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N I H A O M I N E R A L R E S O U R C E S I N T E R N

A T I O N A L , I N C . A N D S U B S I D I A R I E S

6 F N I H A O S U N P L A Z A B L D G . 1 5 0 5 S

H A W B L V D . C O R N E R P R I N C E T O N S T R

E E T M A N D A L U Y O N G C I T Y

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Dept. Requiring this Doc.

Total No. of Stocholders

To be accomplished by SEC Personnel concerned

Document I.D. Cashier

Total Amount of Borrowings

Domestic Foreign

File Number LCU

Fiscal Year Annual Meeting

Secondary License Type, If Applicable

Amended Articles Number/Section

Contact Person Company Telephone Number

SEC 17A-2012 AMENDEDMonth Day FORM TYPE Month Day

ARSENIO C. CABRERA, JR.

COVER SHEET

(Company's Full Name)

(Business Address : No. Street City / Town / Province)

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SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATIONS CODE AND SECTION 141 OF CORPORATION CODE OF THE PHILIPPINES 1. For the calendar year ended December 31, 2012 2. SEC Identification Number 62323 3. BIR Tax Identification No. 050-000-889-223 4. Exact name of issuer as specified in its charter NIHAO MINERAL RESOURCES

INTERNATIONAL, INC. 5. Philippines 6. (SEC Use Only) Province, Country or other jurisdiction of

incorporation or organization Industry Classification Code:

7. 6F, NiHAO Sunplaza Bldg., 1505 Shaw Blvd. corner Princeton Street, Mandaluyong City Address of principal office Postal Code 8. (632)-570-9754 Issuer's telephone number, including area code 9. Former name, former address, and former fiscal year, if changed since last report.

22nd Floor, The Peak, 107 L. P. Leviste St. Makati City 10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA Number of Shares of Common Stock Title of Each Class Outstanding and Amount of Debt Outstanding Common Stock 913,000,000 shares 11. Are any or all of these securities listed on Stock Exchange. Yes [ X ] No [ ] If yes, state the name of such stock exchange and the classes of securities listed therein Philippine Stock Exchange 600,000,000 shares Common stock 12. Check whether the registrant:

(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports);

Yes [ X ] No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days. Yes [ X ] No [ ] 13. Aggregate market value of the voting shares held by non-affiliates: P 2,076,294,167 as at April

17, 2013.

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PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business

a. Brief Corporate History NiHAO MINERAL RESOURCES INTERNATIONAL, INC. (the “Company”) was incorporated in the Philippines and registered with the Securities and Exchange Commission on July 9, 1975 as a mining company under the name Summit Minerals, Inc. On October 3, 1990, the Company’s shares were offered to the public and listed on the PSE.

On December 10, 1993, the Company changed its primary purpose to that of a holding company. Subsequently, on February 24, 1994, the Company changed its corporate name to “Magnum Holdings, Inc.”

On June 28, 2007, the Company changed its corporate name to “NiHAO Mineral Resources International, Inc.” and its primary purpose to that of a mining company. b. Description of Business

The Company is a mining company engaged in exploring, developing, and operating nickel properties. The Company aims to create an integrated mining company using its expertise in nickel exploration, access to processing technology, and the prospectivity of its projects. The Company’s vision is to become a leading nickel mining and processing company in the Philippines. The Company’s name, “NiHAO,” stands for “Bountiful Nickel,” the primary mineral which the Company intends to discover and mine. It derived its name by combining the element symbol for Nickel “Ni,” and the Chinese character for noble or bountiful, “HAO.” As of December 31, 2012, the Company has three (3) mining claims located in the provinces of Zambales, Misamis Oriental and Masbate and operates another active mining claim in Dinapigue, Isabela. The Company’s Mining Claims and operations area cover a total of approximately 17,792.3998 hectares. c. Product

In the foreseeable future, the Company plans to ship nickel ore directly to its customers, similar to most nickel mining companies in the Philippines. d. Competition The company is involved in two separate but related industries. The first being Exploration and Development of mines and mineral resources which primarily involves financial transactions in nature and the second mining contracting, which is a service industry. For the mining and minerals business, the main factors for competition are geology and mineral potential, government policy and public attitude towards the industry. Competition for exploration and development capital is international and depends on the confluence of all factors above. Because the Philippine Stock Exchange does not allow capital raising for mineral exploration projects, competition is mostly between other local companies in the same industry seeking out capital from foreign sources. Most, if not all exploration companies locally comply with the minimum authorized capital stock requirement of P 100 million . The Company’s main advantages are the following:

1) Strong international relations, investment banking and finance team 2) Public listing which allows for flexibility in deal structuring 3) Excellent government relations, especially with the agencies and bureaus related to mining

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e. Sources and availability of raw materials There is no raw material needed for this line of business. f. Need for any government approval of principal products or services Currently the company’s subsidiaries hold an approved Mineral Production and Sharing Agreement (MPSA) and an approved Exploration Permit (EP). To implement exploration programs, these agreements are an absolute necessity. One of the Company’s subsidiaries have a pending Exploration Permit Application, which currently is under final review and should be for issuance once the government decides that it will issue new exploration permits. g. Effect of existing or probable governmental regulations on the business Up until recently, there was a moratorium on the issuance and acceptance of new applications for MPSAs and EPs. During this period there have been no new granted permits to mining companies. In February 2013, the moratorium for acceptance was lifted. There has been no issuance of any permits since. h. Exploration and mine development costs and its percentage to revenues during each of the last three (3) fiscal years:

Year Amount * % to revenues2012 P 1,986,916 3.10%2011 4,060,431 -nil-2010 P -nil- -nil-

* Part of operating expense i. Cost and effects of compliance with environmental laws: Since exploration is minimally invasive and has little environmental effect, the costs of compliance with environmental laws are limited to the commitments of the company on the approved environmental work programs specific to each permit. For the Mining Contracting business, there are numerous outfits that offer similar services to mining companies. The Company was able to secure a long term exclusive operating agreement for the Isabela Nickel Project in Dinapigue, Isabela. Since the agreement is exclusive, the Company currently enjoys no competition from other mining contractors. As most government requirements are taken care of by the claim owner, there are no special or extraordinary permits that are required from the Company for the conduct of its business. The Company has already registered itself as a mining contractor with the Mines and Geosciences Bureau. (MGB) The existing moratorium on the issuance of new MPSAs temporarily prevents the Company from seeking opportunities for contracting with other new mines. The costs of environmental compliance are mostly limited to the budget in the approved 3-year work program that the claim owner has submitted and has had approved by the MGB. This amounts to P39.05 million. j. Subsidiaries

The following table presents certain information related to these acquisitions.

Name of Acquired Company Date of Incorporation Acquisition Date

Name of Acquiring Company

Acquisition Cost (millions)

Mina Tierra Gracia, Inc. ………... 06 June 2007 16 October 2007 NiHAO P 61.469 Bountiful Geomines, Inc………… 14 Sept.2007 9 January 2008 NiHAO 12.500

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Oregalore, Inc…………………… 29 June 2007 10 March 2011 NiHAO 3.000 Masbate 13 Philippines, Inc……. 12 Sept.2006 25 February 2011 Oregalore, Inc. 108.000

P 184.969 On October 16, 2007, the Company acquired for cash all of the outstanding shares of Mina Tierra Gracia, Inc. (“Mina Tierra”), a mining company, pursuant to Deed of Absolute Sale between the Company and the shareholders of Mina Tierra. The total consideration paid by the Company for the acquisition of said shares amounted to P61,469,586.00, representing the valuation of the Botolan Mining Claim made by Minercon International, Inc. On 23 September 2008, the MGB issued an “Order” approving the transfer of the EP for the Botolan Mining Claim from Saprolite Mining, Inc. to Mina Tierra. Pursuant to the aforementioned MGB “Order”, Mina Tierra enjoys exploration rights to 5,081 hectares of land in Botolan, Zambales. Mina Tierra acquired the exploration rights over the Botolan Mining Claim through a Deed of Assignment executed with Saprolite Mining on 31 July 2007. See “Description of Business – Botolan Mining Claim” for detailed description. On January 9, 2008, the Company acquired all of the outstanding shares of two mining companies, Bountiful Geomines, Inc. (“Bountiful Geomines”) and Visayas Ore Philippines, Inc. (“Visayas Ore”), pursuant to Deeds of Absolute Sale between the Company and the shareholders of Bountiful Geomines and Visayas Ore, respectively. The Company acquired the shares of Bountiful Geomines and Visayas Ore at par value amounting to a total consideration of P12,500,000.00 for the Bountiful Geomines shares and a total consideration of P2,500,000.00 for the Visayas Ore shares. Bountiful Geomines has an EP application with the MGB covering the Manticao Mining Claim with an area of 1,944 hectares. Visayas Ore has an EP application covering the Cotabato Mining Claim with an area of approximately 11,441 hectares and another EP application covering the Antique Mining Claim with an area of approximately 2,374 hectares. On November 3, 2011, the Company sold its equity holdings in Visayas Ore Philippines, Inc. for a total consideration of P 2,500,000.00. On March 10, 2011, the Company acquired all the outstanding shares of another mining company, OREGALORE, pursuant to Deeds of Absolute Sale between the Company and the previous shareholders of OREGALORE. The Company acquired the shares of OREGALORE at par value for a total consideration of P=3,000,000. The Company also acquired the stockholder advances of OREGALORE amounting to P125,478,304.62 for the discounted price of P105,000,000. In August 2012, these advances were converted into equity equivalent to 1,250,000 common shares of OREGALORE. OREGALORE owns eighty percent (80%) of the outstanding capital stock of another mining company, Masbate 13 Philippines, Inc. (Masbate 13). Masbate 13 is the owner of a gold mining claim described as follows:

License : Exploration Permit No. V-2008-005 issued on December 2011 Location : Municipalities of Milagros and Mandaon, Province of Masbate Coverage / Area : 8,357.3509 hectares

There is currently no bankruptcy, receivership or any similar proceedings involving the Company or its subsidiaries.

k. Affiliates/Associates

1) 15% Equity in Oriental Vision Mining Philippines, Inc. On March 24, 2010, the Company acquired from various stockholders thirty percent (30%) equity

interest in the privately-held mining operator Oriental Vision Mining Philippines Corporation (“ORVI”). NiHAO paid Three Million Pesos (P 3,000,000.00) as full payment of purchase of 3,000 shares of ORVI valued at its par of P 1,000 per share and a down payment of Thirty Million Pesos (P30,000,000.00) for the subscription of additional 60,000 shares from the current ORVI shareholders for a purchase price of Sixty Million Pesos (P60,000,000.00). Full payment was made in December 2010 upon approval of the increase in authorized capital stock to Four

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Hundred Million Pesos (P400,000,000.00). The increase in authorized capital stock of ORVI was approved by the SEC on November 26, 2010.

In addition, NiHAO has agreed to extend shareholder advances in favor of ORVI for the purpose

of funding the existing mining projects of ORVI, which shareholder advances are payable either in cash or in shares of stock. Out of the total One Hundred Fifty Million Five Hundred Thousand Pesos (P150,500,000.00) loan advances extended by the Company, ORVI has paid Ninety Five Million Pesos (P 95,000,000.00) leaving a balance of Fifty Five Million Five Hundred Thousand ( P55,500,000.00) as of December 31, 2012.

In December 2012, NiHAO sold 31,500 shares or 50% of its holdings with ORVI at par resulting

to 15% of ORVI’s equity.

2) 25% Equity in GNA Resources International Limited

On December 12, 2011, the Company together with Asiabest Group International, Inc. formerly AGP Industrial Corporation (“ABG”) and Glencore International AG established GNA Resources International Limited under the laws of Hong Kong, which is the group’s joint venture corporation, pursuant to the Heads of Agreement dated September 27, 2011entered into by NiHAO, ABG and Glencore. Under the HOA, Glencore, NiHAO and ABG agreed to utilize their respective expertise in the mining industry for purposes of investigating, identifying, acquiring developing and operating mining claims of economically feasible nickel deposits in the Philippines for purposes and Direct Shipping/ Selling Ore (DSO) and other related nickel mining business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its network of various institutions internationally. On the other hand, NiHAO and ABG shall utilize their expertise in mining, contracting and developing of mines in the Philippines and their knowledge of relevant Philippine laws, rules and regulations and issues. In order to accomplish said purpose, the parties have formed and established GNA Resources under the laws of Hong Kong.

l. Mining Claims and Permits The following table sets forth certain information related to the Company’s Mining Claims and their corresponding permits or permit applications as of 31 December 2012.

Location Name of Claim

Permit Description

Permittee/ Applicant

Area Covered

(in hectares)

Status of Work on the Claims

Zambales Botolan and Iba Botolan

Mining Claim

MPSA No. 315-2010-III

Mina Tierra Gracia, Inc.

5,081.6408 Exploration. Pre development, planning and business development

Misamis Oriental Brgy. Opol, and Malayot, El Salvador and Brgy. Tuod, Upper Malubog, Manticao

Manticao Mining Claim

EPA-000093-X Bountiful Geomines,

Inc.

1,944.0000 Under evaluation by the Mines and Geosciences Bureau, Central Office Q.C

Masbate

Milagros and Mandaon

Masbate 13 Mining

Claim

EP-V2008-5 Masbate 13 Phils., Inc.

8,375.3509 Pre-exploration stage.

15,400.9917

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Botolan Project The Botolan Mining Claim covers approximately 5,081 hectares located in the town of Botolan, Zambales. The Botolan Mining Claim was originally staked by Saprolite Mining pursuant to an EPA filed on January 10, 2007. On December 26, 2007, the NCIP issued a Certification Precondition in the form of a Certificate of Non-Overlap for the Botolan Mining Claim, attesting to the fact that the area covered by the Botolan Mining Claim does not affect or overlap with any ancestral domain. On February 12, 2008, the Mines and Geosciences Bureau of the Department of Environment and Natural Resources (“MGB”) issued an Exploration Permit in the name of Saprolite Mining for the Botolan Mining Claim. On July 31, 2007, Saprolite Mining assigned its rights and interests in the Botolan Mining Claim to Mina Tierra pursuant to a Deed of Assignment (the “Deed of Assignment”). The Deed of Assignment provided that all expenses to be incurred in relation to the execution and registration of the Deed of Assignment as well as the transfer of the EPA from Saprolite Mining to Mina Tierra would be for Mina Tierra’s account. On April 9, 2008, Mina Tierra registered the Deed of Assignment with the MGB. On May 20, 2008, Saprolite Mining filed an application with the MGB to upgrade/convert approximately 2,739 hectares of the 5,081 hectares covered by EP-001-2008-III to a Mineral Production Sharing Agreement (“MPSA”) (the “Application for Upgrade/Conversion”). The Application for Upgrade/Conversion was made since the approval of the registration of the Deed of Assignment for the transfer of EP-001-2008-III to the name of Mina Tierra is still pending with the MGB. In view of the filing of the Application for Upgrade/Conversion and in order to clarify and affirm the intent of the Deed of Assignment and the parties’ respective rights and obligations thereunder, Saprolite Mining and Mina Tierra executed a Supplemental Agreement on July 1, 2008. The Supplemental Agreement confirmed that Mina Tierra would be the sole, absolute and legitimate owner of: (a) EP-001-2008-III; (b) the Application for Upgrade/Conversion; and (c) any MPSA covering the Botolan Mining Claim upon approval by the DENR Secretary and/or the MGB of the transfer of the foregoing permits or applications in favor of Mina Tierra. Pursuant to the Supplemental Agreement, Mina Tierra agreed to assume all the responsibilities, duties and liabilities imposed by law in relation to the aforementioned permits and applications upon the approval by the relevant government agencies of the transfers thereof to its name. The Supplemental Agreement was registered with the MGB on September 4, 2008. On September 23, 2008, the MGB issued an “Order” approving the assignment of EP-001-2008-III in favor of Mina Tierra. The “Order” further provided that EP-001-2008-III would now be recorded in the name of Mina Tierra as a result of said “Order”. On October 13, 2008, Mina Tierra applied for the full conversion of the entire 5,081 hectares covered by EP-001-2008-III to MPSA. On February 10, 2010, the MGB approve the application for MPSA of Mina Tierra and issued MPSA No. 315-2010-111 in the name of Mina Tierra covering the Botolan Mining Claim. Manticao Project The Manticao Mining Claim covers a total area of 1,944 hectares and is located in Manticao, Misamis Oriental, a coastal town north of Mindanao Island. As of December 31, 2012, the Company has conducted limited exploration work that includes preliminary field reconnaissance and sampling. Masbate Projects The Masbate Mining Claim covers a total area of 8,357 hectares and is located in Milagros and Mandaon, Masbate.

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m. Agreements Following are the agreements entered into by the Group during the last three (3) years: 1. Marketing Agency Agreement with Glencore International AG On March 13, 2012, the Company executed a “Marketing Agency Agreement” with Glencore International AG (“Glencore”) at Hong Kong. Under the agreement, NIHAO appointed Glencore as its marketing agent for the purpose of providing marketing and sales agency service relating to the sale of Nickel produced, or which may be produced from any of the mines owned or operated by NiHAO, together with its subsidiaries, affiliates, suppliers, and any person or entity selling Nickel through NiHAO (the “NiHAO Group”). Both parties agreed that the sale of Nickel under the Agreement shall be under the brand name of GNA Resources International Limited, the HongKong joint venture company involving the parties. As marketing agent, Glencore has authority to market and sell Nickel, both as a principal for its own account and as agent for third parties other than NiHAO, in all markets where Nickel is imported, exported, bought and/or sold throughout the world (the “Territory”) on a non-exclusive basis. In respect of each potential sale, Glencore shall advise the best prices achievable at which it intends to offer or sell Nickel. In addition, Glencore has authority to conclude Sales Contracts on behalf of NiHAO on terms and conditions deemed commercially reasonable to Glencore, it being understood and acknowledged that such terms and conditions may be in variance or verbal approval from NiHAO in concluding such diverging Sales Contracts. For and in consideration of the services of Glencore, NiHAO shall pay a commission at the rate of Twenty Five Cents ($0.25) per wet metric tonne of the Sales Value of any Nickel sold on an Agency Basis and Twenty Five Cents ($0.25) per wet metric tonne, in case sold on a Principal basis. The Agreement shall take effect upon its execution by the parties and continue for a term of one (1) year, unless terminated in accordance with the terms and conditions of the Agreement. The agreement shall take effect upon its execution by the parties and continue for a term of one (1) year, unless terminated in accordance with the terms and conditions of the Agreement. 2. Operating Agreement with Geogen Corporation / General Contractor Agreement with Geogen Corporation (“Geogen”)

On March 5, 2012, the Board of Directors of the Parent Company approved the execution, delivery and performance of a General Contractor Agreement with Geogen. Under the agreement, the Parent Company is appointed as Geogen’s general contractor over Geogen’s mineral property consisting of a total area of 2,391.4081 hectares located at Dinapigue, Isabela, which is covered by MPSA No. 258-2007-II dated July 30, 2007 (the “Mineral Property”).

Pursuant to the agreement, Geogen shall pay the NiHAO an amount equivalent to 90% of the invoice value of the nickel ore sold by Geogen to third parties in consideration of the following contractor services to be performed by the Parent Company:

(a) Mining services relating to or arising from mining activities within the Mineral Property; (b) Hauling services for the nickel ore extracted from the Mineral Property to designated areas; (c) Barging and stevedoring services for the shipside loading of the nickel ore extracted from the

Mineral Property; (d) Road and causeway maintenance services; and (e) Environmental maintenance services of the Mineral Property.

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On June 13, 2012, the agreement discussed above was superseded by an operating agreement. Pursuant to the operating agreement, NiHAO shall have the exclusive right to explore, operate, mine, develop, utilize and process any minerals found within the Contract Area of the Mineral Property, subject to the following limitations:

(a) NiHAO shall abide by all the terms and conditions of relevant licenses and permits

covering the contract Area or relating to the conduct of mining operations therein; (b) NiHAO shall abide by and comply with all of its obligations and undertakings under the

Operating Agreement, and; (c) NiHAO may build improvements and install machineries and equipment and other

facilities, and do such other things in the Contract Area as may be necessary and proper to carry out exploration, mining development works and operations, utilization, processing, environmental protection and rehabilitation of the Contract Area.

Pursuant to the operating agreement, Geogen shall pay the Parent Company an amount equivalent to 90% of the invoice value of the nickel ore, nickel by-products, chromite and other minerals sold by Geogen to third parties. NiHAO will pay for its own account, Asiabest Group International, Inc. (“ABG”) management fees pursuant to Management Agreement with Option to Buy executed between GEOGEN and ABG on 14 October 2011. 3. Memorandum of Agreement with Capital Gold Pty Ltd. and Welcome Stranger Mining Ltd. /

Memorandum of Understanding with Capital Gold Pty Ltd.(“Capital Gold”) and Capital Resources Corporation Plc (“Capital Resources”)

On January 10, 2012, the Board approved the execution, delivery and performance of a Memorandum of Understanding (“MOU”) by and among NiHAO, Capital Gold and Capital Resources, for the acquisition by Capital Gold and Capital Resources of shares of stock in (a) Oregalore, Inc. (“Oregalore”), a wholly-owned subsidiary of NiHAO; or (b) Masbate 13 Philippines, Inc. (“Masbate 13’), a subsidiary of Oregalore; or (c) a new company incorporated under the laws of the Philippines, (in each case hereinafter referred to as the “NiHAO target”) for the purpose of obtaining equity interest in the registered holder of the exploration license of the Mandaon tenement situated in the Municipality of Milagros and Mandaon, Masbate, Philippines (the “Masbate License”). Capital Gold is a corporation organized and existing under the laws of the State of New South Wales, Australia, while Capital Resources is a corporation organized and existing under the laws of the Isle of Man. On September 17, 2012, the Board approved the execution, delivery and performance of Memorandum of Agreement (“MOA”) by and among NiHAO, Capital Gold Pty Ltd. (“Capital Gold”), and Welcome Stranger Mining Ltd. (“Welcome Stranger”), for the acquisition by Capital Gold and Welcome Stranger from NiHAO of forty percent (40%) of the issued share capital of Masbate 13 Philippines, Inc. (“Masbate 13”) a subsidiary of NiHAO’s wholly-owned subsidiary, Oregalore, Inc. (“Oregalore”). The MOA supersedes the MOU executed. Supervening events have transpired which prevented Capital Resources from performing commercial undertakings, deliveries and covenants as outlined in the MOU. However, despite the expiration of the MOU, Capital Gold, on its own, continued to negotiate, with NiHAO with a view of concluding a mutually beneficial commercial transaction under terms and conditions acceptable to the parties. Subject to the satisfaction of certain conditions, the Parties to the MOA have agreed that: (a) Welcome Stranger shall acquire forty percent (40%) of the entire issued and outstanding share

capital of Masbate 13 in consideration for which NiHAO/Oregalore shall receive Fifty million (50,000,000) shares in Welcome Stranger at an indicative listing market value of twenty Australian cents (AUD0.20 / share) per share ;

(b) Welcome Stranger will pay to NiHAO/Oregalore a cash consideration of two hundred fifty thousand USD dollars (US250,000.00);

(c) At the end of the transaction, the Parties shall have shareholdings in Welcome Stranger in accordance with the following ownership structure

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Company /Entity Number of shares Percentage of ownershipOriginal shareholders 9,120,452.00 3.59%

Capital Gold 80,000,000.00 31.48%Dizon Copper-Silver

Mines, Inc. 90,000,000.00 35.42%

NiHAO 50,000,000.00 19.68%New shareholder after

capital raising 25,000,000.00 9.84%TOTAL 254,120,452.00 100.00%

d) Welcome Stranger shall have the option to buy an additional forty percent (40%) of the entire

issued and outstanding share capital of Masbate 13 upon terms and conditions acceptable to NiHAO.

