Atalaya Mining Regulatory News (ATYM)

11 November 2013

EMED Mining Public Limited

("EMED Mining" or the "Company")

Quarterly Financial Report

EMED Mining Public Limited (AIM: EMED, TSX: EMD) ("EMED Mining" or "the Company"), the Europe-based minerals development and exploration company, announces its unaudited results for the three months ended 30 September 2013.

The full unaudited Quarterly Report (as required by Toronto Stock Exchange reporting standards), including consolidated Financial Statements and the Management Discussion and Analysis relating to the Company, which appear below, are also available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.emed-mining.com.

Period Highlights

· On 15 July 2013, the Company raised £9.6 million (approximately US$15 million) through subscription agreements with cornerstone investors XGC and Red Kite.

· The Government affirmed its objective to process the project trigger permits (Administrative Standing, or "AS", and Environmental Plan, or "AAU") by the end of 2013 in full compliance with standard procedures for regulatory compliance.

· Receipt of the independent Viability Report by the Government's independent technical expert CEDEX in respect of the refinements for the tailings management facility (TMF) as agreed with the Departments of Industry and Environment.

· On 12 August 2013, Mr Jasper Bertisen resigned as a Director of the Company.

· On 19 September 2013, Mr Harry Anagnostaras-Adams resigned as Managing Director and CEO of the Company and Mr Rodney John Patrick Halliday was appointed interim Managing Director and CEO. On the same day, Dr Jose Sierra Lopez, non-executive Director of EMED, was appointed as the Chairman of EMED Tartessus.

John Leach, Executive Director of EMED Mining, commented:

"We remain focused on obtaining the permits required prior to site start-up works - mainly the AAU and AS and the team here has been working closely and effectively with the Government to achieve this objective as soon as possible. In the meantime, we continue with our preparations on the ground in readiness for project execution and look forward to moving into the development and production stage of our cycle as soon as permitting allows." 

Enquiries

EMED Mining Public Limited

(All amounts in Euro thousands unless otherwise stated)

Condensed interim consolidated income statements

(unaudited)

Condensed interim consolidated statements of financial position

(unaudited)

Condensed interim consolidated statements of changes in equity

(unaudited)

Condensed interim consolidated statements of cash flows

(unaudited)

Notes to the condensed interim consolidated financial statements

For the nine months to 30 September 2013 and 2012 - (unaudited)

1. General information

Country of incorporation

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

Principal activities

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

2. Basis of preparation and accounting policies

Basis of preparation

The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) including International Accounting Standard 34 "Interim Financial Reporting" and using the historical cost convention.

These condensed interim consolidated financial statements ('the statements") are unaudited and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the consolidated financial statements of the Company and the Group for the year ended 31 December 2012. These condensed interim consolidated financial statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the consolidated financial statements and other information set out in the Company's 31 December 2012 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.

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

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

Use and revision of accounting estimates

The preparation of the condensed interim consolidated financial statements 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.

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

The Group has adopted all the new and revised IFRSs and International Accounting Standards (IAS) which are relevant to its operations and are effective for accounting periods commencing on 1 January 2013. The adoption of these Standards did not have a material effect on the condensed interim consolidated financial statements.

At the date of authorisation of these condensed interim consolidated financial statements some Standards were in issue but not yet effective. The Group expects that the adoption of these Standards in future periods will not have a material effect on the consolidated financial statements of the Group.

Critical accounting estimates and judgements

The fair values of the Groups' financial assets and liabilities approximate to their carrying amounts at the reporting date. Estimates and judgments 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 unchanged from those disclosed in the annual consolidated financial statements.

3. 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, Spain and Slovakia and its administration and management is based in Cyprus.

4. Loss per share

The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the Company is based on the following data:

There are 4,321,000 warrants and 40,592,000 options which have been excluded when calculating the weighted average number of shares because they have an antidilutive effect.

5. Property, plant and equipment

The above fixed assets are located in Cyprus, Spain and Slovakia.

