LCL RESOURCES LIMITED — Annual Report 2012

Mar 24, 2013

METMINCO LIMITED and its controlled entities

ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2012 ABN 43 119 759 349

CONTENTS

CORPORATE GOVERNANCE STATEMENT	3
DIRECTORS’ REPORT	9
AUDITOR’S INDEPENDENCE DECLARATION	31
FINANCIAL STATEMENTS	32
NOTES TO THE FINANCIAL STATEMENTS	36
DIRECTORS’ DECLARATION	68
INDEPENDENT AUDITOR’S REPORT	69

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2 METMINCO LIMITED Annual Report 31 December 2012

CORPORATE GOVERNANCE STATEMENT

Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied for the entire fi nancial year ended 31 December 2012.

Board Composition

The qualifi cations, experience and expertise relevant to the position of each director who is in offi ce at the date of the annual report and their term of offi ce are detailed in the Directors’ Report.

The names of the independent directors are: Antonio Ortuzar, Timothy Read, Phillip Wing, William Etheridge and Francisco Vergara-Irarrazaval.

When determining whether a non-executive director is independent the director must not fail any one of the following materiality thresholds:

• less than 10% of Company shares are held by the director and any entity or individual directly or indirectly associated with the director;

• no sales are made to or purchase made from any entity or individual directly or indirectly associated with the director; and

• none of the directors’ income or the income of an individual or entity directly or indirectly associated with the director is derived from a contract with any member of the economic entity other than income derived as a director of the entity.

Directors have the right to seek independent professional advice in the furtherance of their duties as directors at the Company’s expense. Written approval must be obtained from the Chairman prior to incurring any expense on behalf of the Company.

Ethical Standards

The Board acknowledges and emphasises the importance of all directors and employees maintaining the highest standards of corporate governance practice and ethical conduct.

A code of conduct has been established requiring directors and employees to:

• act with utmost integrity and honesty and in good faith;

• carry out their roles in a professional and conscientious manner to achieve highest standards of performance;

• adhere to professional codes of conduct where these are provided;

• ensure that information is recorded honestly and accurately so as to enable the Company to meet its obligation to keep the market accurately informed about its activities;

• exercise due care and diligence in fulfi lling the functions of offi ce;

• avoid confl icts and make full disclosure of any possible confl ict of interest;

• respecting all people and their customs with whom they have dealings, and observing the laws of the state or country in which they operate;

• encourage the reporting and investigating of unlawful and unethical behaviour; and,

• comply with the Company’s policies and procedures including the share trading policy as disclosed below.

Directors are obliged to be independent in judgment and ensure all reasonable steps are taken to ensure due care is taken by the Board in making sound decisions.

Trading Policy

The Company’s policy regarding directors and employees trading in its securities is set by the Audit Committee. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be refl ected in the security’s prices.

In compliance with AIM Listing Rules, directors and offi cers of the Company are also not permitted to trade in the Company’s securities for the periods as follows:

• two months preceding the publication of the Company’s annual results or, if shorter, the period from its fi nancial year end to the time of publication;

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3

CORPORATE GOVERNANCE STATEMENT continued

• two months immediately preceding the notifi cation of the Company’s half-yearly report or, if shorter, the period from the relevant fi nancial period end up to and including the time of the notifi cation; or

• one month immediately preceding the notifi cation of the Company’s quarterly results or, if shorter, the period from the relevant fi nancial period end up to and including the time of the notifi cation.

Diversity Policy Statement

Metminco’s workforce consists of people from diverse backgrounds with a range of skills, values and experiences. Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company recognises the organisational strength, deeper problem solving ability and opportunity for innovation that this diversity brings. The Company is committed to providing an environment in which all employees are treated with fairness and respect, and have equal access to opportunities available at work.

Accordingly the Company established a regional offi ce in Moquegua, Southern Peru approximately 60 km from the Los Calatos Project with one of the objectives being to increase community participation in the Group’s work force. As the Group only has four staff based in Australia it is not practical to set measurable targets.

However, the Company aims to continue with this diversity policy over the next few years as director and senior executive positions become vacant and appropriately qualifi ed candidates become available.

Performance Evaluation

The Board regularly receives reports from management on shareholder meetings including feedback on the performance of the Company and the Board.

The Managing Director undertakes an annual review of the performance of each senior executive against individual tasks and objectives. The report is considered by the Remuneration and Nomination Committee. Performance evaluations of the key executives were undertaken in the 2012 fi nancial year.

Board Roles and Responsibilities

The Board of Directors is responsible for the corporate governance of the Group and operates in accordance with the principles set out in its Charter, which is available in the corporate governance section of Metminco’s website. To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board. These responsibilities include:

• Setting the strategy for the Group, including operational and fi nancial objectives and ensuring that there are suffi cient resources for this strategy to be achieved;

• Appointing and, where appropriate, removing the Managing Director, approving other key executive appointments and planning for executive succession;

• Overseeing and evaluating the performance of the Managing Director and the executive team through a formal performance appraisal process having regard to the Group’s business strategies and objectives;

• Monitoring compliance with legal, regulatory, environmental, social and occupational health and safety requirements and standards;

• Overseeing the identifi cation of key risks faced by the Group and the implementation of an appropriate internal control framework to ensure those risks are managed to an acceptable level;

• Approving the Group’s budgets, including operational and capital budgets, and the approval of signifi cant acquisitions, expenditures or divestitures;

• Approval of the annual and half-yearly fi nancial reports; and

• Ensuring the market and shareholders are fully informed of material developments.

The roles of Chairman and Managing Director are separated and clearly defi ned. The Chairman leads the Board and is responsible for ensuring the eff ectiveness of governance practices. The Chairman is also responsible for the conduct of Board and shareholder meetings.

4 METMINCO LIMITED Annual Report 31 December 2012

Responsibility for the operations of the Company is delegated to the Managing Director who manages the Company within the policies set by the Board. The levels of authority for management are also documented.

To ensure that the responsibilities of the Board are upheld and executed to the highest level, the Board has established the following sub-committees:

• Audit and Risk Committee.

• Remuneration and Nomination Committee.

• Safety, Health and Sustainable Development Committee.

Sub-committees are able to focus on a particular responsibility and provide informed feedback to the Board. Each of these sub-committees have established Charters and operating procedures, which are reviewed on a regular basis. The Board may also establish other sub-committees from time to time to deal with issues of special importance.

Shareholder Rights

Shareholders are entitled to vote on signifi cant matters impacting on the business, which include the election and remuneration of directors, changes to the constitution and receipt of annual and interim fi nancial statements. Shareholders are strongly encouraged to attend and participate in the Annual General Meetings of Metminco Limited, to lodge questions to be responded to by the Board, and are able to appoint proxies.

Risk Management

The Board considers identifi cation and management of key risks associated with the business as vital to maximise shareholder wealth. A yearly assessment of the business’s risk profi le is undertaken and reviewed by the Board, covering all aspects of the business from the operational level through to strategic level risks. The Chief Financial Offi cer has been delegated the task of implementing internal controls to identify and manage risks for which the Board provides oversight. The eff ectiveness of these controls is monitored and reviewed regularly.

The Managing Director and Chief Financial Offi cer have signed a declaration in accordance with S295A of the Corporations Act that internal compliance and control systems of the Company and Consolidated Entity to the extent they relate to fi nancial reporting are operating effi ciently and eff ectively, are founded on a sound system of risk management and internal control and that the system is operating eff ectively in all material respects in relation to the reporting of fi nancial risks.

Remuneration Policies

The Remuneration Policy, which sets the terms and conditions for the key management personnel, was developed by the Remuneration and Nomination Committee after seeking professional advice from independent consultants and was approved by the Board. All executives receive a base salary, superannuation, performance incentives and retirement benefi ts. The Remuneration and Nomination Committee reviews executive packages annually by reference to Company performance, executive performance, comparable information from industry sectors and other listed companies and independent advice. The policy is designed to attract the highest calibre executives and reward them for performance, which results in long-term growth in shareholder value.

Executives are also entitled to participate in any employee share and option arrangements.

The amount of remuneration for all key management personnel for the Company is detailed in the Directors’ Report under the heading Remuneration Report. All remuneration paid to executives is valued at the cost to the Company and expensed. Shares given to executives are valued as the diff erence between the market price of those shares and the amount paid by the executive. Options are valued using the Binomial methodology.

The Board expects that the remuneration structure implemented will result in the Company being able to attract and retain the best executives to manage the Consolidated Group. It will also provide executives with the necessary incentives to work to grow long-term shareholder value.

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5

CORPORATE GOVERNANCE STATEMENT continued

The payment of bonuses, options and other incentive payments are reviewed by the Remuneration and Nomination Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the committee’s recommendations. Any changes must be justifi ed by reference to measurable performance criteria.

Audit and Risk Committee

An Audit and Risk Committee has been established by the Board. The Committee’s role and operations are documented in a Charter which is approved by the Board.

The Committee’s Charter provides that all members of the Audit and Risk Committee must be Non-Executive Directors with the majority being independent Directors, and that the Chair cannot be the Chairman of the Board.

The names and qualifi cations of those appointed to the Audit and Risk Committee and their attendance at meetings of the committee are included in the Directors’ Report.

The role of the Committee is to:

• Ensure the integrity of the Group’s internal and external fi nancial reporting including compliance with applicable laws, regulations and codes of conduct;

• Ensure that fi nancial information provided to the Board is of a suffi ciently high quality to allow the Board to make informed decisions;

• Ensure that appropriate and eff ective internal systems and controls are in place to ensure proper fi nancial governance and manage the Group’s exposure to risk;

• Oversee the appointment, compensation, retention and oversight of the external auditor, and review of any non-audit services provided by the external auditor;

• Regularly review the performance of the external auditor regarding quality, costs and independence; and

• Oversee the frequency, signifi cance and propriety of all transactions with related parties.

The Audit and Risk Committee is required under the Charter to meet at least twice per year and otherwise as necessary. The Committee met four times during the year and Committee members’ attendance records are disclosed in the Directors’ Meetings section of the Directors’ Report.

The Managing Director, Chief Financial Offi cer and external auditor also regularly attend the Committee meetings by standing invitation. Other Directors and management are invited to attend Committee meetings and participate in discussion relating to specifi c issues that they have an interest in.

The Committee is authorised to obtain independent legal advice at the Group’s expense if it considers it necessary in fulfi lling its duties.

Remuneration and Nomination Committee

The names of the members of the Remuneration and Nomination Committee and their attendance at meetings of the committee are detailed in the Directors’ Report.

The role of the Committee with respect to its remuneration function is to assist the Board in determining appropriate remuneration arrangements for the Directors and executive management.

These responsibilities include:

• Reviewing the adequacy and form of remuneration of Non-Executive Directors;

• Ensuring that the remuneration of the Non-Executive Directors refl ects the responsibilities and the risks of being a Director of the Group;

• Reviewing the contractual arrangements of the Managing Director and the executive management team including their remuneration;

6 METMINCO LIMITED Annual Report 31 December 2012

• Comparing the remuneration of the Managing Director and executive management to comparable groups within similar industries to ensure that the remuneration on off er can attract, retain and properly reward performance which will translate into long term growth in shareholder value;

• Annually review key performance indicators of the Managing Director and executive team to ensure that they remain congruent with the Group’s strategies and objectives;

• Reviewing the basis for remuneration of other Executive Directors of the Group for their services as Directors.

• Reviewing incentive performance arrangements when instructed by the Board; and

• Reviewing proposed remuneration arrangements for new Directors or executive appointments.

The Committee will submit their recommendations to the Board regarding the remuneration arrangements and performance incentives for the Managing Director and executive team. The Board will review these recommendations before providing their approval.

Details of the Group’s remuneration structure and details of senior executives remuneration and incentives are set out in the Remuneration Report contained within the Directors’ Report.

There are no schemes for retirement benefi ts other than statutory superannuation for non-executive directors.

Safety, Health and Sustainable Development Committee

The names of the members of the Safety, Health and Sustainable Development Committee and their attendance at meetings of the committee are detailed in the Directors’ Report.

The role of the Committee is to review and make recommendations to the Board on:

• The adequacy, integrity and eff ectiveness of the policy, critical systems, internal controls, and processes and procedures used to manage occupational health and safety, social and environmental matters;

• Risk control management and information systems in connection with occupational health and safety, social and environmental concerns;

• The adequacy of the Group’s (including its joint ventures) compliance programmes to ensure compliance with all applicable laws, regulations and standards and any other regulatory requirements in respect of the environment, social and occupational health and safety matters;

• The existence of a culture designed to build and foster environment, social and occupational health and safety leadership and appropriate behaviours consistently at all levels within the Group;

• The performance of the Group including reports on material issues such as serious injury or death, signifi cant environmental incidents or social matters associated with the Group’s operations; and

• The impact of changes and emerging issues in occupational health and safety, social and environment legislation, community expectations, research fi ndings and technology.

The consolidated entity’s operations are subject to signifi cant environmental and other regulations. The consolidated entity has a policy of engaging appropriately experienced contractors and consultants to advise on and ensure compliance with environmental regulations in respect of its exploration and development activities. There have been no reports of breaches of environmental regulations in the fi nancial year and at the date of this report.

Other Information

Further information relating to the Company’s corporate governance practices and policies has been made publicly available on the Company’s website at www.metminco.com.au .

Make timely and balanced disclosure

Metminco has established policies and procedures to ensure timely and balanced disclosure of all material matters concerning the Group, and ensure that all investors have access to information on the Group’s fi nancial performance. This ensures that the Group is compliant with the information disclosure requirements under the ASX Listing Rules and AIM Rules.

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7

These policies and procedures include a comprehensive Disclosure Policy that includes identifi cation of matters that may have a material impact on the price of Metminco’s securities, notifying them to the ASX and AIM, posting relevant information on the Group’s website and issuing media releases. These policies are available on Metminco’s website under www.metminco.com.au/Corporate Governance.

Matters involving potential market sensitive information must fi rst be reported to the Managing Director either directly or via the Company Secretary. The Managing Director will advise the other Directors if the issue is important enough to warrant the consideration of the full Board. In all cases the appropriate action must be determined and carried out in a timely manner in order for the Group to comply with the Information Disclosure requirements of the ASX and AIM.

Once the appropriate course of action has been agreed upon, either the Managing Director or Company Secretary will disclose the information to the relevant authorities, being the only authorised offi cers of the Group who are able to disclose such information. Board approval is required for market sensitive information such as fi nancial results, material transactions or upgrading/downgrading fi nancial forecasts. This approval is minuted in the meetings of the Board of Directors.

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Figure 1: Locality map - Metminco projects

8 METMINCO LIMITED Annual Report 31 December 2012

DIRECTORS’ REPORT

The Directors present their report together with the fi nancial statements of the Group being Metminco Limited (Metminco or the Company) and its controlled entities, for the fi nancial year ended 31 December 2012.

Directors

The following persons held the offi ce of director at any time during or since the year ended 31 December 2012 to the date of this report:

Antonio Ortuzar Non Executive Chairman William Howe Managing Director Timothy Read Non Executive Director Francisco Vergara-Irarrazaval Non Executive Director Phillip Wing Non Executive Director William Etheridge Non Executive Director

Directors have been in offi ce since the start of the year unless otherwise stated.

Company Secretary

Philip Killen was the Company Secretary for the fi nancial year and is in offi ce at the date of this report.

Principal activities and signifi cant changes in the nature of activities

The Principal activities of the Group during the fi nancial year were as a diversifi ed mineral explorer focussing on prospects in South America. The Group has a signifi cant portfolio of projects located in Chile and Peru, primarily focused on porphyry copper style deposits, but including exposure to gold, molybdenum and zinc.

Operating results

The consolidated loss of the Group for the year was A$11,912,898 after providing for income tax (31 Dec 2011: loss of A$8,777,306).

Operations Report

Metminco, through its wholly owned subsidiaries Minera Hampton Chile Limitada (Hampton Chile) and Minera Hampton Peru SAC (Hampton Peru), owns a portfolio of base and precious metal projects located within wellconstrained metallogenic belts that occur within the Andean Cordillera in Chile and Peru (Figure 1).

The Company’s most advanced projects are the Los Calatos (copper-molybdenum), Mollacas (copper) and Vallecillo (gold-zinc) projects, for which mineral resources have been classifi ed in accordance with the JORC Code (2004) (Appendix 1).

The Los Calatos Project, located in southern Peru near, and in a similar geological setting to three large operating copper-molybdenum mines (namely Cerro Verde, Cuajone and Toquepala), is potentially a world class mine (Figure 2).

Production from mines in this region exceeded 600,000 tonnes of copper metal in 2010. With the proposed upgrade to the Toquepala, Cuajone and Cerro Verde mines and the development of the Tia Maria and Quellaveco projects, production from this belt is anticipated to increase to more than 1.3 million tonnes of copper metal per annum. Molybdenum constitutes a signifi cant by-product of copper mining from this belt.

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9

DIRECTORS’ REPORT continued

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The Los Calatos Project, which covers an area of 224 square kilometres, is located on state owned land approximately 80 kilometres to the southeast of Arequipa and 33 kilometres northwest of Moquegua, and occurs at an altitude of approximately 2,900 metres above mean sea level.

Following the conclusion of a recent Scoping Study, Los Calatos is well placed for development as a low cost, long life, mining operation in an investment friendly jurisdiction.

Furthermore, the Project is highly deliverable, with the designated status of a “Project of National Interest” by the Peruvian government that enables Hampton Peru to acquire surface title for infrastructure by direct purchase from the State; there is no competing land usage; seawater is to be used for metallurgical processing purposes; and power costs are low by comparison to similar operations in Chile.

Los Calatos can be accessed via the Pan American Highway from Moquegua and a 50 kilometre unsealed road north of the highway to the project. The port of Ilo is located approximately 160 kilometres by road to the southwest of the project area (Figure 2).

The mineralised porphyry system at Los Calatos is typical of the Andean type porphyry systems found in Chile and Peru, with copper and molybdenum mineralisation being associated with both the porphyry, and adjacent wall rock. High grade copper and molybdenum mineralisation also occurs around the edge of a younger diatreme complex, which is typical of many of these systems (e.g. El Teniente in Chile). Figure 4 shows the distribution of the copper and molybdenum mineralisation asociated with the Los Calatos Porphyry Complex in plan, whereas Figure 5 shows the vertical distribution of the associated copper mineralisation.

Exploration

Extensive, regional scale mapping, geochemical and geophysical programs have historically been undertaken by Metminco over the project area, which identifi ed eight anomalous copper and molybdenum targets. Two targets (Figure 3, numbers 1 and 2) have been drill tested and comprise the subject of the February 2013 Mineral Resource Estimate.

