Chile Mining Technologies Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Chile Mining Technologies Inc.	Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - Chile Mining Technologies Inc.	exhibit31-2.htm
EX-31.1 - EXHIBIT 31.1 - Chile Mining Technologies Inc.	exhibit31-1.htm
EX-32.1 - EXHIBIT 32.1 - Chile Mining Technologies Inc.	exhibit32-1.htm
EX-32.2 - EXHIBIT 32.2 - Chile Mining Technologies Inc.	exhibit32-2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________

Commission File No. 000-53132

CHILE MINING TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

Nevada	26-1516355
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

Jorge Canning 1410
Ñuñoa, Santiago
Republic of Chile
(Address of principal executive offices)

(56) (02) 813 1087
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]

The number of shares outstanding of each of the issuer’s classes of common equity, as of February 20, 2012 is as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.001 par value	10,062,275

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS.	F-1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	3
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	12
ITEM 4.	CONTROLS AND PROCEDURES.	12

PART II	OTHER INFORMATION	13

ITEM 1.	LEGAL PROCEEDINGS.	13
ITEM 1A.	RISK FACTORS.	13
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	13
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	13
ITEM 4.	MINE SAFETY DISCLOSURES	13
ITEM 5.	OTHER INFORMATION.	13
ITEM 6.	EXHIBITS.	13

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CHILE MINING TECHNOLOGIES INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

	Page
Interim Consolidated Financial Statements	F-1
Interim Consolidated Balance Sheets as at December 31, 2011 and March 31, 2011	F-2
Interim Consolidated Statement of Operations, deficit and comprehensive loss for the nine months ended December 31, 2011 and December 31, 2010	F-3
Interim Consolidated Statement of Cash flows for the nine months ended December 31, 2011 and December 31, 2010	F-4
Interim Consolidated Statement of Changes in Stockholders’ Deficiency for the nine months ended December 31, 2011 and year ended March 31, 2011	F-5
Condensed Consolidated Notes to financial statements	F-6

CHILE MINING TECHNOLOGIES, INC.

(Formerly Latin America Ventures, Inc.)

INTERIM CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2011 AND MARCH 31, 2011

(Amounts expressed in U.S. Dollars)

(Unaudited)

		December 31,			March 31,
		2011			2011
		(Unaudited)			(Audited)

ASSETS

Current
Cash and cash equivalent		-			437,124
Sundry assets and other receivables (Note 12)	$	344,819		$	279,942
Inventory (Note 11)		148,209			95,508
Goods in transit		-			-
		493,028			812,574
DEPOSITS AND OTHER ASSETS (Note 13)		641,539			932,291
DEFERRED FINANCING COSTS (Note 8 (b))		126,682			208,507
PROPERTY PLANT AND EQUIPMENT (Note 3)		4,489,976			5,235,099

	$	5,751,225		$	7,188,471

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current liabilities
Accounts payable and accrued liabilities	$	1,262,065		$	1,269,259
Loan from related parties (Note 5)		321,247			104,857
Loan from non related party (Note 14)		500,000			-
Obligation under capital leases		195,460			374,055
Due to related party (Note 5)		1,521,234			1,381,490
Convertible Promissory Note (Note 8 (c))		190,000			190,000

		3,990,006			3,319,661

PROMISSORY NOTES (Note 4)		1,825,060			1,607,983
LONG TERM -OBLIGATION UNDER CAPITAL LEASE		243,540			317,718
DERIVATIVE FINANCIAL INSTRUMENTS (Note 8 (a))		6,834,944			5,866,285

		12,893,550			11,111,647

REDEEMABLE COMMON STOCK (Note 8 (b))		3,128,605			3,128,605
Stockholders’ deficiency
Capital stock (note 6)		9,365			9,365
Additional paid in capital		1,822,309			1,822,309
Deficit		(12,101,804	)		(9,096,767	)
Accumulated other comprehensive income		(800	)		213,312

		(10,270,930	)		(7,051,781	)

Total liabilities and stockholders’ deficiency	$	5,751,225		$	7,188,471

Going Concern (Note 1)
Related Party Transactions (Note 5)
Commitments (Note 15)

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

F-2

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Amounts expressed in U.S. Dollars)

(Unaudited)

	For the three months				For the nine months
	ended				ended
	December 31,				December 31,
	2011		2010		2011		2010
	$		$		$		$
Sales	159,954		31,486		293,892		96,170

Cost of sales	347,275		129,137		946,868		395,927

Gross Profit (Loss)	(187,321	)	(97,651	)	(652,976	)	(299,757	)
Operating expenses:
Impairment of mining rights (Note 7)	-		30,465		701		37,385
Salaries and wages	20,776		117,155		96,210		320,860
General and administrative	248,584		183,418		928,611		768,365
Professional fees	26,988		83,860		40,872		611,189
	296,348		414,898		1,066,394		1,737,799


Operating loss before the undernoted	(483,669	)	(512,549	)	(1,719,370	)	(2,037,556	)

Other expense-interest (Note 8(b))	(27,275	)	(27,275	)	(81,825	)	(54,550	)

Other income (expense)-Derivative Financial Instrument	(1,743,811	)	(426,039	)	(968,659	)	(415,367	)

Imputed interest expense (Note 4)	(73,818	)	(86,385	)	(235,183	)	(246,356	)

Net Loss for the period	(2,328,573	)	(1,052,248	)	(3,005,037	)	(2,753,829	)
Foreign exchange translation adjustment for the period	(15,125	)	98,673		(214,112	)	710,212


Comprehensive income (loss) for the period	(2,343,698	)	(953,575	)	(3,219,149	)	(2,043,617	)

Weighted average number of common shares outstanding	9,364,593		9,364,593		9,364,593		8,681,645
Loss per share – basic and diluted	(0.25	)	(0.11	)	(0.34	)	(0.32	)

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

F-3

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts expressed in U.S. Dollars)

(Unaudited)

For the nine months ended December 31,

		2011			2010

Cash Flows from Operating Activities:
Net loss	$	(3,005,037	)	$	(2,753,829	)
Impairment of mining rights		701			37,385
Amortization		311,198			257,748
Imputed interest expense		235,183			246,356
Issue of convertible promissory note for professional services		-			190,000
Warrant derivative liabilities expensed		-			62,176
Amortization of deferred finance costs		81,825			54,550
Fair value adjustment relating to warrants		968,659			415,367
Changes in non-cash working capital:
Increase in sundry assets and other receivables		(95,689	)		(442,801	)
Increase in inventory		(65,573	)		(132,725	)
Decrease in goods in transit		-			22,850
Increase (Decrease) in accounts payable and accrued liabilities		80,618			(690,332	)
Decrease in deposits and other assets		230,223			-
Net Cash (used) by Operating Activities		(1,257,892	)		(2,733,255	)

Cash Flows from Investing Activities:
Acquisition of mining rights		(701	)		(37,385	)
Acquisition of property plant and equipment		(13,976	)		(3,480,448	)
Net Cash used by Investing Activities		(14,677	)		(3,517,833	)

Cash Flows from Financing Activities:
(Repayments) of promissory notes		-			(47,222	)
Due from related party		257,955			329,400
Loan from related party		215,787			-
Loan from non-related party		500,000			-
Capital lease increase ( repayment)		(276,576	)		989,990
Proceeds from redeemable common stock, net		-			5,286,190
Net Cash Provided By Financing Activities		697,166			6,558,358

Effects of foreign currency exchange rate changes		138,279			451,751
Net Increase (Decrease) in Cash and Cash Equivalents		(437,124	)		759,021
Cash and Cash Equivalents at beginning of the period		437,124			-
Cash and Cash equivalents at end of the period	$	-		$	759,021

Supplemental information:
Income tax paid		Nil			Nil
Interest paid		Nil			Nil

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

F-4

CHILE MINING TECHNOLOGIES, INC.

