2010 ANNUAL REPOR T

ATE DIRECTORY

Directors

A. Anthony McLellan (Non-executive Chairman) Corey Nolan (Managing Director) Neil Stuart (Non-executive Director)

Company Secretar y

Paul Crawford

Address

Head Office

Level 1, 349 Coronation Drive Milton Queensland 4064 Australia Phone: +61 (7) 3871 3985 Fax: 3720 8988 Email: [email protected] Website: www.elementos.com.au +61 (7)

South America

Franklin Rawson 2359 -oeste-San Juan (5400) Argentina Phone: +54 (264) 423 3919

Share Registr y

2010CORPOR Registries Limited Level 7, 207 Kent street Sydney NSW 2000 PO Box R67, Royal Exchange Sydney NSW 2000 Phone: 9290 9600 Fax: 9279 0664 Email: [email protected] +61 (2) +61 (2)

ASX Code

ELT

Share Structure

54,000,001 Fully paid Ordinary Shares

7,000,000 Unlisted Options over Ordinary Shares

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	CONTENTS



Corporate Director	y	1	t
Highlights of the Year Chairman's Letter		3 5
Review of Projects		6
Argentinean Projects		8
Manantiales		7
Santo Domingo		9
Australian Projects		28

Millenium		12
Sydney Flat		12
Cathedral Rocks		13
Dalmorton Competent Persons Statement		13	n
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			ANNUAL REPORT 2010	2

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HIGHLIGHTS OF THE YEAR

Manantiales

Manantiales Environmental Impact Assessment approved by the San Juan Government, covering all exploration activities including drilling for two years
Three high-grade gold epithermal vein targets identified through surface channel sampling: Manantial, Julieta Norte and La Puerta
Diamond drilling program underway to test depth extensions of Manantial and Julieta Norte vein targets
La Puerta vein and Manrique targets being advanced towards drill-ready status

Santo Domingo

Geochemical and alteration surveys support oxidised porphyry copper/gold model
New access road and field camp established to support a three phase exploration program incorporating mapping and sampling, deep penetration geophysics and drilling
Mapping and sampling programs at El Arriero, Divisoria and Alunita underway

2009 - 2010

Millenium

Reconnaissance sampling confirms high-grade copper-cobalt mineralisation extends a further one kilometre along strike to the north
Systematic re-sampling of historic costeans in the southern area confirms previously reported high copper-cobalt grades and widths
Acquiring additional tenements along the major fault structure hosting the mineralisation

Northern New South Wales

Successful piloting of ground penetrating radar remote imaging system at Sydney Flat to identify buried deep lead gold systems. Drilling program suspended due to wet weather
Exploration fieldwork including sampling and mapping of gold and base metals targets commenced at Cathedral Rocks and Dalmorton
Field office established in Armidale with experienced geologist to advance projects

Corporate

Successful debut on the Australian Stock Exchange following the fully-subscribed Initial Public Offering, raising \$8.25 million
Orocobre Limited in-specie share distribution of 20 million Elementos shares completed in March 2010
Unmarketable share sale facility implemented to simplify share capital structure and reduce costs

CHAIRMAN'S LETTER

Dear Shareholder,

Your Company has made a good start in the six months since it was listed on the Australian Securities Exchange.

Elementos has assembled an attractive portfolio of properties in world class mineral provinces in Australia and Argentina. Serious exploration has already been carried out on a number of these properties, readying them for the first round of drilling, which is now underway.

The gold market has performed exceptionally well in the first half of this year, increasing by about 11% to approximately US\$1244 per oz as at the end of June. In the same period, the A\$:US\$ exchange rate fell from about 90 cents per Australian dollar to around 85 cents, resulting in an increase of over A\$200 per oz in Australian dollar terms. Since then, although the gold price has weakened slightly and the Australian dollar has strengthened, we are still above where we were at the beginning of the year.

The market sentiment remains strong, with no shortage of pundits predicting a gold price of \$2,000 per ounce, although that seems a stretch to me.

Our managing director, Corey Nolan, has done an excellent job of building a small team of professionals, which has remained tightly focussed on our mission to create shareholder wealth by exploring, and developing high quality mineral projects. Executives include chief geologist, Alistair Grahame; geologist and country manager, Gustavo Delendatti (both of whom are fluent in both English and Spanish); and geologist and NSW exploration manager, Peter Smith. With a total staff of 9 people, our aim has been to minimise corporate overhead, putting our capital into the ground.

The management team has been ably assisted by Neil Stuart, your other non-executive director. With his long experience and highly-regarded track record as a geologist in Argentina, Mr Stuart has brought much wisdom to the Company's exploration efforts in that country, in particular.

On your behalf, I thank our entire team of directors, executives, employees and consultants who have worked with dedication and commitment, resulting in such a fine start.

The managing director will address the Company's specific projects. Suffice it to say, I believe our portfolio of projects is well balanced, with some high risk/high reward opportunities in Argentina.

One of our major holdings in Argentina immediately adjoins Troy Resources' significant gold/silver deposit for which a sizable plant is now being built. In Australia, it appears that the major gold deposits suitable for open cut mining have now been discovered, and many now see South America as a new frontier, with several huge mines now being developed. Troy's chairman, in announcing that company's move to Argentina entitled his address: "Moving to where the gold is."

There is a lot of wisdom in that statement. And we at Elementos are committed to making the best of our opportunities in that exciting environment.

Sincerely,

A. Anthony McLellan Chairman

eREVIEW OF PROJECTS

Introduction

Gold and copper targets are the priority focus of Elementos, which has interests in a portfolio of six exploration properties in three mineral provinces in two countries, Argentina and Australia. The tenements are located in world class mineral provinces, with developed infrastructure nearby, and attractive investment environments.

Argentinean Projects

The Andes Mountains within western Argentina have a similar geology to the neighbouring mining country, Chile, although comparatively poorly explored and its mineral potential not developed to the same degree. Elementos' projects are located in San Juan province in the Andean foothills, at low altitudes, with well established infrastructure compared to higher Andes projects.

San Juan Province is one of the most attractive destinations for mining and exploration in Argentina due to its suitable geology and mineral prospectivity, strongly pro-mining policies and rapidly developing infrastructure. The region hosts a number of world class mining operations including Veladero and Gualcamayo, and advanced stage development projects including Pascua-Lama, Casposo, Los Azules and El Pachon.

Note: These mines and resources are not assets of the company and their proximity of the company's projects should in no way be taken as indicative that the company will be able to successfully develop the Manantiales and Santa Domingo projects.

Manantiales

Manantiales is situated 150 kilometres northwest of the city of San Juan, and comprises a number of exploration leases covering 92.6 square kilometres. Access is by sealed roads to the town of Callingasta, 30 kilometres southeast of Manantiales, and then via sealed and dirt roads. Local infrastructure and logistics include power, water and labour. The relatively low altitude is expected to allow year-round access for exploration and development activities.

Manantiales is located within a relatively unexplored low sulphidation epithermal district which includes the adjacent Casposo epithermal gold-silver deposit, Castaño Nuevo an abandoned gold mine (10 kilometres northeast) and the Castaño Viejo an abandoned lead – silver – zinc –gold mine (13 kilometres to the north).

The project area adjoins and is immediately to the north of Troy Resources Casposo project. Troy Resources is developing a 400,000 tonne per year carbon-in-pulp gold processing plant based on a 0.4Moz gold and 17Moz silver resource. Manantiales shares a similar geological environment including rock types and structures that host Casposo mineralisation.

The Company has secured Troy's agreement to use Troy's access roads into the Manantiales project. Additionally, Elementos has secured regulatory approval of its Environmental Impact Assessment ("EIA") covering all exploration activities, including drilling, over the property for the next two years. The EIA approval also permits earthmoving for construction of access roads, drill pads, field camps, and underground adits for sampling.

Satellite image showing Manantiales' central location within the Calingasta epithermal district

Early exploration activities focused on mapping and sampling of two vein systems identified from historical rock chip samples at Julietta Norte and La Puerta. During the initial field program a new vein was discovered at Manantial, 1.5 kilometres west of Julietta Norte. A program of mapping and surface channel sampling the three main vein systems is advanced. Results of sampling include:

! Manantial vein 215 sawn channel samples completed across discrete vein systems over 880 metres of north-south strike. True vein width varies between 0.5-5.0 metres with peak gold grades up to 14 grams per tonne;
! Julietta Norte 36 sawn channel samples completed across a 175 metre long vein with true widths varying between 0.5-3.0 metres, with peak gold grades up to 12 grams per tonne. Drilling under a mountain ridge will be required to test the strike extent of the vein system to the north-west; and,
! La Puerta 20 sawn channel samples completed over an outcropping vein of 200 metres east-west strike. True vein width varies between 0.5-2.0 metres and peak gold grades up to 10.4 grams per tonne.

The Manantial and Julietta Norte veins are mapped and sampled to a drill-ready status. A diamond drilling rig was mobilised to Manantiales during June to commence drilling during the first week of July, on completion of site access roads and drill pad construction. The objective of the diamond drilling program is three-fold:

! To confirm the depth and gold-silver grade of the mineralisation in the main vein systems at Manantial and Julietta Norte, identified through surface channel sampling. The program will include both shallow and medium depth holes (up to 120 metres depth);

Sampling highlights and proposed drill program, Manantial prospect

! To test for gold-silver mineralisation within the alteration zone surrounding the main vein zones to confirm the potential for stockwork or disseminated mineralisation potentially buried under talus at surface. This represents the possibility of defining lower grade bulk tonnage mineralisation more amenable to open cut mining; and,
! To explore for parallel, blind vein structures at depth not identified through surface mapping and sampling.

The Company believes the drilling program has the potential to expand known gold and silver mineralisation at Manantiales, and establish the possible extension of the recently-drilled Julietta vein owned by Troy Resources. The first phase of drilling will comprise twenty holes totalling up to 1,500 metres and is scheduled to commence in July 2010.

On-going exploration activity will include further surface channel sampling of the La Puerta vein to drill ready status, further regional exploration to identify new targets and follow-up of the Manrique base metal prospect in the north-east of the property.

Core logging, Manantiales

Santo Domingo

Santo Domingo is situated 120 kilometres east of San Juan city, and comprises a series of exploration tenements covering 215 square kilometres. The exploration target is a partially exposed copper-gold style porphyry system with potential for 100-1000 million tonnes* across three discrete prospective zones. The setting is analogous to the Alumbrera mine, a large copper-gold porphyry deposit 430 kilometres to the north. Santo Domingo is a low altitude project with well established regional infrastructure and access compared to higher Andes Cordillera projects.

The project area is characterised by a significant number of historic small scale gold and base metal workings. Modern exploration is limited to reconnaissance scale mapping and outcrop and talus sampling. In conjunction with detailed ASTER satellite imagery interpretation, three large prospective alteration zones have been identified, mapped and sampled at El Arriero, Alunita and Divisoria. In addition to visible pyrite and copper mineralisation, anomalous copper/gold/molybdenum mineralisation is widespread across the main target zones.

* This target is conceptual in nature as there has been insufficient exploration to define a Mineral Resource to a JORC standard and it is uncertain if further exploration will result in the determination of a Mineral Resource.

Mapping at El Arriero, Santa Domingo

Sampling highlights, Santa Domingo

Temporary camp, Santa Domingo

Intensive exploration activities are underway, following the successful pre-Initial Public Offering program in November 2009.

Further exploration activities will be completed in three distinctive phases, incorporating mapping and sampling, deep penetration geophysics, and drilling. To fast track exploration following the seasonal break from exploration activities since December 2009, the Company has constructed an access road from the main highway through to the El Arriero anomaly, and built a temporary field camp. Rock chip, stream sediment, talus and soil sampling and mapping are underway at El Arriero, Divisoria and Alunita, which are expected to be completed in three to four months.

Australian Projects

Elementos is focused on the Mt Isa Inlier in Queensland and New England Fold Belt in northern New South Wales.

