors.

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Brett Smith Managing Director Dated this day 13 March 2018

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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 2017, 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.

PKF MACK

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SHANE CROSS PARTNER

13 MARCH 2018 WEST PERTH, WESTERN AUSTRALIA

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INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF

CORAZON MINING LIMITED

Conclusion

We have reviewed the accompanying half-year financial report of Corazon Mining Limited (the company) and controlled entities (consolidated entity), which comprises the consolidated statement of financial position as at 31 December 2017, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at 31 December 2017, or during the half year.

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 2017, and of its financial performance for the half-year ended on that date; and

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

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.

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 Regulations 2001 and for such internal control 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.

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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 2017 and its performance for the half year ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Corazon Mining Limited and the entities it controlled during the half year, 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.

PKF MACK

SHANE CROSS PARTNER

13 MARCH 2018 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 2017

Note Revenue Other revenue 3 Expenses 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 Travel expense Loss for the period before income tax expense Income tax benefit/(expense) 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-17 $ 914 (39,964) (109,216) (59,619) (1,928) (99,609) (4,590) (341,728) - (1,000) (100,755) (14,000) (15,727) (10,291) (797,513) - (797,513) - (797,513) (0.08)	31-Dec-16 $ 1,139 (22,664) (95,741) (36,359) (2,058) (85,809) (5,398) (1,180,104) 2,000 (1,231) (400,210) (9,285) (11,700) (5,920)
		(1,853,340) -
		(1,853,340) -
		(1,853,340)
		(0.27)

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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Half Year Financial Report

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2017

Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other assets Financial assets Plant and equipment Intangible assets 4 Exploration and evaluation expenditure 5 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 6 Reserves Accumulated losses TOTAL EQUITY	31-Dec-17 $ 1,100,741 75,750 10,119 1,186,610 59,000 3,503 16,800 - 2,218,403 2,297,706 3,484,316 221,255 221,255 221,255 3,263,061 34,699,324 1,298,150 (32,734,413) 3,263,061	30-Jun-17 $ 1,354,430 18,960 15,009
		1,388,399
		55,000 3,503 18,729 - 1,299,566
		1,376,797
		2,765,197
		631,437
		631,437
		631,437
		2,133,760
		32,772,510 1,298,150 (31,936,900)
		2,133,760

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

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the half year ended 31 December 2017

CASH FLOWS FROM OPERATING ACTIVITIES Interest received Payments for administration and corporate expenses Payments for exploration and evaluation expenses Payments for environmental bonds Payments for staff expenses NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Payments for fixed assets Payments for intangible assets NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payment for costs of share issue 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-17 $ 1,333 (336,670) (1,495,344) (4,000) (95,067) (1,929,748) - (100,755) (100,755) 1,782,993 (6,179) 1,776,814 (253,689) 1,354,430 1,100,741	31-Dec-16 $ 1,557 (237,087) (1,052,314) (10,000) (63,372)
		(1,361,216)
		(4,180) -
		(4,180)
		2,634,411 (231,374)
		2,403,037
		1,037,641 951,256
		1,988,897

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 2017

Balance at 1 July 2017 Loss for the period Total comprehensive income for the period Transactions with owners, recorded directly in equity Issue of share capital Costs of issuing capital Total transactions with owners Balance at 31 December 2017 Balance at 1 July 2016 Loss for the period Total comprehensive income for the period Transactions with owners, recorded directly in equity Issue of share capital Issue of share options Costs of issuing capital Lapse of options Total transactions with owners Balance at 31 December 2016	Issued Capital Share Based Payment Reserves Other Reserves Accumulated Losses Total $ $ $ $ $ 32,772,510 994,400 303,750 (31,936,900) 2,133,760 - - - (797,513) (797,513)
	- - - (797,513) (797,513)
	1,932,993 - - - 1,932,993 (6,179) - - - (6,179)
	1,926,814 - - - 1,926,814
	34,699,324 994,400 303,750(32,734,413) 3,263,061
	27,177,696 138,111 303,750 (25,796,938) 1,822,619 - - - (1,853,340) (1,853,340)
	- - - (1,853,340) (1,853,340)
	2,934,823 - - - 2,934,823 - 157,600 - - 157,600 (357,602) - - - (357,602) - (138,111) - 138,111 -
	2,577,221 19,489 - 138,111 2,734,821
	29,754,917 157,600 303,750 (27,512,167) 2,704,100

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

17

Half Year Financial Report

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CONDENSED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2017

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 2017, 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 for-profit orientated entities. 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 2017 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 2018.

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 annual financial report for the financial year ended 30 June 2017. Those accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

New, revised or amending Accounting Standards and Interpretations adopted

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 relevant to their operations and mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity and are consistent with those of the previous financial years and corresponding interim reporting period.

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

Impact of new standards and interpretations issued but not yet adopted

There are no new standards that have been issued since 30 June 2017 that have been applied by the Consolidated Entity. The 30 June 2017 annual report disclosed that the Consolidated Entity anticipated no new material impacts arising from initial application of those standards issued but not yet applied at that date, and this remains the assessment as at 31 December 2017.