(Formerly Latin America Ventures, Inc.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY FOR THE NINE MONTHS

ENDED DECEMBER 31, 2011 AND YEAR ENDED MARCH 31, 2011

(Amounts expressed in U.S. Dollars)

(Unaudited)

									Accumulated
	Number of								Other
	common		Capital		Additional Paid				Comprehensive
	shares		stock		in capital		Deficit		Income (loss)		Total
Balance as at April 1, 2009*	6,000,000		6,000		4,715		(664,073	)	(33,871	)	(687,229	)
Discount on promissory notes					1,404,458						1,404,458
Net loss for the year	-		-		-		(1,177,963	)	-		(1,177,963	)
Foreign currency translation adjustment	-		-		-				149,268		149,268

Balance as at March 31, 2010	6,000,000		6,000		1,409,173		(1,842,036	)	115,397		(311,466	)
Private placement of shares	2,089,593		2,090								2,090
Stock for credit facility-AIBC	75,000		75								75
Reverse acquisition adjustment	4,800,500		4,800		(4,800	)					-
Cancellation of common shares	(3,600,500	)	(3,600	)	3,600						-
Forgiveness of debt by related parties					661,552						661,552
Discount on promissory notes adjusted due to forgiveness of debt					(261,051	)					(261,051	)
Premium on convertible promissory note					13,835						13,835
Net loss for the year							(7,254,731	)			(7,254,731	)
Foreign currency translation									97,915		97,915
Balance as at March 31, 2011	9,364,593		9,365		1,822,309		(9,096,767	)	213,312		(7,051,781	)
Net loss for the period							(3,005,037	)			(3,005,037	)
Foreign currency translation									(214,112	)	(214,112	)
Balance as at December 31, 2011	9,364,593		9,365		1,822,309		(12,101,804	)	(800	)	(10,270,930	)
*In a reverse merger, the historic stockholders’ deficiency of the accounting acquirer (Minera Licancabur S.A) is retroactively stated for all periods for the equivalent number of shares received in the reverse merger

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

F-5

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

1. NATURE OF OPERATIONS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the results for the interim periods.

The condensed consolidated financial statements should be read in conjunction with the financial statements and Notes thereto together with management’s discussion and analysis of financial condition and results of operations contained in the Company’s annual report on Form 10-K for the year ended March 31, 2011. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at December 31, 2011 and March 31, 2011, the results of its operations for the three and nine month periods ended December 31, 2011 and December 31, 2010, and its cash flows for the nine month periods ended December 31, 2011.. In addition, some of the Company’s statements in this quarterly report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the three and nine month period ended December 31, 2011 are not necessarily indicative of results to be expected for the full year.

The interim consolidated financial statements include the accounts of Chile Mining Technologies, Inc. (the “Company” or “Chile Mining” ), and its subsidiary Minera Licancabur S.A. (“Minera”) (99.99% owned by the Company). All material inter-company accounts and transactions have been eliminated.

Organization

On May 12, 2010, the Company entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Minera, a Chilean company, and its shareholders, pursuant to which the Company acquired 99.9% of the issued and outstanding capital stock of Minera in exchange for 6,000,000 shares of common stock, par value $0.001, which constituted 83.33% of the Company’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement and after giving effect to the Cancellation Agreement described below. The acquisition was accounted for as a recapitalization effected by a share exchange, wherein Minera is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

The Company’s Chief Executive Officer (“CEO”), who is also one of the former shareholders of Minera, retained one share of Minera, constituting 0.1% of Minera’s issued and outstanding capital stock. The acquisition of Minera was structured to allow the CEO to retain one share of Minera in order to comply with Chilean legal requirements to have at least two record owners of its capital stock. Upon the closing of the Share Exchange Agreement, the CEO entered into a nominee agreement with the Company pursuant to which he agreed to act as the record holder of such share, but agreed that all other rights to the share, including the right to receive distributions on the share, vote the share and be the beneficial owner of the share, rest in the Company.

As a condition precedent to the consummation of the Share Exchange Agreement, on May 12, 2010, the Company also entered into a cancellation agreement (the “Cancellation Agreement”) with Halter Financial Investments, LP (“HFI”) and Mr. Pierre Galoppi, the controlling stockholders, whereby HFI and Mr. Galoppi agreed to the cancellation of an aggregate of 3,600,500 shares of common stock owned by them.

Private Placement Transaction

On May 12, 2010, the Company also completed a private placement transaction with a group of accredited investors. Pursuant to a securities purchase agreement that was entered into with the investors and Minera (the “Securities Purchase Agreement”), the Company issued to the investors an aggregate of 2,089,593 shares of common stock for an aggregate purchase price of $5,809,000, or $2.78 per share, and warrants (the “Closing Warrants”) to purchase up to 1,044,803 shares of our common stock. The Closing Warrants have a term of four years, bear an exercise price of $3.61 per share (subject to customary adjustments), are exercisable on a net exercise or cashless basis and are exercisable by investors at any time after the closing date.

F-6

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

1. NATURE OF OPERATIONS-Cont’d

Pursuant to the Securities Purchase Agreement, the Company also agreed to certain “make good” provisions. Under the “make good” provisions, the Company issued additional warrants (the “Make Good Warrants”) to the investors to purchase up to an aggregate of 2,089,593 shares of its common stock, at an exercise price of $0.01 per share, which will only become exercisable if the company does not meet certain financial performance targets in 2011 and 2012. The “make good” provisions established minimum net income thresholds of $14,382,102 and $15,179,687 for the 2011 and 2012 fiscal years, respectively. If, in a given fiscal year, 90% of the applicable minimum net income threshold is not met, such aggregate number of Make Good Warrants will become exercisable equal to the amount by which the Company’s actual net income is less than the applicable financial target, divided by the financial target, and multiplied by 2,089,593. In connection with the private placement, the Company also entered into (i) a registration rights agreement, pursuant to which the Company is obligated to register the shares of common stock issued to investors, including the shares of common stock underlying the warrants, within a pre-defined period and (ii) a closing escrow agreement, with Halter Financial Securities, Inc., as placement agent, and Securities Transfer Corporation, as escrow agent, for deposit of funds by the investors.

The company also entered into lock-up agreements with each of our directors and officers, pursuant to which each of them agreed not to transfer any shares of capital stock held directly or indirectly by them for a one year period following the effective date of a registration statement covering the shares issued in connection with the private placement.

Convertible Promissory Note and Make Good Warrant

Halter Financial Group, L.P. (“HFG”) provided certain advisory services to the Company in connection with the acquisition of Minera and the private placement transaction described above. Pursuant to an advisory agreement that Minera entered into with HFG on April 16, 2009, HFG agreed to (a) advise Minera with regard to its desire to effect a combination transaction with a U.S. domiciled public shell corporation, (b) help Minera identify suitable investment bank(s) to act as placement agent for its contemplated private placement transactions and (c) counsel management on matters related to the operating a U.S. domiciled public company. Under the terms of the advisory agreement, HFG was entitled to receive a cash payment of $450,000 at the closing of the reverse acquisition of Minera. In lieu of such cash payment, HFG agreed to accept a cash payment of $260,000 and a promissory note issued by the Company in the principal amount of $190,000 that accrues simple annual interest at a rate of 3% (the “HFG Note”). The HFG Note is due and payable on the sooner of the closing of our next equity financing (including the receipt of additional funds by the Company from any subsequent closing of the May 12 private placement) or the 180th day following the date of its issuance. In addition, at any time that the HFG Note remains outstanding, it may be converted at HFG’s option into shares of our common stock at a conversion price of $2.78. At the closing, HFG was also issued a “Make Good” warrant, to purchase up to 985,104 shares of the Company’s common stock (the “HFG Make Good Warrant”). The terms of the HFG Make Good Warrant are identical to the terms of the Make Good Warrants issued to the investors in the private placement.

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. This contemplates that assets will be realized and liabilities and commitments satisfied in the normal course of business.

As shown in the accompanying financial statements, the Company has a working capital deficit of $3,496,978 and has incurred a deficit of $12,101,804 for the cumulative period to December 31, 2011. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the production of copper. Management has plans to seek additional capital through private placements and public offering of its capital stock. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations in the future. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

F-7

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

2. COMPLETION OF ACQUISITION

On May 12, 2010, Chile Mining Technologies, Inc (The “Company”) completed an acquisition of Minera pursuant to the Share Exchange Agreement. The acquisition was accounted for as a recapitalization effected by a share exchange, wherein Minera is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

3. PROPERTY PLANT AND EQUIPMENT

		December 31, 2011						March 31, 2011
				Accumulated
		Cost		Amortization		Net		Net

Santa Filomena Plant	$	888,926	$	-	$	888,926	$	911,212
Land-Santa Filomena Plant		47,942		-		47,942		52,428
Ana Maria Plant and equipment		4,107,605		723,057		3,384,548		4,087,184
Machinery under construction		157,902		-		157,902		172,677
Arica leasehold improvement		10,658		-		10,658		11,598
		5,213,034		723,057		4,489,976		5,235,099

Property Plant and Equipment is translated into U.S. Dollars using the rate of exchange prevailing at the balance sheet date. The Santa Filomena Plant is not being amortized as plant is under construction. Amortization for the nine month period amounted to $311,198 ($257,748 in 2010)

4. PROMISSORY NOTES

Promissory notes from related parties payable were unsecured and consisted of the following:

Company	Interest Rate		December 31,		March 31,
			2011		2011
Ivan Vergara	Nil	$	257,648	$	227,003
Jorge Pizarro	Nil		162,543		143,210
Geominco EIRL	Nil		1,404,869		1,237,770
Total Long Term		$	1,825,060	$	1,607,983

All long term liabilities are valued at fair market value at inception. These long term notes do not bear interest and had a maturity date of March 31, 2013. The Company recognized a discount on the face value of the loans at inception to adjust the carrying value to the fair value. Fair value was calculated by using the net present value of the loans, at an assumed interest rate of 18%. The amount of the discount, being $1,404,458 was recorded in “Additional paid in capital” on the opening balance sheet.