The Mt Isa Inlier is one of the most significant gold and base metal producing districts worldwide, host to many world class copper/gold and lead/silver/zinc orebodies, including Mt Isa, Hilton, George Fischer, Cannington and Ernest Henry. Recent major discoveries include Merlin and Rocklands, which prove the continued potential of the district. The district has established mining, transportation and processing infrastructure in close proximity to the major regional centres of Cloncurry and Mt Isa.

The New England Fold Belt is an emerging minerals province, which, in the past, has been a significant production area for gold, tin and base metals. Although previously relatively unexplored, the area is receiving increased attention through the application of new geological theory and exploration techniques.

Queensland

§Mt Isa Inlier minerals province
§Millenium cobalt project
§Five contiguous mining leases and an EPM under application

Millenium

Millenium is located in Queensland, 35 kilometres northwest of Cloncurry, accessible via a well maintained gravel road. Millenium is situated in the world class Mt Isa Inlier, a significant gold and base metal producing region, host to world class copper/gold and lead/silver/zinc deposits. The project area is situated within a highly mineralised district, 10 kilometres from Cudeco's Rocklands copper/cobalt project, which is an emerging major discovery. The district has established mining, processing and transportation infrastructure in close proximity to the major regional centres of Mt Isa and Cloncurry.

Millenium is prospective for shear-hosted mineralisation, identified through historical copper mining activities at the Federal lode (10,000 tonnes of ore produced at 25% copper), and a number of percussion and diamond drilling campaigns between 1964 and 1991. Significant diamond drilling intercepts include holes: copper/cobalt

! FD02 10.7 metres @ 2,333 ppm cobalt and 2.02% copper (within an envelope of 79 metres at 341 ppm cobalt); and
! FD11 16 metres @ 1,743 ppm cobalt.

Previous historical metallurgical test work demonstrated that a potentially saleable, high grade cobalt concentrate with high recoveries could be produced.

Recent surface mapping and sampling extended known copper and cobalt mineralisation over one kilometre to the north. Millenium has potential as an open cut mining operation, producing high value cobalt metal and potentially copper and gold. The Company's immediate focus at Millenium includes expanding on the known mineralisation through:

! resource definition drilling at depth, and along strike from known mineralisation, and,
mpany has lodged applications for exploration permits to the north and south of known mineralisation at the Millenium. ! acquiring additional contiguous tenements along the major fault structure hosting the mineralisation. The Co

Copper staining at the Federal Mine, Millenium

Sydney Flat

Sydney Flat is located 5 kilometres south of Armidale in New South Wales, and encompasses most of the unexploited remnants of the Sydney Flat goldfield, including the Uralla deep leads and their projections under cover. A network of sealed roads covers the property and the New England highway cuts through the eastern side. Excellent support infrastructure is available in Armidale where the Company has established an exploration office.

Sydney Flat is a historically-mined high-grade gold alluvial deep lead project. Gold mineralisation is reportedly hosted in a shallow ancient river system, partially covered by a thin veneer of basalt. Whilst historical mining records indicate the production of high-grade gold, the resource has not been fully exploited due to several factors:

! difficulty in defining the location of the deep lead systems under the basalt cap which is accentuated by the tributary nature of the ancient river system, and the fact that some parts of the basalt cap and river system have been eroded away;

! the high volume of water in the deep lead system has restricted traditional underground mining methods; and,
! open cut mining through the basalt cap was not economic.

The Company planned a small ten-hole drilling program in June following the completion of a Ground Penetrating Radar ("GPR") program that successfully defined the profiles of the deep lead channels. The program was suspended due to the wet weather restricting the safe access of a drilling rig into the project site. Another drilling program will be scheduled when the weather improves, and a rig is available. The aim is to test the grade and potential size of the deep lead system at the Hopetoun property within the Sydney Flat Exploration Licence. The program will target areas surrounding historic workings, water-bores and drill holes where reported data suggests the occurrence of both the deep lead and historical gold recovery.

Should the program successfully define the potential to prove a mineable resource, a second phase of resource definition drilling will be planned over the strike extensions of the interpreted deep lead system following more systematic exploration. GPR will be used to identify the deep lead channels under the basalt cap.

Cathedral Rocks

Cathedral Rocks is a base metals and gold target 50 kilometres east of Armidale in northern New South Wales. Access is via a paved road from Armidale and a network of farm tracks across the tenement.

Cathedral Rocks is centred on the historic reef and alluvial tin fields of Yaroona, Lauder and School Gully which produced tin in the early 1900's. Whilst a number of gold and base metal anomalies were identified in exploration during the early 1950's, it wasn't until the 1970's that CRA Exploration drilling intercepted a number of significant base metal mineralised zones. Crucially, CRA

Exploration did not analyse for gold and molybdenum, now considered the most prospective targets based on a new interpretation of the possibility of intrusion related gold systems (IRGS) within the regional geology.

Mapping and sampling programs, targeting regions known for gold, molybdenum, and tin mineralisation are well advanced. Two anomalies have been identified from historical records and are the focus of the current field campaign. Mapping has identified lead, zinc and tin mineralisation in an alteration related to dykes cutting the boundary of granites and their host rocks. Rock chip samples, assayed for gold and based metals, will be reported in August 2010. The mapping and sampling results will define initial targets for detailed in-fill sampling.

A molybdenum anomaly has been identified from a review of historical exploration data, which is considered significant due to the strong association of gold with molybdenum in IRGS systems. This prospect, located in the east of the Cathedral Rocks tenement, has been reported to have a number of soil samples with highly anomalous molybdenum values, but was historically never analysed for gold. It is considered likely that the area is prospective for gold, molybdenum, silver and tin. Mapping and sampling of this prospect is scheduled to begin early in July 2010.

Dalmorton

The Dalmorton and Little River Goldfields are located approximately 55 kilometres west-southwest of Grafton in northern New South Wales, 60 kilometres east of Glen Innes on the northern tablelands. Both townships have good logistics and infrastructure and are connected by a sealed road. A graded road leads to the Dalmorton town and a network of logging roads provides access to the project.

The Dalmorton and Little River Gold Fields were discovered in the 1860's and intermittently mined until 1942, reportedly producing around 70,000 ounces of highgrade gold. Little River Goldfield's, Getty Oil and B.P. Minerals Australia explored the project area in the 1980s and 1990's and defined a number of target areas. A small gold resource was defined at the Pine Creek prospect, however, with the collapse in the gold price, exploration activity in the area ceased.

Reconnaissance mapping and sampling commenced at Dalmorton in June 2010. The initial focus is to define the gold resource in the Pine Creek prospect.

Competent Person Statement

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Neil Stuart a fellow of the Australasian Institute of Mining and Metallurgy. Mr Stuart is a Director of Elementos Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.' Mr Stuart consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

ABN 49 138 468 756

CONSOLIDATED FINANCIAL REPORT FOR THE FINANCIAL PERIOD ENDED 30 June 2010

Corporate Governance Statement

Elementos Limited ("Elementos" or the "Company") is committed to implementing the highest standards of corporate governance. The Directors are responsible for protecting the rights and interests of the Shareholders through the implementation of sound strategies and action plans and the development of an integrated framework of controls over the Company's resources, functions, and assets.

Committees

The Board has established an Audit & Risk Management Committee, and also a Remuneration Committee. At present, the Company does not have formally constituted Nominations Committees of the Board. The Directors do not consider that the Company is of a sufficient size, or that its affairs are of such complexity as to justify the formation of such as committee.

The information below outlines the main corporate governance policies which the Directors have adopted.

Composition of the Board

The Board comprises three Directors. The names, qualifications and relevant experience of each Director are set out in this Financial Report. There is no requirement for any Director's shareholding qualification. Board policy is that the Board will constantly review and monitor its performance. As the Company's activities increase in size, nature and scope, the size of the Board will be reviewed periodically and the Board may seek to appoint persons who, in the opinion of the Board, will provide specialist expertise required for the Board to adequately perform its role.

Board Membership

The Board acts as a nomination committee. Members of the Board have been brought together to provide a blend of qualifications, skills and national and international experience required for managing a company operating within the resources industry.

Appointment and Retirement of Directors

The Company's Constitution provides that Directors are subject to retirement by rotation, by order of length of appointment. Retiring Directors are eligible for re-election by shareholders at the annual general meeting of the Company.

Duties of Directors

Directors are expected to accept all duties and responsibilities associated with the running of a public company, to act in the best interests of the Company and to carry out their duties and responsibilities with due care and diligence. Directors are required to take into consideration conflicts when accepting appointments to other Boards.

Independent Professional Advice

The Board has determined that individual Directors may, in appropriate circumstances, engage outside advisers at the Company's expense. The engagement of an outside adviser is subject to the prior approval of the Chairman.

Compensation Arrangements

The maximum aggregate amount payable to non-executive Directors as Directors' fees has been set at \$250,000 per annum. The Constitution provides that Director's fees can only change pursuant to a resolution approved at a general meeting.

Remuneration Committee

The Company has established a Remuneration Committee comprising at least one non-executive director, with the objective of maintaining and reviewing the Company's remuneration policies and practices and reporting to the Board on such matters. The Remuneration Committee Charter is available on the Company's website www.elementos.com.au.

The Managing Director is responsible for reviewing and negotiating the compensation arrangements of senior executives and consultants. The Managing Director also monitors the performance of outside consultants, and provides a report to the Board.

Audit & Risk Management Committee

The Board acts as an Audit & Risk Management Committee. The Company has adopted a charter setting out the composition, purpose, powers and scope of the Audit & Risk Management Committee, as well as reporting requirements to the Board as a whole. A copy of the Charter is available at the Company's website, www.elementos.com.au.

Internal Management Controls

Some of the Company's key assets are located outside Australia. Control over the operations is exercised by its Managing Director. Specific control measures have been implemented to manage the distribution of funds in Argentina in relation to activities undertaken there.

Identifying Significant Business Risks

The Board regularly monitors the operational and financial performance of the Company's activities. The Board acting as the Audit & Risk Management Committee, monitors and receives advice on areas of operation and financial risk and considers strategies for appropriate risk management. All operational and financial strategies adopted are aimed at improving the value of the Company. However, the Directors recognise that mineral exploration and evaluation is inherently risky.

ASX Corporate Governance Principles and Recommendations

In order to set apprropriate coprporate governance standards, the Company has used the reporting recommendations set out by the Australian Securities Exchange (ASX) Corporate Governance Council's "Corporate Governance Principles and Recommendations" 2nd Edition (ASX Principles and Recommendations). These have been grouped into eight core principles.

The Company advises that its practices are not entirely consistent with the ASX Principles and Recommendations. While seeking to implement optimal corporate governance practices, the Company does not accept that all the recommendations are applicable to the Company due to the current size and the nature of its operations. Where the Company has not fully adopted the relevant recommendation, the reasons are set out below.

PRINCIPLE 1 - LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT:

Pursuant to Principle 1, the Company has established the functions reserved to the Board and established the functions delegated to the Managing Director. The Board of Directors' role is to govern the Company rather than to manage it, representing the interests of all shareholders. In governing the Company, the Directors are required to act in the best interests of the Company as a whole. It is the role of the Managing Director to manage the Company in accordance with the direction and delegations of the Board and it is the responsibility of the Board to oversee the activities of the Managing Director in carrying out these delegated duties.

1.1 Companies should establish the functions reserved for the Board and those delegated to the senior executives and disclose those functions.

The Company has developed a Statement of matters reserved for the Board which documents the role and responsibilities of the Board, a summary of which is as follows:

provide leadership to the Company;
oversee the development and implementation of an appropriate strategy;
oversee planning activities including the development and approval of strategic plans, annual corporate budgets and long-term budgets including operating budgets, capital expenditure budgets and cash flow forecasts;
review the progress and performance of the Company in meeting these plans and corporate objectives, including reporting the outcome of such reviews on at least an annual basis;
ensure corporate accountability to the shareholders, primarily through effective shareholder communications;
oversee the control and accountability systems to ensure the Company is progressing towards the goals set by the Board and in line with the Company's purpose, the agreed corporate strategy, legislative requirements and community expectations;
ensure that robust and effective risk management, compliance and control systems (including legal compliance) are in place and operating effectively;
appoint the Managing Directorand review the delegation to, and performance of, the Company's senior executives; and,
make all decisions outside the scope of powers delegated to senior management .