Of the €17m additions for land and buildings in 2012, €15m relate to purchases of land, for the operation of the Rio Tinto Copper Project, from Rumbo 5-Cero S.L. ("Rumbo") and Inland Trading 2006, S.L. ("Inland") as follows: The €10 million purchase of certain land plots covering part of the tailings dams owned by Rumbo, adjoining the Rio Tinto Copper Project was satisfied by €4.5 million in cash and €5.5 million by the allotment of 48,549,234 new ordinary shares of 0.25p each in the Company at 9.14 pence per share. The €5 million purchase of a land plot required for planned operations of the Rio Tinto Copper Project, owned by Inland, covering part of the Rio Tinto Copper Project's main tailings dam wall and satisfying all of the project's needs for tailings deposition from proposed operations along with the potential expansion thereof in the shorter term was satisfied by €2.5 million in cash and €2.5 million by the allotment of 18,511,675 new ordinary shares of 0.25p each in the Company at 10.61 pence per share. The Company has also been granted options by Inland and Construcciones Zeitung, S.L. ("Zeitung") to acquire additional plots of land in the surrounding district (the "Option Lands"), exercisable within four years at an aggregate price of €9 million.

6. Intangible assets

The Rio Tinto Copper Project

In September 2008, the Group moved to 100% ownership of EMED Tartessus (and thus full ownership of the Rio Tinto Copper Project) by acquiring the remaining 49% of the issued capital of EMED Tartessus. The cost of the acquisition was satisfied by issuing 39,140,000 Ordinary Shares to MRI Investment AG ("MRI") at an issue price of 21p per Ordinary Share and a deferred cash settlement of €52,999,999 (including loans of €9,116,617 owed to companies related to MRI incurred in relation to the operation of the Rio Tinto Copper Project) to be paid by the Group over six or seven years (at the option of the Company). This consideration is payable once the authorisation from the Junta de Andalucía to restart mining activities in the Rio Tinto Copper Project has been granted and the Group has secured project finance facilities and is able to draw down funds under such facilities.

In consideration for agreeing to pay the deferred cash settlement over six or seven years and for MRI's consent to the arrangements that were entered into in connection with the Convertible Loan Facility (now repaid), the Company agreed to potentially pay further deferred consideration of up to €15,900,000 in regular instalments over the deferred consideration payment period depending upon the price of copper. Any such additional payment will only be made if, during the relevant period, the average price of copper per tonne is US$6,614 or more (US$3.00/lb). On 11 November 2011 MRI novated its right to be paid the deferred consideration to Astor Management AG (Astor).

As security for the obligation on EMED Tartessus to pay the deferred consideration to Astor, EMED Holdings (UK) Limited has granted a pledge to MRI Resources AG over the issued capital of EMED Tartessus and the Company has provided a parent company guarantee.

The funds required to make these payments, should EMED proceed with the restart of the Rio Tinto Project, would be sourced from senior project debt and from project cash flow. The restart of mining operations remains subject to certain conditions set by the Junta de Andalucía Government, completion of technical due diligence and attaining project financing.

Carrying Value of Intangible Assets

The ultimate recoupment of balances carried forward in relation to areas of interest or all such assets including intangibles is dependent on successful development, and commercial exploitation, or alternatively sale of the respective areas. The Company conducts impairment testing on an annual basis unless indicators of impairment are present at the reporting date.

In considering the carrying value of the assets at the Rio Tinto Copper Project, including the intangible assets and any impairment thereof, the Company assessed the carrying values having regard to (a) the current recovery value (less costs to sell) and (b) the net present value of potential cash flows from operations. In both cases, the estimated net realisable values exceeded current carrying values and thus no impairment has been recognised.

7. Trade and other receivables

8. Share capital and share premium

Authorised capital

Under its Memorandum the Company fixed its share capital at 1,000 ordinary shares of nominal value of CY£1 each.

On 13 June 2013 shareholders approved an increase in the authorized share capital of the Company from £4,500,000 to £5,500,000 by the creation of 400,000,000 new ordinary shares of £0.0025 each in the capital of the Company ranking pari passu with the existing ordinary shares of £0.0025 each in the capital of the Company.

On 19 December 2012 shareholders approved an increase in the authorized share capital of the Company from £3,500,000 to £4,500,000 by the creation of 400,000,000 new ordinary shares of £0.0025 each in the capital of the Company ranking pari passu with the existing ordinary shares of £0.0025 each in the capital of the Company.

On 12 March 2012 shareholders approved an increase in the authorized share capital of the Company from £2,500,000 to £3,500,000 by the creation of 400,000,000 new ordinary shares of £0.0025 each in the capital of the Company ranking pari passu with the existing ordinary shares of £0.0025 each in the capital of the Company.

Issued capital

2013

On 17 June 2013, 8,750,000 shares at GBP 0.0025 were issued upon exercise of options at a price of GBP 0.0413. Upon the issue an amount of €397,984 was credited to the Company's share premium reserve.

Warrants

The Company has issued warrants to advisers to the Group. Warrants, noted below, expire five years after the grant date and are exercisable at the exercise price.