During the year ended March 31, 2011, the promissory note holders forgave $661,552 in debt. The transaction was accounted for as a capital transaction with related parties and the company credited ‘Additional paid in capital’ with $661,552. In addition, the Company credited additional paid in capital with $13,835 (refer to Note 8 (c))

The discounts are being amortized over the lives of the promissory notes using the effective interest method, with interest expense being recorded as an expense in the related period. The Company recognized interest expense to amortize discounts on promissory notes to related parties for the nine month period ended December 31, 2011 in the amount of $235,183 ($246,356 in 2010).

F-8

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

5. RELATED PARTY

a) As of December 31, 2011, the Company has loans payable to related parties for $321,247 (2010: $nil). Loan for $143,062 is unsecured, free of interest and is payable on March 31, 2012. The balance loan for $178,185 is unsecured, free of interest and payable on demand.

During the quarter, the Company paid salaries of $8,029 ($9,836 in 2010) to parties that are related to the shareholder of the Company.

During the quarter, the Company had equipment rental and consulting expenses of $253,708 (2010: $311,702) to a related party, a party related by virtue of companies under common control.

The transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties under common control.

b) The company owes the following amounts to related parties:

Included in accounts payable and accrued liabilities are amounts owing for services provided by two directors for $42,500 (2010 $nil).

As of December 31, 2011 the Company owes Geominco E.I.R.L., a related party for $1,521,234. This advance is unsecured non-interest bearing and due on demand.

6. CAPITAL STOCK

Authorized

Preferred Stock; $0.001 par value 10,000,000 shares authorized
Common Stock: $0.001 par value 100,000,000 shares authorized

Issued

Preferred Stock: None issued and outstanding
Common Stock: 9,364,593 common shares (2011: 9,364,593 common shares)

On May 12, 2010, the Company entered into and closed the Share Exchange Agreement with Minera and its shareholders, pursuant to which the Company acquired 99.9% of the issued and outstanding capital stock of Minera in exchange for 6,000,000 shares of common stock, par value $0.001, which constituted 83.33% of the Company’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement and after giving effect to the Cancellation Agreement.

As a condition precedent to the consummation of the Share Exchange Agreement, on May 12, 2010, the Company also entered into the Cancellation Agreement HFI and Mr. Pierre Galoppi, the controlling stockholders, whereby HFI and Mr. Galoppi agreed to the cancellation of an aggregate of 3,600,500 shares of common stock owned by them.

On May 6, 2010, the Company entered into a letter agreement that outlined the proposed terms of a standby facility of credit with AIBC International Corp.(SR), or AIBC. Under the letter agreement, the Company could request an advance from AIBC for up to an aggregate of $3 million, subject to satisfaction of certain conditions. In connection with the execution of the letter agreement, the Company issued to AIBC 75,000 shares of common stock.

On May 12, 2010, the Company also completed a private placement transaction with a group of accredited investors. Pursuant to the Securities Purchase Agreement that was entered into with the investors and Minera, the Company issued to the investors an aggregate of 2,089,593 shares of common stock for an aggregate purchase price of $5,809,000, or $2.78 per share, and the Closing Warrants to purchase up to 1,044,803 shares of common stock. The Closing Warrants have a term of four years, bear an exercise price of $3.61 per share (subject to customary adjustments), are exercisable on a net exercise or cashless basis and are exercisable by investors at any time after the closing date (refer note 8 (b)).

F-9

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

7. IMPAIRMENT OF MINING RIGHTS

The Company has expensed mining rights, since the Company currently has no formal plan to exploit these mineral rights.

8(a) DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments, as defined in FASB Accounting Standards Codification (“ASC”) 815-10-15-83 Derivatives and Hedging, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

The Company generally does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain other financial instruments and contracts, such as secured convertible debenture and warrant financing arrangements that are either (i) not afforded equity classification or (ii) embody risks not clearly and closely related to host contracts. As required by ASC 815, these instruments are required to be carried as derivative liabilities, at fair value, in the financial statements.

The following table summarizes the components of the derivative liabilities as of December 31, 2011 and March 31, 2011:

May 2010 Private Placement:		December 31, 2011		March 31, 2011
Investor warrants	$	607,031	$	882,859
Broker warrants		109,264		158,912
Credit facility warrants		-		304,200
Make Good warrants		4,158,292		3,072,048
Acquisition advisory fees:
Make Good warrants		1,960,357		1,448,266
Total derivative liabilities	$	6,834,944	$	5,866,285

The following table summarizes the common shares indexed to the derivative instruments as of December 31, 2011 and March 31, 2011:

May 2010 Private Placement:	December 31, 2011	March 31, 2011
Investor warrants	1,044,803	1,044,803
Broker warrants	188,062	188,062
Credit facility warrants	-	360,000
Make Good warrants	2,089,593	1,186,119
Acquisition advisory fees:
Make Good warrants	985,104	559,176
	4,307,562	3,338,160

Since the number of common shares indexed to the Make Good warrants is dependent on the number of warrants that will vest based on the achievement of certain performance conditions, the number of shares of common stock indexed to the warrants was determined considering the Company’s inability to meet the income threshold amounts.. Make Good warrants indexed to 1,537,349 shares of common stock vested as of March 31, 2011 when the Company did not meet the 2011 performance condition. The Company expects the balance of 1,537,348 Make Good warrants to vest on March 31, 2012.

F-10

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

8(b) MAY 2010 PRIVATE PLACEMENT

On May 12, 2010, the Company commenced a private placement of (i) 2,089,593 shares of common stock for an aggregate purchase price of $5,809,000, or $2.78 per share, (ii) Closing Warrants to purchase up to 1,044,803 shares of common stock, and (iii) Make Good Warrants to purchase up to an aggregate of 2,089,593 shares of common stock (the “May 2010 Private Placement). In connection with the May 2010 Private Placement, the Company entered into a Registration Rights Agreement related to the common stock and warrants that requires the Company to, among other things, file a Registration Statement within 65 days from the closing of the May 2010 Private Placement and achieve effectiveness as soon as possible , but in no event later than the 180^thday following the Final Closing Date or the 5^thtrading day following the date on which the Company is notified that the initial Registration Statement will not be reviewed or is no longer subject to review and comments. The Registration Rights Agreement does not provide for an alternative or contain a penalty in the event the Company is unable to fulfill its requirements. As a result of the registration rights obligation to file within a specified period, which is presumed not to be within the Company’s control, the Company is required to classify the common stock outside of stockholders’ equity as redeemable common stock.

The Closing warrants included in the May 2010 Private Placement are indexed to 1,044,803 shares of the Company’s common stock and may be exercised until the fourth anniversary of their issuance at an exercise price of $3.61 per share. Pursuant to the Securities Purchase Agreement, the Company also agreed to issue Make Good warrants to investors to purchase up to an aggregate amount of 2,089,593 shares of common stock at an exercise price of $0.01 per share which only become exercisable if the Company does not meet certain financial performance targets in 2011 and 2012. The “make good” provisions established minimum net income thresholds of $14,382,102 and $15,179,687 for the 2011 and 2012 fiscal years, respectively. If, in a given fiscal year 90% of the applicable minimum net income threshold is not met, such aggregate number of Make Good warrants will become exercisable equal to the amount by which our actual net income is less than the applicable financial target, divided by the financial target, and multiplied by 50% of the total warrant shares underlying the warrant agreement. The Closing and Make Good warrants were evaluated under the guidance of ASC 480, Distinguishing Liabilities and Equity for purposes of their classification. Due to the Make Good warrants contingent exercise provisions, they did not meet the definition of “indexed to a Company’s own stock” and were required to be classified as liabilities and measured at inception and an ongoing basis at fair value. The Closing warrants met the definition of “indexed to a Company’s own stock”; however, they did not meet eight conditions for equity classification provided in ASC 815-40 because they have firm registration rights with no economic alternative to registration. The Company is required to assume that cash settlement would be the only alternative to non-filing and effectiveness under the standards. Accordingly, the Closing warrants required liability classification at inception and on an ongoing basis at fair value until the registration rights are fulfilled. In order to estimate the fair value of the warrants the Company was required to develop certain subjective assumptions which are listed in more detail below.

The total basis in the financing was allocated first to derivative instruments, required to be classified as liabilities with the remaining basis being allocated to the common stock.

The following table illustrates the initial allocation:

					Financing
		Proceeds			Cost			Final
		Allocation			Allocation			Allocation
Gross proceeds	$	5,809,000		$	-		$	5,809,000
Financing costs paid in cash		-			(522,810	)		(522,810	)
		5,809,000			(522,810	)		5,286,190
Derivative liabilities:
Closing warrants:
Investor warrants		(1,519,144	)					(1,519,144	)
Broker warrants					(273,442	)		(273,442	)
Credit facility warrants					(523,440	)		(523,440	)
Make Good warrants		(131,891	)					(131,891	)
Total derivative liabilities		(1,651,035	)		(796,882	)		(2,447,917	)

Redeemable common stock		(4,157,965	)		-			(4,157,965	)
Financing costs paid in cash					407,792			407,792
Financing costs paid with warrants					621,568			621,568
Total redeemable common stock		(4,157,965	)		1,029,360			(3,128,605	)

Deferred finance costs	$	-		$	290,332		$	290,332

F-11

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

The Company amortized deferred finance cost by $27,275 during the quarter ended December 31, 2011. Deferred finance costs outstanding as of December 31, 2011 is $126,682.

