ELEMENTOS LIMITED — Regulatory Filings 2013

Sep 23, 2013

ELEMENTOS LIMITED AND CONTROLLED ENTITIES

ABN 49 138 468 756

CONSOLIDATED FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2013

DIRECTORS' REPORT

Your directors submit their report, together with the financial statements of the consolidated Group, being the Company and its controlled entities, for the year ended $30 \text{ line } 2013$

Directors

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

	Board		Audit Committee		Remuneration Committee
Directors	Meetings	Attend	Meetings	Attend	Meetings	Attend
A A McLellan	6	ь	2	2
C Nolan	6	٥	$\overline{\phantom{a}}$	$\blacksquare$	200
M D McCauley (resigned 06/08/13)	6	6	$\overline{2}$	2
JD Calaway	6	4			÷

The directors have been in office since the start of the financial year to the date of this report unless otherwise indicated.

Company Secretary

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

Linda Scott, the Company's Chief Financial Officer, held the position of (Joint) Company Secretary at the end of the financial year. Ms Scott is a Chartered Accountant and holds a Bachelor of Commerce degree.

Principal Activities

The principal activity of the Elementos Group during the course of the year was mineral exploration in Australia, Chile and Argentina. The Company's strategy is to explore for copper and gold in world-class mineral districts in the Andes region of Chile and Argentina, and the Mt Isa province in Australia. The Company's strategic objective is to discover economic mineral deposits and realise value through development, joint venture, or sale.

During the year, the Company's primary focus was a drilling program at the Tamaya project in Chile, and finalising joint venture partners for its others assets in South America.

The Company also commenced a process of finding a more advanced project, given the very difficult environment for raising new equity capital for greenfield exploration, the primary focus of the Company during the financial year.

DIRECTORS' REPORT

Review of Operations

During the year the Company has been active in pursuing its exploration and development activities, including the merger with Rockwell Minerals Limited ("Rockwell"), which was announced on the 2 April 2013.

Exploration and development activities at the Company's projects during the year are detailed below.

At Tamaya in Chile, the Company has carried out the following exploration activities:

• A number of phases of exploration including mapping, sampling, ground $\bullet$ based magnetometry and induced polarisation geophysics, and a combined diamond and reverse circulation drilling program;
• The 5,079 metre drilling program, the first ever conducted on the property, $\bullet$ was designed to explore the copper-gold potential of the Tamaya project. The aim of the program was to test a number of different mineralisation styles and targets identified throughout the project; and
• The majority of the secondary targets have now been drill tested. However, the Company is yet to drill test the main primary structure at San Jose, historically mined for high-grade copper, and a number of secondary targets including Campanil, Lecaros, Tortolas, San Francisco, Borrachos and Arenillas. This will be the focus of any future drilling program.

At Manantiales in Argentina, the Company has carried out the following exploration activities:

• Progress has been made at Manantiales, discovering and defining $\bullet$ prospects through mapping, surface sampling, geophysics and drilling. Three phases of drilling totalling more than 7,841 metres have been completed on the Manantial, Julietta and La Puerta veins;
• The primary target for drilling has been at the Manantial vein where exploration has defined the shallow levels of a low-sulphidation epithermal system; and
• The Company remains in a position at Manantiales to monetise its $\bullet$ discoveries through possible standalone development, should a resource of sufficient size be defined, or potentially in partnership with the adjacent Casposo operation.

At Santo Domingo in Argentina, the Company has carried out the following exploration activities:

• Sampling programs which resulted in the extension of the mineralised zones $\bullet$ at the existing targets, Divisoria and Yvette. The Company also discoved porphyry copper mineralisation in the previoulsy defined El Arriero prospect and a new zone of gold mineralisation at El Arriero West; and
• Identifying potential joint venture partners with the financial capacity to $\bullet$ explore and develop a large porphyry target, to complement the Company's technical understanding of the project.

DIRECTORS' REPORT

In the Mt Isa district of Australia, development activities were focused on:

• Consolidating a large strategic tenement position in the Cloncurry district, in geologically prospective areas, situated near major mines and deposits. This included applying for 109 km2 of new exploration permits at a new prospect south of Cloncurry called Selwyn Range. Selwyn Range is located in close proximity to the copper, gold, molybdenum deposits and mines; and
• The Company is now looking to secure joint venture partners for the $\bullet$ Millenium and Selwyn Range projects. Joint venture funding would be used to commence exploration programs and test for the copper, gold and rareearths potential in the areas within the permits historically mined and drilled.

Additionally, during the period the Company relinquished its options over the Cathedral Rocks project in New South Wales and the Mercedes project in Chile, following initial exploration programs.

In April 2013, the Company announced that it has signed a term sheet to acquire the Cleveland tin project through a merger with Rockwell. Given the extremely difficult environment for raising capital to fund green field exploration during 2012/13, the Company shifted its strategic focus to identifying a more advanced or brownfield asset which the Company believes has a better chance of securing new funding. A conditional Merger Implementation Deed was signed on the 6 June 2013, and subsequent to year end the Company has signed an unconditional Merger Implementation Deed and sent a Bidders Statement to Rockwell shareholders.

Rockwell is an Australian unlisted public company that owns 50% of the Cleveland Project in north-west Tasmania, Australia. Rockwell has an option agreement to acquire the remaining 50% for a total consideration of \$700,000, payable by 31 December 2013.

Significant Changes in State of Affairs

The Group's operating loss for the financial year, after applicable income tax was \$9,362,786 (2012: \$2,726,183). Exploration and evaluation expenditure during the year totalled \$2,263,872 (2012: \$4,722,693).

A provision for impairment has been made against the exploration and evaluation expenditure of Santo Domingo and Tamaya of 63%, to reflect the value of the Company on completion of the merger with Rockwell. Manantiales continues to be fully impaired.

At 30 June 2013, the Group's net assets totalled \$2,143,830 (2012: \$9,277,214) which included cash assets of \$370,894 (2012: \$2,012,552). During the year, the US\$500,000 held as a bank guarantee deposit was released on the completion of 5,000 metres of drilling at the Tamaya project, Chile.

During the year, the Company raised \$2.2million (65,906,821 shares and 32,953,451 listed options) from a Rights Issue, \$157,000 (8,722,238 shares) from a Share Purchase Plan, as well as private placements subsequent to year end of \$338,610 (22,863,170 shares).

DIRECTORS' REPORT

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, Chile 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 Chief Executive Officer of major international companies, including the predecessor of Barrick Gold. Mr McLellan has experience in a range of 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 sector as a director of the Menzies Research Centre and Chairman of the Australian Christian Lobby.

Directorships held in other ASX listed companies in the last three years: Norton Gold Fields Limited (Non-executive Director and Chairman to June 2010).

Corey Nolan

Managing Director

Mr Nolan has twenty years of diverse experience in the resources sector. This has included experience in mining operations, global resource evaluation, and the financing and development of new opportunities in Australia, South Africa, Asia and South America.

Mr Nolan is a qualified mineral economist. He has held specialist roles as an equities analyst in the mining and natural resources sector of stock broking firms Morgan Stanley and Wilson HTM. During this period he undertook detailed coverage of the Australian and global resources sector including the commodities market.

Mr Nolan has been a Director at PWC in the corporate finance and valuations practice, specialising in resources industry valuations for Australian and global resources firms.

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

DIRECTORS' REPORT

Mark D McCauley (resigned 6 August 2013)

Non-executive Director

Mr McCauley is currently the Managing Director of RMM Capital, a Queensland based private equity firm specialising in resource investments.

Prior to this, Mr McCauley was the chief financial officer of Felix Resources Limited, a highly-successful coal company which, during Mr McCauley's tenure grew in market capitalisation from approximately \$30 million to over \$1 billion through a number of successful mergers, acquisitions and green field project developments.

Previously, Mr McCauley worked at the Alumbrera copper-gold mine in Argentina.

Mr McCauley holds an Honours Dearee in Engineering (majoring in Mining), and a Masters in Business Administration. Mr McCauley is also a graduate of the Advanced Management Programme at Harvard Business School, and a member of the Australian Institute of Company Directors. In addition, Mr McCauley holds a First Class Underground Mine Manager's Certificate.

Directorships held in other ASX listed companies in the last three years: Norton Gold Fields Limited to September 2010.

James D Calaway

Non-executive Director

Mr Calaway is a respected business and civic leader in Houston, Texas where he serves as Chairman of the Board of the premier middleware software company in the geological and geophysical software industry.

He is also Chairman of Orocobre Limited, an Australian and TSX-listed company which, in partnership with Toyota, is developing one of the world's largest lithium mines in Argentina.

