RED MOUNTAIN MINING LIMITED — Annual Report 2012

Sep 27, 2012

Red Mountain Mining Ltd ACN 119 568 106

Annual Financial Report 30 June 2012

Red Mountain Mining Ltd ACN 119 568 106

Contents Page

Corporate Directory	1
Directors' Report	2
Auditors' Independence Declaration 18
Corporate Governance Statement 19
Financial Report 29
Directors' Declaration 61
Independent Audit Report to the Members 62

Red Mountain Mining Ltd ACN 119 568 106

Corporate Directory

Directors

Neil Warburton Executive Chairman and Acting CEO

Keith Rowe Executive Director

Michael Wolley Non-executive Director

Secretary Shannon Coates

Auditor

Butler Settineri (Audit) Pty Ltd Unit 16, First Floor Spectrum Offices 100 Railway Road Subiaco WA 6008

Bankers

National Australia Bank 1232 Hay St West Perth WA 6005

Principal registered office in Australia Unit 1 2 Richardson Street West Perth WA 6005

Your Directors present their report on the Consolidated Entity ("Group") consisting of Red Mountain Mining Ltd ("RMX" or "Company") and the entities it controlled at the end of, or during, the financial year ended 30 June 2012.

Directors

The following persons were Directors of Red Mountain Mining Ltd for the full financial year and up to the date of this report, unless otherwise stated:

Neil Warburton	Executive Chairman and Acting CEO
Keith Rowe	Executive Director
Michael Wolley	Non-executive Director
Bo Zhou	Non-executive Director (resigned 3 April 2012)

Principal activities

During the financial year the principal activities of the consolidated entity consisted of sourcing and evaluating suitable gold and polymetallic properties for prospective acquisition in China and the greater Asian region.

Review of operations

A summary of consolidated revenues and results is set out below:

	2012 \$	2011 \$
Revenue	174,499	9,722
Loss before income tax expense Income tax expense	(5,178,481) -	(1,617,692) -
Loss attributable to members of Red Mountain Mining Ltd	(5,178,481)	(1,617,692)

Financial Position

During the financial year the Group had a net increase in contributed equity of \$7,518,000 net of share issue costs (from \$4,139,848 to \$11,657,848) as a result of the issue of 40,000,000 ordinary shares at 20cents each upon listing, less capital raising expenses of \$492,000, plus \$10,000 from the issue of options.

At the end of the financial year the Group had net cash balances of \$4,380,150 (2011: \$446,894) and net assets of \$4,276,270 (2011 net assets: \$48,010).

Total liabilities (being trade and other creditors and provisions) amounted to \$280,035 (2011: \$529,380).

Commentary

The Company is seeking to establish itself as an operating gold producer in the greater Asian region through strategic joint ventures and acquisitions. The Company is focused on acquiring advanced gold projects and underperforming mining operations in Asia which can be upgraded using modern Australian mining methods or converted into producing assets through advanced exploration techniques and modern mine designs.

Red Mountain Mining Ltd listed on the Australian Securities Exchange on 1 September 2011, after successfully raising \$8,000,000. At this time, the Company held binding Framework Agreements to acquire 51% of the Zhongqu Project, an operational gold mine and infrastructure, and 90% of the Diebu Project, an advanced gold exploration target, both in Gansu Province, China.

Following an encouraging initial 17 hole, 2,352 metre Stage I drilling program at the Zhongqu Project, the Company approved a Stage II drilling program targeting down dip extensions of the main granodiorite contact shear zone hosting the gold mineralisation.

The Stage II drilling program comprised 1,645 metres of underground diamond drilling and was completed in February 2012. While the drilling campaign confirmed the presence of high grade gold mineralisation in a series of lenses at the Xinqu underground mine at Zhongqu, the results indicated that these lenses were not continuous, as previously modelled, which warranted a review of the economic viability of the Project. Following this review, the Company concluded it would not be viable to proceed with the proposed acquisition of the Zhongqu Project based on the original terms of the Framework Agreement, and would only proceed should further commercially viable terms be agreed with the vendors.

On 5 March 2012, the Company announced that it had elected to withdraw from the Framework Agreement for the Diebu Project following a review of the technical and commercial aspects of Diebu which downgraded the prospectivity and increased the risk profile of the Project.

On 24 April 2012, the Company further announced that it had withdrawn from the Zhongqu Framework Agreement due to the lower than anticipated gold resources and uncertainty over the extension amendment deed to the Zhongqu Framework Agreement.

Following the withdrawal from the original projects, the Company engaged in advanced discussions with respect to several other projects within China and extended its search of 'under-developed' advanced exploration projects or operating mines to the greater Asian region.

Consistent with this strategy, on 30 May 2012 the Company announced it had signed a non-binding Term Sheet for the proposed acquisition of gold and copper-gold assets in the Philippines from Mindoro Resources Ltd ("Mindoro").

Matters subsequent to the end of the financial year

On 23 July 2012, Red Mountain Mining announced that it had entered into a formal binding Share Sale Agreement with Mindoro ("SSA") to acquire 100% of Mindoro's Batangas and Tapian San Francisco gold and copper-gold assets in the Philippines through the issue of:

• 100,000,000 fully paid ordinary shares in the capital of Red Mountain Mining; and
• 50,000,000 performance shares in the capital of Red Mountain Mining that convert into ordinary shares if, within 12 months of completion of the sale, both (a) the gold resource across the Assets increase to 600,000 ounces at a JORC Indicated level; and (b) a scoping study is completed on the Assets that confirms that the development of a mine is economically viable, where the scoping study must have a minimum of 50% conversion of the 600,000 ounces Indicated JORC Resource to Probable Reserves.

The 100,000,000 ordinary Red Mountain Mining shares and 50,000,000 performance shares to be issued to Mindoro will be escrowed for 12 months from completion. In addition, the 50,000,000 performance shares will be voluntarily escrowed up to 12 months from vesting.

Mindoro intends to make an in specie distribution of the Red Mountain Mining initial 100,000,000 shares on a pro rata basis after 12 months of the sale. The 50,000,000 performance based Red Mountain Mining

shares (if milestones are achieved) will be distributed in specie to Mindoro shareholders up to 24 months after the sale.

Following the transaction, current Red Mountain Mining shareholders will retain an approximate 35% to 44% interest in the expanded group (depending on the final number of shares issued).

Pursuant to the SSA, on 27 July 2012, Mindoro Resources drew down an initial \$200,000 of a \$1 million loan facility provided by the Company to fund drilling of the potential high-grade gold feeder zones at Archangel gold project, within the Batangas Project in the Philippines. This drilling commenced on 5 August 2012.

On 3 September 2012, the Company announced the results of the first diamond drill hole from this drilling program at the Archangel gold project. Drill hole KTD 191-12 intersected 26.2m @ 4.07 g/t gold from 19.4m down hole including two high grade intervals of 6m @ 6.12 g/t gold from 19.4m and 8.8m @ 5.36 g/t gold from 36.8m down hole. These intersections are part of a broader interval of 39.25m @ 3.08 g/t gold from 16.4m down hole.

At the Company's General Meeting held on 4 September 2012, shareholder approval was received on various resolutions to approve and facilitate the proposed acquisition of the Mindoro gold and copper gold assets.

No other matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect:

• (a) the consolidated entity's operations in future financial years, or
• (b) the results of those operations in future financial years, or
• (c) the consolidated entity's state of affairs in future financial years.

Likely developments and expected results of operations

Further information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

Information on directors

Neil Warburton Executive Chairman and Acting CEO, MAusIMM, FAICD

At the commencement of the financial year, Neil Warburton was Non-executive Director of the Company. On 3 April 2012, as part of a Board and management restructure, Neil was appointed Executive Chairman and Acting CEO.

Neil was previously Chief Executive Officer of Barminco, Australia's largest domestic underground mining contractor with operations in Australia and Africa. Barminco mines (under contract) over 800,000 oz of gold per annum in Australia alone. Neil successfully guided and grew that, company with annual revenues having more than doubled during his tenure. Before joining Barminco he was Managing Director of Coolgardie Gold NL.

Neil is also a non executive director of Australian Mines Limited (22 April 2003 to current), a company publicly listed on the ASX. Neil has over 30 years' experience in gold and base metal mining.

Neil is a Member of the Australian Institute of Mining and Metallurgy and is a Fellow of the Australian Institute of Company Directors.

Keith Rowe Executive Director, B App Sci (Pt), Grad Dip (Mt), MAICD

Keith Rowe has over 20 years' experience in the mining industry throughout Australia as a Consultant to mining operations in the development, delivery and management of occupational health and safety systems. Prior to accepting the Executive role at Red Mountain Mining Ltd he was Senior Safety Advisor to Ausdrill Ltd.

Keith is a founding Director of the Finding Sydney Foundation which managed the successful search for the HMAS Sydney II which was sunk off the Western Australian Coast in 1941 and located in 2008, and received the Gold Swan Award at the 2010 Western Australia Citizen of the Year Awards.

Keith qualified as a physiotherapist at Curtin University and has a B.App.Sci (PT) and Grad.Dip (Manip. Th.) and is a Member of the Australian Institute of Company Directors.

Michael Wolley Independent Non-executive Director, BE, MM, MAICD

Michael Wolley was appointed as Non-executive Chairman for Red Mountain Mining Ltd in April 2011. On 3 April 2012, as part of a Board and management restructure, Michael stepped down as Chairman, remaining on the Board as Independent Non-executive Director.

