6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2013.

Commission File Number001-35307

TASMAN METALS LTD.

____________________________________________________________________________

(Translation of registrant’s name into English)

#1305 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7

_____________________________________________________________________________

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.  Form 20-F [X]  Form 40-F [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INCORPORATION BY REFERENCE

This Form 6-K is hereby incorporated by reference into the registration statement on Form F-3 (File No. 333-190863), and the prospectus included therein, of Tasman Metals Ltd. and to be part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

1

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.

	TASMAN METALS LTD.
	(Registrant)
Date November 27, 2013	By:	/s/ Mark Saxon
		Mark Saxon, President and CEO

EXHIBIT INDEX

Exhibit Number	Description
99.1	Consolidated Financial Statements for the Years Ended August 31, 2013, 2012, 2011
99.2	Management’s Discussion and Analysis for the Year Ended August 31, 2013
99.3	Certification of Annual Filings by CEO
99.4	Certification of Annual Filings by CFO

2

EX-99.1

EXHIBIT 99.1

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS

ENDED AUGUST 31, 2013, 2012, 2011

TASMAN METALS LTD.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED

AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

Page 1

Independent Auditor’s Report

To the Shareholders  of Tasman Metals Ltd.

We have audited the accompanying consolidated financial statements of Tasman Metals Ltd., which comprise the consolidated statements of financial position as at August 31, 2013, August 31, 2012 and September 1, 2011, and the consolidated statements of comprehensive loss, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended August 31, 2013, August 31, 2012 and August 31, 2011, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

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

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

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

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

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Tasman Metals Ltd. as at August 31, 2013, August 31, 2012 and September 1, 2011, and its financial performance and its cash flows for the years ended August 31, 2013, August 31, 2012 and August 31, 2011 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 3 in the consolidated financial statements which describes the change in accounting policy related to the treatment of exploration and evaluation expenditures by Tasman Metals Ltd.

"D&H Group LLP"

Vancouver, B.C.
November 25, 2013	Chartered Accountants

Page 2

TASMAN METALS LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars - unless otherwise stated)

	Notes		August 31, 2013 $			August 31, 2012 $ (Note 3)			September 1, 2011 $ (Note 3)
ASSETS
Current assets
Cash		5		5,601,492			9,778,040			15,217,096
Amounts receivable				13,444			44,581			11,688
GST/VAT receivables				56,240			158,271			59,773
Prepaids				69,302			69,929			54,165
Total current assets				5,740,478			10,050,821			15,342,722
Non-current assets
Investment		6		24,805			80,862			332,144
Property, plant and equipment		7		175,485			255,338			128,654
Exploration and evaluation assets		8		7,883,939			6,159,165			2,287,066
Bond deposit				31,646			3,496			3,292
Total non-current assets				8,115,875			6,498,861			2,751,156
TOTAL ASSETS				13,856,353			16,549,682			18,093,878
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities				645,492			782,977			381,479
TOTAL LIABILITIES				645,492			782,977			381,479
SHAREHOLDERS’ EQUITY
Share capital		9		20,299,802			19,808,552			18,888,813
Share-based payments reserve				9,056,102			8,565,897			5,070,735
Deficit				(16,034,024	)		(12,552,782	)		(6,415,723	)
Accumulated other comprehensive (loss) gain				(111,019	)		(54,962	)		168,574
TOTAL SHAREHOLDERS’ EQUITY				13,210,861			15,766,705			17,712,399
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				13,856,353			16,549,682			18,093,878

Events after the reporting period - Note 15

These consolidated financial statements were approved and authorized for issue by the Board of Directors on November 25, 2013 and are signed on its behalf by:

/s/ Mark Saxon	/s/ Nick DeMare
Mark Saxon	Nick DeMare
Director	Director

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

Page 3

TASMAN METALS LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in Canadian Dollars - unless otherwise stated)

			Year Ended August 31
	Notes		$	2013		2012 $ (Note 3)			2011 $ (Note 3)
Expenses
Accounting and administration		10(b)		126,793			71,528			80,375
Audit				41,947			72,091			67,903
Corporate development				110,374			214,946			268,638
Depreciation		7		56,229			40,191			7,040
General exploration				88,577			48,085			113,780
Investor relations				10,500			42,000			41,500
Legal				260,129			123,599			86,530
Management		10(a)		162,000			162,000			158,250
Office				206,279			305,653			84,659
Professional		10		699,141			708,443			221,770
Regulatory				69,403			126,355			35,278
Rent		10(b)		59,414			48,623			4,800
Repairs and maintenance				3,396			-			-
Salaries and benefits				290,616			204,970			116,028
Shareholder costs				35,056			43,381			18,268
Share-based compensation		9(d),10(a)		654,705			3,699,139			4,628,620
Transfer agent				24,452			42,586			31,573
Travel				194,759			277,123			177,338
				3,093,770			6,230,713			6,142,350
Loss before other items				(3,093,770	)		(6,230,713	)		(6,142,350	)
Other items
Gain on sale of investment		6(b)		-			-			565,978
Gain on option and sale of exploration and evaluation assets		8(b)		-			-			100,137
Gain on sale of property, plant and equipment				1,921			-			3,683
Impairment of exploration and evaluation assets		8(a)		(498,114	)		-			(14,803	)
Interest income				95,935			151,298			135,783
Foreign exchange				12,786			(29,898	)		(37,598	)
				(387,472	)		121,400			753,180
Loss before deferred income tax				(3,481,242	)		(6,109,313	)		(5,389,170	)
Deferred income tax		11		-			(27,746	)		27,746
Net loss for the year				(3,481,242	)		(6,137,059	)		(5,361,424	)
Other comprehensive loss, net of deferred income tax				(56,057	)		(223,536	)		176,496
Comprehensive loss for the year				(3,537,299	)		(6,350,595	)		(5,184,928	)
Basic and diluted loss per common share				(0.06	)		(0.10	)		(0.10	)
Weighted average number of common shares outstanding				60,635,585			59,042,266			54,884,348

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

Page 4

TASMAN METALS LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian Dollars - unless otherwise stated)

	Year Ended August 31, 2013
	Share Capital										Accumulated
	Number of Shares		Amount $		Share-Based Payments Reserve $			Deficit $			Other Comprehensive Loss $			Total Equity $
Balance at September 1, 2012 (Note 3)		59,570,982		19,808,552		8,565,897			(12,552,782	)		(54,962	)		15,766,705
Common shares issued for:
Cash - exercise of share options		1,250,000		301,250		-			-			-			301,250
Exploration and evaluation assets		30,000		25,500		-			-			-			25,500
Share-based compensation on share      options		-		-		654,705			-			-			654,705
Transfer on exercise of share options		-		164,500		(164,500	)		-			-			-
Unrealized loss on investment		-		-		-			-			(56,057	)		(56,057	)
Net loss for the year		-		-		-			(3,481,242	)		-			(3,481,242	)
Balance at August 31, 2013		60,850,982		20,299,802		9,056,102			(16,034,024	)		(111,019	)		13,210,861

	Year Ended August 31, 2012
	Share Capital										Accumulated
	Number of Shares		Amount $		Share-Based Payments Reserve $			Deficit $			Other Comprehensive Gain (Loss) $			Total Equity $
Balance at September 1, 2011 (Note 3)		58,480,289		18,888,813		5,070,735			(6,415,723	)		168,574			17,712,399
Common shares issued for:
Cash - exercise of warrants		983,275		613,675		-			-			-			613,675
Cash - exercise of share options		69,672		6,967		-			-			-			6,967
Exploration and evaluation assets		37,746		95,120		-			-			-			95,120
Share-based compensation on share      options		-		-		3,699,139			-			-			3,699,139
Transfer on exercise of agent’s warrants		-		203,977		(203,977	)		-			-			-
Unrealized loss on investment		-				-			-			(251,282	)		(251,282	)
Deferred income tax on unrealized      loss on investment		-		-		-			-			27,746			27,746
Net loss for the year		-		-		-			(6,137,059	)		-			(6,137,059	)
Balance at August 31, 2012 (Note 3)		59,570,982		19,808,552		8,565,897			(12,552,782	)		(54,962	)		15,766,705

	Year Ended August 31, 2011
	Share Capital											Accumulated
	Number of Shares		Amount $			Share-Based Payments Reserve $			Deficit $			Other Comprehensive Gain (Loss) $			Total Equity $
Balance on September 1, 2010 (Note 3)		42,105,402		5,757,155			655,523			(1,054,299	)		(7,922	)		5,350,457
Common shares issued for:
Cash - private placement		5,000,000		7,500,000			-			-			-			7,500,000
Cash - exercise of share options		1,587,844		371,914			-			-			-			371,914
Cash - exercise of agent’s warrants		9,261,043		5,141,101			-			-			-			5,141,101
Cash - exercise of compensation           options		526,000		131,500			-			-			-			131,500
Share issue costs		-		(425,002	)		-			-			-			(425,002	)
Share-based compensation on share      options		-		-			4,628,620			-			-			4,628,620
Share-based compensation on warrants		-		-			198,737			-			-			198,737
Transfer on exercise of share options		-		248,550			(248,550	)		-			-			-
Transfer on exercise of agent’s warrants		-		100,475			(100,475	)		-			-			-
Transfer on exercise of compensation      options				63,120			(63,120	)		-			-			-
Unrealized gain on available-for-sale      investment		-		-			-			-			204,242			204,242
Deferred income tax on unrealized gain      on available-for-sale investment		-		-			-			-			(27,746	)		(27,746	)
Net loss for the year		-		-			-			(5,361,424	)		-			(5,361,424	)
Balance at August 31, 2011 (Note 3)		58,480,289		18,888,813			5,070,735			(6,415,723	)		168,574			17,712,399

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

Page 5

TASMAN METALS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars - unless otherwise stated)

	Year Ended August 31
		2013 $		2012 $ (Note 3)			2011 $ (Note 3)
Operating activities
Net loss for the year		(3,481,242	)		(6,137,059	)		(5,361,424	)
Adjustments for:
Depreciation		56,229			40,191			7,040
Share-based compensation		654,705			3,699,139			4,628,620
Gain on sale of investment		-			-			(565,978	)
Gain on option and sale of exploration and evaluation assets		-			-			(100,137	)
Gain on sale of property, plant and equipment		(1,921	)		-			(3,683	)
Impairment of exploration and evaluation assets		498,114			-			14,803
Deferred income tax		-			27,746			(27,746	)
		(2,274,115	)		(2,369,983	)		(1,408,505	)
Changes in non-cash working capital items:
Decrease (increase) in amounts receivable		31,137			(32,893	)		1,092
Decrease (increase) in GST/VAT receivables		102,031			(98,498	)		(20,917	)
Decrease (increase) in prepaids		627			(15,764	)		(18,172	)
Increase (decrease) in accounts payable and accrued liabilities		228,066			(75,490	)		66,454
		361,861			(222,645	)		28,457
Net cash used in operating activities		(1,912,254	)		(2,592,628	)		(1,380,048	)
Investing activities
Additions to property, plant and equipment		-			(166,875	)		(135,694	)
Additions to exploration and evaluation assets		(2,562,939	)		(3,299,991	)		(1,447,752	)
Additions to bond deposits		(28,150	)		(204	)		-
Proceeds from sale of investment		-			-			605,978
Proceeds from sale of property, plant and equipment		25,545			-			29,209
Proceeds from option and sale of exploration and evaluation assets		-			-			27,450
Net cash used in investing activities		(2,565,544	)		(3,467,070	)		(920,809	)
Financing activities
Issuance of common shares		301,250			620,642			13,144,515
Share issue costs		-			-			(226,265	)
Net cash provided by financing activities		301,250			620,642			12,918,250
Net change in cash		(4,176,548	)		(5,439,056	)		10,617,393
Cash at beginning of year		9,778,040			15,217,096			4,599,703
Cash at end of year		5,601,492			9,778,040			15,217,096

Supplemental cash flow information - see Note 14

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

Page 6

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

1. Nature of Operations

Tasman Metals Ltd. (“Tasman” or the “Company”) was incorporated under the laws of the Province of British Columbia on August 27, 2007.  The Company’s common shares are listed and traded on the TSX Venture Exchange (“TSXV”) under the symbol “TSM” and on the New York Stock Exchange Market (“NYSE MKT”), under the symbol “TAS”.  The Company’s head office is located at #1305 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7, Canada.