Mr Calaway received a Bachelor of Arts degree in Economics from the University of Texas, and a Master of Arts degree in Politics, Philosophy and Economics from Oxford University.

Directorships in other ASX listed companies in the last three years: Orocobre Limited.

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	Listed Options	Unlisted Options
A A McLellan	3,428,976		2,700,000
C Nolan	264,215	58,715	3,300,000
M D McCauley	789,720		850,000
JD Calaway	43,958,674	14,965,986	1,500,000

During the year, the directors elected to be remunerated in shares instead of cash, under the Directors' Salary Sacrifice Plan. The salary paid to directors in shares instead of cash is as follows:

Directors
A A McLellan	65,877
C Nolan
M D McCauley	19,075
JD Calaway	26.667

Mr Nolan elected to reduce his wages during the year, without salary sacrificing any of the sacrificed remuneration.

Remuneration Report (Audited)

This report details the nature and amount of remuneration for each director and other key management 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 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 is set out below.

The remuneration policy, setting the terms and conditions for the executives was developed and approved by the Remuneration Committee acting on behalf of the non-executive directors. The executives receive payments provided for under an employment agreement, which may include cash, superannuation, short-term incentives 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

DIRECTORS' REPORT

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 alian 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. Retiring directors are eligible for reelection by shareholders at the Annual General Meeting of the Company.

The Company's remuneration policy provides for long-term incentives to be offered through a director and employee share option plan. Options were granted under these plans during the prior and current financial years to align directors', executives', employees' and shareholders' interests. The Company does not remunerate any key 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 non-executive directors. In accordance with the board's governance policies, the remuneration committee has been established to carry out this function. Independent external advice will be sought when required. No independent external advice was sought during the current year.

The board is presently reassessing the Remuneration Policy to ensure it incorporates appropriate elements given the Group's status and planned activities. Through this review process, the directors aim to provide clearer and more manageable performance criteria for remuneration incentives including the issue of employee and executive options, while also securing greater loyalty from key employees and executives, reducing administration costs and the regulatory burden on the Company.

Performance-Based Remuneration

Performance-based remuneration includes both short-term and long-term incentives and is designed to reward key management personnel for reaching or exceeding specific objectives or as recognition for strong individual performance. Short-term incentives are available to eligible staff of the Group and are comprised of cash bonuses, determined on a discretionary basis by the chief executive officer and the board. No short-term incentives were made available during the year.

Long-term incentives are comprised of share options, which are granted from timeto-time to encourage sustained strong performance in the realisation of strategic outcomes and growth in shareholder value.

The exercise price of the options is determined after taking into account the underlying share price performance in the period leading up to the date of grant and if applicable, performance conditions attached to the share options. Subject to specific vesting conditions, each option is convertible into one ordinary share.

DIRECTORS' REPORT

Employment Details of Key Management Personnel

The key management personnel of Elementos Limited are the directors as listed previously and the Exploration and Development Manager (Mr A Grahame). The remuneration of each director and key officer of the Group during the year was as follows:

		Short Term Benefits			Post
Key Management Personnel	Salary and Fees	Bonuses	Non- Cash Benefits	Equity Settled Options	Employment Super- annuation
A A McLellan	\$119,000		$\overline{\phantom{a}}$	\$2,274	\$10,710	\$131,984
C Nolan	\$228,475		$\overline{\phantom{0}}$	\$2,599	\$21,833	\$252,907
M D McCauley (resigned
06/08/13)	\$40,000		۰.	\$1,137	\$3,600	\$44,737
JD Calaway	\$40,000	-	z.	\$1,624		\$41,624
A Grahame (redundant
07/02/13	\$157,840	۰	$\equiv$	\$2,055	\$11,297	\$171,192
	\$585,315			\$9,689	\$47,440	\$642,444

Year Ended 30 June 2013

Year Ended 30 June 2012

		Short Term Benefits			Post
Key Management Personnel	Salary and Fees	Bonuses	Non- Cash Benefits	Equity Settled Options	Employment Super- annuation	Total
A A McLellan	\$75,000	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	\$6,750	\$81,750
C Nolan	\$238,179	۰	÷.	$\overline{\phantom{a}}$	\$21,436	\$259,615
N F Stuart (retired 17/11/11)	\$15,222	-		۰.	\$1,370	\$16,592
M D McCauley	\$40,000	۷	w	48	\$3,600	\$43,600
J D Calaway	\$40,000	٠	٠	-		\$40,000
A Grahame	\$160,551	÷.	u,	$\frac{1}{2}$	\$14,450	\$175,001
	\$568,952		-		\$47,606	\$616,558

Key Management Personnel	Position Held at 30 June 2013 and Changes During Year	Contract Details	Proportion of Remuneration
			Equity Based	Salary and Wages
A A McLellan	Non-executive Chairman No change	No fixed term. termination as provided by Corporations Act	1.72%	98.28%
C Nolan	Managing Director Periodic reduction in salary during the year	No fixed term, 3 months notice to terminate	1.03%	98.97%
M D McCauley	Non-executive Director No change	No fixed term, termination as provided by Corporations Act	2.54%	97.46%
JD Calaway	Non-executive Director No change	No fixed term, termination as provided by Corporations Act	3.90%	96.10%
A Grahame	Exploration and Development Manager Redundant 07/02/13	No fixed term, 1 months notice to terminate	1.20%	98.80%

DIRECTORS' REPORT

Options Granted as Remuneration

Remuneration options granted during the current year are summarised below. There were no options granted during the prior year.

All options were granted for nil consideration. Options granted do not convey dividend or voting rights and each option converts into one ordinary share in the Company.

				Value at Grant Date			Terms and Conditions of Grant
Key Management Personnel	Number Vested	Number Granted	Grant Date	Per Option	Total	Exercise price	First Exercise Date	Last Exercise Date
A A McLellan	700,000	700,000	8/2/13	0.325 cents	\$2,274	6 cents	8/2/13	20/1/17
C Nolan	800,000	800,000	8/2/13	0.325 cents	\$2,599	6 cents	8/2/13	20/1/17
M D McCauley (resigned 06/08/13)	350,000	350,000	8/2/13	0.325 cents	\$1,137	6 cents	8/2/13	20/1/17
J D Calaway	500,000	500,000	8/2/13	0.325 cents	\$1,624	6 cents	8/2/13	20/1/17
A Grahame	200,000	200,000	4/12/12	.027 cents	\$2,055	6 cents	4/12/12	3/12/16

Year Ended 30 June 2013

No remuneration options were exercised during the year. There have not been any changes to the terms and conditions of any options since grant date.

Employment Contract of Executives

The contract for service between the Company and the managing director was executed 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 statutory entitlements, short term and equity incentives) was \$228,475 for the 2012/13 year. This remuneration value was periodically reduced during the year, to \$150,000, before statutory entitlements and incentives, to reflect the state of the equity markets and the impending Merger with Rockwell.

The Company is currently negotiating a contract with the Managing Director who will transition to an Executive Director role on 8 October 2013.

In the case of serious misconduct the Company may terminate employment of any executive at any time.

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.

DIRECTORS' REPORT

Company Performance, Shareholder Wealth, and Director and Executive Remuneration

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.

The following table shows some key performance data of the Company since incorporation in 2009, together with the share price at the end of the respective financial years.

	Year to 30 June 2013	Year to 30 June 2012	Year to 30 June 2011	Period to 30 June 2010
Exploration expenditure (\$)	2,263,872	5,126,933	2,921,400	1,640,211
Net assets $($ math)	2,143,830	9,277,231	12,382,554	8,032,224
Share Price at Year end (\$)	.015	.079	0.225	0.130
Dividends Paid (\$)	Nil	Nil	Nil	Nil

This is the end of the Remuneration Report.

Dividends

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

Options

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

Unlisted Options

Grant Date	Expiry Date	Exercise Price	No. Under Option
23 October 2009	23 October 2015	\$0.226(i)	4,500,000
17 December 2009	17 December 2013	\$0.300	1,500,000
7 September 2010	7 September 2015	$$0.226$ (i)	650,000
30 November 2010	29 November 2015	$$0.226$ (i)	500,000
28 March 2011	18 January 2017	\$0.326(i)	1,000,000
4 December 2012	3 December 2016	\$0.06	400,000
8 February 2013	20 January 2017	\$0.06	2,350,000

(i) The Trust Deeds relating to the grant of these options provides for a reduction in the option exercise price where the Company undertakes a pro-rata issue of securities. The reduction in exercise price is calculated in accordance with the formula provided in the ASX Listing Rules.

Listed Options

Grant Date	Expiry Date	Exercise Price	No. Under Option
9 October 2012	9 April 2014	\$0.06	17,986,066
17 October 2012	9 April 2014	\$0.06	14,965,986

DIRECTORS' REPORT

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 person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of any other entity.