Michael has a depth of experience in the resources and industrial sectors in both Australia and internationally. He is currently Vice President Corporate Development of Todd Corporation Ltd. Michael was recently Managing Director of a junior gold development business, Golden Iron Resources, and prior to that was Chief Operating Officer for Lynas Corporation, an ASX 100 company that is a vertically integrated mining and minerals business with mining and processing facilities in Western Australia and downstream processing in Malaysia. Prior to Lynas Corporation, Michael held senior executive roles with industrial and construction services businesses across Asia Pacific including the position of Managing Director Asia Pacific for a refrigeration and climate control business and as President BlueScope Steel China. Prior to joining BlueScope Steel Michael was General Manger Operations for Dexion, a business servicing the logistics industry across Asia Pacific. He began his career with Mobil Oil Australia and over a 15 year period held senior roles in engineering, production and planning across Australia and New Zealand.

Michael holds a first class honours degree in Chemical and Materials Engineering from Auckland University and a Masters of Management from Macquarie Graduate School of Management. Michael is a Member of the Australian Institute of Company Directors.

Bo Zhou Non-executive Director, BSc, PhD, MBA, MAusIMM (resigned 3 April 2012)

Bo Zhou is Managing Director of Qzcorp Pty Ltd, a resource consultancy business, and a director of Griffin Mining's subsidiary in China, Hebei Huaao Mining Industry Co Ltd.

Over the last 16 years Bo has worked on various resource projects covering many projects in China in both senior geological and management banking roles. Bo previously worked as Managing Director of Sinovus Mining Ltd and as General Manager for Guangxi Golden Tiger Mining Joint Venture, a Sino-Australian Joint Venture gold company focused in Guangxi, China. He has also worked as Senior Geologist for Silk Road Resources and as an exploration geologist and programme manager for Turnbull and Partners (Mr Malcolm Turnbull's mining ventures in China in the 1990s).

Bo holds a Bachelor of Science degree in geology from the Peking University and a PhD in exploration geology from the University of Sydney. He also has an MBA from the Australian Graduate School of Management. He is a member of the Australian Institute of Mining and Metallurgy.

Shannon Coates Company Secretary, LLB, ACS, GAICD (Appointed 3 October 2011)

Ms Coates completed a Bachelor of Laws through Murdoch University in 1993 and has since gained over 18 years in-house experience in corporate law and compliance for public companies. She is a Chartered Secretary and an Associate Member of both the Institute of Chartered Secretaries & Administrators and Chartered Secretaries Australia. She is also a member of the Australian Institute of Company Directors.

Ms Coates is currently employed as Legal & Compliance Counsel with Evolution Capital Partners, a company providing corporate advisory services and is also company secretary to a number of ASX, JSE and AIM listed companies

Desmond Kelly Company Secretary, B Comm, CPA, MAICD (Resigned 3 October 2011)

Desmond Kelly is a commerce graduate from the University of Western Australia and is a member of CPA Australia and the Australian Institute of Company Directors. Desmond has over 35 years' experience in the mining industry and accounting profession. He has been an accountant in public practice and currently is consulting to various companies as a company secretary and management consultant. He has held the positions of Director, Managing Director and Company Secretary with a number of public listed mining and industrial companies.

Directors' interests in shares and options

As at the date of this report the interests of the Directors in the shares and options of the Company were:

		Ordinary Shares		Options over Ordinary Shares
	Direct	Indirect	Direct	Indirect
Neil Warburton	125,000	6,988,1251	923,5002	9,319,8193
Keith Rowe	312,500	5,640,6254	1,036,3605	5,342,5436
Michael Wolley			2,000,0007

1. Comprising 4,565,625 shares held indirectly by Michlange Pty Ltd of which Mr Warburton is a director and shareholder; 297,500 shares held indirectly by Michlange Pty Ltd of which Mr Warburton is a director and shareholder and beneficiary of the trust; 1,500,000 held indirectly by Michlange Pty Ltd of which Mr Warburton is a director and shareholder and beneficiary of the trust and 625,000 held indirectly by Australian Beijing Holdings Pty Ltd of which Mr Warburton is a director and shareholder.

2. Comprising 75,000 Options exercisable at \$0.20 expiring on 30 June 2014; 424,250 Options exercisable at \$0.25 expiring on 31 July 2014; 424,250 Options exercisable at \$0.35 expiring on 31 July 2016.

3. Comprising 3,399,375 Options exercisable at \$0.20 expiring on 30 June 2014 held indirectly by Michlange Pty Ltd of which Mr Warburton is a director and shareholder; 375,000 Options exercisable at \$0.20 expiring on 30 June 2014 held indirectly by Australian Beijing Holdings Pty Ltd of which Mr Warburton is a director and shareholder;772,722 Options exercisable at \$0.25 expiring on 31 July 2014 and 772,722 Options exercisable at \$0.35 expiring on 31 July 2016 held indirectly by Michlange Pty Ltd as trustee for the NF Warburton Family A/C of which Mr Warburton is a director and shareholder and beneficiary of the trust; 2,000,000 Options exercisable at \$0.25 expiring on 1 July 2014 and 2,000,000 Options exercisable at \$0.50 expiring on 1 July 2016 held indirectly by Michlange Pty Ltd as trustee for the Warburton Super A/C of which Mr Warburton is a director and shareholder and beneficiary of the fund.

4. Comprising 4,415,625 shares held indirectly by Keith Bowden Rowe and Lesley Rowe. Lesley Rowe is the spouse of Keith Rowe; 625,000 shares held indirectly by Australian Beijing Holdings Pty Ltd of which Mr Rowe is a director and shareholder and 600,000 held by Keith and Lesley Rowe as trustee for the Rowe Self-Administered Superannuation Fund a/c, of which Mr Rowe is a beneficiary.

5. Comprising 187,500 Options Exercisable at \$0.20 expiring on 30 June 2014; 424,430 Options exercisable at \$0.25 expiring on 31 July 2014 and 424,430 Options exercisable at \$0.35 expiring on 31 July 2016

6. Comprising 2,649,375 options exercisable at \$0.20 expiring on 30 June 2014 held indirectly by Keith Bowden Rowe and Lesley Rowe. Lesley Rowe is the spouse of Keith Rowe; 375,000 options exercisable at \$0.20 expiring on 30 June 2014 held indirectly by Australian Beijing Holdings Pty Ltd of which Mr Rowe is a director and shareholder; and 1,159,084 Tranche 1 Options exercisable at \$0.25 expiring on 31 July 2014; and 1,159,084 Tranche 2 Options exercisable at \$0.35 expiring on 31 July 2016 held indirectly by Keith Rowe and Lesley Rowe as trustee for The Marita Trust of which Mr Rowe is a beneficiary.

7. Comprising 1,000,000 Options exercisable at \$0.25 expiring on 31 July 2014 and 1,000,000 Options exercisable at \$0.35 expiring on 31 July 2016.

Directors' Remuneration

Please refer to the Remuneration Report on page 11 to 16 for information relating to the directors' remuneration for the financial year.

Meetings of directors

The number of directors' meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Company during the financial year were:

Director		Board	Committee	Audit and Risk		Remuneration Committee
	A	B	A	B	A	B
Neil Warburton	14	16	N/A	N/A	N/A	N/A
Keith Rowe	16	16	1	1	1	1
Michael Wolley	13	16	1	1	1	1
Bo Zhou1	11	11	N/A	N/A	N/A	N/A

A - denotes the number of meetings attended

B - denotes the number of meetings held during the time the director held office or was a member of the committee during the year.

Notes:

1. Resigned 3 April 2012.

Shares and options on issue

The Company currently has 79,060,026 fully paid ordinary shares on issue.

The Company currently has 42,287,474 options over ordinary shares of which 29,446,558 unlisted options are on issue exercisable at \$0.20 per share of which 27,728,125 have an expiry date of 30 June 2014 and 1,718,433 have an expiry date of 12 September 2013. In addition, there are 4,420,458 unlisted options exercisable at \$0.25 per share with an expiry date of 31 July 2014 and 4,420,458 unlisted options exercisable at \$0.35 per share with expiry date 31 July 2016. Furthermore, there are 2,000,000 unlisted options exercisable at \$0.25 per share with an expiry date of 1 July 2014 and 2,000,000 options exercisable at \$0.50 per share with expiry date 1 July 2016.

Dividends

No dividends were paid to members during the financial period and the directors do not recommend the payment of a dividend.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Remuneration Report

The Directors of Red Mountain Mining Ltd ('the Group') present the Remuneration Report prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. The remuneration report is set out under the following main headings:

• a. Principles used to determine the nature and amount of remuneration
• b. Executive service agreements
• c. Details of remuneration
• d. Share-based remuneration
• e. Other information.

(a) Principles used to determine the nature and amount of remuneration

The principles of the Group's executive strategy and supporting incentive programs and frameworks are:

• motivating senior executives to pursue the long-term growth and success of the Company; and
• demonstrating a clear relationship between senior executives' performance and remuneration.
• attracting and retaining senior executives and directors; and
• not paying excessive remuneration.

Red Mountain Mining Ltd has structured a remuneration framework that is market competitive and complementary to the reward strategy of the Group. The remuneration packages are reviewed annually by the Remuneration Committee and evaluation is based on specific criteria including business performance of the Company and its subsidiaries, whether strategic objectives are being achieved and the development of management and personnel. The remuneration structure that has been adopted by the Group consists of the following components:

• Fixed remuneration being annual salary; and
• Short term incentives, being employee share schemes and bonuses.

Executive directors' remuneration has been structured to reflect short and long-term performance objectives appropriate to the Company's circumstances and goals.

Executive directors' and senior executives' remuneration packages involve a balance between fixed and incentive-based pay, reflecting short and long-term performance objectives appropriate to the Company's circumstances and goals.

Non-executive directors' remuneration has been formulated with regard to the following guidelines:

• Non-executive directors will be remunerated by way of fees, in the form of cash, non-cash benefits, superannuation contributions or equity, usually without participating in schemes designed for the remuneration of executives;
• Non-executive directors will not be provided with retirement benefits other than superannuation.
• No director is involved in setting their own remuneration or terms and conditions and in such a case relevant directors are required to be absent from the full Board discussion.