2013

No warrants were issued, cancelled/expired or exercised in the period from 1 January 2013 to 30 September 2013.

Details of share warrants outstanding as at 30 September 2013:

9. Share options and share option reserve

2013

In April 2013, but with effective date 5 November 2012, Fernando Arauz de Robles was granted options to subscribe for an aggregate total of 1,000,000 Ordinary Shares at an exercise price per Ordinary Share of 12.06 pence. These options expire five years after the effective date and have a vesting of one third at the end of twelve months from the effective date, one third at the end of twenty four months from the effective date and the balance at the end of thirty six months from the effective date.

10. Borrowings

10.

On 12 July 2013 the Company issued Convertible Notes (the "Notes") in the amount of £9,582,000 of which £7,026,800 was subscribed by Yanggu Xiangguang Copper Co. Ltd ("XGC") and £2,555,200 was subscribed by RK Mine Finance (Master) Fund II LP ("Red Kite"). The Notes have a term of 18 months to 12 January 2015 (the "Maturity Date") and will convert into new ordinary shares of 0.25 pence each in the Company ("Ordinary Shares") at a conversion price of 9 pence per share (the "Conversion Price").

The Notes carry a coupon of 9% per annum in the first 12 months and 11% thereafter. All outstanding principal and accrued interest of the Notes will automatically convert into new Ordinary Shares at the Conversion Price at the time the Company (or any of its subsidiaries) makes its first drawdown (the "Drawdown Date") from the facility to be made available by senior financial institutions for the restart of operations at the Company's Rio Tinto Copper Project in Andalucía, Spain. If the Notes have not already been converted at 9 pence and on the Drawdown Date, the volume weighted average price of the Ordinary Shares on AIM over the period of 20 consecutive trading days immediately prior to the Drawdown Date (the "Market Price") is less than the Conversion Price, the Conversion Price will be the Market Price. The Notes are also convertible into Ordinary Shares or redeemable prior to the Maturity Date in other limited circumstances, including a change of control of the Company.

EMED may elect to redeem for cash the principal and accrued interest of the Notes at any time between 12 July 2014 (first anniversary of the date of issue) and the first to occur of the Drawdown Date or Maturity Date upon giving the holders of the Notes not less than 15 business days' notice. A Note holder may choose to convert their Notes into Ordinary Shares rather than have them redeemed but if they do so it will be at a price of 9 pence per share and is not conditional on the Drawdown Date occurring.

The Notes benefit from security interests granted by EMED Mining over the share capital of EMED Holdings (UK) Limited and EMED Marketing Limited as well as certain intra-group debts owing to EMED Mining. In addition, EMED Mining and certain of its subsidiaries have undertaken not to further encumber their assets or share capital, save in certain circumstances, including in connection with the proposed senior debt facility required in order to restart operations at the Rio Tinto Copper Project.

The Notes are subject to certain standard events of default following which Note holders may elect to immediately redeem their Notes and accrued interest. Assuming that the Notes convert in full at the conversion price (including the conversion of 18 months' accrued interest) the Note Holders would receive 122,865,679 shares.

11. Trade and other payables

*Social Security: On 25 May 2010 EMED Tartessus S.L recognized a debt with the Social Security's General Treasury in Spain amounting to €16.9 million that was incurred by a previous owner in order to stop the execution process by Public Auction of the land over which Social Security had a lien. €7.4 million has been repaid to date. Originally payable over 5 years, the repayment schedule was renegotiated in July 2013 with the General Treasury in Spain and was extended until June 2017.

** Other payables relate to future land option payments and promissory notes to Rumbo and Inland.

12. Acquisition of subsidiaries

There were no acquisitions in the nine months ended 30 September 2013.

13. Related party transactions

The following transactions were carried out with related parties:

Compensation of key management personnel

The total remuneration of the Directors and other key management personnel was as follows:

Share-based benefits

The directors and key management personnel have been granted options as set out in Note 9. Charges in the period relate to options issued in prior periods which vest over a three-year period.

Transactions with KEFI Minerals Plc

The Company has an ongoing service agreement with KEFI Minerals Plc for provision of management and other professional services.

14. Contingent liabilities

On 23 September 2010, EMED Tartessus ("EMEDT") was notified that the Andalucían Water Authority ("AWA") had initiated a Statement of Objections and Opening of File (the "Administrative File") following allegations by third parties of unauthorized industrial discharges from the Tailings Management Facility ("TMF") at the Rio Tinto Copper Mine in the winter months of late 2010 and early 2011. These assertions are judicial (alleging negligence) and administrative (alleging damage to the environment) in nature. At that time, the Company owned 33% of the TMF and the owners of the remaining 67% are co-defendants (Rumbo and Zeitung).