1,399 options have been exercised during the year ended 30 June 2013, at an issue price of \$0.06 per share.

Subsequent Events

In late calendar 2012, the Board of Elementos decided to shift its corporate strategy to pursue advanced project acquisition opportunities, in response to the extremely difficult environment for raising capital to fund green field exploration. The strategic focus was to identify more advanced or brownfield assets which the Company believed had a better chance to secure new funding. A number of opportunities were considered, including the Cleveland tin project, in which Rockwell has an interest.

In April 2013, the Company signed a conditional Term Sheet to facilitate the merger of Elementos and Rockwell. The merger of Elementos and Rockwell had a strong strategic rationale:

• Positioned Elementos with a more advanced asset, reducing the Company's exposure to greenfield exploration;
• Secured a new advanced stage project with near term development $\bullet$ potential, and significant exploration upside;
• Provided a potential valuation up-lift from relatively short-term work $\bullet$ programs; and
• Enabled significant exposure to tin, which the board believes has attractive supply and demand fundamentals.

In June 2013, the Company signed a Merger Implementation Deed to acquire all the issued shares of Rockwell, through the issue of Elementos shares. The merger will be affected through an off-market takeover bid for all the shares in Rockwell, subject to the terms and conditions of the Merger Implementation Deed.

Subsequent to the end of reporting period, Elementos issued Rockwell shareholders with a Bidders Statement and secured more than 90% share acceptances. The merger remains conditional on Elementos shareholders approving the transaction at an Extraordinary General Meeting on 8 October 2013.

On completion of the Merger, the Company's primary focus will be advancing the Cleveland Project. The board will establish a detailed work program and budget for the project on completion of the merger. The merged Company will need to raise new equity to achieve its objectives in relation to the Cleveland project, to fund corporate overhead costs and general working capital.

13

DIRECTORS' REPORT

At completion of the Merger, Mr Nolan will cease being managing director, and will become an executive director of the Company. Negotiations are underway with Mr Nolan regarding his new position and contract terms.

Subsequent to the end of the reporting period, the Company raised \$338,610 (before costs) by private placements, and issued 22,863,170 shares as a result.

No other matters or circumstances have arisen since the end of the year 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 vears.

There is no certainty that the Company will be able to raise the financial resources sufficient to fund its capital investments and operating costs as presently proposed, and, in the opinion of the Directors, this risk will be increased if the Merger is not completed.

Environmental Issues

The Group is subject to significant environmental regulations under the laws of the Commonwealth of Australia and states of Australia in which the Group operates. The Group is also subject to environmental regulation in relation to its exploration activities in Chile and 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 contracts include a prohibition on disclosure of the premium paid and nature of the liabilities covered under the policy.

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 auditor of the Company or a related entity during the year and up to the date of this report.

DIRECTORS' REPORT

Proceedings on Behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

Non-Audit Services

The board of directors, in accordance with advice from the Audit Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons:

• (a) all non-audit services are reviewed and approved by the audit committee to ensure they do not adversely affect the integrity and objectivity of the auditor; and
• (b) the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

The following fees were paid or payable to the auditors for non-audit services provided during the financial year:

Paid to lead auditor for tax advice and compliance	\$44,235
Paid to lead auditor for independent experts report	\$30,863
Total paid to the auditors for non-audit services	\$75,098

Auditor's Independence Declaration

The lead 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.

aantio A A McLellan

Chairman Dated this 24th September 2013 Brisbane, Queensland

Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia

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

As lead auditor of Elementos Limited for the year ended 30 June 2013, 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 audit; and
• any applicable code of professional conduct in relation to the audit.

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

A J Whyte

Director

BDO Audit Pty Ltd

Brisbane: 24 September 2013

CORPORATE GOVERNANCE STATEMENT

ASX Corporate Governance Principles and Recommendations

Elementos Limited ("Elementos" or the "Company") is committed to implementing sound corporate governance practices. In order to set appropriate corporate 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 (ASX Principles and Recommendations). These have been categorised into eight core principles.

While seeking to implement sound corporate governance practices, the Company recognises that not all the recommendations are applicable to the Company due to its current size, the nature of its operations, and its stage of development. 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's 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 sets out 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 director and 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.

CORPORATE GOVERNANCE STATEMENT

The board convenes 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 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 evaluating regularly 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 at www.elementos.com.au.

PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

Pursuant to Principle 2, the board should be of a size, composition and have the level of 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 its responsibilities and duties.

The Elementos board is comprised of four directors (as at the date of this Annual Report) that have 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 an equal split between independent and non-independent directors. As at the date of this report, the board comprises one Executive Director, Mr Corey Nolan, who is the Managing Director and is not independent because he is employed in an executive capacity. There are three Non-executive Directors: Mr A. Anthony McLellan (Chairman), Mr Mark McCauley and Mr James Calaway. The Non-executive Directors, with the exception of Mr James Callaway, 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:

CORPORATE GOVERNANCE STATEMENT

• 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 this recommendation as the Chairman, Mr McLellan, is independent.

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 has not establised a nomination committee as the role of the nomination committee has been undertaken by the board. The size and nature of the Company's activities do not justify the establishment a separate committee at this time. The bard 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 directors 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. The board evaluated its performance and the directors' individual performance in relation to goals set at the time of the board's annual strategic planning session.

The chairman provides each non-executive eirector 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.

CORPORATE GOVERNANCE STATEMENT

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 tour of the premises, an induction package and presentations. Information conveyed to new directors will include:

• details of the roles and responsibilities of directors;
• 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 board processes;
• 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

The board assesses the necessary competencies of the board, reviews board succession plans, and develops policies and processes for evaluation of the Board and the nomination, appointment and re-election of directors. These responsibilties, as set out in the board Governance Protocols, are carried out by the board rather than a seprate nomination committee.

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.

PRINCIPLE 3 - PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

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

CORPORATE GOVERNANCE STATEMENT

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.

Company Securities Trading Policy

The Company has a Securities Trading Policy pursuant to ASX Listing Rule 12.9. According to this policy, all directors, senior executives, employees, contractors and consultants, whilst in possession of material, non-public, market price sensitive information, are subject to three restrictions:

• they must not deal in securities where they are in possession of inside information;
• they must not cause or procure anyone else to deal in those securities; and
• they must not communicate the information to any person if they know or ought to know that the other person will use the information, directly or indirectly, for dealings in securities.

Directors, senior executives, employees, contractors and consultants are required to advise the chairman and company secretary of their intentions prior to undertaking any transaction in the Company's securities. If a director, senior executive, employee, contractor or consultant is considered to possess material, non-public, market price sensitive information, they will be precluded from making a security transaction until after the time of public release of that information.

CORPORATE GOVERNANCE STATEMENT

The Securities Trading Policy is available on the Company's website.

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy

The Company has implemented a Diversity Policy which is available on its website. The Diversity Policy is a commitment by the Company to actively seek to maintain a diverse workforce to create a workplace that is fair and inclusive, applies fair and equitable employment practices and provides a working environment that will allow all employees to reach their full potential.

3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the Diversity Policy and progress towards achieving them

The Company is of the view that any measurable statistical objectives on a diverse workforce must be fit for purpose, in line with the Company strategic objectives and ensure the Company is in compliance with all relevant legislative requirements. As at the date of this Annual Report, the Company is of the opinion that measurable objectives are not appropriate at its present stage of development, however, the Company will consider implementation of measurable objectives in future.

3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board

Due to the size and scale of operations of the Company, the board believes that a longer term gender diversity objective is more appropriate.

As at the date of this Annual Report, 0% of board, 29% of employees and 30% of senior executives are women.

3.5 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 manual, is also available on the Company's website under Corporate Governance.

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 true and fair 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 and Risk Management Committee comprised of independent Non-executive Directors, with Mark McCauley as independent Chairman of the Committee.

4. 2 The structure of the audit committee

The Audit and 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 under Corporate Governance.

CORPORATE GOVERNANCE STATEMENT

4.4 Reporting on Principle 4

The Audit and Risk Management Committee is requirted to report its findings and recommendations to the board after each Committee meeting, and to circulate minutes of its meetings to all board members. The members of the Audit and Risk Management Committee and their attendance at Committee meetings is set out in the Directors Report section of this Annual Report.

PRINCIPLE 5 - MAKE TIMELY AND BALANCED DISCLOSURE

Pursuant to Principle, 5 listed companies should make timely and balanced disclosure to the ASX of all material information 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 under the Investors section and then Announcements.

Elementos has established 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 manual.