The direct financing costs are allocated to the financial instruments (redeemable common stock and warrants), based upon their relative fair values. Amounts related to the warrants are recorded as deferred finance costs and amortized through charges to interest expense over the term of the arrangement using the effective interest method while amounts related to the common stock directly offset the carrying value of the redeemable common stock.

8(c) CONVERTIBLE PROMISSORY NOTE AND MAKE GOOD WARRANT

HFG provided certain advisory services to the Company in connection with the acquisition of Minera and the May 2010 Private Placement. Pursuant to an advisory agreement that Minera entered into with HFG on April 16, 2009, HFG agreed to (a) advise Minera with regard to its desire to effect a combination transaction with a U.S. domiciled public shell corporation, (b) help Minera identify suitable investment bank(s) to act as placement agent for its contemplated private placement transactions and (c) counsel management on matters related to the operating a U.S. domiciled public company. Under the terms of the advisory agreement, HFG was entitled to receive a cash payment of $450,000 at the closing of the reverse acquisition of Minera. In lieu of such cash payment, HFG agreed to accept a cash payment of $260,000 and the HFG Note in the principal amount of $190,000 that accrues simple annual interest at a rate of 3%. The HFG Note is due and payable on the sooner of the closing of the next equity financing (including the receipt of additional funds by the Company from any subsequent closing of the May 12 private placement) or the 180th day following the date of its issuance. In addition, at any time that the HFG Note remains outstanding, it may be converted at HFG’s option into shares of our common stock at a conversion price of $2.78.

The Company has evaluated the terms and conditions of the HFG Note under the guidance of ASC 815, Derivatives and Hedging. The embedded conversion feature (“ECF”) is an equity-linked feature that is not clearly and closely related to the risks of the host debt instrument. However, current accounting standards afforded an exemption to bifurcation of the ECF because it is both indexed to the Company’s own stock and otherwise met the definition of Conventional Convertible based upon the fixed conversion price.

At the closing, the Company was also issued to HFG the HFG Make Good Warrant for the purchase up to 985,104 shares of common stock. The terms of the HFG Make Good Warrant are identical to the terms of the Make Good Warrants issued to the investors in the private placement and accordingly, they did not meet the definition of “indexed to a Company’s own stock” and were required to be classified as liabilities and measured at inception and an ongoing basis at fair value. The fair value of the Make Good Warrants was determined using the Black-Scholes-Merton valuation technique over the term to contractual expiration. In applying this technique we were required to develop certain subjective assumptions which are listed in more detail below.

The fair value of the HFG Note was estimated based upon the present value of its future cash flows, using credit risk adjusted rates, as enhanced by the fair value of the ECF. Since the Company does not have an established credit rating, the credit risk adjusted yield of 15.51% was determined by reference to comparable instruments in public markets and industry-specific risk. The fair value of the ECF was determined using the Monte Carlo Simulation (“MCS”). MCS is an option-based model that embodies assumptions that would likely be considered by market participants who trade the financial instrument. In addition to more traditional assumptions, such as stock price, trading volatilities and risk-free rates, MCS assumptions include credit risk, interest risk and redemption considerations. Significant assumptions included in the MSC valuation technique were as follows:

F-12

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

		Assumption
Linked common shares		68,345
Stock price	$	2.78
Expected life (years)		4.00
Volatility (based on peers)		58.24%-63.55%
Risk adjusted yield		15.51%-16.94%
Risk adjusted interest rate		1.52%- 1.65%

The advisory fee expense was determined based upon the fair value of the HFG Note and the HFG Make Good Warrants. In accordance with APB 14, the premium on the HFG Note, representing the difference between the fair value and the face value of the note, was recorded to additional paid in capital.

The following table illustrates the initial allocation:

		Initial
		Allocation
Convertible Promissory Note	$	190,000
Make Good warrants		62,176
Additional paid in capital		13,835
Total	$	266,011

Fair value Disclosures:

ASC 820, Fair value Measurements and Disclosures, provides requirements for disclosure of liabilities that are measured at fair value on a recurring basis in periods subsequent to the initial recognition. Financial instruments arising from the May 2010 Private Placement that are measured at fair value on a recurring basis are (i) the investor warrants, (ii) the broker warrants, (iii) the credit facility warrants and (iii) Make Good warrants, respectively.

The warrants were valued using the Black-Scholes-Merton technique, and the Company estimated (i) the expected term as equal to the remaining term on the warrant, (ii) the volatility, based upon a reasonable peer group, (iii) the risk free rate as the published rate for zero coupon government securities with terms consistent with the expected term.

Information and significant assumptions embodied in our warrant valuations (including ranges for certain assumptions) as of December 31, 2011 are illustrated in the following tables:

	Fair value	Closing	Make Good
	hierarchy	Warrants	warrants
Warrants to purchase common stock:
Stock price (1)	(2)	$2.00	$2.00
Strike price	n/a	$3.61	$0.01
Volatility (2)	(2)
Range of volatilities		62.77% - 99.65%	62.77% - 99.65%
Equivalent volatility		73.32%	73.32%
Term (years) (3)	(3)	2.62	2.62
Risk-free rate (2)	(2)
Range of risk free rates		0.02% -0.42%	0.02% -0.42%
Equivalent risk free rate		0.15%	0.15%
Dividends	n/a	--	--

F-13

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

Fair value hierarchy:

(1)	Level 1 inputs are quoted prices in active markets for identical assets and liabilities, or derived there from. We used our trading market price as of June 30, 2011 as input into the model which is a Level 1 input.

(2)	Level 2 inputs are inputs other than quoted prices that are observable. The Binomial Lattice model provides for multiple assumptions related to volatility and risk free rate over the remaining term of the warrants. The equivalents or averages of these assumptions are also provided above. We use the current published yields for zero-coupon US Treasury Securities for our risk free rate. We did not have a historical trading history sufficient to develop an internal volatility rate for use in the Binomial Lattice model. As a result, we have used a peer approach wherein the historical trading volatilities of certain companies with similar characteristics as ours and who had a sufficient trading history were used as an estimate of our volatility. In developing this model, no one company was weighted more heavily.

(3)	Level 3 inputs are unobservable inputs. Inputs for which any parts are Level 3 inputs are classified as Level 3 in their entirety. The remaining term used equals the remaining contractual term as our best estimate of the expected term. The probability-weighted outcomes of achieving the performance conditions are also a Level 3 input.

Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high estimated volatility. Since derivative financial instruments are initially and subsequently carried at fair values, our income will reflect the volatility in these estimate and assumption changes.

The following table summarizes the changes in fair values of our derivative liabilities, which are reflected in income, during the three months ended December 31, 2011 and 2010:

		Three months ended December 31,
		2011			2010
May 2010 Private Placement:
Investor warrants	$			$	223,588
Broker warrants					40,245
Credit facility warrants		-			77,040
Make Good warrants		(1,185,111	)		(224,405	)
Acquisition advisory fees:					--
Make Good warrants		(558,700	)		(105,796	)
Total derivative (expense) income	$	(1,743,811	)	$	10,672

The following represents a reconciliation of the changes in our derivatives and the related changes in fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended December 31, 2011:

Balances at March 31, 2011	$	5,866,285
Fair value adjustments		968,659
Balances at December 31, 2011	$	6,834,944

9. SEGMENT INFORMATION

As at December 31, 2011 the Company operated in one reportable segment, being the exploration for and the development of mining rights in the Republic of Chile.

F-14

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

10. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to maintain its daily operations. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain the future development of the business.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company upon approval from its Board of Directors will balance its overall capital structure through new share issues or by undertaking other activities as deemed appropriate under the specific circumstances. As such, the Company is dependent on external financing to fund its daily operations. In order to procure materials and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the foregoing paragraph and the relative size of the Company, is reasonable.

There were no changes in the Company’s approach to capital management during the quarter ended December 31, 2011.

11. INVENTORY

The quantity of material in ore on the leach pad is based on surveyed volumes of mined material. Sampling and assaying determine the estimated amount of copper contained in material delivered to the leach pad. As at December 31, 2011 the amount of copper contained in material delivered to the leach pad is at a level of 1%.Expected copper recovery rates are determined using small-scale laboratory tests, historical trends and other known factors, including mineralogy of the ore and rock type. The ultimate recovery of copper contained in leach stockpiles can vary from a very low percentage to over 90 percent depending on several variables, including type of processing, metallurgical processes and mineralogy. As at December 31, 2011 the current ultimate recovery copper has been estimated at 80%.