In December 2011 the judicial claims were dismissed in the initial discovery phase by the appeals Court (upholding a lower court decision) finding that the controlled discharges of excess rainwater were force majeure events carried out to protect the stability of the TMF, thereby ensuring public safety and protection of the environment (the "Court Decisions").

Given that all judicial claims were dismissed in the very early stages of the court´s investigation, no formal charges were ever made against EMEDT or against any of its Directors or Officers.

Now that the Court Decisions are final, the Administrative File, which can only result in a monetary sanction against the co-defendants, has been re-opened.

On January 2, 2013 EMEDT, Rumbo and Zeitung were notified of a Resolution of Fine and Damages (in a total amount of €1,867,958.39). In February 2013 EMEDT appealed this Resolution and the Court has agreed that the Fine and Damages amount be secured by a mortgage over certain properties owned by EMED until the final decision on the alleged discharges is known.

The Company will continue to defend its actions vigorously. In fact, no "industrial discharge" took place, but rather a force majeure controlled discharge of excess rainwater accumulated in the TMF since industrial operations ceased in the early 2000´s with no actual damage to the environment having taken place. All actions taken by the Company were conducted with full transparency and in constant communication with the Government of Andalusia. EMEDT did all it could under the circumstances to meet its standard of care to protect the environment and public safety under the relevant legislation, as acknowledged in the Court Decisions and it is important to note was the only co-owner to do so.

It is improbable that any fine or sanction will be imposed against EMEDT once the Administrative File, reaches its conclusion in approximately 3-5 years.

As part of the acquisition cost of a 95% share in Eastern Mediterranean Minerals (Cyprus) Limited, an additional contingent consideration of €616,200 is payable by the Company to Hellenic Mining Company Ltd one month after the date on which Eastern Mediterranean Minerals (Cyprus) Limited first receives revenue of €1,027,000 from or in respect of specific exploration tenements.

15. Commitments

Spain

There are no minimum exploration requirements at the Rio Tinto Copper Project. However, the Group is obliged to pay municipal taxes which currently are approximately €110,000 per year in Spain and the Group is required to maintain the Rio Tinto site in compliance with all applicable regulatory requirements.

As part of the consideration for the purchase of land from Rumbo, EMED Tartessus has agreed to pay a royalty to Rumbo subject to commencement of production of $250,000 in each quarter where the average price of LME copper or the average copper sale price achieved by the Group is at least $2.60/lb. No royalty is payable in respect of any quarter where the average copper price for that quarter is below this amount and in certain circumstances any quarterly royalty payment can be deferred until the following quarter. The royalty obligation terminates 10 years after commencement of production. Commencement of production is defined as being the processing of ore at a rate of nine million tonnes per annum for a continuous period of six months and the date that is 18 months after the first product sales from the Rio Tinto Copper Project.

Additionally, if after seven years from the date of the land purchase, the Group has not obtained all necessary licenses to open and operate the Rio Tinto Copper Project, the land will be sold back to Rumbo for €1. Should the Group sell the land prior to this date to a third party, Rumbo shall be paid €5.5 million and the above mentioned royalty novated to the third party.

EMED Tartessus has entered into a 50/50 joint venture with Rumbo to evaluate and exploit the potential of the class B resources in the tailings dam and waste areas at the Rio Tinto Copper Project. Under the joint venture agreement, EMED Tartessus will be the operator of the joint venture, will reimburse Rumbo for the costs associated with the application for classification of the Class B resources and will fund the initial expenditure of a feasibility study up to a maximum of €2 million. Costs are then borne by the joint venture partners in accordance with their respective ownership interests. Half of the costs paid by EMED Tartessus in connection with the feasibility study can be deducted from any royalty which may fall due to be paid.

At the Rio Tinto Copper Project, the Group has four year options with each of Zeitung and Inland for the purchase of certain land plots adjacent to the mine at a purchase price of €4.202 million (expiry date 31 July 2016) and €4.648 milion (expiry date 2 August 2016) respectively. The Zeitung option requires an annual option payment from the Group of €119,500 and the Inland option requires an annual payment of €130,500 which is deductible from the purchase price. In each case, half of the purchase price can be made by the issue of share in EMED Mining based on a weighted average market price at the time of the purchase.