Consequences of performance on shareholder wealth

In considering the Group's performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and the previous four financial years:

	2012	2011	2010	2009	2008
EPS (cents)	(7.15)	(5.18)	(1.59)	(0.76)	(4.32)
Dividends (cents per share)	-	-	-	-	-
Net profit/loss	(5,178,481)	(1,617,692)	(628,165)	(282,629)	(1,537,928)

(b) Executive service agreements

Name	Base Salary	Term of agreement	Notice period
Neil Warburton	\$300,000 plus statutory super per annum	Full time. Remuneration to be reviewed on the date 12 month from commencement date and every 12 months after 2,000,000 options at exercise price 25cents per share and 2,000,000 options at exercise price 50 cents per share	2 months
Keith Rowe	\$218,000 statutory super inclusive per annum	Full time. Remuneration to be reviewed on the 30th June each year	6 months

(c) Details of remuneration

Director and other Key Management Personnel Remuneration

Details of the nature and amount of each element of the remuneration of each key management personnel ('KMP') of Red Mountain Mining Ltd are shown in the table below:

Directors' Report

		Short term employee benefits	Share-based payments		% of remuneration which is
Name	- Year	− Cash salary and fees (\$)	− Options (\$)	− Total (\$)	options
Executive Director
N Warburton	2012	89,112	140,638	229,750	61
N Warburton	2011		70,000	70,000	100
K Rowe	2012	181,667	210,953	392,620	54
K Rowe	2011	95,863	40,000	135,863	29
Non-executive directors
M Wolley	2012	50,000	182,000	232,000	78
M Wolley	2011	62,500	-	62,500	-
B Zhou	2012	30,000	105,477	135,477	78
B Zhou	2011		40,000	40,000	100
Other Key Management Personnel
A Richards	2012	144,500	-	144,500	-
D Kelly	2011	57,658	-	57,658	-
Total	2012	495,279	639,068	1,134,347	-
Total	2011	216,021	150,000	366,021	-

• * Neil Warburton became Executive Chairman and Acting CEO on 3 April 2012
• * Michael Wolley stepped down as Non-executive Chairman and remains on the Board as nonexecutive Director on 3 April 2012
• * Bo Zhou resigned as non-executive Director on 3 April 2012
• * Andrew Richards stepped down as CEO on 3 April 2012
• * In addition to the above listed options, Neil Warburton was granted 4,000,000 options on 5 September 2012

Options were issued in lieu of remuneration packages for the year as of 30 June 2012. The details of options are described in (d) Share-based remuneration.

(d) Share-based remuneration

Details of options over ordinary shares in the Company that were granted as remuneration to each key management personnel are set out in the following table.

Name	Number granted	Grant date	Value per option at grant date	Number vested	Number lapsed	Exercise price (\$)	First exercise date	Last exercise date
			(\$)
Keith Rowe	1,159,084	21/11/2011	0.083	1,159,084	-	0.25	21/12/2011	31/07/2014
Keith Rowe	1,159,084	21/11/2011	0.099	1,159,084	-	0.35	21/12/2011	31/07/2016
Neil Warburton	772,722	21/11/2011	0.083	772,722	-	0.25	21/12/2011	31/07/2014
Neil Warburton	772,722	21/11/2011	0.099	772,722	-	0.35	21/12/2011	31/07/2016
Neil Warburton	2,000,000	05/09/2012	0.023	2,000,000	-	0.25	Subject to vesting conditions1	01/07/2014
Neil Warburton	2,000,000	05/09/2012	0.031	2,000,000	-	0.50	03/04/20162	01/07/2016
Michael Wolley	1,000,000	21/11/2011	0.083	1,000,000	-	0.25	21/12/2011	31/07/2014
Michael Wolley	1,000,000	21/11/2011	0.099	1,000,000	-	0.35	21/12/2011	31/07/2016
Bo Zhou	579,542	21/11/2011	0.083	579,542	-	0.25	21/12/2011	31/07/2014
Bo Zhou	579,542	21/11/2011	0.099	579,542	-	0.35	21/12/2011	31/07/2016

1. The Options will vest if and when the trading price of the Company's shares is 20 cents or greater (on a preconsolidation basis) or at or above an equivalent post-consolidation price for more than 30 consecutive trading days on which the shares in the Company trade.

2. The Options will vest on Mr Neil Warburton completing 4 years continuous service as a Director or Chief Executive Officer of the Company from his commencement date of 3 April 2012.

(e) Other information

Hedging of securities

In accordance with the Group's general share trading policy and employee share plan rules, participants are prohibited from engaging in hedging arrangements over unvested securities issued pursuant to any employee or director share plan.

End of remuneration report

Environmental regulations

The operations of the Group are not subject to any particular and significant environmental regulations under a law of the commonwealth or state. There have been no known significant breaches of any other environmental requirement.

Indemnities given and insurance premiums paid to officers and auditors

During the year, Red Mountain Mining Ltd paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all directors.

Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract.

The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnity any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor.

Non-audit services

During the financial year, the Auditor has provided the Investing Accounting Report for the Prospectus. The details of amount paid to the Auditor for non-audit services is outlined in note 15

The Directors are satisfied that the provision of non-audit services during the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations ACT 2001.

The Directors are of the opinion that the services disclosed in note 15 to the financial statements do not compromise the external auditor's independence, based on the following reasons:

• The non-audit service has been approved to ensure it does not impact the integrity and objectivity of the auditor.
• This service does not undermine the general principles relating to auditor independence.

Auditors' Independence Declaration

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 18.

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

Neil Warburton Executive Chairman and Acting CEO

Perth, Western Australia 26 September 2012

The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Red Mountain Mining Ltd and its controlled entities ('the Group') have adopted a corporate governance framework and practices to ensure they meet the interests of shareholders.

To fulfil this role the Board is responsible for the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

The responsibilities of the Board include:

• Protection and enhancement of Shareholder value;
• Formulation, review and approval of the objectives and strategic direction of the Company;
• Approving all significant business transactions including acquisitions, divestments and capital expenditure;
• Monitoring the financial performance of the Company by reviewing and approving budgets and monitoring results;
• Ensuring that adequate internal control systems and procedures exist and that compliance with these systems and procedures is maintained;
• The identification of significant business risks and ensuring that such risks are adequately managed;
• The review and performance and remuneration of executive directors and key staff;
• The establishment and maintenance of appropriate ethical standards; and
• Evaluating and, where appropriate, adopting with or without modification, the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations.

The Board recognises the need for the Group to operate with the highest standards of behaviour and accountability. The aim of the Corporate Government Statement is to ensure that the Group is effectively directed and managed, that risks are identified, monitored and assessed and that appropriate disclosures are made.

Subject to the exceptions outlined below the Group has adopted the ASX Corporate Governance Council's "Corporate Governance Principles and Recommendations with 2010 Amendments" (ASX Principles) to determine an appropriate system of control and accountability to best fit its business and operations commensurate with these guidelines.

Further information on the Group's corporate governance policies and practices can be found on Red Mountain Mining Limited's website at http://www.redmm.com.au.

	ASX Corporate Governance Principle	Company Comments
1	Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.	The Board has adopted aCorporate Governance Statement (set out on the Company's website) which discloses the specific responsibilities of the Board and provides that the Managing Director or Chief Executive Officer is responsible for running the affairs of the Company under delegated authority from the Board.
1.2	Companies should disclose the process for evaluation the performance of senior executives.	The Chairperson and/or the Managing Director are responsible for reviewing the performance of each executive at least once every calendar year with reference to the terms of their employment contract.
1.3	Companies should provide the information indicated in the Guide to reporting on Principle 1.	During the reporting year, the Company's held an annual Board review. The Corporate Governance Statement which is available on the Company's website discloses the specific responsibility of the Board. The Corporate Governance Statement also specifically outlines the role of the Company's Chairperson and Company Secretary as well as the Board Charter.

2	Structure the board to add value
2.1	A majority of the board should be independent directors.	Currently the Board is comprised of one independent Director, Michael Wolley, and two non-independent Directors, Neil Warburton who acts in an executive capacity as the Company's Executive Chairman and Acting CEO, and Keith Rowe, who is an Executive Director. Notwithstanding that the current composition of the Board does not meet the requirements of ASX principle 2, the Board considers that the composition of the Board is adequate for the Company's current size and operations, and includes an appropriate mix of skills and expertise, relevant to the Company's business. The Board has formed the view that the individuals on the Board can, and do make quality judgments in the best interests of the Company on all relevant issues. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic.
2.2	The chair should be an independent director	The current Chairman is Mr Warburton, who is not an independent director. Notwithstanding that the current Chairman does not meet the requirements of ASX principle 2, the Board considers that the current Chairman possesses an appropriate level of expertise and can make quality judgments in the best interests of the Company on all relevant issues.
2.3	The roles of chair and chief executive officer should not be exercised by the same individual.	The current Chairman and Acting CEO of Red Mountain Mining is the same individual, Mr Neil Warburton. However, Mr Warburton intends to step down as Acting CEO and revert to a Non-Executive Chairman of Red Mountain Mining following completion the proposed acquisition of Mindoro Resources Limited's copper-gold assets, and from the date of the proposed appointment of Mindoro's current President and CEO Mr Jon Dugdale as Managing Director.

2.4	The Board should establish a nomination committee.	The Company established a Nomination and Remuneration Committee in May 2012. The role of the Nomination and Remuneration Committee is to assist the Board by reviewing and recommending Red Mountain's remuneration policies and practices and the appointment of non-executive directors to the Board. The Company has adopted a formal Nomination and Remuneration Committee Charter, available on the Company's website, which includes information on the Company's approach to selection and appointment of Directors. The Committee undertakes the process of reviewing the skill base and experience of existing Directors to enable identification or attributes required in new Directors. Where appropriate, independent consultants will be engaged to identify possible new candidates for the Board.
2.5	Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.	A process has been established to review and evaluate the performance of the Board, individual Directors and senior executives. The Nomination and Remuneration Committee is required to meet annually with the specific purpose of reviewing the role of the Board, assessing the performance of the Board and individual Directors over the previous 12 months and examining ways in which the Board can better perform its duties. The Company held an annual Board review during the reporting year. The Managing Director is responsible for assessing the performance of the key executives within the Company. Performance evaluation of senior executives was conducted during the period.