The Company is a junior resource company engaged in the acquisition and exploration of unproven mineral interests in Scandinavia.  As at August 31, 2013 the Company has not earned any production revenue, nor found proved reserves on any of its mineral interests.

The Company is in the process of exploring and evaluating its mineral properties.  On the basis of information to date, it has not yet determined whether these properties contain economically recoverable ore reserves.  The underlying value of the mineral properties and related deferred acquisition costs is entirely dependent on the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete development and upon future profitable production.  The amounts shown as resource interests represent net acquisition costs to date, less amounts written off, and do not necessarily represent present or future values.

As at August 31, 2013 the Company had working capital of $5,094,986.  These consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business operations for the foreseeable future.  The Company’s ability to continue as a going concern is dependent upon the ability of the Company to obtain the necessary financing to develop properties and to establish future profitable production.  The Company’s operations are funded from equity financings which are dependent upon many external factors and may be difficult to impossible to secure or raise when required.  Although management considers that the Company has adequate resources to maintain its core operations and planned exploration programs on its existing exploration and evaluation assets for the next twelve months, the Company recognizes that exploration expenditures may change with ongoing results and, as a result, it may be required to obtain additional financing.  While the Company has been successful in securing financings in the past, there can be no assurance that it will be able to do so in the future.

2. Basis of Preparation

Statement of Compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

Basis of Measurement

The Company’s consolidated financial statements have been prepared on the historical cost basis except for the revaluation of certain financial assets and financial liabilities to fair value.

Details of the Group

In addition to the Company, the consolidated financial statements include all subsidiaries.  Subsidiaries are all corporations over which the Company is able, directly or indirectly, to control financial and operating policies, which is the authority usually connected with holding majority voting rights.  Subsidiaries are fully consolidated from the date on which control is acquired by the Company.  Inter-company transactions and balances are eliminated upon consolidation.  They are de-consolidated from the date that control by the Company ceases.

As at August 31, 2013, 2012 and 2011 the Company has one wholly-owned Swedish subsidiary, Tasman Metals AB.

Page 7

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

3. Change in Accounting Policy

During fiscal 2013 the Company changed its accounting policy with respect to exploration and evaluation expenditures.  In prior years the Company’s policy was to expense mineral exploration and development costs as incurred until such time as either mineral reserves are proven or permits to operate the mineral resource property are received and financing to complete the development are obtained.  The Company has elected to change this accounting policy to now capitalize by property all costs relating to the exploration and evaluation of mineral properties classified as exploration and evaluation assets, effective with the presentation of these consolidated financial statements, on a retrospective basis.

The effects of the change in accounting policy related to the Company’s exploration and evaluation assets are as follows:

Reconciliation of Statements of Financial Position

	As at September 1, 2011
	As previously reported $			Effect of change in accounting policy $		As restated $
ASSETS
Current assets
Cash		15,217,096			-		15,217,096
Amounts receivable		11,688			-		11,688
GST/VAT receivables		59,773					59,773
Prepaids		54,165			-		54,165
Total current assets		15,342,722			-		15,342,722
Non-current assets
Investment		332,144			-		332,144
Property, plant and equipment		128,654			-		128,654
Exploration and evaluation assets		79,176			2,207,890		2,287,066
Bond deposit		3,292			-		3,292
Total non-current assets		543,266			2,207,890		2,751,156
TOTAL ASSETS		15,885,988			2,207,890		18,093,878
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		381,479			-		381,479
TOTAL LIABILITIES		381,479			-		381,479
SHAREHOLDERS’ EQUITY
Share capital		18,888,813			-		18,888,813
Share-based payments reserve		5,070,735					5,070,735
Deficit		(8,623,613	)		2,207,890		(6,415,723	)
Accumulated other comprehensive gain		168,574			-		168,574
TOTAL SHAREHOLDERS’ EQUITY		15,504,509			2,207,890		17,712,399
TOTAL LIABILITIES AND      SHAREHOLDERS’ EQUITY		15,885,988			2,207,890		18,093,878

Page 8

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

3. Change in Accounting Policy (continued)

	As at August 31, 2012
	As previously reported $			Effect of change in accounting policy $		As restated $
ASSETS
Current assets
Cash		9,778,040			-		9,778,040
Amounts receivable		44,581			-		44,581
GST/VAT receivables		158,271			-		158,271
Prepaids		69,929			-		69,929
Total current assets		10,050,821			-		10,050,821
Non-current assets
Investment		80,862			-		80,862
Property, plant and equipment		255,338			-		255,338
Exploration and evaluation assets		214,297			5,944,868		6,159,165
Bond deposit		3,496			-		3,496
Total non-current assets		553,993			5,944,868		6,498,861
TOTAL ASSETS		10,604,814			5,944,868		16,549,682
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		782,977			-		782,977
TOTAL LIABILITIES		782,977			-		782,977
SHAREHOLDERS’ EQUITY
Share capital		19,808,552			-		19,808,552
Share-based payments reserve		8,565,897			-		8,565,897
Deficit		(18,497,650	)		5,944,868		(12,552,782	)
Accumulated other comprehensive loss		(54,962	)		-		(54,962	)
TOTAL SHAREHOLDERS’ EQUITY		9,821,837			5,944,868		15,766,705
TOTAL LIABILITIES AND      SHAREHOLDERS’ EQUITY		10,604,814			5,944,868		16,549,682

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TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

3. Change in Accounting Policy (continued)

Reconciliation of Statements of Comprehensive Loss

	Year Ended August 31, 2012
	As previously reported $			Effect of change in accounting policy $			As restated $
Mineral exploration costs		3,736,978			(3,736,978	)		-
Expenses
Accounting and administration		71,528			-			71,528
Audit		72,091			-			72,091
Corporate development		214,946			-			214,946
Depreciation		40,191			-			40,191
General exploration		48,085			-			48,085
Investor relations		42,000			-			42,000
Legal		123,599			-			123,599
Management fees		162,000			-			162,000
Office		305,653			-			305,653
Professional fees		708,443			-			708,443
Regulatory fees		126,355			-			126,355
Rent		48,623			-			48,623
Salaries and benefits		204,970			-			204,970
Shareholder costs		43,381			-			43,381
Share-based compensation		3,699,139			-			3,699,139
Transfer agent		42,586			-			42,586
Travel		277,123			-			277,123
		6,230,713			-			6,230,713
Loss before other items		(9,967,691	)		3,736,978			(6,230,713	)
Other items
Interest income		151,298			-			151,298
Foreign exchange		(29,898	)		-			(29,898	)
		121,400			-			121,400
Loss before deferred income tax		(9,846,291	)		3,736,978			(6,109,313	)
Deferred income tax		(27,746	)		-			(27,746	)
Net loss for the year		(9,874,037	)		3,736,978			(6,137,059	)
Other comprehensive loss, net of deferred income tax		(223,536	)		-			(223,536	)
Comprehensive loss for the year		(10,097,573	)		3,736,978			(6,350,595	)
Basic and diluted loss per common share		(0.17	)					(0.10	)
Weighted average number of common shares outstanding		59,042,266						59,042,266

Page 10

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

3. Change in Accounting Policy (continued)

	Year Ended August 31, 2011
	As previously reported $			Effect of change in accounting policy $			As restated $
Mineral exploration costs		1,570,435			(1,570,435	)		-
Expenses
Accounting and administration		80,375			-			80,375
Audit		67,903			-			67,903
Corporate development		268,638			-			268,638
Depreciation		7,040			-			7,040
General exploration		113,780			-			113,780
Investor relations		41,500			-			41,500
Legal		86,530			-			86,530
Management		158,250			-			158,250
Office		84,659			-			84,659
Professional		221,770			-			221,770
Regulatory		35,278			-			35,278
Rent		4,800			-			4,800
Salaries and benefits		116,028			-			116,028
Shareholder costs		18,268			-			18,268
Share-based compensation		4,628,620			-			4,628,620
Transfer agent		31,573			-			31,573
Travel		177,338			-			177,338
		6,142,350			-			6,142,350
Loss before other items		(7,712,785	)		1,570,435			(6,142,350	)
Other items
Gain on sale of investment		565,978			-			565,978
Gain on option and sale of exploration and evaluation assets		112,961			(12,824	)		100,137
Gain on sale of property, plant and equipment		3,683			-			3,683
Impairment of exploration and evaluation assets		(9,142	)		(5,661	)		(14,803	)
Interest income		135,783			-			135,783
Foreign exchange		(37,598	)		-			(37,598	)
		771,665			(18,485	)		753,180
Loss before deferred income tax		(6,941,120	)		1,551,950			(5,389,170	)
Deferred income tax		27,746			-			27,746
Net loss for the year		(6,913,374	)		1,551,950			(5,361,424	)
Other comprehensive loss, net of deferred income tax		176,496			-			176,496
Comprehensive loss for the year		(6,736,878	)		1,551,950			(5,184,928	)
Basic and diluted loss per common share		(0.13	)					(0.10	)
Weighted average number of common shares outstanding		54,884,348						54,884,348

Page 11

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

3. Change in Accounting Policy (continued)

Reconciliation of Statements of Cash Flows

	Year Ended August 31, 2012
	As previously reported $			Effect of change in accounting policy $			As restated $
Operating activities
Net loss for the year		(9,874,037	)		3,736,978			(6,137,059	)
Adjustments for:
Depreciation		40,191			-			40,191
Share-based compensation		3,699,139			-			3,699,139
Deferred income tax		27,746			-			27,746
		(6,106,961	)		3,736,978			(2,369,983	)
Changes in non-cash working capital items:
Increase in amounts receivable		(131,391	)		-			(131,391	)
Increase in prepaids		(15,764	)		-			(15,764	)
Increase (decrease) in accounts payable and accrued liabilities		401,498			(476,988	)		(75,490	)
		254,343			(476,988	)		(222,645	)
Net cash used in operating activities		(5,852,618	)		3,259,990			(2,592,628	)
Investing activities
Additions to property, plant and equipment		(166,875	)		-			(166,875	)
Additions to exploration and evaluation assets		(40,001	)		(3,259,990	)		(3,299,991	)
Additions to bond deposits		(204	)		-			(204	)
Net cash used in investing activities		(207,080	)		(3,259,990	)		(3,467,070	)
Financing activity
Issuance of common shares		620,642			-			620,642
Net cash provided by financing activity		620,642			-			620,642
Net change in cash		(5,439,056	)		-			(5,439,056	)
Cash at beginning of year		15,217,096			-			15,217,096
Cash at end of year		9,778,040			-			9,778,040

Page 12

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

3. Change in Accounting Policy (continued)

	Year Ended August 31, 2011
	As previously reported $			Effect of change in accounting policy $			As restated $
Operating activities
Net loss for the year		(6,913,374	)		1,551,950			(5,361,424	)
Adjustments for:
Depreciation		7,040			-			7,040
Share-based compensation		4,628,620			-			4,628,620
Gain on sale of investment		(565,978	)		-			(565,978	)
Gain on option and sale of exploration and evaluation assets		(112,961	)		12,824			(100,137	)
Gain on sale of property, plant and equipment		(3,683	)		-			(3,683	)
Impairment of exploration and evaluation assets		9,142			5,661			14,803
Deferred income tax		(27,746	)		-			(27,746	)
		(2,978,940	)		1,570,435			(1,408,505	)
Changes in non-cash working capital items:
Decrease in amounts receivable		1,092			-			1,092
Increase in GST/VAT receivables		(20,917	)		-			(20,917	)
Increase in prepaids		(18,172	)		-			(18,172	)
Increase  in accounts payable and accrued liabilities		245,507			(179,053	)		66,454
		207,510			(179,053	)		28,457
Net cash used in operating activities		(2,771,430	)		1,391,382			(1,380,048	)
Investing activities
Additions to property, plant and equipment		(135,694	)		-			(135,694	)
Additions to exploration and evaluation assets		(56,370	)		(1,391,382	)		(1,447,752	)
Proceeds from sale of investment		605,978			-			605,978
Proceeds from sale of property, plant and equipment		29,209			-			29,209
Proceeds from option and sale of exploration and evaluation assets		27,450			-			27,450
Net cash provided by (used in) investing activities		470,573			(1,391,382	)		(920,809	)
Financing activities
Issuance of common shares		13,144,515			-			13,144,515
Share issue costs		(226,265	)		-			(226,265	)
Net cash provided by financing activities		12,918,250			-			12,918,250
Net change in cash		10,617,393			-			10,617,393
Cash at beginning of year		4,599,703			-			4,599,703
Cash at end of year		15,217,096			-			15,217,096

Page 13

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies

Critical Judgments and Sources of Estimation Uncertainty

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.  Actual outcomes could differ from these estimates.  These consolidated financial statements include estimates which, by their nature, are uncertain.  The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences.  Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods.  These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical Judgments

The following are critical judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements:

(i) The determination of categories of financial assets and financial liabilities has been identified as an accounting policy which involves judgments or assessments made by management.

