Q2 2011 - Part 2

Condensed Interim Consolidated Financial Statements (Unaudited)

Aureus Mining Inc.

For the Three and Six Months Ended June 30, 2011

(Stated in US dollars)

Registered office: Suite 2300Toronto-Dominion Centre TD Waterhouse Tower79 Wellington Street WestTorontoOntario M5K 1H1Canada

Company registration number: 776831-1

Company incorporated on: 1 February 2011

The accompanying notes are an integral part of these interim consolidated financial statements.

The accompanying notes are an integral part of these interim consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Aureus Mining Inc.

(in US dollars unless otherwise stated)

1 Nature of operations and basis of preparation

Aureus Mining Inc. ("Aureus Mining" or the "Company") is a new company incorporated under the Canada Business Corporations Act on February 1, 2011 in order to facilitate the Plan of Arrangement (the "Arrangement" - see Note 2). Following completion of the Arrangement, Aureus Mining holds gold assets and an investment in Stellar Diamonds plc. ("Stellar Diamonds") previously owned by Afferro Mining Inc. ("Afferro Mining", formerly African Aura Mining Inc.). The focus of Aureus Mining's business is the exploration and development of such gold assets, particularly the New Liberty Gold Project.

These condensed interim consolidated financial statements ("interim financial statements") have been prepared in accordance with IAS 34, "Interim Financial Reporting", they do not include all disclosures that would otherwise be required in a complete set of financial statements.

The consolidated financial statements of Aureus Mining for the year ending December 31, 2011, will be prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). As these interim financial statements represent Aureus Mining's initial presentation of its results and financial position under IFRS, they were prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting and are using the accounting policies which Aureus Mining expects to adopt in its consolidated financial statements for the year ending December 31, 2011 based on currently effective standards. These interim financial statements may differ from those presented in Aureus Mining's first annual IFRS financial statements for the year ending December 31, 2011 due to changes to the IFRS standards, if any.

These interim financial statements were authorized by the board of directors on August 12, 2011.

2 Plan of Arrangement

On April 13, 2011 African Aura completed the Arrangement under the British Columbia Business Corporation Act pursuant to which it transferred its gold assets, 30,792,770 shares in Stellar Diamonds and $10.6 million cash (the "Transferred Assets") to Aureus Mining and African Aura was renamed Afferro Mining Inc.

The Arrangement was approved by the Board of Directors of African Aura and by African Aura's shareholders at a special meeting held on April 5, 2011.

Under the Arrangement, among other things, the Transferred Assets were acquired by Aureus Mining and each Participating Shareholder received new common shares in Afferro and Aureus Mining in exchange for the African Aura common shares held by such shareholder on the basis of one new Afferro common share and one Aureus Mining common share for each African Aura common share held by such shareholder.

3 Summary of significant accounting policies

The accounting policies set out below have been applied consistently in these financial statements, unless otherwise stated.

3.1 Basis of consolidation

3.1.1 Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

These financial statements include the accounts of Aureus Mining and its subsidiaries. The significant group companies at June 30, 2011 are set out below:

3.1.2 Transactions eliminated on consolidation

Intra-group balances and any unrealized gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the financial statements.

3.2 Foreign currency translation

3.2.1 Functional and presentation currency

Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in U.S. dollars ("$"), ("the presentation currency").

In the consolidated financial statements, all separate financial statements of subsidiary entities, originally presented in a currency different from the Group's presentation currency, have been converted into US dollars. Assets and liabilities have been translated into US dollars at the closing rate at the balance sheet date. Income and expenses have been translated at the average rates over the reporting period. Any differences arising from this procedure have been charged/credited to the "Cumulative translation reserve" in equity.

3 Summary of significant accounting policies (continued)

3.2.2 Foreign currency transactions

In preparing the financial statements of the group entities, foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive loss/income.

3.3 Capital contribution

The net assets transferred to Aureus Mining on April 13, 2011 pursuant to the Plan of Arrangement (see Note 2 and 4) have been credited to equity as a capital contribution.

3.4 Property, plant and equipment

All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amounts of any replaced parts are derecognized. All other repairs and maintenance are charged to the consolidated statement of comprehensive loss/income during the financial period in which they are incurred.

Machinery and equipment and vehicles are depreciated at 30% per annum on a reducing balance basis.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

3.5 Acquisition, exploration and evaluation expenditure

The Company's intangible assets relate to capitalised costs relating to the acquisition, exploration and evaluation of the Company's mineral properties. Direct acquisition costs are capitalized by property to resource properties and exploration and evaluation costs are capitalized by property to deferred exploration costs. These assets are not amortized but are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable, at least at each balance sheet date.

