ELEMENT 25 LIMITED — Regulatory Filings 2014

Mar 10, 2014

ABN 46 119 711 929 INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2013

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 Montezuma Mining Company Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

31 DECEMBER 2013

Contents	Page
DIRECTORS' REPORT	3
AUDITOR'S INDEPENDENCE DECLARATION	4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME	5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	7
CONSOLIDATED STATEMENT OF CASH FLOWS	8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	9
DIRECTORS' DECLARATION	12
INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS	13

31 DECEMBER 2013

DIRECTORS' REPORT

Your directors submit their report on the consolidated entity consisting of Montezuma Mining Company Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2013.

DIRECTORS

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

Seamus Cornelius

Justin Brown

John Ribbons

REVIEW AND RESULTS OF OPERATIONS

A summary of revenues and results for the half-year is set out below:

		2013
	Revenues	Results
	\$	\$
Consolidated entity	215,844	(1,203,723)

During the period ending 31 December 2013 the Company continued to actively work on its manganese and copper exploration prospects at its 100% owned Butcherbird Project. A 14 hole, HQ sized (63 mm diameter) diamond drilling program totalling 474 metres was completed at Butcherbird. The purpose of the HQ diamond drilling program was to collect core samples for metallurgical studies. Ore Characterisation and preliminary geotechnical logging were also conducted. Subsequent to drilling, the program included detailed geological logging, petrographic and mineralogical studies plus metallurgical test work.

The Company also continued to actively review alternatives with the potential to deliver low risk opportunities, including assets that would provide near term production.

Subsequent to 31 December 2013, the Company received notification that Grosvenor Gold Pty Ltd ("Grosvenor") would exercise its option to acquire 100% of the Peak Hill gold project. Settlement of this transaction occurred on Friday, 31 January 2014. A total of \$2.8M cash was received, plus 8,400,000 fully paid ordinary shares and 2.1M 75 cent options in Resource and Investment NL.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4.

This report is made in accordance with a resolution of directors.

Justin Brown Executive Director Perth, 11 March 2014

Level 1, Lincoln House, 4 Ventnor Avenue, West Perth WA 6005 P.O. Box 8716, Perth Business Centre WA 6849 Phone (08) 9486 7094 www.rothsayresources.com.au

The Directors Montezuma Mining Company Ltd PO Box 910 West Perth WA 6872

Dear Sirs

In accordance with Section 307C of the Corporations Act 2001 (the "Act") I hereby declare that to the best of my knowledge and belief there have been:

• no contraventions of the auditor independence requirements of the Act in i) relation to the audit review of the 31 December 2013 interim financial statements; and
• no contraventions of any applicable code of professional conduct in relation $\mathsf{ii}$ to the audit.

Graham R Swan (Lead auditor)

Rothsay Chartered Accountants

$\mathcal{U}$ March 2014 Dated

31 DECEMBER 2013

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

	Half-year
	2013	2012
	\$	\$
REVENUE
Interest received	140,844	165,225
Revenue from mining properties	75,000	100,000
Fair value gains on financial assets	-	2,071,457
EXPENDITURE
Depreciation expense	(20,953)	(8,263)
Salaries and employee benefits expense	(98,488)	(65,000)
Exploration expenditure	(821,243)	(1,231,158)
Secretarial and share registry expenses	(69,058)	(82,281)
Administration expenses	(202,306)	(228,678)
Fair value losses on financial assets	(155,062)	-
Share based payment expense	(52,457)	(372,620)
(LOSS)/PROFIT BEFORE INCOME TAX	(1,203,723)	348,682
Income tax benefit	-	235,801
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF MONTEZUMA
MINING COMPANY LIMITED	(1,203,723)	584,483
Basic and diluted (loss)/earnings per share (cents)	(1.7)	0.9