(ii) Management is required to assess the functional currency of each entity of the Company.  In concluding that the Canadian dollar is the functional currency of the parent and its subsidiary company, management considered the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates.  As no single currency was clearly dominant the Company also considered secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained.

(iii) Management is required to assess impairment in respect of intangible exploration and evaluation assets.  The triggering events are defined in IFRS 6.  In making the assessment, management is required to make judgments on the status of each project and the future plans towards finding commercial reserves.  The nature of exploration and evaluation activity is such that only a proportion of projects are ultimately successful and some assets are likely to become impaired in future periods.

Management has determined impairment indicators were present in respect of the Otanmaki property and certain other exploration and evaluation assets and as a result an impairment test was performed.  See also Note 8(a).

Management has determined that there were no triggering events present as defined in IFRS 6 with the other properties as at August 31, 2013 and as such, no impairment test was performed.

(iv) Although the Company takes steps to verify title to exploration and evaluation assets in which it has an interest, these procedures do not guarantee the Company’s title.  Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Estimation Uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year:

(i) Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors.  The Company reviews the adequacy of these provisions at the end of the reporting period.  However, it is possible that at some future date an additional liability could result from audits by taxing authorities.  Where the final outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.

Page 14

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies (continued)

(ii) The assessment of any impairment of exploration and evaluation assets, and property, plant and equipment is dependent upon estimates of the recoverable amount that take into account factors such as reserves, economic and market conditions and the useful lives of assets.  As a result of this assessment, management has carried out an impairment test on its Otanmaki property and certain other exploration and evaluation assets and an impairment charge of $498,114 was made in fiscal 2013.  See also Note 8(a).

Cash and Cash Equivalents

Cash includes cash on hand and demand deposits.  Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.  The Company is not exposed to significant credit or interest rate risk although cash is held in excess of federally insured limits with a major financial institution.  As at August 31, 2013, 2012 and September 30, 2011 the Company did not have any cash equivalents.

Amounts Receivable

Receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.  Receivables are classified as loans and receivables.  A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

Accounts Payable and Accrued Liabilities

Payables are obligations to pay for materials or services that have been acquired in the ordinary course of business from suppliers.  Payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer).  If not, they are presented as non-current liabilities.

Payables are classified as other financial liabilities initially at fair value and subsequently measured at amortized cost using the effective interest method.

Exploration and Evaluation Assets

The Company is in the exploration stage with respect to its investment in exploration and evaluation assets and accordingly follows the practice of capitalizing all costs relating to the acquisition of, exploration for and development of mineral properties and crediting all proceeds received against the cost of the related properties.  Such costs include, but are not exclusive to, geological, geophysical studies, exploratory drilling and sampling.  At such time as commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable reserves.  The aggregate costs related to abandoned mineral properties are charged to operations at the time of any abandonment, or when it has been determined that there is evidence of a permanent impairment.  An impairment charge relating to a mineral property is subsequently reversed when new exploration results or actual or potential proceeds on sale or farmout of the property result in a revised estimate of the recoverable amount, but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized.

The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition.

The Company recognizes in income costs recovered on mineral properties when amounts received or receivable are in excess of the carrying amount.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets.

Page 15

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies (continued)

All capitalized exploration and evaluation expenditures are monitored for indications of impairment.  Where a potential impairment is indicated, assessments are performed for each area of interest.  To the extent that exploration expenditure is not expected to be recovered, it is charged to the results of operations.

Property, Plant and Equipment

Property, plant and equipment are carried at cost, less accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Property, plant and equipment are depreciated annually on a straight-line basis over the estimated useful life of the assets at a rate of 20%.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.  Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the consolidated statement of comprehensive income or loss.

Where an item of plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of plant and equipment.  Expenditures incurred to replace a component of an item of plant and equipment that is accounted for separately, including major inspection and overhaul expenditures are capitalized.

The Company compares the carrying value of property, plant and equipment to estimated net recoverable amounts, based on estimated future cash flows, to determine whether there is any indication of impairment whenever events or circumstances warrant.

Impairment of Assets

At each financial position reporting date, the carrying amounts of the Company’s assets are reviewed to determine whether there is any indication that those assets are impaired.  If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.  Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

An asset’s recoverable amount is the higher of fair value less costs to sell and value in use.  Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years.  A reversal of an impairment loss is recognized immediately in profit or loss.

Decommissioning Provision

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral interest by or on behalf of the Company.  Costs for restoration of site damage which is created on an ongoing basis during exploration and evaluation are provided for at their net present values and charged against profits in the period such exploration and evaluation occurs.

Page 16

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies (continued)

Discount rates using a risk-free rate that reflects the time value of money are used to calculate the net present value.  The related liability is adjusted for each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.  As at August 31, 2013, 2012 and September 30, 2011 the Company does not have any decommissioning obligations.

Financial Instruments

All financial assets are initially recorded at fair value and designated upon inception into one of the following four categories: held to maturity, available for sale, loans and receivables or at fair value through profit or loss (“FVTPL”).

Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through comprehensive loss.  Cash is classified as FVTPL.

Financial assets classified as loans and receivables and held to maturity are measured at amortized cost.  Amounts receivable are classified as loans and receivables.

Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income (loss) except for losses in value that are considered other than temporary.  Investments in common shares are classified as available-for-sale.

Transaction costs associated with FVTPL are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset.

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other financial liabilities.

Financial liabilities classified as other financial liabilities are measured at amortized cost.  Accounts payable and accrued liabilities are classified as other financial liabilities.

Financial liabilities classified as FVTPL are measured at fair value with unrealized gains and losses recognized through comprehensive loss.  At August 31, 2013, 2012 and September 1, 2011 the Company has not classified any financial liabilities as FVTPL.

Share Capital

Common shares issued by the Company are classified as equity.  Costs directly attributable to the issue of common shares, share purchase warrants and share options are recognized as a deduction from equity, net of any related income tax effects.

Equity Financing

The Company engages in equity financing transactions to obtain the funds necessary to continue operations and explore and evaluate mineral properties.  These equity financing transactions may involve issuance of common shares or units.  Units typically comprise a certain number of common shares and share purchase warrants.  Depending on the terms and conditions of each equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the terms of the transaction.  The Company adopted a residual value method with respect to the measurement of common shares and share purchase warrants issued as private placement units.  The fair value of the common shares issued in the private placements is determined by the closing quoted bid price on the price reservation date, if applicable, or the announcement date.  The balance, if any, is allocated to the attached share purchase warrants.

Page 17

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies (continued)

Share-Based Payment Transactions

The share option plan allows Company employees and consultants to acquire shares of the Company.  The fair value of share options granted is recognized as a share-based compensation expense with a corresponding increase in the equity settled share-based payments reserve in equity.  An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

For employees the fair value is measured at grant date and each tranche is recognized separately on a straight line basis over the period during which the share options vest.  The fair value of the share options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the share options were granted.  At the end of each reporting period, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

Equity-settled share-based payment transactions with non-employees are measured at the fair value of the goods or services received.  However, if the fair value cannot be estimated reliably, the share-based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or the services.

Current and Deferred Income Taxes

The tax expense comprises current and deferred income tax.  Tax is recognized separately in the statement of comprehensive income (loss), except to the extent that it relates to items recognized in other comprehensive income (loss) or directly in equity.  In this case the income tax is also recognized in other comprehensive income (loss) or directly in equity, respectively.

Current Tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date.  Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.  It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred Tax

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.  However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.  Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax relating to items recognized directly in equity or other comprehensive income (“OCI”) is recognized in equity or OCI and not in the statement of comprehensive loss.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.  Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Page 18

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies (continued)

Loss Per Share

Basic loss per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period.  The computation of diluted loss per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on loss per share.  The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the “if converted” method.  The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share.

Foreign Currency Translation

Functional and Presentation Currency

The financial statements of each of the Company’s subsidiaries are prepared in the local currency of their home jurisdictions.  Consolidation of each subsidiary includes re-measurement from the local currency to the subsidiary’s functional currency.  Each subsidiary’s functional currency, being the currency of the primary economic environment in which the subsidiary operates, is the Canadian dollar.  The consolidated financial statements are presented in Canadian dollars.

Exchange rates published by the Bank of Canada were used to translate subsidiary financial statements into the consolidated financial statements.  Income and expenses for each statement of comprehensive loss presented are translated using the rates prevailing on the transaction dates.  All resulting foreign exchange differences are recognized in comprehensive loss.

Foreign Currency Transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions.  Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in comprehensive loss.

Accounting Standards and Interpretations Issued but Not Yet Adopted

As at the date of these consolidated financial statements, the following standards, amendments and interpretations have not been applied in these consolidated financial statements.

(i) IFRS 9 Financial Instruments (New; to replace IAS 39); effective for annual periods beginning on or after January 1, 2015.

(ii) IFRS 10 Consolidated Financial Statements; effective for annual periods beginning on or after January 1, 2013.  Early application is permitted.  IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.  IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidated - Special Purpose Entities.

(iii) IFRS 11 Joint Arrangements; effective for annual periods beginning on or after January 1, 2013.  Earlier application is permitted.  IFRS 11 establishes principles for financial reporting by parties to a joint arrangement.  IFRS 11 supersedes the current IAS 31 Interest in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Ventures.

(iv) IFRS 12 Disclosure of Interest in Other Entities; effective for annual periods beginning on or after January 1, 2013.  Earlier application is permitted.  IFRS 12 applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity.

Page 19

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

4. Summary of Significant Accounting Policies (continued)

(v) IFRS 13 Fair Value Measurements; to be applied for annual periods beginning on or after January 1, 2013.  Earlier application is permitted.  IFRS 13 defines fair value, sets out in a single IFRS, a framework for measuring fair value and requires disclosures about fair value measurements.  IFRS 13 applies to IFRSs that require or permit fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements).

Management is currently assessing the impact of these new standards on the Company’s accounting policies and financial statement presentation.

5. Cash

	August 31, 2013 $		August 31, 2012 $		September 1, 2011 $
Cash		5,601,492		208,212		5,012,487
Demand deposits		-		9,569,828		10,204,609
		5,601,492		9,778,040		15,217,096

6. Investment

	August 31, 2013
	Number of Shares		Cost $		Accumulated Compre- hensive Loss $			Carrying Value $
Hannans Reward Limited (“Hannans”)		2,647,059		135,824		(111,019	)		24,805

	August 31, 2012
	Number of Shares		Cost $		Accumulated Compre- hensive Loss $			Carrying Value $
Hannans		2,647,059		135,824		(54,962	)		80,862

	September 1, 2011
	Number of Shares		Cost $		Accumulated Compre- hensive Gain $		Carrying Value $
Hannans		2,647,059		135,824		196,320		332,144

(a) The Company had received common shares of Hannans, a public company listed on the Australian Stock Exchange, from the option of certain of its iron ore properties, as described in Note 8(b)(i).  As at August 31, 2013 the quoted market value of the Hannans shares was $24,805.

(b) In July 2010 the Company completed the sale of certain of its iron ore licenses in Sweden and received 691,921 common shares of Beowulf Mining PLC (“Beowulf”), a public company listed on the London Stock Exchange, with an estimated value of $40,000.  The Company then sold the Beowulf shares for $605,978 resulting in a realized gain of $565,978.  See also Note 8(b)(ii).