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Figure 2: Locality Plan – Los Calatos Copper Project and neighbouring mines

10 METMINCO LIMITED Annual Report 31 December 2012

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Figure 3: Project area comprises 224 km2 of tenements and 8 defi ned exploration targets

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Figure 4: Simplifi ed geology of Los Calatos with copper and molybdenum isograde lines (1900m level)

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Figure 5: Section lines 10300E and 10900E showing the vertical distribution of copper

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11

DIRECTORS’ REPORT continued

LOS CALATOS continued

The mineral resource estimate, derived in support of a Preferred Mining Scenario, provides for mineral resources that are amenable to open-pit mining, and underground bulk mining. Mineral resources amenable to open-pit mining are identifi ed as those resources occurring from near surface to a vertical depth of 500 metres (viz. above an elevation of 2,500 metres above sea level), while resources amenable to underground bulk mining are identifi ed as those resources occurring below this depth (Appendix 1; Tables 1 and 2).

Mineral Resources

During 2012 Metminco completed a 65,677 metre diamond drill program which culminated in an updated mineral resource estimate announced on 4 March 2013. The mineral resource estimate, which was undertaken by SRK Consulting (Chile) S.A (“SRK”), incorporates the drilling results from 134 drill holes totalling 125,376 metres, of which 103 drill holes intersected the interpreted mineralised unit.

In order to establish a regular sample support length for modelling purposes, samples were composited to 5 metres with a total number of 12,560 composites used to interpolate the model. The block model provided for a block size of 15 x 15 x 15. Densities for the mineralised unit were based on 65 drill holes and 5,654 density determinations.

The total mineral resource for the Preferred Mining Scenario, inclusive of inferred mineral resources, is summarised in Table 1.

Table 1: Total Mineral Resource – Preferred Mining Scenario (February 2013)

POTENTIAL MINING METHOD	TONNES (million)	Cu %	Mo %	CuEq %
Open Pit	304	0.36	0.018	0.44
Underground – bulk mining	1,058	0.51	0.024	0.61
Total Mineral Resource	1,362	0.48	0.023	0.57

Note:

i) Open Pit: Mineral resource estimate reported at a 0.15% CuEq cut-off grade.

ii) Underground: Mineral resource estimate reported at a 0.35% CuEq cut-off grade. iii) Cu:Mo ratio of 1:4.2633 used to derive CuEq.

The copper equivalents are calculated according to the following formula and assumed metal prices and recoveries:

CuEq% = Cu% + [((PMo x RecMo) / (PCu x RecCu)) x Mo%] Cu Price (PCu)= US$2.75/lb Mo Price (PMo) = US$15.00/lb Cu Recovery (RecCu) = 87% Mo Recovery (RecMo) = 68% Thus, the formula used is: CuEq% = Cu% + [4.2633 x Mo%]

Mining Study

In October 2012 Metminco commissioned NCL Ingeniería y Construcción Ltda (“NCL”), an independent Chilean based engineering group with substantial experience in underground block cave design, to conduct a conceptual mining study on Los Calatos.

The work undertaken by NCL involved an assessment of a number of diff erent mining scenarios for the exploitation of the Los Calatos deposit, as well as the conduct of a Scoping Study (“the Study”) on the resulting Preferred Mining Scenario. As part of the Study, NCL derived estimates of operating costs and capital costs (mining works, process plant, and infrastructure) consistent with accuracy levels normally ascribed to scoping studies.

The Study was based on the 3D block model provided by Metminco, with related economic information being sourced from both Metminco and NCL for similar projects in the region. In estimating the Life of Mine (“LoM”) tonnes milled, measured, indicated and inferred mineral resources were considered, with 23% of the tonnes reporting into the resulting mining plan having been derived from inferred mineral resources.

On 4 March 2013 the Company announced the results of the Study which concluded that the Preferred Mining Scenario comprises a combination of an open pit and underground mining operation (Figure 6), with a combined LoM of 31 years at a mining and processing rate of 21.9 million tonnes per annum (60,000 tonnes per day).

12 METMINCO LIMITED Annual Report 31 December 2012

Figure 6: Schematic section looking northwest showing the open pit, underground bulk stopes and the mineralised envelope (at a 0.35% CuEq cut-off ) relative to the surface

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The envisaged development schedule for the project can be summarised as follows, noting that aspects of the schedule can potentially be optimised:

The tonnes mined and treated over the life of the mine total 656 million tonnes as detailed in Table 2, which will be processed through a conventional sulphide fl otation plant using seawater for fl otation purposes (Figure 7). Copper and molybdenum recoveries into concentrate are estimated to be 87% and 68% respectively based on initial metallurgical testwork.

• Years 1 to 4: Commence underground development;

• Years 3 and 4: Pre-strip of open pit with stockpiling of supergene ore. Commence construction of plant and infrastructure;

The key results of the Study, as concluded by NCL, are summarised in Tables 3 and 4 below:

• Years 5 to 11: Open pit mining and processing, and establishment of low grade stockpile. Continued underground development; and

Table 3: Preferred Mining Scenario – LoM operational parameters

• Years 12 to 35: Underground bulk mining (block caving), which is supplemented by lower grade ore from the open pit stockpile over the period Years 12 to 16.

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PARAMETER LIFE OF MINE
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Annual tonnes milled (millions)	21.9
Average annual copper in concentrate (kt)	83.3
Average annual molybdenum in	3.7
concentrate (kt)
Strip ratio (open pit)	2.2:1
Mining costs (US$/t)	7.11
Processing costs (US$/t)	4.55
G & A costs (US$/t)	0.59
Cash operating costs_net of credits_(US$/lb	1.09
copper)
Pre-production capital (US$ millions)	1,506

The project development schedule allows for construction of the surface infrastructure and the metallurgical plant to be undertaken simultaneously with the development of the open pit operation. However, in order to commence underground bulk mining in Year 12, the requisite development would have to be initiated four years prior to commencement of copper production from the open pit and metallurgical plant.

The life of the open pit is estimated to be seven years, during which time a low grade stockpile will be established, which will supplement high grade ore from the underground operation during the underground ramp-up stage (Years 12 to 16).

Note: Cash operating costs exclude government royalties, but include all other costs and royalties.

Hence, from Table 3 above, it can be seen that the annual contained copper and molybdenum metal in concentrate is expected to average 83.3 kt and 3.7 kt respectively over the LoM.

Table 2: Total tonnes mined– Preferred Mining Scenario (February 2013)

TYPE OF MINING OPERATION	TONNES (million)	Cu %	Mo %	CuEq %
Open Pit	194	0.37	0.018	0.44
Underground – bulk mining	462	0.49	0.029	0.61
Total tonnes mined	656	0.45	0.026	0.56

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13

DIRECTORS’ REPORT continued

LOS CALATOS continued

Cash operating costs, net of by-product credits, are expected to average US$1.09/lb of copper over the LoM, with the average operating cost per pound of copper over the life of the open pit being similar to that for the underground operation (due to the higher grade ore from the underground operation off setting higher mining costs).

The cash operating costs compare favourably with global cash costs, ranking Los Calatos in the lowest quartile of global producers.

Table 4: Preferred Mining Scenario – open pit and underground mine parameters

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PARAMETER OPEN PIT UNDERGROUND LIFE OF MINE
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Total tonnes mined (millions)	194	462	656
Average copper grade (%)	0.37	0.49	0.45
Average molybdenum grade (%)	0.018	0.029	0.026
Mining costs (US$/t ore milled)	4.19	8.34	7.11
Processing costs (US$/t ore milled)	4.55	4.55	4.55
G & A costs (US$/t ore milled)	0.59	0.59	0.59
Total site costs (US$/t ore milled)	9.33	13.48	12.25
Total of -site costs (US$/t ore milled)	3.35	3.35	3.35
Cash operating costs_net of credits_(US$/lb copper)	1.11	1.09	1.09

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Figure 7: Preliminary fl ow circuit - conventional sulphide fl otation plant

14 METMINCO LIMITED Annual Report 31 December 2012

Key parameters and assumptions used in the derivation of the by-product credits are summarised in Table 5 below.

Table 5: Estimation of by-product credits and other assumptions

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LIFE OF MINE
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Averge annual contained molybdenum in molybdenum concentrate (tonnes)	3,700
Molybdenum recovery into molybdenum concentrate (%)	68
Payable molybdenum (%)	85
Gold grade in copper concentrate (g/t)	1.25
Gold deduction per tonne of concentrate (g/t)	0.5
Silver grade in copper concentrate (g/t)	42
Silver deduction per tonne of concentrate (g/t)	30
Rhenium head grade (ppm)	0.735
Rhenium recovery into molybdenum concentrate (%)	68
Payable rhenium (%)	40
Payable copper in concentrate (%)	96.5
Treatment charges - copper (US$/t)	70
Ref ning charges - copper (US$/lb)	0.07
Transport - copper concentrate, land and port costs (including insurance) (US$/t)	32
Transport - copper concentrate, sea freight (including insurance) (US$/t)	60
Transport - molybdenum concentrate, freight (including insurance) (US$/t)	125
Ref ning charges - gold (US$/oz)	6

Note: Commodity prices used: Copper US$2.75/lb; Molybdenum US$15.00/lb; Gold US$1,500/oz; Silver US$25/oz and Rhenium US$2,000/lb.

The initial capital requirement for the establishment of the open pit, surface infrastructure, metallurgical plant and underground development is estimated at US$1,506 million, which includes a 10 to 30% contingency by virtue of the status of the project. Sustaining capital will be funded from cashfl ow.

The underground mine infrastructure will consist of a twin decline system, one for personnel and equipment, and one for an adjacent conveyor system for the transport of ore. Four vertical raise-bored ventilation shafts will support the underground operations. Ore will be crushed through a primary crusher to be located underground.

Pre-feasibility study planning

Following the completion of the Scoping Study on Los Calatos, preparatory work has commenced to defi ne the scope of the work required for the planned pre-feasibility study, and the costing thereof, for submission to the Metminco Board.

==> picture [40 x 842] intentionally omitted <==

15

DIRECTORS’ REPORT continued

==> picture [184 x 26] intentionally omitted <==

Location

The Mollacas Project, which occurs at an altitude of 1,500 metres above sea level, covers an area of 33 square kilometres and is located in Region IV, Chile, approximately 65 kilometres east of the town of Ovalle, and 160 kilometres by road from the port of La Serena. The project is accessible via the existing road network, and is in close proximity to established infrastructure.

Mineral Resource Estimate

The mineral resource identifi ed at Mollacas relates to both a low grade, primary porphyry system as well as the overlying, enriched, oxide and supergene alteration zone.

With the completion of the fi nal resource defi nition drilling program at Mollacas in late 2011, a further mineral resource estimate was completed by SRK in July 2012, comprising a total mineral resource of 34.3 million tonnes containing 131,749 tonnes copper and 176,408 ounces gold (Appendix 1; Table 3) – inclusive of the oxide, secondary sulphide, transitional sulphide and primary sulphide ore types.

Of this 15.5 million tonnes at a CuT grade of 0.51% in the measured and indicated mineral resource categories (contained metal of 79,111 tonnes of leachable copper) relates to the oxide and secondary sulphide zones (“Copper Leach Project”).

Proposed work program

Metminco’s principal focus is to advance the development of the Copper Leach Project. Accordingly, metallurgical test work (Phase 3) continues on those ore types comprising the oxide and secondary sulphide zones in order to optimise the process design ahead of a planned Feasibility Study.

In this regard, the selection of composites has been completed, as has the mechanical preparation and ore characterisation thereof, which is to be followed by column leach tests that are to be fi nalised in early Q3 2013.

The planned Feasibility Study on the Copper Leach Project has been delayed until the completion of the Phase 3 metallurgical testwork program.

==> picture [455 x 251] intentionally omitted <==

Figure 8: Copper Leach Project - comprises an enriched copper oxide and supergene cap

16 METMINCO LIMITED Annual Report 31 December 2012

==> picture [200 x 26] intentionally omitted <==

Mineral Resource Estimate

Location

The Vallecillo Project covers an area of 199 square kilometres, and is located approximately 50 kilometres northeast of Ovalle and 25 kilometres north of the Mollacas Project, at an altitude of 1,800 to 2,500 metres above mean sea level.

During October 2012, SRK completed a further mineral resource estimate for La Colorada based on 75 drill holes totalling 21,528 metres, of which 5,148 metres of mineralised intercepts were used to derive the estimate. Of the drilling, 24 drill holes (6,592 metres) were reverse circulation holes and 51 (14,936 metres) were diamond drill holes. Assay samples were collected, on average, at 1 metre intervals and sampled for gold, silver, zinc, copper and lead.

Exploration

The Vallecillo Project hosts porphyry related base and precious metal mineralisation that occurs in an arcuate polymetallic belt that has been defi ned on the basis of a soil geochemical sampling program conducted by the Company during 2009 and 2010.

The mineral resource estimate for the La Colorada deposit totals 8.86 million tonnes consisting of a measured resource of 5.5 million tonnes at 0.84 g/t Au, 9.99 g/t Ag, 1.12% Zn and 0.32% Pb, an indicated resource of 2.6 million tonnes at 0.80 g/t Au, 10.23 g/t Ag, 0.94% Zn and 0.35% Pb and an inferred resource of 0.8 million tonnes at 0.50 g/t Au, 8.62 g/t Ag, 0.48% Zn and 0.17% Pb (at a cut-off grade of 0.2 g/t Au) (refer Appendix 1; Table 5).

The La Colorada deposit, which occurs within the defi ned polymetallic belt, is hosted by a porphyry related breccia, and contains gold, silver, zinc, lead and copper mineralisation. The mineralisation displays a horizontal zonation, with gold, silver and lead grades showing a general increase in a northerly direction (over the strike extent of the mineralised zone), as opposed to copper grades which increase in a southerly direction. Zinc grades by comparison tend to be relatively consistent. From a depth perspective, the high grade zones invariably occur at depths of less than 300 metres below surface, and hence render the deposit amenable to open pit mining.

Planned Work Program

Following the completion of the October 2012 Mineral Resource Estimate, an internal scoping study is to be undertaken in 2013 to ascertain the economics of La Colorada as a polymetallic, open pit, mining operation using a metallurgical process that provides for a gravity circuit in combination with a conventional sulphide fl otation circuit. Further exploration work is planned on the broader project area to identify additional La Colorada type polymetallic occurrences based on the geological model developed.

==> picture [40 x 842] intentionally omitted <==

17

DIRECTORS’ REPORT continued

==> picture [173 x 26] intentionally omitted <==

The RC drilling intersected

Location

numerous narrow zones of less than 10 metres in width, comprising quartz veins and breccia’s within hydrothermally altered volcanic and intrusive rocks, characterised by the presence of anomalous precious and/or base metal mineralisation. Signifi cant mineralised intercepts included 4.6g/t gold over 2 metres from 289 metres in hole GR-06; 0.7g/t gold over 4 metres from 68 metres in hole GR-05; and 0.24% copper and 0.52% zinc over 11 metres from 61 metres in hole GR04.

The Camaron Project covers an area of approximately 100 square kilometres, and is located 40 kilometres to the north of the Vallecillo Project and 60 kilometres to the east of the port of La Serena at an altitude of 1,500 metres above mean sea level.

Exploration

The Camaron Project represents a large intensely altered (argillic/ chloritic/silicifi cation) porphyryrelated system, with several well developed gossans. The alteration zone has surface expression that covers an area of approximately 10 x 6 kilometres with a northwestsoutheast strike.

Having assessed the results, the Company decided that, while the drilling had successfully intersected and tested the likely cause for the geochemical and alteration anomalies evident at surface, the mineralisation style is unlikely to be amenable to bulk mining.

A reverse circulation (“RC”) drilling program comprising 12 drill holes (3,600 metres) was completed in the northern sector of the Camaron Project (“Genesis Licences”) in June 2012.

Accordingly the Company relinquished its option to acquire the Genesis Licences.

The drilling program was designed to confi rm the presence of subsurface mineralisation which resulted in the precious and base metal soil geochemical anomalies identifi ed by the Company in a prior exploration program. In particular, the area covered by the Genesis Licences was assessed to provide the Company with suffi cient information to make a decision with respect to the exercise of an option that allowed the Company to increase its interest in the Genesis Licences to 100% under the Genesis Joint Venture Agreement.

However, the remaining project area in which Metminco holds a 100% interest will be retained, and the coincidental copper and molybdenum soil geochemical anomalies identifi ed by previous exploration work, will be drill tested in the medium term.

==> picture [113 x 26] intentionally omitted <==

Location

The Isidro Project, which is located to the north of Vicuna, and north of the Camaron Project, covers an area of approximately 250 square kilometres, of which 230 square kilometres are 100% owned by Metminco and 20 square kilometres are held by SCM San Lorenzo (50% owned by Metminco). The project area occurs at an altitude of 2,000 to 3,000 metres above mean sea level.

Exploration

Isidro has been interpreted to be a large copper-gold stacked manto system, and has as yet to be drill tested. Surface geochemical sampling by Metminco has identifi ed extensive, well developed, copper-gold anomalism.

Further geological mapping and geochemical sampling of the project commenced in late 2012 and will continue into the fi rst half of 2013. This work will be used to defi ne drill targets with follow-up drilling being planned for later in 2013.

18 METMINCO LIMITED Annual Report 31 December 2012

==> picture [99 x 26] intentionally omitted <==

Location

The Loica Project covers an area of 35 square kilometres and is located approximately 100 kilometres to the southeast of Ovalle.

Exploration

Loica comprises a large coppermolybdenum porphyry system, approximately 4 kilometres in strike extent, with a north-south orientation. Metminco drilled the upper part of the Loica porphyry system in 2007, which returned signifi cant intercepts with low grade copper-molybdenum mineralisation.

Future exploration is warranted and will ultimately comprise mapping, geochemical sampling and geophysical surveys of the breccia zones as a prelude to possible further drill testing.

==> picture [178 x 20] intentionally omitted <==

Reconnaissance exploration activities are being planned for areas currently held under application over Caldera (42 square kilometres) in the Arica area of northern Chile, and Jaspe (14 square kilometres) in the Antofagasta area of northern Chile.

Following the completion and interpretation of extensive fi eld work, the decision was made to terminate the La Piedra Option Agreement in December 2012.

==> picture [40 x 842] intentionally omitted <==

19

DIRECTORS’ REPORT continued

APPENDIX 1: MINERAL RESOURCE ESTIMATES

Summarised below are the mineral resources that have been estimated by SRK Consulting (Chile) S.A. in accordance with the JORC Code (2004) for the Company’s most advanced projects, namely Los Calatos, Mollacas and Vallecillo (La Colorada deposit).

Los Calatos Project

Table 1: Mineral Resource Statement - resources to a vertical depth of 500 metres below surface, February 2013

==> picture [236 x 27] intentionally omitted <==

----- Start of picture text -----

RESOURCE CATEGORY TONNES Cu Mo CuEq
(million) % % %
----- End of picture text -----

Measured	121	0.35	0.027	0.47
Indicated	117	0.35	0.016	0.42
Total Measured	238	0.35	0.022	0.44
and Indicated
Inferred	66	0.40	0.006	0.43

Note:

• a) Reported at a cut-off of 0.15% CuEq. Rounding may result in minor discrepancies.