In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies, practices, management and operations of the Company. It is required to do all things that may be necessary to be done in order to carry out the objectives of the Company, which includes supervising the Company's framework of control and accountability systems to enable risk to be assessed and managed.

The Board must convene regular meetings with such frequency sufficient to discharge its responsibilities appropriately.

The Board has delegated powers to the Managing Director necessary to carry out the business of the Company effectively and efficiently.

Newly appointed Directors are to be provided with formal appointment letters setting out the key terms and conditions regarding their appointment. Similarly, senior executives (including the Managing Director) are provided with formal appointment letters making clear their responsibilities, remuneration, appointment term, and entitlements on termination.

1.2 Companies should disclose the process for evaluating the performance of senior executives

The remuneration structure for executive officers is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of Elementos.

Senior executives' performance is reviewed against a range of quantitative and qualitative measures and past performance of Elementos as well as of the individual, and market practice with respect to comparable positions are taken into account.

The Non-Executive Directors are responsible for regularly evaluating the Managing Director's performance. This evaluation is based on the Company's business performance and whether strategic objectives are being achieved. The Managing Director reviews other executives' and staff performance. Performance pay components of executives' packages are dependent on the outcome of the evaluations. The results of the Managing Director's annual performance reviews of senior executives and staff are reported to the Board for information.

1.3 Reporting on Principle 1

Details of the functions reserved for the Board and delegated to the Managing Director are outlined in the Company's Board Governance Protocols, and available on the Company's website (www.elementos.com.au).

PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

Principle 2 is to have a Board of an effective size, composition and commitment to adequately discharge its responsibilities and duties. To add value to the Company, given the size and operations of the Company, the Board has been formed so that it has effective composition, size and commitment to adequately discharge it responsibilities and duties.

The three-person Elementos Board (as at the date of this Annual Report) has wide-ranging experience in the mineral exploration and mining sector and a diverse skill set which is detailed in the Directors' Report in this Annual Report along with details of the Directors, period of office, their qualifications and experience.

2.1 A majority of the Board should be independent Directors

The Company has a majority of independent Directors. As at the date of this report, the Board comprises one Executive Director, Mr Corey Nolan, who is the Managing Director, and two Non-executive Directors: Mr A. Anthony McLellan and Mr Neil Stuart. The Non-Executive Directors meet the criteria for independence proposed by the ASX Principles and Recommendations.

While determining the independent status of Directors, the Board has considered whether the Director:

holds less than five percent of the voting shares of the Company (in conjunction with their associates); or is an officer of the Company, or otherwise associated directly with a shareholder of more than five percent of the voting shares of the Company;
has within the last three years, been employed in an executive capacity by the Company or another group member;
has within the last three years been a principal of a material professional adviser or a material consultant to the Company or another group member, or an employee materially associated with the service provided. In this context, the relationship with the professional adviser or consultant shall be deemed to be material if payments from the Company exceed 10% of the Company's annual expenditure to all professionals and consultants or exceed 10% of the recipient's annual revenue for advisory or consultancy services;
is a material supplier or customer of the Company or another group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer. In this context, the relationship with the supplier or customer shall be deemed to be material if annual payments to or from that supplier or customer exceed 10% of the annual consolidated gross revenue of either the Company or that supplier or customer; and,
has a material contractual relationship with the Company or other group member other than as a Director of the Company.

2.2 The chairperson should be an independent director

The Company complies with the recommendation.

2.3 The roles of the Chairperson and Chief Executive Officer should not be exercised by the same person

The Managing Director, Mr Corey Nolan, is for all practical purposes the Chief Executive Officer of Elementos and as mentioned above, Mr A. Anthony McLellan is the Chairman of the Board. This makes Elementos compliant with this recommendation.

2.4 The Board should establish a nomination committee

Elementos does not comply with this recommendation as a nomination committee has not been established. Currently, the role of the nomination committee has been assumed by the full Board. The size and nature of the Company's activities do not justify the establishment a separate committee at this time. The Board regularly reviews the composition, skill base and effectiveness of the Board and its members.

Candidates for the Board will be considered and selected by reference to a number of factors which include, but are not limited to, their relevant experience and achievements, independence and ability to meet the Board's expectation as set out in the Board Governance Protocols. Directors will be initially appointed by the full Board, subject to election by shareholders at the next general meeting. Directors are required to retire and be subject to re-election by shareholders at least once every three years.

2.5 Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors

The Board considers the evaluation of its own and senior executive performance as fundamental to establishing a culture of performance and accountability. The Chairman undertakes a review of the Board and individual Director's performance at least once a year at a meeting of the Board. Board performance is evaluated in relation to goals that are set at the time of the Board's annual strategic planning session. As ths Company only listed on Australian Securities Exchange in December 2009, no review was been undertaken during the curret year.

The Chairman provides each Non-Executive Director with confidential feedback on his or her performance. The Board does not endorse the re-appointment of a Director who is not performing the role satisfactorily.

Induction and Education

New Directors will undergo an induction process in which they will be given a full briefing on the Company. Where possible, this will include meetings with key executives, a tours of the premises, an induction package and presentations. Information conveyed to new Directors will include:

details of the roles and responsibilities of a Director;
formal policies on Director appointment;
outline of all relevant legal requirements including:
o Corporations Act;
o Tax Office requirements; and,
o other major statutory bodies;
a copy of the Board Governance Protocols;
guidelines on how the Board processes function;
details of past, recent and likely future developments relating to the Board, including anticipated regulatory changes;
background information on and contact information for key people in the organisation including an outline of their roles and capabilities;
an analysis of the Company including:
o core competencies of the Company;
o an industry background briefing;
o a recent competitor analysis;
o details of past financial performance;
o current financial structure; and
o any other important operating information;
a synopsis of the current strategic direction of the Company including a copy of the current strategic plan and annual budget;
a copy of the Constitution of the Company; and,
Director's Deed of Indemnity and Right of Access to Documents, if applicable.

In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development.

Access to information and Independent Professional Advice

Each Director has the right of access to all Company information and to the Company's executives. Further, the Board collectively and each Director, subject to the approval of the Chairman, has the right to seek independent professional advice from a suitably qualified advisor, at the Company's expense, to assist them to carry out their responsibilities. A copy of this advice is to be made available to all other members of the Board.

2.6 Reporting on Principle 2

As there is no short-term need to recuit additional Directors, the process by which Directors are selected, nominated, appointed, and removed from the Board has not yet been fully articulated.

PRINCIPLE 3 - PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

Principle 3 is to actively promote ethical and responsible decision-making.

3.1 Companies should establish a code of conduct and disclose the code or a summary of the code

The Company acknowledges that the community expects businesses to be aware of their wider social obligations and to promote practices to maintain confidence in the Company's integrity. The Elementos Board requires high standards of conduct and responsibility from Directors, senior executives and employees at all times. As part of its commitment to recognising the expectations of their stakeholders, the Company has established a Code of Ethics and Conduct for Directors and employees within its Board Governance Protocols to guide compliance with legal and other obligations to stakeholders, which include employees, clients, customers, government authorities, creditors and the community. Directors are required to adhere to industry standards in conduct and dealings and promote a culture of honesty, fairness and ethical behaviour into its internal compliance policy and procedures as well as dealing with stakeholders.

The Board also requires the Company's employees and consultants, to have similar high standards who are expected to adhere to industry standards in their conduct and dealings, including trading in securities. The Elementos Board has built the promotion of a culture of honesty, fairness and ethical behaviour into its internal compliance policy and procedures.

A copy of the Code of Ethics and Conduct is given to contractors and relevant personnel, including Directors and each individual is accountable for such compliance. Any breach of applicable laws, accepted ethical commercial practices or other aspects of the Code of Ethics and Conduct will result in disciplinary action.

Depending on the severity of the breach, such disciplinary action may include reprimand, formal warning, demotion or termination of employment/engagement (as the case may be). Similar disciplinary action may be taken against any manager who directly approves of such action or has knowledge of the action and does not take appropriate remedial action.

Breach of applicable laws or regulations may also result in prosecution by the appropriate authorities.

The Company will not pay, directly or indirectly, any penalties imposed on personnel as a result of a breach of law or regulation.

Personnel are expected to report any instances of suspected non-compliance and investigate reports of unethical practices. These instances will be investigated fairly. Individuals who report suspected non-compliance in good faith will be appropriately protected.

3.2 Companies should establish a securities trading policy disclose the policy or a summary of the policy

The Company has adopted a formal Securities Trading Policy. A copy of the Policy is incorpoprated in the Board Governance Protocols available on the website of the Company.

Directors, officers and employees are prohibited from directly or indirectly (a) buying, selling or otherwise trading in the Company's shares, if they possess material, price sensitive information which is not generally available; or, (b) where buying or selling those shares in some way infringes the law against insider trading.

Buying is permitted at any time other than two weeks prior to and one business day following the release of financial results, or a price-sensitive announcement. Selling is permitted only within the six weeks commencing one business day following the release of half-yearly and annual financial results.

Before engaging in transactions involving Elementos securities, a Director is required to notify the Chairman of the details.

3.3 Reporting on Principle 3

The Code of Ethics and Conduct is available on the Compoany's website. The Securities Trading Policies, incorporated in the Board Governance Protocols, is also available on the Company's website.

PRINCIPLE 4 - SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Principle 4 is to have a structure of review and authorisation in place which independently verifies and safeguards the integrity of the Company's financial reports. The compilation and timely disclosure of accurate and truthful information about the Company's financial position and performance is vital for the integrity of the market in the Company's securities.

Elementos has established a structure of reporting and oversight to achieve these objectives.

4.1 The Board should establish an audit committee

Elementos has established an Audit & Risk Management Committee.

4. 2 The structure of the audit committee

The Audit & Risk Management Committee consists of at least two and no more than three independent Directors.

4.3 The audit committee has a formal charter

The Audit Committee's Charter is available on the Company's website.

4.4 Reporting on Principle 4

The Audit & Risk Management Committee is requirted to report its findings and recommendations to the Boardafter each Committee meeting, and to cirulate minutes of its meetings to all Board members.

PRINCIPLE 5 - MAKE TIMELY AND BALANCED DISCLOSURE

Principle 5 is that listed companies should make timely and balanced disclosure to the ASX of all material matters concerning the Company.

The Elementos Board has adopted a policy and rules to ensure the Company complies with its obligations under the ASX Listing Rules on continuous disclosure and ensures accountability at a senior executive level for that compliance. The Board has designated the Managing Director as the person responsible for overseeing and co-ordinating disclosure of information to the ASX as well as communicating with the ASX.

In accordance with the ASX Listing Rules, the Company immediately notifies the ASX of information:

concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company's shares; and,
that would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose the Company's shares.

Such matters are advised to the ASX immediately they are identified as being material. Upon confirmation of receipt from the ASX, the Company posts all information disclosed in accordance with this policy on its website in an area accessible by the public.

Elementos has established comprehensive Contiuous Disclosure Policies.

5.2 Reporting on Principle 5

A summary of the Company's policy for media contact and external communications is outlined in the Board Governance Protocols.

In addition, the Company's Continuous Disclosure Policies are incorporated in the Board Governance Protocols, which is available on the Company's website.

PRINCIPLE 6 - RESPECT THE RIGHTS OF SHAREHOLDERS

Principle 6 is that companies should respect the rights of shareholders and facilitate the effective exercise of those rights.

6.1 Communications policy

The Elementos Board respects the rights of its shareholders, and to facilitate the effective exercise of those rights it has adopted a policy on communication with shareholders, and implemented a set of processes to ensure timely and effective communication with shareholders and the wider investment community. The Company is committed to:

communicating effectively with shareholders through releases to the market via ASX, the Company's website, information mailed to shareholders, and the general meetings of the Company;
giving shareholders ready access to balanced and understandable information about the Company and itscorporate proposals;
making it easy for shareholders to participate in general meetings of the Company and ask questions regarding the conduct of audit and about the functioning of the Company generally; and,
making it possible for shareholders to receive communication by electronic means.