Going Concern Basis

The financial statements have been prepared on the going concern basis which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. The Consolidated Entity incurred a net loss after tax of $797,513 for the period ended 31 December 2017 (31 December 2016: $1,853,340). As at 31 December 2017 the Consolidated Entity had net assets of $3,263,061 (30 June 2017: $2,133,760) and continues to incur expenditure on its exploration tenements drawing on its cash balances. As at 31 December 2017 the Consolidated Entity had $1,100,741 (30 June 2017: $1,354,430) 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. Should the Consolidated Entity be unable to raise additional funds, there is a material uncertainty which may cast significant doubt over the Consolidated Entity ability to continue as a going concern. On 31 January 2018 the Company raised $3,390,000 for Company exploration programs and working capital purposes, this has reduced uncertainty as to the company continuing as a going concern. As at 31 December 2017 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.

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.

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

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 the Lynn Lake Nickel Project and initially the acquisition costs related to the earn-in agreement for the Mount Gilmore 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 tests and considered it appropriate that both intangible assets should be impaired as at 31 December 2017.

2. SEGMENT INFORMATION

The Consolidated Entity has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM') 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 and Canada. Discrete financial information about each project is reported to the CODM 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 2017 Revenue Total segment revenue Segment net operating loss after tax Interest revenue Exploration expenditure Depreciation Intangible asset impairment	Australia Canada Unallocated Total $ $ $ $ - - 914 914
	- - 914 914
	- (443,357) (354,156) (797,513)
	- - 914 914 - (341,728) - (341,728) - (874) (1,054) (1,928) - (100,755) - (100,755)

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

As at 31 December 2017 Segment assets Segment Liabilities For the period ended 31 December 2016 Revenue Total segment revenue Segment net operating loss after tax Interest revenue Depreciation Exploration expenditure Intangible asset impairment As at 30 June 2017 Segment assets Segment liabilities	Australia Canada Unallocated Total $ $ $ $ 1,150,362 1,102,789 1,231,165 3,484,316
	(109,840) (24,860) (86,555) (221,255)
	- - 1,139 1,139
	- - 1,139 1,139
	(907,434) (673,908) (271,998) (1,853,340)
	- - 1,139 1,139 - (1,028) (1,030) (2,058) (657,434) (522,669) - (1,180,104) (250,000) (150,210) - (400,210) 1,076,325 254,862 1,434,010 2,765,197
	(444,071) (58,668) (128,698) (631,437)

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

3. OTHER REVENUE Operating activities Interest received Total Other Revenue 4. INTANGIBLE ASSET Balance at the beginning of the period Option payments on Lynn Lake Project Option payments on Mt Gilmore Project Impairment of intangible asset Balance at the end of the period	31 December 2017 $ 914 914 31 December 2017 $ - 100,755 - (100,755) -		31 December 2016 $ 1,139
			1,139
			30 June 2017 $ - 250,441 400,000 (650,441)
			-

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

LYNN LAKE PROJECT

In July 2010, the Consolidated Entity 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 exploration tenements. 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.

Under the terms of the contract the Company are required to make half-yearly consideration payments of $100,000 until the full amount of the CAD1,000,000 has been paid (final payment due on or before 20 April 2019) to acquire the 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 Lynn Lake Project be impaired as at 31 December 2017.

MT GILMORE PROJECT

On 23 June 2017 the Company formalised the transfer of 51% of the Mt Gilmore Project. On acquisition of this interest in the project the Company reclassified this project from being an intangible asset accounted for in accordance with AASB138 Intangible Assets, to an exploration asset accounted for under AASB 6 Exploration and Evaluation of Mineral Resources. Prior to the interest acquisition the project was classified as intangible asset and accounted for in accordance with AASB138.

5. EXPLORATION EXPENDITURE Balance at the beginning of the period Exploration expenditure capitalised during the period Impairment of exploration expenditure Balance at the end of the period	31 December 2017 $ 1,299,566 1,260,565 (341,728) 2,218,403	30 June 2017 $ 971,828 4,488,303 (4,160,565)
		1,299,566

Exploration expenditure includes expenditure on the Victory Nickel and Mt Gilmore 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 or alternatively by their sale.

6. ISSUED CAPITAL (a) Issued and fully paid shares Fully paid ordinary shares Less: capital issue costs net of tax	31 December 2017 $ 36,909,354 (2,210,030) 34,699,324	30 June 2017 $ 34,976,360 (2,203,850) 32,772,510

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

On 22 August 2017 the Company issued 139,856,665 fully paid ordinary shares at an issue price of $0.014. The share issue was comprised of:

• an issue of 120,000,000 shares to Hanking Australia Investments Pty Ltd under a Subscription Agreement for a $1,680,000 investment in the Company;

• an issue of 7,356,665 to sophisticated investors to raise $102,993; and

• an issue of 12,500,000 shares to Providence Gold and Minerals Pty Ltd pursuant to the Company’s Earn-in Agreement with Providence in respect of the Mt Gilmore Project.