12. SUNDRY ASSETS AND OTHER RECEIVABLES

		December 31,2011		March 31,2011
Employee advances	$	115,080	$	18,220
Deferred rent		229,739		156,865
Deposit for production materials		-		104,857
	$	344,819	$	279,942

In November 2010, the Company signed a ten year lease for operating two properties in Arica, Republic of Chile. The Company is obligated to pay a total monthly rent of $32,051 for the first 12 months (Chilean 15 million Pesos) which will be adjusted and offset with future royalty payments. The Royalty established will be equivalent to ten percent of the net value of the ore to be extracted and sold, metallic or nonmetallic, taking as reference the rates established by ENAMI monthly. However, the Company, at its full cost, may install a plant to process the ore extracted. The royalty will be paid monthly, starting in month thirteen counted from the signing of the contract. All direct and indirect expenses related to the program of exploration, conceptual study and feasibility study will be at the total and exclusive charge of the Company and not adjustable with the rent or royalty.

F-15

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

13. DEPOSITS AND OTHER ASSETS

		December 31, 2011		March 31,2011
Investment in San Daniel	$	287,653	$	314,571
Value added taxes (“VAT”)		353,885		433,175
Equipment deposit		-		184,545
	$	641,539	$	932,291

Deposits and other assets includes VAT for $353,885 (March 31, 2011: $433,175) as applicable to the laws in Chile, which the Company will apply for refund from the Government of Chile.

14. LOAN FROM NON RELATED PARTY

During the quarter ended June 30, 2011, the Company received a loan from a non-related party for $500,000. This loan is free of interest and payable in six monthly equal installments commencing six months after the receipt of loan. The Company will be obligated to pay interest at 10% per annum in the event of default.

15. COMMITMENTS

The company is committed to supply 100MT of cathodes per month to a customer for a period of 12 months for a total of 1,200MT commencing May, 2011. The selling prices are based on London metal prices less 8% commission. Any short supply will be carried forward to next month until the supply of 1,200MT is complete. The Company did not supply any cathodes as of December 31, 2011.

16. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK FACTORS

The fair value of a financial instrument is the estimated amount that the Company would receive or pay to settle the financial assets and financial liabilities as at the reporting date. The book value of sundry assets and other receivables, deposits and other assets, accounts payable and accrued liabilities, and due to related party approximate fair values at the balance sheet dates.

The fair value of the long-term debt has been estimated by discounting future cash flows at a rate offered for debt of similar maturities and credit quality.

All financial instruments except for derivative financial instruments and cash and cash equivalent are classified as level 3. Both cash and cash equivalents and derivative financial instruments are classified as level 1.

F-16

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

16. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK FACTORS-Cont’d

		December 31, 2011				March 31, 2011
		Carrying				Carrying
Assets/Liabilities		Value		Fair Value		Value		Fair Value
Cash and cash equivalents	$	-	$	-	$	437,124	$	437,124
Sundry assets and other receivables	$	344,819	$	344,819	$	279,942	$	279,942
Accounts payable and accrued liabilities	$	1,262,065	$	1,262,065	$	1,269,259	$	1,269,259
Due to related party	$	1,521,234	$	1,521,234	$	1,381,490	$	1,381,490

The following table summarizes the components of the derivative liabilities as of December 31, 2011 and inception of the instruments. These financial instruments are measured at fair value at Inception and as of December 31, 2011:

				Inception
May 2010 Private Placement:		December 31, 2011		May 12, 2010
Investor warrants	$	607,031	$	1,519,144
Broker warrants		109,264		273,442
Credit facility warrants		-		523,440
Make Good warrants		4,158,292		131,891
Acquisition advisory fees:
Make Good warrants		1,960,357		62,176
Total derivative liabilities	$	6,834,944	$	2,510,093

Interest rate risk

The company’s exposure to interest rate fluctuations is not significant.

Credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of amounts receivable. The Company is not exposed to material losses on its accounts receivable and future revenues.

Commodity price risk

The ability of the Company to develop its properties and the future profitability of the Company is directly related to the market price of certain minerals. The Company does not currently use derivative financial instruments to reduce its exposure to commodity price risk.

Liquidity risk

The Company’s exposure to liquidity risk is dependent on the collection of amounts receivable and the ability to raise funds to meet purchase commitments and to sustain operations. The company controls its liquidity risk by managing working capital and cash flows.

Foreign currency risk

The Company is exposed to foreign currency risk as substantially all of the Company’s cash is denominated in Chilean Pesos. This risk is partially mitigated by the fact that a significant portion of the costs associated with the mining claims and deferred exploration expenditures are incurred in Chilean Pesos.

F-17

CHILE MINING TECHNOLOGIES INC.

(Formerly Latin America Ventures, Inc.)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Amounts expressed in U.S. Dollars)

(unaudited)

17. SUBSEQUENT EVENTS

In connection with the Company's May 12, 2010 private placement, the Company issued to the investors and its advisors "make-good warrants" to purchase up to an aggregate of 3,074,697 shares of the Company's common stock at an exercise price of $0.01 per share, with the "make good" warrants becoming exercisable only if the Company does not meet certain financial performance targets in fiscal 2011 and 2012. The “make good” provisions established minimum net income thresholds of $14,382,102 and $15,179,687 for the 2011 and 2012 fiscal years, respectively. In August 2011, the Company determined that it had not met the financial performance target for 2011 and announced that the investors and advisors were entitled to exercise 50% of their respective "make-good" warrants. As of February 20, 2012 the Company has issued 697,682 shares upon exercise of the vested make good warrants, all of which were issued in 2012.

F-18

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in Chile, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Certain Defined Terms

Except as otherwise indicated by the context, references in this report to:

the “Company,” “we,” “us,” or “our,” are to the combined business of CMT and its 99.9% owned subsidiary, Minera, but do not include the stockholders of CMT;
“CMT” are to Chile Mining Technologies Inc., a Nevada corporation;
“Minera” are to Sociedad Minera Licancabur, S.A., a Chilean company;
“Chile” and “Chilean” are to the Republic of Chile;
“Peso” are to the Chilean peso, the legal currency of Chile;
“U.S. dollar,” “$” and “US$” are to the legal currency of the United States;
“MT” are to metric tons
“SEC” are to the Securities and Exchange Commission;
“Securities Act” are to the Securities Act of 1933, as amended, and “Exchange Act” are to the Securities Exchange Act of 1934, as amended;
“Exploration” means the process of locating commercially viable concentrations of minerals to mine; and
“Exploitation” means the act of extracting a mineral resource from source material.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking information. See “Special Note Regarding Forward Looking Statements” above for certain information concerning those forward looking statements. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

Overview

We are a mineral extraction company based in the Republic of Chile, with copper as our principal “pay metal.” Our founders, Messrs. Jorge Osvaldo Orellana Orellana and Jorge Fernando Pizarro Arriagada, have refined the electrowin process in a way that permits the electrowin process to be used at a relatively small mine and/or tailings sites. Electrowinning is a process in which positive and negative electrodes are placed in an acidic solution containing copper ions, and an electric current passed through the solution causes the copper to be deposited on the negative electrodes so that it can be collected.

We have obtained rights to conduct our mineral extraction operations at 7 different sites, and are in negotiations to obtain rights to one additional site, in and around the Coquimbo region, which is located in north-central Chile, approximately 400 kilometers north of Santiago. While these sites each have their own mineral deposits, we will procure the majority (approximately 88%) of our source material from non-traditional sources, including tailings, ore, or a combination thereof, by purchasing rights to such source material at smaller sites, where it is not economical for larger open-pit mining companies to operate, due largely to the transportation costs associated with moving source materials to fixed processing sites.

By utilizing MINI plants, we are able to build scalable, less expensive plants closer to source material deposits, resulting in significant processing savings. In addition, since smaller sites generally require higher copper prices, due to transportation costs, to operate profitably, these deposits can currently be purchased at a discount. By utilizing this strategy, we are able to reduce costs and operate profitably with smaller deposits.

The initial design capacity of each MINI plant is between approximately 1,400 and 2,000 metric tons of annual copper cathode output. Each MINI plant can be expanded on a modular basis in increments of 1,500 metric tons. We believe that the installed cost for a new 1,500 metric ton MINI plant, with the ability to produce tailings, at the average location, is about $3,000,000, or $2,000 per metric ton of annual capacity. Expanding the capacity of an existing MINI plant will cost between $400 and $800 per metric ton, depending on the site. Once the available source material deposits at and around the site of an existing MINI plant have been depleted, we anticipate that we can recover up to 70% of the cost of constructing a new MINI plant by relocating the support structures and processing equipment from the original MINI plant.