The Company also makes available a telephone number and email address for shareholders to make enquiries of the Company.

6.2 Reporting on Principle 6

A summary of the Company's policy for media contact and external communications is outlined in the Board Governance Protocols, available on the Company's website.

PRINCIPLE 7 - RECOGNISE AND MANAGE RISK

ASX Principle 7 is that companies should establish a sound system of risk oversight and effective management and internal control.

7.1 Risk Management and Internal Control System

The primary objectives of the risk management and internal control system at the Company are to ensure:

all major sources of potential, opportunity for and harm to the Company (both existing and potential) are identified, analysed and treated appropriately;
business decisions throughout the Company appropriately balance the risk and reward trade off;
regulatory compliance and integrity in reporting is achieved; and,
the Board, senior executives and investors understand the risk profile of the Company.

The system covers:

operations risk;
financial reporting; and,
compliance.

Any matters of significance to the Company or materially relevant to its assets, liabilities or profits are signed off by the Board after discussion and evaluation of submissions made by the Managing Director or other party.

7.2 Report on risk management and internal control system

The Board has required the Managing Director to design and implement the risk management and internal control systems to manage the Company's material business risks. As required by the Board, the Managing Director has reported to the Board that the Company's material business risks have been managed effectively.

The Managing Director reviews risk in response to changing business conditions and regulations. Regular reviews of risk and a regular update of the risk profile is undertaken by the Board. This normally occurs in conjunction with the strategic planning process. An internal audit is carried out by the Audit & risk Management Committee to analyse and give an appraisal of the adequacy and effectiveness of the Company's risk management and internal control system. The internal audit function is independent of the external auditor.

7.3 Attestation by Chief Executive Officer (or equivalent) and chief financial officer (or equivalent)

The Managing Director and the Company Secretary provide a written assurance that the risk management system is effective, efficient and accurately reflected in the Company's financial statements and that:

the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control ; and,
the Company's risk management and internal control system is operating effectively in all material respects in relation to financial reporting risks.

7.4 Reporting on Principle 7

The Company's risk management, internal compliance, and control system policies that have been established to manage material business risks are discussed with the Audit & Risk Management Commiottee, senior executives, management and other employees. The Company envisages disclosing a summary of these policies on its website in future.

PRINCIPLE 8 - REMUNERATE FAIRLY AND RESPONSIBLY

Principle 8 states that companies should ensure the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined. Elementos is committed to remunerating its Directors and officers in a manner that is market competitive, consistent with best practice, and in the interests of shareholders.

8.1 The Board should establish a remuneration committee

Elementos has established a Remuneration Committee, and the Committee's Charter is available on the Company's website.

8.2 Structure of Non-Executive and Executive Director Remuneration

The remuneration structure for executives, including the Managing Director, is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the Company. The remuneration policy, setting the terms and conditions for the Managing Director was developed and approved by Non-Executive Directors. The Managing Director, and other senior executives receive a base salary, superannuation, fringe benefits and equity based performance remuneration. Superannuation payments consist of the 9% superannuation guarantee contribution. Individuals may elect to salary sacrifice part of their salary to increased payments towards superannuation. No other form of retirement benefit is paid.

The Board's policy is to remunerate Non-executive Directors at market rates for comparable companies, having regard to the time commitment and responsibilities. The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders, and is not linked to the performance of the Company. However, to align Director's interests with shareholder interests, Directors are encouraged to hold equity interests in the Company. The maximum aggregate amount of fees that can be paid to Non-Executive Directors approved by shareholders is currently \$250,000.

The Company's remuneration policy provides for long-term incentives through participation in the Company's Employee and Officers Share Option Plan. Any equity based remuneration proposed to be granted to the Managing Director will only be granted with shareholder approval.

The Company has prohibited the entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration.

8.3 Reporting on Principle 8

Details of the Company's remuneration policy are outlined in the Remuneration Report section of the Directors' Report, along with the names, qualifications, experience and the term of office held by each Director.

ELEMENTOS LIMITED ABN 49 138 468 756

DIRECTORS' REPORT

Your directors submit the financial report of the consolidated group for the financial period ended 30 June 2010. The Company was incorporated on 23 July 2009.

Directors

The Directors of the Company at any time during or since the end of the financial year are listed below. During the period there were 10 meetings of the full board of directors. The meetings attended by each Director were:

DIRECTORS	ELIGIBLE TO ATTEND	ATTENDED
A. A. McLellan (appointed 19/10/09)	8	8
C. Nolan (appointed 23/07/07)	10	10
N. F. Stuart (appointed 23/7/07)	10	9
P. A. Crawford (appointed 23/7/07, resigned 19/10/09)	7	7

Directors have been in office since the start of the financial period to the date of this report unless indicated otherwise.

Company Secretary

Paul Crawford held the position of Company Secretary at the end of the financial period. Mr Crawford is a CPA and holds accounting, company secretarial and business law qualifications. He has been Company Secretary of the Company since its incorporation.

Principal Activities

Elementos Limited was incorporated to acquire certain assets from the Orocobre Limited group of companies and issued a Prospectus dated 13 November 2009.

The principal activity of the Elementos group during the course of the period was mineral exploration in Australia and Argentina. During the period, activities focused on asset assessment and acquisition, formulation of a corporate development strategy and funding. There was no change in the principal activity during the period.

Review of Operations

Elementos embarked on a major development phase when it closed its initial public offering (IPO) in December 2009, raising \$8.25 million through the issue of 33 million fully paid shares at 25 cents each. The Company commenced trading on the Australian Securities Exchange on 23 December 2009.

During the reporting period, exploration and assessment work was undertaken on the portfolio of exploration assets. Gold and copper targets are the priority focus of Elementos, which has interests in a portfolio of six exploration properties in three mineral provinces in two countries, Argentina and Australia. The tenements are located in world class mineral provinces, with developed infrastructure nearby, and attractive investment environments.

In Argentina, the Company's projects are located in San Juan Province, in the Andean foothills, at moderate altitudes with well established regional infrastructure.

ABN 49 138 468 756

DIRECTORS' REPORT

At Manantiales, the Company has carried out the following work:

Completion and approval of an environmental impact assessment covering all exploration activities over the next two years;
Completion of surface channel sampling resulting in identification of three high-gold grade epithermal vein targets;
Diamond drilling program commenced to test depth extensions of Manantial and Julieta Norte vein targets; and,
La Puerta vein and Manrique targets being advanced towards drill-ready status.

At Santo Domingo, the Company has continued its active exploration program, including:

Geochemical and alteration surveys, which support oxidised porphyry copper/gold model;
Establishment of new road access and field camp to support the planned exploration program covering mapping and sampling, geophysics and drilling; and,
Commencement of mapping and sampling programs at El Arriero, Divisoria and Alunita.

In Australia, Elementos is focused on the Mt lsa lnlier in Queensland and the New England Fold Belt in northern New South Wales. The Mt Isa lnlier is one of the most significant gold and base metal producing districts worldwide, host to many world class copper/gold and lead/silver/zinc orebodies, including Mt Isa, Hilton, George Fisher, Cannington and Ernest Henry. Recent major discoveries include Merlin and Rocklands, which demonstrate the continued potential of the district. The district has established mining, transportation and processing infrastructure in close proximity to the major regional centres of Cloncurry and Mt Isa.

At Millenium, work programs proposed in the Prospectus have commenced, including:

Reconnaissance sampling confirming high-grade copper-cobalt mineralisation extending a further one kilometre along strike to the north;
Systematic re-sampling of historic costeans in the southern area, confirming previously reported high copper-cobalt grades and widths; and,
New applications for additional tenements along the major fault structure hosting the mineralisation.

The New England Fold Belt is an emerging minerals province, which, in the past, has been a significant production area for gold, tin and base metals. Although relatively unexplored, the area is receiving increased attention through the application of new geological theory and exploration techniques.

At the Northern New South Wales tenement areas, the Company has maintained an active exploration program, including:

Successful piloting of the ground penetrating radar remote imaging system at Sydney Flat to identify buried deep lead gold systems;
A drilling program initiated to test the deep lead systems was suspended due to wet weather;
Exploration fieldwork including sampling and mapping of gold and base metals targets commenced at Cathedral Rocks and Dalmorton; and,
Establishment of a field office in Armidale with experienced geologists to advance projects.

Financial Position & Operating Results

The group's operating loss for the financial period, after applicable income tax was \$813,332. Exploration and evaluation expenditure during the period totalled \$1,640,211.

ABN 49 138 468 756

DIRECTORS' REPORT

During the period the Company issued a total of 54,000,001 shares and 7,000,000 share options (see note 11 in financial statements). At 30 June 2010 the group's net assets totalled \$8,032,224 which included cash assets of \$6,567,437.

The directors believe that the group is currently in a strong and stable financial position to support its planned activities.

Information on Directors

The Board has a strong combination of technical, managerial and capital markets experience. Expertise and experience includes operating and mineral exploration in Australia and Argentina. The names and qualifications of the current directors are summarised as follows:

A. Anthony McLellan

Non-executive Chairman

Mr McLellan has over fifty years business experience in Australia and overseas as CEO of major international companies, including the predecessor of Barrick Gold. Mr McLellan has experience in range of resource industries and been instrumental in the acquisition, operation, and divestment of a number of major Australian resources companies.

Mr McLellan is active in the not-for-profit world as a director of the Menzies Research Centre and Chairman of the Australian Christian lobby.

Directorships currently held in other listed companies: Nil

Directorships held in other listed companies in the last three years: Norton Gold Fields Limited (Non-executive Director and Chairman to June 2010), Allomak Limited (Non-executive Director and Chairman to February 2009), Felix Resources Limited (Non-executive Director from 2003 to 2008), Bemax Resources Limited (Non-executive Chairman to July 2008).

Corey Nolan

Managing Director

Mr Nolan has nearly twenty years diverse experience in the resources sector. This includes experience in mining operations, equity markets as resources analyst and corporate finance executive, and business development and commercial roles.

Mr Nolan was primarily responsible for facilitating the demerger of Orocobre Limited's copper and gold assets into Elementos Limited, and subsequent Initial Public Offering.

Directorships currently held in other listed companies: Nil

Directorships held in other listed companies in the last three years: Nil

Neil F. Stuart

Non-executive Director

Mr Stuart is an exploration geologist with over forty years experience in the minerals industry. He is a Fellow of The Australasian Institute of Mining and Metallurgy, a Member of The Australian Institute of Geoscientists and a number of other professional organisations.

Mr Stuart's experience includes a diverse range of commodities across several countries, but heavily focused on project acquisition and delineation in Australia, Mexico and Argentina. In Argentina, Mr Stuart has been a founding Director of Oroplata Limited, Orocobre Limited and Elementos Limited. Mr Stuart is also a Director of several other ASX listed junior exploration companies.

Directorships currently held in other listed companies: Orocobre Limited; Bowen Energy Limited; Axiom Mining limited; Overseas & General Limited.

Directorships held in other listed companies in the last three years: Nil

ABN 49 138 468 756

DIRECTORS' REPORT

The relevant interest of each director held directly or indirectly in shares and options issued by the Company at the date of this report is as follows:-

Directors	Shares	Options
A A McLellan	-	2,000,000
C Nolan	120,000	2,500,000
N F Stuart	1,935,222	1,000,000

Remuneration Report (audited)

This report details the nature and amount of remuneration for each director and other key executive personnel.

The Company's remuneration policy seeks to align director and executive objectives with those of shareholders and business, while at the same time, recognising the early development stage of the Company and the criticality of funds being utilised to achieve development objectives. The Board believes that the current policy has been appropriate and effective in achieving a balance of these objectives.

The remuneration structure for executives is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the group.

The Company's policy for determining the nature and amount of remuneration of board members and key executives of the Company is as follows.