2.6	Companies should provide the information indicated in the Guide to reporting on Principle 2.	The current Directors have a broad range of qualifications, experience and expertise in the mining operations, industrial and finance industries. A description of the skills and experience of each of the current Directors is contained in the Directors' Report.
		To facilitate independent decision making, the Board and any committees it convenes from time to time may seek advice from independent experts whenever it is considered appropriate.
		With the consent of the Chairman, individual directors may seek independent professional advice, at the expense of the Company, on any matter connected with the discharge of their responsibilities.
		The policy for the appointment of new directors is set out on the Corporate Governance Statement on the Company's website. Directors are appointed for a term of 3 years before rotation by retirement. Directors may seek shareholder approval for a further term.
		Due to the current size and nature of the Company, not all Directors are considered independent due to their founding shareholdings and executive nature of their services provided to the Company.

3	Promote ethical and responsible decision making
3.1	Companies should establish a code of conduct and disclose the code or a summary of the code as to: • the practices necessary to maintain confidence in the company's integrity; • the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and • the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	The Company has adopted a Code of Conduct which provides a framework for decisions and actions in relation to ethical conduct in employment. The Code of Conduct is set out in Appendix A of the Corporate Governance Statement on the Company's website.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.	The Company has established a Diversity Policy having regard to the suggestions set out in the new ASX Corporate Governance Principles and Recommendations. The Diversity Policy covers gender, age, ethnicity and cultural background. It includes a requirement that the Board establish measurable objectives for achieving gender diversity, with progress in achieving these objectives assessed annually by the Nomination and Remuneration Committee. However given the small size of the Company and its current stage of operations, the Board has opted not to establish measurable objectives for achieving gender diversity and as a result has not assessed such objectives and progress toward achieving them. However the Board is pleased to report that both the Company's Financial Controller and Company Secretary are women, which represents 40% of employees.
3.3	Companies should disclose in each annual report the measureable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them.	The Company has not yet established the measurable objectives however these will be considered by the Board during its current term. In addition, the Board will review progress against any objectives identified on an annual basis.
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.	The Company supports workplace diversity and currently employs women in the positions of Financial Controller and Company Secretary, representing 40% of the Company's employees.

3.5	Companies should provide the information indicated in the Guide to reporting on Principle 3.	The Company's Code of Conduct and Diversity Policy are available on the Company's website.
4	Safeguard integrity in financial reporting
4.1	The board should establish an audit committee.	The Company established an Audit Committee in May 2012. The role of the Audit Committee is to assist the Board to meet its oversight responsibilities in relation to the Company's financial reporting, internal control structure, financial risk management procedures and external audit function. The Company has prepared a formal Audit Committee Charter, available from the Company's website, which promotes an environment consistent with best practice financial reporting and includes information on procedures for the selection and appointment of the external auditor and for the rotation of external audit engagement partners. The Audit Committee is composed of one independent non executive directors and an executive director. The external auditors, the Acting CEO and the Financial Controller attend Committee meetings by invitation. The Committee meets at least twice per year.
4.2	The audit committee should be structured so that it: • consists only of non-executive directors; • consists of a majority of independent directors; • is chaired by an independent chair, who is not chair of the board; and • has at least three members.	The Audit Committee is composed of only one independent non-executive director and an executive director. The Committee does not have a majority of independent directors. The Chairman, Mr Michael Wolley, is an independent chair who is not the chair of the Board. Given the current size and structure of the Audit Committee, the Company has not fully complied with Principle 4.2 of the ASX Principles. The Board considers that the current composition of the Audit Committee is adequate for the Company's current size and operations. However, it will seek to do so as the Company matures.
4.3	The audit committee should have a formal charter.	The Audit Committee Charter was adopted during the reporting period.
4.4	Companies should provide the information indicated in the Guide to reporting on Principle 4.	The Audit Committee Charter is available on the Company's website. The Audit Committee Charter includes information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners.

5	Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.	The Company has a continuous disclosure program in place designed to ensure compliance with ASX Listing Rule continuous disclosure and to ensure accountability at a senior executive level for compliance and factual presentation of the Company's financial position.
5.2	Companies should provide the information indicated in Guide to reporting on Principle 5.	A summary of this policy is set out in the Company's Corporate Governance statement on the web site.
6	Respect the rights of shareholders
6.1	Companies should design a communications policy for promoting effective Communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.	The Board is committed to open and accessible communication with holders of the Company's shares and other securities. Disclosure of information and other communication will be made as appropriate by mail or email.

7	Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.	The Company has adopted polices for the management of business risks and a summary of these policies is available on the Company's website.
7.2	The board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company's management of its material business risks.	It is the responsibility of the CEO (or equivalent) to create, maintain and implement risk management and internal control policies for the Company, subject to review by the Board. The Board reviews the effectiveness of implementation of the risk management system and internal control system at least annually.
7.3	The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.	The Company has a continuous disclosure program in place designed to ensure compliance with ASX Listing Rule continuous disclosure and to ensure accountability at a senior executive level for compliance and factual presentation of the Company's financial position. The Board has received assurance from the CEO.
7.4	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.	The CEO (or equivalent) is required annually to state in writing to the Board that the Company has a sound system of risk management, that internal compliance and control systems are in place to ensure the implementation of Board policies, and that those systems are operating efficiently and effectively in all material respects.

8	Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee.	The Company established a Nomination and Remuneration Committee in May 2012. The role of the Nomination and Remuneration Committee is to assist the Board by reviewing and recommending Red Mountain's remuneration policies and practices and the appointment of non-executive directors to the Board. The Company has adopted a formal Nomination and Remuneration Committee Charter, available on the Company's website, which includes information on the Company's approach to remuneration of Directors (executive and non-executive) and senior executives.
8.2	The remuneration committee should be structured so that it: • consists of a majority of independent directors; • is chaired by an independent director; and • has at least three members.	The Nomination and Remuneration Committee is composed of only one independent non-executive director and an executive director. The Committee does not have a majority of independent directors. The Chairman, Mr Michael Wolley, is an independent chair who is not the chair of the Board. Given the current size and structure of the Nomination and Remuneration Committee, the Company has not fully complied with Principle 8.2 of the ASX Principles. The Board considers that the current composition of the Committee is adequate for the Company's current size and operations. However, it will seek to do so as the Company matures.
8.3	Companies should clearly distinguish the structure of non-executive directors' remuneration from that of executive directors and senior executives.	The Board distinguishes the structure of non-executive director's remuneration from that of executive directors and senior executives. The Company's Constitution also provides that the remuneration of non-executive directors will not be more than the aggregate fixed sum determined by shareholders in general meeting.
8.4	Companies should provide the information indicated in the Guide to reporting on Principle 8.	As at the date of this statement, there are no schemes for retirement benefits for non-executive Directors. a summary of the company's policy on prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes.

In relation to the above, the Directors believe that, notwithstanding the Company's departure from the ASX Principles 2.1, 2.2, 3.2, 3.3, 4.2, 8.2 and 8.4 the Board has implemented suitable practices and procedures with respect to corporate governance, considering the size of the Board and the size and maturity of the Company. The Board wishes to acknowledge that nothing has come to its attention that would lead it to conclude that its current practices and procedures are not appropriate for an organisation of the size and maturity of the Company.

FINANCIAL REPORT – 30 JUNE 2012

Contents Page

Financial report
Consolidated Statement of Comprehensive Income	30
Consolidated Statement of Financial Position	31
Consolidated Statement of Changes in Equity	32
Consolidated Statement of Cash Flows	33
Notes to the consolidated financial statements	34
Directors' declaration	61
Independent audit report to the members	62

This financial report covers the Consolidated Entity consisting of Red Mountain Mining Ltd and its controlled entities.

This financial report is presented in Australian dollars.

Red Mountain Mining Ltd is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Red Mountain Mining Ltd Unit 1, 2 Richardson Street West Perth WA 6005

A description of the nature of the Consolidated Entity's operations and its principal activities is included in the Directors' Report, which is not part of this financial report.

The financial report was authorised for issue by the directors on 26 September 2012. The Company has the power to amend and reissue the financial report.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2012

	Notes	2012	2011
Revenue	4	\$ 174,499	\$ 9,722
Professional fees		(159,385)	(91,392)
Consultancy costs		(1,349,719)	(710,694)
Depreciation		(3,919)	(802)
Employee costs		(455,345)	(4,755)
Exploration consulting costs		(612,380)	(474,352)
Legal fees		(315,312)	(166,708)
Travel costs		(197,872)	(32,336)
Interest paid		(183)	(7,545)
Net foreign exchange gains/(losses)	4	55,897	14,096
Capital raising costs		(1,144,306)	-
Directors incentive option		(789,068)	-
Other expenses		(381,388)	(152,926)
Loss before income tax		(5,178,481)	(1,617,692)
Income tax expense	5	-	-
Loss for the year attributable to members of Red Mountain Mining Ltd		(5,178,481)	(1,617,692)
Other comprehensive income:
Exchange differences on translation of foreign controlled entities		(327)	(133,199)
Total comprehensive income for the year attributable to members of Red Mountain Mining Ltd		(5,178,808)	(1,750,891)
		Cents	Cents
Basic and diluted loss per share	22	(7.15)	(5.18)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as of 30 June 2012