3.6 Impairment

At each balance sheet date, the Group reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from

other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax 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.

3 Summary of significant accounting policies (continued)

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 as an expense in the statement of comprehensive income.

In assessing whether there is any indication that an asset(s) may be impaired, an entity shall consider, as a minimum, the following indications:

External

·; During the period an assets market value has declined significantly more than would be expected as a result of the passage of time

·; Significant changes with an adverse effect on the entity have taken place during the year or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated

·; Market interest rates or other market rates of return on investment have increased during the year, and those increases are likely to affect the discount rate used in calculating an assets value in use and decrease the assets recoverable amount

·; The carrying amount of the net assets of the entity is more than its market capitalisation

Internal

·; Evidence of obsolescence or physical damage of an asset

·; Evidence from internal reporting that indicates the economic performance of an assetis or will be worse than expected

·; Significant changes with an adverse effect on the entity have taken place during the year or are expected to take place in the near future to the extent and manner in which an asset is used

·; The facts and circumstances indicating impairment include the following:

- The entity's right to explore in an area has expired, or will expire in the near future, without renewal

- No further exploration or evaluation is planned or budgeted for

- A decision has been made to discontinue exploration and evaluation in an area because of the absence of commercial reserves

- Sufficient data exists to indicate that the book value will not be fully recovered from future development and production

An impairment loss recognised in prior periods shall be reversed if, and only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised.

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 so 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 periods. A reversal of an impairment loss is recognised as income immediately.

3.7 Financial instruments

Financial assets

All financial assets are recognised and derecognised on trade date when the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value,

3 Summary of significant accounting policies (continued)

plus transaction costs, except for those financial assets classified as at fair value through profit or loss ("FVTPL"), which are initially measured at fair value.

Available for sale financial assets

Available for sale financial assets include non-derivative financial assets that are either designated as such or do not qualify for inclusion in any of the other categories of financial assets. All financial assets within this category are measured subsequently at fair value, with changes in value recognised in equity, through the statement of changes in equity. Gains and losses arising from investments classified as available for sale are recognised in the statement of comprehensive income when they are sold or when the investment is impaired. In the case of impairment of available for sale assets, any loss previously recognised in equity is transferred to the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income. Impairment losses recognised previously on debt securities are reversed through the statement of comprehensive income when the increase can be related objectively to an event occurring after the impairment loss was recognised in the statement of comprehensive income.

Loans and receivables

Trade receivables, loans and other receivables that have fixed and determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets at amortised cost

Financial assets that are measured at amortised cost are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been affected.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

3 Summary of significant accounting policies (continued)

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Compound instruments

The component parts of compound instruments issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, in the case of a convertible bond denominated in the functional currency of the issuer that may be converted into a fixed number of equity shares, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured.

Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

·; it has been incurred principally for the purpose of disposal in the near future; or

·; it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

·; it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

·; such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

·; the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the Group is provided internally on that basis; or

3 Summary of significant accounting policies (continued)

·; it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the statement of comprehensive income as the Group chooses not to disclose the effective interest rate for debt instruments that are classified as at fair value through profit or loss. The net gain or loss

recognised in the statement of comprehensive income incorporates any interest paid on the financial liability.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

Embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value through profit or loss.

An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivatives relates to is more than 12 months and is not expected to be realised or settled within 12 months.

3.8 Income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company's subsidiaries operate and generate taxable income. Management periodically evaluate positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

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. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

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.

3 Summary of significant accounting policies (continued)

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

3.9 Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Fair value is measured by use of a Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Equity-settled stock options granted to employees vest immediately and therefore the charge is recognised in the statement of comprehensive income at the grant date.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

3.10 Critical accounting judgements and sources of estimation uncertainty

In the application of the Group's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 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.

Significant balances and transactions affected by management estimates include, but are not limited to, the carrying value of Company's investments, resource properties, deferred exploration costs, the calculation of the fair value of stock-based compensation and warrants as well as the recovery of assets. Actual results could differ from those estimates.

The amounts used to estimate fair values of stock options and warrants issued are based on estimates of future volatility of the Company's share price, expected lives of the options, expected dividends to be paid by the Company and other relevant assumptions.

By their nature, these estimates are subject to measurement uncertainty and the effect of changes in such estimates on the consolidated financial statements of future periods could be significant.