The rights and obligations of the Parties to the MOA is subject to the following conditions being satisfied (or waived by the appropriate Party, in its absolute discretion). (a) The Parties entering into a formal share sale agreement, subscription agreement and shareholders

agreement (the “Formal Agreement”) relating to the Transaction on terms and conditions acceptable to all Parties (acting reasonably). Among other things, Parties shall change the name of Welcome Stranger Mining Ltd. to NoA Mines Ltd. or such other names which the Parties may hereinafter agree to subject to approval by the appropriate Australian body ;

(b) NiHAO being satisfied that Capital Gold and Welcome Stranger have the financial, legal, operational and technical capabilities to undertake the Transaction;

(c) Capital Gold receiving a satisfactory legal opinion from its Philippines counsel as to the validity and enforceability of the formal Agreements under applicable Philippines laws;

(d) Welcome Stranger shareholders approving the transactions in a general/special meeting that will be called for the purpose;

(e) Welcome Stranger obtaining all other regulatory and shareholder approvals in accordance with the Corporations Act 2001 (Australia), the ASX Listing Rules and Welcome Stranger’s constitutions;

(f) ASX providing Welcome Stranger with a list of conditions, following Welcome Stranger obtaining all required shareholder approvals which, when satisfied, will result in the ASX lifting the suspension on the Welcome Stranger’s Shares trading on ASX; and

(g) The agreement between Capital Gold, Welcome Stranger, and Dizon Copper-Silver Mines, Inc. is likewise fulfilled with respect to the capital raising activities and the corresponding vending-in of the property at Dizon Copper-Silver Mines, Inc. into Welcome Stranger as stated under said Agreement.

Requesting Party, shall provide the other Party with all reasonable assistance and relevant information as may be required by the Other Party for the purposes of enabling completion of a Due Diligence in accordance with the terms of the MOA. Capital Gold and Welcome Stranger acknowledged the completion of legal and technical due diligence on NiHAO, Oregalore and Masbate 13, including, without limitation, all activities carried on by Masbate 13 relating to the gold, copper gold prospect situated in the Municipality of Mandaon, Masbate Island, Philippines to the sole satisfaction of Capital Gold and Welcome Stranger. On December 31, 2012, as and by way of partial implementation of the MOA dated 17 September 2012 between the parties, a Sale Share Agreement was executed by and among Nihao, Oregalore and Welcome Stranger involving 1 million shares of stock (40% ownership) of Masbate 13. Pursuant to the agreement, Oregalore shall sell its 40% ownership in Masbate 13 for a total consideration of 50,000,000 shares in Welcome Stranger at listing value of AUD0.20 per share plus US$250,000 cash. The sale shall become effective upon satisfaction of the following contract conditions:

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(a) There shall be a written advice or confirmation from the Treasurer of the Commonwealth of Australia to Oregalore that there is no objection, under the Foreign Acquisition and Takeovers Act 1975, to the issuance of shares of Welcome Stranger to all Parties (acting reasonably);

(b) Where Welcome Stranger is subject to or affected by a foreign policy of the Philippine in connection with the proposed issue of the Sale Shares or this Agreement generally, the Philippine Government, or a duly authorized delegate of the Philippine Government, has provided written advice or confirmation to Welcome Stranger without conditions or on conditions acceptable to the Welcome Stranger acting reasonably that there is no objection under any law or foreign policy of the Philippines to the proposed issue of the Sale Shares or the entering into or completion of this Agreement.

Completion of this agreement is also subject to the following significant conditions precedent: (a) Execution of the Royalty Agreement, Shareholders Agreement Restriction Agreement and

Operating Agreements by all of the parties of this agreement; (b) Completion of the Capital Gold Sale Agreement; (c) Completion of the Dizon Agreement. 4. Heads of Agreement with Glencore International AG (“Glencore”) and AGP Industrial

Corporation (“AGP”). On September 27, 2011, the Company executed a Heads of Agreement (“HOA”) in Hong Kong with Glencore and AGP. The three Companies agreed to utilize their respective expertise in the mining industry for purposes of investigating, identifying, acquiring, developing and operating mining claims of economically feasible nickel deposits in the Philippines for purposes of Direct Shipping/ Selling Ore (DSO) and other related nickel mining business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its network of various institutions internationally. On the other hand NiHAO and AGP shall utilize their expertise in mining, contracting and developing of mines in the Philippines and their knowledge of relevant Philippine laws, rules and regulations and issues. Glencore is a company registered under the laws of Switzerland and is one of the world’s leading integral producers and marketers of commodities with worldwide activities in the production, sourcing, processing, refining, transporting, storage, financing and supply of metals and minerals, energy products and agricultural products. AGP, on the other hand, is a publicly listed holding company in the Philippines with interests in real estate and mining ventures. On 28 October 2011, Glencore, NiHAO and AGP executed an “Addendum to Heads of Agreement”. The Joint Venture Corporation (JVC) shall be formed with an initial authorized share capital of One Hundred Thousand Hong Kong Dollars (HK$ 100,000) with par value of One Hong Kong Dollar per share (HK$ 1/ share) and issued and paid-in capital of Ten Thousand Hong Kong Dollars (HK$ 10,000) equivalent to ten thousand (10,000) shares of the JVC. Said initial issued and paid-in capital shall be contributed equally by the PARTIES in proportion to their respective shares. Once the JVC is formed, the PARTIES (or their respective subsidiaries designated for such purpose) shall remit to a USD dollar account of the JVC, Two Million US Dollars (US$2,000,000.00) in such amounts of contribution as provided by the heads of Agreement, This shall constitute the initial capitalization of the JVC to be used in accordance with the Heads of Agreement but which amounts shall be treated as shareholders advances. Such shareholders advances shall be evidenced by an agreement entered into between each PARTY and the JVC, each of which shall contain identical terms and conditions (other than the identity of the PARTY to such agreement) Pursuant to the Heads of Agreement dated September 27, 2011 entered into by NiHAO, AGP and Glencore, the Company together with AGP Industrial Corporation and Glencore International AG established on December 12, 2011, GNA Resources International Limited under the laws of Hong Kong, as the group’s joint venture corporation. Under the HOA, Glencore, NiHAO and AGP agreed to utilize their respective expertise in the mining industry for purposes of investigating, identifying, acquiring developing and operating mining claims of economically feasible nickel deposits in the Philippines for purposes and Direct Shipping/ Selling Ore (DSO) and other related nickel mining business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as

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well as its network of various institutions internationally. On the other hand, NiHAO and AGP shall utilize their expertise in mining, contracting and developing of mines in the Philippines and their knowledge of relevant Philippine laws, rules and regulations and issues. In order to accomplish said purpose, the parties have formed and established GNA Resources under the laws of Hong Kong. n. Related Party Transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are controlled by or under common control with the Group, including holding companies, subsidiaries and fellow subsidiaries, are related parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Group and close members of the family of these individuals, and companies associated with these individuals also constitute related parties. In considering each possible related entity relationship, attention is directed to the substance of the relationship and not merely the legal form. Outstanding balances of transactions with related parties are unsecured, noninterest bearing, payable on demand and settlements are made in cash. There have been no guarantees provided or received for any related party receivables or payables. In the normal course of business, transactions with related parties include the following: Associate/Investee: 1. The Parent Company entered into a noninterest-bearing loan facility agreement with ORVI amounting to P137 million for use by ORVI exclusively to fund its existing mining projects. Payment of the loan can be made in cash or in shares of stock in ORVI or in a company listed with PSE as may be mutually agreed upon by the Parent Company and ORVI. Balance of the loan as of December 31, 2012 is P 55.5 million. The Parent Company owns 15% equity of ORVI (please refer to note 11 of the accompanying notes to the consolidated financial statements). 2. The Group extended noninterest bearing advances to ORVI and GNA for working capital requirements. Balances as of December 31, 2012 amounted to P 80,160 and P 46,008 for ORVI and GNA respectively (please refer to note 12 of the accompanying notes to the consolidated financial statements). Companies with Common Shareholders or Interlocking Directors: 3. Pursuant to the Operating Agreement with Geogen, the group shall pay ABG management fee equivalent to 5% of the revenue from shipment of nickel ore. As of December 31, 2012, the group has yet to pay P3.45 million of management fee. The group made advances to Geogen for its diesel consumption which as of the end of the year amounted to P208 thousand. The group has an outstanding collectible as of Dec. 31, 2012 from Geogen of P 27 million for its services as operator of Isabela project. Geogen has fully settled both accounts in 2013. 4. AU Philippines, Inc., the previous majority shareholder of Masbate 13, extended noninterest-bearing cash advances to Masbate 13 for working capital requirements. Likewise, Geograce Philippines, Inc. extended advances to Masbate 13 for working capital requirements. As of December 31, 2012, the total unpaid advances amounted to P1.95 million and P0.90 million for AU Philippines and Geograce, respectively. 5. The Parent Company entered into a Contract of Lease with Angping & Associates Securities, Inc. for the lease of its office space and parking slots. The lease is for a period of three (3) years beginning October 19, 2011 with the option to renew for another two (2) years. The rental expense recognize by the Parent Company for 2012 amounted to P1 million. Shareholder: 6. The Parent Company made advances from a shareholder to fund incorporation of the joint venture. This was fully paid in 2012.

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o. Business Risks

The Company and its subsidiaries are engaged in a very competitive business. Numerous other factors beyond the Company’s control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination thereof may result in the Company not receiving an adequate return on invested capital.

p. 5:1 Stock Rights Offering

On January 14, 2009, the PSE approved the application of the Company to list up to 500,000,000 common shares to cover its 5:1 Stock Rights Offering (“the Offer”) at an offer price of P1.00 per share to existing qualified shareholders of record as of October 9, 2009.

The Offer was conducted between October 19-23, 2009, and the Company raised a total of P500,000,000.00 in gross proceeds. The Offer Shares were listed in the PSE on December 15, 2009.

As of December 31, 2012, the Company has made the following disbursements amounting to P 443.87 million out of the total P500 million offer proceeds:

1. P 189.4 million as partial settlement of advances from shareholders; 2. P 150.5 million advances to Oriental Vision Mining Corp. (ORVI); 3. P 63.0 million representing 30% equity in ORVI; 4. P 0.3 million on Botolan project; 5. P 0.4 million on project due diligence expenses; 6. P 16.2 million on offer-related expenses, and 7. P 24.0 million on operating expenses

q: Employees

As of December 31, 2012, the Company had nine (9) full-time employees handling the management and finance operations. For year 2013, the Company expects to maintain the same number of manpower to handle various on-going projects of the Company. . 2012 Projected 2013 Manager 3 3 Supervisor 2 2 Staff 4 4 Total 9 9 Following table will show the figures for its Isabela project. The Company expects to maintain the same numbers for year 2013. Loading Season Off – season Manager 12 3 Supervisor 12 2 Rank & File 209 3 Total 233 8 The Company, its subsidiaries and the subsidiaries of Oregalore, Inc. have no Collective Bargaining Agreements with their respective employees. The Company believes that it has maintained an amicable relationship with its employees and does not anticipate any labor-management issues to arise in the near future.

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Item 2. Properties

The Company leases office space with a total floor area of 325.27 square meters located at 6th Floor, NiHAO SunPlaza Building, 1505 Shaw Blvd. corner Princeton St. Barangay Wack-wack, Greenhills East, Mandaluyong City from Angping and Associates Securities, Inc. The lease is for a period of 2 years and shall expire on 19 October 2013. Monthly lease rental amounts to P103,108.00 inclusive of association dues and 7 parking slots. The contract requires a deposit amounting to P280,114.00. The group has no commitments of acquiring real properties for the next twelve months. The Company has three (3) mining claims- (1) Mineral Production Sharing Agreement (MPSA) for the Company’s wholly owned subsidiary, Mina Tierra Gracia, Inc. was released on 10 February 2010. The MPSA have a term of twenty five (25) years and maybe renewed thereafter for another term not exceeding twenty five (25) years; (2) Exploration Permit issued to Masbate 13 Philippines, Inc. located at Milagros and Mandaon province of Masbate and (3) Exploration Permit Application by Bountiful Geomines, Inc. located at Opol, Manticao province of Misamis Oriental. The group has plans to expand its mining portfolio. The Company and its subsidiaries do not have any mortgage, lien or encumbrance over any of the Mining Claims. Item 3. Legal Proceedings The Company and its subsidiaries are not involved as plaintiffs or defendants in any material legal proceedings. There are also no threatened material legal proceedings against the Company and its subsidiaries or involving the properties of the Company. Item 4. Submission of Matters to a Vote of Security Holders During the annual stockholders’ meeting and organizational meeting of the Board of Directors held on 14 December 2012, there were additional two (2) members and three (3) new members of the Board of Directors. This was reported under SEC Form 17-C submitted on 17 December 2012. On the same meeting held on 14 December 2012, the appointment of SGV & Co. as independent auditor to audit NiHAO’s financial statements for the period ended 31 December 2012 was also approved.

PART II - OPERATIONAL AND FINANCIAL INFORMATION

(A) Market for Registrant's Common Equity and Related Stockholder Matters (1 ) Market Information The principal market for the shares of stock of the Company is the Philippine Stock Exchange

(PSE).

Closing Market price as at 17 April 2013 is P 3.40.

The high and low sales prices of each quarter within the last three years are as follows:

High Low Year 2013 First Quarter P 3.67 P 3.50 Year 2012 First Quarter P 11.24 P 11.10

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Second Quarter 9.20 9.00 Third Quarter 8.05 7.77 Fourth Quarter 5.09 4.99

Year 2011 First Quarter P 2.36 P 2.27 Second Quarter 2.19 2.15 Third Quarter 3.55 3.36 Fourth Quarter 4.49 2.91

Year 2010 First Quarter P 04.15 P 3.95 Second Quarter 3.55 3.40 Third Quarter 3.95 3.85 Fourth Quarter 3.20 3.00

Source : Technistock

(2) Holders

The number of shareholders of record as of December 31, 2012 is 100.

As of December 31, 2008, the Company had 100,000,000 Common Shares issued and outstanding, of which 85,000,000 Common Shares were listed. On January 14, 2009, the PSE approved the applications of the Company to list: (a) 15,000,000 Common Shares covering the 14,960,0000 Common Shares issued to OYEZ!!! Corporation, Inc. and Mr. Chia Kim Teck by way of conversion of advances into equity and 40,000 Common Shares which represent the previously issued, but unlisted, shares; and (b) the 500,000,000 common shares subject of the 5:1 Stock Rights Offering (“Offer Shares”) The Offer Shares shall come from the increase in authorized capital stock of the Company from P100 million to P2 billion.

On December 09, 2009, the SEC approved the increase in authorized capital stock of NiHAO

Mineral Resources International, Inc. to PESOS: Two Billion (P2,000,000,000.00) divided into Two Billion common shares of the same class, all with the par value of One Peso (P1.00) per share.

On December 15, 2009, the 500,000,000 common shares covering the 5:1 Stock Rights

Offering to qualified stockholders on record as of October 9, 2009 were listed in the PSE. This brings the issued and outstanding and listed shares of the Company to 600,000,000 common shares as of December 31, 2009.

The following are the private placements conducted by the Company: A ) Private placements of Mr. Jerry Angping involving an aggregate of 280 million shares. On December 29, 2010, the Board of Directors approved the issuance of Eighty Million

(80,000,000) shares via private placements at an issue price of One Peso and Thirty Five Centavos (P 1.35) per share for a total consideration of One Hundred Eight Million Pesos (P108,000,000.00). On March 10, 2011, proceeds of the issuance of shares was used to acquire from the existing stockholders of OREGALORE, Inc. (“OREGALORE”) of Thirty Thousand (30,000) shares, with a par value of One Hundred Pesos (P100.00) per share, equivalent to one hundred percent (100%) of the outstanding capital stock thereof, for the purchase price of Three Million Pesos (P 3,000,000.00) and the acquisition of all shareholder advances in OREGALORE amounting to One Hundred Twenty Five Million Four Hundred Seventy Eight Thousand Three Hundred Four and 62/100 Pesos (P 125,478,304.62), for the discounted price of One Hundred Five Million Pesos (P 105,000,000.00) resulting to a net gain of P 20,478,305. OREGALORE is a corporation duly organized and existing under Philippine laws. OREGALORE owns eighty percent (80%) of the outstanding capital stock of Masbate 13

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Philippines, Inc. (Masbate 13). Masbate 13 is the owner of a gold mining claim described as follows:

License : Exploration Permit No. V-2008-005 issued on February 7, 2008 Location : Municipalities of Milagros and Mandaon, Province of Masbate Coverage / Area : 8,375.3509 hectares

On August 16, 2011, the Board of Directors approved the issuance of One Hundred Million (100,000,000) shares via private placements at an issue price of Two Pesos (P 2.00) per share for a total consideration of Two Hundred Million Pesos (P200,000,000.00). The proceeds were used initially to purchase Oriental Peninsula Resources Group, Inc (“ORE”) shares. On September 21, 2011, the Board of Directors approved the issuance of One Hundred Million (100,000,000) shares via private placements at an issue price of Two Pesos and Twenty Five Centavos (P 2.25) per share for a total consideration of Two Hundred Twenty Five Million Pesos (P225,000,000.00). Out of the total proceeds, One Hundred Forty Five Million Pesos (P145,000,000.00) were allocated initially for purchase of additional shares of ORE and the Eighty Million Pesos were allocated for acquisition of mining equipment. Significant portion of the ORE shares were sold during the year resulting to a net gain of P 59 million. On December 09, 2011, the stockholders approved the private placements of Mr. Jerry C. Angping involving an aggregate of 280 million shares with a par value of P1 per share and the listing with the PSE of the shares issued pursuant thereto. The majority of the minority shareholders likewise waived the conduct of a rights or public offering with respect to the 280 million shares private placements in favor of Mr. Jerry C. Angping. B) Private Placements of Macquarie Bank Limited On February 11, 2012, the Board of Directors approved the execution, delivery and performance of an Investment Agreement (the “Agreement”) by and among Macquarie, NiHAO and one of its major shareholders, embodying a Multi-tranche Average Price Issuance Program (“Issuance Program”) resulting in Macquarie Bank’s subscription to newly-issued common shares of stock in NiHAO on a private placement basis (“Transaction”). Pursuant to the Agreement, Macquarie Bank agreed to subscribe to NiHAO shares of up to an aggregate amount of One Hundred Fifty Million (150,000,000) (the “Subscriber Shares”), which shall be purchased in tranches, from NiHAO’s authorized but unissued capital stock, provided that, prior to NiHAO’s obtaining the approval of its shareholders to the Transaction (including the issuances of NiHAO shares to Macquarie Bank), Macquarie Bank shall not make any subscription that will result in Macquarie Bank’s total shareholdings in NiHAO exceeding Ninety-Five Million (95,000,000) Shares, which number is just below ten percent (10%) of the resulting issued capital stock of the Company. Each tranche shall consist of ten (10) individual trading days selected by the Subscriber (“the Subscriber Days”), provided that such Subscriber Days shall occur within a sixty (60) consecutive calendar day period. However, the Tranche Period shall be shortened in the event that (i) the total number of shares of the Company traded on the PSE on the Subscriber Days (subject to certain adjustments) reaches an aggregate of Two Hundred Million (200,000,000) or (ii) the shares of the Company close below the floor price of Four Pesos and Fifty Centavos (P4.50) per share. The subscription price for the Subscriber Shares by Macquarie Bank for a particular Tranche Period shall be an amount equivalent to ninety percent (90%) of the Volume Weighted Average Price (“VWAP”) of shares of the Company, rounded down to the nearest centavo during that Tranche Period (“Subscription Price”). For the avoidance of doubt, the VWAP of shares of the Company for the Tranche Period shall refer to the VWAP only the Subscriber Days and not the sixty (60)-consecutive calendar day period. The minimum number of Subscriber Shares for each Tranche Period shall be such number of shares of the Company equivalent to fifteen percent (15%) of the total on-market traded volume of the shares of the Company on the PSE during such Tranche Period (subject to certain

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adjustments), however, the parties may mutually agree to reduce the minimum number of Subscriber Shares for any particular tranche to less than fifteen percent (15%). Macquarie Bank may subscribe to such number of Subscriber Shares greater than the required minimum for a Tranche Period (“Tranche Size”) at its sole discretion. Macquarie Bank’s right to subscribe to the Subscriber Shares shall expire (1) year from the execution of the Agreement, or upon Macquarie Bank having subscribed to and been issued One Hundred Fifty Million (150,000,000) Subscriber Shares, whichever event occurs earlier. The Company shall make available to Macquarie Bank, through one of its major shareholders (the “Transferor”) up to One Hundred Fifty Million (150,000,000) shares of the Company that are registered under the Securities Regulation Code and listed on the PSE (the “Block Shares”), which Macquarie Bank can utilize or trade during the Issuance Program. The transfer of the Block Shares to Macquarie Bank shall be made in tranches and executed through block sales using the facilities of the PSE. The consideration for the transfer of the Block Shares to Macquarie Bank by the Transferor shall be Macquarie Bank’s transfer to the Transferor, through the block sale/s using the facilities of the PSE, of Subscriber Shares that have already been listed with the PSE (“Listed Subscribed Shares”) equivalent to the total number of Block Shares transferred to Macquarie Bank. The Transaction and/or the Issuance Program may however be suspended or terminated by the Parties under certain terms and conditions. The Program targeted to raise approximately One Billion Four Hundred Seventeen Million Five Hundred Thousand Pesos (P1,417,500,000.00) for the various projects of the Company. The proceeds shall be used to fund working capital requirements and business expansion that the Company plans to undertake in 2012, which includes the acquisition of mining rights and contracting of mining and port operations. The Company’s planned operation of port facilities is related to its mining operations, in order to facilitate the loading of ore shipments. Amounts raised from the private placements will equip the Company with adequate financial and logistical support to enable it to undertake full-scale operations and development in the mining sector. Once the projects are operational, a steady income stream may be realized. Over time, ultimate benefit to shareholders is expected as shareholders’ value will be enhanced. The first tranche culminated on 02 March 2012 where Macquarie Bank Limited executed a Subscription Agreement covering the subscription of 33 Million common shares with a par value of P1.00 per share. The subscribed shares are payable in cash at a subscription price of P 9.46 per share or an aggregate value of Three Hundred Twelve Million One Hundred Eighty Thousand Pesos (P 312,180,000.00). The difference between the aggregate par value of the subscribed shares and the total cash payment made by Macquarie Bank for the same shall be treated as additional paid-in capital in NiHAO.

On April 12, 2012, the stockholders approved the private placements of Macquarie Bank Limited of up to One Hundred Fifty Million (150,000,000) shares. The Majority of the minority shareholders waived the conduct of a rights or public offering with respect to the Private Placement Shares of Macquarie Bank. The stockholders likewise approved the Use of Proceeds of the private placement of Macquarie Bank which was presented by the Corporation’s Management during the Special Stockholders’ Meeting. In the period covered by the program from March 2, 2012 to March 2013, actual value transmitted was at P312,180,000. All funds raised with respect to the private placement was used for its Isabela operations.

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Top 20 Stockholders as of December 31, 2012:

NameNo of Common

Shares Held % of Total1. PCD Nominee Corp. (Filipino) 545,099,680 59.704%2. Angping, Jerry C. 285,100,000 31.227%3 PCD Nominee Corp. (Non-Filipino) 42,160,385 4.618%4 Macquarie Bank Limited 33,000,000 3.615%5 Chia Kim Teck 2,349,732 0.257%6 Angping, Diana Kaye 1,000,000 0.110%7 Angping, Jerry ITF John Isaac Angping 1,000,000 0.110%8 Angping, Jerry ITF Christian Daniel Angping 1,000,000 0.110%9 Angping, Ma. Rhodora 1,000,000 0.110%

10 Defensor, Michael 160,000 0.018%11 Crisostomo, Jose Mariano 100,000 0.011%12 Saavedra, Howard 100,000 0.011%13 Fong, Fe G. 100,000 0.011%14 Miranda, Ma. Carla Remedios 100,000 0.011%15 Evangelista, Loeben Luis 100,000 1.110%16 Jorge, Nicanor S. 80,000 0.009%17 Perez, Leonardo 50,000 0.006%18 Lee, Roxanne 50,000 0.006%19 Tolarbas, Luzelle Ann R. 50,000 0.006%20 Gonzales, Bobby 50,000 0.006%

Top 20 stockholders as of March 31, 2013:

NameNo of Common

Shares Held % of Total1. PCD Nominee Corp. (Filipino) 544,781,460 59.669%2. Angping, Jerry 285,100,000 31.227%3 PCD Nominee Corp. (Non-Filipino) 42,503,605 4.655%4 Macquarie Bank Limited 33,000,000 3.614%5 Chia Kim Teck 2,349,732 0.257%6 Angping, Diana Kaye 1,000,000 0.110%7 Angping, Jerry ITF John Isaac Angping 1,000,000 0.110%8 Angping, Jerry ITF Christian Daniel Angping 1,000,000 0.110%9 Angping, Ma. Rhodora V. 1,000,000 0.110%

10 Defensor, Michael T. 160,000 0.018%11 Crisostomo, Jose Mariano 100,000 0.011%12 Saavedra, Howard C. 100,000 0.011%13 Fong, Fe G. 100,000 0.011%14 Miranda, Ma. Carla Remedios E. 100,000 0.011%15 Evangelista, Leoben Luis T. 100,000 0.011%16 Jorge, Nicanor S. 80,000 0.009%17 Perez, Leonardo 50,000 0.005%18 Lee, Roxanne 50,000 0.005%19 Tolarbas, Luzelle Ann R. 50,000 0.005%20 Gonzales, Bobby S. 50,000 0.005%

No. of shareholders on record as of March 31, 2013 is 98.