Table 2: Mineral Resource Statement - resources sub-500 metres below surface, February 2013

==> picture [235 x 26] intentionally omitted <==

----- Start of picture text -----

RESOURCE CATEGORY TONNES Cu Mo CuEq
(million) % % %
----- End of picture text -----

Measured	281	0.48	0.035	0.63
Indicated	485	0.52	0.022	0.61
Total Measured	766	0.51	0.027	0.62
and Indicated
Inferred	292	0.52	0.018	0.60

Mollacas Project

Table 3 Mineral Resource Statement, July 2012 (Total Project)

==> picture [235 x 27] intentionally omitted <==

----- Start of picture text -----

RESOURCE CATEGORY TONNES CuT Au
(million) % (g/t)
----- End of picture text -----

Measured	19.4	0.45	0.163
Indicated	9.4	0.34	0.162
Total Measured and	28.8	0.41	0.163
Indicated
Inferred	5.5	0.26	0.147

Table 4 Mineral Resource Statement, July 2012 (Copper Leach Project – Oxides & Secondary Sulphides)

RESOURCE CATEGORY	TONNES (million)	CuT %	Cu_Sol %	Au (g/t)
Measured	11.2	0.55	0.44	0.124
Indicated	4.3	0.41	0.29	0.138
Total Measured	15.5	0.51	0.40	0.128
and Indicated

Note:

• a) Reported at a cut-off of 0.20% copper. Rounding may result in minor discrepancies.

Note:

• a) Reported at a cut-off of 0.35% CuEq. Rounding may result in minor discrepancies.

Vallecillo Project (La Colorada deposit)

Table 5 Mineral Resource Statement, October 2012.

RESOURCE CATEGORY Measured	TONNES (million) 5.5	Au (g/t) 0.84	Ag (g/t) 9.99	Zn % 1.12	Cu % 0.06	Pb % 0.32
Indicated	2.6	0.80	10.23	0.94	0.07	0.35
Total Measured and Indicated	8.1	0.82	10.06	1.06	0.06	0.33
Inferred	0.8	0.50	8.62	0.48	0.12	0.17

Note:

• a) Reported at a cut-off of 0.2 g/t gold. Rounding may result in minor discrepancies.

20 METMINCO LIMITED Annual Report 31 December 2012

COMPETENT PERSON’S STATEMENT

Metminco

The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Colin Sinclair, BSc, MSc, who is a Member of the Australasian Institute of Mining and Metallurgy and is a full-time employee of the Company as Executive General Manager.

Colin Sinclair has suffi cient experience (over 30 years) which is relevant to the style of mineralisation, type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defi ned in the 2004 Edition of the Australasian Code for Reporting of Exploration Results . Mr Sinclair, as Competent Person for this report, has consented to the inclusion of the information in the form and context in which it appears herein.

SRK Consulting (Chile) S.A.

Metminco supplied SRK with a geological model and the drill data. Precious and base metal grades were estimated into a block model using ordinary kriging with GEMCOM software.

The information provided in this report as it relates to Exploration Results and Mineral Resources is based on information compiled by George G. Even, Principal Geologist of SRK Consulting in Santiago, Chile. Mr Even, a Qualifi ed Person for JORC compliant statements, reviewed the technical information presented in this document. Mr Ernesto Jaramillo, Principal Resource Geologist with SRK Santiago, performed the resource estimation. Mr Even has suffi cient experience that is relevant to the style of mineralisation and type of mineral deposit under consideration, and to the activity which was undertaken, to make the statements found in this report in the form and context in which they appear.

Mr Even and Mr Jaramillo have consented to be named in this report, and have approved of the inclusion of the information attributed to them in the form and context in which it appears herein.

NCL Ingeniería y Construcción Ltda

NCL was commissioned by Hampton Peru to develop a conceptual mining study for the Los Calatos copper - molybdenum project.

In accordance with Hampton Peru’s requirements, the work developed by NCL consisted of analysing diff erent alternatives for the exploitation of the deposit and to carry out, at a conceptual level, the design and mine planning of the selected option. Moreover, NCL calculated the operating costs and capital cost of the mining works, in addition to the capital costs for the process plant and infrastructure, using an estimation model of CAPEX and OPEX for fl otation plants.

The study was based on the block model and economic information provided by Hampton Peru, as well as NCL data from similar projects in the region. In the calculation of the economic resources, measured, indicated and inferred mineral resources were considered, with 23% of mineralised material reporting into the mining plan having been derived from inferred mineral resources.

NCL certifi es that the results reported by Hampton Peru correspond to those obtained by NCL in the conduct of the study.

The reader is cautioned that the mining study, which is an integral part of this report, is of a preliminary nature and includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorised as mineral reserves. There is no certainty that the preliminary economic assessment will be realised. No mineral reserves have been estimated.

NCL’s experience from a consultancy perspective has included block cave mining projects in Chile, Colombia, Papua New Guinea and Australia. The nature of the work conducted by them includes aspects such as mine design and planning, mining methods, material handling and infrastructure and has been conducted at levels varying from Conceptual Studies, through Scoping Studies to Pre-Feasibility Studies, and where required, detailed engineering design. Recent work undertaken by NCL has involved mining operations such as La Colosa (AngloGold Ashanti Colombia S.A.), Golpu (Newcest Mining Ltd.), El Teniente (Codelco) and Rosario Oeste (Cía Minera Doña de Collahuasi SCM), with historical involvement in projects the size of Chuquicamata (Codelco).

Forward Looking Statement

All statements other than statements of historical fact included in this report including, without limitation, statements regarding future plans and objectives of Metminco are forward-looking statements. When used in this report, forward-looking statements can be identifi ed by words such as ‘’anticipate”, “believe”, “could”, “estimate”, “expect”, “future”, “intend”, “may”, “opportunity”, “plan”, “potential”, “project”, “seek”, “will” and other similar words that involve risks and uncertainties.

These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this report, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, its directors and management of Metminco that could cause Metminco’s actual results to diff er materially from the results expressed or anticipated in these statements.

The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forwardlooking statements contained in this report will actually occur and investors are cautioned not to place undue reliance on these forwardlooking statements. Metminco does not undertake to update or revise forward-looking statements, or to publish prospective fi nancial information in the future, regardless of whether new information, future events or any other factors aff ect the information contained in this report, except where required by applicable law and stock exchange listing requirements.

==> picture [40 x 842] intentionally omitted <==

21

DIRECTORS’ REPORT continued

Corporate

the fi nancing and development of Los Calatos and to deliver real shareholder value in the long term.

Capital Raising

On 6 January 2012 the Company received gross funds of approximately A$10.3 million by issue of 73,864,286 new fully paid shares (Shares) in the Company. This issue was the second tranche of the A$40 million placement of 285,714,286 Shares to institutional investors in the United Kingdom, Australia, Asia and Chile at an issue price of A$0.14 per Share announced on 25 November 2011 and approved by shareholders at the Company’s Extraordinary General Meeting on 4 January 2012.

Rights Issue

The Rights Issue of one new share (New Share) at an off er price of A$0.14 per New Share for every twenty Shares held by Australian and New Zealand resident shareholders (Eligible Shareholders), announced 24 November 2011, closed on 3 January 2012 with 1,211,141 New Shares (approximately 2% of the Rights Issue off er) being subscribed for by Eligible Shareholders raising approximately A$0.2 million. The Directors resolved not to place the undersubscribed New Shares.

Expiry of Options

On 31 July 2012, 4,500,000 unlisted options exercisable at A$0.30 per fully paid ordinary share lapsed unexercised.

On 4 December 2012, 27,216,067 option at A$0.25 expired unexercised. 1,450 options were exercised raising A$362.50.

Signifi cant Changes in State of Aff airs

There are no signifi cant changes in the state of aff airs during the year other than as disclosed in this report.

Dividends paid or recommended

No dividends were paid or declared during the year by the Company. The Directors do not recommend paying a fi nal dividend for the year ended 31 December 2012.

Events subsequent to reporting date

Matters subsequent to the end of the fi nancial period follow:

• In January 2013, Metminco’s cash reserves increased to A$16.5 million (US$17.1 million) when Hampton Peru received A$2 million (US$2.1 million) relating to the recovery of VAT paid on Los Calatos expenditure incurred between 01 January 2012 and 30 June 2012.

• On 4 March 2013 Metminco announced the results of the Study on the Los Calatos copper project. The Preferred Mining Scenario comprises an open pit for 7 years at a strip ratio of 2.2:1 followed by an underground block cave mining operation for the remainder of the 31-year LoM with total material treated over the LoM being 656 million tonnes at 0.45% Cu and 0.026% Mo (0.56% CuEq), cash operating costs net of credits of US$1.09/lb and an initial pre-production capital expenditure of U$1.5 billion including initial underground development.

Cash Position and Funding

As at 31 December 2012, Metminco had cash reserves of A$14.5 million (US$15.0 million).

In January 2013, Metminco’s cash reserves increased to A$16.5 million (US$17.1 million) when Hampton Peru received A$2 million (US$2.1 million) relating to the recovery of VAT paid on Los Calatos expenditure incurred between 01 January 2012 and 30 June 2012. Hampton Peru anticipates that during 2013 it will recover in excess of A$1.5 million (US$1.6 million) relating to the recovery of VAT paid on Los Calatos expenditure incurred between 1 July 2012 and 31 December 2012.

With cash on hand of US$17.1 million in January 2013 and the robust results from the Los Calatos Study announced in March 2013, Metminco is in a position to consider a range of strategic options in relation to

Likely future developments

The Group will continue exploration activities and further advancement of mineralised deposits in Chile and Peru, focussing primarily on advancing the Los Calatos Project.

Environmental regulations

The Group’s operations are subject to signifi cant environmental regulation under the laws of Australia, Chile and Peru. The Directors are not aware of any breaches of the legislation during the year that are material in nature.

In Chile the Environmental Act provides a framework for environmental policy and in Peru environmental policy is governed by the Environmental Regulation for Mining Exploration Projects (Supreme Decree N 020-200-EM).

22 METMINCO LIMITED Annual Report 31 December 2012

Information on Directors

Antonio Ortúzar Non Executive Chairman QUALIFICATIONS University Gabriela Mistral (LLB) EXPERIENCE Appointed as the Chairman on 16 March 2011. Antonio, is a senior partner of Cruzat, Ortúzar & Mackenna Ltda, a member of Baker & McKenzie International, one of the leading law fi rms in Chile. He is also the joint coordinator of the Latin America Energy, Mining, Chemicals and Infrastructure Group. Antonio’s experience includes international joint ventures, project fi nancing, foreign investments, corporate and commercial arrangements, as well as major mining infrastructure projects, mining and telecommunications. He has been involved in the placement of shares in the Chilean stock market, ADRs in the New York Stock Exchange and IPOs in Australia and Canada. Antonio also handles the issuing of bonds, various mining infrastructure issues, and energy and water projects in Chile. He also serves as assistant professor of economic law at Finis Terrae University in Santiago, and is a member of the Chilean Bar Association. He is a former vice president of the Australian-Chilean Chamber of Commerce. Mr Ortúzar is a director of Atacama Pacifi c Corporation, a TSX listed company and Baker & McKenzie LLP. INTEREST IN SHARES A related party holds 6,400,000 ordinary shares in Metminco Limited and 5,000,000 options to acquire AND OPTIONS shares. SPECIAL Chairman of the Safety, Health and Sustainable Development Committee. RESPONSIBILITIES William Howe Managing Director QUALIFICATIONS B.Sc. FAusIMM EXPERIENCE Appointed as a Director on 17 July 2009 and Managing Director on 8 December 2010. Mr Howe, the founder of Hampton Mining Limited, has over 30 years experience in the mining industry and has worked in Southern and West Africa, Asia, Australia and the USA. He has been instrumental in the development of a number of new mining operations in Australia and Indonesia including the development and management of the fi rst copper heap leach project in Australia, and an open pit coal mine in South East Kalimantan in Indonesia. He specialises in optimising existing operations and the development of new operations in both underground and open pit mining environments and has extensive experience in mine development, mine management and corporate management. He has worked in many geological and mining environments in several countries around the world and in such commodities as gold, coal, copper, uranium, antimony, chrome and tin. Mr Howe was a founding director of Straits Resources Limited and was Managing Director of Ghana Gold Mines Limited, Hargraves Resources NL,Selwyn Mines Limited and Hampton Mining Limited. INTEREST IN SHARES 48,735,095 ordinary shares in Metminco Limited. AND OPTIONS Phillip Wing Non Executive Director QUALIFICATIONS PhD, MEc, BEc, CPA EXPERIENCE Appointed on 17 July 2009, Dr Wing is the Executive Chairman of a number of special purpose private equity fi rms. He is currently Chairman or non executive Director of six investee companies ranging from mining to medical devices. Until January 2006, Phillip was for 7 years a partner of Technology Venture Partners (TVP), a specialist Institutional Information Technology and Telecommunications venture capital fi rm, and was an active non-executive director on many of TVP’s portfolio companies in Australia and overseas. Prior to joining TVP, Phillip was a senior executive in IBM’s global and Asia Pacifi c management team. He held responsibility for a major industry business unit in Asia and was also General Manager of the IBM (Australia and New Zealand) consulting business. His last role in IBM was as General Manager (Global Services) responsible for strategy, marketing and business development including acquisitions, alliances and business partners. Prior to his career at IBM, Phillip was a partner at Ernst and Young, KPMG Peat Marwick and Touche Ross, specializing in strategy and IT and corporate advisory consulting. Phillip held managing partner roles responsible for the consulting business units and spent two years on secondment as the Chief Information Offi cer of NSW Health. Phillip has worked extensively in the USA, Asia, and Europe. He has a Bachelor and Masters of Economics and has completed a PhD in Organisational Change. He is a member of the Institute of Chartered Accountants, and also an adjunct lecturer with the Centre for Applied Finance (Macquarie University). INTEREST IN SHARES 15,893,336 ordinary shares in Metminco Limited. AND OPTIONS SPECIAL Member of the Audit and Risk Committee. RESPONSIBILITIES

==> picture [40 x 842] intentionally omitted <==

23

DIRECTORS’ REPORT continued

William Etheridge Non Executive Director

QUALIFICATIONS	B.Eng, MA (Economics, Cantab)
EXPERIENCE	Appointed on 17 July 2009. Mr Etheridge has over 35 years experience in the mining and mining f nance
	industry, based mainly in Sydney and London. He worked as a mining engineer with Hamersley Iron, and
	as an economist / business development executive for mining companies in London (Consolidated Gold
	Fields) and Sydney (Renison Goldf elds Consolidated). He has also since worked within mining companies
	(including Hargraves Resources and Selwyn Mines Limited) focusing on mining project scoping,
	analysis and appraisal, valuation of internal and external opportunities, cut-of grade analysis, project
	administration, preparation of company reports and investor relations. He also worked in stockbroking
	(including Merrill Lynch, ABS White and HSBC James Capel) as a resource analyst, covering a range of
	mining companies, and including experience in equity raising. He has consulted on mining investment
	opportunities in coal, gold and base metals and has undertaken detailed analysis of a number of mineral
	commodities.
INTEREST IN SHARES	62,205,931 ordinary shares in Metminco Limited.
AND OPTIONS
SPECIAL	Member of the Safety, Health and Sustainable Development Committee.
RESPONSIBILITIES
Timothy Read	Non Executive Director
QUALIFICATIONS	BA (Economics), Fellow of the Chartered Institute for Securities and Investment
EXPERIENCE	Appointed on 1 April 2010, Tim has over forty years experience in the mining and metals sector, f rst
	as a mining analyst, then as an investment banker and, most recently, as a corporate executive and
	director. Between 1995 and 1999, he was Managing Director and Global Co-Head of Mining and Metals
	Investment Banking for Merrill Lynch Inc. and accordingly has extensive experience in all aspects of
	corporate f nance, particularly M&A and equity capital markets. Between 1999 and 2006, he was the
	chief executive of Adastra Minerals Inc (acquired by First Quantum Minerals in 2006) and since then has
	acted as a non-executive director for several natural resource companies including Cumerio SA (acquired
	by Norddeutsche Af nerie in 2008), Kopane Diamond Developments (until December 2009), Starf eld
	Resources Inc. and Faroe Petroleum plc. Tim is also a Director of Capital Drilling Limited, a company listed
	on the London Stock Exchange.
INTEREST IN SHARES	1,000,000 ordinary fully paid shares in Metminco Limited and 8,000,000 options to acquire shares.
AND OPTIONS
SPECIAL	Chairman of the Audit and Risk and Remuneration and Nomination committees.
RESPONSIBILITIES
Francisco	Non Executive Director
Vergara-Irarrazaval
QUALIFICATIONS	Law Degree from the Catholic University of Chile. Fulbright Scholar and undertook graduate studies in
	the Institute of International and Foreign Trade Law of Georgetown University, Washington D.C. and at the
	Law School of Cornell University, Ithaca, New York.
EXPERIENCE	Appointed on 1 April 2010, Francisco has over 30 years experience in the mining industry in Chile and
	other Latin American countries where he was Vice President of Compañia Minera El Indio and Compañia
	Minera San José, subsidiaries of St. Joe Minerals Corporation until 1991. In 1991, he established Vergara
	& Cia, Law Firm, providing legal services to dif erent mining companies and international engineering
	f rms focused in natural resources, energy, shipping and agriculture.Vergara has also acted for foreign
	governments through their embassies in Chile and as Director of listed companies and Chairman and
	Director of a number of unlisted companies.
INTEREST IN SHARES	50,140,000 ordinary shares in Metminco Limited.
AND OPTIONS
SPECIAL	Member of the Audit and Risk, Remuneration and Nomination, and Safety, Health and Sustainable
	Development Committees.

24 METMINCO LIMITED Annual Report 31 December 2012

Company Secretary

Philip Killen Chief Financial Offi cer/Company Secretary

QUALIFICATIONS B.Maths/B.Commerce, CPA

Appointed as the Secretary on 31 October 2009. Mr Killen is a fi nance professional with over 17 years experience in the mining and exploration sector as principal of CPK Consulting and prior to that in various senior executive roles, including Financial Controller of Plutonic Resources Limited and Chief Financial Offi cer of Otter Gold Mines Limited. Previously he was with the Caltex Group for over 10 years in various senior fi nance, audit and technology roles located in Australia and overseas. His experience includes fi nancial modeling to support bankable feasibility studies, development of funding strategies, treasury, statutory and ASX compliance reporting, and implementation of commercial systems. 4,344,836 ordinary shares in Metminco Limited and 5,000,000 options to acquire shares.

