Final Results

AIM: EMED

TSX: EMD 31 March 2011

Final Results

EMED Mining Public Limited ("EMED Mining" and or "the Company"), the AIM quoted mining exploration and development company, today announces final audited results for the year ended 31 December 2010.

REPORT OF THE BOARD OF DIRECTORS

The Board of Directors presents its report for EMED Mining Public Limited and its subsidiaries (the "Group") together with the consolidated financial statements of the Group for the year ended 31 December 2010.

Incorporation and Principal Activity

EMED Mining was incorporated in Cyprus on 17 September 2004 and is a company with limited liability under the Companies Law of Cyprus, Cap. 113. The Company was listed on the Alternative Investment Market ("AIM") of the London Stock Exchange in May 2005.

On the 20 December 2010 EMED Mining closed an initial public offering in Canada of 180,970,000 ordinary shares at an issue price of CAD$0.135 (approximately 8.5 pence) per Ordinary Share for aggregate gross proceeds of CAD$24.4 million (approximately €18.3 million). At the same time the Company also raised €6 million through the AIM market, making a total raising of €24.4 million. The Company is now dual-listed in London on AIM and in Toronto on the Toronto Stock Exchange ("TSX").

The principal activity of the Group is to explore for and develop natural resources, with a focus on base and precious metals in certain belts of mineralization spanning Europe, the Middle East and Central Asia.

EMED Mining is led by international mining industry specialists with corporate headquarters in Cyprus, the site of the Group's first project. Cyprus is geographically central to the Company's areas of interest and is a member of both the European Union and the British Commonwealth. EMED Mining has a strong commitment to the responsible development of metal production operations in Europe, with an initial focus on copper and gold.

Review of Operations

During the past 12 months EMED Mining has made further progress on its two major projects: the Rio Tinto copper mine in Spain and the Biely Vrch gold project in Slovakia.

At Rio Tinto, EMED Mining's primary effort has been on planning and permitting the re-start of the existing copper mine and processing plant. During the year, the Government of Andalucía, local municipalities and the relevant labour union have publicly expressed support for the restart of copper production. In December 2010 the requested letter of non-opposition to the Administrative Standing application was signed by the fourth member of the Liquidation Commission of the company Minas de Rio Tinto ("MRT"), the last-approved owner/operator. This fulfils a request of the mining regulatory authorities and the next step is for the authorities to grant administrative approval of the mineral rights acquired by EMED Mining in 2007. In January 2011, the Department of Culture and Heritage of the Junta de Andalucía provided a favorable report regarding the Company's plans for the Rio Tinto Copper Mine.

Once the Company has received the necessary government permits for triggering the restart, a six month ramp-up to first production is planned. EMED's target is to start preparing the plant, other infrastructure and human resources in 2011 for production in 2012, the exact timing of which will depend on the rate of permitting. The Company has budgeted re-start costs (capital improvements, repairs and working capital combined) of EUR82 million, which should be largely fundable from bank or off-take facilities.

EMED Mining is progressing towards the development of its 100%-owned Biely Vrch gold deposit, which contains Indicated Resources of 461,000 ounces and Inferred Resources of 596,000 ounces. In parallel with progressing the required permitting studies and approvals, EMED Mining is working towards reaching various agreements with local parties directly impacted by the development of Biely Vrch. The initial capital cost is estimated to be approximately US$64 million for a 3Mtpa heap-leach operation producing approximately 60,000 ounces of gold per annum at an estimated average cash cost of ±US$530 per ounce.

In September 2010, EMED Mining obtained an exclusive option to acquire the Regua tungsten deposit which is located 400km north of Lisbon and 95km east of Porto in Portugal. The deposit has not been previously mined and is located close to infrastructure with good road access. 

In Cyprus, EMED Mining continues to assess its large geological database of historical copper mining. Discussions are progressing with stakeholders over the entire island in a manner appropriate to the current re-unification efforts.

Results

As at 31 December 2010, the Group had cash of €21.5 million (2009: €3.6 million) and listed shares that had a market value of €4.4 million. During 2010, the Group incurred exploration and care and maintenance expenditure of €5.2 million (2009: €5.0 million) and net operating expenditure of €3.4 million (2009: €2.1 million).