The remuneration policy, setting the terms and conditions for the managing director was developed and approved by the non-executive directors. The Managing Director receives payments provided for under an employment agreement, including cash, superannuation and equity based performance remuneration.

Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. Individuals may elect to salary sacrifice part of their fees as increased payments towards superannuation. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting and is not linked to the performance of the Company. However, to align directors' interests with shareholder interests, directors are encouraged to hold equity interests in the Company. The maximum aggregate amount of fees that can be paid to non-executive directors approved by shareholders is currently \$250,000. One-third, by number, of non-executive directors retires by rotation at the Company's annual general meeting.

The Company's remuneration policy provides for long-term incentives to be offered through an employee share option plan. No options have been granted under this plan up to the date of this report. Options were however granted to align directors' and shareholders' interest. Further details are set out in note 18 in the financial statements. The Company currently does not have any other performance-based incentive component built into Director and executive remuneration. The Company does not remunerate any management personnel with securities that are not performance based.

The Board of Directors is responsible for determining and reviewing the Company's remuneration policy, remuneration levels and performance of both executive and nonexecutive directors. Independent external advice will be sought when required.

Employment Details of Key Management Personnel

The remuneration of each director and key officer of the group during the period was as follows:

ABN 49 138 468 756

DIRECTORS' REPORT

2010		Short term benefits	Equity	Post
Key Management Personnel	Salary & Fees	Non-Cash Benefits	Settled Options	Employment Superannuation	Total
A A McLellan	\$40,416	-	\$22,821	\$3,638	\$66,875
C Nolan	\$92,500	-	\$28,526	\$8,325	\$129,351
N F Stuart	\$15,000	-	\$11,410	\$1,350	\$27,760
P A Crawford	\$28,050	-	-	-	\$28,050
	\$175,966	-	\$62,757	\$13,313	\$252,036

Following are employment details of persons who were key management personnel of the group during the financial period.

Key	Position held at 30 June 2010 &			Proportion of Remuneration:
Management Personnel	change during period	Contract Details	Related to performance	Not related to performance	Total
			Options	Salary & Fees
A A McLellan	Non-executive Chairman (appointed 19/10/09)	No fixed term, termination as provided by Corporations Act	34.1%	65.9%	100%
C Nolan	Director from 23/07/09 then Managing Director from 23/12/09	No fixed term, 3 months notice to terminate	22.0%	78.0%	100%
N F Stuart	Non-executive Director (appointed 23/07/09)	No fixed term, termination as provided by Corporations Act	41.1%	58.9%	100%
P A Crawford	Non-executive Director (appointed 23/07/09, resigned 19/10/09)	No fixed term, termination as provided by Corporations Act	-	100%	100%

Options granted as remuneration

Remuneration options granted during the period are summarised below.

Options vest when the Elementos Limited share price closes at or above \$0.30 (50%) and at or above \$0.35 (50%) and expire within six years of granting. All options were granted for nil consideration. Options granted do not convey dividend or voting rights and each option converts into 1 ordinary share. All options remain unvested.

					Value at Grant Date		Terms & Conditions of Grant
Key Management Personnel	No. Vested	Granted Number	Grant Date	Per Option	Total	Exercise price	First Exercise Date	Last Exercise Date
A McLellan	-	2,000,000	23.10.09	10 cents	\$200,000	25 cents	On vest	23.10.15
C Nolan	-	2,500,000	23.10.09	10 cents	\$250,000	25 cents	On vest	23.10.15
N Stuart	-	1,000,000	23.10.09	10 cents	\$100,000	25 cents	On vest	23.10.15

Amounts shown as equity settled options in remuneration reflect the current year's amortised expense of options granted. The grant of the options to the Directors is intended to act as a

ABN 49 138 468 756

DIRECTORS' REPORT

strong incentive to align the interests of the Directors' with the Company's strategic plan focusing on seeking improved performance, the growth of the Company and better returns for shareholders.

Key management personnel are prohibited from entering into hedge arrangements on unvested options. No options have been exercised during the current period. No options lapsed or were forfeited during the period. There have not been any alterations to the terms and conditions of any options since grant date.

Employment Contract of Managing Director (audited)

The contract for service between the Company and the Managing Director was completed in December 2009. It does not provide for a fixed term of employment but provides for annual review of the compensation value. Total remuneration value (excluding equity) is \$200,000 per annum. The Company may terminate the Managing Director's contract without cause by giving 3 months' notice.

In the case of serious misconduct the Company can terminate employment at any time. The terms of this agreement are not expected to change in the immediate future.

The terms of appointment of the Non-executive Directors provide for the payment of fixed directors' fees and consulting fees for services provided in addition to their commitment as directors.

Company performance, shareholder wealth and director and executive remuneration (audited)

As outlined above, the Company's remuneration policy seeks to align directors' and executives' objectives with shareholders and business, whilst recognising the developmental stage of the Company. As the Company was incorporated in 2009, no key performance data is available for the group.

Dividends

No dividend has been proposed or paid since the start of the financial period.

Significant Changes in State of Affairs

The following significant changes in the state of affairs of the Company have occurred during the financial period:

a. During the period the Company issued 20,000,000 fully paid ordinary shares to Orocobre Limited as consideration for the purchase of the Santo Domingo project tenements in Argentina.
b. The Company completed an initial public offering in December 2009, raising \$8.25 million through the issue of 33 million fully paid shares at 25 cents each. The Company commenced trading on the Australian Securities Exchange on 23 December 2009.
c. As part of the IPO process, the Company granted 1,500,000 options to the underwriter to the capital raising.
d. During the period, the Company granted 5,500,000 options to Directors.
e. The economic entity acquired exploration tenements in Australia and Argentina.

There have been no further significant changes in the state of affairs of the Company during the period.

Options

At the date of this report, the unissued ordinary shares of the Company under options are as follows:-

ABN 49 138 468 756

DIRECTORS' REPORT

Grant Date	Expiry Date	Exercise Price	No. Under Option
23 October 2009	23 October 2015	\$0.25	5,500,000
17 December 2009	17 December 2013	\$0.30	1,500,000

There have been no unissued shares or interests under option of any controlled entity within the economic entity during or since reporting date. Option holders do not have any rights to participate in any share issue or other interests in the Company or any other entity. No options have been exercised to the date of this report.

Subsequent Events, Future Developments, Prospects and Business Strategies

The Directors intend that the Company continue to carry out an active exploration program on its Australian and Argentine tenements as detailed in the Company's various public announcements. Directors will also continue to review external opportunities which may arise with a view to acquisition, farm-in or corporate investment.

Since the end of the financial period, the Company has entered into an agreement with Forte Energy NL to extend its option at the Millenium project in Queensland.

No other matters or circumstances have arisen since the end of the period which significantly affected or may significantly affect the operations of the Elementos group, the results of those operations, or the state of affairs of the group in future financial years.

Environmental Issues

The group is subject to significant environmental regulation under the law of the Commonwealth or a State or Territory of Australia. The group is also subject to environmental regulation in relation to its exploration activities in Argentina.

The Directors monitor the Group's compliance with environmental obligations. The Directors are not aware of any compliance breach arising during the year and up to the date of this report.

Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Elementos Limited support and, where practicable or appropriate, have adhered to the ASX Principles of Corporate Governance. The Company's corporate governance statement is contained within this annual report.

Indemnifying Directors and Auditors

The Company has entered into a Deed with each of the Directors whereby the Company has agreed to provide certain indemnities to each Director to the extent permitted by the Corporations Act and to use its best endeavours to obtain and maintain directors and officers' indemnity insurance, subject to such insurance being available at reasonable commercial terms.

The economic entity has paid premiums to insure each of the directors of the Company against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium was \$27,547.

The Company has not given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums in respect of any person who is or has been an

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period ended 30 June 2010

		Period ended
	Note	30 June 2010
		\$

Revenue	2	169,660
Less expenses:
Corporate & administrative expenses		(836,043)
Exploration & evaluation expenditure expensed		(146,949)
Loss before income tax expense		(813,332)
Income tax expense	4	-
Loss for the period	3	(813,332)
Other comprehensive income
Foreign currency translation gain		52,973
Income tax relating to components of other comprehensive
income		-
Other comprehensive income for the period net of tax		52,973

Total comprehensive loss attributable to members of the
parent entity		(760,359)
Basic earnings per share (cents per share)	14	(2.38)
Dividends per share		-

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2010

	Note	30 June 2010
		\$
CURRENT ASSETS
Cash and cash equivalents	5	6,567,437
Trade and other receivables	6	46,754
Other	7	66,918
Total Current Assets		6,681,109
NON-CURRENT ASSETS
Exploration and evaluation asset	8	1,544,751
Property, Plant, and Equipment	9	40,165

Total Non-Current Assets		1,584,916

TOTAL ASSETS		8,266,025
CURRENT LIABILITIES

Trade and other payables	10	233,801
Total Current Liabilities		233,801

TOTAL LIABILITIES		233,801

NET ASSETS		8,032,224
EQUITY
Issued Capital	11	8,600,139
Reserves	12	245,417
Accumulated losses		(813,332)
TOTAL EQUITY		8,032,224

ABN 31 112 589 910

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 30 June 2010

		Share Capital	Accum ulated Losses	Option Reserve	Foreign Currency Translation Reserve	Total
	Note	\$	\$	\$	\$	\$
Opening Balance		-	-	-	-	-
Loss for the period Other comprehensive		-	(813,332)	-	-	(813,332)
income for the period	12	-	-	-	52,973	52,973
Total comprehensive loss		-	(813,332)	-	52,973	(760,359)
Shares issued during the period Transaction costs	11 11	9,500,001 (899,862)	- -	- -	- -	9,500,001 (899,862)
Equity settled compensation	11	-	-	192,444	-	192,444
Balance at 30 June 2010		8,600,139	(813,332)	192,444	52,973	8,032,224

ABN 31 112 589 910

CONSOLIDATED STATEMENT OF CASH FLOWS for the period ended 30 June 2010

	Note	Period Ended 30 June 2010 \$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments due to suppliers and employees on credit terms Interest received		(796,491) 169,660
Net cash provided by (used in) operating activities	13	(626,831)
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration expenditure Purchase of Property, Plant and Equipment	8 9	(493,262) (43,886)
Net cash provided by (used in) investing activities		(537,148)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares Costs associated with share issue	11 11	8,250,001 (520,175)
Net cash provided by (used in) financing activities		7,729,826
Net increase in cash held		6,565,847
Cash at beginning of period		-
Effect of exchange rates on cash holdings in foreign currencies		1,590
Cash at end of year	5	6,567,437

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards, including Australian Accounting Interpretations and other authoritive pronouncements of the Australian Accounting Standards Board.

The Company was incorporated on 23 July 2009 and consequently no comparative figures are available. The Company listed on the Australian Securities Exchange on 23 December 2009.

The financial report covers the economic entity of Elementos Limited and controlled entities. Elementos Limited is a public company, incorporated and domiciled in Australia. The financial report has been prepared on an accruals basis and is based on historical cost modified by the measurement of fair value of selected non-current assets, financial assets and liabilities.

Separate financial statements for Elementos Limited as an individual entity are not presented following a change to the Corporations Act 2001. However, financial information required for Elementos Limited as an individual entity is included in note 24.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated.

Principles of Consolidation

A controlled entity is any entity Elementos Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities. A list of controlled entities is shown in note 17(c).

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the period, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Income Tax

The income tax expense (revenue) for the period comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the period as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Exploration and Evaluation Assets

Exploration and evaluation expenditure incurred is recognised as exploration and evaluation assets, measured on the cost basis and classified as an intangible asset. The expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that rights of tenure are current and either they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the period in which the decision to abandon the area is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation or alternatively sale of the respective areas of interest.

Restoration Costs

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the exploration and mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

The economic entity currently has no obligation for any restoration costs in relation to discontinued operations, nor is it currently liable for any future restoration costs in relation to current areas of interest. Consequently, no provision for restoration has been deemed necessary.

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of Assets

At each reporting date, the economic entity reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the statement of comprehensive income.