		2012	2011
	Notes	\$	\$
Current assets
Cash and cash equivalents	6	4,380,150	446,894
Trade and other receivables	7	144,784	126,275
Total current assets		4,524,934	573,169
Non-current assets
Equipment	8	31,371	4,221
Total non-current assets		31,371	4,221
Total assets		4,556,305	577,390
Current liabilities
Trade and other payables	9	258,490	529,380
Provisions	10	21,545
Total current liabilities		280,035	529,380
Total liabilities		280,035	529,380
Net assets		4,276,270	48,010
Equity
Contributed equity	12	11,657,848	4,139,848
Reserves	13 (a)	1,936,533	47,792
Accumulated losses	13 (b)	(9,318,111)	(4,139,630)
Total equity		4,276,270	48,010

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the financial year ended 30 June 2012

	Share capital \$	Accumulated loss \$	Foreign currency translation reserve \$	Share based payments reserve \$	Total \$
Consolidated Group
Balance at 1 July 2010	1,974,665	(2,521,938)	31,787	176,834	(338,652)
Total comprehensive income for the year	-	(1,617,692)	(133,199)	-	(1,750,891)
Transactions with owners in their capacity as owners:
Contribution of equity Expiry of options	2,165,183	-	-	(27,630)	2,165,183 (27,630)
Balance at 30 June 2011	4,139,848	(4,139,630)	(101,412)	149,204	48,010
Total comprehensive income for the year		(5,178,481)	(327)		(5,178,808)
Transactions with owners in their capacity as owners: Contribution of equity	7,518,000			1,889,068	9,407,068
Balance at 30 June 2012	11,657,848	(9,318,111)	(101,739)	2,038,272	4,276,270

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

CONSOLIDATED STATEMENT OF CASH FLOWS

for the financial year ended 30 June 2012

		2012	2011
	Notes	\$	\$
Cash flows from operating activities Payments to employees and suppliers
(inclusive of goods and services tax)		(2,941,780)	(1,610,521)
Payments for exploration		(827,913)	-
Interest received		160,304	9,722
Interest paid		(183)	(7,545)
Net cash outflow from operating
activities	21	(3,609,572)	(1,608,344)
Cash flows from investing activities
Payment for property, plant and equipment		(31,069)	(5,023)
Net cash outflow from investing activities		(31,069)	(5,023)
Cash flows from financing activities
Repayment of borrowings		-	(103,750)
Proceeds from issue of securities		8,000,000	2,249,573
Proceeds from issue of options		10,000	-
Share issue costs		(492,000)	(112,020)
Net cash inflow from financing
activities		7,518,000	2,033,803
Net increase in cash held		3,877,359	420,436
Cash at the beginning of the year		446,894	145,161
Effect of exchange rate changes on Cash & Cash equivalents		55,897	(119,103)
Cash at the end of the year	6	4,380,150	446,894

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Note 1. Summary of Significant Accounting Policies

(a) General Information

Red Mountain Mining Limited (the Company) is a limited company incorporated in Australia. The address of its registered office is Unit 1, 2 Richardson Street, West Perth, Western Australia.

(b) Statement of Compliance

Red Mountain Mining is a for-profit entity. These financial statements are general purpose financial statements which have been prepared in accordance Australian Equivalents to International Financial Accounting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

These financial statements also comply with International Financial Reporting Standards (IFRSs),

These financial statements comprise the consolidated financial statements of Red Mountain Mining Ltd and its controlled entities (the Group).

(c) Basis of preparation of the financial report

The consolidated financial statements have been prepared on the basis of historical cost convention and the accrued basis, as explained in the accounting policies below.

(d) Adoption of New and Revised Accounting Standards

The Company has adopted all the new and revised AIFRSs that are relevant to its operations and effective for the reporting period starting from 1July 2011.

At the date of authorization of the financial statements, the Company has not applied the new Standards and Interpretations that were in issue but not yet effective.

(e) Critical accounting judgments and the key sources of estimation uncertainty

In the application of the Group's accounting policies, management is required to make judgments, estimates and assumptions about carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects both current and future periods. Refer to note 3 for further details.

(f) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Company as at 30 June 2012 and the results of all controlled entities for the financial year then ended. The Company and its controlled entities together are referred to in this financial report as the Group or the Consolidated Entity.

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

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

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

Intercompany transactions, balances and unrealised income and expenses on transactions between group companies are eliminated in preparing the consolidated financial statements. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(g) Segment reporting

Operating segments are components of the Group that engage in business activities from which they may earn revenues and incur expenses. They are reported in a manner consistent with the internal reporting to the chief operating decision makers. The chief operating decision makers, who are responsible for allocating resources and assessing performance of the operating segments, have been identified as the Board of Directors ("Board").

(h) Segment information

The Board has reviewed the operating activities and determined that the Group has one operating segment being mineral exploration.

(i) Revenue recognition

Revenue is recognized and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be measured reliably. The following specific criteria must also be met before revenue is recognised:

Interest income

Interest income is recognised on a time proportionate basis using the effective interest method.

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

(j) Income tax

The income tax expense for the reporting period is the tax payable on the current financial year's taxable income based on the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(k) Imputation Credits

Pursuant to AASB 1054, Imputation Credits that will arise from the payment of the amount of the provision for income tax or the receipt of dividends are recognized as receivables at the reporting date. The disclosure of Imputation Credits shall be made separately in respect of any Australian imputation credits. To date, the Imputation Credits for the financial year ended 30 June 2012 is nil.

(l) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(m) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 120 days from the date of recognition.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

(n) Financial instruments

Financial assets and financial liabilities are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue of financial assets other than financial assets and financial liabilities at fair value through profit or loss. Financial assets and financial liabilities are recognised in the statement of financial position.

Financial Assets

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, and available-for-sale financial assets. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

(1) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are acquired principally for the purpose of selling in the short term or if so designated by management. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in profit or loss in the period in which they arise.

(2) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity.

(3) Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position.

(4) Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available for sale or that are not classified as (a) financial assets at fair value through profit or loss (b) held-to-maturity investments or (c) loans and receivables.

Financial Liabilities and equity instruments

Financial liabilities and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements.

Financial liabilities are non-derivative financial liabilities that are recognized initially at fair value plus any directly attributable transaction costs. Upon initial recognition, they are measured at amortised cost, using the effective interest rate method.

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on a trade date basis – the date on which the Group commits to purchase or sell the asset. Financial liability is recognised when the Group becomes a party of the contractual provision of the financial instrument.

Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Upon derecognition of a financial asset, the difference between the asset's carrying value and the sum of consideration received and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

Financial liabilities are derecognized when the obligations specified in the contract are discharged or cancelled or expire. Upon derecognition of a financial liability, the difference between the carrying amount of liability derecognized and consideration paid is recognized in profit or loss.

(o) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid 30 days end of month. Trade and other payables are carried at amortised cost, using the effective interest method.

(p) Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(q) Earnings per share

(1) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.

(2) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(r) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flow.

(s) Foreign exchange

Both the functional and the presentation currency of Red Mountain Mining Limited is the Australian Dollar.

Transactions in foreign currencies are initially recorded in the functional currency at the rate prevailing at that transaction date. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange at the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rate of exchange at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated. Gains and losses arising from this translation policy are recognised in profit or loss.

The functional currency of Red Mountain Mining (Hong Kong) Holdings Ltd is the Hong Kong Dollar. The functional currency of Red Mountain Mining Consulting (Shenyang) Co Ltd is the Chinese Yuan.

At the reporting date the assets and liabilities of the overseas subsidiaries are translated into presentation currency of Red Mountain Mining Limited at the rate prevailing at the balance sheet date and the statement of comprehensive income are translated at the weighted average exchange rate for the period. Resulting exchange differences are recognised in equity.

(t) Impairment of assets

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

The discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the profit or loss immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.

A reversal of an impairment loss is recognised in the profit or loss immediately.

(u) Equipment

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

Equipment is measured on the cost basis less accumulated depreciation and impairment losses.

The carrying amount of equipment is reviewed annually by the Board 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 flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset's useful life to the Group commencing from the time the asset is held ready for use.

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

Class of Fixed Asset	Depreciation Rate
Plant and equipment	18.75% – 50%

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

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

(v) Operating Lease

A lease that does not substantially transfer to the Group all the risks and rewards of ownership of assets are accounted for as operating lease. For operating leases, lease payments (excluding costs for services such as insurance and maintenance) are recognised as an expense on a straight-line basis over the lease term.

(w) Mineral exploration, evaluation and development expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest where we have the right of tenure. 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 profit or 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 transferred to Mine Properties and amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

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

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

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

(x) Capital risk management

The Group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to fund investment opportunities and develop or secure access to a producing mining asset.

Consistently with others in the industry, the Group monitors capital on the basis of working capital requirements.

During 2012, the Group's strategy - which was unchanged from 2011 - was to maintain a current account balance sufficient to meet the Group's day to day expenses with the balance held in term deposits.

	2012 \$	2011 \$
Cash and cash equivalents	4,380,150	446,894
Trade and other receivables	144,785	126,275
Trade and other payables	(258,490)	(529,380)
Provisions	(21,545)	-
Working capital position	4,244,900	43,789

(y) Changes in accounting policies

Standards and Interpretations adopted with no effect on consolidated financial statements

The following new and revised Standards and Interpretations have been adopted in these consolidated financial statements. Their adoption has not had significant impact on the amounts and disclosure reported in these consolidated financial statements.