EMED Mining continues to take a conservative approach in its accounting policy towards exploration expenditure. All such expenditures are written off when incurred pending the Directors' decision to commence project development. This policy is a major factor in EMED Mining recording a net loss for 2010 of €10.2 million (2009: net loss €9.6 million) after minority interests.

Development permit costs for the Rio Tinto Mine have been capitalised.

The financial results are summarised as follows:

The Group's full results for the year are set out on page 15.

The increase in assets during the year is due to an increase in property, plant and equipment of €17.8 million at the Rio Tinto Copper Mine and an increase in cash reserves of €18 Million. The increase in plant and equipment is mainly due to the agreement entered into with the Department of Social Security in Spain. Under the terms of the agreement, the Department of Social Security has agreed not to enforce the liens held by it against the relevant assets now owned by EMED Tartessus provided that the outstanding debt of €16.9 million is repaid in full over a five year period. This transaction has given rise to the increase in long term liabilities.

Share Capital

Details on authorized and issued share capital are disclosed in Note 17 of the consolidated financial statements.

Two significant share placements were completed during 2010:

·; The issue of 83.5 million new ordinary shares at 10.5p in May 2010, raising €10.1 million; and

·; The issue of 241.1 million new ordinary shares at 8.5p in December 2010, raising €24 million.

At 31 December 2010, EMED Mining had a total of 673 million shares on issue (915 million shares fully-diluted).

Future Developments

The Company's key near-term priority is to safely and efficiently start copper production at the Rio Tinto Mine once EMED Mining has completed the regulatory approval process, financed the start-up and obtained shareholder approval.

Our excellent team at the Rio Tinto Mine integrates local expertise with international experience. By working very closely with the regulatory authorities, EMED Mining plans to bring this established mine up to the high standards of a 21st century operation.

Development of our Biely Vrch gold deposit in Slovakia would also create substantial value. Our Slovakian team is progressing further studies and permitting of Biely Vrch, while continuing to test numerous prospects in a prolific district.

Board of Directors

The names and particulars of the qualifications and experience of each director at the end of the financial year are set out below. All directors, except Mr. Davey who was appointed on 22 April 2010, held office from the start of the financial year to the date of this report. In accordance with the Company's Articles of Association, one third of the board of directors must resign each year. The Company's directors, Mr. J. Leach and Dr.R.Bhappu will resign from their current positions at the forthcoming Annual General Meeting and, being eligible, will offer themselves for re-election. The remaining directors, presently members of the Board, will continue in office.

Ronald (Ronnie) Beevor, BA (Hons)

Non-Executive Chairman, British and Australian Citizen based in Australia.

Mr. Beevor serves as the Chairman of the Board. He is also Chairman of the Audit and Financial Risk Committee and a member of the Corporate Governance, Nominating and Compensation Committee.

Mr. Beevor is an investment banker with extensive involvement in the natural resources industry globally. He was Head of Investment Banking at NM Rothschild & Sons (Australia) Limited between 1997 and 2002 and is currently a Senior Advisor to Gryphon Partners Advisory. He is also a director of Bannerman Resources Limited, Rey Resources Limited, Talison Lithium Limited and Unity Mining Limited. Mr. Beevor has an honours degree in Philosophy, Politics and Economics from Oxford University and qualified as a Chartered Accountant in London in 1972.

Aristidis (Harry) Anagnostaras-Adams, B. Comm., MBA 

Managing Director, Australian Citizen based in Cyprus and Spain.

Mr. Anagnostaras-Adams serves as Managing Director and Chief Executive Officer of the Company. He has served as Deputy Chairman of the Australian Gold Council, is a Fellow of the Australian Institute of Management and of the Australian Institute of Company Directors. In January 2005 he moved to Europe to establish and lead EMED Mining.