Financial Instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

Classification and Subsequent Measurement

Financial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties.

Amortised cost is calculated as:

(a) the amount at which the financial asset or financial liability is measured at initial recognition;
(b) less principal repayments;
(c) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and
(d) less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The economic entity does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Impairment

At each reporting date, the economic entity assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of comprehensive income.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of less than 3 months.

Issued Capital

Ordinary shares are classified as equity. Transaction costs (net of tax where the deduction can be utilised) arising on the issue of ordinary shares are recognised in equity as a reduction of the share proceeds received.

Equity Settled Compensation

The economic entity makes equity-settled share-based payments to directors, employees and other parties for services provided or the acquisition of exploration assets. The fair value of the equity is measured at grant date and recognised over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a binomial lattice pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

Where the fair market value of services rendered by other parties can be reliably determined, this is used to measure the equity-settled payment.

Revenue

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Employee Benefits

Provision is made for the economic entity's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

one year, have been measured at the amounts expected to be paid when the liability is settled, plus related oncosts. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Contributions are made by the entity to employee superannuation funds and are charged as expenses when incurred.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis except for the GST component of investing and financing activities which are disclosed as operating cash flow.

Foreign Currency Transactions and Balances

Functional and presentation currency:

The economic entity's financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transaction and balances:

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised as revenue / loss in the statement of comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised as other comprehensive income in the statement of comprehensive income.

Group companies:

The financial results and position of foreign operations whose functional currency is different from the economic entity's presentation currency are translated as follows:

assets and liabilities are translated at period-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred to the economic entity's foreign currency translation reserve in the statement of financial position.

Earnings per Share (EPS)

Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period adjusted for any bonus elements in ordinary shares issued during the period. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the economic entity.

The economic entity makes estimates and judgements in applying the accounting policies. Critical judgements in respect of accounting policies relate to the exploration and evaluation assets, whereby exploration and evaluation expenditure is capitalised in certain circumstances, primarily where activities in the area of interest have not yet reached a stage which permits reasonable assessment of economically recoverable reserves. Otherwise expenditure is expensed. The majority of the capitalised expenditure in the financial period was with a related party and settled by issue of equity (see notes 8 & 17).

Adoption of New and Revised Accounting Standards

The Company has adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory.

The adoption of these standards has impacted the recognition, measurement and disclosure of certain transactions. The following is an explanation of the impact the adoption of these standards and interpretations has had on the financial statements of the Company.

AASB 8: Operating Segments

In February 2007 the Australian Accounting Standards Board issued AASB 8 which replaced AASB 114: Segment Reporting.

AASB 8 requires the 'management approach' to the identification measurement and disclosure of operating segments. The 'management approach' requires that operating segments be identified on the basis of internal reports that are regularly reviewed by the entity's chief operating decision maker, for the purpose of allocating resources and assessing performance. Under AASB 114, segments were identified by business and geographical areas, and only segments deriving revenue from external sources were considered.

As the Company operates in a single segment, the adoption of the 'management approach' to segment reporting has had no impact.

AASB 101: Presentation of Financial Statements

In September 2007 the Australian Accounting Standards Board revised AASB 101 and as a result, there have been changes to the presentation and disclosure of certain information within the financial statements. Below is an overview of the key changes and the impact on the Company's financial statements.

Disclosure impact:

Terminology changes — the revised version of AASB 101 contains a number of terminology changes, including the amendment of the names of the primary financial statements.

Reporting changes in equity — the revised AASB 101 requires all changes in equity arising from transactions with owners, in their capacity as owners, to be presented separately from non-owner changes in equity. Owner changes in equity are to be presented in the statement of changes in equity, with non-owner changes in equity presented in the statement of comprehensive income. The previous version of AASB 101 required that owner changes in equity and other comprehensive income be presented in the statement of changes in equity.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Statement of comprehensive income — the revised AASB 101 requires all income and expenses to be presented in either one statement, the statement of comprehensive income, or two statements, a separate income statement and a statement of comprehensive income. The previous version of AASB 101 required only the presentation of a single income statement.

The Company's financial statements contain a statement of comprehensive income.

Other comprehensive income — the revised version of AASB 101 introduces the concept of 'other comprehensive income' which comprises of income and expenses that are not recognised in profit or loss as required by other Australian Accounting Standards. Items of other comprehensive income are to be disclosed in the statement of comprehensive income. Entities are required to disclose the income tax relating to each component of other comprehensive income. The previous version of AASB 101 did not contain an equivalent concept.

New Accounting Standards for Application in Future Periods

The AASB has issued new, revised and amended standards and interpretations that have mandatory application dates for future reporting periods. The Company has decided against early adoption of these standards.

The following standards and amendments to standards have been identified as those which may impact on the Company in the period of initial application:

AASB 9: Financial Instruments and AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (applicable for annual reporting periods commencing on or after 1 January 2013).

These standards are applicable retrospectively and amend the classification and measurement of financial assets. The Company has not yet determined the potential impact on the financial statements. The changes made to accounting requirements include:

simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; and
reclassifying financial assets where there is a change in an entity's business model as they are initially classified based on:
a. the objective of the entity's business model for managing the financial assets; and
b. the characteristics of the contractual cash flows.

AASB 2009–4: Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 2 and AASB 138 and AASB Interpretations 9 & 16] (applicable for annual reporting periods commencing from 1 July 2009) and AASB 2009-5: Further Amendments to Australian Accounting Standards arising from the Annual Improvements

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Project [AASB 5, 8, 101, 107, 117, 118, 136 & 139] (applicable for annual reporting periods commencing from 1 January 2010).

These standards detail numerous non-urgent but necessary changes to accounting standards arising from the IASB's annual improvements project. No changes are expected to materially affect the Company.

AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting periods commencing on or after 1 January 2011).

This standard makes a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of International Financial Reporting Standards by the IASB. The standard also amends AASB 8 to require entities to exercise judgment in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. These amendments are not expected to impact the Company.

AASB 2009–13: Amendments to Australian Accounting Standards arising from Interpretation 19 [AASB 1] (applicable for annual reporting periods commencing on or after 1 July 2010).

This standard makes amendments to AASB 1 arising from the issue of Interpretation 19. The amendments allow a first-time adopter to apply the transitional provisions in Interpretation 19. This standard is not expected to impact the Company.

AASB 2009–8: Amendments to Australian Accounting Standards - Group Cash-settled Sharebased Payment Transactions [AASB 2] (applicable for annual reporting periods commencing on or after 1 January 2010).

These amendments clarify the accounting for group cash-settled share-based payment transactions in the separate or individual financial statements of the entity receiving the goods or services when the entity has no obligation to settle the share-based payment transaction. The amendments incorporate the requirements previously included in interpretation 8 and Interpretation 11 and as a consequence, these Interpretations are superseded by the amendments. These amendments are not expected to impact the Group.

AASB Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments (applicable for annual reporting periods commencing on or after 1 January 2010).

This interpretation deals with how a debtor would account for the extinguishment of a liability through the issue of equity instruments. The Interpretation states that the issue of equity should be treated as the consideration paid to extinguish the liability, and the equity instruments issued should be recognised at their fair value unless fair value cannot be measured reliably in which case they shall be measured at the fair value of the liability extinguished. The Interpretation deals with situations where either partial or full settlement of the liability has occurred. This Interpretation is not expected to impact the Group.

NOTE 2: REVENUE & OTHER INCOME	Period ended 30 June 2010
	\$
Revenue from operating activities:
Interest received from other persons	169,660

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 3: EXPENSES	Period ended 30 June 2010
Included in expenses are the following items:	\$
Exploration expenditure expensed Depreciation & amortisation Foreign currency translation gain	146,949 3,728 (1,293)
Employee benefits expense comprises: Short term benefits Contributions to defined contribution plans	407,518 22,521
Share based payments	62,757
less capitalised as exploration expenditure	(127,411)
	365,385
NOTE 4: INCOME TAX EXPENSE
The prima facie tax on the operating loss is reconciled to income tax expense as follows:
Prima facie tax payable/(benefit) on loss from ordinary activities before income tax at 30%.	(244,000)
Adjust for tax effect of: Non-deductible amounts Tax losses and temporary differences not brought to account	19,358 224,642
Income tax expense/(benefit) attributable to entity	-
Weighted average effective tax rate	0.00%
Deferred tax assets and liabilities not brought to account, the net benefit of which will only be realised if the conditions for deductibility set out in Note 1 occur:
Temporary differences (comprising exploration expenditure, provisions and other items) Tax losses	(511,996) 736,638

Net unbooked deferred tax asset	224,642
The economic entity has unconfirmed carry forward losses of approximately \$2,400,000.
	30 June 2010
NOTE 5: CASH AND CASH EQUIVALENTS	\$
Cash at bank and on hand Short term deposits	527,437 6,040,000
	6,567,437

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 6: TRADE AND OTHER RECEIVABLES	30 June 2010 \$
Current: Other receivables	46,754

There are no balances within trade and other receivables that contain assets that are impaired or are past due. It is expected these balances will be received when due. Impaired assets are provided for in full. There are no balances with terms that have been renegotiated, but which would otherwise be past due or impaired.

These amounts are non-interest bearing & generally on 30 day terms. No collateral is held over receivables.

Credit Risk — Trade and Other Receivables

The economic entity has no significant concentration of credit risk with respect to a single counter party. The class of assets described as Trade and Other Receivables is considered to be the main source of credit risk related to the economic entity A major portion of the receivables are in Australia.

NOTE 7: OTHER ASSETS	30 June 2010 \$
Current:
Prepayments	66,918
NOTE 8: EXPLORATION AND EVALUATION ASSET
Exploration and evaluation expenditure carried forward in respect of areas of interest are:
Exploration and evaluation phase - at cost	1,544,751
Movement in exploration and evaluation asset:
Opening balance - at cost	-
Capitalised exploration expenditure (a)	1,493,262
Foreign currency translation movement	51,489
Carrying amount at the end of period	1,544,751

(a) Includes \$1,000,000 settled by way of shares based payment. Refer notes 11(a) & 13 for more detail.

Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and development of projects or alternatively through the sale of the areas of interest.

NOTE 9: PLANT AND EQUIPMENT	30 June 2010
	\$
Plant and equipment
At cost	43,893
Accumulated depreciation	(3,728)
Total plant and equipment	40,165

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 9: PLANT AND EQUIPMENT (continued)	30 June 2010
Reconciliation of the carrying amounts for property, plant and equipment is set out below:	\$
Balance at the beginning of year	- 43,886
Additions Disposals	-
Depreciation expense	(3,728)
Foreign currency translation movement	7
Carrying amount at the end of year	40,165
NOTE 10: TRADE AND OTHER PAYABLES
Current:
Trade payables and accrued expenses (a)	212,294
Short term employee benefits	21,507
Total payables (unsecured)	233,801

(a) Includes \$30,000 payable to related parties.

The average credit period on purchases of goods and services is 30 days. No interest is charged on trade payables. Trade payables and accruals are the only financial liabilities shown at amortised cost.

NOTE 11: ISSUED CAPITAL		30 June 2010
		\$
Fully paid ordinary shares		8,600,139
Ordinary shares		No.
Balance at the beginning of the reporting period		-
Shares issued during the period:
23 July 2009		1
20 October 2009	(a)	20,000,000
17 December 2009	(b)	1,000,000
17 December 2009	(c)	33,000,000
Balance at reporting date		54,000,001

(a) Issued at 5 cents each pursuant to a sale agreement with Orocobre Limited, covering the Santo Domingo Project in Argentina.

(b) Issued at 25 cents each pursuant to the Umbrella Agreement with Orocobre Limited, whereby Elementos reimbursed costs incurred by Orocobre on its behalf, up to completion of the initial public offering, including direct IPO costs.

(c) Issued at 25 cents each, pursuant to an initial public offering to raise \$8,250,000. Costs of the issue totalled \$899,862, including non-cash option costs of \$129,687. The Company successfully applied to the Australian Securities Exchange for admission to the Official List of the Exchange and commenced trading on 23 December 2009.