Shares owned by foreigners: December 31, 2012 : 8.49% or 77,516,117 common shares March 31, 2013 : 8.53% or 77,859,337 common shares Source: Transfer agent monthly report on foreign ownership

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( 3) Dividends There were no dividends declared in the previous and current years.

(4) Recent Sales of Unregistered Securities For the period 2008 to 2012, the company has no sale of any unregistered securities.

PART III – FINANCIAL INFORMATION

(A) Management's Discussion and Analysis or Plan of Operation. Financial Performance In Thousand Pesos

Year 2011 Year 2011Revenues 125,951 42,638 Cost and Expenses 101,800 31,897 Net Income (Loss) 24,151 10,741

Current Assets 907,780 369,234 Current Liabilities 16,199 7,948 Total Assets 1,262,148 919,921 Total Liabilities 16,199 7,948 Stockholders' Equity 1,245,949 911,973

Current Ratio 56.04 46.46 Current Assets / Current Liabilities 907,780 / 16,199 369,234 / 7,948

Debt to Equity Ratio 0.01 0.01 Total Liabilities/Stockholders' Equity 16,199 / 1,245,949 7,948 / 911,973

Return on assets 0.02 0.01 Net Income / Total Assets 24,151 / 1,262,148 10,741 / 919,921

Asset to Equity 1.01 1.01 Total Assets/Stockholders' Equity 1,262,148 / 1,245,949 919,921 / 911,973

Earnings (Loss) Per Share 0.03 0.01 Net Income (Loss) /Weighted ave. no. of shares 24,151 /907,500 10,741 /780,000

Full Fiscal Years

Calendar Year 2012

Financial condition / changes in financial condition In June 2012, the Company inked an Operating Agreement with Geogen Corporation covering a majority portion of the Dinapigue Nickel Project located in Dinapigue, Isabela with 2,314.2018 hectares. The project with an approved Mineral Purchase and Sharing Agreement (“MPSA”) is already in the development and operating stage. NiHAO upon its assumption as operator of the project rehabilitated existing roads and built new arterial road networks to increase efficiency in moving ore, and developed other mine infrastructure to comply with regulatory requirements for the development of an efficient mining operations. In addition, existing extensive activities are being conducted.

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Pursuant to the operating agreement, Geogen shall pay the Parent Company an amount equivalent to 90% of the invoice value of the nickel ore, nickel-by-products, chromite and other minerals sold by Geogen to third parties. For the year, this activity posted a service income of P64.08 million with cost of services of P 52.14 million resulting to a gross profit of P11.94 million or 18.64% of service income. General and administrative expenses incurred during the period amounted to P46.51 million while the Company reported other income of P72.59 million. Resulting income after taxes amounted to P24.15 million. A change in fair value of available-for-sale financial assets amounting to P2.35 million resulted to a net comprehensive income of P21.8 million.

On December 14, 2012, the Group sold 31,500 shares of Oriental Vision Mining Philippines Corporation (“ORVI”) to a third party for a total consideration of P 31.5 million, As a result the Group lost its significant influence over ORVI. The remaining investment in ORVI after the sale was reclassified to “AFS financial asset” account and carried at cost. The sale resulted in a net loss amounting to P0.6 million. Prior to the sale of the shares discussed above, the investment was accounted for as an investment in an associate using equity method. Share in associate’s net loss in 2012 amounted to P 10.7 million. Share in associate’s net income amounted to P9.3 million and P2.6 million in 2011 and 2010, respectively. Since May 2012, the Parent Company has been liquidating its shares in Oriental Peninsula Resources Group, Inc. (“ORE”). NiHAO obtained a net gain on this investment amounting to P58.62 million.

Cash and cash equivalent as of December 31, 2012 amounted to P 619.95 million 104% or P315.79 million higher than the P 304.16 million cash as at December 31, 2011. The increase is brought about by the proceeds of the sale of ORE shares in the stock market and the sale of 31,500 ORVI shares and revenues from operations.

Receivables soared to P 184.95 million from P 0.46 million in December 31, 2011 mainly due to advances made to various suppliers and sales receivable relative to the Company’s operations in Isabela.

Other current assets of P 44.02 million is P38.02 million or 634% higher as compared to P6.0 million in 2011. The difference is due to a) an increase in input vat; b) deposits made for subscontracted services; c) deferred costs and d) increase in creditable taxes, all in relation to its Isabela operations. Available-for-sale financial assets of P78.61 is P 192.71 million or 71.03% lower as compared to P 271.30 million in December 31, 2011. This account is composed of ORE shares which is listed in the stock market and ORVI shares. Investment in ORE shares went down from P271.32 million in Dec. 31, 2011 to P 46.50 million as of December 31, 2012 attributed to the liquidation process undertaken by the Company to lock-up its gain beginning May 2012. Investment in ORVI shares amounted to P 32.11milion.

A significant increase of P 60.64 million in property and equipment from P 2.50 million as of December 31, 2011 to P 63.14 million as of December 31, 2012 was due to acquisition of office and heavy equipment relative to its Isabela operations. Other non-current assets of P10.97 million is 3,815% or P10.69 million higher than P0.28 million. The increase is composed of leasehold rights net of amortization and long-term deposits made to subcontracted services in relation to the Geogen operations.

Total consolidated assets stood at P1,262.15 million, a 37% or P 342.23 million increase from recorded consolidated assets of P919.92 million as of December 31, 2011. The significant increase in total assets was due to the following transactions:

a) Sale and issuance of thirty three million (33,000,000) shares of the Company at P9.46

per share by way of a private placement transaction on March 2, 2012. Total private placement proceeds amounted to P312.18 million.

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On February 11, 2012, the Board of Directors approved the execution, delivery and performance of an Investment Agreement (the “Agreement”) by and among Macquarie (“Macquarie Bank”), NiHAO and one of its major shareholders, embodying a Multi-tranche Average Price Issuance Program (“Issuance Program”) resulting in Macquarie Bank’s subscription to newly-issued common shares of stock in NiHAO on a private placement basis (“Transaction”).

Pursuant to the Agreement, Macquarie Bank agreed to subscribe to NiHAO shares of up to an aggregate amount of One Hundred Fifty Million (150,000,000) (the “Subscriber Shares”), which shall be purchased in tranches, from NiHAO’s authorized but unissued capital stock, provided that, prior to NiHAO’s obtaining the approval of its shareholders to the Transaction (including the issuances of NiHAO shares to Macquarie Bank), Macquarie Bank shall not make any subscription that will result in Macquarie Bank’s total shareholdings in NiHAO exceeding Ninety-Five Million (95,000,000) Shares, which number is just below ten percent (10%) of the resulting issued capital stock of the Company.

The first tranche culminated on 02 March 2012 where Macquarie Bank Limited executed a Subscription Agreement covering the subscription of 33 Million common shares with a par value of P1.00 per share. The subscribed shares were payable in cash at a subscription price of P 9.46 per share or an aggregate value of Three Hundred Twelve Million One Hundred Eighty Thousand Pesos (P 312,180,000.00). The difference between the aggregate par value of the subscribed shares and the total cash payment made by Macquarie Bank for the same was shown as additional paid-in capital.

Proceeds from this private placement are currently being used to fund expenses relative to the Operating Services of the Company to Geogen Corporation.

The Company and Macquarie Bank cannot proceed to the second and subsequent tranches of this program as the listing of the shares in the first tranche above are still pending with the Philippine Stock Exchange (PSE). To date, the parties have complied with the requirements of the PSE listing department for this purpose.

The proceeds of the Macquarie investment was used to fund its Geogen operations.

b) Sale of ORE shares thru the PSE resulting to a net gain of P 58.62 million.

c) Revenues from operations.

Total liabilities as of December 31, 2012 amounted to P16.20 million which were 1,038.15% or P 8.25 million higher than the P 7.95 million recorded liabilities as of December 31, 2011. The increase in total liabilities was mainly due to withholding taxes on payments made to suppliers and unpaid expenses relative to its Isabela operations. Additional paid-in-capital increased from P253.27 million in December 31, 2011 to P382.38 million. The private placement of Macquarie on March 2012 resulted to an APIC of P 279.180. On October 22, 2012, the Securities and Exchange Commission has approved the application of the Parent Company to undergo restructuring to wipe out deficit as of 31 December 2011 amounting to P 150.07 million. Total deficits went down to P 48.42 million from P 223.26 million as of December 31, 2011. The decrease is brought about by a) the application of APIC against the deficit was approved on October 22, 2012 by the Securities and Exchange Commission and b) net income attributable to parent company for 2012 amounting to P 24.76 million.

Operating expenses incurred in 2012 of P46.51 million were 52% or P15.9 million higher than those incurred in 2011. The increase is mainly attributable to the expenses incurred in relation to its Geogen operations.

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Plan of Operations Proceeds of 2009 Stock Rights Offering

The Company will continue to use the balance of the net proceeds from the 2009 SRO to maintain its Botolan and perfect its Manticao Mining claims. The former which has already been awarded a Mineral Production Sharing Agreement; and the Manticao Mining Claim, which will have to be perfected into an Exploration permit before any detailed work can be done on the property.

Management is focused on the operation of the Isabela mine and is gearing towards more nickel ore exports this year. It is likewise keen on the acquisition of other prospective mining claims that it can develop for immediate production in partnership with select foreign and local partners.

Proceeds of 2011 Private Placements

Balance of the proceeds from the P225 million private placement concluded in September 2011 were initially used to purchase additional ORE shares from the PSE open market and for acquisition of mining equipment. The Group has started liquidating its shares to lock-in its gains resulting to a net income of P58.62 million. Proceeds of the sale is primarily being used to fund its Isabela operations. Management is keen on this project considering its vast potential and clear immediate cash flows that certainly enhances shareholder value.

Botolan Mining Claim The Company is continuously implementing its Community Development Program (CDP) for its MPSA located in Botolan and Iba, Zambales to create a strong symbiotic relationship between the Company and the community. As nickel prices continue to improve, the Company may implement additional exploration on the property to determine the additional commercial viability of developing the Botolan Mining Claim as a Direct Shipping Ore (DSO) nickel mine. The Company believes that its investment in the implementation of a CDP will be easier for the transition of the Botolan Mining Claim from exploration into development and full scale operation. Plans for development of a loading facility as well as the options to its possible location are being studied to minimize hauling and transport costs of ore from the mine. Manticao Mining Claim NiHAO’s subsidiary, Bountiful Geomines, Inc. has an Exploration Permit Application (“EPAs”) in Manticao. NiHAO will evaluate their respective mineral potentials through its technical team and/or third party geological services companies as soon as the approval of its Exploration Permit has been issued.

After awarding of the Exploration Permit (“EP”), NiHAO shall implement exploration works according to the approved Exploration Work Program and Environmental Work Program attached to the EP.

a) There is no known trend, event or uncertainty that has or is reasonably likely to have a

negative impact on the Company’s short-term or long-term liquidity. The Company is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring the Company to make payments.

b) The liquidity of the Company was generated from the Company’s financial resources as well

as from the proceeds of the private placements and the 2009 Stock Rights Offering.

c) There are no events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation.

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d) There are no material commitments for capital expenditures except for those provided for in the use of proceeds from private placements and from the 2009 Stock Rights Offering and those needed by its Isabela operations.

e) There are no known trends, events or uncertainties that have had or that are reasonably

expected to have a material favorable or unfavorable impact on the Company’s financial statements.

f) There are no significant elements of income or loss that did not arise from the Company’s

continuing operations. Top Five Key Performance Indicators The following describes the Company’s top performance indicators. Tonnage Sold. The amount of nickel ore the Company manages to sell will be the key driver for revenues. Another factor affecting the revenues gained from shipments is the nickel content of the ore. Nickel Prices. The price NiHAO will receive for the nickel ore it mines and sells will be based on prevailing world prices. Nickel is a widely traded metal and the industry's benchmark price for nickel is obtained from the London Metal Exchange and China Metals Market. Currency Exchange Rates. Because nickel is traded worldwide, its price is denominated in U.S. dollars and all transactions for nickel are conducted in this currency. Even contracting costs are by practice settled in US dollars. NiHAO's profitability as a Philippine-based company will be affected by short-term fluctuations and long-term movement in the exchange rates of U.S. dollars and Philippine pesos. Cost per Ton. The cost the Company incurs for mining each metric ton of nickel is a key measure of its operation's efficiency and competitiveness. Lowering costs through economies of scale is an important consideration for NiHAO in order to achieve maximum profit. Earnings Per Share. The Company's earnings per share is a key measurement of its profitability especially when benchmarked against the earnings per share of other operators in the mining industry

Calendar Year 2011

Financial condition / changes in financial condition In 2009, the Company concluded a 5:1 Stock Rights Offering (“SRO”) of 500,000,000 common shares at an offer price of P1.00 per share to existing qualified shareholders of record as of October 9, 2009. The Offer was fully subscribed and generated total gross proceeds of P500.00 million. Total disbursements made from offer proceeds amounted to P437.45 million as of December 31, 2011. On December 29, 2010, the Board of Directors agreed to open for subscription a portion of the Company’s authorized but unissued capital stock. Mr. Jerry C. Angping, the President of the Company and a major stockholder, agreed to subscribe to 80,000,000 common shares at a subscription price of P 1.35 per share for a total consideration of P 108 million. A Subscription Agreement covering this private placement transaction was entered into by and between the Company and Mr. Angping on January 5, 2011. On March 10, 2011, proceeds of the issuance of shares was used to acquire from the existing stockholders of OREGALORE, Inc. (“OREGALORE”) of Thirty Thousand (30,000) shares, with a par value of One Hundred Pesos (P100.00) per share, equivalent to one hundred percent (100%) of the outstanding capital stock thereof, for the purchase price of Three Million Pesos (P 3,000,000.00) and the acquisition of all shareholder advances in OREGALORE amounting to One Hundred Twenty Five Million Four Hundred Seventy Eight Thousand Three Hundred Four and 62/100 Pesos (P 125,478,304.62).

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On August 16, 2011, the Board of Directors approved the issuance of One Hundred Million (100,000,000) shares via private placements at an issue price of Two Pesos (P 2.00) per share for a total consideration of Two Hundred Million Pesos (P200,000,000.00). The proceeds were used to acquire Oriental Peninsula Resources Group, Inc (“ORE”) shares. On September 21, 2011, the Board of Directors approved the issuance of One Hundred Million (100,000,000) shares via private placements at an issue price of Two Pesos and Twenty Five Centavos (P 2.25) per share for a total consideration of Two Hundred Twenty Five Million Pesos (P225,000,000.00). Out of the total proceeds, One Hundred Forty Five Million Pesos (P145,000,000.00) is allocated for acquisition of additional shares of ORE and the Eighty Million Pesos is allocated for acquisition of mining equipment. The balance from private placement and from the SRO conducted in 2009 consequently led to a 51.65% or P 103.59 million increase in total cash from P 200.56 million in 2010 to P 304.16 million in 2011. Receivables of P0.46 million as at Dec 31, 2011 is 97.42% or P17.33 million lower as compared to P17.79 million as at Dec. 31, 2010 due to collection of non-trade receivable amounting to P15.68 million and receivable from sold subsidiaries which were no longer posted as part of the group. Receivables from related parties amounting to P55.58 million as at the end of 2011 is 59.45% or P81.49 million lower as compared with 2010 balances of P137.07 million mainly due to partial payments made by ORVI on its advances from NiHAO. Other current assets of P6.00 million as at the end of 2011 is 76.39% or P2.60 million higher as compared with the P3.40 million balances as of 2010 due to the creditable taxes derived from the revenues generated in 2010 and collected in 2011. Non-current assets posted a 356.87% or P430.15 million increase from P 120.53 million in 2010 to P550.69 million in 2011. The increase is attributable to the following:

1. Acquisition of Oriental Peninsula Resources Group, Inc (“ORE”) shares funded by private placements. A total of 68 million ORE shares were acquired by the Company thru the PSE open market of which market price as at December 31, 2011 is pegged at P3.99 per share or an aggregate value of P271.32 million.

2. 14.20% or P9.31 million increase in Investment in Associates. Nihao recorded a P9.31 million equity equivalent to 30% of ORVI’s P31.03 million net income for the year 2011. Also, GNA Resources International Limited was born under the laws of Hongkong on December 12, 2011 a joint venture company with AGP Industrial Corporation and Glencore International AG.

3. Acquisition of two (2) units motor vehicles. 4. 307.37% or P152.14 million increase in Mining rights. The increase is brought about

by the acquisition of Oregalore Inc. of 80% interest in Masbate 13 Philippines, Inc. who owns the Masbate tenement.

5. The Company’s wholly owned subsidiary, MTGI reclassified its pre-fabricated collapsible building from “Other non-current assets” account to “Assets held for sale” account. The sale of the pre-fabricated collapsible building is expected to be consummated in 2012.

As a result of the foregoing, total assets grew by P440.56 million or by 91.91% from P479.36 million in 2010 to P 919.92 million in 2011.

Total liabilities went up by 37.08% or P2.15 million from P5.80 million as of 2010 to P 7.95 million in 2011, brought about by the advances made by Masbate 13 Philippines from non-related companies.

Capital stock increased pursuant to the private placement transaction of Mr. Jerry Angping covering 200 million shares equivalent to P425 million. The difference from par value of

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P225M attributed to the increase in APIC from P28.27 million in 2010 to P253.27 million in 2011.

Deficit decreased by P 11.46 million or 4.88% from P234.71 million in 2010 to P223.26 million in 2011 due to reported net income for 2011 net of share of non-controlling interests.

Other Revenues for the year amounting to P 42.64 million is 79.51% or P18.88 million higher than other revenues posted in 2010 of only P 23.75 million. The increase is attributable to the following:

1. Income from acquisition of Oregalore, Inc. with 80% equity in Masbate 13 Philippines, Inc. amounting to P 17.18 million.

2. Gain on disposal of subsidiaries of P 9.69 million 3. 253.22% or P 6.67 million increase in share in equity in ORVI from P 2.64 million in

2010 to P9.31 million in 2011.

However, the sum of the above transactions amounting to P 33.54 million is offset against the following resulting to a net increase of P18.88 million:

1. P14.0 million service income earned in 2010. Nil in 2011. 2. Gain on disposal of property and equipment in 2010 amounting to P0.14 million. 3. 7.44% or P 0.52 million decrease in interest earned from time deposits.

Operating expenses incurred in 2011 of P31.90 million were 124.21% or P17.67 million higher than those incurred in 2010. The increase is attributable to the following:

1. P 1.49 million commission expense brought about by the purchased of 68M Oriental Peninsula Resources Group, Inc. (ORE) shares at the open market of the PSE.

2. P5.24 million permitting expenses principally due to renewal of exploration permits of Masbate 13 Philippines, Inc. and Bountiful Geomines and for MPSA of Mina Tierra Gracia, Inc.

3. P4.01 million exploration expenses relative to the MPSA of Mina Tierra Gracia, Inc. 4. Documentary stamp taxes were paid for shares issued relative to private placements

conducted during the year. 5. Full settlement of deferred expenses.

The group posted a P27.245 million other comprehensive loss on change in fair value of available –for-sale financial assets as the group started accumulating ORE shares in 2011. Closing price of ORE shares as at December 31, 2011 is pegged at P3.99 per share. The group acquired a total of 68 million shares. This resulted to a total comprehensive loss of P 16.50 million in 2011, a complete turn- around from comprehensive income of P9.53 million in 2010.

a) There is no known trend, event or uncertainty that has or is reasonably likely to have a negative impact on the Company’s short-term or long-term liquidity. The Company is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring the Company to make payments.

b) The liquidity of the Company was generated from the Company’s financial resources as well

as from the proceeds of the private placements and the 2009 Stock Rights Offering.

c) There are no events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation.

d) There are no material commitments for capital expenditures except for those provided for in

the use of proceeds from private placements and from the 2009 Stock Rights Offering.

e) There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on the Company’s financial statements.

f) There are no significant elements of income or loss that did not arise from the Company’s

continuing operations.

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Calendar Year 2010

Financial condition / changes in financial condition

In 2009, the Company concluded a 5:1 Stock Rights Offering (“the Offer”) of 500,000,000 common shares at an offer price of P1.00 per share to existing qualified shareholders of record as of October 9, 2009. The Offer was fully subscribed and generated total gross proceeds of P500.00 million. Total disbursements made from offer proceeds amounted to P414.14 million as of December 31, 2010.

On December 29, 2010, the Board of Directors agreed to open for subscription a portion of the Company’s authorized but unissued capital stock. Mr. Jerry C. Angping, the President of the Company and a major stockholder, agreed to subscribe to 80,000,000 common shares at a subscription price of P 1.35 per share for a total consideration of P 108 million. A Subscription Agreement covering this private placement transaction was entered into by and between the Company and Mr. Angping on January 5, 2011. The proceeds from the private placement and the balance of the SRO conducted in 2009 consequently led to an increase in total assets of P68.18 million or 16.76% from P410.54 million in 2009 to P479.36 million in 2010.

Total increase in Current Assets are also attributable to the following:

1. increase in receivables amounting to P12.04 million - In December 2010, the Company has signed a management agreement with Oregalore, Inc. (OI) whereby the Company will handle the due diligence engagement of OI’s acquisition of Masbate 13 Philippines, Inc. (MPI). Service income earned from the OI agreement amounted to P14 million;

2. increase in due to related party was brought about by the loan facility agreement signed by

the Company with Oriental Vision Mining Philippines, Inc. (ORVI) amounting to P137.0 million. The loan proceeds were used by ORVI exclusively to fund its existing mining projects.

Non-current assets amounted to P 120.53 million as of December 31, 2010, which were higher by 116.58% or P64.88 million than December 31, 2009 balance of P55.65 million. The increase was due to the acquisition of 30% equity in ORVI amounting to P 63.00 million.

As a result of the foregoing, total assets grew by P68.81 million or by 16.76% from P410.54 million in 2009 to P 479.36 million in 2010.

Total liabilities declined by 89.36% or P48.71 million from P54.51 million as of 2009 to P 5.80 million in 2010, brought about by the following:

1. decrease in payable of P 7.08 million from P 12.60 million in 2009 to P 5.52 million in 2010;

2. full payment of advances made from related party of P41.91 million; and 3. income tax payable as a result of management agreement with OI.

Capital stock increased pursuant to the private placement transaction of Mr. Jerry Angping covering 80 million shares valued at P1.35 per share or a total amount of P108 million .

Deficit decreased by P 9.53 million or 3.9% from P244.24 million in 2009 to P234.71 million in 2010 due to reported net income for 2010.

Pursuant to the OI Management Agreement dated December 2010, the Company posted service income in the amount of P14 million. Interest income amounting to P 3.36 million from money market placements in 2009 has doubled in 2010 which posted a total of P 6.98 million.

Operating expenses of P10.13 million were 74.07% or P28.93 million lower than those incurred in 2009. This decrease was brought about by lower professional fees and no exploration costs and donations made in 2010.

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ORVI, the Company’s associate reported a net income for 2010 of P 11.71 million. The investment made by NiHAO with ORVI in March 2010 for a 30% stake in its equity resulted to its share in net income amounting to P 2.64 million.

In view of the aforementioned events, the Company successfully posted total net income of P9.53 million.

a). There is no known trend, event or uncertainty that has or is reasonably likely to have a negative impact on the Company’s short-term or long-term liquidity. The Company is not in default or breach of any note, loan, lease or other indebtedness or financing arrangement requiring the Company to make payments.

b) The liquidity of the Company was generated from the Company’s financial resources as well

as from the proceeds of the private placements and the 2009 Stock Rights Offering.

c) There are no events that will trigger direct or contingent financial obligation that is material to the Company, including any default or acceleration of an obligation.

d) There are no material commitments for capital expenditures except for those provided for in

the use of proceeds from the 2009 Stock Rights Offering.

e) There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material favorable or unfavorable impact on the Company’s financial statements.

f) There are no significant elements of income or loss that did not arise from the Company’s

continuing operations. Financial Statements Audit report enclosed

INFORMATION ON INDEPENDENT ACCOUNTANT

Audit Fees Sycip Gorres Velayo & Co. (“SGV”) has been the group’s independent auditor since 2010 up to present. The 2009 audit was performed by Punongbayan & Araullo (“P & A”). SGV fees for the group covering year 2012 amounted to P 1,460,000, P1,781,450 for year 2011, P 1,889,734 in 2010 and for 2009, P&A’s fees amounted to P1,280,000. Except for annual audit of financial statements, SGV & Company was not commissioned to perform any special audit for the group. Audit Committee’s Approval Policies and Procedures The Audit Committee and SGV meet to discuss its audit plan, new accounting standards for adoption by the group, timetable, professional staff assigned to perform the engagement and service fees to be charged by the auditor, among others. Before the audit report is finalized, the SGV will present with the Audit Committee and secure its approval for release of the audited financial statements of the parent, its subsidiaries and consolidated reports. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures There were no disagreements with former accountants on any matter of accounting principles or practices, financial statements disclosures or auditing scope of procedure which, if not received to the satisfaction of the former accountants, would have caused it to make reference to the subject matter of the disagreements in connection with its report.