Standard/Interpretation	Summary
AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB1 &AASB 7]	This Standard makes amendments to AASB 1 First-time Adoption of Australian Accounting Standards and AASB 7 Financial Instruments: Disclosures. This Standard amends the disclosure requirements and introduced additional disclosure requirements for transactions involving transfers of financial assets and the risk associated with them. To date, the Group has not entered into any transfer arrangements. Therefore, the application of the amendments has not had significant impact on the disclosures in the consolidated financial statements.
Amendments to AASB 1 Presentation of Financial Statements	The amendment allows entities to choose presenting the reconciliations for each component of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. The Group has presented such reconciliations in the note to the Consolidated Financial Statement of Changes in Equity. This reduces duplicated disclosures and presents more clearly the overall changes in equity. Prior period comparatives have been restated accordingly
Amendments to AASB 7 Financial Instruments: Disclosures	This Standard clarifies the requirements of disclosures in the financial statements that enable users to evaluate the significance of financial instruments for the entity's financial position and performance and the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the end of the reporting period, and how the entity manages those risks.
	The principles in this Standard complement the principles for recognising, measuring and presenting financial assets and financial liabilities in AASB 132 Financial Instruments: Presentation and AASB 139 Financial Instruments: Recognition and Measurement. The application of this Standard has not had material impact on the Group's consolidated financial statements.
Amendments - AASB 2009-12	This Standard makes amendments to AASB 8 Operating Segments, AASB 124 Related Party Disclosures and a number of editorial amendments to a range of Australian Accounting Standards and Interpretations, incorporating amendments reflected in IFRSs issued by the IASB. This Standard makes amendments to AASB 8 Operating Segments by requiring an entity to exercise judgement to access whether a government, government agencies and entities known to the reporting entity to be under the control of that government are considered a single customer for disclosure purpose. The application of this Standard has not had significant impact on the Group's consolidated financial statements.

Standards and Interpretations in issue not yet effective

At the date of authorisation of these consolidated financial statements, the Standards and Interpretations listed below were in issue but not yet effective. Their adoption is unlikely to have significant impact on the amounts and disclosure reported in these consolidated financial statements.

Reference and		Summary	Application date of	First affected reporting date for
issue date AASB 9 AASB 2009-11 Dec-09	Title Financial Instruments Amendment to Australian Accounting Standards arising from AASB 9	Address the classification and measurement of financial assets	standard* 01-Jan-15	Group* 30-Jun-16
AASB 2009-14 Dec-09	Amendment to Australian Accounting Interpretation 14 - Prepayments of a Minimum Funding Requirement	Follows amendments to IFRIC 14 and relates to specific parts of Interpretation 14 on Defined Benefit Funds	01-Jan-11	30-Jun-12
AASB 1053	Application of Tiers of Australian Accounting Standards Amendment to Australian	Introduces a reduced disclosure regime for entities eligible to be classified as Tier 2 entities	01-Jul-13	30-Jun-14
AASB 2010-2 AASB 2011-2	Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5,7, 8, 101, 102, 107, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17 127, 129 & 1052]		01-Jul-13	30-Jun-14
AASB 2010-7	Amendments to Australian Accounting Standards arising from AASB 9 (Dec 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136,137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127]	Adds the requirements for classification and measurement of financial liabilities	01-Jan-13	30-Jun-14
AASB 2010-8	Amendments to Australian Accounting Standards - Deferred Tax: Recovery of Underlying Assets [AASB 112]	The amendments address the determination of deferred tax on investment property measured at fair value and introduce a rebuttable presumption that the deferred tax should be determined on the basis that the carrying amount will be recoverable through sale.	01-Jan-12	30-Jun-13
AASB 2011-4	Amendments to Australian Accounting Standards to Remove Individual KMP Disclosure Requirements [AASB 124]	Deletes the requirement for individual KMP disclosures for disclosing entities which are NOT companies	01-Jul-13	30-Jun-14
AASB 2011-9	Amendments to Australian Accounting Standards - Presentation of Other Comprehensive Income	Requires items to be presented on the basis of whether they will subsequently be reclassified to profit and loss or not	01-Jul-12	30-Jun-13

AASB 10	Consolidated Financial	Establishes a new control model that applies to all	01-Jan-13	30-Jun-14
	Statements	entities Replaces AIS 27 and SIC-12 It broadens the situations when an entity is
		considered to be controlled by another entity and includes new guidance for applying the model to specific situations
		Resulting amendments to other standards AASB 2011-7
AASB 11	Joint Arrangements	Replaces IAS 31 and SIC-13 and uses the principle of control from IFRS 10 to define joint control and therefore the determination as to whether joint	01-Jan-13	30-Jun-14
		control exists. It also removes the options to account for jointly controlled entities via proportionate consolidation basing the accounting on the nature of the rights and
		obligations arising from the arrangement. If the venturers have right to the net assets (rather than the individual assets and liabilities) then the equity accounting method is applied.
		Resulting amendments to other standards AASB 2011-7 and changes to AASB 128
AASB 12	Disclosure of Interests in Other Entities	New disclosures have been included about the judgements made by management to determine whether control exists and to require summarised information about joint arrangements	01-Jan-13	30-Jun-14
AASB 13	Fair Value Measurement	Establishes a single source of guidance for determining the fair value of assets and liabilities Resulting amendments to other standards AASB 2011-10	01-Jan-13	30-Jun-14
AASB 119	Employee Benefits	Revises the accounting for defined benefit schemes Changes the definition of short term employee benefits Resulting amendments to other standards AASB 2011-10	01-Jan-13	30-Jun-14
Interpretation 20	Stripping costs in the Production Phase of a Surface	Requires that stripping costs are capitalised as part of the	01-Jan-13	30-Jun-14
	Mine	asset IF the entity can demonstrate future benefits, reliable measurement AND identification of the component of the ore body to which access has been improved. Resulting amendments to other standards AASB 2011-12
Annual Improvements 2009-2011	Annual Improvements to IFRSs 2009-2011 Cycle	Impacts various standards but have not yet been adopted by the AASB Standards affected are as follows:	01-Jan-13	30-Jun-14
Cycle (only required if report states full IFRS compliance)		IFRS 1 - First Time Adoption of IFRS IAS 1 - Presentation of Financial Statements IAS 16 - Property, Plant & Equipment IAS 32 - Financial Instruments - Presentation IAS 34 - Interim Financial Reporting

Note 2. Financial risk management

The Group's financial instruments details are disclosed in note 11.

The Group's activities expose it to a variety of financial risks: liquidity risk, market risk (including fair value interest rate risk, currency risk and price risk) and credit risk.

The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

Risk management is carried out by the full Board of Directors. The Board identifies and evaluates financial risks in close co-operation with management and provides written principles for overall risk management.

The executive management team meets regularly to analyse and monitor the financial risks associated to the business operations.

(i) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, prudent oversight of future funding requirements and maintaining ongoing contact to facilitators of further funding.

The Group has implemented a creditors policy, authorization matrix and purchase order system in order to consistently improve the quality of control over contractual obligations, cash flow and budgeting.

It is the Group's policy to review the Group's liquidity position including cash flow forecasts, actual cash flows and variation reports regularly to determine the forecast liquidity position and maintain appropriate liquidity levels.

The remaining contractual maturities of the Group's financial liabilities are:

	2012 \$	2011 \$
Three months or less	258,490	529,380
Greater than three months	-	-
	258,490	529,380

The Group funds its activities through capital raising in order to limit its liquidity risk.

The Group has \$40,000 of unused credit facilities.

(ii) Market risk

Fair value interest rate risk

As the Group's major assets are cash deposits held in fixed and variable interest rate deposits, the Group's income and operating cash flows are materially exposed to changes in market interest rates. The Group manages this risk by only investing in A+ rated institutions and maintaining an appropriate mix between different terms.

At balance date, the Group had the following exposure to variable interest rate risk.

	2012 \$	2011 \$
Financial assets
Cash and cash equivalents
- Australia	3,299,510	446,894
- Hong Kong	237,741	-
- China	842,899	-
	4,380,150	446,894

At 30 June 2012, if interest rates had moved, as illustrated in the following table, with all other variables held constant, post-tax profit would have been affected as follows:

	Higher/(Lower)
	2012	2011
	\$	\$
Judgments of reasonably possible movements:
Post tax profit
+1.0% (100 basis points)	43,802	4,469
-1.0% (100 basis points)	(43,802)	(4,469)

Currency risk

The Company's subsidiary is based in Hong Kong and its sustainability is dependent on the provision of cash from the parent entity. Cash funds in Hong Kong are held in Hong Kong dollars, US dollars and Australian Dollars. The Group's subsidiary is based in China and its sustainability is dependent on the provision of cash from its parent entity. Cash funds in China are held in Chinese Yuan and US dollars thus the Group is exposed to diminution of cash balances through currency exchange risk.

The Group manages its currency risks by closely monitoring exchange rate fluctuations.

Price risk

The Group is not exposed to equity securities price risk as it holds no investments in securities classified on the statement of financial position either as available-for-sale or at fair value through profit or loss. The Group is not exposed directly to commodity price risk.

(iii) Credit Risk

The Group's maximum exposures to credit risk at the reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the statement of financial position.

The Group trades only with recognised, credit worthy third parties. The Group has no significant concentrations of credit risk.

Note 3. Critical accounting estimates and judgments

(i) Significant accounting judgments

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

(ii) Exploration and evaluation assets

The Group's accounting policy for exploration and evaluation expenditure is set out in note 1(w). The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves are found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under this policy, the Directors conclude that the Group is unlikely to recover the expenditure by future exploration or sale, then the relevant capitalised amount will be written off to the consolidated statement of comprehensive income.

Note 4. Revenue

	2012 \$	2011 \$
Other revenue
Interest received	174,499	9,722
Net foreign exchange gains/(losses)	55,897	14,096
	230,396	23,818

Note 5. Income tax

	2012 \$	2011 \$
(a) Income tax expense
Current tax	-	-
Deferred tax	-	-
	-	-

(b) Numerical reconciliation of income tax expense to prima facie tax payable

Loss from continuing operations before income tax expense	(5,178,481)	(1,617,692)
Tax at the Australian tax rate of 30%	(1,553,544)	(485,308)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Legal fees	72,695	30,162
Directors share based payments	236,721	-
Lead Manager share based payments	330,000	-
Other Non- Assessable	(558)	-
Other Non- Deductible	369,320	98,085
Difference in tax rates	(118,501)	80,251
	(663,868)	(276,810)
Current year tax assets not recognised	663,868	276,810
Income tax expense	-	-

(c) The estimated potential deferred tax benefits not brought to account at 30%

Revenue losses - Australia	1,293,000	552,032
Temporary differences - Australia	74,750	100,289
Temporary differences – Overseas	2,351	204,039

The potential future income tax benefit will only be obtained if:

(i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised;

(ii) the Company continues to comply with the conditions for deductibility imposed by law; and

(iii) no changes in tax legislation adversely affect the Company in realising the benefit.