Page 20

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

7.           Property, Plant and Equipment

Cost:	Computers $			Office Furniture and Equipment $			Field Equipment $			Vehicles $			Total $
Balance at August 31, 2010		-			-			-			26,334			26,334
Additions		18,032			-			40,054			77,608			135,694
Disposal		-			-			-			(26,334	)		(26,334	)
Balance at September 1, 2011		18,032			-			40,054			77,608			135,694
Additions		-			19,767			58,027			89,081			166,875
Balance at August 31, 2012		18,032			19,767			98,081			166,689			302,569
Disposal		-			-			-			(32,214	)		(32,214	)
Balance at August 31, 2013		18,032			19,767			98,081			134,475			270,355
Accumulated Depreciation:
Balance at August 31, 2010		-			-			-			(808	)		(808	)
Depreciation		(1,360	)		-			(1,967	)		(3,713	)		(7,040	)
Disposal		-			-			-			808			808
Balance at September 1, 2011		(1,360	)		-			(1,967	)		(3,713	)		(7,040	)
Depreciation		(3,675	)		(3,201	)		(11,855	)		(21,460	)		(40,191	)
Balance at August 31, 2012		(5,035	)		(3,201	)		(13,822	)		(25,173	)		(47,231	)
Depreciation		(3,507	)		(3,842	)		(20,265	)		(28,615	)		(56,229	)
Disposal		-			-			-			8,590			8,590
Balance at August 31, 2013		(8,542	)		(7,043	)		(34,087	)		(45,198	)		(94,870	)
Carrying Value:
Balance at September 1, 2011		16,672			-			38,087			73,895			128,654
Balance at August 31, 2012		12,997			16,566			84,259			141,516			255,338
Balance at August 31, 2013		9,490			12,724			63,994			89,277			175,485

Page 21

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

8. Exploration and Evaluation Assets

	August 31, 2013
	Acquisition Costs $		Deferred Exploration Costs $		Total $
Rare Earth Properties
Norra Kärr		23,045		7,179,904		7,202,949
Otanmaki		-		-		-
Olserum		124,846		488,336		613,182
Other		49,088		15,860		64,948
Iron Ore Properties		2,406		454		2,860
		199,385		7,684,554		7,883,939

	August 31, 2012
	Acquisition Costs $		Deferred Exploration Costs $		Total $
Rare Earth Properties
Norra Kärr		23,045		5,289,659		5,312,704
Otanmaki		801		339,965		340,766
Olserum		103,488		212,649		316,137
Other		86,288		100,410		186,698
Iron Ore Properties		2,406		454		2,860
		216,028		5,943,137		6,159,165

	September 1, 2011
	Acquisition Costs $		Deferred Exploration Costs $		Total $
Rare Earth Properties
Norra Kärr		16,078		1,801,064		1,817,142
Otanmaki		801		317,242		318,043
Other		59,891		89,130		149,021
Iron Ore Properties		2,406		454		2,860
		79,176		2,207,890		2,287,066

Page 22

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

8.           Exploration and Evaluation Assets (continued)

	Rare Earth Element Properties									Iron Ore Projects
	Norra Kärr $		Otanmaki $		Olserum $		Other $			Other $			Total $
Balance at August 31, 2010		577,046		13,641		-		83,923			13,278			687,888
Exploration costs
Assays		3,588		-		-		-			-			3,588
Consulting		197,664		69,094		-		10,630			-			277,388
Database		2,967		3,889		-		3,387			-			10,243
Drilling		546,211		125,832		-		-			-			672,043
Exploration site		61,207		6,324		-		1,407			-			68,938
Geochemical		159,347		8,667		-		713			-			168,727
Geological		171,593		14,348		-		20,404			-			206,345
Geosurvey		48,000		67,625		-		-			-			115,625
Maps		1,550		2,235		-		3,743			-			7,528
Salaries		12,255		-		-		-			-			12,255
Sample preparation		1,066		-		-		-			-			1,066
Site preparation		4,562		3,804		-		-			-			8,366
Travel		15,739		2,584		-		-			-			18,323
		1,225,749		304,402		-		40,284			-			1,570,435
Acquisition costs
Mining rights		14,347		-		-		39,617			2,406			56,370
Impairment		-		-		-		(14,803	)		-			(14,803	)
Disposition		-		-		-		-			(12,824	)		(12,824	)
		-		-		-		(14,803	)		(12,824	)		(27,627	)
Balance at September 1, 2011		1,817,142		318,043		-		149,021			2,860			2,287,066
Exploration costs
Consulting		847,733		21,791		54,407		8,104			-			932,035
Core cutting		49,498		-		-		-			-			49,498
Database		2,350		-		-		2,086			-			4,436
Drafting		3,331		-		1,603		-			-			4,934
Drilling		1,348,072		-		123,017		-			-			1,471,089
Environmental		6,236		-		-		-			-			6,236
Exploration site		96,272		113		2,008		-			-			98,393
Fuel		7,878		303		650		-			-			8,831
Geochemical		275,352		-		21,834		-			-			297,186
Geological		13,568		-		7,121		-			-			20,689
Maps		50		-		-		670			-			720
Metallurgical consulting		27,262		-		-		-			-			27,262
Metallurgical testing		377,605		-		-		-			-			377,605
Preliminary economic assessment		203,904		-		-		-			-			203,904
Pre-feasibility study		103,612		-		-		-			-			103,612
Salaries		52,623		-		-		-			-			52,623
Sample preparation		34,900		-		-		-			-			34,900
Travel		40,080		516		2,009		420			-			43,025
		3,490,326		22,723		212,649		11,280			-			3,736,978
Acquisition costs
Mining rights		5,236		-		103,488		26,397			-			135,121
Balance at August 31, 2012		5,312,704		340,766		316,137		186,698			2,860			6,159,165

(continued)

Page 23

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

8.           Exploration and Evaluation Assets (continued)

	Rare Earth Element Properties										Iron Ore Projects
	Norra Kärr $		Otanmaki $			Olserum $		Other $			Other $		Total $
Balance at August 31, 2012		5,312,704		340,766			316,137		186,698			2,860		6,159,165
Exploration costs
Consulting		400,543		-			186,511		-			-		587,054
Core cutting		13,837		-			-		-			-		13,837
Database		3,707		-			3,698		-			-		7,405
Drilling		74,950		-			-		-			-		74,950
Exploration site		21,779		-			119		-			-		21,898
Fuel		1,253		-			668		-			-		1,921
Geochemical		385,093		-			35,306		-			-		420,399
Geological		92,398		-			31,511		-			-		123,909
Maps		-		-			-		1,920			-		1,920
Metallurgical consulting		21,152		-			-		-			-		21,152
Metallurgical testing		692,637		-			-		-			-		692,637
Preliminary economic assessment		27,559		-			-		-			-		27,559
Pre-feasibility study		117,594		-			-		-			-		117,594
Salaries		13,486		-			-		-			-		13,486
Sample preparation		-		-			17,791		-			-		17,791
Travel		24,257		-			83		-			-		24,340
		1,890,245		-			275,687		1,920			-		2,167,852
Acquisition costs
Mining rights		-		-			21,358		33,678			-		55,036
Impairment		-		(340,766	)		-		(157,348	)		-		(498,114	)
Balance at August 31, 2013		7,202,949		-			613,182		64,948			2,860		7,883,939

(a) Rare Earth Element Properties

Norra Kärr

The Norra Kärr property consists of four staked exploration claims and a mining lease located in southern Sweden.

Olserum

During fiscal 2012 the Company acquired a 100 % interest in the Olserum property, comprising one claim, in southern Sweden.  The Olserum property was purchased from Norrsken Energy Limited, a private company registered in the United Kingdom, for a total consideration of 37,746 common shares of the Company issued at an estimated fair value of $95,120.  The Company subsequently staked a further five claims surrounding the Olserum property.

Otanmaki

During fiscal 2013 the Company determined to record an impairment charge of $340,766 on the Otanmaki property, comprising 24 staked exploration claims, located in central western Finland, and is proceeding with its relinquishment.

Page 24

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

8.           Exploration and Evaluation Assets (continued)

Other

On June 7, 2012 the Company entered into a purchase and sale agreement with Magnus Minerals Oy (“Magnus”), a Finnish private company at arms-length to the Company, whereby the Company agreed to acquire 25 mineral exploration licenses (the “Magnus Licenses”) located in central Finland for a total consideration of 60,000 common shares of the Company.  On May 27, 2013 the Company issued an initial 30,000 common shares to Magnus with an estimated fair value of $25,500.  The Company subsequently determined to record an impairment charge of $81,628 on the Magnus Licenses and is proceeding with its relinquishment.

During fiscal 2013 the Company relinquished certain exploration claims in Finland, Norway and Sweden and recorded an impairment charge of $75,720 to exploration and evaluation assets.

On March 23, 2010 the Company entered into an option agreement to acquire a 90% interest in two exploration licenses, known as the Bastnäs property, located in the Bergslagen mining district, Sweden.  To earn the 90% interest the Company was required to make cash payments totalling SEK 975,000 (SEK 65,000 paid) and incur contract services with the vendor totalling SEK 390,000 over a four year period.  During fiscal 2011 the Company made a decision to terminate the option agreement and wrote-off $14,803 of exploration and evaluation assets.

As at August 31, 2013 the Company has been granted or made reservations on other rare earth element properties, as follows:

(i) 5 exploration claims in Sweden; and

(ii) 47exploration claims or claim applications in Finland.

(b)	Iron Ore Properties
	(i)	On May 16, 2010 the Company entered into an option agreement with Hannans whereby Hannans has agreed to acquire up to a 90% interest in the Sautusvaara, Vieto, Harrejaure and Lauukujarvi exploration claims (the “Iron Ore Claims”) in Sweden under the following terms:
		i)	during fiscal 2010 Hannans issued 1,764,705 common shares at an estimated fair value of $86,116 and paid $28,705 to the Company resulting in a gain on option of exploration and evaluation assets of $81,462;
		ii)	during fiscal 2011 Hannans issued 882,354 common shares at an estimated fair value of $49,708, paid $16,570 and reimbursed the Company $10,880 resulting in a gain on option of exploration and evaluation assets of $77,158;
		iii)	Hannans must spend a minimum of AUS $175,000 within 12 months prior to being entitled to withdraw.  Should Hannans withdraw after meeting the minimum expenditure it shall have no further interest in the Iron Ore Claims;
		iv)	the Company grants Hannans the exclusive right to earn a 51% interest in the Iron Ore Claims by spending AUS $750,000 on exploration prior to June 30, 2013;
		v)	Hannans may earn a further 24% interest in the Iron Ore Claims by spending a further AUS $500,000 on exploration prior to June 30, 2014; and
		vi)	Hannans may earn a further 15% interest in the Iron Ore Claims by sole funding a feasibility study on at least one Iron Ore Claim prior to June 30, 2018, including a minimum spend of AUS $100,000 per annum.

On June 28, 2013 the Company received notification from Hannans that it had spent the requisite expenditures to earn a 75% interest in the Iron Ore Claims.

Page 25

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

8.           Exploration and Evaluation Assets (continued)

(ii) During fiscal 2010 the Company entered into a sale agreement with Beowulf covering the three remaining iron ore property exploration licenses in Sweden.  During fiscal 2011 in consideration for the sale, the Company received 691,921 common shares in Beowulf at an estimated fair value of $40,000, resulting in a gain on option of exploration and evaluation assets of $22,979.  The Company also retained a 1.5% net smelter returns royalty on any future production from the three permit areas.

(c) See also Note 15(a).

9. Share Capital

(a)           Authorized Share Capital

At August 31, 2013, 2012 and September 1, 2011 the Company’s authorized share capital consisted of an unlimited number of common shares without par value.  All issued common shares are fully paid.

(b)           Reconciliation of Changes in Share Capital

(i) No equity financings were conducted by the Company during fiscal 2013 and 2012.  See also Notes 8(a) and 15(a).

(ii) During fiscal 2011 the Company completed a private placement of 5,000,000 units at a price of $1.50 per unit for gross proceeds of $7,500,000.  Each unit comprised one common share and one-half non-transferable share purchase warrant.  Each full warrant entitled the holder to purchase an additional common share at a price of $1.85 per share on or before November 17, 2012.

The Company paid a finders’ fee of $193,494 cash and issued finders’ warrants which entitled the holder to purchase 129,050 common shares at a price of $1.85 per share on or before November 17, 2012.  The fair value of the finders’ warrants, estimated using the Black-Scholes option pricing model, is $198,737.  The assumptions used were: a risk-free interest rate of 1.38%; an estimated volatility of 174%; an expected life of two years; an expected dividend yield of 0%; and an estimated forfeiture rate of 0%.

The Company incurred $32,771 for legal and filing fees associated with this private placement.