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

PRINCIPLE 6 - RESPECT THE RIGHTS OF SHAREHOLDERS

Pursuant to Principle 6, companies should design a communications policy to promote effective communication with shareholders.

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;

CORPORATE GOVERNANCE STATEMENT

• giving shareholders ready access to balanced and understandable information about the Company and its corporate 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.

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 manual, available on the Company's website under Corporate Governance.

PRINCIPLE 7 - RECOGNISE AND MANAGE RISK

Principle 7 provides 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.

Some of the Company's key assets are located outside Australia. Control over the operations is exercised by the managing director. Specific control measures have been implemented to manage the distribution of funds in Chile and 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 Audit and 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.

CORPORATE GOVERNANCE STATEMENT

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. The Audit and Risk Management Committee oversees the internal audit process that analyses and provides 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/CEO and the chief financial officer 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 and Risk Management Committee, 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 provides 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 under Corporate Governance. The Commitee is comprised of independent Non-executive Directors, with Mark McCauley as independent Chairman of the Remuneration Committee.

The members of the Remuneration Committee and their attendance at Committee meetings are set out in the Directors Report section of this Annual Report.

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 payments in accordance with the provisions of the Superannuation Guarantee Scheme

CORPORATE GOVERNANCE STATEMENT

legislation. 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.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

	Note	30 June 2013	30 June 2012
		\$	\$
Revenue	2	32,616	285,739
Corporate and administrative expenses Exploration and evaluation expenditure	3	(1,940,216) (7,458,428)	(1,836,479) (1,172,321)
Loss before income tax expense		(9,366,028)	(2,723,061)
Income tax expense	4	3,242	(3,122)
Loss for the period attributable to members of the parent entity	3	(9,362,786)	(2,726,183)
Other comprehensive income
Items that will be reclassified to profit or loss: Foreign currency translation gain/(loss) Income tax relating to components other comprehensive income		(113,014) -	(379,147) -
Other comprehensive income for the period net of tax		(113,014)	(379,147)
Total comprehensive income attributable to members of the parent entity		(9,475,800)	(3,105,330)
Basic and diluted earnings per share (cents per share)	14	(7.2)	(3.3)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013

		Note 30 June 2013	30 June 2012
		\$	\$
CURRENT ASSETS
Cash and cash equivalents	5	370,894	2,012,552
Other receivables	6	20,917	122,917
Other current assets	7	17,119	511,980
TOTAL CURRENT ASSETS		408,930	2,647,449
NON-CURRENT ASSETS
Exploration and evaluation assets	8	1,996,379	7,321,698
Plant and equipment	9	50,861	86,434
TOTAL NON-CURRENT ASSETS		2,047,240	7,408,132
TOTAL ASSETS		2,456,170	10,055,581
CURRENT LIABILITIES
Trade and other payables	10	312,340	778,367
TOTAL CURRENT LIABILITIES		312,340	778,367
TOTAL LIABILITIES		312,340	778,367
NET ASSETS		2,143,830	9,277,214
EQUITY
Issued capital	11	18,250,596	15,919,925
Reserves	12	(29,949)	71,320
Accumulated losses		(16,076,817)	(6,714,031)
TOTAL EQUITY		2,143,830	9,277,214

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013

	Note	Issued Capital	Accumulated Losses	Option Reserve	Foreign Currency Translation Reserve	Total
		\$	\$	\$	\$	\$
Balance at 30 June 2011		15,919,925	(3,987,848)	997,477	(547,010)	12,382,544
Loss for the period		-	(2,726,183)	-	-	(2,726,183)
Other comprehensive income for the period		-	-	-	(379,147)	(379,147)
Total comprehensive income		-	(2,726,183)	-	(379,147)	(3,105,330)
Balance at 30 June 2012		15,919,925	(6,714,031)	997,477	(926,157)	9,277,214
Loss for the period		-	(9,362,786)	-	-	(9,362,786)
Other comprehensive income for the period	12	-	-	-	(113,014)	(113,014)
Total comprehensive income		-	(9,362,786)	-	(113,014)	(9,475,800)
Shares issued during the period	11	2,463,823	-	-	-	2,463,823
Transaction costs	11	(234,785)	-	-	-	(234,785)
Equity settled compensation	11	99,015	-	11,745	-	110,760
Share options exercised	11	2,618	-	-	-	2,618
Balance at 30 June 2013		18,250,596	(16,076,817)	1,009,222	(1,039,171)	2,143,830

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013

	Note	30 June 2013	30 June 2012
		\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Other receipts		-	10,000
Payments to suppliers and employees Interest received		(1,781,486) 21,259	(2,084,236) 275,739
Net cash provided by (used in) operating activities	13	(1,760,227)	(1,798,497)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure		(2,617,509)	(4,903,114)
Return of/(payments for) deposits		496,115	(494,787)
Purchase of property, plant and equipment		(641)	(94,038)
Proceeds from sale of property, plant and equipment		13,636	-
Net cash provided by (used in) investing activities		(2,108,399)	(5,491,939)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		2,463,823	-
Costs associated with share issue		(234,785)	-
Net cash provided by (used in) financing activities		2,229,038	-
Net increase/(decrease) in Cash Held		(1,639,588)	(7,290,436)
Cash at Beginning of Year		2,012,552	9,316,709
Effect of exchange rates on cash holdings in foreign currencies		(2,070)	(13,721)
Cash at End of Year	5	370,894	2,012,552

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements are general purpose financial statements that have been prepared in accordance with the Corporations Act 2001 , Australian Accounting Standards, and other authoritive pronouncements of the Australian Accounting Standards Board. Elementos Limited is a for-profit entity for the purpose of preparing the financial statements.

Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

The financial statements are for the economic entity consisting of Elementos Limited and Controlled Entities. Elementos Limited is a public Company, incorporated and domiciled in Australia. The financial statements have been prepared on an accruals basis and are based on historical cost modified by the measurement at fair value of selected non-current assets, financial assets and liabilities. The financial report was authorised for issue on 24 September 2013 by the directors of the Company.

Separate financial statements for Elementos Limited as an individual entity are no longer 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.

Material accounting policies adopted in the preparation of these financial statements are presented below. They have been consistently applied unless otherwise stated.

Going Concern

The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The Group has not generated significant revenues from operations. As such, the Group's ability to continue to adopt the going concern assumption will depend upon a number of matters including subsequent successful raising in the future of necessary funding and the successful exploration and subsequent exploitation of the Group's tenements. In the absence of these matters being successful, there exists a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern with the result that the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business, and at amounts different from those stated in the financial statements. No adjustments for such circumstances have been made in the financial statements.

Subsequent to balance date, the Company raised \$338,610 (before costs) from private placements. The Company is in the process of completing a merger with Rockwell Minerals Ltd ("Rockwell"). It is expected that the merger will be completed in October 2013, and that the merged Group will need to raise further funds through debt or equity by year end.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Principles of Consolidation

Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Elementos Limited ("Company" or "parent entity") as at 30 June 2013 and the results of all subsidiaries for the year then ended. Elementos Limited and its subsidiaries together are referred to in these financial statements as the Group or the economic entity.

The names of the subsidiaries are contained in Note 17 (c ). All subsidiaries have a 30 June financial year-end and are accounted for by the parent entity at cost.

Subsidiaries are all entities over which the economic entity has the power to govern the financial and operating policies generally accompanying a shareholding of more than onehalf of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the economic entity controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of controlled entities have been changed where necessary to ensure consistency with the policies adopted by the Group.

Changes in ownership interests

When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in the carrying amount recognised in the profit or loss.

The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to the profit or loss.

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Income Tax

The income tax expense (income) for the year 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.

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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Exploration and Evaluation Assets

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that 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 and active or significant operations in relation to the area are continuing.

A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

A provision is raised against exploration and evaluation assets where the directors are of the opinion that the carried forward net cost may not be recoverable or the right of tenure in the area lapses. The increase in the provision is charged against the results for the year. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

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 for 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

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 profit or loss.

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.

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 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Financial Instruments (cont)

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.

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 significant or prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the profit or loss.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Share Based Payments

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 as an expense 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.

Issued capital also includes amounts received from the exercise of options and the transfer from Options Reserve of any balance relating to the options exercised.

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 reporting date. Employee benefits expected to be settled within one year, have been measured at the amounts expected to be paid when the liability is settled, plus related on costs.

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 (or overseas VAT), except where the amount of GST incurred is not recoverable. In these circumstances the GST (or overseas VAT) 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 statement of cash flows on a gross basis except for the GST component of investing and financing activities which are disclosed as operating cash flows.

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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Foreign Currency Transactions and Balances (cont)

Transactions 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 in the profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge.

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 recognised in other comprehensive income.

Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the 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 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 statements 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Critical Accounting Estimates and Judgements (cont)

Key judgements – Exploration and Evaluation Assets

The economic entity performs regular reviews on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and analysis of drilling results performed to reporting date.

Exploration and evaluation assets at 30 June 2013 were \$1,996,379 (2012: \$7,321,698).

New and Amended Standards and Interpretations

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012 affected any of the amounts recognised in the current period or any period prior and are not likely to affect future periods.

New Accounting Standards for Application in Future Periods

A number of new standards, amendments and interpretations are effective for annual periods beginning after 1 July 2011, and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements, except for the following:

(i) AASB 9 Financial Instruments (effective from 1 January 2015)

The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard is being issued in phases. To date, the parts dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These parts are effective for annual periods beginning 1 January 2015. Further parts dealing with impairment and hedge accounting are still being developed.

Management have yet to assess the impact that this amendment is likely to have on the financial statements. However, they do not expect to implement the amendments until all parts of AASB 9 have been released and they can comprehensively assess the impact of all changes.

(ii) Consolidation Standards

A package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on these new standards is presented below. Management have yet to assess the impact of these new and revised standards on the financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

New Accounting Standards for Application in Future Periods (cont)

AASB 10 Consolidated Financial Statements

AASB 10 supersedes AASB 127 Consolidated and Separate Financial Statements and Interpretation 112 Consolidation – Special Purpose Entities. It revises the definition of control and provides guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same.

AASB 11 Joint Arrangements

AASB 11 supersedes AASB 131 Interests in Joint Ventures. It requires an entity that is a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations and to account for these rights and obligations in accordance with the type of joint arrangement. For a joint operation an entity will recognise its share of relevant assets and liabilities. For a joint venture an entity will account for its investment using the equity method. The accounting will be dependent upon an assessment by the investor of its rights and obligations not merely the legal structure of the arrangements.

AASB 12 Disclosure of Interests in Other Entities

AASB 12 introduces new disclosure requirements. It requires an entity to disclose information about the nature of, and risks associated with, its interest in other entities.

Consequential amendments to AASB 127 and AASB 128 Investments in Associates and Joint Ventures. AASB 127 now only deals with separate financial statements. AASB 128 brings investments in joint ventures into its scope. However, AASB 128's equity accounting methodology remains unchanged.

(iii) AASB 13 Fair Value Measurement

AASB 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods beginning on or after 1 January 2012. Management believes this won't have significant impact on the financial statements.

(iv) Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine (effective from 1 January 2013)

Interpretation 20 clarifies that costs of removing mine waste materials (overburden) to gain access to mineral ore deposits during the production phase of a mine must be capitalised as inventories under AASB 102 Inventories if the benefits from stripping activity is realised in the form of inventory produced. Otherwise, if stripping activity provides improved access to the ore, stripping costs must be capitalised as a non-current, stripping activity asset if certain recognition criteria are met. The Group does not currently operate a surface mine.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

	30 June 2013 \$	30 June 2012 \$
NOTE 2: REVENUE AND OTHER INCOME
Revenue from operating activities:
Interest received from other persons	21,259	275,739
Option payments Profit on sale of non-current assets	- 11,357	10,000 -
	32,616	285,739
NOTE 3: EXPENSES
Included in expenses are the following items:
Exploration and evaluation expenditure comprises:
Expenditure expensed during the year	135,983	404,300
Capitalised expenditure written off	-	768,021
Impairment provision	7,322,445 7,458,428	- 1,172,321
Depreciation and amortisation	33,098	42,348
Foreign currency translation loss/(gain)	(19,899)	9,491
Employee benefits expense comprises: Salaries and wages	1,397,885	1,919,518
Contributions to defined contribution plans	66,094	68,842
Equity settled options	11,745	-
Less capitalised as exploration expenditure	(514,999)	(1,022,092)
	960,725	966,268
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% (2012: 30%)	(2,809,808)	(816,918)
Adjust for tax effect of: Non-deductible amounts
- Share based payments	62,625	-
- Impairment	2,080,328	-
- Other	63,554	55,804
Tax losses and temporary differences not brought to
account Income tax expense/(benefit) attributable to entity	600,059 (3,242)	764,237 3,122

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

	30 June 2013	30 June 2012
	\$	\$
NOTE 4: INCOME TAX EXPENSE (CONT)

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, share issue expenses, merger
expenses and other items)	234,702	2,766
Tax losses	2,007,385	1,383,316
Net unbooked deferred tax asset	2,242,087	1,386,082

The Group has carry forward losses of \$ 5,867,274 in Australia and \$1,610,700 in foreign losses.

As set out in note 1, the availability of these losses is dependent upon compliance with income tax legislation in Australia, Argentina and Chile. For the Australian tax losses, compliance with income tax legislation includes satisfying the same business test if the continuity of ownership test is no longer satisfied as a result of the Rockwell merger. The foreign tax losses can be carried forward for five years after they have been incurred.

NOTE 5: CASH AND CASH EQUIVALENTS

Cash at bank and on hand	370,894	950,772
Short term deposits	-	1,061,780
	370,894	2,012,552
NOTE 6: OTHER RECEIVABLES
Current:
Other receivables	20,917	122,917

There are no balances within 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 and generally on 30 day terms. No collateral is held over receivables.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

	30 June 2013 \$	30 June 2012 \$
NOTE 7: OTHER CURRENT ASSETS
Current:
Bank guarantee deposit	-	496,115
Other deposits	4,230	790
Prepayments	12,889	15,075
	17,119	511,980

The bank guarantee deposit of US\$500,000 was released upon completion of 5,000 metres drilling at the Tamaya project, Chile.

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	1,996,379	7,321,698
Movement in exploration and evaluation asset:
Opening balance - at cost	7,321,698	3,662,498
Capitalised exploration expenditure	2,263,872	4,722,693
Capitalised expenditure written off	-	(768,021)
Foreign currency translation movement	(266,746)	(295,472)
Provision for impairment	(7,322,445)	-
Carrying amount at the end of the year	1,996,379	7,321,698

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.

The Group has taken up a provision for impairment for 100% of the Manantiales project (\$4,260,866) and 63% of both the Santo Domingo and Tamaya projects (\$3,061,579). 100% of the Manantiales project has been impaired after taking into consideration that the Group has not made option payments during 2013 in accordance with the current Option-to-Purchase agreement, that this agreement is currently being renegotiated, and there is currently no planned exploration activity in relation to the tenement.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 8: EXPLORATION AND EVALUATION ASSET (CONT)

In regards to the Santo Domingo and Tamaya projects, payments have been made in accordance with the respective Option-to-Purchase and Earn-in Joint Venture agreements for these projects. There has been recent exploration activity in relation to these projects, and ongoing activity is planned by either sale or joint venture of the assets.

A provision for impairment has been taken up for 63% of the Santo Domingo and Tamaya projects after taking into consideration the financial impact of the likely proposed merger with Rockwell subsequent to year end (Note 23).

	30 June 2013 \$	30 June 2012 \$
NOTE 9: PLANT AND EQUIPMENT
Plant and Equipment
At cost	124,234	148,272
Accumulated depreciation	(73,373)	(61,838)
Total plant and equipment	50,861	86,434

Reconciliation of the carrying amounts for property, plant and equipment is set out below:

Balance at the beginning of year	86,434	35,244
Additions	641	94,038
Disposals	(2,279)	-
Depreciation expense	(33,098)	(42,348)
Foreign currency translation movement	(837)	(500)
Carrying amount at the end of year	50,861	86,434

NOTE 10: TRADE AND OTHER PAYABLES

Current: Trade payables and accrued expenses (a) 307,523 711,993 Short term employee benefits 4,817 66,374 Total payables (unsecured) 312,340 778,367

(a) Includes \$3,465(2012: \$11,584) payable to related parties.

The average credit period on purchases of goods and services is 30 days. No interest is paid on trade payables.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 11: ISSUED CAPITAL

		30 June 2013		30 June 2012
Fully paid ordinary shares		No. of Shares	\$	No. of Shares	\$
Balance at the beginning of the reporting period		82,383,526	15,919,925	82,383,526	15,919,925
Shares issued during the year:
9 October 2012	(a)	35,974,850	1,259,120	-	-
17 October 2012	(b)	29,931,971	1,047,619	-	-
22 November 2012	(c)	60,892	2,618	-	-
27 November 2012	(d)	1,399	84	-	-
8 February 2013	(e)	1,178,782	27,230	-	-
18 April 2013	(f)	4,817,789	71,785	-	-
28 June 2013	(g)	8,722,238	157,000	-	-
Total		163,071,447	18,485,381	82,383,526	15,919,925
Total transaction costs associated with share issues			(234,785)		-
Net issued capital			18,250,596		15,919,925

Ordinary shareholders are entitled to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amount paid on the shares held. Every ordinary shareholder present at a meeting in person or by proxy is entitled to one vote on a show of hands or by poll. Ordinary shares have no par value.