No deferred tax assets have been recognised due to the fact that it is not probable that future taxable profit will be available against which the unused tax losses can be utilised.

The franking account balance at year end was nil.

Note 6. Current Assets – Cash and cash equivalents

	2012 \$	2011 \$
Cash at bank and on hand	4,380,150	446,894
There are \$40,000 of unused credit facilities

Note 7. Current assets – Trade and other receivables

Trade and Other receivables 144,784 126,275 Note 8. Non-Current assets – Equipment 2011 2012 \$ \$ Carrying amount at 1 July 4,221 - Additions 31,069 5,023 Disposals/Write-offs - - Less depreciation (3,919) (802) Carrying amount at 30 June 4,221	2012 \$	2011 \$
	31,371

Note 9. Current liabilities - Trade and other payables

2012 \$	2011 \$
76,485	141,856
182,005	387,524
258,490	529,380

Note 10. Current liabilities – Provisions

	2012 \$	2011 \$
Provisions for employee benefits	21,545	-

Note 11. Financial Instruments

Financial Assets	2012 \$	2011 \$
Cash and Cash equivalents Trade and other receivables Other Financial assets	4,380,150 144,785 -	446,894 126,275 -
Total Financial Assets	4,524,935	573,169
Financial Liabilities Trade and other payables	258,490	529,380
Total Financial Liabilities	258,490	529,380

Note 12. Contributed equity

(a) Share capital

		Parent entity
		Shares	2012 \$	Shares	2011 \$
	Notes
Ordinary shares fully paid	12(b)	79,060,026	11,657,848	39,060,026	4,139,848

(b) Movements in ordinary share capital

Date	Details	Notes	Share No.	Issue price \$	\$
1 July 2010	Balance		41,275,000	-	1,974,665
15 November 2010	Placement to sophisticated investors	(d) (i)	6,000,000	0.10	600,000
4 March 2011	Consolidation	(d) (ii)	(17,728,125)	-	-
5 March 2011	New share issues post consolidation	(d) (iii)	9,375,000	0.16	1,500,000
31 March 2011	Issue of options for consideration	(d) (iv)	-	-	163,621
22 June 2011	Issue of shares in lieu of services	(d) (v)	138,151	0.20	27,630
	Share issue expenses		-	-	(126,068)
1 July 2011	Balance		39,060,026		4,139,848
1 September 2011	Share issue upon listing	(d) (vi)	40,000,000	0.20	8,000,000
	Share issue expenses				(492,000)
	Issue of options				10,000
30 June 2012	Balance		79,060,026		11,657,848

(c ) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Effective 1 July 1998, the corporations legislation abolished the concepts of authorised capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its issued capital.

(d) Ordinary share issues

• i. On 15 November 2010 a placement of 6,000,000 ordinary shares was made to sophisticated investors.
• ii. On 4 March 2011 the Company restructured its share capital and options on issue with a consolidation whereby share and option holders received 1 new share or option for every 1.6 share or option held before consolidation. As part of this consolidation process it was resolved to convert certain options as described into ordinary shares.
• iii. On 5 March 2011 a placement of 9,375,000 ordinary shares was made to sophisticated investors.
• iv. On 31 March 2011 the Company issued 17,728,125 options to participating shareholders at a price of 1 cent per option to increase working capital. These options carry a strike price of 20 cents per ordinary share and have a three and a half year term.
• v. On 22 June 2011, 138,151 shares were issued to capital raising consultant on cancellation of previously issued options.
• vi. On 1 September 2011, 40,000,000 shares were issued upon listing.

(e) Options

		Parent entity
	Notes		2012		2011
		Options	\$	Options	\$
Options over ordinary shares of the Company	12(f)	38,287,474	2,038,272	19,466,558	149,204

(f) Movement in options on issue

Date	Details	Notes	Options No.	\$
30 June 2010	Balance Net of consolidation/expiry of		3,000,000	176,834
31 March 2011	options		(1,281,567)	(27,630)
31 March 2011	Issue of options		17,728,125	-
30 June 2011	Balance		19,446,558	149,204
21 December 2011	Issue of options to Lead Manager		10,000,000	1,100,000
	Issue of options to Directors		8,840,916	789,068
30 June 2012	Balance		38,287,474	2,038,272

Note 13. Reserves and Accumulated Losses

	2012 \$	2011 \$
(a)Reserves
Share-based payments reserve	2,038,272	149,204
Foreign currency translation reserve	(101,739)	(101,412)
Total reserves at the end of the financial year	1,936,533	47,792
Movements:
Share-based payments reserve
Balance at beginning of year	149,204	176,834
Share-based payments during the year	1,889,068	-
Converted to ordinary shares during the year		(27,630)

Balance at the end of the financial year 2,038,272 149,204

Movements:
Foreign currency translation reserve
Balance at beginning of year	(101,412)	31,787
Exchange differences on translation of foreign operation	(327)	(133,199)
Balance at the end of the financial year	(101,739)	(101,412)
(b)Accumulated losses
Accumulated losses at the beginning of the financial year	(4,139,630)	(2,521,938)
Net loss attributable to members of the Company	(5,178,481)	(1,617,692)
Accumulated losses at the end of the financial year	(9,318,111)	(4,139,630)

(c) Nature and purpose of reserve

(i) Share-based payments reserve

The share-based payments reserve is used to recognize the value of equity benefits provided to directors as remuneration or to suppliers as payment for products and services. The details of share-based payments are disclosed in note 20.

(ii) Foreign currency translation reserve

Exchange differences arising from translation of the foreign controlled entities are taken to the foreign currency translation reserve, as prescribed in note 1(s). The reserve is recognised in the profit and loss when the net investment is disposed of.

Note 14. Key management personnel disclosures

(a) Directors

The following persons were directors of Red Mountain Mining Ltd during the financial year:

N F Warburton	Executive Chairman & Acting CEO
K B Rowe	Executive Director
M Wolley	Non-executive Director
B Zhou	Non-executive Director (resigned on 3 April 2012)

(f) Key management personnel compensation

Payments to key management personnel included cash payments and accruals for the period from 1 July 2011 to 30 June 2012. No bonuses pertaining to the financial year 2012 had been recommended or paid at the date of this report.

	2012 \$	2011 \$
Short-term employee benefits - Cash salaries and fees	495,279	216,021
Share-based payments – Options (refer to note 20)	639,068	150,000
	1,134,347	366,021

(c) Key management personnel compensation disclosure

The Board policy in determining the nature and amount of compensation and discussion of the relationship between the Board's policy and the entity's performance are provided in the remuneration report section of the Director's report.

(d) Equity instrument disclosures relating to key management personnel

Share holdings

The numbers of shares in the Company held during the financial year by each director of Red Mountain Mining Ltd and other key management personnel of the group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

2012 Name	Balance at the start of the year	Received during the year on the exercise of options	Other changes during the year	Balance at the end of the year
Directors of Red Mountain Mining Ltd
N F Warburton	6,290,625	-	725,000	7,015,625
K B Rowe	5,353,125	-	100,000	5,453,125
M Wolley	-	-	-	-
B Zhou	2,418,750	-	(2,418,750)¹	-

¹ B Zhou still holds the shares. The change merely reflected the fact that B Zhou ceased to be a non-executive director.

2011 Name Directors of Red Mountain Mining Ltd	Balance at the start of the year	Received during the year on the exercise of options	Other changes during the year	Balance at the end of the year
N F Warburton	10,065,000	-	(3,774,375)	6,290,625
B Zhou	3,870,000	-	(1,451,250)	2,418,750
K B Rowe	8,565,000	-	(3,211,875)	5,353,125
Other key management personnel of the group
D J Kelly	1,000,000	-	(375,000)	625,000

Options

Options were provided in lieu of remuneration packages for the period ending 30 June 2012. The number of options granted during the financial year is set out in the following table.

Name	Number granted	Grant date	Value per option at grant date (\$)	Number vested	Number lapsed	Exercise price (\$)	First exercise date	Last exercise date
K Rowe	242,430	30/08/2011	0.075	242,430	-	0.25	30/08/2011	31/07/2014
K Rowe	242,430	30/08/2011	0.09	242,430	-	0.35	30/08/2011	31/07/2016
K Rowe	1,159,084	21/11/2011	0.083	1,159,084	-	0.25	21/12/2011	31/07/2014
K Rowe	1,159,084	21/11/2011	0.099	1,159,084	-	0.35	21/12/2011	31/07/2016
N Warburton	424,250	30/08/2011	0.075	424,250	-	0.25	30/08/2011	31/07/2014
N Warburton	424,250	30/08/2011	0.09	424,250	-	0.35	30/08/2011	31/07/2016
N Warburton	772,722	21/11/2011	0.083	1,159,084	-	0.25	21/12/2011	31/07/2014
N Warburton	772,722	21/11/2011	0.099	1,159,084	-	0.35	21/12/2011	31/07/2016
M Wolley¹	1,000,000	21/11/2011	0.083	1,000,000	-	0.25	21/12/2011	31/07/2014
M Wolley	1,000,000	21/11/2011	0.099	1,000,000	-	0.35	21/12/2011	31/07/2016
B Zhou²	242,430	30/08/2011	0.075	242,430	-	0.25	30/08/2011	31/07/2014
B Zhou	242,430	30/08/2011	0.09	242,430	-	0.35	30/08/2011	31/07/2016
B Zhou	579,542	21/11/2011	0.083	579,542	-	0.25	21/12/2011	31/07/2014
B Zhou	579,542	21/11/2011	0.099	579,542	-	0.35	21/12/2011	31/07/2016

¹ Mr. Michael Wolley stepped down as Non-executive Chairman on 3 April 2012 and remains on the Board as an independent non-executive director.