EXPERIENCE

INTEREST IN SHARES AND OPTIONS

Meetings of the Board

The Board of Directors held 6 meetings during the year ended 31 December 2012. Attendances of Directors at these meetings are shown in the table below:

meetings are shown in the table below:
DIRECTOR	MEETINGS ATTENDED	ELIGIBLE TO ATTEND BOARD MEETINGS
Antonio Ortúzar	5	6
Phillip Wing	6	6
William Howe	6	6
William Etheridge	5	6
Timothy Read	6	6
Francisco Vergara-Irarrazaval	6	6

Meetings of Board Committees

The number of board committee meetings held and the number of meetings attended by each director (who are members of board committees) during the year ended 31 December 2012 were as follows:

				REMUNERATION AND	REMUNERATION AND	SAFETY, HEALTH AND SUSTAINABLE	SAFETY, HEALTH AND SUSTAINABLE
	AUDIT AND RISK COMMITTEE		NOMINATION		COMMITTEE	DEVELOPMENT	COMMITTEE
	MEETINGS	ELIGIBLE TO	MEETINGS		ELIGIBLE TO	MEETINGS	ELIGIBLE TO
DIRECTOR	ATTENDED	ATTEND	ATTENDED		ATTEND	ATTENDED	ATTEND
Timothy Read	4	4	1		1	–	–
Francisco Vergara-Irarrazaval	4	4	1		1	1	1
Phillip Wing	4	4	–		–	–	–
William Etheridge	–	–	–		–	1	1
Antonio Ortúzar	–	–	–		–	1	1

Indemnifi cation of Directors and Offi cers

Under the provisions of the Constitution of the Company every offi cer (and former offi cer) of the Company is indemnifi ed, to the extent permitted by law, against all costs expenses and liabilities incurred as such an offi cer providing it is in respect of a liability to another person (other than the Company or a related body corporate) where such liability does not arise out of conduct involving a lack of good faith and is in respect of a liability for costs and expenses incurred in defending proceedings in which judgment is given in favour of the offi cer or in which the offi cer is acquitted or is granted relief under the Law.

The Company has paid premiums to insure the Directors and Offi cers against liabilities for costs and expenses incurred by them in defending legal proceedings arising from their conduct while acting in their capacity as offi cers of the Company other than conduct involving a wilful breach of duty in relation to the Company. The premiums amounted to A$21,768 for the year ended 31 December 2012 (for the year ended 31 Dec 2011: A$28,447).

Indemnifi cation of Auditors

No indemnities have been given or insurance premiums paid, during or since the end of the fi nancial year, for any person who is or has been an auditor of the Company.

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25

DIRECTORS’ REPORT continued

Options

At the date of this report, the unissued ordinary shares of Metminco Limited under option are as follows: Unlisted options

GRANT DATE	DATE OF EXPIRY	EXERCISE PRICE	NUMBER UNDER OPTION
30 December 2010	06 December 2013	$0.44	14,250,000
30 December 2010	06 December 2013	$0.525	14,250,000
30 December 2010	06 December 2013	$0.44	2,000,000
30 December 2010	06 December 2013	$0.525	2,000,000
05 December 2011	05 December 2014	$0.215	2,500,000
05 December 2011	05 December 2014	$0.260	2,500,000
15 June 2012	15 June 2015	$0.175	2,000,000
15 June 2012	15 June 2015	$0.210	2,000,000
			41,500,000

Option holders do not have any right to participate in any issues of shares or other interests in the Company or any other entity. There have been no unissued shares or interests under option of any controlled entity within the Group during the reporting period. For details of options issued to directors and executives as remuneration, refer to the Remuneration Report.

Non-audit services

The Board of Directors is satisfi ed that the provision of non-audit services during the half year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfi ed that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

• all non-audit services are reviewed prior to commencement to ensure they do not adversely aff ect the integrity and objectivity of the auditor; and

• 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 Grant Thornton for non-audit services provided during the year ended 31 December 2012:

r 2012:
	$
Advisory services regarding payroll tax disclosure	1,637
	1,637

Auditor’s Independence Declaration

The lead auditors’ independence declaration as required under section 307C of the Corporations Act 2001 for the year ended 31 December 2012 is set out on page 31.

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 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.

26 METMINCO LIMITED Annual Report 31 December 2012

REMUNERATION REPORT (audited)

Remuneration Policy

The remuneration policy of Metminco has been designed to align remuneration arrangements with strategic business objectives, empowering employees by diff erentiating top performers, whilst achieving simplicity and transparency in the design and communication of remuneration. Key management personnel are provided with a fi xed remuneration component and specifi c long-term incentives based on key performance areas aff ecting the Company’s fi nancial results. The Board of Metminco believes the remuneration policy to be appropriate and eff ective in its ability to attract and retain the best key management personnel to run and manage the Company, as well as create goal congruence between directors, executives and shareholders.

The Board’s policy for determining the nature and amount of remuneration for key management personnel of the Company is as follows:

• The remuneration policy is to be developed by the Remuneration and Nomination Committee and approved by the Board. The overriding responsibility of the Remuneration and Nomination Committee is to create the remuneration policies and practices that achieve the best value for shareholders. Pay and incentives have to be set at the right level to attract and retain good management and to fully incentivise outstanding management performance, but at levels that are in line with the sector in general, and that provide a fair return to shareholders.

• The Remuneration and Nomination Committee reviews key management personnel packages annually by reference to the Group´s performance, executive performance and comparable information from industry sectors. For the purposes of assessing the appropriate level of executive remuneration, the Remuneration and Nomination Committee references the McDonald & Company independent remuneration reports on the resources sector companies. The McDonald & Company reports are considered the most relevant source of comparator information as it comprises organisations broadly comparable to Metminco. Additional references are also made to other relevant supplementary comparator groups.

The performance of key management personnel is measured against criteria agreed with each executive. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the Committee’s recommendations. The policy is designed to attract the highest calibre of executives and reward them for performance results leading to long-term growth in shareholder wealth.

Key Australian resident management personnel receive a superannuation guarantee contribution required by the Superannuation Guarantee legislation, and do not receive any other retirement benefi ts.

Upon retirement, key management personnel are paid employee benefi t entitlements accrued to the date of retirement. All remuneration paid to key management personnel is valued at the cost to the Company and expensed.

The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Remuneration and Nomination Committee determines payments to the Non-Executive Directors and reviews their remuneration annually, based on the McDonald & Company reports, market practice, duties and accountability.

In April 2012 the Company retained McDonald & Company to provide a special report on Non-Executive Directors among comparable organisations in the Australian metalliferous mining industry. The report which was completed mid May 2012 concluded that “the remuneration of the non-executive directors appears to be below market expectations for a company of Metminco’s size”. McDonald & Company were paid $9,500 for the report. The Board is satisfi ed the remuneration recommendation is free from undue infl uence by the members or members of key management personnel.

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at the Annual General Meeting.

There is currently no relationship between remuneration and the entity’s performance due to the exploration phase of the entity.

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27

DIRECTORS’ REPORT continued

REMUNERATION REPORT continued

Performance-based Remuneration

As approved by shareholders at the Company’s annual general meeting on 31 May 2012, the Company granted options to Antonio Ortuzar and Timothy Read in recognition of their respective contributions to Metminco to date and to provide an incentive by participating in the future growth and prosperity of the Company through share ownership. The combination of higher exercise price and long dated options were designed to incentivise the Directors to perform for the longer term. The Company did not pay performance based remuneration to other non executive directors during 2012.

The Company has not provided performance based remuneration to the executive director during the period.

Employment Details of Members of Key Management Personnel and Other Executives

The following table provides employment details of persons who were, during the year, members of key management personnel of the Group. The table also illustrates the proportion of remuneration that was performance and non-performance based and the proportion of remuneration received in the form of options.

			PROPORTIONS OF ELEMENTS OF	PROPORTIONS OF ELEMENTS OF
		PROPORTIONS OF ELEMENTS	REMUNERATION NOT RELATED TO
		OF REMUNERATION RELATED TO PERFORMANCE	PERFORMANCE
POSITION HELD AS AT	CONTRACT DETAILS	NON-SALARY
31 DECEMBER 2012 AND	(DURATION AND	CASH-BASED	FIXED SALARY/
ANY CHANGE DURING THE YEAR	TERMINATION)	INCENTIVES SHARES/UNITS OPTIONS/RIGHTS	FEES	TOTAL
		% % %	%	%
Group Key Management Personnel Antonio Ortúzar Chairman	No written contract	– – 48	52	100
William Howe Managing Director	Written contract	– – –	100	100
	(6 months’ notice)
Phillip Wing Non Executive Director	No written contract	– – –	100	100
William Etheridge Non Executive Director	No written contract	– – –	100	100
Tim Read Non Executive Director	No written contract	– – 41	59	100
Francisco Vergara- Non Executive Director	No written contract	– – –	100	100
Irarrazaval Philip Killen CFO and Company	Written contract	– – –	100	100
Secretary	(6 months’ notice)
Colin Sinclair Executive General	Written contract	– – –	100	100
Manager	(6 months’ notice)
Stephen Tainton General Manager	Written contract	– – –	100	100
Investor Relations	(6 months’ notice)
Gavin Daneel General Manager	Written contract	– – –	100	100
Exploration	(6 months’ notice)

The employment terms and conditions of key management personnel are usually formalised in contracts of employment.

Terms of employment require that the relevant group entity provide an executive with their contractual entitlements.

A contracted person employed on a permanent basis may terminate their employment in accordance with their contract by giving three month’s prior written notice. Termination payments are not payable on resignation or under the circumstances of unsatisfactory performance.

Non Executive Directors are not subject to contracts. Termination payments are at the discretion of the Board.

28 METMINCO LIMITED Annual Report 31 December 2012

Changes in Directors and Executives Subsequent to 31 December 2012

There were no changes in Directors or Executives subsequent to 31 December 2012.

Remuneration Details for the year ended 31 December 2012

The following table of benefi ts and payments, in respect to the fi nancial year details, the components of remuneration for each member of the key management personnel of the Consolidated Group:

==> picture [485 x 496] intentionally omitted <==

----- Start of picture text -----

EQUITY-SETTLED
POST-EMPLOYMENT LONG-TERM SHARE-BASED
SHORT-TERM BENEFITS BENEFITS BENEFITS PAYMENTS
CASH-
PENSION SETTLED
PROFIT AND SHARE- TERMIN-
SALARY, FEES SHARE AND NON- HOUSING SUPER- INCENTIVE SHARES/ OPTIONS/ BASED ATION
AND LEAVE BONUSES MONETARY ALLOWANCE ANNUATION OTHER PLANS LSL UNITS RIGHTS PAYMENTS BENEFITS TOTAL
$ $ $ $ $ $ $ $ $ $ $ $ $
Group Key Management Personnel
Antonio Dec 2012 100,000 – – – – – – – – 92,920 – – 192,920
Ortúzar
Dec 2011 97,917 – – – – – – – – – – – 97,917
William Howe Dec 2012 450,000 – – 54,382 – – – – – – – – 504,382
Dec 2011 450,000 225,000 – 55,435 – – – – – – – – 730,435
Phillip Wing Dec 2012 191,479 – – – – – – – – – – – 191,479
Dec 2011 256,376 107,500 – – – – – – – – – – 363,876
William Dec 2012 101,095 – – – – – – – – – – – 101,095
Etheridge Dec 2011 208,624 107,500 – – 8,876 – – – – – – – 325,000
Tim Read Dec 2012 132,953 – – – – – – – – 92,920 – – 225,873
Dec 2011 123,103 – – – – – – – – – – – 123,103
Francisco Dec 2012 75,000 – – – – – – – – – – – 75,000
Vergara-
Irarrazaval Dec 2011 75,000 – – – – – – – – – – – 75,000
Philip Killen Dec 2012 250,000 – – – 50,000 – – – – – – – 300,000
Dec 2011 275,000 – – – 12,385 – – – – 40,717 – – 328,102
Colin Sinclair Dec 2012 350,000 – – – – – – – – – – – 350,000
Dec 2011 300,000 – – – – – – – – 40,717 – – 340,717
Keith Weston Dec 2012 – – – – – – – – – – – – –
Dec 2011 175,000 – – – – – – – – – – – 175,000
Stephen Dec 2012 266,909 – – – 33,091 – – – – – – – 300,000
Tainton Dec 2011 200,000 – – – – – – – – 81,434 – – 281,434
Gavin Daneel Dec 2012 300,000 – – 34,944 – – – – – – – – 334,944
Dec 2011 300,000 – – 40,515 – – – – – 40,717 – – 381,232
John Fillmore Dec 2012 – – – – – – – – – – – – –
Dec 2011 25,000 – – – – – – – – – – 75,000 100,000
Total Key Dec 2012 2,217,436 – – 89,326 83,091 – – – – 185,840 – – 2,575,693
Management Personnel Dec 2011 2,486,020 440,000 – 95,950 21,261 – – – – 203,585 – 75,000 3,321,816
----- End of picture text -----

Securities received that are not performance-related

No members of key management personnel are entitled to receive securities which are not performance-based as part of their remuneration package.

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29

DIRECTORS’ REPORT continued

Cash bonuses, performance-related bonuses and share-based payments

Executive directors and senior executives may be eligible to participate in an annual bonus based on performance of the Company and the executive’s contribution thereto, as determined by the Remuneration Committee. The Company has not paid bonuses to executive directors and senior executives in 2012 but has granted options to nonexecutive directors as mentioned above and detailed below.

Options and Rights issued, granted and exercised

The Company issued options to non-executive directors under terms and conditions set out in the Employee Share Option Plan as follows:

Antonio Ortuzar:

• 1,000,000 options exercisable at A$0.175 per share no later than 15 June 2015 in accordance with the rules of the Company’s Employee Option Plan. Grant date of 15 June 2012.

• 1,000,000 options exercisable at A$0.210 per share no later than 15 June 2015 in accordance with the rules of the Company’s Employee Option Plan. Grant date of 15 June 2012.

Timothy Read:

• 1,000,000 options exercisable at A$0.175 per share no later than 15 June 2015 in accordance with the rules of the Company’s Employee Option Plan. Grant date of 15 June 2012.

• 1,000,000 options exercisable at A$0.210 per share no later than 15 June 2015 in accordance with the rules of the Company’s Employee Option Plan. Grant date of 15 June 2012.

The full value of the options have been included in employee and director’s benefi ts expense in the statement of comprehensive income. The options have been valued using the Binomial method assuming the options are transferrable, a share price of $0.115 (based on the Company’s share price as at 14 June 2012), interest rate of 2.32%, 80% volatility, the terms of the options and a maximum option life to 15 June 2015. The options are not transferrable, the expiry date is contingent on a number of terms and conditions set out in the Employee Share Option Plan and the holder will only realise a benefi t through exercise of the options. The options to Non-Executive directors were not based on a service condition.

There were no other options or rights issued or granted to directors and employees, or exercised by directors and employees during the year.

Voting and comments made at the company’s 2011 Annual General Meeting (AGM)

The Company received 83% “For” votes on its remuneration report for the 2011 fi nancial year. No other specifi c feedback was received at the AGM on its remuneration report.

This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.

==> picture [91 x 56] intentionally omitted <==

William Howe Managing Director

25 March 2013

Sydney

30 METMINCO LIMITED Annual Report 31 December 2012

AUDITOR’S INDEPENDENCE DECLARATION to the Directors of Metminco Limited

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31

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2012

NOTE Revenue Other income 2 Fair value loss on convertible notes Fair value adjustment on equity swap Finance costs Foreign exchange gain/(loss) Administration expenses Corporate expenses Occupancy expense Exploration and evaluation expenditure impaired 15 Loss before income tax 4 Income tax expense Loss for the year Other comprehensive income Exchange dif erences on translating foreign controlled entities (net of tax) Total comprehensive loss for the year Loss for the year attributable to members of the parent entity Total comprehensive loss attributable to members of the parent entity From continuing operations: Basic loss per share (cents) 7 Diluted loss per share 7	CONSOLIDATED GROUP 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 336,988 350,909 – (66,649) (233,382) (1,029,297) (316,573) (560,005) (654,452) 317,596 (4,003,895) (4,599,382) (1,993,210) (2,675,082) (507,487) (462,248) (4,540,887) (53,148)
	(11,912,898) (8,777,306) – –
	(11,912,898) (8,777,306)
	(986,163) (928,552)
	(12,899,061) (9,705,858)
	(11,912,898) (8,777,306)
	(12,899,061) (9,705,858)
	(0.68) (0.63) (0.68) (0.63)

The fi nancial statements should be read in conjunction with the accompanying notes

32 METMINCO LIMITED Annual Report 31 December 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2012

NOTE ASSETS Current assets Cash and cash equivalents 8 Trade and other receivables 9 Derivative f nancial instrument 9 Other assets 10 Total current assets Non-current assets Trade and other receivables 9 Investments accounted for using equity method 11 Property, plant and equipment 14 Exploration and evaluation expenditure 15 Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables 16 Short term provisions 17 Total current liabilities Non-current liabilities Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 18 Reserves 27 Accumulated losses TOTAL EQUITY	CONSOLIDATED GROUP 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 14,484,097 44,030,949 3,756,276 2,402,416 – 109,613 53,266 14,495
	18,293,639 46,557,473
	4,374,785 3,515,405 2,891,734 2,947,726 3,740,442 3,589,445 205,359,513 183,840,162
	216,366,474 193,892,738
	234,660,113 240,450,211
	1,254,750 4,167,824 345,394 216,805
	1,600,144 4,384,629
	– –
	1,600,144 4,384,629
	233,059,969 236,065,582
	317,607,678 307,900,070 (41,515,733) (40,715,410) (43,031,976) (31,119,078)
	233,059,969 236,065,582

The fi nancial statements should be read in conjunction with the accompanying notes