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Pursuant to the General Requirements of SRC Rule 68, Section 3.b.iv (Qualifications of Independent Auditors), the external auditors shall be rotated every after five (5) years of engagement. In case of a firm, the signing partner shall be rotated every after said period. The Company is in compliance with SRC Rule 68, Section 3.b.iv.

PART IV - CONTROL AND COMPENSATION INFORMATION

(A) (1) Directors and Executive Officers of the Registrant

The following persons are nominated to serve as directors and officers until the next annual meeting of stockholders or until their successors, if any, are elected.

Office Name Citizenship Age Director/Chairman/President Antonio Victoriano Gregorio III Filipino 40 Director Chi Ho Co . Filipino 39 Independent Director Jong Dae Lee . Filipino 53 Independent Director Manuel G. Ong Filipino 57 Director David Chua Filipino 44 Director Job Adrian M. Ambrosio Filipino 39 Director Jose Francisco Miranda Filipino 35 Director/Corporate Secretary Arsenio C. Cabrera, Jr. Filipino 52 Director/Treasurer/Chief Finance Officer and Compliance Officer Delfin S. Castro, Jr. Filipino 47

ANTONIO VICTORIANO GREGORIO III, President, Filipino

Atty. Antonio Gregorio III, 40 years old, was elected as President of the Company on 21 December 2011, and became Chairman of the Board, Chairman of the Compensation Committee and member of the Audit and Nomination Committees on 29 October 2012. He graduated Second Honors, with a Juris Doctor from the Ateneo de Manila University in 1998 and passed the bar examinations in 1998. He also has a Bachelor of Science Major in Management Engineering and a Bachelor of Arts, Major in Economics-Honors, both from the Ateneo de Manila University, Magna Cum Laude. He was a valedictorian of his high school class in the Ateneo. Atty. Gregorio is a Partner at Gregorio Law Offices and sits as director and officer of various public and private companies, including, Asiabest Group International, Inc., Lodestar Investment Holdings Corporation, Dizon Copper-Silver Mines, Abacus Consolidated Resources and Holdings, Inc., Minerales Industrias Corporation, GNA Resources International Limited, among other companies.

CHI HO CO, Director, Filipino

Mr. Co, 39 years old, is a graduate of Bachelor of Arts in Economics at the Ateneo de Manila University and was elected Director of the Company. He is currently the Vice-President of Cavite Apparel Corporation and Subic Bay Apparel Corporation; President of Hightower, Inc.; Chairman of Glomedic Philippines, Inc. and Banquets in Style, Inc.; Treasurer of Julia Realty & Development Corp.; Treasurer and Corporate Secretary of Edgeport Properties, Inc.; Chairman of Fasttrack Realty & Development, Inc.; Director and President of Lodestar Investments Holdings Corporation and President of CAC Motors Corp. JONG- DAE LEE , Independent Director, Korean Mr. Lee, 53 years old, was elected Independent Director of the Company on 14 December 2012. He obtained his Juris Doctor degree from Georgetown Law, received his BA in Economics from Haverford College. He is currently the Managing Director of Quadrant Management, a New York based buy-out fund; Independent Director of Mando China Inc., a

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subsidiary of Mando Corp., which is one of the largest auto parts manufacturer in the world; a member of the Young Presidents’ Organization; and a member of the executive committee and chair of education programs of the Hong Kong chapter and regional chair of networking for North Asia Region. He has served on the boards of both public and leading private companies including Asian Logic Ltd., a gaming software company which was listed in 2008 on the London Stock Exchange, DKoram Limited, a subsidiary of Ssangyong Paper, Morrison Express, a Taiwanese logistics company; and Antiro Funds, a family of hedge funds, among other companies. He was likewise an Executive Committee member of Lee International IP and Law Group, a leading Korean law firm with particular focus on intellectual property, and was of counsel to Orrick Herrington Sutcliffe’s Hong Kong office, a leading global law firm. MANUEL G. ONG, Independent Director, Filipino Mr. Ong, 57 years old, was elected Director of the Company on 18 December 2009. He is currently the Chairman of the Audit and Nomination Committees. He is currently the Vice President and Technical Director of Industrial Welding Corporation. DAVID O. CHUA, Director, Filipino Mr. Chua, 44 years old, was elected Director of the Company on 20 February 2008. He graduated from St. Mary's College of California with a Bachelors of Science in Financial Services Management Honors Program and received his Master of Business Administration from J.L. Kellogg School of Management (Northwestern University) and the Hong Kong University of Science & Technology (HKUST) Graduate School of Management. Mr. Chua is President of both Cathay Pacific Steel Corporation (CAPASCO) and Asia Pacific Capital Equities and Securities Corporation. He currently serves as a director on the board of the Philippine Stock Exchange, Philippine Savings Bank and Crown Equities Inc. He is also a trustee of the University of the East and the University of the East Ramon Magsaysay Medical Center. Mr. Chua is a director and Chairman of the Trade Committee of the Federation of Filipino-Chinese Chambers of Commerce and Industry as well as Chairman of the 2008 National Employer’s Conference of the Employers Confederation of the Philippines (ECOP), He also serves as a director of the Galleria Corporate Center Condominium Corporation and as director and Treasurer of the Heavenly Garden Memorial Park Development Corporation. Mr. Chua currently serves as President of the Kellogg/Northwestern University Alumni Association of the Philippines as well as the President of the Philippine Steelmakers Association and director of the Hardware Foundation of the Philippines. He is also a member of the Makati Business Club, Financial Executives Institute of the Philippines (FINEX), ECOP, Rotary Club of Makati West and the Young Presidents Organization. He was previously a director for First Metro Investment Corporation, The Philippine Banking Corporation, PBC Capital and Investments Corporation and Philippine Internet Service Organization. JOB ADRIAN M. AMBROSIO, Director, Filipino Mr. Ambrosio, 39 years old, was elected Director of the Company on 14 December 2012. He is a member of both the Philippine Bar and State Bar of California. He is a Cochran Fellow on Biofuels sponsored by the United States Department of Agriculture; a graduate of the College of Law of England and Wales/International Bar Association with a Practice Diploma on International Capital Markets and Loans, and the University of California, Berkeley Extension, Berkeley, CA, on International Diploma in Computer Information Systems (with distinction). He obtained his Juris Doctor Degree, and likewise holds an AB Economics degree from the Ateneo de Manila University.

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JOSE FRANCISCO MIRANDA, Director, Filipino Mr Miranda, 35 years old, was elected Director of the Company on 09 December 2011 and became a member of the Audit, Nomination and Compensation Committees on 29 October 2012. He is currently the Company’s Chief Operating Officer. He graduated from the University of the Philippines, Diliman, Quezon City, with a degree in B. S. Geodetic Engineering. He sits as a director and officer of various public and private corporations including Geograce Resources Philippines, Inc., Dizon-Copper Silver Mines, Inc., Lodestar Investment Holdings Corporation, Asiabest Group International, Inc., among other companies. ARSENIO C. CABRERA, JR., Director/ Corporate Secretary, Filipino Atty. Cabrera, 52 years old, has been the Corporate Secretary and Corporate Information Officer of the Company since 30 November 2006. He is a member of the Philippine Bar, holds a Bachelor of Laws (Second Honors) and a Bachelor of Science in Legal Management from the Ateneo de Manila University. Mr. Cabrera is the Managing Partner of Herrera Teehankee & Cabrera Law Offices. He is currently the General Counsel of STI Education Services Group, Inc., Director and Corporate Secretary of GEOGRACE Resources Philippines, Inc. and Corporate Secretary of STI Education Systems Holdings, Inc., Lorenzo Shipping, Calatagan Bay Realty, Inc., Canlubang Golf and Country Club, Inc., DLS-STI College, Inc., Foundation for Filipinos, Inc., Northcroft Lim (Philippines) Inc., People’s Shrine Foundation, Inc., Philplan First, Inc., Philhealthcare, Inc., Banclife Insurance Co., inc., Philippines First Insurance Co., Renaissance Condominium Corporation, Sonak Holdings, Inc., Trend Developers, Inc., Villa Development Corporation and WVC Development Corporation. DELFIN S. CASTRO, JR, Director/Treasurer/Chief Finance Officer/Compliance Officer, Filipino Mr.Castro, 47 years old was elected Director of the Company and was appointed as CFO /Treasurer/Compliance Officer since January 2012. He is currently the Chief Financial Officer of Geograce Resources Philippines, Inc. and Asiabest Group International, Inc. and the Chairman and President of Dizon Copper-Silver Mines, Inc. He holds a Masters in Business Administration and a Bachelor of Science in Business Administration from the University of the Philippines. From June 2000 to April 2001, he was the Global Portfolio Manager for Private Equities at United Resources Asset Management, Inc. and formerly the Engagement Director of Palo Alto Consultants Asia, Inc, and a Senior Assistant Vice-President at Asiatrust Bank.

(2) Identify Significant Employee

No person, who is not a director or an executive officer, is expected to make a significant contribution to the business of the Company. Neither is the business highly dependent on the services of certain key personnel.

(c) Family Relationships

No family relationships up to the fourth civil degree either by consanguinity or affinity exist among the directors, executive officers or persons nominated or chosen by the Company to become directors or executive officers.

(d) Involvement in Certain Legal Proceedings

To the knowledge and/or information of the Company, the above named directors and executive officers of the Company are not, presently or during the last five (5) years up to the

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present date, involved or have been involved in: (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer; (b) any conviction by final judgment, in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, excluding traffic violations and other minor offenses; (c) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and (d) being found by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign Exchange or other organized trading market or self regulatory organization, to have violated a securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.

Disagreement with a Director No director has declined to stand for re-election to the Board of Directors since the date of the last annual stockholders’ meeting because of a disagreement with the Company on any matter relating to the Company's operations, policies or practices.

(B) Executive Compensation

SUMMARY COMPENSATION TABLE

Amount of Name and Principal Position Year Compensation

2013 (est) 3,134,681Antonio V. F Gregorio III, President (2) sum of the aggregateJose Francisco Miranda, COO (2)Delfin S. Castro, Jr., CFO / Treasurer (2)Michael Defensor - Head of Isabela Operations (1)Alex Gonzales- Permtting Manager No other officers receiving compensation as a group

Michael Defensor - Chairman (1) 2012 3,134,681Antonio V. F Gregorio III, President (2) sum of the aggregate

Delfin S. Castro, Jr., CFO / Treasurer (2)Alex Gonzales- Permtting Manager

No other officers receiving compensation as a group

Michael Defensor - Chairman (1) 2011 2,891,000Delfin S. Castro, Jr., CFO / Treasurer (2) sum of the aggregate

Alex Gonzales- Permtting Manager annual cash compensation of the named executives

No other officers receiving compensation as a group---------------------------------------------------------------------

(2) No compensation for services rendered

annual cash compensation of the named executives

(1) By end of the year 2012, Mr. Defensor resigned as Chairman of the Board and was appointed as Head of Isabela operations. Previously, his compensation in the form of management fee is subject to expanded withholding tax.

annual cash compensation of the named executives

• Compensation of Directors and Chairman

Other than per diems in the amount of P5,000.00 for each Board meeting attended, the Directors of the Company are not compensated, directly or indirectly, for any services provided as such including committee participation or any special assignments. There are no other arrangements pursuant to which any director of the Company was compensated, or is to be compensated, directly or indirectly, for any services provided as a director. The By-Laws of the Company provide that the officers of the Company shall be paid such salaries as the Board of Directors may determine.

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• Employment Contracts and Termination of Employment and Change-in-control

Arrangement

There are no special arrangements as to the employment contract of any executive officer such that said officer will be compensated upon his resignation, retirement or other termination from the Company or its subsidiaries, or as may result from a change-in-control except as provided by law.

• Warrants and Options Outstanding

There are no outstanding warrants and options outstanding held by the Company’s President, the named executive officers and all officers and directors as a group.

(C) Security Ownership of Certain Beneficial Owners and Management

( 1 ) Security Ownership of Certain Record and Beneficial Owners March 31, 2013 (*)

Name and address Name of of record owner Beneficial Owner No. of

Type of Class and relationship and relationship Citizenship Shares Held Percentwith owner with Record owner

Common PCD Nominee Corp Filipino 544,781,460 59.67%Common PCD Nominee Corp Non-Filipino 42,503,605 4.66%

Name of PCD participant owning more than 5%Angping & Associates Filipino 77,462,585 8.48%20/F The Peak, 107 LP Liveste St. Non - Filipino 95,000 0.01%Salcedo Village, Makati City

Citibank, N. A. Filipino 127,363,807 13.95%11F Citibank Tower Villar corner Valero Sts., Non - Filipino 107,000 0.01%MakatiCity

Premium Securities Filipino 77,611,000 8.50%Unit 1415, Tower 1 & Exchange Plaza Ayala Ave Non - Filipino - 0.00%corner Paseo De Roxas, Makati City

The Enterprise, Makati City

32

( 1 ) Security Ownership of Certain Record and Beneficial Owners December 31, 2012

Name and address Name of of record owner Beneficial Owner No. of

Type of Class and relationship and relationship Citizenship Shares Held Percentwith owner with Record owner

Common PCD Nominee Corp Filipino 545,099,680 59.70%Common PCD Nominee Corp Non-Filipino 42,160,385 4.62%

Name of PCD participant owning more than 5%Angping & Associates Filipino 101,780,185 11.15%20/F The Peak, 107 LP Liveste St. Non - Filipino 45,000 0.00%Salcedo Village, Makati City

BPI Securities Corporation Filipino 65,104,994 7.13%8F BPI Head Office, Ayala Avenue cor. Non - Filipino 23,600 0.00%Paseo de Roxas, Makati City

Citibank, N. A. Filipino 127,363,807 13.95%11F Citibank Tower Villar corner Valero Sts., Non - Filipino 7,000 0.00%MakatiCity

Premium Securities Filipino 62,110,500 6.80%Unit 1415, Tower 1 & Exchange Plaza Ayala Ave Non - Filipino - 0.00%corner Paseo De Roxas, Makati City

The Enterprise, Makati City

Note 1 PCD Nominee Corporation is a wholly owned subsidiary of Philippine Central Depository, Inc. (PCD) and is the registered owner of the shares in the book of the Company’s transfer agent. The participants of the PCD are the beneficial owner of such shares. PCD holds the shares on behalf of their clients.

( 2 ) Security Ownership of Management March 31, 2013

Amount & nature PercentType of Class Name of Beneficial Owner of beneficial of

ownership Citizenship classCommon shares Antonio V. F. Gregorio III D 10,000 Filipino 0.0011%

Chi Ho Co D/I 2,914,900 Filipino 0.3193%David Chua D/I 600 Filipino 0.0001%Manuel Ong D 1,000 Filipino 0.0001%Jose Francisco Miranda D 1,000 Filipino 0.0001%Job Adrian M. Abrosio D 1,000 Filipino 0.0001%Jong-Dae Lee D 1,000 Korean 0.0001%Delfin S. Castro, Jr. D 1,000 Filipino 0.0001%Arsenio Cabrera , Jr. I 200,000 Filipino 0.0219%All Directors and executive officers as a group 3,130,500 0.3429%

33

( 2 ) Security Ownership of Management Dec. 31, 2012

Amount & nature PercentType of Class Name of Beneficial Owner of beneficial of

ownership Citizenship classCommon shares Antonio V. F. Gregorio III D 10,000 Filipino 0.0011%

Chi Ho Co D/I 2,914,900 Filipino 0.3193%David Chua D/I 600 Filipino 0.0001%Manuel Ong D 1,000 Filipino 0.0001%Jose Francisco Miranda D 1,000 Filipino 0.0001%Job Adrian M. Abrosio D 1,000 Filipino 0.0001%Jong-Dae Lee D 1,000 Korean 0.0001%Delfin S. Castro, Jr. D 1,000 Filipino 0.0001%Arsenio Cabrera , Jr. I 200,000 Filipino 0.0219%All Directors and executive officers as a group 3,130,500 0.3429%

(D) Certain Relationships and Related Transactions No family relationships up to the fourth civil degree either by consanguinity or affinity exist among the directors, executive officers or persons nominated or chosen by the Company to become directors or executive officers.

NiHAO and its subsidiaries in the regular conduct of its operations have intercompany transactions with each other, principally consisting of advances. These advances are unsecured, noninterest bearing, payable on demand and settlements are made in cash. There have been no guarantees provided or received for any related party receivables or payables.

PART V – CORPORATE GOVERNANCE

(i) The evaluation system established by the Company to measure or determine the level of compliance of the Board of Directors and top-level management with its Manual of Corporate Governance.

The Corporation complied with the appropriate performance self-rating assessment and performance evaluation system to determine and measure compliance with corporate governance (ii) Measures being undertaken by the Company to fully comply with the adopted leading practices on good corporate governance. Some of the Board of Directors are yet to attend a 2-day seminar on Corporate Governance and are planning to attend at the earliest schedule offered by the SEC, failing which the particular director involved may be subject to disciplinary action, including suspension or even permanent disqualification, after due process. (iii) Any deviation from the Company’s Manual of Corporate Governance. It shall include a disclosure of the name and position of the person/s involved, and the sanctions imposed on said individual. The Company does not know of any deviation from its Manual of Corporate Governance. (iv) Any plan to improve corporate Governance of the Company. The Board of Directors will study the need to improve the corporate governance of the Company. In compliance with the Securities and Exchange Commission Memorandum Circular No. 2 dated April 5, 2002, a certification was issued and submitted by the Company on 03 January 2013.

34

PART VII - EXHIBITS AND SCHEDULES (A) Exhibits and Reports on SEC Form 17-C

(a) Exhibits - See accompanying index to Exhibits • The other exhibits, as indicated in the Index to Exhibits are either not applicable to

the Company or require no answer.

(b) Reports on SEC Form 17-C 1. Filed on January 13, 2012 – execution of Memorandum of Understanding by and among

NiHAO, Capital Gold Pty Ltd and Capital Resources Corporation Plc, for the acquisition by Capital Gold and Capital Resources of shares of stock in (a) Oregalore, Inc. or (b) Masbate 13 Philippines, Inc. or (c) a new company incorporated under the laws of the Philippines for the purpose of obtaining equity interest in the registered holder of the exploration license of the Mandaon tenement situated in the Municipality of Milagros and Mandaon, Masbate, Philippines.

2. Filed on February 6, 2012 – amendment to 17C filed on January 13, 2012. (please see

item no. 1 above). 3. Filed on February 13, 2012 – execution of Investment agreement by and among

Macquarie Bank , NiHAO and one of its major shareholders, embodying a Multi-tranche Average Price Issuance Program resulting in Macquarie Bank’s subscription to newly-issued common shares of stock in NiHAO on a private placement basis.

4. Filed on February 22, 2012 – execution of an Amendment to Investment Agreement to amend certain provisions of the Investment Agreement dated 11 February 2012 executed by the Macquarie Bank, the Company and one of the Company’s major stockholders in order to clarify certain mechanisms and reflect the true and real intentions of the parties.

5. Filed on March 05, 2012 – execution of Subscription Agreement covering Macquarie’s subscription of Thirty Three Million (33,000,000) common shares with a par value of One Peso (P1.00) per share.

6. Filed on March 06, 2012 – execution, delivery and performance of a General Contractor Agreement between NiHAO and Geogen Corporation. of Subscription Agreement

7. Filed on March 15, 2012 – execution of a Marketing Agency Agreement with Glencore International AG on 12 March 2012 at Hong Kong.

8. Filed on April 13, 2012 – approval of the following matters during the special

stockholders’ meeting held on April 12, 2012: a) Stockholders approval of the private placement of Macquarie Bank Limited of

up to One Hundred Fifty Million (150,000,000) shares, which shal be undertaken in tranches, at a subscription price equivalent to ninety percent (90%) of the Volume Weighted Average Price of the shares of NiHAO rounded down to the nearest centavo during a tranche period, and the listing with the Philippine Stock Exchange of the shares issued to Macquarie bank pursuant thereto;

b) The majority of the minority shareholders waived the conduct of a rights or public offering with respect to the Private Placement Shares of Macquarie bank.

c) The stockholders likewise approved the Use of Proceeds of the private placement of Macquarie Bank, which was presented by the Corporation’s Management during the Special Stockholders’ Meeting.

35

9. Filed on May 9, 2012 - Postponement of annual stockholders meeting to the fourth quarter of the year, on such date and time to be later determined by the Company’s Board of Directors.

10. Filed on June 14, 2012 – execution of an Operating Agreement between NiHAO and

GEOGEN, under which NiHAO shall have the exclusive right to explore, operate, mine, develop, utilize and process any minerals found within the Contract Area of GEOGEN’s mineral property consisting of an aggregate area of 2,391.4081 hectares more or less, located at Dinapigue, Isabela and covered by Mineral Production Sharing Agreement No. 258-2007-II dated 30 July 2007. As previously disclosed to the Philippine Stock Exchange, GEOGEN and NiHAO executed a General Contractor Agreement dated 05 March 2012 for the appointment of NiHAO as GEOGEN’s general contractor over a specified area of the Mineral Property. GEOGEN and NiHAO have expressed a mutual interest to convert the General Contractor Agreement executed between them for the purposes of improving and continuing with the operation, conduct of commercial mining activity, development, and utilization of minerals within the Contract Area of the Mineral property, For such reason the General Contractor Agreement executed between the Parties is deemed superseded by the Operating Agreement and is rendered of no force and effect as of the date of effectivity of the Operating Agreement.

11. Filed on August 30, 2012 – Board acceptance of resignations of Mr. Michael T.

Defensor as Chairman and Director and Mr. Jerry C. Angping as Director. 12. Filed on September 18, 2012 – execution, delivery and performance of a Memorandum

of Agreement y and among NiHAO, Capital Gold Pty Ltd and Welcome Stranger Mining Limited for the acquisition by Capital Gold and Welcome Stranger from NiHAO of forty percent (40%) of the issued share capital of Masbate 13 Philippines, Inc., a subsidiary of NiHAO’s wholly-owned subsidiary, Oregalore Inc. The MOA supersedes the Memorandum of Understanding executed on 10 January 2012 by and among the Capital Gold and NiHAO together with Capital Resources Corporation PLC which was likewise disclosed to the PSE.

13. Filed on October 5, 2012 – Adoption of the Audit Committee Charter and come up with a plan to comply with the Guidelines for the Assessment of the Performance of Audit Committees of Companies listed on the Exchange pursuant to SEC Memorandum Circular No. 4, Series of 2012.

14. Filed on October 24, 2012 – announcement of the annual stockholders meeting of

NiHAO. Scheduled on 14 December 2012 at 4:00 in the afternoon at the 4th Floor, NiHAO Sun Plaza Building, Shaw Blvd. corner Princeton Street, Brgy. Wack-wack, GReenhills East, Mandaluyong City.

15. Filed on October 30, 2012 – appointment of Atty. Antonio Victoriano F. Gregorio III as

Chairman of the Board of Directors, member of the Audit and Nomination Committees and Chairman of the Compensation Committee, and of Jose Francisco Miranda as Member of the Audit, Nomination and Compensation Committees.

16. Filed on November 5, 2012 –Final list of candidates pre-screened and determined by the Nomination Committee to be eligible for election to the Board of Directors

1. Antonio Victoriano F. Gregorio III 2. Chi Ho Co 3. David O. Chua 4. Delfin S. Castro, Jr. 5. Jose Francisco Miranda 6. Job Adrian M. Ambrosio 7. Arsenio C. Cabrera Jr.

36

Independent Directors 8. Jong-Dae Lee 9. Manuel G. Ong.