By reducing unit costs and carefully managing the average source material grade, we estimate that the MINI plant technology will allow us to break even at copper prices as low as US$1.00 per pound, or US$2,205 per metric ton. As of February 20 ,2012, copper was trading at $8,234 per metric ton on the LME. As the price of finished copper has increased, however, there has been increased interest in raw copper ore from a number of “higher cost” producers that can increase their production volumes by buying ore in the market from small miners. Historically, these producers would not have been interested in raw ore purchases, as they could not generate profits at lower finished copper prices. However the increase in finished copper prices has made third-party purchase attractive for a number of additional producers. While the additional producers entering the market for minerals has not had an affect on the cost of the ore, it has put the miners into a stronger negotiating position on the sales of their ore. As such, the market now demands that producers must purchase the ore by providing payment upon delivery of the ore, as opposed to the historical practice of providing payment following the sale of the finished copper. This shift in the market has affected our need for working capital substantially, in that we now require approximately $1 million per MINI plant to purchase enough ore to operate at full capacity.

Initially, we plan to sell our copper cathodes to Madeco, the largest cable producer in Chile. Based on our discussions with Madeco, we expect that the selling price will be at a 3% discount from the price for copper, adjusted for purity, on the LME. We expect that sales will be made under purchase orders where cash will be paid upon delivery. We anticipate that this arrangement will provide us with immediate cash flow with which we will use to fund our current operations. In the future, as business volume grows, we may elect to sell our copper cathodes at the generally higher prices prevailing on the LME.

Since our inception on January 2, 2008, we have focused our activities on acquiring mineral rights and sites on which to construct our MINI plants. Since starting construction in the fall of 2008, we have successfully completed our first scalable MINI plant, designated as the Ana Maria plant, located about 30 kilometers northeast of the town of Illapel, in the mining district of Matancilla. We have been testing the production of copper cathodes at the Ana Maria plant since late April 2009. In July 2009, we produced our first commercial run of copper cathodes.

We commenced operations at the Ana Maria plant in July 2009. The Ana Maria plant was taken off-line the first week of May 2010 in order to increase the capacity of this facility. As a result, the total capacity of the Ana Maria plant increased from 120 metric tons per month to 180 metric tons per month, effectively increasing its capacity by 50%. We resumed operations at the plant with the additional capacity in place at the beginning of August 2010. We believe that the site can be progressively expanded to about 5,000 metric tons per annum on a modular basis in increments of 500 to 1,000 metric tons, subject to the market price for copper and the grade and quantity of source materials available to be processed. In addition, we are also further enhancing our electrowin-based recovery techniques to reduce costs and improve the yield of the copper out of the mineral spectrum.

Our second plant, Santa Filomena, is approximately 75% complete as of the date of this report, and we have also begun preparatory work at one additional site we have under our control, in anticipation of the construction of additional MINI plants over the next 18 to 24 months.

The table below summarizes the capacity of each of our current and planned MINI plants

District	Plant	Initial Production	Initial Capacity/Year
		PHASE 1
Matancilla	Ana Maria	Operating	1,500 MT (1)
Salamanca	Santa Filomena	2^ndQuarter 2012	1,500 MT
Arica	Navidad	1^stQuarter 2013	1,500 MT
Combarbala	Gabriella	4^thQuarter 2013	1,500 MT
Panucillo	Panucillo	4^thQuarter 2013	1,500 MT
TOTAL			7,500 MT
		PHASE 2
Camisa	Camisa	TBD	1,500 MT
Chincolco	Jakeline	TBD	1,500 MT
Cerrado	Cerrado	TBD	1,500 MT
Cabildo	Jaqueline	TBD	1,500 MT
TOTAL			13,500 MT

(1) Since we commenced operations at the Ana Maria plant, total annual capacity has been increased to 2,225 metric tons.

To date, the majority of our $4,489,976 in capital expenditures has been used for the construction of our facilities.

Results of Operations

Comparison of the Three Months Ended December 31, 2011 and 2010

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage increase/decrease over prior year numbers for the periods indicated in dollars. The financial data for the three months ended December 31, 2011 reflects the third quarter of Fiscal Year 2012, while the financial data for the same period in 2010 reflects the third quarter of Fiscal Year 2011.

		Three Months Ended Dec 31,					% Increase/
		2011		2010			(Decrease)
Net sales	$	159,954		31,486		$	408.0%
Cost of sales		347,275		129,137			168.9%
Gross profit (loss)		(187,321	)	(97,651	)		91.8%
Operating expenses:
Impairment of mining rights		-		30,465			n/a
Salaries and wages		20,776		117,155			(82.3%	)
General and administrative expenses		248,584		183,418			35.5%
Professional fees		26,988		83,860			(67.8%	)
Total operating expenses		296,348		414,898			16.6%
Operating loss before the undernoted		(483,669	)	(512,549	)		(5.6%	)
Other expense-interest		(27,275	)	(27,275	)		0.0%
Other expense-derivative financial instrument		(1,743,811	)	(426,039	)		309.3%
Imputed interest expense		(73,818	)	(86,385	)		(14.5%	)
Net Loss		(2,328,573	)	(1,052,248	)		121.3%
Foreign exchange translation adjustment		(15,125	)	98,673			(115.3%	)
Comprehensive loss	$	(2,343,698	)	(953,575	)	$	145.8%

Net Sales. We had net sales of $159,954 for the three months ended December 31, 2011, as compared with net sales of $31,486 for the three months ended December 31, 2010. During the three months ended December 31, 2011, the Company was severely working capital constrained. Even with the limited working capital, we attempted to focus on producing as much copper as possible.

During the three months ended December 31, 2010, we ran the Ana Maria facility at a lower capacity due to the increased price of minerals and a limited amount of working capital. Our original business plan anticipated that third party mineral would be consigned to us, and that we would be required to pay for the cost of the mineral after the copper had been produced and sold. As the price of finished copper has increased to over $4.00 per pound during the year, there has been increased interest in raw copper ore from a number of “higher cost” producers that can increase their production volumes by buying ore in the market from small miners. The result has had no artificial affect on the cost of the ore, but it has put the miners into a stronger negotiating position on the sales of their ore. As a result, the market now demands that producers must purchase the ore by providing payment upon delivery of the raw ore. This change in market practice has substantially increased the amount of working capital required to ramp the plants and, as a result of our limited working capital, our production for this period was limited.

The Ana Maria plant also ran at a lower capacity for the 3 months ended December 31, 2010. The Ana Maria plant was taken off-line the first week of May 2010 in order to increase the capacity of this facility. As a result, the total capacity of the Ana Maria plant went from 120 MT/month to 180 MT/month, effectively increasing its capacity by 50%. We resumed operations at the plant with the additional capacity in place at the end of August 2010 and began ramping operations at this time. As a result, the Company had revenues of $31,486 for the three months ended December 31, 2010.

Cost of Sales. Cost of sales includes direct costs associated with the sale of our products. Cost of sales was $347,275 for the three months ended December 31, 2011, as compared with $129,137 for the three months ended December 31, 2010. The increase in cost of sales was mainly due to higher material, labor and other direct costs associated with production and higher amortization on plant and equipment for the three months ended December 31, 2011. In addition, the lower cost reflected for the same period in 2010 is due to the fact that we produced less copper.

Gross Profit (Loss). Gross profit (loss) is equal to the difference between our net sales and the cost of sales. For the three months ended December 31, 2011, we had a gross loss of $187,321, as compared with a gross loss of $97,651 for the three months ended December 31, 2010. The increase in gross loss was primarily due to the increase of cost of sales as discussed above.

Operating Expenses. Our operating expenses consist of impairment of mining rights, salaries and wages, general and administrative expenses and professional fees.

Impairment of Mining Rights. For the three months ended December 31, 2011, we had no impairment of mining rights, as compared with $30,465 for the three months ended December 31, 2010. We have expensed mining rights, since we currently have no formal plans to exploit these mining rights.

Salaries and Wages. Salaries and wages amounted to $20,776 for the three months ended December 31, 2011, as compared to $117,155 for the three months ended December 31, 2010. As the price of ore remained high during the year, we encountered working capital challenges and were forced to limit overhead costs. With limited resources, we worked hard to minimize salaries and wages during the period.

General and Administrative Expenses. General and administrative expenses consist primarily of building maintenance, repairs and other general expenses. General and administrative expenses for the three months ended December 31, 2011 were $248,584, as compared with $183,418 for the three months ended December 31, 2010. The increase was primarily due to the increased costs of being a publicly traded company and the required costs to support the Company’s sites and projects. In addition, we produced less copper during the December 31, 2010 quarter. As a result, we incurred fewer general and administrative expenses at that time.

Professional Fees. Professional fees consist of legal and other fees associated with our operations as a public company. For the three months ended December 31, 2011, we incurred professional fees of $26,988, as compared with $83,860 for the three months ended December 31, 2010. The decrease was due to our limiting outside contractors for the quarter ended December 31, 2011 due to our limited working capital available.

Other Expenses

Other Expense – Interest. On May 12, 2010 (during fiscal year 2011), we commenced a private placement of common shares, warrants and make good warrants. The direct financing costs were allocated to the financial instruments (redeemable common stock and warrants), based upon their relative fair values. Amounts related to the warrants were recorded as deferred finance costs and amortized through charges to interest expense over the term of the arrangement using the effective interest method, while amounts related to the common stock directly offset the carrying value of the redeemable common stock. For the three months ended December 31, 2011, we amortized deferred finance costs of $27,275, which resulted in no change from the three months ended December 30, 2010.