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33

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2012

ISSUED CAPITAL ACCUMULATED LOSSES OPTION RESERVE FOREIGN CURRENCY TRANSLATION RESERVE ACQUISITION RESERVE $ $ $ $ Consolidated Group Total equity as at 1 January 2011 196,501,824 (22,341,772) 3,032,656 (1,516,437) (41,506,662) Loss attributable to members of the parent entity – (8,777,306) – – – Other comprehensive income – – – (928,552) – Total comprehensive loss – (8,777,306) – (928,552) – Options issued to directors and employees and service providers – – 203,585 – – Shares issued during the period 115,342,535 – – – – Transaction costs (3,944,289) – – – – Balance as at 31 December 2011 307,900,070 (31,119,078) 3,236,241 (2,444,989) (41,506,662) Total equity as at 1 January 2012 307,900,070 (31,119,078) 3,236,241 (2,444,989) (41,506,662) Loss attributable to members of the parent entity – (11,912,898) – – – Other comprehensive income – – – (986,163) – Total comprehensive loss – (11,912,898) – (986,163) – Options issued to directors and employees and service providers – – 185,840 – – Shares issued during the period 10,962,791 – – – – Transaction costs (1,255,183) – – – – Balance as at 31 December 2012 317,607,678 (43,031,976) 3,422,081 (3,431,152) (41,506,662)	ISSUED CAPITAL ACCUMULATED LOSSES OPTION RESERVE FOREIGN CURRENCY TRANSLATION RESERVE ACQUISITION RESERVE $ $ $ $ Consolidated Group Total equity as at 1 January 2011 196,501,824 (22,341,772) 3,032,656 (1,516,437) (41,506,662) Loss attributable to members of the parent entity – (8,777,306) – – – Other comprehensive income – – – (928,552) – Total comprehensive loss – (8,777,306) – (928,552) – Options issued to directors and employees and service providers – – 203,585 – – Shares issued during the period 115,342,535 – – – – Transaction costs (3,944,289) – – – – Balance as at 31 December 2011 307,900,070 (31,119,078) 3,236,241 (2,444,989) (41,506,662) Total equity as at 1 January 2012 307,900,070 (31,119,078) 3,236,241 (2,444,989) (41,506,662) Loss attributable to members of the parent entity – (11,912,898) – – – Other comprehensive income – – – (986,163) – Total comprehensive loss – (11,912,898) – (986,163) – Options issued to directors and employees and service providers – – 185,840 – – Shares issued during the period 10,962,791 – – – – Transaction costs (1,255,183) – – – – Balance as at 31 December 2012 317,607,678 (43,031,976) 3,422,081 (3,431,152) (41,506,662)	TOTAL $ 134,169,609 (8,777,306) (928,552)
		(9,705,858) 203,585 115,342,535 (3,944,289)
		236,065,582
		236,065,582 (11,912,898) (986,163)
	– (11,912,898) – (986,163) – – – 185,840 – – 10,962,791 – – – – (1,255,183) – – – –	(12,899,061) 185,840 10,962,791 (1,255,183)
	317,607,678 (43,031,976) 3,422,081 (3,431,152) (41,506,662)	233,059,969

The fi nancial statements should be read in conjunction with the accompanying notes

34 METMINCO LIMITED Annual Report 31 December 2012

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2012

NOTE Cash f ows from operating activities Payments to suppliers and employees Interest received Finance costs paid Net cash used in operating activities 23(b) Cash f ows from investing activities Purchase of plant and equipment Purchase of land Payments for exploration expenditure Payment for subsidiaries net of cash acquired 23(c) Net cash used in investing activities Cash f ows from f nancing activities Proceeds from issue of shares Payments in respect to capital raisings Proceeds from equity swap Net cash provided by f nancing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of the year/period Ef ect of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at the end of the year/period 23(a)	CONSOLIDATED GROUP 31 DECEMBER 2012 31 DECEMBER 2011 $ $ (6,552,906) (6,554,301) 400,043 412,312 (21,419) (92,500)
	(6,174,282) (6,234,489)
	(370,790) (704,748) (90,725) (2,364,254) (32,243,012) (18,902,274) – (10,144,361)
	(32,707,527) (32,115,637)
	10,510,888 60,058,905 (1,255,183) (3,944,289) 735,415 2,854,740
	9,991,120 58,969,356
	(28,887,689) 20,619,230 44,030,949 23,189,432 (659,163) 222,287
	14,484,097 44,030,949

The fi nancial statements should be read in conjunction with the accompanying notes

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35

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This fi nancial report includes the consolidated fi nancial statements and notes of Metminco Limited and controlled entities (“Consolidated Group” or “Group”) for the full year ended 31 December 2012.

Basis of preparation

The fi nancial report is a general purpose fi nancial report which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

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

The fi nancial report has been prepared on an accruals basis and is based on historical costs, modifi ed, where applicable, by the measurement at fair value of selected non-current assets, fi nancial assets and fi nancial liabilities. The fi nancial statements were authorised for issue by the directors on 25 March 2013.

a. Going concern basis of accounting

The Consolidated Group has made a loss for the year. Metminco is an exploration Company currently without an operating cash fl ow and the net cash position of the Group will continue to decrease until such time as the Group has an operating cashfl ow. The directors are satisfi ed that the Company and Group have suffi cient cash reserves to maintain its current portfolio and meet its debts as and when they fall due. Therefore these fi nancial statements have been prepared on a going concern basis.

b. Principles of Consolidation

The consolidated fi nancial statements incorporate the assets, liabilities and results of entities controlled by Metminco at the end of the reporting period. A controlled entity is any entity over which Metminco has the power to govern the fi nancial and operating policies so as to obtain benefi ts from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and eff ect of holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the Group during the year, the fi nancial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 13 to the fi nancial statements.

In preparing the consolidated fi nancial statements, all inter-group balances and transactions between entities in the Consolidated Group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are shown separately within the Equity section of the consolidated Statement of Financial Position and Statement of Comprehensive Income. The noncontrolling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date.

36 METMINCO LIMITED Annual Report 31 December 2012

c. Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identifi ed as the acquirer (ie parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifi able assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured.

The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate fi nancial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

Fair value uplifts in the value of pre-existing equity holdings are taken to the profi t and loss. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profi t or loss. Acquisitions of non-controlling interests in a subsidiary are accounted for as an equity transaction. The carrying amount of the controlling and non-controlling interests shall be adjusted to refl ect the changes in their relative interests in the subsidiary. Any diff erence between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received shall be recognised directly in equity and attributed to the owners of the parent.

All transaction costs incurred in relation to the business combination are expensed to the profi t and loss.

d. Income Tax

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

Current income tax expense charged to the profi t or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. 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 refl ects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Changes in deferred tax assets or liabilities are recognised as a component or tax income or expense in profi t and loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity.

Deferred tax assets and liabilities are ascertained based on temporary diff erences arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial 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 eff ect on accounting or taxable profi t or loss.

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 the end of the reporting period. Their measurement also refl ects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary diff erences and unused tax losses are recognised only to the extent that it is probable that future taxable profi t will be available against which the benefi ts of the deferred tax asset can be utilised.

Where temporary diff erences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary diff erence can be controlled and it is not probable that the reversal will occur in the foreseeable future.

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37

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued

Current tax assets and liabilities are off set where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are off set where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or diff erent taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which signifi cant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

e. Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash fl ows that will be received from the asset’s employment and subsequent disposal. The expected net cash fl ows have been discounted to their present values in determining recoverable amounts.

The cost of property and plant constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fi xed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profi t or loss during the fi nancial period in which they are incurred.

Depreciation

The depreciable amount of all fi xed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

CLASS OF FIXED ASSET	DEPRECIATION RATE
Land	Nil
Plant and equipment	20% to 33%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in profi t or loss. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.

f. Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifi able 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 that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profi t and loss 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.

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

38 METMINCO LIMITED Annual Report 31 December 2012

g. Leases

Leases of assets where substantially all the risks and benefi ts incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the consolidated group are classifi ed as fi nance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefi ts remain with the lessor, are charged as expenses on a straight-line basis over the period of the lease.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

h. Financial Instruments

Recognition and initial measurement

Financial assets and fi nancial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For fi nancial assets, this is equivalent to the date that the Company commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classifi ed “at fair value through profi t or loss”, in which case transaction costs are expensed to profi t or loss immediately.

Classifi cation and subsequent measurement

Financial instruments are subsequently measured at either of fair value, amortised cost using the eff ective 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. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

• a. the amount at which the fi nancial asset or fi nancial liability is measured at initial recognition;

• b. less principal repayments;

• c. amount initially recognised and the maturity amount calculated using the eff ective interest method ; and

• d. less, for fi nancial assets, any reduction for impairment.

The eff ective 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 fi nancial instrument to the net carrying amount of the fi nancial asset or fi nancial liability. Revisions to expected future net cash fl ows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profi t or loss. The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifi cally applicable to fi nancial instruments.

• i. Financial assets at fair value through profi t or loss

Financial assets are classifi ed at ‘fair value through profi t or loss’ when they are either held for trading for the purpose of short-term profi t taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of fi nancial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profi t or loss.

• ii. Loans and receivables Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. (All other loans and receivables are classifi ed as non-current assets.)

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39

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued

h. Financial Instruments continued

iii. Held-to-maturity investments

Held-to-maturity investments are non-derivative fi nancial assets that have fi xed maturities and fi xed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost.

Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (All other investments are classifi ed as current assets.)

If during the period the Group sold or reclassifi ed more than an insignifi cant amount of the held-to-maturity investments

before maturity, the entire held-to-maturity investments category would be tainted and reclassifi ed as available-for-sale.

iv. Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are non-derivative fi nancial assets that are either not suitable to be classifi ed into other categories of fi nancial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fi xed maturity nor fi xed or determinable payments. Available-for-sale fi nancial assets are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (All other fi nancial assets are classifi ed as current assets.)

v. Financial liabilities

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

Impairment

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

De-recognition

Financial assets are de-recognised where the contractual rights to receipt of cash fl ows expires or the asset is transferred to another party whereby the entity no longer has any signifi cant continuing involvement in the risks and benefi ts associated with the asset. Financial liabilities are de-recognised where the related obligations are either discharged, cancelled or expired. The diff erence between the carrying value of the fi nancial 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 profi t or loss.

Equity swap agreement

The equity swap arrangement embedded in the long-term receivable (Note 9) is treated as an embedded derivative and measured at fair value through profi t or loss.

Convertible note option

The conversion option embedded in the convertible notes has been treated as an embedded derivative and fair valued through the profi t and loss.

On conversion of a convertible instrument at maturity, the entity derecognises the liability component and recognises it as equity. The original equity component remains as equity (although it may be transferred from one line item within equity to another). There is no gain or loss on conversion at maturity.

When an entity extinguishes a convertible instrument before maturity through an early redemption or repurchase in which the original conversion privileges are unchanged, the entity allocates the consideration paid and any transaction costs for the repurchase or redemption to the liability and equity components of the instrument at the date of the transaction. The method used in allocating the consideration paid and transaction costs to the separate components is consistent with that used in the original allocation to the separate components of the proceeds received by the entity when the convertible instrument was issued.

i. Derivative fi nancial instruments

The Consolidated Group uses derivative fi nancial instruments. In relation to the convertible note, changes in the fair value of this derivative are included in the profi t and loss, together with any changes in the fair value of the liabilities that the derivatives are attributable to.

40 METMINCO LIMITED Annual Report 31 December 2012

j. Impairment of Non-Financial Assets

At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profi ts. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Impairment testing is performed annually for goodwill and intangible assets with indefi nite lives.

k. Investments in Associates

Associate companies are companies in which the Group has signifi cant infl uence through holding, directly or indirectly, 20% or more of the voting power of the company. Investments in associates are accounted for in the fi nancial statements by applying the equity method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the postacquisition change in the Group’s share of net assets of the associate company. In addition the Group’s share of the profi t or loss of the associate company is included in the Group’s profi t or loss.

The carrying amount of the investment includes goodwill relating to the associate. Any excess of the Group’s share of the net fair value of the associate’s identifi able assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the investor’s share of the associate’s profi t or loss in the period in which the investment is acquired.

Profi ts and losses resulting from transactions between the Group and the associate are eliminated to the extent of the relation to the Group’s investment in the associate.

When the reporting dates of the Group and the associate are diff erent, the associate prepares, for the Group’s use, fi nancial statements as of the same date as the fi nancial statements of the Group with adjustments being made for the eff ects of signifi cant transactions or events that occur between that date and the date of the investor’s fi nancial statements.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group discontinues recognising its share of further losses unless it has incurred legal or constructive obligations or made payments on behalf of the associate. When the associate subsequently makes profi ts, the Group will resume the recognition of its share of those profi ts once its share of the profi ts equals the share of the losses not recognised.

l. Interests in Joint Ventures

The consolidated group’s share of the assets, liabilities, revenue and expenses of jointly controlled assets have been included in the appropriate line items of the consolidated fi nancial statements. Details of the consolidated group’s interests are shown in Note 12.

The consolidated group’s interests in joint venture entities are brought to account using the equity method of accounting (refer to Note 1(k) for details) in the consolidated fi nancial statements. The parent entity’s interests in joint venture entities are brought to account at cost.

Where the Group contributes assets to the joint venture or if the Group purchases assets from the joint venture, only the portion of the gain or loss that is not attributable to the Group’s share of the joint venture shall be recognised. The Group however will recognise the full amount of any loss when the contribution results in a reduction in the net realisable value of current assets or an impairment loss.

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41

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued

m. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated fi nancial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

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 diff erences arising on the translation of monetary items are recognised in the statement of comprehensive income. Exchange diff erences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the gain or loss is directly recognised in equity, otherwise the exchange diff erence is recognised in the statement of comprehensive income.

Group companies

The fi nancial results and position of foreign operations whose functional currency is diff erent from the Group’s presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at the end of the reporting period;

• 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 diff erences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of fi nancial position. These diff erences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

n. Employee Benefi ts

Provision is made for the Group’s liability for employee benefi ts arising from services rendered by employees to balance date. Employee benefi ts that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefi ts payable later than one year have been measured at the present value of the estimated future cash outfl ows to be made for those benefi ts. In determining the liability, consideration is given to employee wages increases and the probability that the employee may satisfy vesting requirements. Those cash outfl ows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash fl ows.

o. Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outfl ow of economic benefi ts will result and that outfl ow can be reliably measured.

p. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of one month or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities in the statement of fi nancial position.

q. Revenue and Other Income

Interest revenue is recognised using the eff ective interest rate method, which, for fl oating rate fi nancial assets, is the rate inherent in the instrument.

All revenue is stated net of the amount of goods and services tax (GST).

42 METMINCO LIMITED Annual Report 31 December 2012

r. Equity Settled Compensation

The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled 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 pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting date such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

Where equity is used to pay service providers the Group measures the goods or services received and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted.

s. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Offi ce. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of fi nancial position are shown inclusive of GST. Cash fl ows are presented in the statement of cashfl ows on a gross basis, except for the GST component of investing and fi nancing activities, which are disclosed as operating cash fl ows.

t. Comparative Figures

When required by Accounting Standards, comparative fi gures have been adjusted to conform to changes in presentation for the current fi nancial year.

When the Group applies an accounting policy retrospectively, makes a retrospective restatement or reclassifi es items in its fi nancial statements, a statement of fi nancial position as at the beginning of the earliest comparative period will be disclosed.

u. Key estimates

i. Impairment

The Group assesses impairment at the end of each reporting period by evaluating conditions and events specifi c to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using valuein-use calculations which incorporate various key assumptions. These assumptions are disclosed in each of the notes to the fi nancial report where applicable.

ii. Exploration and Evaluation Expenditure

The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such capitalised expenditure is carried at the end of the reporting period at $205,359,513 (see Note 15).

iii. Fair value of derivative fi nancial instruments

The fair value of derivative fi nancial instruments are determined using various key assumptions. These assumptions are disclosed in each of the notes to the fi nancial report where applicable.

iv. Valuation methodology used in calcuation of share options

The Binomial method has been used to value shares options in respect of the optionality underlying the convertible notes, share options issued in lieu of consulting fees and share options issued to directors and employees. The Company has used a 80% volatility (based on historical volatity), the share price on the applicable date (being either the date of issue or the balance date) and an option life based on the Company’s best estimate of the expected exercise patterns which may not eventuate in the future.

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43

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued

v. Signifi cant Management Judgment in Applying Accounting Policies

The following are signifi cant management judgements in applying the accounting policies of the Group that have the most signifi cant eff ect on the fi nancial statements.

Signifi cant management judgement

The following are signifi cant management judgements in applying the accounting policies of the Group that have the most signifi cant eff ect on the fi nancial statements.This Standard is not expected to impact the Company.

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilised. In addition, signifi cant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

w. Changes in Accounting Policies

AASB 2010-8 Amendments to Australian Accounting Standard – Deferred Tax: Recovery of Underlying Assets (Eff ective for annual reporting periods beginning on or after 1 January 2012)

AASB 2010-8 provides clarifi cation on the determination of deferred tax assets and deferred tax liabilities when investment property is measured using the fair value model in AASB 140 Investment Property . It introduces a rebuttable presumption that an investment property is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model where the objective is to consume substantially all of the economic benefi ts embodied in the investment property over time, rather than through sale.

AASB 2010-8 also includes the requirement that the measurement of deferred tax assets and deferred tax liabilities on nondepreciable assets measured using the revaluation model in AASB 116 Property, Plant and Equipment should always be based on recovery through sale.

These amendments have had no impact on the Group.

x. Operating 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 identifi ed as the Board of Directors.

Segment results that are reported to the Board of Directors include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The operating segments are disclosed in Note 22.

y. Standards, amendments and interpretations to existing standards that are not yet eff ective and have not been adopted early by the Group

At the date of authorisation of these fi nancial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet eff ective, and have not been adopted early by the Group.

Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the fi rst period beginning after the eff ective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s fi nancial statements is provided below.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s fi nancial statements.

AASB 9 Financial Instruments (eff ective from 1 January 2015)

The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classifi cation, measurement and derecognition of fi nancial assets and liabilities have been issued. These chapters are eff ective for annual periods beginning 1 January 2013. Further chapters dealing with impairment methodology and hedge accounting are still being developed.

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

44 METMINCO LIMITED Annual Report 31 December 2012

y. Standards, amendments and interpretations to existing standards that are not yet eff ective and have not been adopted early by the Group continued

Consolidation Standards

A package of consolidation standards are eff ective for annual periods beginning after 1 January 2013. Information on these new standards is presented below. The Group’s management do not believe these changes will have a material impact on the fi nancial statements.

AASB 10 Consolidated Financial Statements (AASB 10)

AASB 10 supersedes AASB 127 Consolidated and Separate Financial Statements (AASB 127) and Interpretation 112

Consolidation – Special Purpose Entities. It revised the defi nition of control together with accompanying 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)

AASB 11 supersedes AASB 131 Interests in Joint Ventures (AASB 131). It aligns more closely the accounting by the investors with their rights and obligations relating to the joint arrangement. In addition, AASB 131’s option of using proportionate consolidation for joint ventures has been eliminated. AASB 11 now requires the use of the equity accounting method, which is currently used for investments in associates.

AASB 12 Disclosure of Interests in Other Entities (AASB 12)

AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including

unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

Consequential amendments to AASB 127 and AASB 128 Investments in Associates and Joint Ventures (AASB 128)

AASB 127 now only deals with separate fi nancial statements. AASB 128 brings investments in joint ventures into its scope. However, AASB 128’s equity accounting methodology remains unchanged.

AASB 13 Fair Value Measurement (AASB 13)

AASB 13 does not aff ect which items are required to be fair-valued, but clarifi es the defi nition 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 2013. The Group’s management do not believe these changes will have a material impact on the fi nancial statements. Amendments to AASB 101 Presentation of Financial Statements (AASB 101 Amendments)

The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassifi ed subsequently to profi t or loss and (b) will be reclassifi ed subsequently to profi t or loss when specifi c conditions are met. It is applicable for annual periods beginning on or after 1 July 2012. The Group’s management expects this will change the current presentation of items in other comprehensive income; however, it will not aff ect the measurement or recognition of such items.