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

31 DECEMBER 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

	31 December 2013	30 June 2013
	\$	\$
CURRENT ASSETS
Cash and cash equivalents	5,830,030	6,771,107
Trade and other receivables	178,392	189,032
Financial assets at fair value through profit or loss	689,250	844,312
TOTAL CURRENT ASSETS	6,697,672	7,804,451
NON-CURRENT ASSETS
Receivables	594,300	594,300
Plant and equipment	48,185	66,819
TOTAL NON-CURRENT ASSSETS	642,485	661,119
TOTAL ASSETS	7,340,157	8,465,570
CURRENT LIABILITIES
Trade and other payables	175,539	149,686
TOTAL CURRENT LIABILITIES	175,539	149,686
TOTAL LIABILITIES	175,539	149,686
NET ASSETS	7,164,618	8,315,884
EQUITY
Issued capital	12,353,350	12,353,350
Reserves	2,810,970	2,758,513
Accumulated losses	(7,999,702)	(6,795,979)
TOTAL EQUITY	7,164,618	8,315,884

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

31 DECEMBER 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

	Contributed Equity	Share-based Payments Reserve	Accumulated Losses	Total
	\$	\$	\$	\$
BALANCE AT 1 JULY 2012	11,793,350	2,327,753	(6,053,557)	8,067,546
Profit for the period	-	-	584,483	584,483
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	-	-	584,483	584,483
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS
Shares issued during the period	560,000	-	-	560,000
Employee and contractor share options and performance rights	-	372,620	-	372,620
BALANCE AT 31 DECEMBER 2012	12,353,350	2,700,373	(5,469,074)	9,584,649
BALANCE AT 1 JULY 2013 Loss for the period	12,353,350 -	2,758,513 -	(6,795,979) (1,203,723)	8,315,884 (1,203,723)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD	-	-	(1,203,723)	(1,203,723)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS
Employee and contractor share options and performance rights	-	52,457	-	52,457
BALANCE AT 31 DECEMBER 2013	12,353,350	2,810,970	(7,999,702)	7,164,618

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

MONTEZUMA MINING COMPANY LIMITED 31 DECEMBER 2013

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

	Half-year
	2013	2012
	\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from sale of mining interests	75,000	100,000
Expenditure on mining interests	(822,293)	(1,175,019)
Payments to suppliers and employees	(329,447)	(449,306)
Refund of income taxes	-	202,649
Interest received	137,982	176,396
Proceeds from sale of financial assets at fair value through
profit or loss	-	812,145
Payments for financial assets at fair value through profit or loss	-	(336,000)
Net cash used in operating activities	(938,758)	(669,135)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of plant and equipment	-	26,473
Payments for plant and equipment	(2,319)	(27,916)
Refund of security bonds	-	25,000
Net cash (used in)/provided by investing activities	(2,319)	23,557
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares	-	560,000
Net cash provided by financing activities	-	560,000
Net decrease in cash and cash equivalents	(941,077)	(85,578)
Cash and cash equivalents at the beginning of the half-year	6,771,107	6,847,835
CASH AND CASH EQUIVALENTS AT THE END OF THE HALF-YEAR	5,830,030	6,762,257

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

31 DECEMBER 2013

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

This condensed consolidated interim financial report for the half-year reporting period ended 31 December 2013 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This condensed consolidated 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 Montezuma Mining Company Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

Adoption of new and revised Accounting Standards

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

New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Group include:

• AASB 10 Consolidated Financial Statements and AASB 2011-7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards;
• AASB 11 Joint Arrangements and AASB 2011-7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards;
• AASB 12 Disclosure of Interests in Other Entities and AASB 2011-7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards;
• AASB 127 Separate Financial Statements (2011) and AASB 2011-7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards;
• AASB 128 Investments in Associates and Joint Ventures (2011) and AASB 2011-7 Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards;
• AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13;
• AASB 119 Employee Benefits and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (2011);
• AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities;
• AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle; and
• AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments.

The above standards have extensive disclosure requirements however, these do not effect this half-year financial report.

The adoption of the above standards has not had a material impact on this half-year financial report.

31 DECEMBER 2013

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 2: SEGMENT INFORMATION

For management purposes, the Group has identified only one reportable segment being exploration activities undertaken in Australia. This segment includes activities associated with the determination and assessment of the existence of commercial economic reserves, from the Group's mineral assets in this geographic location.

Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance with the Group's accounting policies.