² Mr. Bo Zhou resigned on 3rd April 2012

(e) Loans to key management personnel

There are no loans made to directors or other key management personnel of Red Mountain Mining Ltd or the consolidated entity during the financial year or outstanding at the end of the financial year.

Note 15. Remuneration of auditors

	2012 \$	2011 \$
During the year the following services were paid or accrued to the auditors of the Group:
Assurance services
Audit services
Audit and review of financial report
- parent entity auditors-Butler Settineri	51,180	7,500
- controlled entities auditors-OCRA & Jacky Chang	5,200	3,765
Non-audit services –IAR for Prospectus	11,500	-
	67,880	11,265

Note 16. Contingent liabilities

The Group has no contingent liabilities at 30 June 2012.

Note 17. Commitments for expenditure

Remuneration commitments

The Group has no remuneration commitments as of 30 June 2012.

Lease Commitments

within one year later than one year but not later than five years	95,904 63,936	137,000 -
later than five years	-	-
	159,840	137,000
The Group has no other commitments for expenditure at 30 June 2012.

Note 18. Related parties

Directors and specified executives

Disclosures relating to directors and other key management personnel are set out in Note 14.

Wholly-owned group

The wholly-owned group consists of Red Mountain Mining Ltd and its wholly-owned subsidiary: Red Mountain Mining (Hong Kong) Holdings Ltd as described in Note 19.

Aggregate amounts receivable from Red Mountain Mining (Hong Kong) Holdings Ltd at balance date:

		Parent
	2012 \$	2011 \$
Non-current receivables	4,059,181	2,244,914
Less: Provision for non-recovery	(4,059,181)	(2,244,914)
	-	-

Ownership interests in related parties

Interests held in the following classes of related parties are set out in the following note.

Note 19. Investments in controlled entities

Ltd

Name of entity	Country of incorporation	Class of shares	Equity holding 2012 %
Red Mountain Mining (Hong Kong) Holdings Ltd	Hong Kong	Ordinary	100
Red Mountain Mining Consulting (Shenyang) Co	People's Republic of China	Ordinary	100

Note 20. Share-based payments

The Group provides benefits to directors and contractors of the Group in the form of share-based payment transactions, whereby options to acquire ordinary shares are issued as an incentive to improve the Board and shareholders goal congruence.

The exercise price of options granted is in the range from 20 cents to 35 cents per option. All options granted have expiry dates ranging from 12 September 2013 to 31 July 2016.

Terms and conditions

	Unlisted	Unlisted	Unlisted	Unlisted	Unlisted	Unlisted	Unlisted	Unlisted
	options	options	options	options	options	options	options	options
	expiry	expiry	expiry	expiry	expiry	expiry	expiry	expiry
	30/06/2014	12/09/2013	30/06/14 @	31/07/14	31/07/16	30/06/14	31/07/14	31/07/16
	@ \$0.20	@\$0.20	\$0.20	@ \$0.25	@ \$0.35	@\$0.20	@ \$0.25	@ \$0.35
		escrowed	escrowed	escrowed	escrowed	escrowed	escrowed	escrowed
		until	until	until	until	until	until	until
		1/09/13	1/09/13	1/09/13	1/09/13	1/09/13	21/12/13	21/12/13
No. of options	9,300,000	1,718,433	8,428,125	909,110	909,110	10,000,000	3,511,348	3,511,348

28,287,474 options are provided in lieu of remuneration packages.

10,000,000 options are granted to the Cygnet Capital, including a success fee of 6,000,000 options upon completion of IPO raising and 4,000,000 options post-completion of the IPO.

	2012			2011
	No. of Options	Weighted average exercise price (\$)	No. of Options	Weighted average exercise price (\$)
Balance at beginning of year	19,446,558	0.20	3,000,000	N/A
Granted during the year	18,840,916	0.25	16,446,558	0.20
Forfeited during the year	-	-		-
Exercised during the year	-	-		-
Expired during the year	-	-		-
Balance at the end of the year	38,287,474	0.22	19,446,558	0.20
Exercisable at the end of the year	38,287,474	0.22	19,446,558	0.20

Movement in options during the year

The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.22 years, and the exercise prices range from 20cents to 35 cents.

Options granted during the year

Options without market based vesting conditions can be exercised at any time following vesting up to expiry date, and as such are more suitable valued using a binomial option pricing model. Option pricing models assume that the exercise of an option does not affect the value of the underlying asset.

The price was calculated in accordance with AASB 2 by using the Black-Scholes option pricing model by applying the assumptions set out below:

No. of options	Fair Value per option (\$)	Underlying Security spot price (\$)	Exercise price (\$)	Option life (year)	Expected volatility	Expected Dividends	Risk-free interest rate
909,110	0.075	0.20	0.25	2.10	85%	Nil	3.68%
909,110	0.09	0.20	0.35	4.10	85%	Nil	3.83%
3,511,348	0.083	0.18	0.25	2.69	85%	Nil	3.68%
3,511,348	0.099	0.18	0.35	4.70	85%	Nil	3.83%
10,000,000	0.11	0.20	0.20	2.84	85%	Nil	3.84%

Expenses arising from share-based payment transactions for the year

Total expenses arising from share-based payment transactions recognized during the year were as follows:

Director incentive options	\$ 789,068
Options for capital raising costs	\$ 1,100,000
Total	\$ 1,889,068

Note 21. Reconciliation of loss from ordinary activities after income tax to net cash outflow used in operating activities

	2012 \$	2011 \$
Operating loss after income tax	(5,178,481)	(1,617,692)
Interest accrued	(13,868)	-
Provision for employee benefits	21,545	-
Depreciation	3,919	802
Share based payments	1,889,068	-
Forex reserve	(327)	-
Net foreign exchange losses/(gains)	(55,897)	(14,096)
Change in operating assets and liabilities
(Increase)/decrease in other receivables	(4,642)	(114,480)
Increase/(decrease) in trade creditors	(399,579)	137,122
Increase/(decrease) in other operating	128,690	-
ti iti Net cash used in operating activities	(3,609,572)	(1,608,344)

Note 22. Loss per share

	2012	2011
	Cents	Cents
Basic and diluted loss per share	(7.15)	(5.18)

Weighted average number of shares used as the denominator	2012 Number	2011 Number
Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share. Losses used in calculating losses per share	72,393,359	31,204,984
Net loss	(5,178,481)	(1,617,692)

Diluted loss per share

As at 30 June 2012, none of the outstanding options were dilutive as the weighted average exercise price of the options were higher than the weighted average share price for the year.

Note 23. Dividend

The Board does not recommend the payment of a dividend for the financial year ended 30 June 2012. No dividends were paid during the financial year.

Note 24. Parent entity information

The following information relates to the parent entity, Red Mountain Mining Ltd, as at 30 June 2012. The information presented hereto has been prepared using accounting policies consistent with those presented in Note 1.

		Parent Entity
	2012 \$	2011 \$
Current assets	3,429,239	458,665
Non-current assets Total assets	31,387 3,460,626	4,238 462,903
Current liabilities	277,046	524,400
Total liabilities	277,046	524,400
Contributed equity	11,657,848	4,139,848
Reserves Accumulated losses	2,038,272 (10,512,540)	149,204 (4,350,549)
Net Assets	3,183,580	(61,497)
Loss for the year Other comprehensive income	(6,161,991) (59,914)	(1,778,299) -
Total comprehensive income for the year	(6,221,905)	(1,778,299)

The parent entity has no contingent liabilities or capital commitment as at 30 June 2012.

Note 25. Events occurring after reporting date

On 23 July 2012, the Company signed a Binding Share Sale Agreement to acquire Gold and Copper-Gold Assets from Mindoro Resources. The key developments include:

• On completion, the Company will issue Mindoro 100,000,000 RMX shares that will be held by Mindoro in escrow for 12 months and have full voting rights.
• In addition, the Company will issue 50,000,000 Performance Shares that will convert to full voting shares upon the Company upgrading the Indicated Resource at Batangas to 600,000 ozs of gold and completing a scoping study that demonstrates a viable gold mining project based on over 50% of the Indicated Resource converting to Mineral Reserve or equivalent within 12 months of completing the transaction.
• Mindoro intends to make an in-specie distribution of the initial 100,000,000 RMX Shares on expiry of the escrow period 12 months from the sale. The 50,000,000 performance based RMX shares may be distributed in –specie to Mindoro shareholders up to 12 months from vesting.
• Subsequent to the signing of the Binding Share Sale Agreement, Mindoro has drawdown initial A\$200,000 of A\$1m Loan Facility provided by the Company to fund drilling of the potential high-grade feeder zones at Archangel within Batangas Project in the Philippines.
• The shareholders approved the transaction at EGM held on 4 September 2012.

No other matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect:

• (a) the consolidated entity's operations in future financial years, or
• (b)the results of those operations in future financial years, or
• (c) the consolidated entity's state of affairs in future financial years.

Directors' Declaration

In the directors' opinion:

• (a) The financial statements and notes set out on pages 30 to 60 are in accordance with the Corporations Act 2001, including:
• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• (ii) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 1 to the financial statements; and
• (iii) giving a true and fair view of the Company's and the consolidated entity's financial position as at 30 June 2012 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial period ended on that date; and
• (f) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
• (g) the directors have been given the declarations required by s.295A of the Corporations Act 2001.

Signed in accordance with a resolution of the directors made pursuant to s.295 (5) of the Corporate Act 2001.

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

Neil Warburton Executive Chairman & Acting CEO

Perth, Western Australia 26 September 2012