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At shareholders' meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 11: ISSUED CAPITAL (continued)
Options Unlisted Share Options		No. of Options 7,000,000
Balance at the beginning of the reporting period Options issued during the period:		-
Issue to Directors Issue to Martin Place Securities Limited for IPO	(d)	5,500,000
services	(e)	1,500,000
Balance at reporting date		7,000,000

(d) Issued to directors pursuant to shareholder approval.

(e) Issued pursuant to an agreement relating to services provided in relation to the initial public offering.

Other details of the options granted are:	Director Options	IPO Services Options
Number of options granted	5,500,000	1,500,000
Date of grant and vesting of options	23/10/09	17/12/09
Option expiry date	23/10/15	17/12/13
The fair value of share options and assumptions for the period ended 30 June 2010:	Director Options	IPO Services Options
Fair value at grant date	10 cents	8.65 cents
Share price	25 cents	25 cents
Exercise price	25 cents	30 cents
Expected volatility	45.00%	45.00%
Option life	6 years	4 years
Expected dividends	nil	nil
Risk-free interest rate	4.25%	4.25%
Target share price for vesting	30/35 cents	N/A

The weighted average fair value of options granted in the period was \$0.097. The fair values of options were calculated using a binomial lattice pricing model. Volatility was based on best estimates and reference to similar equity instruments.

The amount of the expense during the period in relation to Director options is \$62,757. The expense (treated as equity transactions costs) relating to IPO services options is \$129,687. These amounts have been credited to the Option Reserve. The fair value of the options granted to Directors is deemed to represent the value of employee services received over the vesting period.

Capital Management

Exploration companies such as Elementos are funded exclusively by share capital. The Company has no debt. The Company's capital comprises its share capital supported by financial assets.

Management controls the capital of the Company to ensure that it can fund its operations and continue as a going concern. Capital management policy is to fund its exploration activities by way of equity. No dividend will be paid while the Company is in exploration stage. There are no externally imposed capital requirements.

There have been no changes to the capital management policies during the period.

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 12: RESERVES	30 June 2010 \$
Foreign currency translation reserve The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.	52,973
Options reserve The options reserve records amounts recognised on valuation of share options granted to directors and others for services provided.	192,444
NOTE 13: CASH FLOW INFORMATION	30 June 2010 \$
Reconciliation of Cash Flow from Operations with Loss after Income Tax: Loss from ordinary activities after income tax Non-cash flows in loss from ordinary activities: Depreciation	(813,332) 3,728
Options expense Changes in assets and liabilities:	62,757
(Increase)/Decrease in receivables (Increase)/Decrease in prepayments (Decrease)/Increase in creditors and accruals	(46,513) (66,189) 232,718
Cash flows from operations	(626,831)

Non-cash Financing and Investing Activities

Equity Issues:

During the period, the Company issued 20,000,000 shares, representing \$1,000,000 as consideration for the Santo Domingo exploration tenements in Argentina.

During the period, the Company issued 1,000,000 fully paid ordinary shares at 25 cents each, representing \$250,000 as a cost reimbursement in respect of various costs incurred by Orocobre Limited on behalf of the Company.

During the period, the Company also issued 1,500,000 options, valued at \$129,687 as consideration for services rendered in relation to initial public offering.

	Period ended 30 June 2010
NOTE 14: EARNINGS PER SHARE	cents
Net loss used in the calculation of basic & diluted EPS	(813,332)
Weighted average number of ordinary shares outstanding during the period used in the calculation of basic EPS	34,181,288

Options are considered potential ordinary shares. The average market price of ordinary shares during the period ended 30 June 2010 did not exceed the exercise price of the options. Accordingly, the 7,000,000 options on issue at reporting date were not considered dilutive for the reporting periods during which they were on issue and were not included in the determination of diluted earnings per share for the period.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 15: COMMITMENTS	30 June 2010
	\$

Exploration Commitments

The economic entity must meet minimum expenditure commitments in relation to option agreements over exploration tenements and to maintain those tenements in good standing.

The following commitments exist at balance date but have not been brought to account. If the relevant option to acquire a mineral tenement is relinquished the expenditure commitment also ceases.

Not later than 1 year	577,629
Later than 1 year but not later than 5 years	3,602,921
Total commitment	4,180,550

NOTE 16: CONTINGENT LIABILITIES

There were no contingent liabilities at the end of the reporting period.

NOTE 17: RELATED PARTY TRANSACTIONS

The economic entity undertakes transactions with related parties in the normal course of business. Transactions between related parties are on normal commercial terms and conditions, no more favourable than those available to other parties unless otherwise stated.

Related party transactions in the period were:

(a) As set out in the Company's Prospectus dated 13 November 2009, the economic entity was established to acquire certain assets from the Orocobre group of companies. Orocobre Limited is listed on the Australian Securities Exchange and initially owned 100% of the Company. Following the Company's IPO, Orocobre's interest reduced to 39% and subsequently to 1.85%.

Transactions with Orocobre Group in the period were:

The issue of 20,000,000 full paid ordinary shares at 5 cents each (\$1,000,000) to Orocobre for the assignment of the rights to the Santo Domingo Tenements.

Payment of \$500,000 to Orocobre as a cost reimbursement in respect of various costs incurred by Orocobre on behalf of Elementos. The payment was satisfied by the issue of 1,000,000 fully paid ordinary shares at 25 cents each and \$250,000 cash. Other cost reimbursements of \$30,000 remain payable to Orocobre at reporting date.

During the period, the Company was party to a tenancy agreement with Orocobre Limited. A total of \$38,993 was paid under this agreement.

(b) During the period the Company entered into transactions with key management personnel as follows:

Key management personnel compensation and equity interests are detailed in note 20.

A. McLellan

Appointed as Director and Chairman of the Board effective 15 October 2009 and to retire no later than the 3rd Annual General Meeting after appointment. Other conditions of appointment, remuneration and resignation procedures are commensurate with normal commercial practices.

C. Nolan

Appointed as Managing Director effective when the initial IPO was filed. Responsibilities, duties, remuneration and conditions of employment are defined in an Employment Agreement which is in line with normal commercial practices.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 17: RELATED PARTY TRANSACTIONS (continued)

N. Stuart

Appointed as Non-Executive Director effective 23 July 2009. Conditions of appointment as a director, together with remuneration and resignation procedures are commensurate with normal commercial practices. Mr Stuart also has a separate consultancy agreement with the Company to provide services as requested by the Company subject to a maximum remuneration of \$25,000 pa. No costs were incurred under this agreement during the reporting period.

P. Crawford

Appointed as Company Secretary effective 23 July 2009. Mr Crawford is the principal of a corporate consultancy firm he established in 2001, offering a range of commercial and corporate governance services to the Company. Conditions of appointment, remuneration, and resignation procedures are commensurate with normal commercial practices. Professional fees for the provision of these services for the period totalled \$28,050. At balance date nothing was owing.

Element Minerals Pty Ltd, 100% owned, incorporated in Australia.
Elementos Minerales SA, 100% owned, incorporated in Argentina.

The Company has current amounts receivable from its subsidiaries on an interest free basis and repayable on demand.

NOTE 18: SHARE BASED PAYMENTS

The following share-based payment arrangements existed at 30 June 2010:

During the period, 5,500,000 share options were granted to Directors. Refer to Note 11 and the Directors' Report for more details.

During the period, 1,500,000 share options were granted as consideration for services rendered in relation to initial public offering. Refer to Note 11 for more details.

At reporting date, the options granted to key management personnel are:

Options

Granted 23 October 2010 5,500,000

All options granted are over ordinary shares in Elementos Limited, which confer a right of one ordinary share per option. The options hold no voting or dividend rights and are not transferrable. These options are summarised as:

	30 June 2010
	Number of Weighted Average Options Exercise Price
	No	\$
Outstanding at the beginning of the year	-	-
Granted	7,000,000	0.261
Forfeited	-	-
Exercised	-	-
Expired	-	-
Outstanding at year-end	7,000,000	0.261
Exercisable & vested at year-end	1,500,000	0.300

The options outstanding at 30 June 2010 had a weighted average exercise price of \$0.261 and a weighted average remaining contractual life of 4.9 years. Refer to Note 11 regarding assessment of fair value of options granted during the year.

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 19: AUDITORS' REMUNERATION	30 June 2010 \$
Remuneration of the auditor for:
- auditing or reviewing the financial report	21,500
- other services (due diligence)	2,000

NOTE 20: KEY MANAGEMENT PERSONNEL COMPENSATION & EQUITY

The names of key management personnel of the entity who have held office during the financial period are:

(a) Key Management Person Position

Mr. A McLellan	Non-Executive Chairman
Mr. C Nolan	Managing Director - Executive
Mr. N Stuart	Director - Non-Executive
Mr. P Crawford	Company Secretary

(b)	Key Management Personnel Compensation	30 June 2010 \$
	Short-term employee benefits	175,966
	Post-employment benefits	13,313
	Share-based payments	62,757
		252,036

Detailed disclosures on compensation for key management personnel are set out in the Remuneration Report included in the Directors' Report.

(c) Number of shares held by Key Management Personnel (i)

2010	Opening Balance	Compen sation (ii)	Options Exercised	Purchased / (Sold)	Balance 30 June 2010

Mr. A McLellan	-	-	-	-	-
Mr. C Nolan	-	-	-	120,000	120,000
Mr. N Stuart	-	-	-	1,935,222	1,935,222
Mr. P Crawford	-	-	-	24,000	24,000
Total	-	-	-	2,079,222	2,079,222

(i) Represents shares held directly, indirectly or beneficially.

(ii) The Company does not issue shares as a form of remuneration.

(d) Number of options held by Key Management Personnel (i)

	2010	Opening Balance	Compen sation (e)	Options Acquired	Options Expired	Balance 30/06/10	Total Vested	Total Exercisable

	Mr. McLellan	-	2,000,000	-	-	2,000,000	-	-
Mr. Nolan		-	2,500,000	-	-	2,500,000	-	-
Mr. Stuart		-	1,000,000	-	-	1,000,000	-	-
	Mr. Crawford	-	-	-	-	-	-	-
Total		-	5,500,000	-	-	5,500,000	-	-

(i) Represents options held directly, indirectly or beneficially.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 20: KEY MANAGEMENT PERSONNEL COMPENSATION & EQUITY (continued)

(e) Compensation Options

Details of options provided as compensation for key management personnel are set out in the Remuneration Report included in the Directors' Report.

NOTE 21: FINANCIAL INSTRUMENTS

(a) Financial Risk Management Policies

The Company's financial instruments comprise cash balances, receivables and payables. The main purpose of these financial instruments is to provide finance for Company operations.

Treasury Risk Management

A finance committee consisting of key management of the Company meet on a regular basis to analyse exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. Management is responsible for developing and monitoring the risk management policies and reports to the Board.

Financial Risks

The main risks the Company is exposed to through its financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. These risks are managed through monitoring of forecast cashflows, interest rates, economic conditions and ensuring adequate funds are available.

Interest Rate Risk

The economic entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates, arises in relation to the economic entity's bank balances.

This risk is managed through the use of variable rate bank accounts.

Liquidity Risk

Liquidity risk is the risk that the economic entity will not be able to meet its financial obligations as they fall due. This risk is managed by ensuring, to the extent possible, that there is sufficient liquidity to meet liabilities when due, without incurring unacceptable losses or risking damage to the economic entity's reputation.

The economic entity's activities are funded from equity sources.

Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

Credit risk arises from exposures to deposits with financial institutions and sundry receivables.

Credit risk is managed and reviewed regularly by management by actively assessing the rating quality and liquidity of counter parties:

only banks and financial institutions with an 'A' rating are utilised; and,
all other entities are rated for credit worthiness taking into account their size, market position and financial standing.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 21: FINANCIAL INSTRUMENTS (continued)

The carrying amount of financial assets recorded in the financial statements represents the economic entity's maximum exposure to credit risk.