17. Filed on November 14, 2012 – change of venue of the annual stockholders’ meeting on

December 14, 2012, from 4th Floor, Sun Plaza Center, Shaw Blvd. corner Princeton Street, Barangay Wack-Wack, Greenhills East, Mandaluyong City to 7th floor, Peaksun Bldg., 1505 Princeton Street, Brgy. Wack-Wack, Greenhills East, Mandaluyong City. City.

18. Filed on November 27, 2012 – Resignation of Mr. Gary Lincoln Taboso as a director.

His term as Director of NiHAO will expire on 13 December 2012, or the day before the 14 December 2012 NiHAO Annual Stockholders’ Meeting.

19. Filed on December 17, 2012 – Following matters were transpired during the Annual Stockholders’ Meeting of NiHAO. A. The stockholders elected the following Directors of NiHAO to serve as such for the ensuing year and until the election and qualification of their successors:

1. Antonio Victoriano F. Gregorio III 2. Chi Ho Co 3. David O. Chua 4. Delfin S. Castro, Jr. 5. Jose Francisco Miranda 6. Job Adrian M. Ambrosio 7. Arsenio C. Cabrera Jr. Independent Directors 8. Jong-Dae Lee 9. Manuel G. Ong.

B. The stockholders appointed SGV & Co., as independent auditor to audit NiHAO’s financial statements for the period ended 31 December 2012. In the organizational Meeting of the Board of Director immediately succeeding the shareholders’ meeting, the following were elected officers of NiHAO to serve as such for the ensuing year and until the election and qualification of their successors:

Chairman & President - Antonio Victoriano Guerrero III Vice-President - COO - Jose Francisco Miranda CFO/Treasurer/ Compliance Officer - Delfin S. Castro, Jr. Corporate Secretary/ Corporate Information Officer - Atty. Arsenio Cabrera, Jr. Assistant Corporate Secretary - Atty. Rosalynn R. Vergara Audit Committee: Chairman - Manuel G. Ong Members - Atty. Antonio V.F. Gregorio II Jose Francisco E. Miranda Nomination Committee: Chairman - Manuel G. Ong Members - Atty. Antonio V. F. Gregorio III Jose Francisco Miranda Compensation Committee Chairman - Atty. Antonio V.F. Gregorio III Members - Jose Francisco Miranda Delfin S. Castro, Jr.

NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Financial Statements December 31, 2012 and 2011 and Years Ended December 31, 2012, 2011 and 2010 and Independent Auditors’ Report SyCip Gorres Velayo & Co.

*SGVMG700045*

INDEPENDENT AUDITORS’ REPORT The Stockholders and the Board of Directors Nihao Mineral Resources International, Inc. and Subsidiaries We have audited the accompanying consolidated financial statements of Nihao Mineral Resources International, Inc. and Subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2012 and 2011, and the consolidated statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years ended December 31, 2012, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements 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 management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

SyCip Gorres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines

Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001, December 28, 2012, valid until December 31, 2015 SEC Accreditation No. 0012-FR-3 (Group A), November 15, 2012, valid until November 16, 2015

A member firm of Ernst & Young Global Limited

*SGVMG700045*

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Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Nihao Mineral Resources International, Inc. and Subsidiaries as at December 31, 2012 and 2011, and their financial performance and their cash flows for each of the three years ended December 31, 2012 in accordance with Philippine Financial Reporting Standards. SYCIP GORRES VELAYO & CO. Renato J. Galve Partner CPA Certificate No. 37759 SEC Accreditation No. 0946-AR-1 (Group A), February 25, 2013, valid until February 24, 2016 Tax Identification No. 102-087-055 BIR Accreditation No. 08-001998-20-2012, April 11, 2012, valid until April 10, 2015 PTR No. 3669685, January 2, 2013, Makati City March 15, 2013

*SGVMG700045*

NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31 2012 2011

ASSETS

Current Assets Cash and cash equivalents (Note 6) P=619,947,767 P=304,155,480 Receivables (Note 7) 184,935,595 459,219 Due from related parties (Note 23) 55,834,755 55,580,160 Other current assets (Note 8) 44,019,029 5,996,022 904,737,146 366,190,881 Asset held for sale (Note 9) 3,042,667 3,042,667 Total Current Assets 907,779,813 369,233,548 Noncurrent Assets Available-for-sale financial assets (Note 10) 78,610,915 271,320,000 Investments in: Joint venture (Note 12) 13,946 13,946 Associate (Note 11) – 74,942,989 Mining rights (Note 14) 201,633,419 201,633,419 Property and equipment (Note 15) 63,143,385 2,497,415 Other noncurrent assets (Note 16) 10,967,016 280,114 Total Noncurrent Assets 354,368,681 550,687,883

TOTAL ASSETS P=1,262,148,494 P=919,921,431

LIABILITIES AND EQUITY

Current Liabilities Accounts payable and other current liabilities (Note 17) P=13,347,528 P=5,096,253 Due to related parties (Note 23) 2,851,784 2,851,784 Total Current Liabilities 16,199,312 7,948,037

Equity Equity attributable to equity holders of the Parent Company Capital stock (Note 18) 913,000,000 880,000,000 Additional paid-in capital (Notes 1 and 18) 382,377,974 253,271,465 Unrealized loss on available-for-sale financial assets (Note 10) (29,599,573) (27,244,854) Deficit (Note 1) (48,420,505) (223,257,742) 1,217,357,896 882,768,869 Equity attributable to non-controlling interests 28,591,286 29,204,525 Total Equity 1,245,949,182 911,973,394

TOTAL EQUITY AND LIABILITIES P=1,262,148,494 P=919,921,431 See accompanying Notes to Consolidated Financial Statements.

*SGVMG700045*

NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 2012 2011 2010

SERVICE INCOME (Note 23) P=64,080,812 P=– P=14,000,000

COST OF SERVICES (Note 19) 52,137,775 – –

GROSS PROFIT 11,943,037 – 14,000,000

GENERAL AND ADMINISTRATIVE EXPENSES (Note 20) 46,506,453 30,605,648 12,548,220

SHARE IN NET INCOME (LOSS) OF AN ASSOCIATE (Note 11) (10,722,398)

9,307,827

2,635,162

OTHER INCOME (EXPENSE) Gain (loss) on sale of: Available-for-sale financial assets (Note 10) 58,617,506 – – An associate (Note 11) (610,296) – – Subsidiaries (Note 13) – 9,691,030 – Property and equipment (Note 15) – – 141,240 Interest income (Note 6) 14,584,967 6,458,700 6,976,394 Income from the acquisition of a subsidiary (Note 13) – 17,180,711 – 72,592,177 33,330,441 7,117,634

INCOME BEFORE INCOME TAX 27,306,363 12,032,620 11,204,576

PROVISION CURRENT FOR INCOME TAX (Note 21) 3,155,856 1,291,741 1,678,104

NET INCOME 24,150,507 10,740,879 9,526,472

OTHER COMPREHENSIVE LOSS Loss on change in fair value of available-for-sale financial assets (Note 10) (2,354,719) (27,244,854) –

TOTAL COMPREHENSIVE INCOME (LOSS) P=21,795,788 (P=16,503,975) P=9,526,472

NET INCOME (LOSS) ATTRIBUTABLE TO Equity holders of the Parent Company P=24,763,746 P=11,456,075 P=9,526,472 Non-controlling interests (613,239) (715,196) – P=24,150,507 P=10,740,879 P=9,526,472

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO Equity holders of the Parent Company P=22,409,027 (P=15,788,779) P=9,526,472 Non-controlling interests (613,239) (715,196) – P=21,795,788 (P=16,503,975) P=9,526,472

BASIC EARNINGS (LOSS) PER SHARE (Note 22) Based on net income P=0.03 P=0.02 P=0.01

Based on total comprehensive income (loss) P=0.02 (P=0.02) P=0.01 See accompanying Notes to Consolidated Financial Statements.

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NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 Equity Holders of the Parent Company

Non-controlling Interests Total Capital Stock

Additional Paid-in Capital

Cumulative unrealized losses on available-for-

sale financial assets Deficit Total

Balances at January 1, 2012 P=880,000,000 P=253,271,465 (P=27,244,854) (P=223,257,742) P=882,768,869 P=29,204,525 P=911,973,394 Total comprehensive income (loss) – – (2,354,719) 24,763,746 22,409,027 (613,239) 21,795,788 Issuance of shares of stocks (Note 18) 33,000,000 279,180,000 – – 312,180,000 – 312,180,000 Equity restructuring (Note 1) – (150,073,491) – 150,073,491 – – – Balances at December 31, 2012 P=913,000,000 P=382,377,974 (P=29,599,573) (P=48,420,505) P=1,217,357,896 P=28,591,286 P=1,245,949,182

Balances at January 1, 2011 P=680,000,000 P=28,271,465 P=– (P=234,713,817) P=473,557,648 P=– P=473,557,648 Total comprehensive income (loss) – – (27,244,854) 11,456,075 (15,788,779) (715,196) (16,503,975) Issuance of shares of stocks (Note 18) 200,000,000 225,000,000 – – 425,000,000 – 425,000,000 Non-controlling interest arising on a

business combination (Note 13) – –

– – –

29,919,721 29,919,721 Balances at December 31, 2011 P=880,000,000 P=253,271,465 (P=27,244,854) (P=223,257,742) P=882,768,869 P=29,204,525 P=911,973,394

Balances at January 1, 2010 P=600,000,000 P=271,465

P=– (P=244,240,289) P=356,031,176

P=– P=356,031,176

Total comprehensive income – – – 9,526,472 9,526,472 – 9,526,472 Issuance of shares of stocks (Note 18) 80,000,000 28,000,000 – – 108,000,000 – 108,000,000 Balances at December 31, 2010 P=680,000,000 P=28,271,465 P=– (P=234,713,817) P=473,557,648 P=– P=473,557,648 See accompanying Notes to Consolidated Financial Statements.

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NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31 2012 2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax P=27,306,363 P=12,032,620 P=11,204,576 Adjustments for:

Loss (gain) on sale of: Available-for-sale financial assets (Note 10) (58,617,506) – – An associate (Note 11) 610,296 – – Subsidiaries (Note 13) – (9,691,030) – Property and equipment (Note 15) – – (141,240) Interest income (Note 6) (14,584,967) (6,458,700) (6,976,394) Share in net (income) loss of an associate (Note 11) 10,722,398 (9,307,827) (2,635,162) Depreciation (Note 15) 2,819,266 405,534 932,481 Amortization (Note 16) 116,667 – – Income from acquisition of a subsidiary (Note 13) – (17,180,711) – Provision for impairment loss on receivables (Note 7) – 1,762,343 2,420,076 Operating income (loss) before working

capital changes (31,627,483) (28,437,771) 4,804,337 Decrease (increase) in: Receivables (184,534,397) 5,810,457 (14,483,180) Due from related parties (254,595) 81,493,167 (137,028,327) Other current assets (37,252,073) (2,596,770) 1,160,280 Increase (decrease) in accounts payable and other

current liabilities 8,251,275 8,861,015 (7,081,082) Net cash generated from (used for) operations (245,417,273) 65,130,098 (152,627,972) Interest received 14,642,988 5,771,515 6,998,896 Income tax paid (3,155,856) (1,574,566) (1,395,279) Net cash provided by (used in) operating activities (233,930,141) 69,327,047 (147,024,355)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of: Property and equipment (Note 15) (64,236,170) (2,013,215) (28,815) Available-for-sale financial assets (Note 10) (56,797,499) (298,564,854) – Leasehold rights (Note 16) (5,000,000) – – Subsidiary (Note 13) – (104,179,375) – Joint venture (Note 12) – (13,946) – An associate (Note 11) – – (63,000,000) Proceeds from disposal of: Available-for-sale financial assets (Note 10) 337,879,666 – – An associate (Note 11) 31,500,000 – – Subsidiaries (Note 13) – 9,994,250 – Property and equipment – – 1,254,390 Decrease (increase) in other noncurrent assets (5,803,569) 1,190,285 (1,263,847) Net cash provided by (used in) investing activities 237,542,428 (393,586,855) (63,038,272)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of capital stock (Note 18) 312,180,000 425,000,000 108,000,000 Increase (decrease) in due to related parties – 2,851,784 (41,914,979) Net cash provided by financing activities 312,180,000 427,851,784 66,085,021

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 315,792,287 103,591,976 (143,977,606)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 304,155,480 200,563,504 344,541,110

CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6) P=619,947,767 P=304,155,480 P=200,563,504

See accompanying Notes to Consolidated Financial Statements.

*SGVMG700045*

NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Corporate Information, Status of Operations and Authorization for the Issuance of the

Consolidated Financial Statements

Corporate Information NiHAO Mineral Resources International, Inc., (NiHAO or the Parent Company) and its subsidiaries (collectively referred to as the Group) were incorporated in the Philippines. The Group’s registered office address is NiHAO Sun Plaza, Shaw Boulevard corner Princeton Street, Barangay Wack-Wack, Greenhills East, Mandaluyong City. The Parent Company was incorporated and registered with the Philippine Securities and Exchange Commission (SEC) on July 9, 1975, as a mining company under the name Summit Minerals, Inc. On October 3, 1990, the Parent Company’s shares were offered to the public and listed on the Philippine Stock Exchange (PSE). On December 10, 1993, the Parent Company changed its primary purpose to that of a holding company. Subsequently, on February 24, 1994, the Parent Company changed its corporate name to Magnum Holdings, Inc. However, on June 28, 2007, the Parent Company decided to change its corporate name again to NiHAO Mineral Resources International, Inc. and its primary purpose to that of a mining company. As a mining company, its primary purpose is to carry on the business of mining, milling, concentrating, converting, smelting, preparing for market, manufacturing, buying, selling, exchanging, and otherwise producing and dealing in nickel, chromite, and other kinds of ores, metal, minerals and by-products. The following are the subsidiaries and associate of the Parent Company:

Percentage of Ownership Company Ownership 2012 2011 Subsidiaries: Mina Tierra Gracia, Inc. (MTGI) Direct 100 100 Bountiful Geomines, Inc. (BGI) Direct 100 100 Oregalore, Inc. (OI) Direct 100 100 Masbate13 Philippines, Inc. (Masbate13)* Indirect 80 80 Associate - Oriental Vision Mining Philippines Corporation (ORVI)** – 30 * The ownership in this subsidiary is held through OI ** The 15% ownership in this associate was sold in 2012, resulting in a loss of significant influence

The subsidiaries and associate were all incorporated in the Philippines and are involved in mining activities.

Status of Operations In the second quarter of 2012, the Parent Company commenced large scale commercial mining operations on the Dinapigue Nickel Project (the “Project”) of a related company, Geogen Corporation (“Geogen”), under an Operating Agreement with Geogen. The operations generated service income for the Group of P=64.1 million for that year. The Project has an approved Mineral

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Purchase and Sharing Agreement (MPSA) and is located in Dinapigue, Isabela covering an area of 2,314.2018 hectares. Since the Parent Company became the operator of the Project, it has rehabilitated roads and other mine infrastructure and complied with all the necessary government requirements relating to nickel mining operations. In addition to the Project, the Group is also conducting exploration activities in other areas. As of December 31, 2012, the Group has three (3) mining claims located in the provinces of Zambales, Misamis Oriental, and Masbate. The following are the Group’s mining claims: a. Botolan Mining Claim

Botolan Mining Claim is registered under the name of MTGI. This mining claim covers approximately 5,081 hectares located in the town of Botolan, Zambales. On February 10, 2010, MTGI’s application for MPSA with Mines and Geosciences Bureau (MGB) on the Botolan Mining Claim was approved. With the MPSA, MTGI projects that it will produce and ship up to 450,000 dry metric tons (DMT) of nickel ore at a grade of 1.6% nickel grade. On October 22, 2012, the Mines and Geosciences Bureau (MGB) granted the MTGI the first renewal of the two (2) year Exploration Period under MPSA No. 315-2010-III. On the first year of the renewed term of the MPSA, the bulk of the geologic program will concentrate on research on relevant literature concerning the deposit. Data compiled will be used as basis for further sampling programs. In 2011, MTGI focused on the implementation of Community Development Program (CDP). This CDP was intended to establish a symbiotic relationship between MTGI and the community. As part of the CDP, MTGI conducts Information and Education Campaigns (IEC) wherein MTGI conducts project presentations to the community. The objectives of the project presentation are to inform the community about the exploration program in terms of its several component activities, accomplishments, on-going and future activities.

b. Manticao Mining Claim

BGI has an Exploration Permit (EP) application with the MGB covering the Manticao Mining Claim with an area of 1,944 hectares located in Manticao, Misamis Oriental. In connection with the aforementioned EP application, BGI submitted all mandatory requirements provided under the Philippine Mining Act and its Implementing Rules and Regulations, including, an exploration work program as well as proof of technical and financial competence. As of December 31, 2012, the EP application is undergoing initial evaluation by the MGB. The Group will conduct additional study and exploration to further support the application. The budget planned for the additional study and exploration amounted to P=30.0 million. The EP application may only become and EP once the regulation specifying the revenue sharing scheme with the government is finalized.

c. Masbate Mining Claim

Masbate13 has an EP covering Masbate Mining Claim with an area of approximately 8,357 hectares located in Milagros and Mandaon, Masbate. As of December 31, 2012, management is currently undergoing data gathering and reconnaissance mapping simultaneously and they are expecting that those will be completed after six months before they perform other exploration procedures.

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The Group incurred losses in the past resulting in deficit of P=48.4 million, P=223.3 million and P=234.7 million as of December 31, 2012, 2011 and 2010, respectively. The recoverability from the deficit position is dependent upon the ability of the Group to successfully execute and implement their projects, and, ultimately, to attain profitable operations. On June 13, 2012, the Board of Directors (BOD) approved the Parent Company’s equity restructuring to eliminate the Parent Company’s deficit amounting to P=150.0 million as of December 31, 2011 by application against additional paid-in capital. The equity restructuring was approved by SEC on October 24, 2012, subject to the condition that the remaining additional paid-in capital amounting to P=103.2 million shall not be used to wipe out losses that may be incurred in the future without prior approval of the SEC. Executive Order (EO) 79 On July 12, 2012, EO 79 was released to lay out the framework for the implementation of mining reforms in the Philippines. The policy highlights several issues that includes area of coverage of mining, small-scale mining, creation of a council, transparency and accountability and reconciling the roles of the national government and local government units. Management believes that EO 79 has no major impact on its current operations since the mine is covered by an existing MPSA and EP with the government. Section 1 of EO 79, provides that mining contracts approved before the effectivity of the EO shall continue to be valid, binding, and enforceable so long as they strictly comply with existing laws, rules and regulations and the terms and conditions of their grant. The EO could, however, delay the processing of the BGI’s application for EP given the provision of the EO on the moratorium on the granting of new mineral agreements by the government until a legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect.

Authorization for the Issuance of the Consolidated Financial Statements The consolidated financial statements as of and for the years ended December 31, 2012 and 2011 were authorized for issue in accordance with a resolution of the BOD on March 15, 2013.

2. Basis of Preparation and Consolidation and Statement of Compliance

Basis of Preparation The consolidated financial statements of the Group have been prepared on a historical cost basis, except for the available-for-sale (AFS) financial assets that have been measured at fair value. The consolidated financial statements are presented in Philippine peso (Peso). Amounts are rounded off to the nearest Peso unit, except when otherwise indicated.

Statement of Compliance The accompanying consolidated financial statements have been prepared in compliance with accounting principles generally accepted in the Philippines as set forth in Philippine Financial Reporting Standards (PFRS). PFRS includes statements named PFRS, Philippine Accounting Standards (PAS), and Standard Interpretation Committee/International Financial Reporting Interpretations Committee (IFRIC) which have been approved by the Financial Reporting Standards Council and adopted by SEC, including SEC pronouncements. Basis of Consolidation The consolidated financial statements comprise the financial statements of the Parent Company and its subsidiaries as of December 31 of each year.

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Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from intra-group transactions and dividends are eliminated in full.

3. Summary of Significant Changes in Accounting Policies and Disclosures Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the following amendments to previously issued PAS and PFRS which became effective on January 1, 2012: • Amendment to PAS 12, Income Taxes - Deferred Tax: Recovery of Underlying Assets • Amendment to PFRS 7, Financial Instruments: Disclosures - Transfers of Financial Assets

The adoption of the new and amended standards and interpretations above had no impact on the accounting policies, financial position or performance of the Group.

Standards Issued but not yet Effective The Group will adopt the new, revised and amended PFRS, PAS and Philippine Interpretations enumerated below, as applicable, when these become effective. The Group does not expect the adoption of these PFRS and Philippine Interpretations to have significant impact on its financial statements in the period of initial application unless stated otherwise. Effective in 2013 • Amendment to PAS 1, Financial Statement Presentation - Presentation of Items of Other

Comprehensive Income (OCI), effective for annual periods beginning or after July 1, 2012, changes the grouping of items presented in OCI. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time would be presented separately from items that will never be reclassified.

• Revised PAS 19, Employee Benefits, effective for annual periods beginning on or after January 1, 2013, includes changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording.

• Revised PAS 27, Separate Financial Statements, effective for annual periods beginning on or after January 1, 2013, establishes that as a consequence of the new PFRS 10, Consolidated Financial Statements and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements.

• PAS 28, Investments in Associates and Joint Ventures, effective for annual periods beginning on or after January 1, 2013, explains that as a consequence of the new PFRS 11, Joint Arrangements and PFRS 12, Disclosure of Interests in Other Entities, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.

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• PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities, effective for annual periods beginning on or after January 1, 2013, requires an entity to disclose information about rights of set-off and related arrangements (such as collateral agreements). The new disclosures are required for all recognized financial instruments that are set off in accordance with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or ‘similar agreement’, irrespective of whether they are set-off in accordance with PAS 32.

• PFRS 10, Consolidated Financial Statements, effective for annual periods beginning on or

after January 1, 2013, replaces the portion of PAS 27, Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in Standards Interpretation Committee (SIC) -12, Consolidation - Special Purpose Entities. It establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27.

• PFRS 11, Joint Arrangements, effective for annual periods beginning on or after January 1, 2013, replaces PAS 31, Interests in Joint Ventures and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by Venturers. It removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method.

• PFRS 12, Disclosure of Interests with Other Entities, effective for annual periods beginning on or after January 1, 2013, includes all of the disclosures that were previously in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities.

• PFRS 13, Fair Value Measurement, effective for annual periods beginning on or after January 1, 2013, establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under PFRS when fair value is required or permitted.

• Annual improvements to PFRSs (2009-2011 cycle), effective for annual periods beginning on or after January 1, 2013 and are applied retrospectively. Earlier application is permitted. These disclosures contain non-urgent but necessary amendments to PFRSs.

• Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, effective for annual periods beginning on or after January 1, 2013. This interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. The interpretation addresses the accounting for the benefit from the stripping activity.

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Effective in 2014 • Amendments to PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets

and Financial Liabilities, effective for annual periods beginning on or after January 1, 2014, these amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.

Effective in 2015 • PFRS 9, Financial Instruments: Classification and Measurement, effective for annual periods

beginning on or after January 1, 2015, reflects the first phase on the replacement of PAS 39, Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in PAS 39.

To be Determined • Philippine Interpretation IFRIC 15, Agreement for Construction of Real Estate, this

interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction contract to be accounted for under PAS 11 or involves rendering of services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and the Financial Reporting Standards Council (FRSC) have deferred the effectivity of this interpretation until the final Revenue standard is issued by the International Accounting Standards Board and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed.

4. Summary of Significant Accounting and Financial Reporting Policies

Business Combinations Business combinations are accounted for using the purchase method. This involves recognizing identifiable assets and liabilities of the acquired business initially at fair value. If the acquirer’s interest in the net fair value of the identifiable assets and liabilities exceeds the cost of the business combination, the acquirer shall: (a) reassess the identification and measurement of the acquiree’s identifiable assets and liabilities and the measurement of the cost of the combination; and (b) recognize immediately in profit or loss any excess remaining after that reassessment.

For business combinations achieved in stages, each exchange transaction is treated separately by the Parent Company. The cost of the transaction and fair value information at the date of each exchange transaction is used to determine the amount of any goodwill associated with that transaction. This results in a step-by-step comparison of the cost of the individual investments with the Parent Company’s interest in the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities at each step.

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The fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities may be different at the date of each exchange transaction for the following reasons: (a) the acquiree’s identifiable assets, liabilities and contingent liabilities are notionally restated to

their fair values at the date of each exchange transaction to determine the amount of any goodwill associated with each transaction; and

(b) the acquiree’s identifiable assets, liabilities and contingent liabilities must then be recognized

by the parent company at their fair values at the acquisition date.