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45

NOTES TO THE FINANCIAL STATEMENTS continued

	CONSOLIDATED	CONSOLIDATED
	31 DECEMBER 2012	31 DECEMBER 2011
	$	$
NOTE 2: REVENUE
Interest received – other persons	336,988	350,909
NOTE 3: LOSS FOR THE YEAR
Expenses from continuing operations:
Other expenses	(310,740)	(420,569)
Employee and directors’ benef ts expense	(3,429,431)	(4,029,878)
Depreciation and amortisation expense	(263,724)	(148,935)
NOTE 4: INCOME TAX EXPENSE
The prima facie tax on loss from ordinary activities before income tax is	reconciled to the income tax as	follows:
Loss before tax	11,912,898	8,777,306
Total income tax benef t calculated at 30% for Australia and Peru and at
35.5% for Chile (2011: 30% for Australia and Peru and 35.5% for Chile)	(3,932,334)	(2,738,299)
Tax ef ect of:
Foreign exchange losses/(gains)	189,691	(86,661)
Impairment on equity swap derivative	70,015	308,789
Fair value loss on convertible notes derivative	–	158,560
Allowable capital raising deductions	(545,396)	(453,495)
Options issued	55,754	61,075
Provisions	42,370	44,335
Accruals	(183,041)	375,623
	(4,302,941)	(2,330,072)
Deferred tax asset not brought to account	4,302,941	2,330,072
Income tax expense	–	–
Applicable weighted average ef ective tax rate	0%	0%
Deferred tax asset not taken to account
Tax losses carried forward:
– Revenue losses	6,827,396	2,524,455
– Temporary timing dif erences	279,287	419,958
	7,106,683	2,944,413

Tax balances for the 2011 comparative year have been restated to refl ect changes in availability of carried forward tax losses and taxation laws in respective countries.

The deductible temporary diff erences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not yet considered probable that future taxable income will be available to utilise them. The Group does not have any capital losses.

46 METMINCO LIMITED Annual Report 31 December 2012

NOTE 5: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)

Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 31 December 2012.

The totals of remuneration paid to KMP of the Company and the Group during the year are as follows:

Short term employee benef ts Post-employment benef ts Other long term benef ts Termination benef ts Share based payments	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 2,306,762 3,021,970 83,091 21,261 – – – 75,000 185,840 203,585
	2,575,693 3,321,816

KMP Options and Rights Holdings

The number of options over ordinary shares held by each KMP of the Group during the period is as follows:

BALANCE AT THE BEGINNING OF THE YEAR GRANTED AS REMUNER- ATION DURING THE PERIOD EXERCISED DURING THE PERIOD OTHER CHANGES DURING THE PERIOD BALANCE AT END OF YEAR VESTED DURING THE PERIOD 31 December 2012 Antonio Ortúzar 3,000,000 – – – 3,000,000 Unlisted option @ $0.175 Jun 2015 – 1,000,000 – – 1,000,000 1,000,000 Unlisted option @ $0.210 Jun 2015 – 1,000,000 – – 1,000,000 1,000,000 William Howe – – – – – – Philip Wing – – – – – – William Etheridge – – – – – – Tim Read 6,000,000 – – – 6,000,000 – Unlisted option @ $0.175 Jun 2015 – 1,000,000 – – 1,000,000 1,000,000 Unlisted option @ $0.210 Jun 2015 – 1,000,000 – – 1,000,000 1,000,000 Francisco Vergara-Irarrazaval – – – – – – Philip Killen 5,000,000 – – – 5,000,000 – Stephen Tainton 2,000,000 – – – 2,000,000 – Gavin Daneel 2,500,000 – – – 2,500,000 – Colin Sinclair 6,000,000 – – – 6,000,000 – Total1 24,500,000 4,000,000 – – 28,500,000 4,000,000

VESTED AND EXERCISABLE 3,000,000 1,000,000 1,000,000 – – – 6,000,000 1,000,000 1,000,000 – 5,000,000 2,000,000 2,500,000 6,000,000

28,500,000

1 Balance at the beginning of the year 2012 is lower than the balance at the end of the year 2011 due to the resignations of John Fillmore (7,099,999 options) and Keith Weston (3,274,999 options).

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47

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 5: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP) continued

NOTE 5: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)continued	NOTE 5: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)continued
BALANCE AT THE BEGINNING OF THE YEAR GRANTED AS REMUNER- ATION DURING THE PERIOD EXERCISED DURING THE PERIOD OTHER CHANGES DURING THE PERIOD BALANCE AT END OF YEAR VESTED DURING THE PERIOD 31 December 2011 Antonio Ortúzar1 3,000,000 – – – 3,000,000 William Howe – – – – – – Philip Wing – – – – – – William Etheridge – – – – – – Tim Read 6,000,000 – – – 6,000,000 – Francisco Vergara-Irarrazaval – – – – – – Philip Killen 4,000,000 – – – 4,000,000 – Unlisted option @ $0.215 Dec 2014 – 500,000 – – 500,000 500,000 Unlisted option @ $0.260 Dec 2014 – 500,000 – – 500,000 500,000 Stephen Tainton – – – – – – Unlisted option @ $0.215 Dec 2014 – 1,000,000 – – 1,000,000 1,000,000 Unlisted option @ $0.260 Dec 2014 – 1,000,000 – – 1,000,000 1,000,000 Gavin Daneel 750,000 – – – 750,000 – Unlisted option @ $0.215 Dec 2014 – 500,000 – – 500,000 500,000 Unlisted option @ $0.260 Dec 2014 – 500,000 – – 500,000 500,000 Colin Sinclair 5,000,000 – – – 5,000,000 – Unlisted option @ $0.215 Dec 2014 – 500,000 – – 500,000 500,000 Unlisted option @ $0.260 Dec 2014 – 500,000 – – 500,000 500,000 Keith Weston 3,274,999 – – – 3,274,999 – John Fillmore2 7,099,999 – – – 7,099,999 – 29,124,998 5,000,000 – – 34,124,998 5,000,000		VESTED AND EXERCISABLE 3,000,000 – – – 6,000,000 – 4,000,000 500,000 500,000 – 1,000,000 1,000,000 750,000 500,000 500,000 5,000,000 500,000 500,000 3,274,999 7,099,999
	29,124,998 5,000,000 – – 34,124,998 5,000,000	34,124,998

1 Antonio Ortúzar was appointed a Director on 16 March 2011

2 John Fillmore resigned as a Director on 16 March 2011

48 METMINCO LIMITED Annual Report 31 December 2012

KMP Shareholdings

The number of ordinary shares in Metminco Limited held by each KMP of the Group during the period is as follows:

BALANCE AT 31 DECEMBER 2011 GRANTED AS REMUNERATION DURING THE PERIOD ISSUED ON EXERCISE OF OPTIONS DURING THE PERIOD OTHER CHANGES DURING THE PERIOD 31 December 2012 Antonio Ortúzar 6,400,000 – – – William Howe 48,264,168 – – 470,927 Philip Wing 15,893,336 – – – William Etheridge 61,800,000 – – 405,931 Tim Read 650,000 – – 350,000 Francisco Vergara - Irarrazaval 50,140,000 – – – Philip Killen 4,149,836 – – 195,000 Stephen Tainton – – – 200,000 Gavin Daneel – – – – Colin Sinclair 5,766,353 – – 139,741 Total1 193,063,693 – – 1,761,599	BALANCE AT 31 DECEMBER 2011 GRANTED AS REMUNERATION DURING THE PERIOD ISSUED ON EXERCISE OF OPTIONS DURING THE PERIOD OTHER CHANGES DURING THE PERIOD 31 December 2012 Antonio Ortúzar 6,400,000 – – – William Howe 48,264,168 – – 470,927 Philip Wing 15,893,336 – – – William Etheridge 61,800,000 – – 405,931 Tim Read 650,000 – – 350,000 Francisco Vergara - Irarrazaval 50,140,000 – – – Philip Killen 4,149,836 – – 195,000 Stephen Tainton – – – 200,000 Gavin Daneel – – – – Colin Sinclair 5,766,353 – – 139,741 Total1 193,063,693 – – 1,761,599	BALANCE AT 31 DECEMBER 2012 6,400,000 48,735,095 15,893,336 62,205,931 1,000,000 50,140,000 4,344,836 200,000 – 5,906,094
	193,063,693 – – 1,761,599	194,825,292

• 1 Balance at the beginning of the year 2012 is lower than the balance at the end of the year 2011 due to the resignations of John Fillmore (2,220,000 shares) and Keith Weston (525,000 shares).

BALANCE AT 31 DECEMBER 2010 GRANTED AS REMUNERATION DURING THE PERIOD ISSUED ON EXERCISE OF OPTIONS DURING THE PERIOD OTHER CHANGES DURING THE PERIOD 31 December 2011 Antonio Ortúzar1 – – – 6,400,000 William Howe 48,264,168 – – – Philip Wing 15,893,336 – – – William Etheridge 62,400,000 – – (600,000) Tim Read 250,000 – – 400,000 Francisco Vergara - Irarrazaval 50,140,000 – – – Philip Killen 3,949,836 – – 200,000 Colin Sinclair 5,766,353 – – – Keith Weston 550,000 – – (25,000) John Fillmore2 2,220,000 – – – 189,433,693 – – 6,375,000	BALANCE AT 31 DECEMBER 2010 GRANTED AS REMUNERATION DURING THE PERIOD ISSUED ON EXERCISE OF OPTIONS DURING THE PERIOD OTHER CHANGES DURING THE PERIOD 31 December 2011 Antonio Ortúzar1 – – – 6,400,000 William Howe 48,264,168 – – – Philip Wing 15,893,336 – – – William Etheridge 62,400,000 – – (600,000) Tim Read 250,000 – – 400,000 Francisco Vergara - Irarrazaval 50,140,000 – – – Philip Killen 3,949,836 – – 200,000 Colin Sinclair 5,766,353 – – – Keith Weston 550,000 – – (25,000) John Fillmore2 2,220,000 – – – 189,433,693 – – 6,375,000	BALANCE AT 31 DECEMBER 2011 6,400,000 48,264,168 15,893,336 61,800,000 650,000 50,140,000 4,149,836 5,766,353 525,000 2,220,000
	189,433,693 – – 6,375,000	195,808,693

• 1 Antonio Ortúzar was appointed as a Director on 16 March 2011

• 2 John Fillmore resigned as a Director on 16 March 2011

Other KMP Transactions

There have been no other KMP transactions involving equity instruments other than those described in the tables above. For details of other transactions with KMP refer to Note 25 Related Party Transactions.

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49

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 6: AUDITORS’ REMUNERATION Audit services provided by Grant Thornton: Parent Subsidiaries – Minera Hampton Chile Limitada and Minera Hampton Peru SAC Non audit tax advisory services – Australia NOTE 7: LOSS PER SHARE a. Reconciliation of earnings to loss Loss Loss attributable to minority equity interest Loss used in the calculation of basic and dilutive EPS b. Weighted average number of ordinary shares outstanding during the full year used in calculating basic EPS Weighted average number of dilutive options outstanding c. Anti-dilutive options on issue not used in dilutive EPS calculation NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank Short-term bank deposits	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 99,500 89,541 26,237 36,349
	125,737 125,890 1,637 15,127
	127,374 141,017
	(11,912,898) (8,777,306) – –
	(11,912,898) (8,777,306)
	NO. NO. 1,748,499,517 892,478,975 – – 41,500,000 69,217,517 CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 14,484,097 44,030,949 – –
	14,484,097 44,030,949

50 METMINCO LIMITED Annual Report 31 December 2012

NOTE 9: RECEIVABLES AND DERIVATIVE FINANCIAL INSTRUMENT Current Other receivables Receivable from equity swap – secured1 IGV receivables2 Total current trade and other receivables Equity swap derivative at fair value Non-current VAT receivables3 Total non-current trade and other receivables	288,551 397,953 – 854,473 3,467,725 1,149,990
	3,756,276 2,402,416
	– 109,613
	4,374,785 3,515,405
	4,374,785 3,515,405

• 1 Equity Swap:

The Company entered into a subscription agreement, an equity swap confi rmation, an interest rate swap confi rmation and a credit support agreement on 1 April 2010. Pursuant to these agreements the Company issued 25,000,000 shares at 9p per share for an aggregate subscription amount of £2,250,000. As security for the proceeds of these shares the recipient of the shares placed £2,250,000 in government bonds with an escrow agent as security for the proceeds receivable.

During the period ended 30 June 2012 the Company exchanged £93,750 worth of government bonds per month for a cash payment amount determined against a benchmark price of 12p per ordinary share. If the volume weighted average price of an ordinary share for the fi ve dealing days prior to settlement exceeded the benchmark price then the Company received more than 100% of the monthly payment due. If the price was less than the benchmark price, the Company received less than 100% of the monthly payment due. There was no higher or lower limit on the amount of the payments under these arrangements but the total number of shares issued was fi xed. The secured equity swap receivable has been settled in full and a realised loss of $233,382 has been recognised for the period as a result of the equity swap derivative.

• 2 VAT receivables – current is IGV (Peruvian equivalent of VAT) incurred by Hampton Peru relating to the Los Calatos Project for the current period. Hampton Peru has been approved by the Peruvian Mining Department to recover IGV (Peruvian equivalent of VAT) paid on direct expenditure relating to the Los Calatos Project incurred until 31 December 2015. Hampton Peru has recovered in full all IGV paid with respect to the Los Calatos Project until 31 December 2011.

• 3 VAT receivables – non-current is IGV and IVA (Chilean equivalent of VAT) incurred by Hampton Peru and Hampton Chile which is recoverable against VAT received from sales and/or exports in the respective tax jurisdictions.

NOTE 10: OTHER ASSETS

NOTE 10: OTHER ASSETS
CURRENT Prepayments Total current other assets NOTE 11: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Equity accounted investments in joint venture entities 12	53,266 14,495
	53,266 14,495
	2,891,734 2,947,726
	2,891,734 2,947,726

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51

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 12: INTEREST IN JOINT VENTURES

Interests are held in the following:

	PRINCIPAL	COUNTRY OF
	NAME ACTIVITIES	INCORPORATION		SHARES		OWNERSHIP INTEREST	CARRYING		AMOUNT OF INVESTMENT
Unlisted:					31 DECEMBER 2012 31 DECEMBER 2011		31 DECEMBER 2012 31 DECEMBER 2011
SCM San Lorenzo Exploration		Chile	Ordinary		50% 50%		2,891,734 2,947,726
							2,891,734 2,947,726
In	January 2009, in accordance with an	agreement dated		19 May 2008 between Golden Amazonas (Amazonas) and Hampton
Chile , SCM San Lorenzo was incorporated. The shareholders of SCM					San Lorenzo are Hampton Chile, with 50% of the shares, and
f ve minor shareholders with the remaining 50%. For the transfer of the title						of the San Lorenzo Properties to SCM San Lorenzo,
Hampton Chile paid Amazonas US$3 million. Hampton Chile does not control SCM San Lorenzo as the joint venture was formed
for the sole purpose of holding ownership of the mining tenements.
						CONSOLIDATED
						31 DECEMBER 2012			31 DECEMBER 2011
						$			$
a.	Movements during the year in equity accounted investment in
	joint venture entities:
	Balance as at the beginning of the period					2,947,726			4,160,154
	Less acquisition of 100% of SCM Ovalle – now consolidated					–			(1,209,237)
	Impact of foreign exchange movement on		balance at beginning of			(55,992)			(3,191)
	period
	Balance as at the end of the year					2,891,734			2,947,726
b.	Summarised presentation of aggregate assets, liabilities				and
	performance of joint venture
	Current assets					–			–
	Non-current assets					5,783,468			5,895,452
	Total assets					5,783,468			5,895,452
	Current liabilities					–			–
	Total liabilities					–			–
	Net assets					5,783,468			5,895,452
	Loss after income tax					–			–
			COUNTRY OF INCORPORATION			PERCENTAGE OWNED
						31 DECEMBER 2012			31 DECEMBER 2011
NOTE 13. CONTROLLED ENTITIES						%			%
a.	Controlled entities consolidated
Subsidiaries of Metminco Limited:
	Hampton Mining Limited	Australia				100			100
	North Hill Holdings Group Inc	British Virgin Islands				100			100

52 METMINCO LIMITED Annual Report 31 December 2012

COUNTRY OF INCORPORATION Wholly owned subsidiaries of North Hill Holdings Group Inc: Cerro Norte Mining Inc British Virgin Islands North Hill Ovalle Inc British Virgin Islands North Hill Peru Inc British Virgin Islands North Hill Colombia Inc British Virgin Islands Minera Hampton Peru SAC Peru Minera Hampton Chile Limitada Chile Minera Hampton Colombia SAS Colombia NOTE 14: PROPERTY, PLANT AND EQUIPMENT Land At cost Total land Plant and equipment At cost Accumulated depreciation Total plant and equipment Total property, plant and equipment Reconciliations Reconciliation of the carrying amounts for each class of property, plant and equipment are set out below: Land Carrying amount at beginning of year Additions through acquisition of entity Impact of foreign exchange movement on balance at beginning of year Carrying amount of land at end of year Plant and equipment Carrying amount at beginning of year Additions Impact of foreign exchange movement on balance at beginning of year Depreciation Carrying amount of plant and equipment at end of year Carrying amount at end of year No assets are held as security for any liabilities.	PERCENTAGE OWNED 31 DECEMBER 2012 31 DECEMBER 2011 % % 100 100 100 100 100 100 100 100 100 100 100 100 100 – CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 2,724,414 2,678,365
	2,724,414 2,678,365
	1,586,771 1,234,199 (570,743) (323,119)
	1,016,028 911,080
	3,740,442 3,589,445
	2,678,365 314,111 90,725 2,364,254 (44,676) –
	2,724,414 2,678,365
	911,080 355,267 370,790 704,748 (2,118) – (263,724) (148,935)
	1,016,028 911,080
	3,740,442 3,589,445

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53

NOTES TO THE FINANCIAL STATEMENTS continued

	CONSOLIDATED	CONSOLIDATED
	31 DECEMBER 2012		31 DECEMBER 2011
	$		$
NOTE 15: EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of areas of interest in:
– exploration and evaluation phases at the end of year	205,359,513		183,840,162
Reconciliations
Carrying amount at the beginning of year	183,840,162		102,297,461
Expenditure incurred during current year	26,829,287		18,902,274
Additions through acquisition of entity and conditional Barrick buy back	–		63,758,741
Impact of foreign exchange movement during the year	(769,049)		(1,065,166)
Exploration written of	(4,540,887)		(53,148)
Carrying amount at the end of year	205,359,513		183,840,162

Recoverability of the carrying amount of exploration assets is dependent upon the successful recovery of mineral reserves.