4 Capital contribution

As described in Note 2, on April 13 2011, upon completion of the Arrangement Aureus Mining received the Transferred Assets from Afferro Mining. As there was no substantive change in ultimate ownership of the Transferred Assets as a result of the transaction, the transaction has been accounted for as a capital contribution and the Transferred Assets have been brought into Aureus Mining at the carrying values recorded by Afferro Mining at the date of transfer as follows:

5 Intangible assets

5 Intangible assets (continued)

6 Property, plant and equipment

7 Equity

(a) Authorised

Unlimited number of common shares without par value.

(b) Issued

On May 19, 2011, the Company concluded a public offering issuing 27,000,000 new common shares of Cdn$1.30 each raising gross proceeds of Cdn$35.1 million. The direct costs to issue that have been charged to share capital amounted to Cdn$2.4 million (including compensation warrants valued at Cdn$0.2 million (see Note 7d)).

On June 3, 2011, the over-allotment option attached to the public offering was exercised upon which the Company issued 4,050,000 new common shares of Cdn$1.30 each raising gross proceeds of Cdn$5.3 million. The direct costs to issue that have been charged to share capital amounted to Cdn$0.3 million (including compensation warrants valued at Cdn$ 26,882 (see Note 7d)).

On June 23, 2011, the Company issued 37,500 new common shares in exchange for the exercise of 37,500 stock options at a weighted average exercise price of Cdn$0.69.

(c) Stock options

In connection with the Arrangement, each African Aura option outstanding immediately prior to the completion was exchanged for one Afferro option and one Aureus Mining option and the African Aura option so exchanged was immediately thereupon cancelled.

The Aureus Mining options were granted pursuant to the Aureus Mining Stock Option Plan. The issuance of Afferro options and Aureus Mining options is intended to put the holders of the options in the same position (or as close as possible thereto) as each shareholder of African Aura who participated in the Arrangement as if such holders of African Aura options had exercised such options prior to the effective time of the Arrangement. Therefore it is not necessary to value the African Aura options prior to the effective time of the Arrangement and Afferro and Aureus options after the effective time using an option pricing model as these options are not a new grant or a re-pricing.

The exercise price of each Afferro option and each Aureus Mining option was determined in accordance with the following formulae, in each case rounded up to the nearest whole cent:

·; the exercise price of each Afferro option represents the product of (a) the original exercise price of the African Aura option multiplied by (b) the difference between one (1) and the Exercise Price Proportion, an amount determined in accordance with the fraction A/B where: (A) is the one day volume weighted average trading price of one Aureus common share following the completion of the Arrangement; and (B) is the aggregate of the one day volume

7 Equity (continued)

weighted average trading price of one Aureus common share and one Afferro common share following the completion of the Arrangement; and

·; the exercise price of each Aureus Mining option represents the product of (a) the original exercise price of the African Aura option multiplied by (b) the Exercise Price Proportion.

The Exercise Price Proportion was calculated as 0.3978

Information relating to stock options outstanding and vested at June 30, 2011 is as follows:

7 Equity (continued)

The fair value of the stock options granted in the three months ended June 30, 2011 was estimated at Cdn$0.63 per option at the grant date based on the Black-Scholes option-pricing model using the following assumptions:

 (d) Compensation warrants

During the three months ended June 30, 2011 the Company issued 931,500 compensation warrants in relation to its public offering. Each compensation warrant is exercisable at a price per common share of Cdn$1.30 and expire between November 19, 2011 and December 3, 2011. These warrants have been treated as a derivative liability and are fair valued at each reporting date using the Black-Scholes option pricing model with changes in fair value being taken directly to the statement of comprehensive loss.

8 Related party transactions

During the three months ended June 30, 2011, the Company incurred management and office service fees of $27,504 payable to Afferro Mining. The payable to related parties as at June 30, 2011 of $164,415 includes the management and office and service fees payable to Afferro Mining and also other supplier payments made by Afferro Mining on the Company's behalf.

Related party transactions are in the normal course of business and occur on terms similar to transactions with non-related parties.

9 Segment information

The Company is engaged in the acquisition, exploration and development of gold properties in the West African countries of Liberia, Cameroon, and Sierra Leone. Information presented to the Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is focused on the geographical location. The reportable segments under IFRS 8 are as follows:

·; Liberia exploration;

·; Cameroon exploration;

·; Sierra Leone exploration

·; Corporate

Following is an analysis of the Group's results, assets and liabilities by reportable segment for the three month period ended June 30, 2011: