ELEMENTOS LIMITED — Regulatory Filings 2012

Feb 27, 2012

ABN 49 138 468 756

CONSOLIDATED FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

ABN 49 138 468 756

DIRECTORS' REPORT

Your Directors submit the financial report of the consolidated Group for the half-year ended 31 December 2011.

Directors

The following persons were Directors of the Company during or since the end of the financial period:

A A McLellan

C. Nolan

N F Stuart (resigned 17 November 2011)

M D McCauley

J D Calaway

Review of Operations

The Group's operating loss for the half-year, after applicable income tax was \$879,021. Exploration and evaluation expenditure during the period totalled \$2,940,059.

At 31 December 2011 the Group's net assets totalled \$11,407,865 which included cash assets of \$5,298,390. The Group is in a strong financial position to undertake its planned activities.

During the reporting period, exploration and assessment work was undertaken on the Company's portfolio of exploration assets.

Manantiales

During the period, the Phase II drilling program was completed at Manantiales. The program comprised 33 diamond core holes totalling 5,599 metres, distributed at the Manantial vein (4,337 metres in 22 holes), Julieta Norte (446 metres in 4 holes) and La Puerta (816 metres in 7 holes). A 600 metre extension to the Phase II program, consisting of three holes in the Manantial and Manantial Sur prospects, commenced in December 2011.

The Phase II drilling program has expanded the size of the high-grade gold system at the Manantial vein. The system now has a minimum strike length extended to 180 metres in a north-south direction and down to 250 metres depth. A new zone of mineralisation positioned approximately 250 metres south of the main Manantial vein has been identified. The system remains open along strike and to depth.

ABN 49 138 468 756

DIRECTORS' REPORT

Santo Domingo

Divisoria

During the period, a ground magnetometry geophysical survey was undertaken. This demonstrated a pattern of magnetic lows, potentially related to the mapped porphyry mineralisation, but over a larger area than observed on surface. This was followed up by a combined Pole-Dipole Induced Polarisation ("PDIP") and Audio Magneto-Telluric ("AMT") survey. These commenced in late December 2011 and were completed in January 2012.

Yvette

More than 8.5 kilometres of structure containing combined gold and silver veins have now been identified throughout the Yvette area. Elementos has established a spatial relationship between the vein system and the porphyry environment at surface level, increasing the potential size of the combined mineralised systems. Mapping and sampling continued throughout the period.

Millenium

No exploration activities were completed during the period. The Company is awaiting the renewal of the Mining Licences and granting of the Exploration Permit Applications prior to commencing any further exploration activities.

Selwyn Range

During the period, the Company made applications for 109 square kilometres of Exploration Permits (19371, 19375 and 19426) at a new project area called Selwyn South, approximately 120 kilometres south-east of Millenium. EPM 19375, representing 59% of the total area, is subject to a Contested Application which has yet to be resolved.

Cathedral Rocks

During the period, the Company completed its first geological mapping and sampling program. The results have returned geochemical signatures which appear to confirm an intrusive related gold-style mineralisation on the property.

An additional two Exploration Permit Applications, totalling 200 sub-blocks, have been lodged over contiguous ground west of Cathedral Rocks.

Subsequent Events

Mercedes Copper Project, Northern Chile

On 6 February 2012, the Company announced it had secured an option to acquire a 90% interest in the Mercedes copper project in northern Chile. The agreement is subject to the completion of a 30-day legal due diligence.

Mercedes comprises 8,589 ha of mining concessions and 21,200 ha of exploration permit applications, strategically located 60 kilometres east of the world-class Chiquicamata mining district.

ABN 49 138 468 756

DIRECTORS' REPORT

Tamaya Copper Project, Central Chile

On 7 February 2012, the Company announced it had entered into an Earn-In Joint Venture with HMC Gold SCM on the Cerrillo Tamaya copper project in Chile. Elementos can earn a 50% interest in the project by spending \$7 million on exploration and development within a three year period. The agreement is subject to a 45-day legal due diligence and completion of the Shareholders and Option agreements.

Tamaya comprises 5,690 and 1,200 ha of mining concessions and exploration applications respectively. It is located in the Cerrillo Tamaya historic mining district, 55 kilometres south of the regional capital and port of Coquimbo.

No other material matters or circumstances have arisen since the balance date.

Auditor's Independence Declaration

The auditor's independence declaration under section 307C of the Corporations Act 2001 is included in this financial report.

Signed in accordance with a resolution of the Board of Directors.

a. autu

A A McLellan Chairman

C Nolan Managing Director

28 February 2012 Signed: Brisbane, Queensland

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DECLARATION OF INDEPENDENCE BY A J WHYTE TO THE DIRECTORS OF ELEMENTOS LIMITED

As lead auditor for the review of Elementos Limited for the half-year ended 31 December 2011, I declare that to the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Elementos Limited and the entities it controlled during the period.

A J Whyte Director

BDO Audit (QLD) Pty Ltd

Brisbane: 28 February 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

	Note	31 Dec 2011 \$	31 Dec 2010 \$
Revenue	2	200,600	133,289
Less expenses: Corporate and administrative expenses	2	(929,196)	(950,528)
Exploration and evaluation expenditure expensed Capitalised exploration and evaluation		(111,436)	(283,484)
expenditure written-off		(38,989)	(102,497)
Loss before income tax expense		(879,021)	(1,203,220)
Income tax expense		-	-
Loss for the period attributable to members of the parent entity	2	(879,021)	(1,203,220)
Other comprehensive income
Foreign currency translation gain loss Income tax relating to components of other comprehensive income		(95,658) -	(360,465) -
Other comprehensive income for the period, net
of tax		(95,658)	(360,465)
Total comprehensive income attributable to members of the parent entity		(974,679)	(1,563,685)
Basic earnings per share (cents per share) Diluted earnings per share (cents per share)		(1.07) (1.07)	(2.23) (2.23)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

	Note	31 Dec 2011 \$	30 June 2011 \$
CURRENT ASSETS
Cash and cash equivalents		5,298,390	9,316,709
Trade and other receivables		155,520	217,995
Other		62,256	5,728
Total Current Assets		5,516,166	9,540,432
NON-CURRENT ASSETS
Exploration and evaluation assets	3	6,509,469	3,662,498
Property, plant and equipment		97,856	35,244
Total Non-Current Assets		6,607,325	3,697,742
TOTAL ASSETS		12,123,491	13,238,174
CURRENT LIABILITIES
Trade and other payables		715,626	855,630
Total Current Liabilities		715,626	855,630
TOTAL LIABILITIES		715,626	855,630
NET ASSETS		11,407,865	12,382,544
EQUITY
Issued capital		15,919,925	15,919,925
Reserves		354,809	450,467
Accumulated losses		(4,866,869)	(3,987,848)
TOTAL EQUITY		11,407,865	12,382,544

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

	Issued Capital	Accumulated Losses	Option Reserve	Foreign Currency Translation Reserve	Total
	\$	\$	\$	\$	\$
Balance at 1 July 2010	8,600,139	(813,332)	192,444	52,973	8,032,224
Loss for the period Other comprehensive income for the period	- -	(1,203,220) -	- -	- (360,465)	(1,203,220) (360,465)
Total comprehensive income	-	(1,203,220)	-	(360,465)	(1,563,685)
Share based payments	-	-	53,571	-	53,571
Balance at 31 December 2010	8,600,139	(2,016,552)	246,015	(307,492)	6,522,110
Balance at 1 July 2011	15,919,925	(3,987,848)	997,477	(547,010)	12,382,544
Loss for the period Other comprehensive income for the period	- -	(879,021) -	- -	- (95,658)	(879,021) (95,658)
Total comprehensive income	-	(879,021)	-	(95,658)	(974,679)
Balance at 31 December 2011	15,919,925	(4,866,869)	997,477	(642,668)	11,407,865

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

	Note	31 Dec 2011	31 Dec 2010
		\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments due to suppliers and employees Interest received		(1,189,864) 200,600	(1,165,871) 133,289
Net cash used in operating activities		(989,264)	(1,032,582)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets Purchase of property, plant and equipment		(2,940,059) (83,903)	(924,598) (687)
Net cash used in investing activities		(3,023,962)	(925,285)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares Costs associated with share issue		- -	- -
Net cash provided by (used in) financing activities		-	-
Net decrease in cash held		(4,013,226)	(1,957,867)
Cash at beginning of period		9,316,709	6,567,437
Effect of exchange rates on cash holdings in foreign currencies		(5,093)	(16,793)
Cash at end of period	3	5,298,390	4,592,777

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These general purpose financial statements for the interim half-year reporting period ended 31 December 2011 have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards AASB 134.

This interim financial report does not include all notes of the type normally included in the Annual Financial Report. Accordingly, this report is to be read in conjunction with the Annual Report of Elementos Limited (the Company) as at 30 June 2011, together with public announcements made by the Company during the interim reporting period in accordance with its continuous disclosure obligations.

The accounting policies and methods of computation adopted are consistent with those of the previous financial period as disclosed in the 30 June 2011 annual report. There has been no new or revised Australian Accounting Standards issued by the AASB that materially affect the Company in the current period.

The financial statements have been prepared on a going concern basis. The going concern basis contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The ability of the Group to continue to adopt the going concern basis is dependent on a number of matters including the successful raising in the future of necessary funding and/or the successful exploration and subsequent exploitation of the Group's tenements.

In the event that the Group is unable to raise its future funding requirements, there exists a material uncertainty that may cast doubt on the Group's ability to continue as a going concern. The Group may then be required to realise its assets at amounts different to those currently recognised, settle liabilities other than in the ordinary course of business and make provision for costs which may arise as a result of cessation or curtailment of normal business operations.