Capitalised costs amounting to $26,829,287 (for the period ended 31 December 2011: $18,902,274) have been included in cash fl ows from investing activities.

NOTE 16: TRADE AND OTHER PAYABLES
Trade payables	583,704	2,440,901
Other payables and accrued expenses	671,046	1,726,923
	1,254,750	4,167,824
NOTE 17: PROVISIONS
	SHORT-TERM EMPLOYEE BENEFITS
Consolidated Group
Balance at the beginning of the reporting period	216,805	73,382
Additional provisions	128,589	143,423
Balance at the end of the reporting period	345,394	216,805

54 METMINCO LIMITED Annual Report 31 December 2012

NOTE 18: CONTRIBUTED EQUITY 1,749,543,023 (31 December 2011: 1,676,466,146) fully paid ordinary shares a. Movements in ordinary share capital (no. of shares) Balance at beginning of the reporting period Shares issued – 31 March 2011 – 19 April 2011 – 28 April 2011 – 28 April 2011 – 3 May 2011 – 26 May 2011 – 6 June 2011 – 5 December 2011 – 6 January 2012 – 11 January 2012 – 4 December 2012 At the end of the reporting period b. Movements in ordinary share capital ($) Balance at beginning of the reporting period Shares issued – 31 March 2011 – 19 April 2011 – 28 April 2011 – 28 April 2011 – 3 May 2011 – 26 May 2011 – 6 June 2011 – 5 December 2011 – 6 January 2012 – 11 January 2012 – 4 December 2012 Costs of capital raising 2012 At the end of the reporting period	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 317,607,678 307,900,070
	NO. OF SHARES NO. OF SHARES 1,674,466,146 1,231,107,839 – 161,671 – 1,200,000 – 70,250,855 – 75,000,000 – 20,000,000 – 4,895,781 – 60,000,000 – 211,850,000 73,864,286 – 1,211,141 – 1,450 –
	1,749,543,023 1,674,466,146
	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 307,900,070 196,501,824
	– 60,627 – 450,000 – 24,510,523 – 28,500,000 – 7,600,000 – 1,762,481 – 22,800,000 – 29,658,904 10,341,000 – 169,560 – 362 – (803,314) (3,944,289)
	317,607,678 307,900,070

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55

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 18: CONTRIBUTED EQUITY continued

On 6 January 2012 the Company issued 73,864,286 new ordinary shares by way of private placement to sophisticated and professional investors at a subscription price of A$0.14 per share to raise equity of A$10.3million.

On 11 January 2012 the Company issued 1,211,141 new ordinary shares pursuant to the Rights Issue which closed 3 January 2012.

On 4 December 2012 the Company issued 1,450 shares pursuant to the exercise of 1,450 listed options expiring on 4 December 2012.

All the shares rank for dividends pari passu. Each share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.

c. Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confi dence and to sustain future development of the business to provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital includes ordinary share capital and fi nancial liabilities, supported by fi nancial assets.

There are no externally imposed capital requirements.

Management eff ectively manages the Group’s capital by assessing the Group’s fi nancial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. This strategy is to ensure that the Group’s gearing ratio remains below 10%. The gearing ratios for the full year ended 31 December 2012 are as follows:

NOTE Cash and cash equivalents 8 Net debt Total equity Gearing ratio	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ (14,484,097) (44,030,949)
	(14,484,097) (44,030,949) 233,059,969 236,065,582
	– –

56 METMINCO LIMITED Annual Report 31 December 2012

NOTE 19: OPTIONS

GRANT DATE	EXPIRY DATE	EXERCISE PRICE $	OUTSTANDING AT 31 DECEMBER 2011	GRANTED DURING THE YEAR	EXERCISED DURING THE YEAR	LAPSED DURING THE YEAR	OUTSTANDING AT 31 DECEMBER 2012
31 December 2012
Listed
4 December 2007	4 December 2012	$0.25	26,217,517	–	(1,450)	(26,216,067)	–
4 December 2009	4 December 2012	$0.25	1,000,000	–	–	(1,000,000)	–
Unlisted
24 September 2010	31 July 2012	$0.30	4,500,000	–	–	(4,500,000)	–
6 December 2010	6 December 2013	$0.44	14,250,000	–	–	–	14,250,000
6 December 2010	6 December 2013	$0.525	14,250,000	–	–	–	14,250,000
6 December 2010	6 December 2013	$0.44	2,000,000	–	–	–	2,000,000
6 December 2010	6 December 2013	$0.525	2,000,000	–	–	–	2,000,000
5 December 2011	5 December 2014	$0.215	2,500,000	–	–	–	2,500,000
6 December 2010	5 December 2014	$0.260	2,500,000	–	–	–	2,500,000
15 June 20121	15 June 2015	$0.175	–	2,000,000	–	–	2,000,000
15 June 20122	15 June 2015	$0.210	– 69,217,517	2,000,000 4,000,000	– (1,450)	– (31,716,067)	2,000,000 41,500,000

Notes:

• 1 On 15 June 2012 the Company issued 2,000,000 options to Directors in accordance with the Company’s ESOP @ $0.175 cents expiring 15 June 2015.

• 2 On 15 June 2012 the Company issued 2,000,000 options to Directors in accordance with the Company’s ESOP @ $0.210 cents expiring 15 June 2015.

		EXERCISE PRICE	OUTSTANDING AT GRANTED DURING EXERCISED DURING LAPSED DURING OUTSTANDING AT
EXPIRY DATE		$	31 DECEMBER 2010 THE YEAR THE YEAR THE YEAR 31 DECEMBER 2011
31 December 2011
Listed
4 December 2007	4 December 2012	$0.25	26,217,517 – – – 26,217,517
4 December 2009	4 December 2012	$0.25	1,000,000 – – – 1,000,000
Unlisted
24 September 2010	31 July 2012	$0.30	4,500,000 – – – 4,500,000
6 December 2010	6 December 2013	$0.44	14,250,000 – – – 14,250,000
6 December 2010	6 December 2013	$0.525	14,250,000 – – – 14,250,000
6 December 2010	6 December 2013	$0.44	2,000,000 – – – 2,000,000
6 December 2010	6 December 2013	$0.525	2,000,000 – – – 2,000,000
5 December 2011	5 December 2014	$0.215	– 2,500,000 – – 2,500,000
5 December 2011	5 December 2014	$0.260	– 2,500,000 – – 2,500,000 64,217,517 5,000,000 – – 69,217,517

The options have been included in employee and director’s benefi ts expense in the statement of comprehensive income. The options have been valued using the Binomial method, a share price of $0.115 (based on the Company’s share price as at 14 June 2012), interest rate of 2.32%, 80% volatility, the life is 3 years which may not eventuate) and assuming the option are tradeable. The options are not transferrable, the expiry date is contingent on a number of terms and conditions set out in the Employee Share Option Plan and the holder will only realise a benefi t through exercise of the options.

Included under employee and directors’ benefi t expense in Note 3 is $185,840 (Dec 2011: $203,585). The exercise prices of the options are either $0.215 or $0.260.

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57

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 20: CAPITAL AND LEASING COMMITMENTS a. Operating Lease Commitments Non-cancellable operating leases contracted for but not capitalised in the f nancial statements Payable (minimum lease payments) – not later than 12 months – between 12 months and 5 years – greater than 5 years The Group has non-cancellable leases over six premises in Australia, Chile an Rent is payable monthly in advance. b. Exploration Tenement Licence Commitments Mining and exploration licence fees for tenements held by the Group but not yet capitalised in the f nancial statements Payable (minimum licence payments) – not later than 12 months	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 252,870 240,165 22,881 229,155 – –
	275,751 469,320
	d Peru with terms ranging from 1 to 15 months. 378,877 426,422

NOTE 21: COMMITMENTS AND CONTINGENT LIABILITIES

The holder of land titles in respect of the Mollacas Project, Agrícola Bauzá Ltda has fi led various actions against Hampton Chile with respect to access and environmental matters. All claims made by Agrícola Bauzá Ltda have been vigorously defended by Hampton Chile and the Chilean judiciary have ruled in favour of Hampton Chile in respect of all matters heard by the judiciary to date.

NOTE 22: REPORTING SEGMENTS

The Company’s primary activity is mineral exploration in the geographic area of South America. This focus is consistent with the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group is managed primarily for the sole purpose of mineral exploration.

Basis of accounting for purposes of reporting by operating segments

a. Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual and half yearly fi nancial statements of the Group.

b. Inter-segment transactions

There are no inter segment transactions.

c. Segment assets

Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that asset. In the majority of instances, segment assets are clearly identifi able on the basis of their nature and physical location.

58 METMINCO LIMITED Annual Report 31 December 2012

d. Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

e. Non-core reconciling items

The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:

• Derivatives

• Impairment of assets and other non-recurring items of revenue or expense

• Income tax expense

• Deferred tax assets and liabilities

• Current tax liabilities

• Other fi nancial liabilities

MINERAL EXPLORATION UNALLOCATED TOTAL 31 DECEMBER 2012 31 DECEMBER 2011 31 DECEMBER 2012 31 DECEMBER 2011 31 DECEMBER 2012 31 DECEMBER 2011 $ $ $ $ $ $ i. Segment performance Other income 12,699 785 324,289 350,124 336,988 350,909 Total segment revenue 12,699 785 324,289 350,124 336,988 350,909 Total group revenue 12,699 785 324,289 350,124 336,988 350,909 Segment loss before tax 6,239,874 2,257,250 5,673,024 6,520,056 11,912,898 8,777,306 Loss before tax from continuing operations 6,239,874 2,257,250 5,673,024 6,520,056 11,912,898 8,777,306 Depreciation and amortisation expense included in segment result 141,888 112,670 121,836 36,265 263,724 148,935 ii. Segment assets Segment assets 219,484,970 196,083,034 15,175,143 44,367,177 234,660,113 240,450,211 Segment asset increases for the period – capital expenditure 32,651,021 21,951,379 53,506 19,897 32,704,527 21,971,276 – acquisitions – 80,512,559 – – – 80,512,559 32,651,021 102,463,938 53,506 19,897 32,704,527 102,483,835 Included in segment assets are: – Equity accounted associates and joint ventures 2,891,734 2,947,726 – – 2,891,734 2,947,726 iii. Segment liabilities Segment liabilities 1,160,123 3,374,730 440,021 1,009,899 1,600,144 4,384,629 Reconciliation of segment liabilities to group liabilities Total group liabilities 1,160,123 3,374,730 440,021 1,009,899 1,600,144 4,384,629	MINERAL EXPLORATION UNALLOCATED TOTAL 31 DECEMBER 2012 31 DECEMBER 2011 31 DECEMBER 2012 31 DECEMBER 2011 31 DECEMBER 2012 31 DECEMBER 2011 $ $ $ $ $ $ i. Segment performance Other income 12,699 785 324,289 350,124 336,988 350,909 Total segment revenue 12,699 785 324,289 350,124 336,988 350,909 Total group revenue 12,699 785 324,289 350,124 336,988 350,909 Segment loss before tax 6,239,874 2,257,250 5,673,024 6,520,056 11,912,898 8,777,306 Loss before tax from continuing operations 6,239,874 2,257,250 5,673,024 6,520,056 11,912,898 8,777,306 Depreciation and amortisation expense included in segment result 141,888 112,670 121,836 36,265 263,724 148,935 ii. Segment assets Segment assets 219,484,970 196,083,034 15,175,143 44,367,177 234,660,113 240,450,211 Segment asset increases for the period – capital expenditure 32,651,021 21,951,379 53,506 19,897 32,704,527 21,971,276 – acquisitions – 80,512,559 – – – 80,512,559 32,651,021 102,463,938 53,506 19,897 32,704,527 102,483,835 Included in segment assets are: – Equity accounted associates and joint ventures 2,891,734 2,947,726 – – 2,891,734 2,947,726 iii. Segment liabilities Segment liabilities 1,160,123 3,374,730 440,021 1,009,899 1,600,144 4,384,629 Reconciliation of segment liabilities to group liabilities Total group liabilities 1,160,123 3,374,730 440,021 1,009,899 1,600,144 4,384,629	MINERAL EXPLORATION UNALLOCATED TOTAL 31 DECEMBER 2012 31 DECEMBER 2011 31 DECEMBER 2012 31 DECEMBER 2011 31 DECEMBER 2012 31 DECEMBER 2011 $ $ $ $ $ $ i. Segment performance Other income 12,699 785 324,289 350,124 336,988 350,909 Total segment revenue 12,699 785 324,289 350,124 336,988 350,909 Total group revenue 12,699 785 324,289 350,124 336,988 350,909 Segment loss before tax 6,239,874 2,257,250 5,673,024 6,520,056 11,912,898 8,777,306 Loss before tax from continuing operations 6,239,874 2,257,250 5,673,024 6,520,056 11,912,898 8,777,306 Depreciation and amortisation expense included in segment result 141,888 112,670 121,836 36,265 263,724 148,935 ii. Segment assets Segment assets 219,484,970 196,083,034 15,175,143 44,367,177 234,660,113 240,450,211 Segment asset increases for the period – capital expenditure 32,651,021 21,951,379 53,506 19,897 32,704,527 21,971,276 – acquisitions – 80,512,559 – – – 80,512,559 32,651,021 102,463,938 53,506 19,897 32,704,527 102,483,835 Included in segment assets are: – Equity accounted associates and joint ventures 2,891,734 2,947,726 – – 2,891,734 2,947,726 iii. Segment liabilities Segment liabilities 1,160,123 3,374,730 440,021 1,009,899 1,600,144 4,384,629 Reconciliation of segment liabilities to group liabilities Total group liabilities 1,160,123 3,374,730 440,021 1,009,899 1,600,144 4,384,629
	12,699 785 324,289 350,124 336,988	350,909
	12,699 785 324,289 350,124 336,988	350,909
	6,239,874 2,257,250 5,673,024 6,520,056 11,912,898	8,777,306
	6,239,874 2,257,250 5,673,024 6,520,056 11,912,898	8,777,306
	141,888 112,670 121,836 36,265 263,724 219,484,970 196,083,034 15,175,143 44,367,177 234,660,113	148,935 240,450,211
	32,651,021 21,951,379 53,506 19,897 32,704,527 – 80,512,559 – – –	21,971,276 80,512,559
	32,651,021 102,463,938 53,506 19,897 32,704,527	102,483,835
	2,891,734 2,947,726 – – 2,891,734	2,947,726
	1,160,123 3,374,730 440,021 1,009,899 1,600,144	4,384,629
	1,160,123 3,374,730 440,021 1,009,899 1,600,144	4,384,629

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59

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 22: REPORTING SEGMENTS continued

iv. Other income by geographical region

Revenue attributable to external customers is disclosed below, based on the location of the external customer:

	31 DECEMBER2012		31 DECEMBER 2011
	$		$
Australia	324,289		350,124
South America	12,699		785
Total revenue	336,988		350,909
v. Assets by geographical region
The location of segment assets by geographical location of the assets is disclosed below:
Australia	15,175,143		44,367,177
South America	219,484,970		196,083,034
Total assets	234,660,113		240,450,211
	CONSOLIDATED
	31 DECEMBER2012		31 DECEMBER 2011
	$		$
NOTE 23: NOTES TO THE STATEMENT OF CASH FLOWS
a. Reconciliation of Cash
Cash at the end of the f nancial year as shown in the statement of cash
f ows is reconciled to items in the statement of f nancial position as
follows:
Cash and cash equivalents	14,484,097		44,030,949
	14,484,097		44,030,949
b. Reconciliation of loss from ordinary activities after
Income Tax to net cash used in operating activities
Loss from ordinary activities after income tax	(11,912,898)		(8,777,306)
Add/(less) non-cash items:
Depreciation and amortisation	263,724		148,935
Fair value loss on convertible notes	–		66,649
Exchange loss/(gains)	654,452		(317,596)
Fair value of receivables loss/(gain)	233,382		1,029,297
Impairment of exploration properties	4,540,887		53,148
Expense on grant of options	185,840		203,585
Finance costs	–		528,908
Changes in assets and liabilities, net of the ef ects of purchase and disposal
of controlled entities during the f nancial year:
(Increase) in receivables	(72,867)		(110,453)
(Increase)/decrease in prepayments	(38,771)		182,076
Increase/(decrease) in payables	(156,620)		614,845
Increase in provisions	128,589		143,423
Net cash used in operating activities	(6,174,282)		(6,234,489)

60 METMINCO LIMITED Annual Report 31 December 2012

c. Acquisition of Entities During the year ended 31 December 2011 the Company increased its interest in SCM Ovalle from 50% to 100% ownership and paid stamp duty with respect to the purchase of Hampton Mining Limited completed in 2010. Details of this transaction are: Purchase consideration for SCM Ovalle – Cash consideration – Ordinary shares Total consideration Purchase consideration for Hampton Mining Limited – Cash consideration – Ordinary shares Total consideration Cash consideration Cash outf ow Assets and liabilities held at acquisition date: Exploration	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ – 9,414,800 – 24,510,523
	– 33,925,323
	– 729,561 – –
	– 729,561
	– 10,144,361
	– 9,414,800
	– 33,925,323

d. Financing and Investing Activities

Share issue

During the full year ended 31 December 2012, 73,864,286 ordinary fully paid shares were issued at an average price of $0.140 by way of private placement to sophisticated and professional investors.

The Company also issued 1,211,141 new ordinary shares pursuant to the Rights Issue which closed 3 January 2012. The Rights Issue was undersubscribed by 67,349,599 Shares (Shortfall Shares).

On 04 December 2012 the Company issued 1,450 shares pursuant to the exercise of 1,450 listed options expiring on 04 December 2012.

NOTE 24: EVENTS SUBSEQUENT TO REPORTING DATE

Matters that have arisen in the interval between the end of the year and the date of this report of a material or unusual nature likely, in the opinion of the Directors of the Company, to signifi cantly aff ect the operations of the Group, the results of those operations, or the state of aff airs of the Group, in future fi nancial years are as follows:

• In January 2013, Metminco’s cash reserves increased to A$16.5 million (US$17.1 million) when Hampton Peru received A$2 million (US$2.1 million) relating to recovery of VAT paid on Los Calatos expenditure incurred between 01 January 2012 and 30 June 2012.

• On 4 March 2013 Metminco announced the results of the Study on the Los Calatos copper project. The Preferred Mining Scenario comprises an open pit for 7 years at a strip ratio of 2.2:1 followed by an underground block cave mining operation for the remainder of the a 31-year LoM with total material treated over the LoM being 656 million tonnes at 0.45% Cu and 0.026% Mo (0.56% CuEq), cash operating costs net of credits of US$1.09/lb and an initial pre-production capital expenditure of U$1.5 billion including initial underground development.

Other than the matters noted above, no other matters have arisen in the interval between the end of the full year and the date of this report of a material or unusual nature likely, in the opinion of the Directors of the Company, to signifi cantly aff ect the operations of the Group, the results of those operations, or the state of aff airs of the Group, in future fi nancial years.