At 30 June 2010, there was no concentration of credit risk, other than on a geographical basis with most financial assets in Australia.

Foreign Currency Risk

The economic entity is exposed to fluctuations in foreign currencies arising from the purchase of goods and services in currencies other that the economic entity's measurement currency.

Financial assets and liabilities exist for the economic entity's Argentine operations, and thus there is exposure to the Argentine Peso. As this risk is minor, it is not hedged. At reporting date, the net foreign currency risk (stated in A\$) was \$166,540.

(b) Financial instrument composition and contractual maturity analysis

Financial assets:	30 June 2010 \$
Within 6 months - cash & cash equivalents (i) - receivables (ii)	6,567,437 46,754
Total	6,614,191
Financial liabilities: Within 6 months
- payables (b)	233,801

(i) Floating interest rates, with weighted average effective interest rate 5.05%, with an average maturity of 30 days.

(ii) Non-interest bearing, at amortised cost.

(c) Net Fair Values

No financial assets or liabilities are readily traded on organised markets in a standardised form.

Financial assets where the carrying amount exceeds net fair values have not been written down, as the economic entity intends to hold these assets to maturity.

The aggregate net fair values and carrying amounts of financial assets and liabilities are disclosed in the balance sheet and notes to the financial statements. Fair values are materially in line with carrying values.

(d) Sensitivity Analysis

The Company has performed sensitivity analysis relating to its exposure to interest rate risk. At year end, the effect on profit and equity as a result of a 1% change in the interest rate, with all other variables remaining constant would be +/- \$65,674.

The group has performed sensitivity analysis relating to its exposure to foreign exchange risk. At year end, the effect on profit and equity as a result of a 10% change in the Argentine Peso, with all other variables remaining constant would be +/-\$16,654.

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 22: SEGMENT REPORTING

The economic entity operates internationally, in the mineral exploration industry. The economic entity undertakes exploration activity in Australia and Argentina.

The economic entity has one reportable segment, being its exploration activity.

In determining operating segments, the entity has had regard to the information and reports the chief operating decision maker uses to make strategic decisions regarding resources. The Managing Director (MD) is considered to be the chief operating decision maker and is empowered by the Board of Directors to allocate resources and assess the performance of the economic entity. The MD assesses and reviews the business using a total exploration activity approach.

Geographical Information

	Australia Period ended 30 June 2010 \$	Argentina Period ended 30 June 2010 \$	Economic Entity Period ended 30 June 2010 \$
REVENUE
Segment revenue - Interest	169,660	-	169,660
ASSETS
Segment assets	6,679,267	1,586,758	8,266,025
LIABILITIES
Segment liabilities	161,792	72,009	233,801

Segment accounting policies

Segment accounting policies are consistent with the economic entity's policies.

NOTE 23: SUBSEQUENT EVENTS

Since the end of the financial period, the Company has entered into an agreement with Forte Energy NL to extend its option to acquire the Millenium project in Queensland. There have been no other significant events since balance date.

NOTE 24: PARENT ENTITY INFORMATION

The following information relates to the parent entity, Elementos Limited at 30 June 2010. This information has been prepared using consistent accounting policies as presented in note 1.

	30 June 2010
	\$
Current assets	8,292,366
Non-current assets	54,260
Total assets	8,346,626
Current liabilities Non-current liabilities	161,792 -
Total liabilities	161,792
Contributed equity Reserves Accumulated losses	8,600,139 192,444 (607,749)
Total equity	8,184,834

ABN 31 112 589 910

Notes to the Consolidated Financial Statements for the period ended 30 June 2010

NOTE 24: PARENT ENTITY INFORMATION (continued)	30 June 2010 \$
Loss for the period Other comprehensive income for the period	(607,749) -
Total comprehensive income for the period	(607,749)
The Company has no contingent liabilities.

NOTE 25: COMPANY DETAILS

The registered office and principal place of business is:

Level 1 349 Coronation Drive Milton Queensland 4061 Australia

ELEMENTOS LIMITED ABN 31 112 589 910

ASX INFORMATION

Following is additional information required by the Australian Securities Exchange Limited and not disclosed elsewhere in this report.

1. Shareholding:

The following information is provided as at 24 August 2010.

Distribution of Shareholders Number

Category Number (Size of Holding)	Ordinary Shares (Number)
1 - 1,000	64
1,001 - 5,000	124
5,001 - 10,000	159
10,001 - 100,000	295
100,001 - and over	89
	831

The number of shareholdings held in less than marketable parcels is 100.

Twenty Largest Holders - Ordinary Shares

		Number of	% of Total
		Shares Held	Issued Capital
1	ANZ Nominees Limited (Cash Income A/C)	4,426,795	8.198
2	Mr Ian Lindsay Campbell	2,061,790	3.818
3	Lithium Investors LLC	2,029,256	3.758
4	Hinton Family Holdings Pty Ltd	1,562,227	2.893
5	Richard Seville & Associates Pty Ltd (The Seville
	Super Fund A/C)	1,193,177	2.210
6	Fairground Pty Ltd	1,115,162	2.065
7	Thosnunn Pty Ltd (Super Fund A/C)	1,000,000	1.852
8	Orocobre Limited	1,000,000	1.852
9	Angora Lane Pty Ltd (Angora Lane P/L S/Fund
	A/C)	960,000	1.778
10	Absolute Investment Funds SPC (Macro Div Seg
	Portfolio A/C)	900,000	1.667
11	Alcardo Investments Limited (Styled 102501 A/C)	840,000	1.556
12	Mr David Creighton Gellatly	800,000	1.481
13	IE Properties Pty Ltd	800,000	1.481
14	Macbeth Genealogical Services Pty Ltd (Macbeth
	Super Fund A/C)	673,675	1.248
15	Mr Dennis Grenville Hinton & Mrs Roslyn Susanna
	Hinton	654,249	1.212
16	Mr Dennis Grenville Hinton & Mrs Roslyn Susanna
	Hinton (Hinton Family Super A/C)	646,397	1.197
17	North Asia Metals Ltd	557,713	1.033
18	Dr Leon Eugene Pretorius	500,000	0.926
19	Mr Robert Bruce Woodland & Mrs Erika Woodland
	(R Woodland Exhibit S/F A/C)	495,998	0.919
20	Mr Derek Brian Croft & Mrs Penelope Janet Ruth


	Croft (Super Duper Super Fund A/C)	494,141 22,710,580	0.915 42.057

ELEMENTOS LIMITED ABN 31 112 589 910

ASX INFORMATION

Unlisted Equity Securities:

The following unlisted securities were on issue as at 24 August 2010.

Security	Number	No. of Holders
Options exercisable at 25 cents on or before 23 October 2015	5,500,000	3
Options exercisable at 30 cents on or before 17 December 2013	1,500,000	1

There are no substantial shareholders listed in the Company's register as at 24 August 2010.

Voting Rights:

Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting has one vote on a show of hands.

There are no voting rights attaching to the Options, but voting rights as detailed above will attach to the ordinary shares issued when the Options are exercised.

2. Registers of securities are held at the following address:

Registries Limited Level 2 28 Margaret Street Sydney NSW 2000 Australia

3. Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Stock Exchange Limited, other than those classified as restricted securities and detailed below.

4. Restricted Securities

The Company has issued the following restricted securities:

Security	Number of Restricted Securities	Date of Cessation of Restriction
Ordinary Shares	5,314,547	23 December 2011
Unlisted Options	5,500,000	23 December 2011

5. Use of Cash and Convertible assets

During the period from admission to the official list of the Australian Stock Exchange to 30 June 2010, the Company has used cash and assets readily convertible to cash in a manner consistent with its business activities. The Company is involved in mineral exploration in Australia and Argentina.

ELEMENTOS LIMITED ABN 31 112 589 910

ASX INFORMATION

6. Schedule of Tenements

Tenement Name	Tenement	Area	Elementos	Loaction of
	Number	(Hectares)	Interest	Tenements
Santo Domingo	414-765-R-04	497	Nil - earning	Argentina
	414-1213-R-05	500	Nil - earning	Argentina
	414-1336-R-05	500	Nil - earning	Argentina
	1124-0144-G-06	1,458	Nil - earning	Argentina
	1124-0367-G-06	1,940	Nil - earning	Argentina
	1124-0368-G-06	2,155	Nil - earning	Argentina
	1124-0385-G-06	5,000	Nil - earning	Argentina
	1124-493-G-07	498	Nil - earning	Argentina
	1124-94-G-09	500	Nil - earning	Argentina
	1124-133-G-09	1458	Nil - earning	Argentina
Manaltiales	520-120-M-97	3,126	Nil - earning	Argentina
	520-121-M-97	3,069	Nil - earning	Argentina
	520-122-M-97	3,062	Nil - earning	Argentina
Millenium	ML 2512	4	Nil - earning	Queensland
	ML 2761	20	Nil - earning	Queensland
	ML 2762	16	Nil - earning	Queensland
	ML 7506	50	Nil - earning	Queensland
	ML 7507	45	Nil - earning	Queensland
Sydney Flat	EL 6918	14,760	Nil - earning	New South Wales
Cathedral Rocks	EL 7066	14,760	Nil - earning	New South Wales
Dalmorton	EL 7067	14,500	Nil - earning	New South Wales

ANNUAL REPORT 2010 14

AI assistant

ELEMENTOS LIMITED — Regulatory Filings 2010

64837_rns_2010-09-07_da8ae8be-1761-4511-b84d-5deb7fd9176a.pdf

2010 ANNUAL REPOR T

ATE DIRECTORY

Directors

Company Secretar y

Address

Head Office

South America

Share Registr y

ASX Code

Share Structure

CONTENTS

HIGHLIGHTS OF THE YEAR

Manantiales

Santo Domingo

2009 - 2010

Millenium

Northern New South Wales

Corporate

CHAIRMAN'S LETTER

eREVIEW OF PROJECTS

Introduction

Argentinean Projects

Manantiales

Santo Domingo

Australian Projects

Queensland

Millenium

Sydney Flat

Cathedral Rocks

Dalmorton

Competent Person Statement

Corporate Governance Statement

Committees

Composition of the Board

Board Membership

Appointment and Retirement of Directors

Duties of Directors

Independent Professional Advice

Compensation Arrangements

Remuneration Committee

Audit & Risk Management Committee

Internal Management Controls

Identifying Significant Business Risks

ASX Corporate Governance Principles and Recommendations

PRINCIPLE 1 - LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT:

1.2 Companies should disclose the process for evaluating the performance of senior executives

1.3 Reporting on Principle 1

PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

2.1 A majority of the Board should be independent Directors

2.2 The chairperson should be an independent director

2.3 The roles of the Chairperson and Chief Executive Officer should not be exercised by the same person

2.4 The Board should establish a nomination committee

2.5 Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors

Induction and Education

Access to information and Independent Professional Advice

2.6 Reporting on Principle 2

PRINCIPLE 3 - PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

3.1 Companies should establish a code of conduct and disclose the code or a summary of the code

3.2 Companies should establish a securities trading policy disclose the policy or a summary of the policy

3.3 Reporting on Principle 3

PRINCIPLE 4 - SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

4. 2 The structure of the audit committee

4.3 The audit committee has a formal charter

4.4 Reporting on Principle 4

PRINCIPLE 5 - MAKE TIMELY AND BALANCED DISCLOSURE

5.2 Reporting on Principle 5

PRINCIPLE 6 - RESPECT THE RIGHTS OF SHAREHOLDERS

6.1 Communications policy

6.2 Reporting on Principle 6

PRINCIPLE 7 - RECOGNISE AND MANAGE RISK

7.1 Risk Management and Internal Control System

7.2 Report on risk management and internal control system

7.3 Attestation by Chief Executive Officer (or equivalent) and chief financial officer (or equivalent)

7.4 Reporting on Principle 7

PRINCIPLE 8 - REMUNERATE FAIRLY AND RESPONSIBLY

8.1 The Board should establish a remuneration committee

8.2 Structure of Non-Executive and Executive Director Remuneration

ELEMENTOS LIMITED Regulatory Filings 2010