Since 2006, Mr. Anagnostaras-Adams has also served as Non-Executive Chairman of AIM-listed, KEFI. Mr. Anagnostaras-Adams has previously served as Managing Director of Gympie Gold Limited ("Gympie Gold"), Executive Director of investment company Pilatus Capital Ltd., General Manager of resources investment group Clayton Robard Limited Group, Senior Investment Manager of Citicorp Capital Investors Australia Ltd. and serves (or has served) as a non-executive Director of many other public and private companies across a range of industries.

Mr. Anagnostaras-Adams has a Bachelor of Commerce (in Systems and Finance) from the University of New South Wales, Australia. He qualified as a Chartered Accountant while working with PricewaterhouseCoopers and has a Master of Business Administration from the Australian Graduate School of Management where he was awarded the John Story Memorial Prize as outstanding graduate.

John Leach, B.A. (Economics), MBA.

Finance Director, Canadian and Australian citizen based in Cyprus and Spain.

Mr. Leach has over 25 years' experience in senior financial and executive director positions within the mining industry internationallyMr. Leach serves on the Board of KEFI Minerals plc (since 2006) and is a former member of the boards of Resource Mining Corporation Limited (2006 to 2007) and Gympie Gold Limited (1995 to 2003).

Mr. Leach holds a Bachelor of Arts (Economics) and a Master of Business Administration and is a member of the Institute of Chartered Accountants (Australia), the Canadian Institute of Chartered Accountants and is a Fellow of the Australian Institute of Directors. 

Dr. Ross Bhappu, B.Sc., M.Sc., Ph.D.

Non-Executive Director, American Citizen based in USA.

Dr. Bhappu serves as a Non-Executive Director of the Company and is Chairman of the Corporate Governance, Nominating and Compensation Committee and is a member of the Physical Risks Committee and the Audit and Financial Risk Committee.

Dr. Bhappu is a Partner with RCF and has extensive experience in the mining industry working for both senior and junior mining companies.

Prior to joining RCF in early 2001, he held various commercial and technical roles including chief executive officer of a start-up copper mining company, Director of Business Development for Newmont Mining Corporation ("Newmont") and he served in both technical and financial roles for Cyprus Minerals Company. He serves on the boards of RCF's portfolio companies Traxys SA and Molycorp Inc. (where he serves as Chairman) and was previously a director of Anglo Asian Mining Plc and Constellation Copper Corporation. Dr. Bhappu holds a Ph.D. in Mineral Economics from the Colorado School of Mines and Bachelor of Science and Master of Science degrees in Metallurgical Engineering and Metallurgy, respectively, from the University of Arizona.

Roger Davey, ACSM, MSc., C.Eng., Eur.Ing., MIMMM.

Non-Executive Director, British citizen based in the UK.

Mr. Davey serves as a Non-Executive Director of the Company. Mr. Davey is also Chairman of the Physical Risks Committee and is a member of the Audit and Financial Risk Committee.

 Mr. Davey has over thirty years experience in the mining industry. He is presently an Assistant Director and the Senior Mining Engineer at NM Rothschild & Sons. Mr. Davey has served as Director, Vice-President and General Manager of Minera Mincorp S.A., Operations Director of Greenwich Resources plc, London; Production Manager for Blue Circle Industries in Chile; and various production roles from graduate trainee to mine manager, in Gold Fields of South Africa (1971 to 1978). Mr. Davey is a director of GoldQuest Mining Corp., Orosur Mining Inc. and Alexander Mining Plc, and was formerly a director of Serabi Mining Plc.

Mr. Davey is a graduate of the Camborne School of Mines, England (1970), with a Master of Science degree in Mineral Production Management from Imperial College, London University, (1979) and a Master of Science degree from Bournemouth University (1994). He is a Chartered Engineer (C.Eng.), a European Engineer (Eur. Ing.) and a Member of the Institute of Materials, Minerals and Mining (MIMMM).

Ashwath Mehra, B.Sc.

Non-Executive Director, British Citizen based in Switzerland.