Any resulting fair value adjustment to acquiree’s identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Parent Company is accounted for as a revaluation.

Non-controlling Interests (NCI) NCI represent the portion of profit or loss and the net assets in subsidiaries, not held by the Parent Company and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from the equity attributable to the equity holders of the Parent Company. Cash and Cash Equivalents Cash includes cash on hand and cash in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, with original maturities of up to three months or less from dates of acquisition and are subject to an insignificant risk of change in value.

Financial Instruments

Date of Recognition. The Group recognizes a financial asset or a financial liability in the consolidated statement of financial position when it becomes a party to the contractual provisions of the instrument. In the case of a regular way purchase or sale of financial assets, recognition and derecognition, as applicable, is done using settlement date accounting. Initial Recognition and Classification of Financial Instruments. Financial assets and financial liabilities are recognized initially at fair value. Transaction costs are included in the initial measurement of all financial assets and financial liabilities, except for financial instruments at fair value through profit or loss (FVPL). Fair value is determined by reference to the transaction price or other market prices. If such market prices are not readily determinable, the fair value of the consideration is estimated as the sum of all future cash payments or receipts, discounted using the prevailing market rates of interest for similar instruments with similar maturities. Financial assets are classified into the following categories: financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and AFS financial assets, as appropriate. Financial liabilities, on the other hand, are classified into the following categories: financial liabilities at FVPL and other financial liabilities, as appropriate. The Group determines the classification at initial recognition and, where allowed and appropriate, reevaluates this designation at each reporting date.

Financial instruments are classified as liability or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains or losses relating to a financial instrument or a component that is a financial liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity, net of any related income tax benefits.

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Determination of Fair Value. The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs at the close of business on the reporting date. When current bid prices and asking prices are not available, the prices of the most recent transaction provide evidence of the current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models. An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 26.

Day 1 difference. When the transaction price in a non-active market is different from the fair value from other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Group recognizes the difference between the transaction price and fair value (a Day 1 difference) in the consolidated profit or loss unless it qualifies for recognition as some other type of asset. In cases where use is made of data which is not observable, the difference between the transaction price and model value is only recognized in the consolidated profit or loss when the inputs become observable or when the instrument is derecognized. For each transaction, the Group determines the appropriate method of recognizing the Day 1 difference.

Subsequent Measurement. The subsequent measurement of the Group’s financial instruments depends on their classification as described below. As of December 31, 2012 and 2011, the Group had no financial assets and financial liabilities at FVPL and HTM investments. § Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less any impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are integral part of the effective interest rate. The effective interest rate amortization, if any, is included in the “Interest income” account in the consolidated statement of comprehensive income. The losses arising from impairment of receivables, if any, are recognized in the “General and Administrative expenses” account in the consolidated profit or loss.

This category includes the Group’s cash and cash equivalents, receivables and due from related parties.

§ AFS Financial Assets AFS financial assets include equity investments. These investments are those that are neither classified as held for trading nor designated at fair value through profit or loss. After initial measurement, AFS financial assets are subsequently measured at fair value with unrealized gains or losses recognized as other comprehensive income until the investment is

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derecognized, at which time the cumulative gain or loss is recognized in other income or expenses. The fair value of investments that are actively traded in organized financial markets is determined by reference to quoted market bid prices at the close of business on the reporting date.

§ Other Financial Liabilities This category pertains to financial liabilities that are not held for trading or not designated as at FVPL upon inception of the liability. These include liabilities arising from operations and non-interest bearing loans and borrowings. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the consolidated statement of comprehensive income when the liabilities are derecognized as well as through the effective interest rate amortization process. Amortized cost is calculated by taking into account any premium or discount on acquisition and fees and costs that are an integral part of the effective interest rate. The effective interest rate amortization, if any, is included in “Interest income” account in the consolidated profit or loss.

This classification includes the Group’s accounts payable and other current liabilities and due to related parties.

Derecognition of Financial Instruments

Financial Assets. A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:

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

§ the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; 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.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Financial Liabilities. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has expired.

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. The difference in the respective carrying amounts is recognized in the consolidated profit or loss.

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Impairment of Financial Assets The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and when observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Assets Carried at Amortized Cost. For financial assets carried at amortized cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually or assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that are not yet incurred). The present value of the estimated future cash flows is discounted at the financial assets’ original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the consolidated statement of comprehensive income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded under interest income account in the consolidated profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the other income account in the consolidated profit or loss.

In relation to trade receivables, a provision for impairment is made when there is objective evidence (the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through the use of an allowance account. Impaired receivables are derecognized when they are assessed as uncollectible.

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AFS Financial Assets. In case of equity investments classified as AFS financial assets, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. Significant is evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss which is measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the consolidated statement of comprehensive income, is removed from other comprehensive income and recognized in the consolidated profit or loss. Impairment losses on equity investments are not reversed through the consolidated profit or loss. Increases in fair value after impairment are recognized directly in the consolidated statement of changes in equity. Offsetting of 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 recognized amounts and there is an intention to settle on a net basis, or to realize 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 consolidated statement of financial position.

Exploration and Evaluation Costs Pre-license costs are expensed in the period in which they are incurred. Once the legal right to explore has been acquired, exploration and evaluation expenditures are charged to the consolidated profit or loss as incurred, unless there is a future economic benefit that is more likely to be realized than not. These costs include materials and fuel used, surveying costs, drilling costs and payments made to contractors.

In evaluating whether expenditures meet the criteria to be capitalized, several different sources of information are utilized. The information that is used to determine the probability of future benefits depends on the extent of exploration and evaluation that has been performed.

Deferred Costs Deferred costs represent cost incurred in providing exploration services which will be charged to operations when shipments are made to customers. Input Value Added Tax (VAT) Revenues, expenses, assets and liabilities are recognized net of the amount of VAT, except where the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable. Asset Held for Sale Asset held for sale is a property being constructed or acquired for sale in the ordinary course of business, and is carried at the lower of cost and net realizable value (NRV). NRV is the estimated selling price in the ordinary course of business, less estimated costs necessary to complete and make the sale.

Investment in an Associate The Group’s investment in an associate is accounted for using the equity method. An associate is an entity in which the Group has significant influence.

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Under the equity method, the investment in the associate is carried on the consolidated statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment. The consolidated profit or loss reflects the Group’s share of the results of operations of the associate. When there has been a change recognized directly in the equity of the associate, the Group recognizes its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The financial statements of the associate are prepared for the same reporting period as the Group. After application of the equity method, the Group determines whether it is necessary to recognize any additional impairment loss on its investment in the associate. The Group determines at each reporting date whether there is any objective evidence that the investment in an associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the difference in the consolidated statement of comprehensive income.

Investment in a Joint Venture The Parent Company has an interest in a joint venture, which is a jointly controlled entity, whereby the venturers have a contractual agreement that establishes joint control over the economic activities of the entity. The agreement requires unanimous agreement for financial and operating decisions among the venturers.

Property and Equipment Property and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and amortization and any accumulated impairment in value. Such cost includes the cost of replacing part of such property and equipment when that cost is incurred, if the recognition criteria are met.

Depreciation and amortization is calculated on a straight-line basis over the useful lives of the property and equipment. The useful life of each of the Group’s property and equipment is estimated based on the period over which the asset is expected to be available for use. Such estimation is based on a collective assessment of industry practice and experience with similar assets.

The useful lives of the Group’s property and equipment are estimated as follows:

Transportation equipment 5 years Office equipment, furniture and fixtures 3 years Drilling and exploration equipment 3 years Site assets 5-10 years

The property and equipment’s useful lives and depreciation method are reviewed, and adjusted if appropriate, at each reporting date.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated statement of comprehensive income in the year the item is derecognized.

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Mining Rights Mining rights are carried at cost less amortization and impairment in value, if any. Amortization shall commence at the start of commercial production based on units of production. Amortization shall cease at the earlier of the date that the intangible assets is classified as held for sale in accordance with PFRS 5 and the date that asset is derecognized. An impairment review is performed when there are indicators that the carrying amount of the assets may exceed their recoverable amounts. To the extent that this occurs, the excess is fully provided against, in the financial period in which this is determined. Mining rights are reassessed on a regular basis and these costs are carried forward provided that at least one of the following conditions is met: § such costs are expected to be recouped in full through successful development and exploration

of the area of interest or alternatively, by its sale; or § exploration and evaluation activities in the area of interest have not yet reached a stage which

permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area continuing, or planned for the future.

Mining rights represent the Group’s intangible asset for its right to mine certain areas. Impairment of Nonfinancial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. The recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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. Any impairment loss is recognized in the consolidated profit or loss in those expense categories consistent with the function of the impaired asset. Capital Stock Ordinary or common shares are classified as equity. The proceeds from the increase of ordinary or common shares are presented in equity as capital stock to the extent of the par value issued shares and any excess of the proceeds over the par value of shares issued less any incremental costs directly attributable to the issuance, net of tax, is presented in equity as additional paid-in capital.

Retained earnings (deficit) Retained earnings (deficit) represent the cumulative balance of the results of the Group’s operations, less dividend declarations.

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Revenue Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

Service income. Revenue is recognized upon rendering of service.

Interest income. Revenue is recognized as the interest accrues taking into account the effective yield on the asset. Cost of Services Cost of services is recognized as the services are rendered. General and Administrative Expenses General and administrative expenses constitute cost of administering the business and are recognized as incurred. Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies:

(a) there is a change in contractual terms, other than a renewal or extension of the arrangement;

(b) a renewal option is exercised or extension granted, unless that term of the renewal or

extension was initially included in the lease term;

(c) there is a change in the determination of whether fulfillment is dependent on a specified asset; or

(d) there is a substantial change to the asset.

When a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) above, and at the date of renewal or extension period for scenario (b). Operating Leases. Operating lease payments are recognized as expense in the parent company statements of comprehensive income on a straight-line basis over the lease term.

Income Tax

Current Income Tax. Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Deferred Income Tax. Deferred income tax is provided using the liability method on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred income tax assets are recognized for the net operating loss carryover (NOLCO) and minimum corporate income tax (MCIT), to the extent that it is probable that sufficient future taxable profits will be available against which the NOLCO and MCIT can be utilized.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred income tax assets to be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred income tax assets and liabilities are offset if a legally enforceable right exists to offset current income tax assets against current income tax liabilities and the deferred income tax relates to the same taxable entity and the same taxation authority.

Earnings (Loss) Per Share

Earnings (loss) per share is computed by dividing the net income (loss) attributable to equity holders of the Group by the weighted average number of shares outstanding during the year adjusted to give retroactive effect to any stock dividends declared during the year. Basic earnings (loss) per share is calculated by dividing the net income attributable to equity holders of the Group for the year by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed in the same manner, adjusted for the effect of the any potential dilutive shares. When the effect of the potential shares is anti-dilutive, basic and diluted earnings per share are stated at the same amount.

Segment Reporting An operating segment is a component of an entity: a) that engages in business activities from which it may earn revenues and incur expenses

(including revenues and expenses relating to transactions with other components of the same entity);

b) whose operating results are regularly reviewed by the entity’s chief operating decision maker

to make decisions about resources to be allocated to the segment and assess its performance; and

c) for which discrete financial information is available.

Provisions Provisions, if any, are recognized when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations; and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by

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discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as interest expense.

Contingencies Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed in the notes to consolidated financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but are disclosed in the notes to consolidated financial statements when inflows of economic benefits are probable.

Events after the Reporting Date Post year-end events that provide additional information on the Group’s financial position at the reporting date (adjusting events) are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to consolidated financial statements when material.

5. Significant Accounting Judgment, Estimates and Assumptions

The preparation of the Group’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts in the consolidated financial statements and related notes at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Judgments In the process of applying the Group’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

§ Determination of Functional Currency

Based on the economic substance of the underlying circumstances relevant to the Parent Company, the functional currency has been determined to be the Peso. The Peso is the currency of the primary economic environment in which the Parent Company operates. It is the currency that mainly influences the revenue and costs of the Parent Company.

§ Classification of Financial Instruments The Group classifies a financial instrument or its component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial asset, a financial liability or an equity instrument. The substance of a financial instrument, rather than its legal form, governs its classification in the consolidated statement of financial position. Classification of financial instruments is disclosed in Note 26 to the consolidated financial statements.

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§ Impairment of AFS Financial Assets The Group treats AFS financial assets as impaired when there has been a significant or prolonged decline in the fair value below its cost or whether other objective evidence of impairment exists. The determination of what is “significant” and “prolonged” requires judgment. The Group generally treats a decline of 20% or more of the original cost as “significant” and a period greater than six months as “prolonged”. In addition, the Group evaluates other factors including normal volatility in share prices for quoted securities, future cash flows and discount factors for unquoted securities. The carrying values of AFS financial assets amounted to P=78.6 million and P=271.3 million as of December 31, 2012 and 2011, respectively (see Note 10). Based on management’s assessment, there has been no significant or prolonged decline in the fair value of AFS financial assets, thus, no impairment loss was recognized in 2012, 2011 and 2010.

§ Operating Lease

The Group has entered into commercial property leases related to their office spaces. As a lessee, the Group determined that it does not acquire the significant risks and rewards of ownership of this property which are being leased by the Group under operating lease arrangements.

§ Capitalization of Exploration Costs

Exploration costs are capitalized until the viability of the mineral interest is determined. Exploration, evaluation and pre-feasibility costs are charged to operations in the period incurred until such time as it has been determined that a property has economically recoverable reserves, in which case, subsequent exploration costs and the costs incurred to develop a property are capitalized. In 2012, 2011 and 2010, all exploration costs were charged to operations.

Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, 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:

§ Fair Value of Financial Instruments

PFRS requires that financial assets and financial liabilities (including derivative financial instruments) be carried or disclosed at fair value, which requires the use of accounting estimates and judgment. While significant components of fair value measurement are determined using verifiable objective evidence (i.e., foreign exchange rates, interest rates, and volatility rates), the timing and amount of changes in fair value would differ using a different valuation methodology. When Level 2 of the fair value hierarchy is used to determine the fair value of financial instruments, inputs and assumptions are based on market observable data and conditions, and reflect appropriate risk adjustments that market participants would make for credit and liquidity risks existing for each of the periods indicated. Any change in the fair values of financial assets and financial liabilities (including derivative instruments) directly affects the consolidated statement of comprehensive income and equity and related disclosure. The fair values of financial assets and liabilities by category and the fair value hierarchy are set out in Note 26 of the consolidated financial statements.

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§ Estimation of Allowance for Impairment Loss on Receivables and Due from Related Parties A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the receivable is impaired.

The Group recognized impairment loss on receivables amounting to P=1.8 million in 2011 and P=2.4 million in 2010 (see Note 7). The carrying values of receivables as of December 31, 2012 and 2011 amounted to P=184.9 million and P=0.5 million, respectively (see Note 7). The carrying values of due from related parties as of December 31, 2012 and 2011 amounted to P=55.8 million and P=55.6 million, respectively (see Note 23).

§ Estimation of Useful Lives of Property and Equipment

The useful life of each of the Group’s property and equipment is estimated based on the period over which the asset is expected to be available for use. Such estimation is based on a collective assessment of industry practice, internal technical evaluation and experience with similar assets. The estimated useful life of each asset is reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the asset. It is possible, however, that future results of operations could be materially affected by changes in the amounts and timing of recorded expenses brought about by changes in the factors mentioned above. A reduction in the estimated useful life of any property and equipment would increase the recorded operating expenses and decrease noncurrent assets. There were no changes in the estimated useful lives of property and equipment in 2012, 2011 and 2010. The carrying values of the Group’s property and equipment as of December 31, 2012 and 2011 amounted to P=63.1 million and P=2.5 million, respectively (see Note 15).

§ Impairment of Nonfinancial Assets

An impairment review is performed when certain impairment indicators are present.

Determining the value in use of nonfinancial assets, require the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such asset, require the Group to make estimates and assumptions that can materially affect its financial statements. Future events could cause the Group to conclude that the nonfinancial assets are impaired. Any resulting additional impairment loss could have a material adverse impact on the Group’s financial condition and results of operations. The preparation of the estimated future cash flows involves significant judgment and estimations.

The carrying values of the investment in an associate amounted to nil and P=74.9 million as of December 31, 2012 and 2011, respectively (see Note 11). The carrying values of the Group’s property and equipment as of December 31, 2012 and 2011 amounted to P=63.1 million and P=2.5 million, respectively (see Note 15). The carrying values of the Group’s mining rights

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amounted to P=201.6 million as of December 31, 2012 and 2011 (see Note 14). The carrying value of an investment in a joint venture as of December 31, 2012 and 2011 amounted to P=13,946 (see Note 12). The carrying values of other noncurrent assets amounted to P=11.0 million and P=0.3 million as of December 31, 2012 and 2011, respectively (see Note 16).

There was no impairment loss recognized on the Group’s nonfinancial assets in 2012, 2011 and 2010.

§ Recognition of Deferred Income Tax Assets

The Group’s assessment on the recognition of deferred income tax assets on nondeductible temporary differences is based on forecasted future taxable income. This forecast is based on the Group’s past results and future expectations on revenues and expenses. Deferred income tax assets on temporary differences amounting to P=47.3 million and P=70.5 million as of December 31, 2012 and 2011, respectively, were not recognized in the books because the Group does not expect to have sufficient taxable profit in the future against which these can be applied (see Note 21).

6. Cash and Cash Equivalents

2012 2011 Cash P=20,243,348 P=3,542,283 Cash equivalents 599,704,419 300,613,197 P=619,947,767 P=304,155,480

Cash in banks earn interest at the prevailing bank deposit rates. Cash equivalents are made for varying periods of up to three months, depending on the immediate cash requirements of the Group, and earn interest at the prevailing short-term deposit rates. Interest income earned amounted to P=14.6 million in 2012, P=6.5 million in 2011 and P=7.0 million in 2010.

7. Receivables

2012 2011 Trade (Note 23) P=27,007,407 P=– Advances to: Suppliers 158,609,431 1,762,343 Officers and employees 669,376 94,091 Others 2,906,442 2,917,867 Interest receivable 411,168 353,147 189,603,824 5,127,448 Less allowance for impairment loss 4,668,229 4,668,229 P=184,935,595 P=459,219

All of the receivables above generally have 30- to 60- day terms.

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Advances to suppliers pertain to advance payments for (a) services to be rendered for the mining operation, (b) development of the project, and (c) exploration studies required under the MPSA. This account also includes advance payments made to surface right owners and other contractors. Interest receivable pertains to the interest accrued on the Group’s deposits with a local bank. Other receivables are cash advances to third parties that are due on demand.

Allowance for impairment loss as of December 31, 2012 and 2011 pertains to the following:

Advances to: Suppliers P=1,762,343 Others 2,905,886 P=4,668,229

There were no movements in the allowance for impairment loss in 2012. Movements in the

allowance for impairment loss in 2011 were as follows:

Beginning balance P=8,480,060 Provisions during the year: Advances to suppliers 1,762,343 Write-offs during the year: Advances to suppliers (2,835,000) Advances to officers and employees (17,219) Others (2,721,955) Ending balance P=4,668,229

The Group wrote off receivables amounting to P=5.6 million in 2011 because management assessed that it was not probable that these accounts could be recovered.

8. Other Current Assets

This account consists of the following:

2012 2011 Input VAT P=20,244,472 P=3,728,965 Deposits (Note 24) 17,250,000 – Prepayments 3,448,507 2,100,000 Deferred service cost 1,569,448 – Deferred input VAT 1,506,602 167,057 P=44,019,029 P=5,996,022

In 2012, the Group made deposits for subcontracted services in relation to the Geogen Operation.

Deferred service costs represents amount incurred in providing exploration services which will be charged to operations when shipments are made to customers.

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9. Asset Held for Sale In 2011, MTGI reclassified its pre-fabricated collapsible building from “Other noncurrent assets” account to “Asset held for sale” account. The sale of the pre-fabricated collapsible building will be consummated in 2013. Upon reclassification, the pre-fabricated collapsible building was carried at its carrying value amounting to P=3.0 million, which was lower than its fair value less estimated costs to sell.

10. Available-for-sale Financial Assets

2012 2011 At fair value - quoted P=76,100,193 P=298,564,854 At cost - unquoted (Note 11) 32,110,295 – 108,210,488 298,564,854 Cumulative changes in fair value (29,599,573) (27,244,854) P=78,610,915 P=271,320,000

The quoted securities consist of investment in a publicly listed entity. These are carried at fair value with cumulative changes in fair value presented as part of “Unrealized loss on available-for-sale financial assets” in the consolidated statement of financial position. The fair value of these shares is based on the quoted market prices as of the reporting date. Unquoted equity securities include unlisted shares of stock which the Group will continue to carry as part of its investments. The fair value of these securities cannot be reliably determined, thus, they are carried at cost less allowance for impairment, if any. In 2012, the Parent Company acquired additional investments in quoted securities amounting to P=56.8 million. Furthermore, the Company sold certain investments with a cost of P=279.3 million. The proceeds from the sale of the investments amounted to P=337.9 million, which resulted in a gain of P=58.6 million. The related unrealized portion of the change in fair value transferred to profit or loss amounted to P=27.9 million.

Movements in the “Unrealized loss on AFS financial assets” account shown under the equity section of the consolidated statement of financial position are summarized below:

2012 2011 Balance at beginning of year (P=27,244,854) P=– Change in fair value of AFS financial assets (2,354,719) (27,244,854) Balance at end of year (P=29,599,573) (P=27,244,854)

11. Investment in an Associate

On December 14, 2012, the Group sold 31,500 shares of ORVI to a third party for total consideration of P=31.5 million. As a result, the Group lost its significant influence over ORVI. The remaining investment in ORVI after the sale was reclassified to “AFS financial asset” account and carried at cost. The sale resulted in a loss amounting to P=0.6 million.

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Prior to the sale of the shares discussed above, the investment was accounted for as an investment in an associate using equity method. Share in the associate’s net loss in 2012 amounted to P=10.7 million. Share in the associate’s net income amounted to P=9.3 million and P=2.6 million in 2011 and 2010, respectively. The Parent Company also extended non-interest bearing loan to ORVI to fund its existing mining projects. Advances to ORVI amounted to P=55.5 million as of December 31, 2012 and 2011.

The following table presents information on the financial position and performance of ORVI as of and for the year ended December 31, 2011:

Total Assets P=634,328,530 Total Liabilities 394,973,855 Total Equity 239,354,675 Total Net Income 31,026,090

12. Investment in a Joint Venture

On September 27, 2011, the Parent Company, AsiaBest Group International, Inc. (ABG), formerly AGP Industrial Corporation, and Glencore International AG (Glencore) executed a Heads of Agreement (HOA) in Hong Kong under which the parties agreed to utilize their respective expertise in the mining industry for purposes of investigating, identifying, acquiring, developing and operating mining claims of economically feasible nickel deposits in the Philippines for purposes of direct shipping or selling of ore and other related nickel mining business. Glencore shall contribute its expertise in marketing of nickel ores in the world market as well as its network of various institutions internationally. On the other hand, the Parent Company and ABG shall utilize their expertise in mining, contracting and developing mines in the Philippines and their knowledge of relevant Philippine laws, rules and regulations and issues.

In order to accomplish the said purpose, the parties incorporated in November 23, 2011 under the laws of Hong Kong a joint venture company, GNA Resources International Limited (GNA), with an initial authorized capital of HK$100,000 with a par value of HK$1/share. GNA should have an initial issued and paid-in capital of HK$10,000 to be contributed by the parties as follows: (1) 50% from Glencore; and (2) 25% each for the Parent Company and ABG. Moreover, the parties agreed to execute the following implementing agreements of the HOA: § Marketing agreement whereby Glencore will act as the exclusive marketing agent for GNA

and market and sell all material produced by GNA; § Management agreement; § Contractor(s) agreement; and, § Any other agreements agreed by the parties as being necessary or useful to facilitate the

implementation and operation of GNA. As of December 31, 2012, the marketing agreement was already executed. The Group’s contribution of P=13,946 into GNA was advanced by a related party. As of December 31, 2012, GNA has not started its commercial operations.

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13. Business Combinations Acquisition of OI On March 10, 2011, the Parent Company acquired all of the outstanding shares of OI pursuant to a Memorandum of Agreement between the Parent Company and the previous stockholders of OI. Under the agreement, the total consideration of P=108.0 million covered the assignment of all outstanding shares of OI, assignment of advances made by the previous stockholders to OI aggregating P=125.5 million and the 80% ownership of outstanding shares of Masbate13 held by OI. Masbate13 is the owner of a gold mining claim covering 8,375.35 hectares in the Municipalities of Milagros and Mandaon in Masbate.