(c) Warrants

During fiscal 2013 the Company extended the expiry dates on 1,257,334 warrants which were to expire on November 17, 2012, to a revised expiry date of November 17, 2013 and on 833,333 warrants which were to expire on November 26, 2012, to a revised expiry date of November 26, 2013.  All other terms of the warrants remained the same.

Page 26

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

9. Share Capital (continued)

A summary of the number of common shares reserved pursuant to the Company’s warrants outstanding at August 31, 2013, 2012 and September 1, 2011 and the changes for the years ended on those dates is as follows:

	2013					2012					2011
	Number			Weighted Average Exercise Price $		Number			Weighted Average Exercise Price $		Number			Weighted Average Exercise Price $
Balance, beginning of year		2,177,607			1.85		3,160,882			1.47		9,266,875			0.50
Issued on private placement		-			-		-			-		2,629,050			1.85
Issued on exercise of    compensation option		-			-		-			-		526,000			0.40
Exercised		-			-		(983,275	)		0.62		(9,261,043	)		0.56
Expired		(86,940	)		1.85		-			-		-			-
Balance, end of year		2,090,667			1.85		2,177,607			1.85		3,160,882			1.47

The following table summarizes information about the number of common shares reserved pursuant to the Company’s warrants outstanding and exercisable at August 31, 2013:

Number	Exercise Price $	Expiry Date
1,257,334	1.85	November 17, 2013
833,333	1.85	November 26, 2013
2,090,667

See also Note 15(c).

(d)          Share Option Plan

The Company has established a rolling share option plan (the “Plan”), in which the maximum number of common shares which can be reserved for issuance under the Plan is 10% of the issued and outstanding shares of the Company.  The minimum exercise price of the options is set at the Company’s closing share price on the day before the grant date, less allowable discounts in accordance with the policies of the TSXV.  Options granted may be subject to vesting provisions as determined by the Board of Directors and have a maximum term of ten years.

During fiscal 2013 the Company granted 230,000 (2012 - 2,270,000; 2011 - 1,700,000) share options and recorded compensation expense of $154,000 (2012 - $3,307,750; 2011 - $4,001,200).  In addition, the Company recorded $9,475 (2012 - $391,389; 2011 - $627,420) compensation expense on share options previously granted which had vested during the year.

The fair value of share options granted and/or vested during fiscal 2013, 2012 and 2011 is estimated using the Black-Scholes option pricing model using the following assumptions:

	2013	2012	2011
Risk-free interest rate	1.09% - 1.26%	0.97% - 1.21%	1.38% - 2.14%
Estimated volatility	86% - 130%	105% - 145%	147% - 175%
Expected life	2 years - 3 years	2 years - 3 years	2 years - 3 years
Expected dividend yield	0%	0%	0%
Estimated forfeiture rate	0%	0%	0%

The weighted average fair value of all share options granted and/or vested during fiscal 2013 was $0.56 (2012 - $1.44; 2011 - $3.17) per option.

Page 27

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

9. Share Capital (continued)

During fiscal 2013 the Company re-priced 1,706,500 share options previously granted, from original exercise prices ranging from $2.13 to $4.22 per share, to a revised exercise price of $1.40 per share.  The fair value of the re-priced share options have been estimated using the Black-Scholes option pricing model.  The assumptions used were:  risk-free interest rate of 1.09% - 1.22%;  estimated volatility of 91% - 103%;  expected life of 1.25 years to 2.46 years;  expected dividend yield of 0%;  and estimated forfeiture rate of 0%.  The value assigned to the re-pricing of the share options was $491,230.

Option-pricing models require the use of estimates and assumptions including the expected volatility.  Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measure of the fair value of the Company’s share options.

A summary of the Company’s share options at August 31, 2013, 2012 and September 1, 2011 and the changes for the years ended on those dates is presented below:

	2013					2012					2011
	Number			Weighted Average Exercise Price $		Number			Weighted Average Exercise Price $		Number			Weighted Average Exercise Price $
Balance, beginning of year		5,181,500			2.09		3,041,172			1.98		2,929,016			0.21
Granted		230,000			0.96		2,270,000			2.35		1,700,000			3.39
Exercised		(1,250,000	)		0.24		(69,672	)		0.10		(1,587,844	)		0.23
Expired		(380,000	)		2.32		(60,000	)		2.96		-			-
Balance, end of year		3,781,500			2.01		5,181,500			2.09		3,041,172			1.98

The following table summarizes information about the share options outstanding and exercisable at August 31, 2013:

Number Outstanding	Exercise Price $	Expiry Date
96,500	1.40	December 24, 2013
665,000	1.40	January 6, 2014
250,000	3.45	January 6, 2014
100,000	1.40	July 15, 2014
100,000	4.22	July 15, 2014
200,000	1.40	August 9, 2014
50,000	3.20	August 9, 2014
60,000	1.40	August 22, 2014
100,000	3.37	September 13, 2014
285,000	1.40	December 6, 2014
250,000	1.40	January 9, 2015
445,000	2.13	January 9, 2015
700,000	2.70	January 9, 2015
50,000	1.40	February 27, 2015
200,000	1.87	May 3, 2015
50,000	1.40	September 13, 2015
25,000	1.44	October 31, 2015
30,000	1.07	February 11, 2016
125,000	0.66	April 12, 2016
3,781,500

See also Note 15(b).

Page 28

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

10. Related Party Disclosures

A number of key management personnel hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.  Certain of these entities transacted with the Company during the reporting period.

(a) Transactions with Key Management Personnel

During fiscal 2013, 2012 and 2011 the following amounts were incurred with respect to the Company’s executive officers, comprising the President, Vice-President of Corporate Development (“VPCD”) and Chief Financial Officer (“CFO”):

	2013 $	2012 $	2011 $
Management fees	162,000	162,000	158,250
Professional fees	156,000	181,009	42,412
Share-based compensation	51,250	930,736	161,975
	369,250	1,273,745	362,637

As at August 31, 2013, $18,000 (2012 - $16,000; 2011 - $5,000) of the above amounts remained unpaid and has been included in accounts payable and accrued liabilities.

The Company has a management agreement with the President, which provides that in the event the President’s services are terminated without cause or upon a change of control of the Company, a termination payment of two years of compensation, at $13,500 per month, is payable.  If the termination had incurred on August 31, 2013, the amount payable under the agreement would be $324,000.

(b)          Transactions with Other Related Parties

(i) During fiscal 2013, 2012 and 2011 the following amounts were incurred with respect to the Company’s current and former non-management directors and non-executive officer of the Company:

	2013 $	2012 $	2011 $
Professional fees	126,000	121,750	76,000
Health benefits	631	659	-
Share-based compensation	-	1,534,250	-
	126,631	1,656,659	76,000

As at August 31, 2013, $32,500 (2012 - $21,500; 2011 - $12.000) of the above amounts remained unpaid and has been included in accounts payable and accrued liabilities.

(ii) In addition, during fiscal 2013 the Company incurred a total of $48,650 (2012 - $48,000;  2011 - $57,875) to Chase Management Ltd. (“Chase”), a private corporation owned by the CFO of the Company, for accounting and administration services provided by Chase personnel, excluding the CFO, and $4,475 (2012 - $4,800; 2011 - $4,800) for rent.  As at August 31, 2013, $4,085 (2012 - $3,400; 2011 - $7,700) remained unpaid and has been included in accounts payable and accrued liabilities.

(c) During fiscal 2013 the Company incurred $25,110 (2012 - $7,068; 2011 - $8,250) for shared administration costs with public companies with common directors and officers.  As at August 31, 2013, $2,640 (2012 - $930; 2011 - $nil) of the amount remained unpaid and has been included in accounts payable and accrued liabilities.

Page 29

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

10. Related Party Disclosures (continued)

(d) During fiscal 2013 the Company recorded a recovery of $96,625 (2012 - $36,441; 2011 - $nil) for shared office personnel and costs from public companies with common directors and officers.  As at August 31, 2013, $9,821 (2012 - $41,083; 2011 - $nil) of the amount remained outstanding and has been included in amounts receivable.

11.           Income Tax

Deferred income tax assets and liabilities of the Company as at August 31, 2013, 2012 and September 1, 2011 are as follows:

	August 31, 2013 $			August 31, 2012 $			September 1, 2011 $
Deferred income tax assets
Losses carried forward		2,533,700			1,580,200			674,900
Other		65,700			76,800			46,000
		2,599,400			1,657,000			720,900
Valuation allowance		(2,599,400	)		(1,657,000	)		(720,900	)
Net deferred income tax asset		-			-			-

The recovery of income taxes shown in the consolidated statements of comprehensive loss for fiscal 2013, 2012 and 2011 differs from the amounts obtained by applying statutory rates to the loss before provision for income taxes due to the following:

	2013 $		2012 $		2011 $
Income tax rate reconciliation
Combined federal and provincial income tax rate	25.0	%	25.5	%	27.17	%
Expected income tax recovery	870,300		1,557,900		1,464,200
Effect of income tax rate changes	(24,900	)	(46,600	)	(23,700	)
Foreign income tax rate differences	16,100		6,400		(2,700	)
Non-deductible share-based compensation	(163,700	)	(943,300	)	(1,257,600	)
Other	23,600		27,400		56,900
Unrecognized benefit of income tax losses	(721,400	)	(629,546	)	(209,354	)
Actual income tax (expense) recovery	-		(27,746	)	27,746

As at August 31, 2013, the Company has non-capital losses of approximately $7,390,600 and accumulated pools of approximately $151,600 for Canadian income tax purposes and are available to reduce taxable income of future years.  The non-capital losses expire commencing in 2024 through 2033.  The Company’s subsidiary in Sweden has losses for income tax purposes of approximately $2,608,600 (SEK 16,434,900) which may be carried forward indefinitely.

Page 30

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

12.           Segmented Information

The Company is involved in the exploration and development of resource properties in certain Scandinavian countries, with corporate operations in Canada.  The Company is in the exploration stage and accordingly, has no reportable segment revenues or operating results.

The Company’s total assets are segmented geographically as follows:

	August 31, 2013
	Canada $		Scandinavia $		Total $
Current assets		5,518,107		222,371		5,740,478
Investment		24,805		-		24,805
Property, plant and equipment		-		175,485		175,485
Exploration and evaluation assets		-		7,883,939		7,883,939
Bond deposit		-		31,646		31,646
		5,542,912		8,313,441		13,856,353

	August 31, 2012
	Canada $		Scandinavia $		Total $
Current assets		9,679,327		371,494		10,050,821
Investment		80,862		-		80,862
Property, plant and equipment		-		255,338		255,338
Exploration and evaluation assets		-		6,159,165		6,159,165
Bond deposit		-		3,496		3,496
		9,760,189		6,789,493		16,549,682

	September 1, 2011
	Canada $		Scandinavia $		Total $
Current assets		15,117,687		225,035		15,342,722
Investment		332,144		-		332,144
Property, plant and equipment		-		128,654		128,654
Exploration and evaluation assets		-		2,287,066		2,287,066
Bond deposit		-		3,292		3,292
		15,449,831		2,644,047		18,093,878

13. Financial Instruments and Risk Management

Categories of Financial Assets and Financial Liabilities

Financial assets are classified into one of the following four categories:  FVTPL; held-to-maturity investments; loans and receivables; and available-for-sale.  Financial liabilities are classified as FVTPL or other temporary liabilities.  The carrying values of the Company’s financial instruments are classified into the following categories:

Financial Instrument	Category	August 31, 2013 $			August 31, 2012 $			September 1, 2011 $
Cash	FVTPL		5,601,492			9,778,040			15,217,096
Investment	Available-for-sale		24,805			80,862			332,144
Amounts receivable	Loans and receivables		13,444			44,581			11,688
Accounts payable and accrued liabilities	Other liabilities		(645,492	)		(782,977	)		(381,479	)

Page 31

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

13. Financial Instruments and Risk Management (continued)

The Company’s financial instruments recorded at fair value require disclosure about how the fair value was determined based on significant levels of inputs described in the following hierarchy:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.  Active markets are those in which transactions occur in sufficient frequency and value to provide pricing information on an ongoing basis.

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1.  Prices in Level 2 are either directly or indirectly observable as of the reporting date.  Level 2 valuations are based on inputs including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the market place.

Level 3 - Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.

The recorded amounts for amounts receivable and accounts payable and accrued liabilities approximate their fair value due to their short-term nature.  The Company’s cash and investment under the fair value hierarchy are measured using Level 1 inputs.