	Half-year
	2013	2012
Exploration Segment	\$	\$
Segment revenue	75,000	100,000
Reconciliation of segment revenue to total revenue before tax:
Interest revenue	140,844	165,225
Fair value gains on financial assets	-	2,071,457
Total revenue	215,844	2,336,682
Segment results	(746,243)	(1,131,158)
Reconciliation of segment result to net profit/(loss) before tax:
Other corporate and administration	(457,480)	1,479,840
Net (loss)/profit before tax	(1,203,723)	348,682
	31 December 2013 \$	30 June 2013 \$
Segment operating assets	-	-
Reconciliation of segment operating assets to total assets:
Other corporate and administration assets	7,340,157	8,465,570
Total assets	7,340,157	8,465,570
Total assets includes additions to plant and equipment:
Other corporate and administration	2,319	41,397

MONTEZUMA MINING COMPANY LIMITED 31 DECEMBER 2013

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 3: MOVEMENTS OF EQUITY SECURITIES

	2013 Shares	2013 \$	2012 Shares	2012 \$
Issues of ordinary shares during the half-year
Issued on conversion of 20 cent options	-	-	2,800,000	560,000
	-	-	2,800,000	560,000
			Number of options
			2013	2012
Movement of options during the half-year
Issue of unlisted options, exercisable at 20 cents, on or before 30 July 2016			1,020,000	-
Issue of unlisted options, exercisable at 30 cents, on or before 30 July 2016		1,000,000	-
Issue of unlisted options, exercisable at 20 cents, on or before 19 November 2018			2,000,000	-
Expiry of unlisted options, exercisable at 58 cents, on 14 December 2013			(3,000,000)	-
Exercise/expiry of unlisted options, exercisable at 20 cents, on or before 30 November 2012			-	(3,050,000)
Expiry of unlisted options, exercisable at 35 cents, on 30 November 2012			-	(50,000)
Issue of unlisted options, exercisable at 32.5 cents, on or before 30 November 2016			-	3,000,000
Issue of unlisted options, exercisable at 38 cents, on or before 30 November 2017			-	3,000,000
			1,020,000	2,900,000

NOTE 4: CONTINGENCIES

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

NOTE 5: SUBSEQUENT EVENTS

Subsequent to 31 December 2013, the Company received notification that Grosvenor Gold Pty Ltd ("Grosvenor"), Resource and Investment NL's ("RNI") wholly owned subsidiary, would exercise its option to acquire 100% of Peak Hill Metals Pty Ltd, which owned the Peak Hill gold project. Settlement occurred on 31 January 2014. The key terms of the sale agreement were:

• Grosvenor paid Montezuma \$2.8 million in cash, and issued 8,400,000 fully paid ordinary shares in RNI, and 2.1 million 35 cent options in RNI.
• Grosvenor granted Montezuma a 1% Gross Royalty, capped at \$1 million, on all revenue received from production from the Peak Hill Project.

No other matter or circumstance has arisen since 31 December 2013, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.

MONTEZUMA MINING COMPANY LIMITED 31 DECEMBER 2013

DIRECTORS' DECLARATION

In the directors' opinion:

• 1. the financial statements and notes set out on pages 5 to 11 are in accordance with the Corporations Act 2001, including:
• (a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (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; and
• 1. there are reasonable grounds to believe that Montezuma Mining Company Limited 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.

Justin Brown Executive Director Perth, 11 March 2014

Level 1, Lincoln House, 4 Ventnor Avenue, West Perth WA 6005 P.O. Box 8716, Perth Business Centre WA 6849 Phone (08) 9486 7094 www.rothsayresources.com.au

Independent Review Report to the Members of Montezuma Mining Company Ltd

The financial report and directors' responsibility

The interim consolidated financial report comprises the statement of financial position, statement of comprehensive income, statement of changes in equity, cashflow statement, accompanying notes to the financial statements, and the directors' declaration for Montezuma Mining Company Ltd for the half-year ended 31 December 2013.

The Company's directors are responsible for the preparation and fair presentation of the consolidated financial report in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim consolidated financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated financial position as at 31 December 2013 and the performance for the half year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Montezuma Mining Company Ltd, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical 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.

Conclusion

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

• giving a true and fair view of the consolidated financial position as at 31 December 2013 and of the performance for the half-year ended on that date; and
• complying with Australian Accounting Standard AASB134 Interim Financial Reporting and the Corporations Regulations 2001.

Rothsay

Graham R Swan Partner

Dated $11 \text{ MgC}$ $\text{H}$ $2014$