(a) Issued at 3.5 cents each, pursuant to a rights issue

(b) Issued at 3.5 cents each, pursuant to a rights issue

(c) Issued at 4.3 cents each, pursuant to directors and executive staff salary sacrifice plan, valued at the previous 5 trading day vwap

(d) Issued at 6.0 cents each, pursuant to option exercise

(e) Issued at 2.31 cents each, pursuant to directors and executive staff salary sacrifice plan, valued at the previous 5 trading day vwap

(f) Issued at 1.49 cents each, pursuant to directors and executive staff salary sacrifice plan, valued at the previous 5 trading day vwap

(g) Issued at 1.8 cents each, pursuant to the 2013 Share Purchase Plan

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 11: ISSUED CAPITAL (CONT)

Options		30 June 2013 No. of Options	30 June 2012 No. of Options
Unlisted Share Options		11,450,000	8,700,000
Balance at the beginning of the reporting period		8,700,000	9,700,000
Options issued during the period:
Issued to directors	(a)	2,350,000	-
Issued to staff	(b)	400,000	-
Exercised by directors		-	-
Exercised by staff		-	-
Lapsed by directors	(c)	-	(1,000,000)
Balance at Reporting Date		11,450,000	8,700,000

(a) Issued to directors pursuant to shareholder approval

(b) Issued to staff pursuant to the Employee Share Option Plan

(c) Options lapsed by Neil Stuart, who retired as a director during the year ended 30 June 2012.

The weighted average fair value of options granted in the year was 0.43 cents (2012: \$nil). The fair values of options were calculated using a binomial lattice pricing model. Volatility was based on historical share price as it is assumed this is indicative of future movements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 11: ISSUED CAPITAL (CONT)

The inputs used for the option pricing model for options granted during the year ended 30 June 2013 were:

	Director Options	Staff Options
Number of options granted Date of grant and vesting of options Option expiry date	2,350,000 08/02/2013 20/01/2017	400,000 04/12/2012 03/12/2016
The fair value of share options and assumptions for the period ended 30 June 2013:
Fair value at grant date	0.33 cents	1.03 cents
Share price	1.80 cents	3.30 cents
Exercise price	6.00 cents	6.00 cents
Expected volatility	58%	57%
Option life	4 years	4 years
Expected dividends	nil	nil
Risk-free interest rate	4.75%	4.25%

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 11: ISSUED CAPITAL (CONT)

The amount of the expense during the year in relation to options is \$11,745 (2012: \$nil). This amount has been credited to the Option Reserve.

		30 June 2013	30 June 2012
Listed Share Options		No. of Options	No. of Options
Balance at the beginning of the reporting period		-	-
Options issued during the period:
Issued	(a)	32,953,451	-
Exercised		(1,399)	-
Balance at Reporting Date		32,952,052	-

(a) Issued to shareholders pursuant to the rights issue in October 2012

Capital Management

Exploration companies such as Elementos Limited are funded almost exclusively by share capital. The Group has no debt. The Group's capital comprises equity, as disclosed in the statement of financial position.

Management controls the capital of the Group to ensure 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 Group is in exploration stage. There are no externally imposed capital requirements.

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

	30 June 2013	30 June 2012
	\$	\$
NOTE 12: RESERVES
Foreign currency translation reserve	(1,039,171)	(926,157)
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.
Options reserve	1,009,222	997,477
The options reserve records amounts recognised on valuation of share options granted for services provided.
NOTE 13: CASH FLOW INFORMATION
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:	(9,362,786)	(2,726,183)
Depreciation	33,098	42,348
Plant and equipment sold and written off	(11,357)
Share based payment expense	113,378	-
Exploration expenditure written off	-	768,021
Exploration expenditure impairment	7,322,445	-
Changes in assets and liabilities:
(Increase)/Decrease in receivables	235,628	(148,873)
(Increase)/Decrease in prepayments and
other assets	2,186	141,197
(Decrease)/Increase in payables	(92,819)	124,993
Cash flows from operations	(1,760,227)	(1,798,497)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

	30 June 2013 \$	30 June 2012 \$
NOTE 14: EARNINGS PER SHARE
Net loss used in the calculation of basic and diluted EPS	(9,362,786)	(2,726,183)
Weighted average number of ordinary shares outstanding during the period used in the calculation of basic EPS	130,903,711	82,383,526

Options are considered potential ordinary shares. Options issued are not presently dilutive and were not included in the determination of diluted earnings per share for the period.

NOTE 15: COMMITMENTS

(a) 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 reporting 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	3,127,468	2,708,224
Later than 1 year but not later than 5 years	4,454,102	7,697,128
Total commitment	7,581,570	10,405,352

The minimum expenditure commitment for the Tamaya project, being US\$7 million over three years with 15,000 metres of drilling, has been included in the note above, less expenditure already incurred at the end of the reporting period.

There is no exploration commitment for the Manantiales project, as the current Optionto-Purchase agreement has lapsed, and is currently being renegotiated.

(b) Operating Lease Commitments

The operating leases consist of premises rent and equipment lease.
Not later than 1 year	34,524	34,524
Later than 1 year but not later than 5 years	14,385	48,908
Total commitment	48,909	83,432

NOTE 16: CONTINGENT LIABILITIES

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

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 as follows:

• (a) The Company had been a party to an office services arrangement with Orocobre Limited (a Company of which Mr Calaway is a Director and Mr Crawford a Company Secretary). A total of \$nil (2012: \$48,9341) was paid under the arrangement and the balance outstanding at year end is \$nil (2012: \$nil). The arrangement covered occupancy, accounting and administration services. During the previous year, the Company ceased this arrangement with Orocobre Limited.
• (b) During the year, the Company did not enter into any new transactions with key management personnel.

Key Management Personnel:

Messrs A A McLellan, C Nolan, M McCauley, J Calaway continued in their roles as Directors of the Company.

Details of key management personnel compensation and equity interests are set out in Note 20.

• (c) During the year, the Company controlled the following entities within the Group:
• Element Minerals Australia Pty Ltd, 100% owned, incorporated in Australia;
• Elementos Minerales S.A., 100% owned, incorporated in Argentina; and
• Elementos Chile Ltda, 100% owned, incorporated in Chile.

NOTE 18: SHARE BASED PAYMENTS

	30 June 2013	30 June 2012
	\$	\$
Share based payment expense recognised during the year:
Options issued under employee share option plan	4,111	-
Options issued under director share option plan	7,634	-
	11,745	-

(a) The following share-based payment arrangements existed at 30 June 2013:

(i) On 8 February 2013, 2,350,000 share options were issued to directors under the Elementos Limited Directors and Officers Share Option Plan, to take up ordinary shares at an exercise price of 6 cents. The options vested immediately and are exercisable on or before 20 January 2017. The options hold no voting or dividend rights and are not transferable.

(ii) On 4 December 2012 400,000 share options were issued to staff under the Elementos Limited Directors and Officers Share Option Plan, to take up ordinary shares at an exercise price of 6 cents. The options vested immediately and are exercisable on or before 3 December 2016. The options hold no voting or dividend rights and are not transferable.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 18: SHARE BASED PAYMENTS (CONT)

(iii) On 28 March 2011 1,000,000 share options were issued to James Calaway, under the Directors' Share Option Plan, to take up ordinary shares at an exercise price of 32.6 cents. Vesting conditions of the options were 50% when the share price reached 40 cents and 50% when the share price reached 45 cents. These options are exercisable on or before 18 January 2017. The options hold no voting or dividend rights and are not transferable. These options have not vested. 1,000,000 options were outstanding at year end (2012: 1,000,000) and nil options were exercisable (2012: nil).

(iv) On 30 November 2010 1,000,000 share options were issued to Mark McCauley, under the Directors' Share Option Plan, to take up ordinary shares at an exercise price of 22.6 cents. Vesting conditions of the options were 50% when the share price reached 30 cents and 50% when the share price reached 35 cents. These options are exercisable on or before 30 November 2015. The options hold no voting or dividend rights and are not transferable. 500,000 options were outstanding at year end (2012: 500,000) and 500,000 options were exercisable (2012: 500,000).

(v) On 7 September 2010 1,300,000 share options were issued to staff under the Elementos Limited Employee Share Option Plan, to take up ordinary shares at an exercise price of 22.6 cents. Vesting conditions of the options were 50% when the share price reached 30 cents and 50% when the share price reached 35 cents. These options are exercisable on or before 7 September 2015. The options hold no voting or dividend rights and are not transferable. These options vested during the 2011 year. 1,200,000 options were outstanding at year end (2012: 1,200,000) and 1,200,000 options were exercisable (2012: 1,200,000).