Other Expense – Derivative Financial Instrument. For the three months ended December 31, 2011, we recognized other expense for derivative financial instrument of $1,743,811, as compared to $426,039 for derivative financial instrument during the three months ended December 31, 2010. On May 12, 2010, (during fiscal year 2011), we commenced a private placement of common shares, warrants and make good warrants. We valued our derivative financial instruments on inception (May 12, 2010) at fair value for $2,510,093. Derivative financial instruments are initially, and subsequently, measured at fair value and were recorded as liabilities. The fair value of the derivative financial instrument was valued at $5,091,133 as of September 30, 2011. The fair value of the derivative financial instruments increased to $6,834,944 as of December 31, 2011. The increase in fair value resulted in the Company recognizing loss for $1,743,811 in its Income statement.

Imputed Interest Expense. Imputed interest expense is related to unsecured, no interest promissory notes from related parties. These loans were valued at fair value at inception. We recognized a discount on the face value of the loans at inception to adjust the carrying value to the fair value. Discounts associated with these notes are being amortized over the lives of the promissory notes using the effective interest method, with interest expense being recorded as an expense in the related period. We recognized interest expense to amortize discounts on promissory notes to related parties for the three months ended December 31, 2011 in the amount of $73,818, as compared with $86,385 for the three months ended December 31, 2010.

Net Loss. As a result of the cumulative effect of the foregoing factors, we generated a net loss of $2,328,573 for the three months ended December 31, 2011, as compared to a net loss of $1,052,248 for the three months ended December 31, 2010.

Comparison of the Nine Months Ended December 31, 2011 and 2010

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage increase/decrease over prior year numbers for the periods indicated in dollars. The financial data for the nine months ended December 31, 2011 reflect the first, second and third quarters of Fiscal Year 2012, while the financial data for the same period in 2010 reflect the first, second and third quarters of Fiscal Year 2011.

		Nine Months Ended
		December 31,
		2011			2010
							% Increase /
		Amount			Amount		Decrease
Net sales	$	293,892		$	96,170		205.6%

Cost of sales	$	946,868		$	395,927		139.2%
Gross profit	$	(652,976	)	$	(299,757	)	117.8%

Operating expenses
Impairment of mining rights	$	701		$	37,385		(98.1%	)
Salaries and wages	$	96,210		$	320,860		(70.0%	)
General and admin expenses	$	928,611		$	768,365		20.9%
Professional fees	$	40,872		$	611,189		(93.3%	)

Total operating expenses	$	1,066,394		$	1,737,799		(38.6%	)


Operating loss before the undernoted	$	(1,719,370	)	$	(2,037,556	)	(15.6%	)
Other expense-interest	$	(81,825	)	$	(54,550	)	50.0%
Other income (expense)-Derivative Financial Instrument	$	(968,659	)	$	(415,367	)	133.2%
Imputed Interest Expense	$	(235,183	)	$	(246,356	)	(4.5%	)

Net loss for the period	$	(3,005,037	)	$	(2,753,829	)	9.1%
Foreign exchange translation adjustment for the period	$	(214,112	)	$	710,212		(130.1%	)

Comprehensive loss for the year	$	(3,219,149	)	$	(2,043,617	)	57.5%

Net Sales. The Company had revenues of $293,892 for the nine months ended December 31, 2011 as compared with $96,170 for the nine months ended December 30, 2010. Since our inception, we have run the Ana Maria facility at lower capacities due to the increased price of minerals and our limited amount of working capital. Our original business plan anticipated that third party mineral would be consigned to us, and that we would be required to pay for the cost of the mineral after the copper had been produced and sold. As the price of finished copper has increased to over $4.00 per pound during the year, there has been increased interest in raw copper ore from a number of “higher cost” producers that can increase their production volumes by buying ore in the market from small miners. The result has had no artificial affect on the cost of the ore, but it has put the miners into a stronger negotiating position on the sales of their raw ore. As a result, the market now demands that producers must purchase the ore by providing payment upon delivery of the ore. This has substantially increased the amount of working capital required to ramp the plants. During the nine months ended December 31, 2011 the Company had limited resources and working capital. We attempted to focus our resources on copper production, but were limited in our production.

The Ana Maria plant was taken off-line the first week of May 2010 in order to increase the capacity of this facility. As a result, the total capacity of the Ana Maria plant went from 120 MT/month to 180 MT/month, effectively increasing its capacity by 50%. We resumed operations at the plant with the additional capacity in place at the end of August 2010 and began ramping operations at this time. As a result, the Company had revenues of $96,170 for the nine months ended December 31, 2010 because the facility was not in production for a significant portion of this time.

Cost of Sales. Cost of sales includes direct costs associated with the sale of the product. The Company incurred cost of sales of $946,868 for the nine months ended December 31, 2011, as compared with $395,927 for the year ago same period ending December 31, 2010. The increase in cost of sales was mainly due to higher material, labor and other direct costs allocated with production and higher amortization on plant and equipment for the nine months ended December 31, 2011. In addition, the lower cost reflected for the same period in 2010 is due to the fact that we were in production for only part of this period.

Gross Profit (loss). Gross profit is equal to the difference between our revenue and the cost of revenue. Gross margin is equal to gross profit divided by revenue. In the nine months ended December 31, 2011, gross loss was $652,976 as compared with $299,757 for the nine months ended December 31, 2010. The increase in gross loss was primarily due to the increase in cost of sales discussed above.

Operating Expenses. Our operating expenses primarily consist of salaries and wages, general and administrative expenses and professional fees. As we continue to ramp up our extraction activities, we will begin to incur material operating costs

Impairment of Mining Rights. For the nine months ended December 31, 2011, we had impairment of mining rights of $701, as compared with $37,385 for the nine months ended December 31, 2010. We have expensed mining rights, since we currently have no formal plans to exploit these mining rights.

Salaries and Wages. For the nine months ended December 31, 2011, salaries and wages were $96,210 as compared to $320,860 for the nine months ended December 31, 2010. As the price of ore remained high during the year, we encountered working capital challenges and were forced to limit overhead costs. With limited resources we were forced to minimize salaries and wages during the period.

General and Administrative Expenses. General and administrative expenses consist primarily of building maintenance, repairs and other general expenses. We expect most components of our general and administrative expenses will increase as our business grows and as we incur increased costs as a public company. General and administrative expenses for the nine months ended December 31, 2011 were $928,611 as compared with $768,365 for the same period in 2010. The increase was primarily due to the increased costs of being a publicly traded company and the required costs to support the Company’s sites and projects. Since the Ana Maria plant was taken off-line for a portion of the nine months ended December 31, 2010, we incurred fewer general and administrative expenses at that time.

Professional Fees. Professional fees consist of legal and other fees associated with our private operating as a public company. For the nine months ended December 31, 2011, professional fees were $40,872, as compared to $611,189 for the nine months ended December 31, 2010. This significant decrease is due to the fact that we incurred professional fees and expenses related to undertaking the private placement transaction and becoming a public company in May 2010.

Other Expenses

Other expense – interest. Interest expense for the nine months ended December 31, 2011 was $81,825, as compared to $54,550 for the nine months ended December 31, 2010, which represents the amortization of deferred finance costs (refer to note 8(b) to the financial statements). The Company commenced the amortization of deferred financing costs from July 1, 2010.

Other Income-Derivative Financial Instrument. For the nine months ended December 31, 2011, we recognized other expense for derivative financial instrument of $968,659, as compared to $415,367 for derivative financial instrument during the nine months ended December 31, 2010. On May 12, 2010, (during fiscal year 2011), we commenced a private placement of common shares, warrants and make good warrants. We valued our derivative financial instruments on inception (May 12, 2010) at fair value for $2,510,093. Derivative financial instruments are initially, and subsequently, measured at fair value and were recorded as liabilities. The fair value of the derivative financial instrument was valued at $5,866,285 as of March 31, 2011. The fair value of the derivative financial instruments increased to $6,834,944 as of December 31, 2011. The increase in fair value resulted in the Company recognizing expense for $968,659 in its Income statement for the nine months ended December 31, 2011.

Imputed Interest Expense. Interest expense relating to initial recognition of long term non-interest bearing loans to related parties for the nine months ended December 31, 2011 was $235,183 as compared to $246,356 for the nine months ended December 31, 2010. This relates to the valuation of promissory notes valued at fair market value at inception. These long term promissory loans do not bear interest and had a maturity date of March 31, 2013. The Company recognized a discount on the face value of the loans at inception to adjust the carrying value to the fair value. The discounts are being amortized over the lives of the promissory notes using the effective interest method, with interest expense being recorded as an expense in the related period

Net Loss. Net loss increased to $3,005,037 for the nine months ended December 31, 2011 from a net loss of $2,753,829 for the same period last year, mainly as a result of the reasons as stated above.