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61

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 25: RELATED PARTIES

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Directors

The names of each person holding the position of Director of Metminco Limited during the full year are:

Antonio Ortúzar, Phillip Wing, William Howe, William Etheridge, Tim Read and Francisco Vergara-Irarrazaval.

Details of Key Management Personnel remuneration are set out in Note 5.

Transactions with related parties:

a. Directors

Apart from the details disclosed in Note 5, no Directors entered into a material contract with the Company or the Consolidated Group since the end of the previous fi nancial year and, there were no material contracts involving Directors’ interests existing at year end.

Directors’ and Executive Offi cer’s holdings of shares and options

The aggregate interests of Directors and the Executive Offi cers of the reporting entity and their Director-related entities in shares and share options of entities within the Consolidated Group at year end are set out in the Directors’ Report and in Note 5.

b. Subsidiaries

Advances by Metminico are in AUD and are non interest bearing with no fi xed repayment terms. Total advances to the subsidiary companies as at 31 December 2012 was $33,286,962 (31 Dec 2011: $25,756,719).

NOTE 26: FINANCIAL RISK MANAGEMENT

The Group’s fi nancial instruments consist mainly of deposits with banks, local money market instruments, trade and other receivables, trade and other payables and convertible notes.

The totals for each category of fi nancial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these fi nancial statements, are as follows:

NOTE Financial assets Cash and cash equivalents 8 Trade and other receivables 9 Fair value of equity swap derivative 9 Total f nancial assets Financial liabilities Financial liabilities at amortised cost – Trade and other payables 16 Total f nancial liabilities	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 14,484,097 44,030,949 8,131,061 5,917,821 – 109,613
	22,615,158 50,058,383
	1,254,750 4,167,824
	1,254,750 4,167,824

Financial Risk Management Policies

The Board of Directors is responsible for, amongst other issues, monitoring and managing fi nancial risk exposures of the Group. The Board monitors the Group’s fi nancial risk management policies and exposures and approves fi nancial transactions within the scope of its authority. It also reviews the eff ectiveness of internal controls relating to counterparty credit risk, currency risk, fi nancing risk and interest rate risk.

The Board’s overall risk management strategy seeks to assist the consolidated group in meeting its fi nancial targets, while minimising potential adverse eff ects on fi nancial performance. Its functions include the review of the credit risk policies and future cash fl ow requirements.

62 METMINCO LIMITED Annual Report 31 December 2012

Specifi c Financial Risk Exposures and Management

The main risks the Group is exposed to through its fi nancial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk and foreign currency risk.

a. Credit risk

Exposure to credit risk relating to fi nancial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a fi nancial loss to the Group.

Credit risk is managed through the maintenance of procedures (such procedures include the regular monitoring of exposures and monitoring of the fi nancial stability of signifi cant customers and counterparties), ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment.

Risk is also minimised through investing surplus funds in fi nancial institutions that maintain a high credit rating, or in entities that the Board has otherwise cleared as being fi nancially sound.

Credit Risk Exposures

The maximum exposure to credit risk by class of recognised fi nancial assets at reporting date, excluding the value of any collateral or other security held, is equivalent to the carrying value and classifi cation of those fi nancial assets (net of any provisions) as presented in the statement of fi nancial position.

With the exception of the receivable from the equity swap which is secured (Note 9), the Group has no signifi cant concentration of credit risk with any single counterparty or group of counterparties. However, on a geographical basis, the Group has signifi cant credit risk exposures to South America given the substantial operations in those regions.

Trade and other receivables are neither past due nor impaired and are considered to be of high credit quality. Aggregates of such amounts are as detailed in Note 9. No impairment has been applied to trade and other receivables. Derivative instruments are held at fair value and not considered impaired.

With the exception of the receivable from the equity swap which is secured (Note 9), the Group has no signifi cant concentration of credit risk with any single counterparty or group of counterparties. However, on a geographical basis, the Group has signifi cant credit risk exposures to South America given the substantial operations in those regions.

Trade and other receivables are neither past due nor impaired and are considered to be of high credit quality. Aggregates of such amounts are as detailed in Note 9. No impairment has been applied to trade and other receivables. Derivative instruments are held at fair value and not considered impaired.

b. Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter diffi culty in settling its debts or otherwise meeting its obligations related to fi nancial liabilities. The Group manages this risk through the following mechanisms:

• preparing forward looking cash fl ow analysis in relation to its operational, investing and fi nancing activities;

• maintaining a reputable credit profi le;

• managing credit risk related to fi nancial assets;

• only investing surplus cash with major fi nancial institutions; and

• comparing the maturity profi le of fi nancial liabilities with the realisation profi le of fi nancial assets.

The tables below refl ect an undiscounted contractual maturity analysis for fi nancial liabilities.

Cash fl ows realised from fi nancial assets refl ect management’s expectation as to the timing of realisation. Actual timing may therefore diff er from that disclosed. The timing of cash fl ows presented in the table to settle fi nancial liabilities refl ects the earliest contractual settlement dates.

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63

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 26: FINANCIAL RISK MANAGEMENT continued

Financial Liability and Financial Asset Maturity Analysis

WITHIN 1 YEAR 1 TO 5 YEARS OVER 5 YEARS TOTAL 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 $ $ $ $ $ $ $ $ Consolidated Group Financial liabilities due for payment Trade and other payables (excluding est. annual leave) 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Total contractual outf ows 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Total expected outf ows 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Financial assets – cash f ows realisable Cash and cash equivalents 14,484,097 44,030,949 – – – – 14,484,097 44,030,949 Trade, term and loans receivables 3,756,276 2,512,029 – – – – 3,756,276 2,512,029 Total anticipated inf ows 18,240,373 46,542,978 – – – – 18,240,373 46,542,978 Net (outf ow)/inf ow on f nancial instruments 16,985,623 42,375,154 – – – – 16,985,623 42,375,154	WITHIN 1 YEAR 1 TO 5 YEARS OVER 5 YEARS TOTAL 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 $ $ $ $ $ $ $ $ Consolidated Group Financial liabilities due for payment Trade and other payables (excluding est. annual leave) 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Total contractual outf ows 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Total expected outf ows 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Financial assets – cash f ows realisable Cash and cash equivalents 14,484,097 44,030,949 – – – – 14,484,097 44,030,949 Trade, term and loans receivables 3,756,276 2,512,029 – – – – 3,756,276 2,512,029 Total anticipated inf ows 18,240,373 46,542,978 – – – – 18,240,373 46,542,978 Net (outf ow)/inf ow on f nancial instruments 16,985,623 42,375,154 – – – – 16,985,623 42,375,154	WITHIN 1 YEAR 1 TO 5 YEARS OVER 5 YEARS TOTAL 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 31 DEC 2012 31 DEC 2011 $ $ $ $ $ $ $ $ Consolidated Group Financial liabilities due for payment Trade and other payables (excluding est. annual leave) 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Total contractual outf ows 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Total expected outf ows 1,254,750 4,167,824 – – – – 1,254,750 4,167,824 Financial assets – cash f ows realisable Cash and cash equivalents 14,484,097 44,030,949 – – – – 14,484,097 44,030,949 Trade, term and loans receivables 3,756,276 2,512,029 – – – – 3,756,276 2,512,029 Total anticipated inf ows 18,240,373 46,542,978 – – – – 18,240,373 46,542,978 Net (outf ow)/inf ow on f nancial instruments 16,985,623 42,375,154 – – – – 16,985,623 42,375,154
	1,254,750 4,167,824 – – – – 1,254,750	4,167,824
	1,254,750 4,167,824 – – – – 1,254,750	4,167,824
	14,484,097 44,030,949 – – – – 14,484,097 3,756,276 2,512,029 – – – – 3,756,276	44,030,949 2,512,029
	18,240,373 46,542,978 – – – – 18,240,373	46,542,978
	16,985,623 42,375,154 – – – – 16,985,623	42,375,154

c. Market Risk

i. Interest rate risk

Exposure to interest rate risk arises on fi nancial assets and fi nancial liabilities recognised at the end of the reporting period whereby a future change in interest rates will aff ect future cash fl ows or the fair value of fi xed rate fi nancial instruments. The Group is also exposed to earnings volatility on fl oating rate instruments.

ii. Foreign exchange risk

Exposure to foreign exchange risk may result in the fair value or future cash fl ows of a fi nancial instrument fl uctuating due to movement in foreign exchange rates of currencies in which the Group holds fi nancial instruments which are other than the AUD functional currency of the Group.

The Consolidated Group is exposed to interest rate and foreign exchange risk through cash assets held and fi nancial liabilities owed as at the reporting date.

Cash assets held in Australian dollars and subject to f oating interest rate Australian currency equivalent of cash assets held in US dollars and subject to f oating interest rate Australian currency equivalent of cash assets held in UK pounds and subject to f oating interest rate Australian currency equivalent of cash assets held in Chilean pesos and subject to f oating interest rate Total cash assets

CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 2,437,519 6,464,772 11,253,865 37,167,874 761,094 124,097 31,619 274,206

14,484,097 44,030,949

64 METMINCO LIMITED Annual Report 31 December 2012

CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ INTEREST RECEIVED WEIGHTED AVERAGE INTEREST RECEIVED WEIGHTED AVERAGE Cash assets held in Australian dollars and subject to f oating interest rate 229,177 0.78% 313,291 0.93% Australian currency equivalent of cash assets held in US dollars and subject to f oating interest rate 97,927 0.33% 37,618 0.11% Australian currency equivalent of cash assets held in UK pounds and subject to f oating interest rate – – – – Australian currency equivalent of cash assets held in Chilean pesos and subject to f oating interest rate 9,884 0.03% – – Total interest received 336,988 1.14% 350,909 1.04%	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ INTEREST RECEIVED WEIGHTED AVERAGE INTEREST RECEIVED WEIGHTED AVERAGE Cash assets held in Australian dollars and subject to f oating interest rate 229,177 0.78% 313,291 0.93% Australian currency equivalent of cash assets held in US dollars and subject to f oating interest rate 97,927 0.33% 37,618 0.11% Australian currency equivalent of cash assets held in UK pounds and subject to f oating interest rate – – – – Australian currency equivalent of cash assets held in Chilean pesos and subject to f oating interest rate 9,884 0.03% – – Total interest received 336,988 1.14% 350,909 1.04%	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ INTEREST RECEIVED WEIGHTED AVERAGE INTEREST RECEIVED WEIGHTED AVERAGE Cash assets held in Australian dollars and subject to f oating interest rate 229,177 0.78% 313,291 0.93% Australian currency equivalent of cash assets held in US dollars and subject to f oating interest rate 97,927 0.33% 37,618 0.11% Australian currency equivalent of cash assets held in UK pounds and subject to f oating interest rate – – – – Australian currency equivalent of cash assets held in Chilean pesos and subject to f oating interest rate 9,884 0.03% – – Total interest received 336,988 1.14% 350,909 1.04%
	336,988 1.14% 350,909	1.04%

Sensitivity Analysis

The following table illustrates sensitivities to the Group’s exposures to changes in interest rates and exchange rates. The table indicates the impact on how profi t and equity values reported at reporting date would have been aff ected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables.

Interest Rate Sensitivity Analysis

At 31 December 2012, the eff ect on profi t and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

constant would be as follows:
Change in prof t
Increase in interest rate by 2%	289,682	880,619
Decrease in interest rate by 2%	(289,682)	(880,619)
Change in equity
Increase in interest rate by 2%	289,682	880,619
Decrease in interest rate by 2%	(289,682)	(880,619)

Foreign Currency Risk Sensitivity Analysis

At 31 December 2011, the eff ect on profi t and equity as a result of changes in the value of the Australian dollar (AUD) compared to the US dollar (USD), the UK pound (GBP) and the Chilean peso (CLP), with all other variables remaining constant, would be as follows:

follows:
Change in prof t
Improvement in AUD to USD by 5%	(561,820) (1,858,394)
Decline in AUD to USD by 5%	561,820 1,858,394
Change in equity
Improvement in AUD to USD by 5%	(561,820) (1,858,394)
Decline in AUD to USD by 5%	561,820 1,858,394
Change in prof t
Improvement in AUD to GBP by 5%	(38,055) (6,205)
Decline in AUD to GBP by 5%	38,055 6,205
Change in equity
Improvement in AUD to GBP by 5%	(38,055) (6,205)
Decline in AUD to GBP by 5%	38,055 6,205
Change in prof t
Improvement in AUD to CLP by 5%	(1,581) (13,710)
Decline in AUD to CLP by 5%	1,581 13,710
Change in equity
Improvement in AUD to CLP by 5%	(1,581) (13,710)
Decline in AUD to CLP by 5%	1,581 13,710

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65

NOTES TO THE FINANCIAL STATEMENTS continued

NOTE 26: FINANCIAL RISK MANAGEMENT continued

Net Fair Values

Fair value estimation

Financial assets and fi nancial liabilities are presented at fair value or at amortised cost in the statement of fi nancial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have a material impact on the amounts estimated. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes are available, fair value is obtained using discounted cash fl ow analysis and other valuation techniques commonly used by market participants.

Diff erences between fair values and carrying values of fi nancial instruments with fi xed interest rates are due to the change in discount rates being applied by the market since their initial recognition by the Group. Most of these instruments which are carried at amortised cost (i.e. term receivables, held-to-maturity assets, loan liabilities) are to be held until maturity and therefore the net fair value fi gures calculated bear little relevance to the Group.

31 DECEMBER 2012 31 DECEMBER 201 FOOTNOTE NET CARRYING VALUE NET FAIR VALUE NET CARRYING VALUE NET FAIR VALUE $ $ $ $ Consolidated Group Financial assets Cash and cash equivalents (i) 14,484,097 14,484,097 44,030,949 44,030,949 Trade and other receivables (i) 8,131,061 8,131,061 5,917,821 5,917,821 Financial assets at fair value (ii) – – 109,613 109,613 Total f nancial assets 22,615,158 22,615,158 50,058,383 50,058,383 Financial liabilities Financial liabilities at amortised cost (i) 1,254,750 1,254,750 4,167,824 4,167,824 Total f nancial liabilities 1,254,750 1,254,750 4,167,824 4,167,824	31 DECEMBER 2012 31 DECEMBER 201 FOOTNOTE NET CARRYING VALUE NET FAIR VALUE NET CARRYING VALUE NET FAIR VALUE $ $ $ $ Consolidated Group Financial assets Cash and cash equivalents (i) 14,484,097 14,484,097 44,030,949 44,030,949 Trade and other receivables (i) 8,131,061 8,131,061 5,917,821 5,917,821 Financial assets at fair value (ii) – – 109,613 109,613 Total f nancial assets 22,615,158 22,615,158 50,058,383 50,058,383 Financial liabilities Financial liabilities at amortised cost (i) 1,254,750 1,254,750 4,167,824 4,167,824 Total f nancial liabilities 1,254,750 1,254,750 4,167,824 4,167,824	31 DECEMBER 2012 31 DECEMBER 201 FOOTNOTE NET CARRYING VALUE NET FAIR VALUE NET CARRYING VALUE NET FAIR VALUE $ $ $ $ Consolidated Group Financial assets Cash and cash equivalents (i) 14,484,097 14,484,097 44,030,949 44,030,949 Trade and other receivables (i) 8,131,061 8,131,061 5,917,821 5,917,821 Financial assets at fair value (ii) – – 109,613 109,613 Total f nancial assets 22,615,158 22,615,158 50,058,383 50,058,383 Financial liabilities Financial liabilities at amortised cost (i) 1,254,750 1,254,750 4,167,824 4,167,824 Total f nancial liabilities 1,254,750 1,254,750 4,167,824 4,167,824
	22,615,158 22,615,158 50,058,383	50,058,383
	1,254,750 1,254,750 4,167,824	4,167,824
	1,254,750 1,254,750 4,167,824	4,167,824

The fair values disclosed in the above table have been determined based on the following methodologies:

(i) Cash and cash equivalents, trade and other receivables and trade and other payables are short-term instruments in nature whose carrying value is equivalent to fair value. Trade and other payables exclude amounts provided for annual leave, which is not considered a fi nancial instrument.

(ii) The fair value of term receivables generally approximates carrying value.

d. Financial Instruments Measured at Fair Value

The fi nancial instruments recognised at fair value in the statement of fi nancial position have been analysed and classifi ed using a fair value hierarchy refl ecting the signifi cance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels:

• quoted prices in active markets for identical assets or liabilities (Level 1);

• inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

• inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The Company only has level 3 categories and the basis for valuation is set out in the notes to the accounts.

66 METMINCO LIMITED Annual Report 31 December 2012

NOTE 27: RESERVES

a. Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange diff erences arising on translation of a foreign controlled subsidiary.

b. Option Reserve

The option reserve records items recognised as expenses on valuation of employee share options.

c. Acquisition Reserve

The acquistion reserve records items recognised on the subsequent acquisition of the Hampton minority interest.

NOTE 28: PARENT ENTITY INFORMATION

Statement of Financial Position Current assets Total assets Current liabilities Total liabilities Issued capital Retained earnings Reserves Statement of Comprehensive Income Loss for the year Total comprehensive loss	CONSOLIDATED 31 DECEMBER 2012 31 DECEMBER 2011 $ $ 14,428,253 44,059,385 288,526,943 284,876,896 440,021 1,009,897 440,021 1,009,897 317,607,677 307,900,070 (32,942,836) (27,269,812) 3,422,081 3,236,241
	288,086,922 283,866,499
	5,673,025 6,520,058
	5,673,025 6,520,058

The parent entity has lease commitments of A$125,432. The parent entity has not entered into a deed of cross guarantee nor are there any contigent liabilities at the year end.

NOTE 29: COMPANY DETAILS

Metminco Limited is a company domiciled in Australia and its registered offi ce is located at:

Level 6 122 Walker Street North Sydney NSW 2060 Australia

The Company’s principal offi ce is located at:

Isidora Goyenechea 3162 Ofi cina 201 Las Condes Chile.

The Group’s principal activities are exploration and development of mineral prospects primarily located in Chile and Peru, South America.

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67

DIRECTORS’ DECLARATION

The directors of the company declare that:

1. the fi nancial statements and notes, as set out on pages 32 to 67, are in accordance with the Corporations Act 2001 and:

2. a. comply with Accounting Standards;

3. b. give a true and fair view of the fi nancial position as at 31 December 2012 and of the performance for the full year ended on that date of the Consolidated Group; and

4. c. comply with International Financial Reporting Standards as discussed in Note 1.

5. the Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director and Chief Financial Offi cer for the fi nancial year ended 31 December 2012

6. 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.

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William J Howe

Director

Dated this 25th day of March 2013

68 METMINCO LIMITED Annual Report 31 December 2012

INDEPENDENT AUDITOR’S REPORT to the Members of Metminco Limited

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70 METMINCO LIMITED Annual Report 31 December 2012