(vi) On 17 December 2009, 1,500,000 share options were issued to Martin Place Securities Pty Ltd, as part of the IPO, to take up ordinary shares at an exercise price of 30 cents. Vesting conditions were admittance of the Company to the ASX. These options are exercisable on or before 17 December 2013. The options hold no voting or dividend rights and are not transferable. 1,500,000 options were outstanding at year end (2012: 1,500,000) and 1,500,000 options were exercisable (2012: 1,500,000).

(vii) On 23 October 2009, 5,500,000 share options were issued to Directors, under the Directors' Share Option Plan, to take up ordinary shares at an exercise price of 22.6 cents. Vesting conditions of the options were 50% when the share price reached 30 cents and 50% when the share price reached 35 cents. These options are exercisable on or before 23 October 2015. The options hold no voting or dividend rights and are not transferable. Nil options lapsed during the year (2012: 1,000,000). 4,500,000 options were outstanding at year end (2012: 5,500,000) and 4,500,000 options were exercisable (2012: 5,500,000).

(b) At reporting date, the options granted to key management personnel under the Share Option Plan are:

Granted 23 October 2009	4,500,000
Granted 7 September 2010	550,000
Granted 30 November 2010	500,000
Granted 28 March 2011	1,000,000
Granted 4 December 2012	200,000
Granted 8 February 2013	2,350,000
	9,100,000

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 18: SHARE BASED PAYMENTS (CONT)

(c) 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:

	2013			2012
	Weighted Number of Average Options Options Exercise Price		Number of	Weighted Average Exercise Price
	No.	\$	No.	\$
Outstanding at the beginning of the year	8,700,000	0.258	9,700,000	0.027
Granted	2,750,000	0.060	-	-
Forfeited	-	-	(1,000,000)	0.233
Exercised	-	-	-	-
Expired	-	-	-	-
Outstanding at year-end	11,450,000	0.211	8,700,000	0.258
Exercisable and vested at year-end	10,450,000	0.231	7,700,000	0.292

There are no options subject to escrow at the end of the year.

The options outstanding at 30 June 2013 had a weighted average exercise price of 21.07 cents (2012: 25.8 cents) and a weighted average remaining contractual life of 2.46 years (2012: 3.12 years). At the date of exercise, the weighted average share price of options exercised during the year was nil cents (2012: nil cents). The exercise price of options outstanding at year end ranges from 6 cents to 33.3 cents (2012: 23.3 cents to 33.3 cents). The weighted average fair value of options granted during the year was 4.3 cents (2012: nil cents). Refer to Note 11 regarding assessment of fair value of options granted during the year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

	30 June 2013 \$	30 June 2012 \$
NOTE 19: AUDITORS' REMUNERATION
Remuneration of the auditor of the parent entity: BDO Audit Pty Ltd and its related entities
- auditing or reviewing the financial reports	20,006	22,014
- tax advice and compliance	44,235	16,000
- independent experts report and associated advice	30,863	-
	95,104	38,014
Remuneration of other auditors of subsidiaries: Network firms of BDO
- auditing or reviewing the financial reports	6,000	34,091
- other services	-	3,873
Other firms
- auditing or reviewing the financial reports	4,000	8,103
	10,000	46,067

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 20: KEY MANAGEMENT PERSONNEL COMPENSATION AND EQUITY

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

Mr A A McLellan	Chairman - Non-executvie
Mr C Nolan	Managing Director - Executive
Mr M McCauley (resigned 06/08/13)	Director - Non-executive
Mr J Calaway	Director - Non-executive
Mr A Grahame (redundant 07/02/13)	Exploration and Development Manager

	30 June 2013	30 June 2012
	\$	\$
(b) Key Management Personnel Compensation
Short-term employee benefits	585,315	568,952
Post-employment benefits	47,440	47,606
Share-based payments	9,689	-
	642,444	616,558

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 20: KEY MANAGEMENT PERSONNEL COMPENSATION AND EQUITY (CONT)

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

2013	Opening Balance	Compen sation (ii)	Options Exercised	Purchased / (Sold)	Net Other Changes (iii)	Balance 30 June 2013
Mr A A McLellan	-	3,428,976	-	-	-	3,428,976
Mr C Nolan	146,786	-	-	117,429	-	264,215
Mr M McCauley	-	789,720	-	-	-	789,720
Mr J Calaway	11,937,291	1,256,078	-	30,765,305	-	43,958,674
Mr A Grahame	146,784	-	-	283,347	(430,131)	-
Total	12,230,861	5,474,774	-	31,166,081		(430,131) 48,441,585

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

(ii) The Company issued shares as part of the salary sacrifice plan.

(iii) Includes shares held upon resignation or appointment.

2012	Opening Balance	Compen sation (ii)	Options Exercised	Purchased / (Sold)	Net Other Changes (iii)	Balance 30 June 2012
Mr A A McLellan	-	-	-	-	-	-
Mr C Nolan	146,786	-	-	-	-	146,786
Mr N Stuart	2,367,185	-	-	-	(2,367,185)	-
Mr M McCauley	-	-	-	-	-	-
Mr J Calaway	11,937,291	-	-	-	-	11,937,291
Mr A Grahame	146,784	-	-	-	-	146,784
Total	14,598,046	-	-	-		(2,367,185) 12,230,861

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

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

(iii) Includes shares held upon resignation or appointment.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 20: KEY MANAGEMENT PERSONNEL COMPENSATION AND EQUITY (CONT)

(d) Number of Options held by Key Management Personnel

2013	Opening Balance	Compen sation (e)	Options Acquired	Options Exercised	Net Other Changes (i)	Balance 30 June 2013	Total Vested	Total Exercisable
Mr A A McLellan	2,000,000	700,000	-	-	-	2,700,000	2,700,000	2,700,000
Mr C Nolan	2,500,000	800,000	-	-	-	3,300,000	3,300,000	3,300,000
Mr M McCauley	500,000	350,000	-	-	-	850,000	850,000	850,000
Mr J Calaway	1,000,000	500,000	-	-	-	1,500,000	500,000	500,000
Mr A Grahame	550,000	200,000	-	-	(750,000)	-	-	-
Total	6,550,000	2,550,000	-	-	(750,000)	8,350,000	7,350,000	7,350,000

(i) Includes options held upon resignation or retirement

2012	Opening Balance	Compen sation (e)	Options Acquired	Options Exercised	Net Other Changes (i)	Balance 30 June 2012	Total Vested	Total Exercisable
Mr A A McLellan	2,000,000	-	-	-	-	2,000,000	2,000,000	2,000,000 (ii)
Mr C Nolan	2,500,000	-	-	-	-	2,500,000	2,500,000	2,500,000 (ii)
Mr N Stuart	1,000,000	-	-	-	(1,000,000)	-	-	- (ii)
Mr M McCauley	500,000	-	-	-	-	500,000	500,000	500,000
Mr J Calaway	1,000,000	-	-	-	-	1,000,000	-	-
Mr A Grahame	550,000	-	-	-	-	550,000	550,000	550,000
Total	7,550,000	-	-	-	(1,000,000)	6,550,000	5,550,000	5,550,000

(ii) In escrow due to ASX regulations.

(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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 21: FINANCIAL INSTRUMENTS

(a) Financial Risk Management Policies

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

Treasury Risk Management

Key executives 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 Group'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 Group 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 cash flows, 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 cash flows credit 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 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 their 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 key executives. The key executives monitor credit risk 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 YEAR ENDED 30 JUNE 2013

NOTE 21: FINANCIAL INSTRUMENTS (CONT)

At 30 June 2013, there was no concentration of credit risk, other than bank balances and on 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 than the economic entity's functional 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 \$AUD) was \$12,771 (2012: \$10,206).

Financial assets and liabilities exist for the economic entity's Chilean operations, and thus there is exposure to the Chilean Peso. As this risk is minor, it is not hedged. At reporting date, the net foreign currency risk (stated in \$AUD) was \$20,735 (2012: \$59,061).

(b) Financial Instrument Composition and Contractual Maturity Analysis

	30 June 2013	30 June 2012
Financial assets:	\$	\$
Within 6 months
- cash & cash equivalents (i)	370,894	2,012,552
- receivables (ii)	20,917	122,917
	391,811	2,135,469
Financial liabilities:
Within 6 months
- payables (ii)	(312,340)	(778,367)

(ii) Non-interest bearing. The contractual cash flows do not differ to the carrying amount. (i) Floating interest rates, with weighted average effective interest rate 2.39%, with an average maturity of 7 days.