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit Risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations.  The Company’s credit risk is primarily attributable to cash and amounts receivable.  Management believes that the credit risk concentration with respect to financial instruments included in cash and amounts receivable is remote.

Liquidity Risk

Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall due.  The Company manages this risk by closely monitoring cash forecasts and managing resources to ensure that it will have sufficient liquidity to meet its obligations.  All of the Company’s financial liabilities are classified as current and are anticipated to mature within the next fiscal period.  The following table is based on the contractual maturity dates of financial assets and the earliest date on which the Company can be required to settle financial liabilities.

	Contractual Maturity Analysis at August 31, 2013
	Less than 3 Months $			3 - 12 Months $		1 - 5 Years $		Over 5 Years $		Total $
Cash		5,601,492			-		-		-		5,601,492
Investment		-			-		24,805		-		24,805
Amounts receivable		13,444			-		-		-		13,444
Accounts payable and      accrued liabilities		(645,492	)		-		-		-		(645,492	)

	Contractual Maturity Analysis at August 31, 2012
	Less than 3 Months $			3 - 12 Months $		1 - 5 Years $		Over 5 Years $		Total $
Cash		9,778,040			-		-		-		9,778,040
Investment		-			-		80,862		-		80,862
Amounts receivable		44,581			-		-		-		44,581
Accounts payable and      accrued liabilities		(782,977	)		-		-		-		(782,977	)

Page 32

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

13.           Financial Instruments and Risk Management (continued)

	Contractual Maturity Analysis at September 1, 2011
	Less than 3 Months $			3 - 12 Months $		1 - 5 Years $		Over 5 Years $		Total $
Cash		15,217,096			-		-		-		15,217,096
Investment		-			-		332,144		-		332,144
Amounts receivable		11,688			-		-		-		11,688
Accounts payable and      accrued liabilities		(381,479	)		-		-		-		(381,479	)

Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.  These fluctuations may be significant.

(a) Interest Rate Risk

The Company is exposed to interest rate risk to the extent that the cash bears floating rates of interest.  The interest rate risk on cash and on the Company’s obligations are not considered significant.

(b) Foreign Currency Risk

The Company’s functional currency is the Canadian dollar and major transactions are transacted in Canadian Dollars and Swedish Kronors (“SEK”).  The Company maintains SEK bank accounts in Sweden to support the cash needs of its foreign operation.  Management believes the foreign exchange risk related to currency conversions are minimal and therefore does not hedge its foreign exchange risk.  At August 31, 2013, 1 Canadian Dollar was equal to 6.30 SEK.

Balances are as follows:

	Swedish Kronors			CDN $ Equivalent
Cash		919,927			146,020
Amounts receivable		344,927			54,750
Accounts payable and accrued liabilities		(2,042,720	)		(324,241	)
		(777,866	)		(123,471	)

Based on the net exposures as of August 31, 2013 and assuming that all other variables remain constant, a 10% fluctuation on the Canadian Dollar against the SEK would result in the Company’s net loss to be approximately $11,000 higher (or lower).

Capital Management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of mineral properties.  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 future development of the business.  The Company defines capital that it manages as share capital, cash and cash equivalents and short-term investments.  The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.  Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

Page 33

TASMAN METALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED AUGUST 31, 2013, 2012 AND 2011

(Expressed in Canadian Dollars - unless otherwise stated)

14.           Supplemental Cash Flow Information

During fiscal 2013, 2012 and 2011 non-cash activities were conducted by the Company as follows:

	2013 $		2012 $		2011 $
Operating activity
Increase in accounts payable and accrued liabilities	111,437		476,988		179,053
Financing activities
Issuance of common shares	190,000		299,097		412,145
Share issue costs	-		-		(198,737	)
Share-based payments reserve	(164,500	)	(203,977	)	(213,408	)
	25,500		95,120		-
Investing activities
Additions to exploration and evaluation assets	(136,937	)	(572,108	)	(179,053	)
Proceeds on sale of exploration and evaluation assets	-		-		49,708
Investments	-		-		(49,708	)
	(136,937	)	(572,108	)	(179,053	)

15.           Events after the Reporting Period

(a) On October 7, 2013 the Company entered into a letter agreement with Tumi Resources Ltd. (“Tumi”) and acquired a 100% interest in seven exploration licenses (the “Tungsten Projects”) located in south-central Sweden by paying $45,000 cash and issuing 50,000 common shares of the Company.  A further 50,000 common shares are issuable upon commencement of production from any of the Tungsten Projects.  Tumi has two common directors.

(b) Subsequent to August 31, 2013 the Company granted share options to consultants to purchase 60,000 common shares of the Company at an exercise price of $0.65 per share, expiring September 2, 2016, and 160,000 common shares at an exercise price of $0.76 per share, expiring September 23, 2016.

(c) Subsequent to August 31, 2013 warrants to purchase 1,257,334 common shares of the Company expired without exercise.

Page 34

EX-99.2

EXHIBIT 99.2

MANAGEMENT'S DISCUSSION AND ANYALYSIS

FOR THE YEAR ENDED AUGUST 31, 2013

TASMAN METALS LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED AUGUST 31, 2013

This discussion and analysis of financial position and results of operation is prepared as at November 25, 2013 and should be read in conjunction with the audited consolidated financial statements for the years ended August 31, 2013 and August 31, 2012 of Tasman Metals Ltd. (“Tasman” or “the Company”).  The following disclosure and associated financial statements are presented in accordance with International Financial Reporting Standards (“IFRS”).  Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis (“MD&A”) are quoted in Canadian dollars.

Forward Looking Statements

Certain information included in this discussion may constitute forward-looking statements.  Forward-looking statements in this MD&A include, but are not limited to, statements with respect to: (i) the registration of the concessions comprising the various rare earth elements (“REE”) projects; (ii) the market and future price of commodities; (iii) the timing, cost and success of future exploration activities, including, but not limited to, the Company’s proposed work programs; (iv) currency fluctuations; (v) requirements for additional capital; and (vi) changes in mineral resource estimates.  Forward-looking statements are based on current expectations and entail various risks and uncertainties.  These risks and uncertainties could cause or contribute to actual results that are materially different than those expressed or implied.  The Company disclaims any obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Historical results of operations and trends that may be inferred from this MD&A may not necessarily indicate future results from operations.  In particular, the current state of the global securities markets may cause significant reductions in the price of the Company’s securities and render it difficult or impossible for the Company to raise the funds necessary to continue operations.

All of the Company’s public disclosure filings, including its most recent management information circular, Form 20-F (in lieu of an Annual Information Form), material change reports, press releases and other information, may be accessed via www.sedar.com or the Company’s website at www.tasmanmetals.com and readers are urged to review these materials, including the technical reports filed with respect to the Company’s mineral properties.

Company Overview

The Company was incorporated under the laws of the Province of British Columbia on August 27, 2007.  On October 22, 2009 the Company completed a statutory amalgamation with Lumex Capital Corp. and Ausex Capital Corp. and the surviving corporation continued under the name of Tasman Metals Ltd.  On November 3, 2009 the Company commenced trading on the TSX Venture Exchange (“TSXV”) under the symbol “TSM”.  On December 2, 2011 the Company commenced trading on the NYSE MKT (formerly the NYSE AMEX) under the symbol “TAS”.

The Company is a junior resource company engaged in the acquisition and exploration of unproven REE and holds interests in iron ore properties in Scandinavia and is considered a development stage company.  As at August 31, 2013 the Company has not earned any production revenue, nor found proved reserves on any of its mineral interests.

During fiscal 2013 the Company’s main focus was the continued exploration and assessment of the Company’s Norra Kärr property.  In July 2013 the Company filed a revised preliminary economic assessment (“PEA”) of Norra Kärr.  See also “Exploration Projects - REE Projects, Sweden, Norra Kärr” in this MD&A.

During fiscal 2013 the Company changed its accounting policy with respect to exploration and evaluation expenditures.  In prior years the Company’s policy was to expense mineral exploration and development costs as incurred until such time as either mineral reserves are proven or permits to operate the mineral resource property are received and financing to complete the development are obtained.  The Company has elected to change this

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accounting policy to now capitalize by property all costs relating to the exploration and evaluation of mineral properties classified as exploration and evaluation assets, effective with the presentation of these consolidated financial statements, on a retrospective basis.

On August 28, 2013 the Company filed a preliminary base shelf prospectus and F-3 Registration Statement under which the Company may issue from time to time, any combination of common shares, warrants to purchase common shares or units, up to an initial offering price of $25,000,000 during a 25 month period.  On October 1, 2013 the base shelf prospectus and F-3 Registration Statement were declared effective.

The Company has prepared a budget of approximately $3,056,000 for the fiscal year ended August 31, 2014.  The budget covers $2,500,000 for ongoing levels of corporate and general field administration and overheads and $556,000 for limited exploration, metallurgy and permitting activities on the Norra Kärr property.  The Company has sufficient financial resources to meet these costs.  Subject to additional financings the Company intends to consider commissioning a pre-feasibility study on the Norra Kärr property at an estimated cost of $2,300,000.

See also “Financial Condition / Capital Resources” in this MD&A.

Exploration Projects

As of the date of this MD&A the Company is the 100% owner of 111 exploration claims or claim applications and 1 mining lease for strategic metals, in Sweden and Finland, and the owner of a 25% interest in four iron ore exploration claims in the Kiruna district of Sweden.  Furthermore, Tasman holds a 100% interest in seven exploration claims for tungsten which are awaiting transfer to Tasman by the Swedish Mining Inspectorate (Bergsstaten).

REE Projects

Sweden

Tasman holds 15 exploration claims and one mining lease in Sweden considered prospective for REEs.  Sweden is the home of REEs, many of which were first discovered in a quarry in the village of Ytterby, near Stockholm.  REE consumption is growing, being essential in the production of hybrid/electric cars, solar panels, wind turbines, compact florescent lighting, high-energy magnets, mobile phones and computers.  Tasman is well placed as the European Union is actively supporting policies to promote the domestic supply of REEs to secure high-tech industry.

As announced July 2013, Tasman’s wholly owned Swedish subsidiary (Tasman Metals AB) has been selected as a key mining industry partner in the recently launched EURARE project.  EURARE is a research project co-funded by the European Commission under the Seventh Framework Programme of the European Community for Research, Technological Development and Demonstration Activities (Grant Agreement NMP2-LA-2012-309373).  Following the rare earth element (REE) supply crisis of 2010 and 2011, the EURARE project was initiated collaboratively by European research and industry, with the aim to “develop a sustainable exploitation scheme for Europe’s rare earth ore deposits”.  EURARE brings together the partners required for a complete European REE supply chain.  The impressive consortium includes university-affiliated research groups, geological surveys, metallurgical equipment manufacturers, environment management groups and REE consumers.

On the potential REE supply side, 4 European deposits were selected to be part of the EURARE consortium and advance into full pilot scale technology demonstration.  Tasman’s Norra Kärr project is one of these 4 deposits.  Furthermore, lab scale research on Tasman’s Olserum deposit will also be conducted under the project.  Tasman’s Swedish REE deposits can present attractive supply options for European Union REE consumers, as they are enriched in the high-value heavy REE’s, lie close to established infrastructure and are within an active mining jurisdiction.  The EURARE project will receive a total of up to €9 million over a period of 5 years, to be directed towards “Work Packages” that range from deposit scale assessment to REE metal and alloy production.  Tasman shall receive direct funding of approximately €250,000 (CA$340,000) plus additional indirect funding applied to all phases of metallurgical research including beneficiation, REE separation and metal production.

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Norra Kärr

Norra Kärr is located in southern Sweden, 300km SW of Stockholm and lies in farming and forestry land, well serviced by power, road, water and a local skilled community.

Norra Kärr is a zirconium and rare earth element enriched peralkaline (agpaitic) nepheline syenite intrusion which covers 350m x 1200m in area.  The deepest extents of the mineralized intrusion have not been delineated, but exceed 320m.  The rock units comprising the Norra Kärr intrusion are uncommon on a global scale, and include mineral phases that are comprised of or associated with REE’s, Zr, Nb, Y and Hf.  The most abundant intrusion present is grännaite, a medium grained syenite consisting of alkali feldspar, nepheline, aegirine, natrolite, eudialyte and catapleite.  Lesser units include lakarpite (arfvedsonite-albite nepheline syenite), pulaskite (microcline-arfvedsonite­albite nepheline syenite) and kaxtorpite (eckermannite-microcline-aegirine-pectolite-nepheline syenite).  Intervals of irregular coarse grained pegmatite schlieren with equivalent mineralogy to the grännaite are also commonly developed.