Mr. Mehra is the Chief Executive Officer of MRI. The MRI Group is a commodities group with annual turnover of approximately $3 billion. Mr. Mehra has worked in the minerals industry for 25 years, starting his career with Philipp Brothers (now Phibro LLC) after which he spent 10 years with Glencore International AG, where he was a senior partner and ran the Nickel and Cobalt Divisions. He has substantial experience in projects and project finance and has worked on equity and bond issues.

Mr. Mehra holds a Bachelors degree in Economics and Philosophy from the London School of Economics and Political Science.

During the past three years Mr. Mehra has held the following listed company directorships, Northern Iron Limited (Since May 2007),Champion Minerals (Since October 2010) and Unquote.

Directors' Interests

The interests of the Directors and their immediate families (all of which are beneficial unless otherwise stated) and of persons connected with them in Ordinary Shares as at the date of this report are as follows:

 R. Davey - - - -

 A. Mehra - - - -

The Directors to whom options over Ordinary Shares have been granted and the number of Ordinary Shares subject to such Options as at the date of this report are as follows:

Options, except those noted below, expire six or four years after grant date and are exercisable at the exercise price in whole or in part up to one third in the first year from the grant date, two thirds in the second year from the grant date and the balance thereafter.

On 11 May 2007, 2.5 million options exercisable at 15p were issued to Mr. H. Anagnostaras-Adams, Managing Director. These options vested when the Company acquired 100% ownership of the Rio Tinto Mine. The options expire 11 May 2013 and can be exercised at any time.

On 23 July 2007, 1 million options exercisable at 20p were issued to Mr. J. Leach, Finance Director. These options vested when the Company acquired 100% ownership of the Rio Tinto Mine. The options expire 23 July 2013 and can be exercised at any time.

On 23 March 2009, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1.5 million options were issued to Mr. J. Leach, Finance Director, 1 million to Mr. R. Beevor (Chairman) and 500,000 each to Messrs. R. Bhappu, A. Mehra and G. Toll, Non-Executive Directors. These options are exercisable at 4.1p and expire four years after the date of issue.

On 9 June 2009, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1.45 million options were issued to Mr. J. Leach, Finance Director, 500 000 to Mr. R. Beevor (Chairman) and 250,000 each to Messrs. R. Bhappu, A. Mehra and G. Toll, Non-Executive Directors. These options are exercisable at 8p and expire four years after the date of issue.

On 25 January 2010, 1.8 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1.2 million options were issued to Mr. J. Leach, Finance Director, 600,000 to Mr. R. Beevor (Chairman) and 367,000 each to Messrs. R. Bhappu and A. Mehra and 366,000 to G. Toll, Non-Executive Directors. These options are exercisable at 13.4p and expire four years after the date of issue.

On 22 April 2010, 500,000 options were issued to Mr. R. Davey, a Non-Executive Director. These options are exercisable at 13.4p and expire four years after the date of issue.

On 20 December 2010, 2 million options were issued to Mr. H. Anagnostaras-Adams, Managing Director, 1 million options were issued to Mr. J. Leach, Finance Director, 800 000 to Mr. R. Beevor (Chairman) and 400,000 each to Messrs. R. Bhappu, A. Mehra and R Davey, Non-Executive Directors. These options are exercisable at 12p and expire four years after the date of issue

In 2009, Mr. H. Anagnostaras-Adams and Mr. G. Toll, both then Directors of the Company exercised options over 1,000,000 Ordinary Shares and 2,000,000 Ordinary Shares, respectively. The options were exercised at prices ranging from 4.13 pence per Ordinary Share to 8 pence per Ordinary Share.

Directors' and Executive Officers Emoluments

In compliance with the disclosure requirements of the listing requirements of AIM, the aggregate remuneration paid to the directors and executive officers of EMED Mining for the year ended 31 December 2010 is set out on page 9.