7. FAIR VALUE MEASUREMENT

The following table details the Consolidated Entity's assets and liabilities, measured or disclosed at fair value, using quoted prices (unadjusted) in active markets for identical assets or liabilities that the Entity can access at the measurement date (level 1).

		31	December	30 June
			2017	2017
			$	$
Assets
Ordinary	shares available-for-sale		3,503	3,503

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

8. CONTINGENT LIABILITIES

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

9. EVENTS SUBSEQUENT TO REPORTING DATE

On 31 January 2018 the Company announced the placement of 226,000,000 fully paid ordinary shares with sophisticated professional investors. The shares were issued at $0.015 per share and raised $3,390,000 for Company exploration programs and working capital purposes.

Other than the above event no matters or circumstances have arisen subsequent to 31 December 2017 that has significantly affected, or may significantly affect, the state of affairs or operations of the reporting entity in future financial periods.

10. DIVIDENDS

No dividends have been declared or paid during the half-year ended 31 December 2017.

11. COMMITMENTS

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

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

VICTORY PROJECT

On 1 April 2015, the acquisition of the Victory Project from Victory Nickel Inc. (“the Vendor”) was finalised. The Victory Project is located immediately adjacent to the Company’s Lynn Lake Project, and contains the main nickel resources in that area.

The terms of the acquisition include a requirement to spend an aggregate amount of AUD$3.5 million on exploration and resource development in a five year period (concluding on the 19 December 2019). In the event that the Company fails to meet this expenditure requirement:

• The difference between AUD$3.5 million expenditure requirement and what is actually spent, must be paid to the Vendor in cash or shares; or

• The project is returned to Vendor.

Payable: — Not longer than one year — Longer than one year and not longer than 5 year Total	31 December 2017 $ 700,000 1,707,959
	2,407,959

LYNN LAKE PROJECT

On 13 July 2010, the Company acquired a subsidiary entity Manitoba Nickel Pty Ltd holder of an option to acquire a 100% interest in the Lynn Lake Project for approximately CAD$1.75 million in expenditure over four years.

On 29 July 2015, the Company renegotiated the terms of its option to acquire 100% equity in project, securing more favourable terms with regards to the future acquisition of the Lynn Lake Project. Under the terms of the original contract the Company was required to make a cash payment of CAD1,000,000 by 20 October 2015 to acquire the project, this has now been revised to half-yearly payments of CAD100,000 until the full amount of the CAD1,000,000 has been paid. The other change of significance is that the deferred consideration of CAD750,000 is now payable on the ‘commencement of commercial mining’ as opposed to the original agreement of being payable 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 2017, the Company has spent approximately $11.56 million on exploration and evaluation at the Lynn Lake Project. The renegotiated option agreement acknowledges that the existing earn in obligation has been satisfied. The Company has the discretion to exercise the option to acquire Lynn Lake project on or before 20 April 2020 by paying the balance of the half yearly payments.

Payable: — Not longer than one year — Longer than one year and not longer than 5 year Total	31 December 2017 $ 204,074 1,071,389
	1,275,463

Subject to Manitoba Co. 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 original shareholders of Manitoba Nickel a further 4,500,000 Shares.

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Half Year Financial Report

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CONDENSED NOTES TO THE CONSOLIDATED STATEMENTS for the half year ended 31 December 2017 (cont)

MT GILMORE PROJECT

On 16 June 2016 the Company announced that it had executed an agreement for exclusive rights to acquire up to 80% of the Mt Gilmore Cobalt-Copper-Gold Project in New South Wales, Australia from private company Providence Gold and Minerals Pty Ltd “the Vendor”.

On 23 June 2017 following the satisfaction of the first earn-in period conditions, the Company formalised the transfer from the Vendor of a 51% interest in the Mt Gilmore Project.

The Company is currently working toward acquiring a further 29% interest of the project (bringing the Company’s total interest in the project up to 80%) by satisfying the following terms of the second earn-in period by:

• Completing $2 million in exploration within three years of the commencement date of the second earn-in period (at reporting date $1,576,695 had already been contributed towards this target which also extinguished the Company’s committed expenditure for the full year to 31 December 2017 for the project).

• Paying $150,000 in cash or shares to the Vendor upon the earlier of the commencement of the third year and the Company spending a minimum of $500,000 on the Project’s exploration expenditure (this condition was satisfied on 22 August 2017 following the issue of 12,500,000 shares to Providence Gold and Minerals Pty Ltd with an aggregate value of $150,000).

• • Paying $250,000 in cash or shares upon achieving the previous two conditions.

Payable: — Not longer than one year — Longer than one year and not longer than 5 year Total	31 December 2017 $ - 673,305
	673,305

12. KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report. Except for Mark Qiu who was appointed on 18 August 2017 as a Non-Executive Director he is due an annual fee of $45,000 per annum.

25

Half Year 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 14 to 25 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 2017 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 2018

26