Slovakia

Annual tenement rental fees for 2013 are in the order of €58,000 this year. EMED has met its obligations to date. All annual technical and financial reports have been submitted on time.

Other

In Cyprus, there are no exploration commitments required and tenement rentals are approximately €30,000 per annum.

16. Important events of the period

On 13 August 2013, Mr Jasper Bertisen resigned as a Director of the Company. On 19 September 2013, Mr Harry Anagnostaras-Adams resigned as Managing Director and CEO of the Company and Mr Rodney John Patrick Halliday was appointed as interim Managing Director and CEO of the Company. On the same day, Dr Jose Sierra Lopez, non-executive Director of EMED, was appointed as the Chairman of EMED Tartessus.

17. Events after the reporting period

There were no other events after the reporting period, which would have a material effect on the condensed interim consolidated financial statements.

Management's Responsibility for Financial Reporting

The accompanying condensed interim unaudited consolidated financial statements of EMED Mining Public Limited were prepared by management in accordance with International Financial Reporting Standards ("IFRS"). Management acknowledges responsibility for the preparation and presentation of the condensed interim unaudited consolidated financial statements, including responsibility for significant accounting judgments and estimates and the choice of accounting principles and methods that are appropriate to the Company's circumstances. The significant accounting policies of the Company are summarised in Note 2 to the condensed interim unaudited consolidated financial statements.

Management has established systems of Internal Control over the Financial Reporting ("ICFR"), process, which are designed to provide reasonable assurance that relevant and reliable financial information is produced. There was no change in the Company's ICFR that occurred during the period beginning on 1 January 2013 and ended on 30 September 2013 that has materially affected, or is reasonably likely to materially affect, the Company's ICFR.

The Board of Directors is responsible for reviewing and approving the condensed interim unaudited consolidated financial statements and for ensuring that management fulfils its financial reporting responsibilities. An Audit and Financial Risk Management Committee assists the Board of Directors in fulfilling this responsibility. The members of the Audit and Financial Risk Management Committee are not officers of the Company. The Audit and Financial Risk Management Committee meets with management to review the internal controls over the financial reporting process, the consolidated financial statements and the auditors' report. The Audit and Financial Risk Management Committee also reviews the Annual Report to ensure that the financial information reported therein is consistent with the information presented in the consolidated financial statements. The Audit and Financial Risk Management Committee reports its findings to the Board of Directors for its consideration in approving the condensed interim unaudited consolidated financial statements for issuance to the shareholders.

Management recognises its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, as defined in National Instrument 52-109-Certification of Disclosure in Issuer's Annual and Interim Fillings ("NI 52-109") of the Canadian Securities Regulators, and for maintaining proper standards of conduct for its activities.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED 30 September 2013

This Management's Discussion and Analysis ("MD&A") of financial condition and results should be read in conjunction with the unaudited condensed interim consolidated financial statements and related notes thereto of EMED Mining Public Limited (the "Company" or "EMED Mining") and its subsidiaries (together "EMED" or "Group") for the three and nine months ended 30 September 2013. The unaudited condensed interim consolidated financial statements and related notes on which the MD&A are based have been prepared in accordance with the International Financial Reporting Standards ("IFRS").

This report which is dated 11 November 2013 and the Company's other public filings, including its most recent Annual Information Form, can be viewed via the SEDAR website (www.sedar.com).

Cautionary Statements Regarding Forward Looking Statements

This MD&A contains "forward‑looking information" which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company, and the Group and its projects, the future price of metals, the estimation of ore reserves and mineral resources, the conversion of mineral resource estimates to ore reserve estimates, the realization of ore reserve estimates, the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcomes of pending litigation and/or regulatory matters. Often, but not always, forward‑looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate" or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Accordingly, readers should not place undue reliance on forward‑looking statements.

Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are based on facts and assumptions that management considers reasonable. The material assumptions upon which such forward-looking statements are based include, among others, that: the grant of Administrative Standing (as defined herein) will be obtained; all other regulatory approvals and authorizations from the Andalucía Government and departmental ministries will be obtained; requisite shareholder approval for project re-start will be obtained; definitive documentation for project financing will be completed; regulatory and political views regarding the Rio Tinto Copper Project will remain positive and unchanged; the demand for copper will develop as anticipated; that the price of copper will remain at levels that render the Rio Tinto Copper Project economic; the mineral resource and reserve estimates as disclosed in the Rio Tinto Technical Report (as defined herein) will be realized; and that there are no material unanticipated variations in the production, capital cost and economic estimates as disclosed in the Rio Tinto Technical Report.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward‑looking statements. Such factors include, among others: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of metals; the future cost of capital to the Company; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, terrorism, insurrection or war; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form for the year ended 31 December 2012 (the "AIF") available under the Company's profile on SEDAR at www.sedar.com .

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward‑looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward‑looking statements contained herein are made as of the date of this AIF and the Company disclaims any obligation to update any forward‑looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws. There can be no assurance that forward‑looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Reconciliation Note between JORC and CIM Standards

This MD&A may contain disclosure of mineral resources and ore reserves using the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia, as amended ("JORC"). While the technical disclosure on the Company's material properties in this MD&A has been prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") of the Canadian Securities Administrators, the estimates of mineral resources and ore reserves are disclosed using the categories under JORC. There is no material difference between JORC and The Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards for Mineral Resources and Mineral Reserves" adopted by the CIM Council on 11 December 2005. 

History and Strategy

EMED Mining (AIM: EMED, TSX: EMD) is committed to the development of metal production operations in Europe, with an initial focus on copper and gold. The strategy is to evaluate and prioritise metal production opportunities in several jurisdictions throughout the well-known belts of base and precious metal mineralisation in the European region.

In Spain, the Group's Rio Tinto Copper Project provides an excellent opportunity to bring a large copper mine back into production at a relatively low total cost as it already has an established open-pit mine, processing plant and other infrastructure. Other mineral deposits on the same property are also earmarked for potential redevelopment and a drilling program is planned to coincide with the restart of the Cerro Colorado Open Pit operations.

In Slovakia, the Biely Vrch deposit at the Group's Detva Gold Project is a potential greenfields development of an open-pit gold mine.

EMED Mining has earlier-stage activities in Cyprus via its 95%-owned subsidiary, and in Saudi Arabia via 14.0%-owned associate KEFI Minerals Plc. In 2009, KEFI Minerals formed the Gold and Minerals Joint Venture ("G&M") in Saudi Arabia with a local Saudi partner to explore for gold and associated metals in the Arabian Shield. To date, Kefi Minerals, in conjunction with its joint venture partner (Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR")) has conducted preliminary regional reconnaissance and currently has 23 Exploration Licence Applications (ELAs), of which 4 have been granted.

EMED Mining is managed by a well-qualified, multi-cultural team drawn initially from Australia and now predominantly comprised of Spanish citizens. The main priority for the short term is to safely and efficiently start copper production at the Rio Tinto Copper Project once EMED Mining has obtained necessary approvals and financed the start-up.

Overview of Operations and Significant Events

The Company, listed on AIM in May 2005 and on the TSX in December 2010 continues to be dependent upon cash generated from equity financings to fund its activities. The ownership of the Company consists of substantial international mining investment specialists including the following:

· The Board and senior management who come from Australia, Canada and Europe include mining engineers, metallurgical engineers, financiers and management specialists with extensive experience in project development and operations;

· Astor Management AG ("Astor"), a large Swiss-based metals and commodities investments group;

· Rand Merchant Bank ("RMB"), a large South African mining bank with specialist mine investment teams based in Australia, United Kingdom and the United States of America;

· RBC Asset Management, a leading Canadian funds management company;

· Resource Capital Fund IV L.P. ("RCF"), the world's largest group of mine development investment funds, is based in the United States of America with offices in Australia and Canada;

· RK Mine Finance (Master) Fund II LP ("Red Kite"), a New York based copper trading and investment company;

· Rumbo 5-Cero S.L. ("Rumbo"), part of an established diversified Andalucían investment group; and

· Yanggu Xiangguang Copper Co. Ltd ("XGC"), a large copper smelting group based in China which has agreed to be a cornerstone customer and project financier for the Rio Tinto Copper Project.