Shareholders holding more than 3% of share capital

The Shareholders holding more than 3% of the share capital of the Company as at 31 December 2010 were:

RBC Dexia IS Global Securities 62,800 9.3%

Resource Capital Funds ("RCF") 51,274 7.6%

RMB Australia Holdings Limited 31,819 4.7%

MRI Investment AG 31,540 4.7%

TD Waterhouse Nominees (Europe) Limited 29,064 4.3%

OZ Minerals 27,039 4.1%

Scotia Capital Inc 23,880 3.6%

Directors and Management 15,978  2.3%

273,394 40.6%

Corporate governance

The Directors are aware of the Combined Code 2003 applicable to listed companies. The Directors note that as an AIM company there is no requirement to adopt the Combined Code. The Directors intend to comply with its main provisions as far as is practicable having regard to the size of the Group. The Board remains accountable to the Company's shareholders for good corporate governance.

The Board of Directors

The Company supports the concept of an effective Board leading and controlling the Company. The Board is responsible for approving Company policy and strategy. The Board holds at least six formal meetings in each calendar year and is supplied with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company Secretary and independent professionals at the Company's expense. Training is available for new Directors and other Directors as necessary. A number of the Group's key strategic and operational decisions are reserved exclusively for the decision of the Board.

The Board consists of two executive directors who hold operating positions in the Company (the Managing Director and the Finance Director) and four non-executive Directors, who bring a breadth of experience and knowledge, all of whom are independent of management and three of whom are independent of any business or other relationship which could interfere with the exercise of their independent judgement. The Board regularly reviews key business risks including the financial risks facing the Group in the operation of its business.

The Company has adopted a model code for Directors' dealings which is appropriate for a TSX and AIM listed company. The Directors intend to comply with Rules 21 and 31 of the AIM Rules relating to Directors' dealings and will take all reasonable steps to ensure compliance by the Group's applicable employees as well.

Board Committees

The Company's Audit and Financial Risk Management Committee comprises Mr. R. Beevor (Chair), Dr. R. Bhappu and Mr. R. Davey. The Audit Committee is responsible for ensuring that appropriate financial reporting procedures are properly maintained and reported on, for meeting with the Group's auditors and reviewing their reports on the Group's financial statements and the internal controls and for reviewing key financial risks.

The Company's Corporate Governance, Nominating and Compensation Committee, comprises Dr. R. Bhappu (Chair), Mr. R. Beevor and Mr. A. Mehra. The Remuneration Committee is responsible for reviewing the performance of the executives, setting their remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant.

The Company's Physical Risk Management Committee comprises Mr. R. Davey (Chair), Dr. R. Bhappu, and Mr. A. Mehra. The Physical Risks Committee is responsible for reviewing the compliance with regulatory and industry standards for environmental performance and occupational health and safety of personnel and the communities affected by the Company.

Directors' responsibilities for the financial statements

Cyprus company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent; and

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for maintaining proper accounting records, for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Legislation in Cyprus governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Creditors' payment terms

The Company does not have a specific policy towards our suppliers and does not follow any code or standard practice. However, terms of payment with suppliers are settled when agreeing overall terms of business, and the Company seeks to abide by the terms of the contracts to which it is bound.

Political donations

No political donations were made during the 2010 financial year.

Subsequent Events

EMED Mining's listing on the TSX was completed in January 2011 with the issue of a further 18.1 million new ordinary shares to various institutional investors at 8.5p raising €1.8 Million before expenses.

In early March 2011, the Andalucía Government announced it was satisfied as to the legality of the transmission of the Rio Tinto mineral rights to EMED Mining. The Company shares the Government's belief that this decision has "unblocked" the process of granting Administrative Standing. EMED's target is to start preparing the plant, other infrastructure and human resources in 2011 for production in 2012, the exact timing of which will depend on the rate of permitting.

Auditors

The auditors, MOORE STEPHENS STYLIANOU & CO, have expressed their willingness to continue in office and a resolution approving their reappointment and giving authority to the Board of Directors to fix their remuneration will be proposed at the next Annual General Meeting.

The auditor for the purposes of Canadian securities laws, MSCM LLP, has expressed their willingness to continue in office and a resolution to ratify their appointment will be proposed at the next Annual General Meeting.

By Order of the Board

Inter Jura CY (Services) Limited,

Secretary

Nicosia, Cyprus, 30 March 2011

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF

EMED MINING PUBLIC LIMITED

Report on the Consolidated and Company's Separate Financial Statements

We have audited the consolidated financial statements of EMED Mining Public Limited ("the Company") and its subsidiaries ("the Group") on pages 15 to 53 which comprise the consolidated statement of financial position of the Group and the Company as at 31 December 2010, and the consolidated statements of comprehensive income, changes in equity and cash flows of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Board of Directors' Responsibility for the Financial Statements

The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap 113. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated and Company's separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

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

Opinion

In our opinion, the consolidated and the Company's Separate financial statements give a true and fair view of the financial position of EMED Mining Public Limited and its subsidiaries as of 31 December 2010, and of its financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Cyprus Companies Law, Cap 113.

Emphasis of Matter 

Without qualifying our opinion we draw attention to the fact that certain mining assets and deferred tax associated with the Rio Tinto project acquired during the year as set out in notes 10 and 8 may require write down in value in the future should the project not proceed.

Without qualifying our opinion we draw attention to the fact that the financial statements have been prepared on a going concern basis. This basis may not be appropriate because its validity depends principally on the discovery of economically viable mineral deposits, obtain the necessary mining licences and the availability of subsequent funding to extract the resource or alternatively the availability of funding to extend the Group's exploration activities. The financial information does not include any adjustment that would arise from a failure to complete either option. Details of the circumstances relating to this fundamental uncertainty are described in the accounting policies. Our opinion is not qualified in this respect. 

Report on Other Legal Requirements

Pursuant to the requirements of the Cyprus Companies Law, Cap. 113, we report the following:

·; We have obtained all the information and explanations we considered necessary for the purposes of our audit.

·; In our opinion, proper books of account have been kept by the Company.

·; The Company's consolidated financial statements are in agreement with the books of account.

·; In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give the information required by the Cyprus Companies Law, Cap. 113, in the manner so required.

·; In our opinion, the information given in the report of the Board of Directors on pages 2 to 12 is consistent with the consolidated financial statements.

Other Matter

This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 156 of the Cyprus Companies Law, Cap.113 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

EMED MINING PUBLIC LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2010

EMED MINING PUBLIC LIMITED

STATEMENT OF FINANCIAL POSITION

31 December 2010

On 30 March 2011, the Board of Directors of EMED MINING PUBLIC LIMITED authorized these financial statements for issue.

EMED MINING PUBLIC LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2010

EMED MINING PUBLIC LIMITED

COMPANY STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2010

EMED MINING PUBLIC LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2010

EMED MINING PUBLIC LIMITED

COMPANY STATEMENT OF CASH FLOWS

Year ended 31 December 2010

EMED MINING PUBLIC LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended 31 December 2010

1. Incorporation and principal activities

Country of incorporation

EMED Mining Public Limited (the "Company") was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under the Companies Law, Cap. 113 and was converted to a public limited liability company at 26 January 2005. Its registered office is at, 1 Lambousa Street, Nicosia, Cyprus. The Company was listed on the Alternative Investment Market ("AIM") of the London Stock Exchange in May 2005 and the TSX on 20 December 2010.

Principal activities

The principal activity of the Company and its subsidiaries ("the Group") is to explore for and develop natural resources, with a focus on base and precious metals in the regions of Western and Central Europe, the Middle East and Western Asia.

2. Accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied throughout the period presented in these consolidated financial statements unless otherwise stated.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires management to exercise its judgement in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Going concern

The Directors have formed a judgment at the time of approving the financial statements that there is a reasonable expectation that the Company or the Group has adequate resources to continue in operational existence for the foreseeable future.

The financial information has been prepared on the going concern basis, the validity of which depends principally on the discovery of economically viable mineral deposits, obtaining the necessary mining licences and on the availability of subsequent funding to extract the resource or alternatively on the availability of funding to extend the Group's exploration activities. The financial information does not include any adjustment that would arise from a failure to complete either option. Changes in future condition could require write downs of the carrying values of property, plant and equipment, intangible assets and defferred tax.

Adoption of new and revised International Financial Reporting Standards (IFRSs)

During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2010. This adoption did not have a material effect on the accounting policies of the Company.

At the date of approval of these financial statements the following accounting standards were issued by the International Accounting Standards Board but were not yet effective:

Adoption of new and revised International Financial Reporting Standards (continued)

i) Standards and Interpretations adopted by the EU

(ii) Standards and Interpretations not adopted by the EU

The Board of Directors expects that the adoption of these standards or interpretations in future periods will not have a material effect on the consolidated financial statements of the Company.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The financial statements of all the Group companies are prepared using uniform accounting policies. All inter-company transactions and balances between Group companies have been eliminated during consolidation.

Business Combinations:

(i) Acquisitions

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

(ii) Goodwill

Purchased goodwill is capitalized and classified as an asset on the consolidated statement of financial position. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.

Goodwill is reviewed for impairment on an annual basis. When the directors consider the initial value of the acquisition to be negligible, the goodwill is written off to the consolidated statement of comprehensive income immediately. Trading results of acquired subsidiary undertakings are included from the date of acquisition. Goodwill is deemed to be impaired when the present value of the future cash flows expected to be derived is lower than the carrying value. Any impairment is charged to the consolidated statement of comprehensive income immediately.

Investments in subsidiary companies

Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an expense in the period in which the impairment is identified. This policy only applies to the "Company" financial statements.

Investments in associate companies

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Investments in associates are initially recognized at cost and are accounted for by the equity method of accounting.

Revenue recognition

Revenues earned by the Group are recognised on the following bases:

Interest income

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

Finance costs

Interest expense and other borrowing costs are charged to the consolidated statement of comprehensive income as incurred.

Foreign currency translation 

Tax

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation authorities using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Currently enacted tax rates are used in the determination of deferred tax.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.

Acquisitions of assets

All assets acquired, including property, plant and equipment other than goodwill and intangibles, are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.

When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value, except where the notional price at which they could be placed in the market is a better indication of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the extent of proceeds received, otherwise expensed.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on the straight‑line method to write off the cost of each asset to their residual values over their estimated useful life. The annual depreciation rates used are as follows:

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Expenditure for repairs and maintenance of property, plant and equipment is charged to the statement of comprehensive income of the year in which they were incurred. The cost of major renovations and other subsequent expenditures are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with carrying amount and are included in consolidated statement of comprehensive income.

Intangible assets

Intangible assets relate to mineral rights acquired and permits in respect of projects that are at the pre-development stage. Intangible assets acquired through a business combination or an asset acquisition are capitalised separately from goodwill if the asset is separable or arises from contractual or legal rights, and the fair value can be measured reliably on initial recognition. No depreciation charge is recognised in respect of intangible assets.

Share capital

Ordinary shares are classified as equity. The difference between the fair value of the consideration received by the Company and the nominal value of the share capital being issued is taken to the share premium account.

Exploration costs

The Group has adopted the provisions of IFRS 6 "Exploration for and Evaluation of Mineral Resources" for expenses and exploration costs. The Group's stage of operations as at the year end and as at the date of approval of these consolidated financial statements have not yet met the criteria for capitalization of exploration costs. Care and maintenance costs are expensed in the statement of comprehensive income.

Share‑based compensation benefits

IFRS 2 "Share‑based Payment" requires the recognition of equity‑settled share‑based payments at fair value at the date of grant and the recognition of liabilities for cash‑settled share‑based payments at the current fair value at each balance sheet date.

The fair value is measured using the Black Scholes pricing model. The inputs used in the model are based on management's best estimates for the effects of non-transferability, exercise restrictions and behavioural considerations.

For 2010, the impact of share-based payments was a net charge to income of €1,197,570 (2009: €1,627,245) and €383,041 share issue costs charged to share premium. At 31 December 2010, the equity reserve recognized for share based payments amounted to €5,014,824 (2009: €3,470,488).

Use and revision of accounting estimates

The preparation of the financial report requires the making of estimations and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand.

Investments

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

Trade and other receivables

Trade receivables are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Impairment of trade receivables is established when there is objective evidence as a result of a loss event that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The impairment is recognised in the income statement.