The first phase drill program by Tasman at Norra Kärr commenced in mid-December 2009 and comprised 26 holes.  This first successful program was followed by two further phases for a total of 49 drill holes.  A fourth phase of drilling was commenced in early 2012, which infilled drilling to 50m sections, and a total of 121 holes have now been completed.

In March 2012 Tasman announced the positive technical and financial results achieved from the PEA of Norra Kärr.  Following a review by the British Columbia Securities Commission a revised PEA was completed and submitted in July 2013.  The conclusions reached in the amended technical reports have not varied from those disclosed in the previously filed PEA.  The PEA for Norra Kärr was completed by independent mining consultants Pincock, Allen & Holt (“PAH”) of Denver, Colorado (subsequently renamed RungePincockMinarco).  Metallurgical process design was completed by Mr. John Litz of JE Litz and Associates, Colorado, on the basis of data provided from process testing of Norra Kärr mineralization completed by SGS Canada Inc. (“SGS”) in Lakefield, Canada, and the Geological Survey of Finland (“GTK”) in Outokumpu, Finland.

The July 2013 PEA financial highlights included:

·       $1,465 million after-tax net present value (“NPV”) at 8% discount rate.

·       45.6% after-tax internal rate of return (“IRR”).

·       After-tax payback period of 2.5 years.

·       $10.9 billion in revenue over the 40 year life of mine.

·       Initial capital expenditures of $266 million (including contingency of $42.8 million).

·       Average annual operating expenses of $74.3 million or $10.93 per kg of mixed total rare earth oxide (“TREO”) concentrate.

·       Conservative basket price of US $51 per kg.

The project is proximal to road, rail, power and operating ports, plus skilled personnel, minimizing the need for offsite infrastructure to be built by the Company.  Development of the project will occur as an open pit mine, with crushing, grinding, beneficiation and mineral dissolution occurring in the immediate vicinity of the pit.  High purity precipitates of a mixed rare earth carbonate concentrate and a zirconium carbonate concentrate will be produced.

A summary of the operating assumptions for Norra Kärr can be found in Table 1 below:

Table 1: Norra Kärr Project, Annual Operating Summary

	Units	Year 1	Year 2	Year 3-20 (avg)	Year 21-40 (avg)
Total Tonnes mined (ore+waste)	Mt	2.91	2.54	2.82	2.58
Strip Ratio	Waste : Ore	2.86	1.24	0.87	0.75
Tonnes processed	Mt	752	1,133	1,504	1,458
Grade TREO	%	0.53	0.56	0.58	0.60
Grade ZrO2	%	1.61	1.60	1.64	1.77

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	Units	Year 1	Year 2	Year 3-20 (avg)	Year 21-40 (avg)
Recovery TREO	%	80%	80%	80%	80%
Recovery ZrO2	%	60%	60%	60%	60%
Mixed TREO concentrate	Tonnes	3,165	5,067	6,946	7,004
Zirconium Carbonate concentrate	Tonnes	7,260	10,893	14,831	15,492

For the purposes of the PEA and following a supply and demand study of the heavy REE market, PAH was requested to optimize the resource and pit that would allow for the production 6,000 - 7,000 tonnes of separated rare earth oxides per annum over an initial mine life of 20 years.  This production rate was chosen due the globally significant output of the heavy REE’s dysprosium, yttrium and terbium that will be produced from Norra Kärr under this scenario.

Using this production rate and duration guidance provided by Tasman, PAH produced a Whittle pit model to estimate the in-pit Canadian Institute of Mines (CIM) compliant Mineral Resource as provided in Table 2.

Table 2: Norra Kärr Project, “CIM” Compliant March 2012 “In-Pit” Mineral Resource1 Estimate

Classification	Tonnes Mt	TREO %	LREO %	HREO %	HREO/TREO %	ZrO2 %	Tonnes of Contained TREO
Indicated	41.6	0.57	0.28	0.29	50.8	1.71	237,120
Inferred	16.5	0.64	0.33	0.31	48.4	1.70	105,600

Notes:

1.      Mineral resources that are not mineral reserves do not have demonstrated economic viability.  The PEA includes inferred mineral resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves.  There is no certainty that the results projected in the PEA will be realized and actual results may vary substantially.

2.      TREO includes: La2O3, Ce2O3, Pr2O3, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3.

3.      Heavy Rare Earth Oxides (“HREO”) includes: Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3.

4.      “In-pit” Mineral Resources were estimated using the Whittle pit optimization software and preliminary economic parameters for commodity prices, metal recoveries and current operating expenses as presented in the PEA.

5.      Mineral Resources are reported at a marginal cutoff grade of 0.17% TREO.

6.       Resource estimate assumes mining recovery 95%, dilution 5%.

Samples submitted by Tasman used with the resource calculation quoted above were analyzed by the ME-MS81 technique by ALS Chemex Ltd’s laboratories in Pitea, Sweden and Vancouver, Canada, where duplicates, repeats, blanks and known standards were inserted according to standard industry practice.  Where over-range for ME-MS81, Zr was determined using the ME-XRF10 technique.  The qualified person for the Company’s exploration projects, Mark Saxon, President and Chief Executive Officer of Tasman and a member of the Australasian Institute of Mining and Metallurgy and Australian Institute of Geoscientists oversaw this data collection.  Metallurgical products produced during research by the GTK were analyzed by the XRF technique in the laboratories of Labtium Oy in Finland.  Labtium Oy is an independent consulting laboratory, fully accredited to industry standards.

During July 2012 Tasman submitted an application for a Mining Lease (“ML”) covering Norra Kärr.  In May 2013 the Swedish Mining Inspectorate (Bergsstaten) granted the Norra Kärr ML to Tasman.  A granted ML under the Swedish Mining Act is valid for 25 years, when it is available for renewal.  The application documents for the ML were prepared by independent consulting group Golder Associates AB and documented the extensive environmental, archeological and social impact data that was collected by consultants and assessed by the Swedish Mining Inspectorate for the granting of the ML.  Tasman has been advised that the ML granted by the Swedish Mining Inspectorate (Bergsstaten) is currently under appeal from certain stakeholders.  The nature of the appeal shall determine the duration of the appeal process which may take up to twelve months.  The ML remains in full effect.

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In November 2012 Tasman reported on optimization results from expanded metallurgical testing at Norra Kärr.  Test work was completed in Germany by ANZAPLAN (DORFNER Analysenzentrum und Anlagenplanungs-gesellschaft mbH).

Highlights of this work included:

·       High recovery of REE in a low mass during combined flotation - magnetic separation tests, including 82.5% yttrium oxide (Y2O3) and 76.9% TREO recovered in only 25.2% of the original mass;

·       High recovery of REE in magnetic separation tests on three major mineralized material types from Norra Kärr;

·       Eudialyte confirmed as the only REE-bearing mineral present in more than trace abundance in all mineralized material types;

·       All major mineralized material types shown to be mineralogically indistinguishable when ground to 500 micron, suggesting geological variation across the mineralized material body is unlikely to affect processing behavior;

·       Flotation test work very successful in separating aegirine from eudialyte using commercial reagent;

·       Low-iron nepheline/feldspar fraction identified as potential by-product;

Three bulk samples totaling approximately 1.2 tonnes were supplied to ANZAPLAN, representing the two major (PGT, GTM) and one minor mineralized material type (GTC) that comprise the Norra Kärr resource.  Each sample was composited from drill core collected across the deposit, and is considered very representative.  All previous metallurgical testing was performed on blended material combining all mineralized material types.  Mineralogical character and metallurgical behavior of each mineralized material type was tested, to constrain future processing considerations.  Geochemical character of each mineralized material type based on drilling information is given in Table 3.

Table 3:  Summary of Principal Mineralized Material Type Geochemistry from Average Drilling Data

			TREO%	HREO/ TREO%	ZrO2%	Dy2O3 ppm	Y2O3 ppm	Tb2O3 ppm	Nd2O3 ppm
PGT		Pegmatitic Grennaite	0.614	54.7%	2.00	289	2300	42	662
GTM		Migmatitic Grennite	0.490	45.0%	1.52	184	1506	27	563
GTC		Grennaite	0.261	63.5%	1.33	152	1056	20	233
	TREO = sum of La2O3, Ce2O3, Pr2O3, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3,                 Y2O3; HREO = sum of Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3; Most significant REO’s by % are Y2O3, La2O3, Ce2O3, Nd2O3, Dy2O3

Mineral Concentrate Tests

A range of mineral concentrate preparation tests were run by ANZAPLAN, based on the previously reported results achieved by the GTK in 2011.  The aim was to produce a mineral concentrate containing most or all of the eudialyte (so achieving high recovery), while discarding most of the un-mineralized gangue material (so achieving low sample mass).  Tests were run in parallel on the different mineralized material types, however no significant variation in results by mineralized material type were observed.  While magnetic separation and flotation were the focus of research, gravity, electrostatic and centrifuge methods were also applied, each of which achieved only poor eudialyte separation.

Magnetic Separation

Due to the paramagnetic behavior of eudialyte, magnetic separation performed very well under non-optimized conditions.  Numerous tests were completed which demonstrated the excellent magnetic extractability of both eudialyte and a common iron-bearing mineral aegirine.  Review of external publications suggest aegirine is not soluble under the acid conditions considered for hydrometallurgical processing of Norra Kärr mineralized material, and shall therefore be inert in a REE-leach circuit.  Example recoveries achieved with single pass (not re-circulated) WHIMS (wet high intensity magnetic separation) using the -100 micron fraction of representative Nora Kärr mineralized material are provided in Table 4.

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Table 4:  Recovery Associated With Magnetic Separation.

	Mass	TREO Recovery	ZrO2 Recovery	Fe2O3 Recovery
-100/+20 micron fraction	53 %	97 %	71%	99 %
-20 micron fraction	23 %	80 %	41%	91 %

Flotation

Extensive flotation testing was also completed by ANZAPLAN.  While eudialyte does not appear amenable to efficient direct flotation, a commercially available flotation reagent at near-neutral pH was shown to be extremely effective in the selective removal of aegirine from eudialyte.

Aegirine is three times more abundant than eudialyte in typical mineralized material samples, therefore its removal greatly reduces the mass of the magnetic fraction.  Non-optimized test results indicate that approximately two thirds of the aegirine can be removed from the crushed sample prior to magnetic separation at a TREO recovery of 88%.  Removal of this material prior to magnetic separation significantly improves quality of the eudialyte concentrate, with only a small loss of REE.

Combined Flotation and Magnetic Separation

Furthermore, ANZAPLAN has tested various scenarios combining flotation and magnetic separation.  One such combination proved extremely effective, where recovery for the total process was 82.2% of the yttrium oxide (Y2O3), 76.9% of the TREO and 49.7% ZrO2 in only 25.2% of the mineral mass.  Recovery of other heavy REE’s (Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu) mirrors the recovery of Y2O3 in flotation and magnetic separation tests.

Tasman has now passed the research and process optimization role to the internal laboratories of magnetic separation equipment manufacturers.  This engagement ensures that recovery is optimized, and that the mine-scale equipment requirements of the Norra Kärr project are well understood by equipment manufacturers.

In March 2013, Tasman announced that the Company engaged ANSTO Minerals of Australia (ANSTO) to support the next stage of Tasman's hydrometallurgical testing program on Norra Kärr.  ANSTO is an Australian government owned research institution, widely acknowledged as the industry leader in all facets of REE mineral leaching, solution purification and precipitation. ANSTO has operated numerous large scale pilot and demonstration plants for REE.

ANSTO shall execute a series of leaching tests, extending and refining those completed to date by other laboratories. REE recoveries exceeding 80% have been achieved during previous tests using sulfuric acid under atmospheric temperature and pressure conditions.  This leach test program is designed to maximize the recovery of the heavy REE's, reduce acid consumption, and constrain all remaining leaching variables.  ANSTO has been provided with mineral concentrate prepared by Germany's ANZAPLAN.  The concentrate sample was prepared from drill core collected across the Norra Kärr deposit and is considered representative.  Results from this testwork will be reported as they become available.