During the period the following developments are particularly noteworthy:

Spain - Rio Tinto Copper Project:

o An updated NI 43-101 Independent Technical Report was published reporting that capital and operating cost estimates were consistent with recent guidance published by the Company (announced 18 February 2013);

o The Andalucian Government's Department of Industry formally notified the remaining conditions for Administrative Standing ("Titularidad Administrativa", or "AS"), (the administrative approval of the Company's mineral rights) namely: (a) a preliminary report from technical agency CEDEX on the viability of the project after taking into account restrictions imposed on the tailings management system, and (b) approval by the Andalucian Government's Department of Environment of the Unified Environmental Authorisation ("AAU"), being the environmental plan;

o The Company has implemented the required civil liability insurance policy for the tailings facility;

o The Andalucian Government completed the public comment period for the "Class B Resources", the recycling of precious-metal rich tailings via the Company's joint venture with local investment group Rumbo;

o As regards exploration potential, the Company reported its successful application for the Aguilas Two Exploration Licence located 8 kilometres from the Rio Tinto Copper Project. Combined with the Company's other ancillary local mineral concessions, this reinforces the Company's 100%-ownership of the tenements for the Rio Tinto Copper Project and surrounding district;

o The Company has completed and lodged the reports requested by the Andalucian Government's Departments of Industry and Environment to substantiate compliance with the conditions set in April and May 2013 respectively for the tailings management facility (TMF)(the "Completed Reports");

o The Completed Reports included plans for: (a) tailings deposition density and location within the already-approved wall height and footprint of the TMF, (b) progressive rehabilitation of the TMF, and (c) management of process water for recycling within the production circuit and of rainwater for diversion away from the site. The Completed Reports included the formal issuance of an "independent opinion of viability" by the Government's independent technical expert CEDEX. This was followed by a public viewing period covering the changes, which ended 19 October 2013. This period was extended for 15 days for Ecologistas en Acción on the basis that information they requested was not provided until 16 October 2013. This is not expected to affect the timetable for approval of the AAU;

o The submission of the Completed Reports allowed the continued processing of the permits required prior to site start-up works - mainly AAU and AS;

o Administrative procedures for the additional ancillary permits as scheduled at this stage, such as plant inspections to check all existing plant and equipment to ensure compliance for certification purposes with safety and other standards have commenced;

o Discussions with local councils regarding a Plan Especial have commenced;

o It is expected, based on progress to date, that the Conditional Approval Resolution of the AAU will be received around the end of the year with AS following shortly thereafter;

Slovakia- Detva Gold Project

o In Slovakia, the focus is on the approval of the Mining Lease Area ("MLA") by the Central Mining Board, expected in the first quarter of 2014, and at the same time in meeting the regulatory responsibilities in respect of the tenements held. On approval of the MLA, work will be carried out on completing the Preliminary Environmental Impact Study.

Corporate

o As previously reported, on 12 July 2013 the Company issued Convertible Notes (the "Notes") in the amount of £9,582,000 (of which £7,026,800 was subscribed by XGC and £2,555,200 was subscribed by Red Kite.

o On 12 August 2013, Mr Jasper Bertisen resigned as a Director of the Company.

o On 19 September 2013, the Company reported that Mr Harry Anagnostaras-Adams resigned as Managing Director and CEO of the Company and Mr Rodney John Patrick Halliday was appointed as interim Managing Director and CEO of the Company. On the same day, Dr Jose Sierra Lopez, non-executive Director of EMED, was appointed as the Chairman of EMED Tartessus.

o Steps being taken towards the dissolution of non-strategic subsidiaries in Georgia and Greece.

Mineral Exploration and Development Property Interests

Spain - Rio Tinto Copper Project

EMED Mining, via its wholly-owned subsidiary EMED Tartessus, owns 100% of the Rio Tinto Copper Project in Andalucía, Spain. The Group is the owner of the mine, the mineral rights and the processing plant and is complying with all regulatory requirements to be awarded the permits necessary to commence construction and ultimately restart operations. For construction, these are principally the AAU and the AS. For operations, these are principally the Final Restoration Plan and approval of the operating project (the "Mining Permit" or "Exploitation Permit").

As detailed in the updated NI 43-101 Technical Report issued February 2013, key anticipated production parameters for the Rio Tinto Copper Project are:

· Ramp-up to a 9 million tonne per annum ("tpa") throughput over a two-year period;

· Open-pit mine with average waste-to-ore strip ratio of ~ 1.1 to 1;

· Contained copper-in-concentrate averaging ~37,000 tpa;

· Measured and Indicated Resources = 203 million tonnes at 0.46% copper, containing 933,000 tonnes of copper (inclusive of Ore Reserves);

· Ore Reserves = 123 million tonnes at 0.49% copper, containing 600,000 tonnes of copper; Mine life > 14 years;

· Project cost estimates will require refinement when permitting conditions are finalised and after detailed engineering is duly completed and procurement arranged.

Steps to Restart Copper Production

Mining activities are the responsibility of the Autonomous Communities of Spain (i.e. individual states, which in the case of the Rio Tinto Copper Project is Andalucía) and the provincial government within those states (for the Rio Tinto Copper Project, this is the province of Huelva).