Liquidity and Capital Resources

As of December 31, 2011 we had no cash or cash equivalents, and had a working capital deficit of $3,496,978. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

Cash Flow
(all amounts in U.S. dollars)

		Nine Months Ended December 31,
		2011			2010
Net cash provided by (used in) operating activities	$	(1,257,892	)	$	(2,733,255	)
Net cash provided by (used in) investing activities		(14,677	)		(3,517,833	)
Net cash provided by (used in) financing activities		697,166			6,558,358
Effects of Exchange Rate Change in Cash		138,279			451,751
Net Increase in Cash and Cash Equivalents		(437,124	)		759,021
Cash and Cash Equivalents, Beginning		437,124			-
Cash and Cash Equivalent, End	$	-		$	759,021

Operating Activities

Net cash used in operating activities was $1,257,892 for the nine months ended December 31, 2011 as compared to $2,733,255 net cash used in operating activities for the nine months ended December 31, 2010. The decrease in cash used in operating activities is mainly due to the decrease in deposits and other assets and our limited capital.

Investing Activities

Net cash used in investing activities for the nine months ended December 31, 2011 was $14,677, as compared to $3,517,833 for the nine months ended December 31, 2010. This decrease is mainly the result of the Company conserving working capital and limiting its capital investment in the nine months ended December 31, 2011. The increased cash used in investing activities for the nine months ended December 31, 2010 was the result of the acquisition of plant and property to continue construction of the second MINI plant facility at the Salamanca site and to develop the Navidad project.

Financing Activities

Net cash provided by financing activities for the nine months ended December 31, 2011 was $697,166, as compared to $6,558,358 for the nine months ended December 31, 2010. This decrease was primarily due to a decrease in proceeds from common stock in 2011 as compared to 2010.

As discussed above, on May 12, 2010, we completed a private placement in which we issued and sold to certain accredited investors an aggregate of 2,089,593 shares of our common stock for an aggregate purchase price of $5,809,000, or $2.78 per share, and warrants to purchase up to 1,044,803 shares of our common stock. The warrants have a term of four years, bear an exercise price of $3.61 per share (subject to customary adjustments), are exercisable on a net exercise or cashless basis and are exercisable by investors at any time after the closing date. As a result of this private placement, we raised approximately $5.8 million in gross proceeds, which left us with approximately $5.3 million in net proceeds after the deduction of offering expenses.

Overall Liquidity and Capital Resources

In May 2010, we determined that potential long-term opportunities of increasing the capacity at the Ana Maria plant outweighed the short-term costs to us of taking the plant off-line. Accordingly, we shut down operations at the Ana Maria facility for a period of approximately three months and increased the facility’s capacity by 50%. As a result, we generated only $96,170 in net sales for the nine months ended December 31, 2010, which affected our cash flows from operations.

As discussed above, through the course of our operations we have realized that MINI plants which process tailings will now require an additional module at a cost of $500,000 in order to more efficiently process the tailings. Accordingly, the total cost of construction per such MINI plant has increased from our initial estimates of $2,500,000 to approximately $3,000,000. In addition, due to the higher copper prices, there has been a significant increase in demand for raw copper ore. As a result, the market now demands that any producer must purchase the ore by providing payment at the delivery of the ore, and therefore, we now require approximately $500,000 per MINI plant to purchase enough ore to operate at full capacity.

Initially, we estimated that it would cost approximately $2,500,000 in working capital per plant to construct and operate the plant to capacity. However, as discussed above, we now require approximately $3,500,000 in working capital per MINI plant in order to construct and operate the plant to capacity.

In order to fully operate on our business plan, we will need an aggregate of approximately $2.2 million to operate at full capacity at our Ana Maria and Filomena plants. In addition, we will need approximately $1.3 million in order to fully capitalize on our opportunity at the site in Arica, as discussed elsewhere in this report. Accordingly, we will need to raise approximately $3.5 million.

If we are able to obtain sufficient funds, through a financing, bank loans or a combination thereof, our plan of operations over the next 12 months is as follows:

Ana Maria Plant: First, we will spend approximately $140,000 on equipment for upgrades and repairs at the existing plant. An additional $400,000 will be spent to purchase mining rights and $200,000 in working capital will be required to ramp production to capacity.

Filomena Plant: Once we have fully funded the Ana Maria plant as indicated above, we will spend approximately $200,000 in manufacturing equipment to complete construction of the plant and commence operations. In addition, we will spend approximately $887,000 over several years to purchase mining rights and $338,000 of working capital to allow the plant to operate at full capacity.

Arica: Once we have fully funded the Ana Maria and Filomena plants as indicated above, we intend to spend approximately $3.8 million on the Arica project. An initial $1.0 million will be spent on capital equipment for the open pit mining exploitation. In addition, $2.5 million will be spent on construction of a new MINI plant at the Arica site, and $300,000 will be used for working capital at the plant. We anticipate that construction of the Arica plant will be funded by a combination of a financing or bank loans, and cash flow from ongoing operations at our Ana Maria and Filomena MINI plants. We anticipate that we will begin construction on the Arica plant in September 2012, with the expectation that the facility will commence operations in March 2013.

Obligations under Material Contracts

On September 11, 2008, we issued a promissory note to Geominco in exchange for a loan of 200,000,000 Pesos (approximately $381,345). On June 17, 2010, Geominco forgave 186,308,540 Pesos of the indebtedness under this loan, pursuant to a Loan Cancellation Agreement. Therefore, as of December 31, 2011, 13,691,460 Pesos (approximately $26,106) of this loan, which does not bear interest and matures on March 31, 2013, remains outstanding.

On December 30, 2008, we issued a promissory note to Geominco in exchange for a loan of 100,000,000 Pesos (approximately $190,672). The promissory note does not bear interest and matures on March 31, 2010. The entire amount of the loan was outstanding as of December 31, 2011 and remains outstanding.

On July 31, 2009, we issued a promissory note to Geominco in exchange for a loan of 250,000,000 Pesos (approximately $476,681). The promissory note does not bear interest and matures on March 31, 2013. The entire amount of the loan was outstanding as of December 31, 2011 and remains outstanding.

On December 31, 2009, we issued a promissory note to Geominco in exchange for a loan of 554,200,000 Pesos (approximately $1,056,708). The promissory note does not bear interest and matures on March 31, 2013. The entire amount of the loan was outstanding as of December 31, 2011 and remains outstanding.

From time to time, Minera has borrowed funds from its shareholders, directors and officers. As of March 31, 2010, Minera had borrowed 200,000,000 Pesos (approximately $381,345) from Iván Orlando Vergara Huerta, a shareholder, and 231,000,000 Pesos (approximately $440,453) from Jorge Fernando Pizarro Arriagada, a shareholder. On June 17, 2010, Mr. Jorge Fernando Pizarro Arriagada forgave 126,420,030 Pesos (approximately $241,048) of the indebtedness under his loan and Mr. Iván Orlando Vergara Huerta forgave 34,229,250 Pesos (approximately $65,266) of the indebtedness under his loan, pursuant to separate Loan Cancellation Agreements. The outstanding face values of the loans, which do not bear interest and mature on March 31, 2013, remained outstanding as of December 31, 2011.

Inflation

Inflation does not materially affect our business or the results of our operations.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Seasonality

The price of copper on the LME fluctuates during the year, with prices tending to be stronger in the April to September period, and weaker in the October to March period, subject to global supply and demand.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this report on Form 10-Q. This evaluation was carried out under the supervision and with the participation of our management, including our President and Chief Executive Officer, and our Chief Financial Officer. Based upon that evaluation, management concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to management (including the chief executive officer and chief financial officer) to allow timely decisions regarding required disclosure and that our disclosure controls and procedures are effective to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

There were no changes in our internal control over financial reporting identified in connection with the evaluation performed that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Internal Controls Over Financial Reporting

Section 404 of the Sarbanes-Oxley Act of 2002 requires that management document and test the Company’s internal control over financial reporting and include in this Quarterly Report on Form 10-Q a report on management’s assessment of the effectiveness of our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting is effective, as of December 31, 2011.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We did not sell any equity securities during the quarter ended December 31, 2011.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

The following exhibits are filed as part of this report or incorporated by reference:

Exhibit
Number	Description
31.1	Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS *	XBRL Instance Document
101.SCH *	XBRL Taxonomy Extension Schema Document
101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *	XBRL Taxonomy Extension Label Linkbase Document
101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document

*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Chile Mining Technologies Inc.

Dated: February 21, 2012	/s/ Jorge Osvaldo Orellana
	Orellana
	Jorge Osvaldo Orellana Orellana
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

Dated: February 21, 2012	/s/ Ronald Christian Pellegrini Vasquez
	Ronald Christian Pellegrini Vasquez
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

EXHIBIT INDEX

Exhibit
Number	Description
31.1	Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Attached files

Chile Mining Technologies Inc. Reports

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