On December 31, 2011, the BOD of OI approved the increase in authorized share capital to 2,000,000 shares and the conversion of the P=125.5 million advances assigned to the Parent Company into 1,250,000 shares, with par value of P=100 per share.

The non-controlling interest in the acquiree was measured at the proportionate share of the acquiree’s identifiable net assets. Assets acquired and liabilities assumed The fair value of the identifiable assets and liabilities of OI as at the date of acquisition were:

Fair value recognized on

acquisition Assets: Cash in banks P=3,820,625 Mining rights 152,136,833 Other current assets 1,702,200 157,659,658 Liabilities: Accrued expenses 89,600 Due to related parties 2,469,626 2,559,226 Total identifiable net assets at fair value 155,100,432 Non-controlling interest (29,919,721) Negative goodwill arising on acquisition (17,180,711) Purchase consideration P=108,000,000

OI obtained an independent valuation for the gold mining claim of Masbate13. The valuation showed that the fair value at the date of acquisition was P=152.1 million. This was presented under “Mining rights” account in the consolidated statement of financial position (see Note 14). The excess of the fair value of the net assets acquired over the purchase price amounting to P=17.2 million is presented as “Income from the acquisition of a subsidiary” in the consolidated statement of comprehensive income.

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Sale of Subsidiaries Details of the sale of the subsidiaries in 2011 are presented below: a. The Parent Company sold its ownership in VOPI to an individual for a total consideration of

P=2.5 million. This transaction was approved by the BOD of the Parent Company on November 3, 2011.

b. Pursuant to various Deeds of Absolute Sale, MTGI sold its ownership in CNMI, CMTI and MDI to the same individual for a total consideration of P=7.5 million. The transactions were approved by the BOD of MTGI on June 16, 2011 and November 3, 2011.

The sale of the above subsidiaries resulted in a gain of P=9.7 million presented as “Income from sale of subsidiaries” account in the consolidated statement of comprehensive income.

14. Mining Rights Mining rights represent the Group’s intangible assets for its right to mine certain areas. The details as of December 31, 2012 and 2011 are presented below:

Botolan, Zambales P=49,496,586 Milagros and Magdaon Masbate (Note 13) 152,136,833 P=201,633,419

15. Property and Equipment

2012

Transportation

Equipment

Office Equipment,

Furniture and Fixtures

Laboratory Equipment

Site Assets Total

Cost: Balance at beginning of year P=2,350,000 P=145,810 P=1,103,285 P=– P=3,599,095 Additions – 356,710 – 63,879,460 64,236,170 Balance at end of year 2,350,000 502,520 1,103,285 63,879,460 67,835,265 Less accumulated Depreciation: Balance at beginning of year 305,834 112,097 683,749 – 1,101,680 Depreciation 470,000 93,872 220,657 2,805,671 3,590,200 Balance at end of year 775,834 205,969 904,406 2,805,671 4,691,880 Net Book Value P=1,574,166 P=296,551 P=198,879 P=61,073,789 P=63,143,385

2011

Transportation

Equipment

Office Equipment,

Furniture and Fixtures

Laboratory Equipment

Site Assets Total

Cost: Balance at beginning of year P=350,000 P=1,600,088 P=1,438,807 P=– P=3,388,895 Additions 2,000,000 13,215 – – 2,013,215 Disposals (1,467,493) (335,522) (1,803,015)Balance at end of year 2,350,000 145,810 1,103,285 – 3,599,095

(Forward)

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2011

Transportation

Equipment

Office Equipment,

Furniture and Fixtures

Laboratory Equipment

Site Assets Total

Less accumulated Depreciation:

Balance at beginning of year P=169,167 P=1,531,380 P=798,614 P=– P=2,499,161 Depreciation 136,667 48,210 220,657 – 405,534 Disposals – (1,467,493) (335,522) – (1,803,015)Balance at end of year 305,834 112,097 683,749 – 1,101,680 Net Book Value P=2,044,166 P=33,713 P=419,536 P=– P=2,497,415

16. Other Noncurrent Assets

This account consists of:

2012 2011 Deposits (Note 24) P=5,803,569 P=– Leasehold rights 4,883,333 – Rental deposits 280,114 280,114 P=10,967,016 P=280,114

In 2012, the Group made deposits for subcontracted services in relation to the Geogen Operation. On June 1, 2012, the Group purchased a right to use a 10-hectare land located in Brgy. Dicabasan, Dilasag, Aurora for P=5.0 million to be used in its mining operations. The land will be returned to its original owner upon completion of the Isabela Nickel Project. The leasehold is to be amortized on a straight-line basis over 25 years, which corresponds to the term of the MPSA.

Details of leasehold rights are as follows:

Cost P=5,000,000 Accumulated amortization (116,667) Net book value P=4,883,333

17. Accounts Payable and Other Current Liabilities

2012 2011 Accounts payable P=1,663,741 P=63,741 Accrued expenses (Note 23) 8,347,357 4,663,663 Taxes payable 3,311,646 365,591 Others 24,784 3,258

P=13,347,528 P=5,096,253

Accounts payable and other current liabilities are noninterest-bearing and have an average term of 30 days, but may go beyond depending on the agreement of the involved parties. Accrued expenses pertain to legal, management fee and other professional fees.

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18. Capital Stock

Movements in the authorized and issued number of shares were as follows:

2012 2011 2010 Common shares - P=1 par value Authorized Balance at beginning and end of year 2,000,000,000 2,000,000,000 2,000,000,000 Issued Balance at beginning of year 880,000,000 680,000,000 600,000,000 Issuance during the year 33,000,000 200,000,000 80,000,000 Balance at end of year 913,000,000 880,000,000 680,000,000

Below were the Parent Company’s issuances of shares of stock approved by the SEC:

Date of SEC Approval Type of Issuance No. of Shares Issued Issue/Offer Price October 3, 1990 Initial Public Offering 100,000,000 P=1.00 January 14, 2009 Stock Rights 500,000,000 P=1.00

On March 2, 2012, Macquarie Bank Limited (Macquarie Bank), in relation to the Memorandum of Agreement (MOA) discussed in Note 24, entered into a Subscription Agreement with the Parent Company for the initial subscription of 33,000,000 common shares (the “Subscribed Shares”). The Subscribed Shares were paid in cash and in full at a subscription price of P=9.46 per share, or a total amount of P=312.2 million. The issuance resulted in additional paid in capital amounting to P=279.2 million. In 2011, the Parent Company entered into various subscription agreements with a stockholder for additional subscriptions to the portion of the Parent Company’s authorized but unissued capital stock. Details were as follow:

Date Number of

Shares Subscription

price per share Total

consideration

Increase in additional

paid-in capital

September 21, 2011 100,000,000 P=2.00 P=200,000,000 P=100,000,000 August 16, 2011 100,000,000 2.25 225,000,000 125,000,000 200,000,000 P=425,000,000 P=225,000,000

Proceeds from the subscriptions are intended to be used to acquire equity in mining companies for strategic business purposes and mining equipment to further enhance the mining assets portfolio of the Group. On December 9, 2011, the Group’s stockholders approved the waiver of the requirement for a rights offer of private placement shares pursuant to Section 9 of Article V of the Revised Listing Rules. The approval resulted in a waiver of SRO to other stockholders.

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On December 29, 2010, the Parent Company entered into an agreement with one of its stockholders to open for subscription a portion of the Parent Company’s authorized but unissued capital stock for the purpose of utilizing the proceeds from such subscription to fund business expansion activities that the Company was to undertake in the succeeding years, including the acquisition of mining tenements and mining rights. The stockholder agreed to subscribe to 80,000,000 common shares at a subscription price of P=1.35 per share for a total consideration of P=108,000,000. The issuance resulted in an increase in additional paid-in capital of P=28.0 million. On the same date, the Parent Company’s BOD approved the issuance of additional shares of stocks through a stock rights offering (SRO), implemented on a 2:5 proportion. This was to provide other stockholders with equal opportunity to subscribe to new share issuances of the Parent Company. However, this right was waived by stockholders during the annual stockholders’ meeting. As of December 31, 2012, 2011 and 2010, the total number of shareholders of the Parent Company was 100, 84 and 78, respectively.

19. Cost of Services

In 2012, this account consisted of:

Fuel and oil P=23,237,174 Barging and loading cost 12,015,739 Management fee and port cost 6,090,389 Indirect labor cost 3,578,914 Laboratory fee 2,290,837 Depreciation 1,550,310 Rent 1,339,146 Field tools and supplies 1,025,742 Survey 892,857 Amortization 116,667 P=52,137,775

20. General and Administrative Expenses

2012 2011 2010 Representation P=10,612,359 P=813,841 P=1,140,915 Professional fees 8,917,440 4,283,583 4,336,654 Transportation 5,210,061 705,096 740,224 Management fees (Note 23) 3,067,886 4,646,359 788,667 Outside services 2,620,524 360,429 – Exploration costs 1,986,916 4,060,431 – Salaries and wages 1,943,611 1,089,372 958,210 Repairs and maintenance 1,869,006 36,466 – Commission 1,800,654 1,492,675 – Permitting fees 1,770,988 5,235,438 – Listing and filing fees 1,188,551 517,148 111,687 Rent (Note 23) 1,062,206 1,282,852 206,550

(Forward)

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2012 2011 2010 Taxes and licenses P=1,019,555 P=1,880,778 P=75,180 Depreciation (Note 15) 1,005,927 405,535 932,481 Utilities and communication 827,388 515,396 419,956 Provision for impairment loss on

receivables (Note 7) – 1,762,343 2,420,076 Others 1,603,381 1,517,906 417,620 P=46,506,453 P=30,605,648 P=12,548,220

21. Income Taxes

Current Income Tax The components of provision for income tax as reported in the consolidated statements of comprehensive income were as follows:

2012 2011 2010 Final tax on interest income P=2,916,995 P=1,291,741 P=1,395,279 MCIT 238,861 – 282,825 P=3,155,856 P=1,291,741 P=1,678,104

The reconciliation between provision for (benefit from) income tax computed at statutory tax rate and the Group’s provision for income tax at effective tax rate were as follows:

2012 2011 2010 Provision for (benefit from) income

tax computed at statutory income tax rate P=8,191,909 (P=6,827,486) P=3,361,374

Additions to (reductions in) income tax resulting from:

Nontaxable income (17,585,252) (4,740,547) – Change in unrecognized

deferred income tax asset 7,334,431 10,559,783 (544,995) Nondeductible expenses 3,456,546 5,738,209 349,913 Share in net loss (income) of

an associate 3,216,719 (2,792,348) (790,549) Interest income already subject

to final tax (1,458,497) (645,870) (697,639) P=3,155,856 P=1,291,741 P=1,678,104

Deferred Income Tax Deferred income tax assets were not recognized in the books because the Group does not expect to have sufficient taxable income in the future against which this can be applied. The Group’s deferred income tax assets relate to the carry forward benefits of NOLCO, MCIT and temporary differences, as follows:

2012 2011 NOLCO P=42,080,328 P=65,597,981 Allowance for impairment loss on receivables 4,668,229 4,668,229 MCIT 521,686 282,825 P=47,270,243 P=70,549,035

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*SGVMG700045*

As of December 31, 2012, NOLCO and MCIT that can be claimed as deduction against future regular taxable income and income tax due, respectively, were as follows:

Year Incurred Expiry Year NOLCO MCIT 2010 2013 P=2,648,782 P=282,825 2011 2014 15,424,350 – 2012 2015 24,007,196 238,861 P=42,080,328 P=521,686

The movements in the NOLCO and MCIT accounts were as follows:

2012 2011 NOLCO: Balance at beginning of year P=65,597,981 P=131,026,762 Applications – (6,996,291) Expirations (47,524,849) (73,856,840) Additions 24,007,196 15,424,350 Balance at end of year P=42,080,328 P=65,597,981 MCIT:

Balance at beginning of year P=282,825 P=282,825 Additions 238,861 – Balance at end of year P=521,686 P=282,825

22. Basic Earnings (Loss) Per Share

Earnings (loss) per share amounts for the years ended December 31, 2012, 2011 and 2010 were computed as follows:

2012 2011 2010 Net income (a) P=24,763,746 P=11,456,075 P=9,526,472 Total comprehensive income (loss) (b) P=22,409,027 (P=15,788,779) P=9,526,472 Weighted average number of common

shares (c) 907,500,000 742,500,000 640,000,000

Basic earnings (loss) per share Based on net income (loss) (a/b) P=0.03 P=0.02 P=0.01

Based on total comprehensive income (loss) (a/c) P=0.02 (P=0.02) P=0.01

There were no other transactions that involved potential issuance of shares of stocks.

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*SGVMG700045*

23. Related Party Transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are controlled by or under common control with the Group, including holding companies, subsidiaries and fellow subsidiaries, are related parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Group and close members of the family of these individuals, and companies associated with these individuals also constitute related parties. In considering each possible related entity relationship, attention is directed to the substance of the relationship and not merely the legal form.

Terms and Conditions of Transactions with Related Parties Outstanding balances of transactions with related parties are unsecured, noninterest bearing, payable on demand and settlements are made in cash. There have been no guarantees provided or received for any related party receivables or payables. Transactions with Related Parties In the normal course of business, transactions with related parties include the following:

Associate/Investee

Volume/Transaction Outstanding Receivables 2012 2011 2012 2011 Terms Conditions

Loan - ORVI P=– P=– P=55,500,000 P=55,500,000 On demand;

Noninterest bearing Unsecured; no

impairment Cash Advances

GNA 46,008 – 46,008 – On demand;

Noninterest bearing Unsecured; no

impairment

ORVI – 6,833 80,160 80,160 On demand;

Noninterest bearing Unsecured; no

impairment P=46,008 P=6,833 P=55,626,168 P=55,580,160

a. On March 24, 2010, the Parent Company entered into a noninterest-bearing loan facility

agreement with ORVI amounting to P=137,000,000 for use by ORVI exclusively to fund its existing mining projects. Payment of the loan can be made in cash or in shares of stock in ORVI or in a company listed with PSE as may be mutually agreed upon by the Parent Company and ORVI.

b. The Group extended noninterest bearing advances to ORVI and GNA for working capital requirements.

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*SGVMG700045*

Companies with Common Shareholders or Interlocking Directors

Volume/Transaction

Outstanding Receivables (Payables)

2012 2011 2012 2011 Terms Conditions Cash advances from:

AU Philippines, Inc. (AU) P=– P=– (P=1,953,741) (P=1,953,741) On demand;

Noninterest bearing Unsecured; no

impairment

Geograce – – (898,043) (898,043) On demand;

Noninterest bearing Unsecured; no

impairment (P=2,851,784) (P=2,851,784)

Cash advances to Geogen P=208,587 P=– P=208,587 P=– On demand;

Noninterest bearing Unsecured; no

impairment

Service income - Geogen P=64,080,812 P=– P=27,007,407 P=– 30-day term;

Noninterest bearing Unsecured; no

impairment

Management fee - Asiabest Group International, Inc. (ABG) P=3,560,045 P=– (P=3,453,244) P=–

On demand; Noninterest bearing

Unsecured; no impairment

Rental - Angping and Associates Securities Inc. (AASI) P=1,000,406 P=1,282,852 P=– P=–

On demand; Noninterest bearing

Unsecured; no impairment

c. Pursuant to the Operating Agreement with Geogen, the Group shall pay ABG management fee

equivalent to 5% of the revenue from the shipment of nickel ore.

d. AU, the previous majority shareholder of Masbate13, extended noninterest-bearing cash advances to Masbate13.

e. Geograce extended noninterest-bearing cash advances to Masbate13 for working capital

requirements.

f. The Parent Company entered into HOA with Geograce whereby the latter shall be granted exclusive right to various mining tenements controlled by the Parent Company. Geograce, together with the Parent Company, also signed a Cooperation Agreement with Jiangxi Rare Earth and Rare Metals Tungsten Group Co. (Jiangxi).

g. On October 19, 2011, the Parent Company entered into a Contract of Lease with Angping &

Associates Securities Inc. (AASI) for the lease of its office space and parking slots. The lease is for a period of three (3) years beginning October 19, 2011 with the option to renew for another two (2) years. The monthly lease rental is P=103,180 inclusive of taxes and association dues. The security deposit for the lease amounting to P=280,114 will be returned to the Parent Company not earlier than sixty (60) days after the termination of the lease contract. The security deposit is recorded in “Other noncurrent assets” account in the consolidated statement of financial position. Prior to October 19, 2011, the Parent Company’s lease contract with AASI was for a period of two (2) years until December 31, 2010, with the option to extend upon mutual consent of both parties. The monthly lease rental is P=68,850, exclusive of taxes and association dues. Moreover, under the lease contract, the Parent Company paid one year advance rentals aggregating P=826,200. This amount was recorded under “Other current assets” account in the consolidated statement of financial position. The security deposit for the lease amounted to P=206,550 and was returned to the Parent Company after termination of the contract.

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*SGVMG700045*

h. In 2011, the Parent Company opened an account with AASI in order for the Parent Company to buy and sell shares of companies listed in the stock exchange under such terms and conditions as may be beneficial to the Parent Company.

Shareholder

Volume/Transaction Outstanding Payable

2012 2011 2012 2011 Terms Conditions

Advances P=– P=13,946 P=– P=13,946 On demand;

Noninterest bearing Unsecured; no

impairment

i. The advances were used for the incorporation of the joint venture. This was fully settled in 2012.

Transactions with Key Management Personnel The compensation of the Group’s key management personnel consisted mainly of management fees aggregating P=3.0 million in 2012, P=4.6 million in 2011 and P=0.8 million in 2010.

24. Agreements and Commitments

As of December 31, 2012 and 2011, the Group is a party to the following agreements: Agreements with Geogen On June 13, 2012, the BOD of the Parent Company approved the execution, delivery and performance of Operating Agreement with Geogen. Under the agreement, the Group shall have the exclusive right to explore, operate, mine, develop and process minerals found within the Geogen’s mineral property consisting of a total area of 2,391.4081 hectares located at Dinapigue, Isabela, which is covered by MPSA No. 258-2007-II dated July 30, 2007 (the “Mineral Property”). Pursuant to the agreement, Geogen shall pay the Group an amount equivalent to 90% of the invoice value of the nickel ore sold by Geogen to third parties in consideration of the services to be performed by the Company. This agreement superseded the General Contractor Agreement entered into with Geogen on March 5, 2012. The General Contractor Agreement was executed to appoint the Company as Geogen’s general contractor over the Mineral Property. Service income recognized from this agreement amounted to P=64.1 million in 2012. Related costs incurred, which were mostly subcontracted to third parties, amounted to P=52.1 million. Agreements with Various Subcontractors In 2012, the Parent Company entered into subcontracting agreements with various subcontractors to mine, process, transport and deliver the nickel ore found within the Geogen’s Mineral Property. This agreement was in relation to the Operating Agreement with Geogen. Advances made for future services amounted to P=152.7 million as of December 31, 2012. Deposits made to subcontractors amounted to P=23.1 million as of December 31, 2012 (P=17.3 million was shown in Note 8 to the consolidated financial statements and P=5.8 million was shown in Note 16 to the consolidated financial statements). These deposits will be applied to other expenses incurred upon termination of the agreements.

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*SGVMG700045*

Sale and Purchase Agreement with Welcome Stranger Mining Ltd. (“Welcome Stranger”) On December 31, 2012, the Parent Company, OI and Welcome Stranger entered into a Sale and Purchase Agreement involving 1,000,000 shares of stock (40% ownership) of Masbate13. Pursuant to the agreement, OI shall sell its 40% ownership in Masbate13 for a total consideration of 50,000,000 shares in Welcome Stranger at listing value of AUD0.20 per share plus US$250,000 in cash. The sale shall become effective upon satisfaction of the following contract conditions: (a) Where OI is subject or affected by the Foreign Acquisition and Takeovers Act 1975

(the “Act”) or the foreign investment policy (the “policy”) of Australia in connection with the issuance of shares of Welcome Stranger, there shall be a written advice or confirmation without conditions from the Treasurer of the Commonwealth of Australia to OI that there is no objection, under that act or policy, to the issuance of shares of Welcome Stranger;

(b) Where Welcome Stranger is subject or affected by the policy of the Philippines in connection with the proposed issuance of the sale shares, there shall be a written advice or confirmation from the Philippine Government or a duly authorized delegate of the Philippine Government, to Welcome Stranger that there is no objection, under the Philippine Laws or the policy of the Philippines, to the issuance of shares of Masbate13.

Completion of this agreement is also subject to the following significant conditions precedent: (a) Execution of the Royalty Agreements, Shareholders Agreement, Restriction Agreement and

Operating Agreements by all of the parties to this agreement; (b) Completion of the Capital Gold Sale Agreement; (c) Completion of the Dizon Agreement. This agreement was in connection with the previous MOA entered into with Capital Gold Pty Ltd. (“Capital Gold”) and Welcome Stranger on September 17, 2012.

Agreement by and among Macquarie Bank Limited (“Macquarie Bank”), Parent Company and one of its major shareholders On February 11, 2012, the BOD of the Parent Company approved the execution, delivery and performance of an Investment Agreement (the “Agreement”) by and among Macquarie Bank, the Parent Company and one of its major shareholder, embodying a Multi-tranche Average Price Issuance Program (“Issuance Program”) resulting in Macquarie Bank’s subscription to newly-issued common shares of stock in the Parent Company (the “NiHAO Shares”) on a private placement basis (“Transaction”). Pursuant to the Agreement, Macquarie Bank agreed to subscribe to the Parent Company’s shares of up to an aggregate amount of 150,000,000, which shall be purchased in tranches from the Parent Company’s authorized but unissued capital stock, provided that, prior to the Parent Company’s obtaining the approval of its shareholders to the Transaction, Macquarie Bank shall not make any subscription that will result in Macquarie Bank’s total shareholdings in the Parent Company exceeding 95,000,000 shares, which number is just below ten percent (10%) of the resulting issued capital stock of the Company. The Parent Company will raise approximately US$ 25,000,000 to US$30,000,000 from the issuance of the shares. Macquarie Bank’s right to subscribe to the Subscriber Shares shall expire (1) year from the execution of the Agreement, or upon Macquarie Bank having subscribed to and been issued 150,000,000 Subscriber Shares, whichever event occurs earlier. On March 2, 2012, Macquarie Bank entered into a Subscription Agreement with the Company for the subscription of 33,000,000 shares of stocks.

- 34 -

*SGVMG700045*

HOA with Geograce Pursuant to the HOA, Geograce has been granted the exclusive right to explore, develop and operate various mining tenements which are controlled by the Parent Company or controlled by it through its subsidiaries MTGI, BGI and OI (collectively known as the “Mining Tenements”). Geograce’s exclusive right to explore, develop and operate any, some or all of the Mining Tenements covered by the HOA shall be conditional upon the fulfillment of the following conditions precedent:

(a) satisfactory legal and technical due diligence on the Parent Company and the Mining

Tenements; (b) satisfactory legal and technical due diligence on MTGI, BGI and OI and their respective

mining tenements; and (c) the approval of the terms and conditions of the Operating Agreements for any, some or all of

the mining tenements by the appropriate regulatory agencies.

Subject to compliance with applicable laws, the parties intend to execute the necessary Operating Agreements within sixty (60) days from the date the EPs are secured for the various Mining Tenements covered by the HOA with Geograce. Subject to such other terms and conditions as may be agreed upon by the parties in the Operating Agreements, the Parent Company shall be entitled to receive at least fifty percent (50%) of the net profits arising from or relating to the operation of the Mining Tenements. The HOA with Geograce also granted Geograce the option to purchase any, some or all of the Mining Tenements by way of cash or through property-for-share swaps whereby Geograce shall issue unissued shares in exchange for the target mining tenements. The option to purchase granted to Geograce is subject to the completion of satisfactory due diligence, the fair valuation of the target Mining Tenements and the approval of said transactions by the appropriate regulatory agencies.

Cooperation Agreement with Jiangxi The agreement is to form a strategic partnership to jointly explore and develop the six mining tenements directly and indirectly held by the Parent Company and Geograce and are located in the province of Zambales.

HOA with ABG and Glencore For the details of this agreement, please refer to Note 12 of the consolidated financial statements.

Marketing Agency Agreement with Glencore On March 12, 2012, the Parent Company and Glencore executed a Marketing Agency Agreement in which the Parent Company appointed Glencore as its marketing agent for the purpose of providing marketing and sales agency services relating to the sale of nickel produced by the Group. The Parent Company and Glencore agreed that the sale of nickel under the agreement shall be under the brand name of GNA. Under the agreement, Glencore is given the authority to market and sell nickel, or entered into a sales contract, in behalf of the Parent Company. For the consideration of the services of Glencore, the Parent Company shall pay a commission at the rate of US$0.25 per wet metric tonne of the sales value of any nickel sold.