(c) Net Fair Values

Fair values of financial assets and financial liabilities 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 +/- \$2,085 (2011: +/-\$20,125).

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 +/-\$1,277 (2012: +/-\$1,021). The effect on profit and equity as a result of a 10% change in the Chilean Peso, with all other variables remaining constant would be +/-\$2,073 (2011: +/-\$5,906).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 22: SEGMENT REPORTING

Description of Segments

Operating segments have been determined on the basis of reports reviewed by the chief operating decision maker. The Managing Director is considered to be the chief operating decision maker of the group. The Managing Director assesses and reviews activities based on each area of interest. Each area of interest is aggregated on a geographic basis to form a reportable segment. The Group's exploration activities in each area of interest are primarily centered around gold and copper. The Group's reportable segments are Australia, Chile and Argentina.

Information provided to the Managing Director

Segment information provided to the Managing Director for the year ended 30 June 2013 is as follows:

2013	Australia \$	Chile \$	Argentina \$	Total \$
Segment Profit or Loss Before Tax	(6,015)	(1,479,938)	(6,189,705)	(7,675,658)
Included in segment profit or loss before tax are the following items:
Depreciation and amortisation	5,888	-	5,692	11,580
Impairment of capitalised exploration expenditure	-	1,395,835	5,926,610	7,322,445
Other exploration and evaluation expenditure expensed	5,270	41,898	40,600	87,768
Segment Assets and Liabilities
Segment assets	197,617	700,961	978,904	1,877,482
Segment liabilities	1,219	13,201	24,610	39,030
Additions to capitalised exploration expenditure	86,655	1,584,627	592,590	2,263,872

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 22: SEGMENT REPORTING (CONT)

Segment information provided to the Managing Director for the year ended 30 June 2012 is as follows:

2012	Australia \$	Chile \$	Argentina \$	Total \$
Segment Profit or Loss Before Tax	(205,909)	(792,560)	(477,023)	(1,475,492)
Included in segment profit or loss before tax are the following items:
Depreciation and amortisation	160	-	2,152	2,312
Impairment of capitalised exploration expenditure	191,532	573,195	-	764,727
Other exploration and evaluation expenditure expensed	-	189,467	218,127	407,594
Segment Assets and Liabilities
Segment assets	111,789	1,104,635	7,138,733	8,355,157
Segment liabilities	-	188,143	279,387	467,530
Additions to capitalised exploration expenditure	111,835	951,430	3,659,428	4,722,693

Other Segment Information

Segment profit or loss before tax excludes corporate revenue and expenses. Segment profit or loss before tax reconciles to total profit or loss before tax as follows:

	30 June 2013	30 June 2012
	\$	\$
Segment profit or loss before tax	(7,675,658)	(1,475,492)
Interest received from other persons	21,259	275,739
Other revenue	11,357	10,000
Corporate and other expenses	(1,722,986)	(1,533,308)
Profit or loss before tax	(9,366,028)	(2,723,061)

Segment assets excludes corporate assets. Segment assets reconciles to total assets as follows:

	30 June 2013	30 June 2012
	\$	\$
Segment assets	1,877,482	8,355,157
Cash	355,047	1,622,214
Plant and equipment	45,847	74,794
Other corporate assets	177,794	3,433
Total assets	2,456,170	10,055,598

Segment liabilities excludes corporate liabilities. Segment liabilities reconciles to total liabilities as follows:

	30 June 2013	30 June 2012
	\$	\$
Segment liabilities	39,030	467,530
Trade and other payables	273,310	310,837
Total liabilities	312,340	778,367

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 23: SUBSEQUENT EVENTS

In late calendar 2012, the Board of Elementos decided to shift its corporate strategy to pursue advanced project acquisition opportunities, in response to the extremely difficult environment for raising capital to fund green field exploration. The strategic focus was to identify more advanced or brownfield assets which the Company believed had a better chance to secure new funding. A number of opportunities were considered, including the Cleveland tin project, controlled by Rockwell.

In April 2013, the Company signed a conditional Term Sheet to facilitate the merger of Elementos and Rockwell. The merger of Elementos and Rockwell had a strong strategic rationale:

● Positioned Elementos with a more advanced asset, reducing the Company's exposure to greenfield exploration;

● Secured a new advanced stage project with near term development potential, and significant exploration upside;

● Provided a potential valuation up-lift from relatively short-term work programs; and

● Enabled significant exposure to tin, which the board believes has attractive supply and demand fundamentals.

In June 2013, the Company signed a Merger Implementation Deed to acquire all the issued shares of Rockwell, through the issue of Elementos shares. The merger will be affected through an off-market takeover bid for all the shares in Rockwell, subject to the terms and conditions of the Merger Implementation Deed.

Subsequent to the end of reporting period, Elementos issued Rockwell shareholders with a Bidders Statement and secured more than 90% share acceptances. The merger remains conditional on Elementos shareholders approving the transaction at an Extraordinary General Meeting planned for 8th October 2013.

On completion of the Merger, the Company's primary focus will be advancing the Cleveland Project. The board will establish a detailed work program and budget for the project on completion of the merger. The merged Company will need to raise new equity to achieve its objectives in relation to the Cleveland project, to fund corporate overhead costs and general working capital.

At completion of the Merger, Mr Nolan will cease being managing director, and will become an executive director, of the Company. Negotiations are underway with Mr Nolan regarding his new position and contract terms.

Subsequent to the end of the reporting period, the Company raised \$338,610 (before costs) by private placements, and issued 22,863,170 shares as a result.

No other matters or circumstances have arisen since the end of the year 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

NOTE 24: PARENT ENTITY INFORMATION

The following information relates to the parent entity, Elementos Limited at 30 June 2013. This information has been prepared using consistent accounting policies as presented in Note 1.

	30 June 2013	30 June 2012
	\$	\$
Current assets	373,233	1,643,287
Non-current assets	6,095,505	10,945,929
Total assets	6,468,738	12,589,216
Current liabilities	287,949	325,476
Non-current liabilities	-	-
Total liabilities	287,949	325,476
Contributed equity	18,250,596	15,919,925
Reserves	1,009,222	997,477
Accumulated losses	(13,079,029)	(4,653,662)
Total equity	6,180,789	12,263,740
Loss for the period	(8,273,952)	(1,303,581)
Other comprehensive income for the period	-	-
Total comprehensive income for the period	(8,273,952)	(1,303,581)

The Company has no contingent liabilities, nor has it entered into any guarantees in relation to the debts of its subsidiaries.

The Company has not entered into any contractual commitments for the acquisition of property, plant and equipment.

The Company and its Australian 100% owned controlled entities have formed a tax consolidated Members of the Group entered into a tax sharing arrangement. The agreement provides for the allocation of income tax liabilities between the entities in proportion to their contribution to the Group's taxable income. The head entity of the tax consolidated Group is Elementos Ltd.

NOTE 25: COMPANY DETAILS

The registered office and principal place of business is:

Level 8, 26 Wharf Street

Brisbane, Queensland, 4000 Australia

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 Standards which, as stated in accounting policy note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
• (b) giving a true and fair view of the Company's and the consolidated entity's financial position as at 30 June 2013 and of their performance for the financial year ended on that date.
• 1. The chief executive officer and chief financial officer have each declared that:
• (a) the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001:
• (b) the financial statements and notes for the financial year comply with the Accounting Standards; and
• (c) the financial statements and notes for the financial year give a true and fair view.
• 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.

gargee A A McLellan Chairman

Dated this 24th September 2013 Brisbane, Queensland

Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia

INDEPENDENT AUDITOR'S REPORT

To the members of Elementos Limited

Report on the Financial Report

We have audited the accompanying financial report of Elementos Limited, which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the 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 financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, 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.

Opinion

In our opinion:

• (a) the financial report of Elementos Limited is in accordance with the Corporations Act 2001, including:
• (i) giving a true and fair view of the consolidated entity's financial position as at 30 June 2013 and of its performance for the year ended on that date; and
• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Emphasis of Matter

Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates that the ability of the consolidated entity to continue as a going concern is dependent upon the future successful raising of necessary funding through debt or equity by 31 December 2013, successful exploration of the consolidated entity's tenements, and/or sale of non-core assets. These conditions, along with other matters set out in Note 1, indicate the existence of a material uncertainty that may cast significant doubt on the consolidated entity's ability to continue as a going concern and, therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2013. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Elementos Limited for the year ended 30 June 2013 complies with section 300A of the Corporations Act 2001.

BDO Audit Pty Ltd

A J Whyte Director

Brisbane: 24 September 2013