NOTE 2: RESULTS FOR THE PERIOD	31 Dec 2011 \$	31 Dec 2010 \$
The following revenue and expense items are relevant in explaining the financial performance for the interim period:
Interest received from other persons Depreciation and amortisation	200,600 18,412	133,289 7,619

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

NOTE 3: EXPLORATION AND EVALUATION ASSETS	31 Dec 2011 \$	30 June 2011 \$
Exploration and evaluation expenditure carried forward in respect of the areas of interest are:
Exploration and evaluation phase - at cost	6,509,469	3,662,498
Movement in exploration and evaluation assets:
Opening balance - at cost (1 July 2011)	3,662,498	2,023,643
Capitalised exploration expenditure	2,940,059	1,716,359
Capitalised exploration expenditure written-off	(38,989)	-
Foreign currency translation movement	(54,099)	(77,504)
Carrying amount at the end of period (31 Dec 2011)	6,509,469	3,662,498

NOTE 4: COMMITMENTS

Exploration Commitments

The Group 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.

	31 Dec 2011	30 June 2011
	\$	\$
Not later than 1 year	357,139	226,266
Later than 1 year but not later than 5 years	2,223,933	2,043,002
Total commitment	2,581,071	2,269,268

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

NOTE 5: RELATED PARTY TRANSACTIONS

The Company undertakes transactions with related parties in the normal course of business. In the current period, arrangements with related parties continue to be in place, generally consistent with those reported in the 30 June 2011 annual financial report.

NOTE 6: CONTINGENT LIABILITIES

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

NOTE 7: EVENTS AFTER BALANCE SHEET DATE

Mercedes Copper Project, Northern Chile

On 6 February 2012, the Company announced it had secured an option to acquire a 90% interest in the Mercedes copper project in northern Chile. The agreement is subject to the completion of a 30-day legal due diligence.

No option payments are due for the first six months. Option payments then commence at \$50,000 per month for the next 12 months, increasing to \$100,000 per month for the ensuing 29 months. At any time during this period of four years, the Company can withdraw from the project with no penalty.

The purchase price of \$10 million is payable 50% at the end of the fourth year, plus 25% at the end of the fifth and sixth years.

Tamaya Copper Project, Central Chile

On 7 February 2012, the Company announced it had entered into an Earn-In Joint Venture with HMC Gold SCM on the Cerrillo Tamaya copper project in Chile.

The Company can earn a 50% interest in the project by spending \$7 million on exploration and development within a three year period. The agreement is subject to a 45-day legal due diligence and completion of the Shareholders and Option agreements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

NOTE 8: SEGMENT REPORTING

The Groupy operates internationally, in the mineral exploration industry. The Group undertakes exploration activity in Australia and Argentina. An entitiy has been established in Chile.

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 Half-Year Ended 31 December		Argentina Half-Year Ended 31 December		Chile Half-Year Ended		Economic Entity Half-Year Ended
						31 December		31 December
	2011	2010	2011	2010	2011	2010	2011	2010
REVENUE	\$	\$	\$	\$	\$	\$	\$	\$
Segment revenue - interest	200,600	133,289	-	-	-	-	200,600	133,289
PROFIT/(LOSS)		(842,318) (789,205)		(30,797) (414,015)	(5,906)	-		(879,021) (1,203,220)
ASSETS	Dec 2011 \$	June 2011 \$	Dec 2011 \$	June 2011 \$	Dec 2011 \$	June 2011 \$	Dec 2011 \$	June 2011 \$
CURRENT ASSETS	4,671,081	8,874,981	845,018	665,451	67	-	5,516,166	9,540,432
NON-CURRENT ASSETS
Property, plant and equipment	89,912	30,971	7,944	4,273	-	-	97,856	35,244
Exploration and evaluation assets	541,918	276,724	5,966,358	3,385,774	1,193	-	6,509,469	3,662,498
TOTAL ASSETS	5,302,911	9,182,676	6,819,320	4,055,498	1,260	-	12,123,491	13,238,174

ELEMENTOS LIMITED ABN 49 138 468 756

DIRECTORS' DECLARATION

The Directors of the Company declare that:

• 1. The attached financial statements and notes are in accordance with the Corporations Act 2001, including:
• (a) complying with Accounting Standard AASB 134: Interim Financial Reporting; and
• (b) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date.
• 1. In the Directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

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

accute A A McLellan Chairman

$\mathbf{v}_\mathrm{p}$

urlal

C Nolan Managing Director

Signed: 28^th February 2012 Brisbane, Queensland

Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au

Level 18, 300 Queen St Brisbane QLD 4000, GPO Box 457 Brisbane QLD 4001 Australia

INDEPENDENT AUDITOR'S REVIEW REPORT

To the members of Elementos Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Elementos Limited, which comprises the consolidated statement of financial position as at 31 December 2011, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the half-year's end or from time to time during the half-year.

Directors' Responsibility for the Half-Year Financial Report

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

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Elementos Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Elementos Limited, would be in the same terms if given to the directors as at the time of this auditor's report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Elementos Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

BDO Audit (QLD) Pty Ltd

A J Whyte

Director

Brisbane: 28 February 2012