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*SGVMG700045*

The term is valid for 1 year, unless terminated earlier, in accordance with the terms and conditions of the agreement. Lease Contract with Angping & Associates Securities Inc. (AASI) On October 19, 2011, the Group entered into a Contract of Lease with AASI for the lease of its office space and parking slots. The lease is for a period of three (3) years beginning October 19, 2011 with the option to renew for another two (2) years. The monthly lease rental is P=83,367 inclusive of taxes and association dues. The security deposit for the lease amounting to P=280,114 will be returned to the Company not earlier than sixty (60) days after the termination of the lease contract. The security deposit is recorded in “Other noncurrent assets” account in the consolidated statement of financial position. The aggregate future minimum lease payments are as follows:

Within one year P=1,000,406 After one year but not more than five years 750,303 P=1,750,709

25. Financial Risk Management Objectives and Policies

The Group’s principal financial instruments comprises of cash and cash equivalents, due from related parties and due to related parties. The purpose of these financial instruments is to fund the Group’s operations. The Group has other financial assets and liabilities such as receivables and account payable and other current liabilities which arise directly from its operations.

The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The Group is not subject to any market risk. The BOD reviews and approves policies for managing each of these risks and they are summarized below:

Credit Risk The Group’s credit risk is the risk that counterparty will not meet its obligations under a financial instrument leading to a financial loss. The Group is exposed to credit risk from its deposits with banks. The Group’s maximum exposure to credit risk is equal to the carrying amount of these instruments as summarized below:

2012 2011 Cash and cash equivalents* P=619,937,767 P=304,145,480 Receivables: Trade 27,007,407 – Interest receivable 411,168 353,147 Advances to others 556 11,981 Due from related parties 55,834,755 55,580,160 AFS financial assets 78,610,915 271,320,000 P=781,802,568 P=631,410,768

*excluding cash on hand

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*SGVMG700045*

As of December 31, 2012 and 2011, the credit quality and aging of the Group’s financial assets are as follows:

2012

Neither past due nor impaired Past due but not impaired

(More than 90 days) Impaired

Less Allowance

For impairment Total High Grade

Standard Grade

Cash and cash equivalents P=619,937,767 P=– P=– P=– P=– P=619,937,767 Receivables: Trade – 27,007,407 – – – 27,007,407 Interest receivable 411,168 – – – – 411,168 Advances to others – – 556 2,905,886 2,905,886 556 Due from related parties – – 55,834,755 – – 55,834,755 AFS financial assets 78,610,915 – – – – 78,610,915 P=698,959,850 P=27,007,407 P=55,835,311 P=2,905,886 P=2,905,886 P=781,802,568

2011

Neither past due nor impaired Past due but not impaired

(More than 90 days) Impaired

Less Allowance

For Impairment Total High Grade

Standard Grade

Cash and cash equivalents P=304,145,480 P=– P=– P=– P=– P=304,145,480 Receivables: Interest receivable 353,147 – – – – 353,147 Advances to others – – 11,981 2,905,886 2,905,886 11,981 Due from a related party – – 55,580,160 – – 55,580,160 AFS financial assets 271,320,000 – – – – 271,320,000 P=575,818,627 P=– P=55,592,141 P=2,905,886 P=2,905,886 P=631,410,768

Cash and cash equivalents are classified as high grade since these are deposited and invested with a reputable bank and can be withdrawn anytime.

The credit quality of receivables is determined as follows: § Grade A (High grade)

This includes receivables from debtors that always pay on time or even before the maturity date and is classified as low risk debtors.

§ Grade B (Standard grade)

This includes receivables from clients that are collected on their due dates provided that they were reminded or followed up by the Group and are classified as medium risk.

§ Grade C (Substandard grade)

This includes receivables from debtors which are collected within their due dates but require persistent effort from the Group and are classified as high risk.

AFS financial assets are considered as high grade because it pertains to investment in a publicly listed entity with good financial operations.

Liquidity Risk Liquidity risk is defined as the risk that the Group could not be able to settle or meet its obligations on time or at a reasonable price.

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*SGVMG700045*

The Group’s exposure to liquidity risk relate to raising funds. The Group manages its liquidity profile to be able to finance capital expenditures and service maturing debts. To cover its financing requirements, the Group intends to use internally generated funds and available short-term credit facilities.

As part of its liquidity risk management, the Group regularly evaluates its projected and actual cash flows. It also continuously assesses conditions in the financial markets for opportunities to pursue fund raising activities, in case any requirements arise.

As of December 31, 2012 and 2011, the Group’s other financial liabilities are summarized below:

2012 2011 Accounts payable and other current liabilities* P=10,035,882 P=4,730,662 Due to related parties 2,851,784 2,851,784 P=12,887,666 P=7,582,446

*excluding taxes payables

Accounts payable and other current liabilities are normally settled within 30 days or throughout the year. Due to related parties are payable on demand. As of December 31, 2012 and 2011, the Company’s financial assets amounting to P=781.8 million and P=631.4 million, respectively, were determined by management to be realizable within one year.

Capital Management The primary objective of the Company’s management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions.

The Company monitors capital on the basis of the debt-to-equity ratio. This ratio is calculated as total debt divided by equity. Total debt is the sum of accounts payable and other current liabilities, income tax payable and advances from related parties.

Equity comprises all components of equity.

The Company’s debt-to-equity ratio as of December 31, 2012 and 2011 were as follows:

2012 2011 Total debt P=16,199,312 P=7,948,037 Total equity 1,245,949,182 911,973,394 Debt-to-equity ratio 0.01 0.01

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*SGVMG700045*

26. Financial Instruments Fair Values Set out below is a comparison by category of carrying amounts and fair values of all the Company’s financial instruments that are carried in the consolidated financial statements as of December 31, 2012 and 2011:

2012 2011

Carrying

Value Fair Value Carrying

Value Fair Value

Financial Assets Loans and receivables: Cash and cash equivalents* P=619,937,767 P=619,937,767 P=304,145,480 P=304,145,480 Receivables: Trade 27,007,407 27,007,407 – – Interest receivable 411,168 411,168 353,147 353,147 Advances to others 556 556 11,981 11,981 Due from a related party 55,834,755 55,834,755 55,580,160 55,580,160 AFS financial assets 78,610,915 78,610,915 271,320,000 271,320,000 P=781,802,568 P=781,802,568 P=631,410,768 P=631,410,768 *excluding cash on hand

Financial Liabilities

Other financial liabilities: Accounts payable and

other current liabilities* P=10,035,882 P=10,035,882 P=4,730,662 P=4,730,662 Due to related parties 2,851,784 2,851,784 2,851,784 2,851,784 P=12,887,666 P=12,887,666 P=7,582,446 P=7,582,446 *excluding taxes payable

Cash and cash equivalents, Receivables, Due from a Related Party, Accounts Payable and Other Current Liabilities and Due to Related Parties. Due to the short-term nature of the transactions the carrying values of these financial assets and liabilities approximate their fair values as of reporting date.

AFS Financial Assets. The fair value of these financial assets are determined by reference to quoted market bid prices at the close of business on the reporting date since these are actively traded in organized financial market.

Fair Value Hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: § Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

§ Level 2: other techniques for which all inputs which have a significant effect on the recorded

fair value are observable, either directly or indirectly § Level 3: techniques which use inputs which have a significant effect on the recorded fair value

that are not based on observable market data

As of December 31, 2012, the Group’s AFS financial assets are measured using Level 1.

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*SGVMG700045*

27. Segment Information The Group has a single reporting segment, which is its mining business. Financial information with regard to the Group’s reporting segment is as follows:

2012 2011 2010 Net income P=24,150,507 P=10,740,879 P=9,526,472 Other information: Segment assets 1,262,148,494 919,921,431 479,355,911 Segment liabilities 16,199,312 7,948,037 5,798,263

*SGVMG700045*

INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY SCHEDULE The Stockholders and the Board of Directors Nihao Mineral Resources International, Inc. NiHAO Sun Plaza, Shaw Boulevard, Princeton Street Barangay Wack-Wack Greenhills East, Mandaluyong City We have audited in accordance with Philippine Standards on Auditing, the accompanying consolidated financial statements of Nihao Mineral Resources International, Inc. and Subsidiaries as at December 31, 2012 and 2011 and for each of the three years ended December 31, 2012, included in this Form 17-A, and have issued our report thereon dated March 15, 2013. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the Index to Consolidated Financial Statements and Supplementary Schedules are the responsibility of the Company’s management. These schedules are presented for purposes of complying with the Securities Regulation Code Rule 68, As Amended (2011), and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects, the information required to be set forth therein in relation to the basic financial statements taken as a whole. SYCIP GORRES VELAYO & CO. Renato J. Galve Partner CPA Certificate No. 37759 SEC Accreditation No. 0946-AR-1 (Group A), February 25, 2013, valid until February 24, 2016 Tax Identification No. 102-087-055 BIR Accreditation No. 08-001998-20-2012, April 11, 2012, valid until April 10, 2015 PTR No. 3669685, January 2, 2013, Makati City March 15, 2013

SyCip Gorres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines

Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001, December 28, 2012, valid until December 31, 2015 SEC Accreditation No. 0012-FR-3 (Group A), November 15, 2012, valid until November 16, 2015

A member firm of Ernst & Young Global Limited

NiHAO Mineral Resources International, Inc. and SubsidiariesSEC Supplementary Schedules

December 31, 2012

Table of Contents

Schedule Description Page

A Financial Assets Short Term Cash Investments Available-for-sale Financial Assets 1

B Amounts Receivable from Directors, Officers, Employees, Related Parties,and Principal Stockholders (Other than Affiliates) 2

C Amounts receivable from related parties which are eliminated during the consolidation of financial statements 3

D Intangible Assets - Other Assets 4

E Long Term Debt 5

F Indebtedness to Related Parties 6

G Guarantees of Securities of Other Issuers 7

H Capital Stock 8

Other Required InformationReconciliation of Retained Earnings Available for Dividend Declaration 9MAP Showing the Relationship Between the Company and its Related Entities 10Schedule Showing Financial Soundness Indicators 11List of Effective Standards 12

Page 1

Name of Issuing entity and association of each issue

Number of shares or

principal amount of bonds and

notes

Amount shown in the balance sheet

Valued based on market quotation at balance sheet

date

Income received and accrued

SHORT TERM INVESTMENTS 599,704,419 P 599,704,419 P 14,584,967

AVAILABLE-FOR-SALE FINANCIAL ASSETSOriental Peninsula Resources Group, Inc. 15,000,200 shares 46,500,620 P 3.10 P Oriental Vision Mining Philippines, Inc. 31,500 shares 32,110,295 P N/A*

78,610,915 P

* This is carried at cost since the market price is not available.

NiHAO Mineral Resources International, Inc. and Subsidiaries

December 31, 2012Schedule A - Financial Assets

P

Page 2

Balance at Amounts Amounts Balance at beg inning of period Additions Collected Written Off Current Not Current end of period

Due from related parties 55,580,160 254,595 - - 55,834,755 55,834,755 P

Advances to officers and employees 94,091 655,725 80,440 669,376 669,376

Total 55,674,251 P 910,320 P 80,440 P - 56,504,131 P - 56,504,131 P

Name and Designation of debtor

NiHao Mineral Resources, International, Inc. and SubsidiariesSchedule B - Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties)

December 31, 2012

P P P P

P

P P P

Page 3

Balance at Amounts Amounts Balance at beginning of period Additions collected written off Current Not Current end of period

Mina Tierra Gracia, Inc. 108,465,114 P 2,702,404 )( 105,762,710 P 105,762,710 P

Bountiful Geomines, Inc. 27,665,797 (251,584.00) 27,414,213.00 27,414,213

Oregalore, Inc. 10,243,763 3,091,577 13,335,340 13,335,340

Masbate 13 Philippines, Inc. 49,830 4,607,595 4,657,425 4,657,425

Total 146,424,504 P 7,699,172 P 2,953,988 )( P - 151,169,688 P - 151,169,688 P

NiHAO Mineral Resources International, Inc. and SubsidiariesSchedule C - Amounts receivable from related parties which are eliminatred during the consolidation of financial statements

December 31, 2012

Name and Designation of debtor

P P P P

P

Page 4

Description Beginning balance Additions at cost Charged to cost

and expenses

Charged to other

accounts

Other changes additions

(deductions)Ending balance

Non - current AssetsMining rights 49,496,586 P 152,136,833 P - - - 201,633,419 P

Deduction

NiHAO Mineral Resources International, Inc. and Subsidiaries

December 31, 2012Schedule D - Intangible Assets - Other Assets

P P P P

Page 5

Title of Issue and type of obligation Amount authorized by indenture

Amount shown under caption" Current portion of long-term debt" in related

statement of financial posittion

Amount shown under caption" Long-Term Debt" in related statement of financial

position

NONE NONE NONE NONE

NiHAO Mineral Resources International, Inc. and SubsidiariesSchedule E - Long-Term Debt

December 31, 2012

Page 6

Name of related party Balance at beginning of period Balance at end of period

NONE NONE NONE

NiHAO Mineral Resources International, Inc. and Subsidiaries

December 31, 2012Schedule F - Indebtedness to Related Parties (Long-Term Loans from Related Companies)

Page 7

Name of issuing entity of securities guaranteed by the

company for which this statement is filed

Title of issue of each class of securities

guaranteed

Total amount guaranteed and

outstanding

Amount owned by person for which statement is filed

Nature of guarantee

NONE NONE NONE NONE NONE

NiHAO Mineral Resources International, Inc. and Subsidiaries

December 31, 2012Schedule G - Guarantees of Securities of Other Issuers

Page 8

Title of Issue Number of shares authorized

Number of shares issued and outstanding as shown

under the related statement of financial position

caption

Number of shares reserved for options,

warrants, coversion and other rights

Related parties Directors, officers and employees Others

Common shares - P1 par value 2,000,000,000 913,000,000 - 299,194,745 3,130,500 610,674,755

Number of shares held by

NiHAO Mineral Resources International, Inc. and SubsidiariesSchedule H - Capital Stock

December 31, 2012

Page 9

ANNEX "A"

Unappropriated Retained Earnings, as adjusted to available for dividend distribution, beginning (150,073,491)

Add: Net income actually earned/realized during the period 40,272,438 Net income during the period closed to Retained Earnings - Less Non-actual/unrealized income net of tax -

Equity in net income of associate/ joint venture - Unrealized foreign exchange gain-net (except those attributable to cash and cash equivalent) - Unrealized actuarial gain - Fair value adjustment (mark-to-market gains) - Fair value adjustment of investment property resulting to gain - Adjustment due to deviation from PFRS/GAAP - gain - Other unrealized gains or asjustments to the retained earnings as a result of certain - transactions accounted for under PFRS -

Subtotal - Add: Non-actual losses -

Depreciation on revaluation increment (after tax) - Adjustment due to deviation from PFRS/GAAP - loss - Loss on fair value adjustment of investment property (after tax) -

Subtotal - Net loss actually incurred during the periodAdd (less) -

Dividend declaration during the period - Appropriations of retained earnings - Reversals of appropriations - Effects of restructuring 150,073,491 Treasury shares -

Subtotal - 190,345,929 TOTAL RETAINED EARNINGS, END 40,272,438

AVAILABLE FOR DIVIDEND 40,272,438

NiHAO Mineral Resources International, Inc.Reconciliation of Retained Earnings Available for Dividend Distribution

December 31, 2012

Page 10

MAP SHOWING RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP

NIHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES

DECEMBER 31, 2012

ANNEX "B"

NiHAO Mineral Resources International, Inc. Parent Company

Mina Tierra Gracia, Inc. Bountiful Geomines, Inc. Oregalore, Inc. Oriental Vision Mining Corp.

GNA Resources, Ltd

Masbate 13 Philippines, Inc.

100% 100% 100% 15% 25%

80%

Page 11

NiHAO Mineral Resources International, Inc. and SubsidiariesKey Performance IndicatorsDecember 31, 2012

2012 2011 2012 2011

a.) Current Ratio

Current Assets 907,779,813 369,233,548 56.038 46.456 Current Liabilities 16,199,312 7,948,037

b.) Quick Ratio

Cash 619,947,767 304,155,480 38.270 38.268 Current Liabilities 16,199,312 7,948,037

c.) Debt-to-equity Ratio

Debt 16,199,312 7,948,037 0.013 0.009 Equity 1,245,949,182 911,973,394

d.) Book value per share

Equity 1,245,949,182 911,973,394 1.365 1.036 No. of Shares Outstanding 913,000,000 880,000,000

e.) Net Profit Margin

Net income 24,150,507 N/A 37.688% N/ARevenue 64,080,812 N/A N/A

f.) Asset to Equity Ratio

Asset 1,262,148,494 919,921,431 1.013 1.009 Equity 1,245,949,182 911,973,394

g.) Interest Rate Coverage Ratio

EBITInt. Expense

Not applicable. The Company has no borrowings in 2012 and 2011.

h.) Gross Profit Margin

Gross profit 11,943,037 N/A 18.637% - Revenue 64,080,812 N/A

Amount Ratio

*SGVMG700045*

NiHAO MINERAL RESOURCES INTERNATIONAL, INC. AND SUBSIDIARIES SCHEDULE OF THE EFFECTIVE STANDARDS AND INTERPRETATIONS

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as at December 31, 2012

Adopted Not Adopted

Not Applicable

Framework for the Preparation and Presentation of Financial Statements Conceptual Framework Phase A: Objectives and qualitative characteristics

PFRSs Practice Statement Management Commentary

Philippine Financial Reporting Standards

PFRS 1 (Revised)

First-time Adoption of Philippine Financial Reporting Standards

ü

Amendments to PFRS 1 and PAS 27: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

ü

Amendments to PFRS 1: Additional Exemptions for First-time Adopters

ü

Amendment to PFRS 1: Limited Exemption from Comparative PFRS 7 Disclosures for First-time Adopters

ü

Amendments to PFRS 1: Severe Hyperinflation and Removal of Fixed Date for First-time Adopters

ü

Amendments to PFRS 1: Government Loans ü

PFRS 2 Share-based Payment ü

Amendments to PFRS 2: Vesting Conditions and Cancellations ü

Amendments to PFRS 2: Group Cash-settled Share-based Payment Transactions

ü

PFRS 3 (Revised)

Business Combinations ü

PFRS 4 Insurance Contracts ü

Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts

ü

PFRS 5 Non-current Assets Held for Sale and Discontinued Operations ü

PFRS 6 Exploration for and Evaluation of Mineral Resources ü

PFRS 7 Financial Instruments: Disclosures ü

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets

ü

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets - Effective Date and Transition

ü

Amendments to PFRS 7: Improving Disclosures about Financial Instruments

ü

Amendments to PFRS 7: Disclosures - Transfers of Financial Assets

ü

Amendments to PFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities

Not early adopted

Amendments to PFRS 7: Mandatory Effective Date of PFRS 9 and Transition Disclosures

Not early adopted

- 2 -

*SGVMG700045*

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as at December 31, 2012

Adopted Not Adopted

Not Applicable

PFRS 8 Operating Segments ü

PFRS 9 Financial Instruments Not early adopted

Amendments to PFRS 9: Mandatory Effective Date of PFRS 9 and Transition Disclosures

Not early adopted

PFRS 10 Consolidated Financial Statements Not early adopted

PFRS 11 Joint Arrangements Not early adopted

PFRS 12 Disclosure of Interests in Other Entities Not early adopted

PFRS 13 Fair Value Measurement Not early adopted

Philippine Accounting Standards

PAS 1 (Revised)

Presentation of Financial Statements ü

Amendment to PAS 1: Capital Disclosures ü

Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation

ü

Amendments to PAS 1: Presentation of Items of Other Comprehensive Income

Not early adopted

PAS 2 Inventories ü

PAS 7 Statement of Cash Flows ü

PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

ü

PAS 10 Events after the Balance Sheet Date ü

PAS 11 Construction Contracts ü

PAS 12 Income Taxes ü

Amendment to PAS 12 - Deferred Tax: Recovery of Underlying Assets

ü

PAS 16 Property, Plant and Equipment ü

PAS 17 Leases ü

PAS 18 Revenue ü

PAS 19 Employee Benefits ü

Amendments to PAS 19: Actuarial Gains and Losses, Group Plans and Disclosures

ü

PAS 19 (Amended)

Employee Benefits Not early adopted

PAS 20 Accounting for Government Grants and Disclosure of Government Assistance

ü

PAS 21 The Effects of Changes in Foreign Exchange Rates ü

Amendment: Net Investment in a Foreign Operation ü

PAS 23 (Revised)

Borrowing Costs ü

PAS 24 Related Party Disclosures ü

- 3 -

*SGVMG700045*

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as at December 31, 2012

Adopted Not Adopted

Not Applicable

(Revised)

PAS 26 Accounting and Reporting by Retirement Benefit Plans ü

PAS 27 Consolidated and Separate Financial Statements ü PAS 27 (Amended)

Separate Financial Statements Not early adopted

PAS 28 Investments in Associates ü

PAS 28 (Amended)

Investments in Associates and Joint Ventures Not early adopted

PAS 29 Financial Reporting in Hyperinflationary Economies ü

PAS 31 Interests in Joint Ventures ü

PAS 32 Financial Instruments: Disclosure and Presentation ü

Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation

ü

Amendment to PAS 32: Classification of Rights Issues ü

Amendments to PAS 32: Offsetting Financial Assets and Financial Liabilities

Not early adopted

PAS 33 Earnings per Share ü

PAS 34 Interim Financial Reporting ü

PAS 36 Impairment of Assets ü

PAS 37 Provisions, Contingent Liabilities and Contingent Assets ü

PAS 38 Intangible Assets ü

PAS 39 Financial Instruments: Recognition and Measurement ü

Amendments to PAS 39: Transition and Initial Recognition of Financial Assets and Financial Liabilities

ü

Amendments to PAS 39: Cash Flow Hedge Accounting of Forecast Intragroup Transactions

ü

Amendments to PAS 39: The Fair Value Option ü

Amendments to PAS 39 and PFRS 4: Financial Guarantee Contracts

ü

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets

ü

Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date and Transition

ü

Amendments to Philippine Interpretation IFRIC-9 and PAS 39: Embedded Derivatives

ü

Amendment to PAS 39: Eligible Hedged Items ü

PAS 40 Investment Property ü

PAS 41 Agriculture ü

Philippine Interpretations

- 4 -

*SGVMG700045*

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as at December 31, 2012

Adopted Not Adopted

Not Applicable

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

ü

IFRIC 2 Members' Share in Co-operative Entities and Similar Instruments

ü

IFRIC 4 Determining Whether an Arrangement Contains a Lease ü

IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

ü

IFRIC 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment

ü

IFRIC 7 Applying the Restatement Approach under PAS 29 Financial Reporting in Hyperinflationary Economies

ü

IFRIC 8 Scope of PFRS 2 ü

IFRIC 9 Reassessment of Embedded Derivatives ü

Amendments to Philippine Interpretation IFRIC-9 and PAS 39: Embedded Derivatives

ü

IFRIC 10 Interim Financial Reporting and Impairment ü

IFRIC 11 PFRS 2- Group and Treasury Share Transactions ü

IFRIC 12 Service Concession Arrangements ü

IFRIC 13 Customer Loyalty Programmes ü

IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

ü

Amendments to Philippine Interpretations IFRIC- 14, Prepayments of a Minimum Funding Requirement

ü

IFRIC 16 Hedges of a Net Investment in a Foreign Operation ü

IFRIC 17 Distributions of Non-cash Assets to Owners ü

IFRIC 18 Transfers of Assets from Customers ü

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments ü

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Not early adopted

SIC-7 Introduction of the Euro ü

SIC-10 Government Assistance - No Specific Relation to Operating Activities

ü

SIC-12 Consolidation - Special Purpose Entities ü

Amendment to SIC - 12: Scope of SIC 12 ü

SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers

ü

SIC-15 Operating Leases - Incentives ü

SIC-25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

ü

SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease

ü

- 5 -

*SGVMG700045*

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as at December 31, 2012

Adopted Not Adopted

Not Applicable

SIC-29 Service Concession Arrangements: Disclosures. ü

SIC-31 Revenue - Barter Transactions Involving Advertising Services ü

SIC-32 Intangible Assets - Web Site Costs ü