Available‑for‑sale financial assets

Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available‑for‑sale; these are included in non‑current assets unless Management has the express intention of holding the investment for less than 12 months from the reporting date or unless they will need to be sold to raise operating capital, in which case they are included in current assets.

Regular way purchases and sales of investments are recognised on the trade‑date which is the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available‑for‑sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method.

Realised and unrealised gains and losses arising from changes in the fair value of financial assets at fair value through profit or loss are included in the consolidated statement of comprehensive income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of available‑for‑sale financial assets are recognised in profit or loss and then in equity. When available‑for‑sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the consolidated statement of comprehensive income.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis, making maximum use of market inputs and relying as little as possible on entity specific inputs. Equity investments for which fair values cannot be measured reliably are recognised at cost less impairment.

The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available‑for‑sale financial assets the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit and loss. Impairment losses recognised on equity instruments are not subsequently reversed.

Borrowings

Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method.

Trade payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

·; the rights to receive cash flows from the asset have expired;

·; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' arrangement; or

·; the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation 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).

Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.

Provisions

Provisions are recognised when the Group has a present obligation, whether legal or constructive, as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the obligation at the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

3. Financial Risk Management

Financial risk factors

The Group is exposed to interest rate risk, liquidity risk, currency risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Group to manage these risks are discussed below:

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group has no significant interest-bearing assets. The Group is exposed to interest rate risk in relation to its non-current borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

At the reporting date the interest rate profile of interest-bearing financial instruments was:

Fixed rate instruments

Sensitivity analysis

An increase of 100 basis points in interest rates at 31 December 2010 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. For a decrease of 100 basis points there would be an equal and opposite impact on the profit and other equity.

Liquidity risk

Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.

The following tables detail the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's measurement currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US Dollar, the Canadian Dollar and the British Pound. The Group's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Sensitivity analysis

A 10% strengthening of the Euro against the following currencies at 31 December 2010 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. For a 10% weakening of the Euro against the relevant currency, there would be an equal and opposite impact on the profit and other equity.

Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group's overall strategy remains unchanged from last year.

Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Income taxes

Significant judgement is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Capitalisation of exploration and evaluation costs

Under the Group's accounting policy, exploration and evaluation expenditure is not capitalised until the point is reached at which there is a high degree of confidence in the project's viability and it is considered probable that future economic benefits will flow to the Group.

Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project. If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are written off.

Impairment review of asset carrying values

Events or changes in circumstances can give rise to significant impairment charges or reversals of impairment in a particular year.

Where the recoverable amounts of Group cash generating units are assessed by analyses of discounted cash flows, the resulting valuations are particularly sensitive to changes in estimates of long term commodity prices, exchange rates, operating costs, the grouping of assets within cash-generating units and discount rates.

Contingencies

Material contingencies facing the Group are set out in note 24 of the consolidated financial statements. A contingent liability arises where:

i) a past event has taken place for which the outcome will be confirmed only by the occurrence or non-occurrence of one or more uncertain events outside of the control of the Group; or

ii) a present obligation exists but is not recognised because it is not probable that an outflow of resources will be required to settle the obligation.

A provision is made when a loss to the Group is likely to crystallise. The assessment of the existence of a contingency and its likely outcome, particularly if it is considered that a provision might be necessary, involves significant judgement taking all relevant factors into account.

Share-based compensation benefits

Share-based compensation benefits are accounted for in accordance with the fair value recognition provisions of IFRS 2 'Share-based Payment'. As such, share-based compensation expense for equity-settled share-based payments is measured at the grant date based on the fair value of the award and is recognized as an expense over the vesting period. The fair value of such share-based awards at the grant date is measured using the Black Scholes pricing model. The inputs used in the model are based on management's best estimates for the effects of non-transferability, exercise restrictions, behavioural considerations and expected volatility.

4. Expenses by nature

5. Business and geographical segments

Business segments

The Group has only one distinct business segment, being that of mineral exploration and development.

Geographical segments

The Group's exploration activities are located in Cyprus, Georgia, Greece, Spain and Slovakia and its administration and management is based in Cyprus.