For the Rio Tinto Copper Project, the Director General of the Ministry of Economy, Innovation, Science and Employment ("CEICE", as it is now known) of the Junta de Andalucia (the "Andalucian Government") is the substantive regulatory body that has the authority to approve the restart of mining operations which requires the granting of Administrative Standing (administrative approval of the transmission of the mineral rights held by EMED since 2007), approval of the Final Restoration Plan (to be updated once final AAU conditions are known) and the operating license ("Mining Permit"). This is the case except for explosive permits which are governed by the Central Government of Spain.

Approvals are also required from:

(i) The Director General of the Ministry of Environment and Territorial Management for AAU (which includes the Environmental Impact Statement ('EIS') and a final restoration plan amongst other environmental permits) and the Huelva Territorial Delegation of the Ministry of Environment and Territorial Management for concession required for the use of public domain water, and

(ii) The Huelva Territorial Delegation of the Ministry of Culture ("Culture") as various project lands are listed as cultural heritage sites. 

The steps to restarting production at the Rio Tinto Copper Project are briefly summarised as follows; Receipt of the AAU, Administrative Standing, approval of the Final Restoration Plan and granting of the Mining Permit. In this regard:

· The AAU was resubmitted in February 2012. As required by administrative procedure, following the submission of the Completed Reports, an Addendum to the Company´s AAU in the form of an Environment Impact Study covering the changes was submitted for public review which concluded on October 19 2013. This period was extended for 15 days for Ecologistas en Acción on the basis that information they requested was not provided until 16 October 2013. This is not expected to affect the timetable for approval of the AAU.  

· Once all review processes are finalised, the Company expects to receive its AAU authorisation subject to certain conditions which it believes will have been taken into account in project planning.

· Once the AAU is approved, the Final Restoration Plan can be updated to reflect any final conditions contained in the AAU.

· Engineering is being completed now that the authorities have informally agreed the permitting conditions. The only material aspect of project approval under discussion related to conditions to be attached to the operation and closure of the tailings deposit, and to this end, the Completed Reports were submitted in accordance with the recommendations of CEDEX, Spain´s national civil engineering review agency.

· The technical team has expanded the water management and environmental plans to reflect the enlarged land footprint and the Government's new river management policies. The relevant water concession application has been submitted.

· The Company received conditional approval from Culture in December 2010 which must now be updated to take into account the expanded restoration footprint.

· The processing of ancillary ordinary-course of business permits has also been scheduled in keeping with the planned timetable to production.

The restart is expected to be straightforward from an operational perspective, with an established infrastructure and processing facility that can be restarted, upon the incorporation of mining industry improvements that have been developed over the past 20 years. It is also anticipated that the following project features will also be revised in due course after exploration drilling has been conducted:

Steps to Restart Copper Production - continued

· Ore Reserves (Proven and Probable - 123 million tonnes at 0.49% copper, containing 600,000 tonnes of copper) are currently based on a cut-off grade of 0.2% copper which was derived using a copper price of $2.00/lb ($4,400/tonne). In due course, this needs re-optimisation in light of the planned drilling within the open pit;

· Mineral Resources (Measured plus Indicated - 203 million tonnes at 0.46% copper, containing 933,000 tonnes of copper) which was derived using a copper price of $3.00/lb ($6,600/tonne) for the Cerro Colorado open pit. This needs updating in light of the planned drilling of the open pit and the underground deposits on the property.

Slovakia - Detva Gold Project

In Slovakia, the focus is on the approval of the MLA by the Central Mining Board, expected in the first quarter of 2014, and at the same time in meeting the regulatory responsibilities in respect of the tenements held. On approval of the MLA, work will be carried out on completing the Preliminary Environmental Impact Study.

KEFI Minerals Plc

KEFI Minerals Plc is a gold and copper exploration company with projects mainly in the Kingdom of Saudi Arabia. It commenced trading on AIM in December 2006. EMED Mining contributed initial assets and currently has a 14.0% shareholding. In Saudi Arabia, KEFI Minerals Plc has a joint venture with leading Saudi construction and investment group ARTAR. This joint venture already has 4 licences granted, with 23 Exploration Licence Applications (ELAs) pending in Saudi Arabia.

Selected Financial Data

The table below summarises selected consolidated financial information for the Group's unaudited interim condensed consolidated financial statements for the three and nine months ended 30 September 2013 and 30 September 2012. The audited consolidated financial statements are for the year ended 31 December 2012.