Tasman has completed comminution (crushing and grinding) studies to characterize Norra Kärr mineralized material.  Work undertaken by Wardell Armstrong International in Truro, UK, showed milling conditions lay within a normal processing range.  These comminution results will enable the design of the crushing and grinding circuits.

In July 2013, the Company announced the granting of a permit to extract a large surface sample for expanded metallurgical testing.  The permit allows for the extraction of 200 cubic metres of rock (approximately 500 tonnes) from selected locations that represent the Norra Kärr deposit.  The permit was granted by Länsstyrelsen Östergötland (County Administration Board of Östergötland), the Swedish government agency that manages land use in the region of Norra Kärr.

Olserum

On October 13, 2011 Tasman announced the acquisition of a 100% interest in a new heavy rare earth element project in southern Sweden, located only 100km east of the Company’s flagship Norra Kärr project.  The Olserum project was

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purchased outright from a private UK registered company, Norrsken Energy Limited, for a total consideration of 37,746 fully paid shares in Tasman.

Olserum is located approximately 10km from the Baltic coast, 30km north of the town of Västervik and 200km SSW of Stockholm.  The project is secured by a granted exploration claim 1,100 Ha in size, and five surrounding exploration claim applications 5,160 Ha in size.

The REE potential of the Olserum region was first identified by the Swedish Geological Survey (“SGU”) in the early 1990’s, when a number of REE anomalous samples were collected and assayed from several locations.  The presence of yttrium (“Y”) enriched outcrops associated with historic iron ore prospects was noted.  In 2003 the Swedish exploration company IGE claimed the area, concentrating on the iron ore workings at Olserum.  During 2004 and 2005 a total of 27 diamond drill holes were drilled by IGE, 24 of which targeted the REE potential.

Drilling discovered an REE mineralized zone 600m in length and up to 100m wide.  Drilling was performed on 40m spaced profiles with typically two holes on each profile.  Drilling results included:

Table 5:  Historical Drilling Results, Olserum

DRILL HOLE	FROM	TO	LENGTH (metres)	TREO (%)	HREO/TREO (%)
OL0401	55.3	69.9	14.6	1.38	37.8
OL0403	86.3	116.5	30.2	0.55	37.7
OL0510	102.8	121.3	18.5	1.02	34.5
OL0511	30.3	64.5	34.2	0.86	15.7
OL0513	112.9	146.9	34.0	0.81	37.6
OL0513	173.9	264.1	90.2	0.63	29.0
OL0516	56.4	66.4	10.0	1.07	45.6
OL0521	126.9	137.9	11.0	0.91	32.1

TREO = sum of La2O3, Ce2O3, Pr2O3, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3,Er2O3, Tm2O3,

  Yb2O3, Lu2O3, Y2O3;

HREO = sum of Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3;

Most significant REO’s by % are Y2O3, La2O3, Ce2O3, Nd2O3, Dy2O3

In late 2012, Tasman completed a 5 hole program completed at Olserum.  Five holes were drilled that totalled 997.0m to confirm previous drilling results and infill untested sections.  All holes intersected significant REE mineralization.  Best results returned from holes OLR12001 through OLR12005 are provided in Table 6:

Table 6:  Drilling Results from Tasman 2012 Program, Olserum

DRILL HOLE	FROM	TO	LENGTH (metres)	TREO (%)	HREO/TREO (%)	EASTING	NORTHING	AZIMUTH (deg)	DIP (deg)
OLR12001	59.7	157.9	98.2	0.60%	36.3%	580072	6423831	209	- 46
Including	59.7	85.95	25.3	1.02%	42.3%
OLR12002	83.1	225.3	142.2	0.65%	26.6%	580127	6423833	195	- 55
Including	132.4	169.5	37.1	1.00%	22.9%
OLR12003	117.0	250.6	133.6	0.52%	42.1%	580083	6423863	207	- 61
Including	190.1	203.0	12.9	1.14%	42.6%
OLR12004	47.9	178.9	131.0	0.49%	44.7%	579995	6423857	205	- 55
Including	118.7	135.7	17.0	1.01%	47.3%
OLR12005	52.8	121.6	68.8	0.39%	24.7%	580145	6423705	19	- 43
Including	75.3	107.4	32.1	0.52%	27.3%
TREO = sum of La2O3, Ce2O3, Pr2O3, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3,          Y2O3; HREO = sum of Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3; Most significant REO’s by % are Y2O3, La2O3, Ce2O3, Nd2O3, Dy2O3 EASTING, NORTHING provided in SWEREF99TM coordinate system

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The Technical University of Freiberg (TU Bergakademie Frieberg) in Germany undertook petrological, MLA and microprobe research to identify REE bearing minerals within 18 samples taken from Olserum drill core.  Mineralogy was determined to be simple, with coarse to fine grained xenotime, monazite and rare apatite recognized as the host to all significant REE’s.

Using all available drilling data, the first CIM compliant independent resource estimate for Olserum was published in February 2013.  The resource estimate was prepared by consulting geologists at ReedLeyton Consulting Pty Ltd following site visits, core sampling and geological modeling.  Following a review by the BCSC a revised resource estimate was completed and submitted in July 2013.  The conclusions reached in the amended technical report have not varied from those disclosed in the previously filed report.  Along with Norra Kärr, Olserum is the second of Tasman's resource-stage REE projects.

Mineral Resources were modelled applying six different TREO cut-off grades, with a base-case resource estimated using a TREO cut-off of 0.4% (Tables 7 and 8).  At this cut-off, Olserum hosts an Indicated Mineral Resource of 4.5 million tonnes grading 0.60% TREO and an Inferred Mineral Resource of 3.3 million tonnes grading 0.63% TREO, both with 34% of the TREO being the higher value HREO.  Table 9 and 10 provide the grade averages for rare earth oxides at the various cut-offs.

Table 7: Indicated Resource Estimate for the Olserum Deposit.

TREO % Cut-off	Million Tonnes	TREO %	% of HREO in TREO	Dy2O3 ppm	Y2O3 ppm	Nd2O3 ppm	Tonnes of Contained TREO
0.7	1.0	0.89	32.3	292	1800	1314	8,620
0.6	1.7	0.78	32.9	262	1610	1146	13,360
0.5	3.0	0.68	33.3	232	1420	996	20,650
0.4	4.5	0.60	33.9	209	1283	878	27,260	BASE CASE
0.3	6.3	0.53	34.4	187	1146	769	33,530
0.2	7.7	0.48	34.5	0.017	1042	700	37,030

Table 8: Inferred Resource Estimate for the Olserum Deposit.

TREO % Cut-off	Million Tonnes	TREO %	% of HREO in TREO	Dy2O3 ppm	Y2O3 ppm	Nd2O3 ppm	Tonnes of Contained TREO
0.7	0.9	0.85	31.8	288	1667	1294	7,947
0.6	1.6	0.77	32.5	264	1547	1151	12,088
0.5	2.5	0.69	33.6	242	1445	1018	16,960
0.4	3.3	0.63	33.7	222	1320	925	20,770	BASE CASE
0.3	4.2	0.57	33.9	202	1205	841	23,820
0.2	4.7	0.54	33.9	191	1134	790	25,050

Notes:

1.     TREO includes: La2O3, Ce2O3, Pr2O3, Nd2O3, Sm2O3, Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3

2.     HREO includes: Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3

3.     The calculated resource is sensitive to cut-off grade which will be influenced by metallurgical operating costs.  Bench scale metallurgical tests were completed on an Olserum composite sample by Swedish consultants Minpro AB in 2005.  Magnetic and gravity separation gave a mineral concentrate of 14% rare earth oxide in only 5% of the mass with a recovery of 59%.

4.     The mineral resource estimate was completed by Mr Geoffrey Reed, Senior Consulting Geologist of ReedLeyton Consultants Pty Ltd, and is based on geological and geochemical data supplied by Tasman, audited by Mr Reed.  Mr Reed is an independent qualified person for the purposes of NI 43-101 standards of disclosure for mineral projects of the Canadian Securities Administrators.

5.     The resource estimate has been classified as an Indicated and Inferred Resource based on the distance-space between sample data within the current deposit outline.  Variograms were obtained from a variography study of TREO, with the continuity analysis showing a reasonable fit model in the major and semi major direction for the mineralised domains.

6.     The resource estimate is based on:

§   A database of 31 'In Resource' drill holes totalling 5,297m of diamond drilling completed by Tasman and previous project owner IGE since 2004 where samples were composited on 1m lengths.  All assays by both Tasman and IGE were completed at ALS Chemex's Vancouver laboratory.

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§   Specific gravity (SG) has an overall mean of 2.80 g/cc from 458 SG readings.  The mean of the mineralisation of 2.82 g/cc was used in the estimate and a mean of the host rock of 2.67 g/cc was used in the estimate

§   Block model was estimated by ordinary kriging interpolation method on blocks 5m (x) x 20m (y) x 10m (z).

§   Metallurgical test work at Olserum is in progress and no information was available at the time of this resource calculation.

In order to demonstrate that the mineralization as estimated in the block model has a reasonable expectation of being mined at some time in the foreseeable future, ReedLeyton completed a mining optimisation exercise.  As the mining concept for the Olserum Deposit is currently surface mining, Whittle® software was used to generate a conceptual pit shell.  Notwithstanding the pit optimisation exercise, it has not resulted in an engineered and operational open-pit mine design.  Operating assumptions used for the Whittle® pit shell were based on the PEA data from Tasman’s more advanced Norra Kärr REE project that lies 100km northwest of Olserum with similar grade and surface aspect.  The economic assumptions used to derive the optimised pit shell include:

·       Stripping Cost $/tonne mined $3.66

·       Mining Cost $/tonne mined $3.66

·       Processing Cost $/tonne ore $41.48

·       REO Recovery 80.0%

·       Discount to TREO Basket Price 38.0% (accounts for REO separation charge)

·       Discounted TREO Price $31.0 kg

·       5 percent mining loss, 5 percent for mining dilution

·       Exchange rate US$1 : CA$1

Overall, ReedLeyton considers these assumptions are fair for the purpose of determining reasonable prospects for economic extraction of the Olserum deposit but do not demonstrate that the mineralization is economic, since the exercise is not at the level of a PEA and does not conform to the studies required for a PEA.

The drill-defined Mineral Resource at Olserum begins at surface and is open at depth and to the east.  The resources comprise parallel bodies of mineralization, with lower grade intervening material, trending approximately east-west and dipping steeply to the north.  Host rock to mineralization is a biotite and amphibole bearing foliated quartzite, with veins and patches of magnetite.  It is interpreted that mineralization may represent heavy mineral sediments which have been subsequently metamorphosed and folded.

Table 9: Indicated Resource Estimate Rare Earth Oxide Grade Averages for the Olserum Deposit.

TREO % Cut-off	La2O3	Ce203	Pr203	Nd203	Sm203	Eu203	Gd203	Tb203	Dy203	Ho203	Er203	Tm203	Yb203	Lu203	Y203
0.7	0.125	0.281	0.034	0.131	0.029	0.001	0.029	0.005	0.029	0.006	0.017	0.002	0.015	0.002	0.180
0.6	0.109	0.244	0.030	0.115	0.026	0.001	0.026	0.004	0.026	0.005	0.015	0.002	0.014	0.002	0.161
0.5	0.094	0.212	0.026	0.100	0.023	0.001	0.023	0.004	0.023	0.005	0.014	0.002	0.012	0.002	0.142
0.4	0.083	0.186	0.023	0.088	0.020	0.001	0.021	0.004	0.021	0.004	0.012	0.002	0.011	0.002	0.128
0.3	0.072	0.163	0.020	0.077	0.018	0.000	0.018	0.003	0.019	0.004	0.011	0.002	0.010	0.001	0.115
0.2	0.065	0.147	0.018	0.070	0.016	0.000	0.017	0.003	0.017	0.004	0.010	0.001	0.009	0.001	0.104

Table 10: Inferred Resource Estimate Rare Earth Oxide Grade Averages for the Olserum Deposit.

TREO % Cut-off	La2O3	Ce203	Pr203	Nd203	Sm203	Eu203	Gd203	Tb203	Dy203	Ho203	Er203	Tm203	Yb203	Lu203	Y203
0.7	0.118	0.270	0.033	0.129	0.030	0.001	0.029	0.005	0.029	0.006	0.016	0.002	0.014	0.002	0.167
0.6	0.105	0.241	0.030	0.115	0.027	0.001	0.026	0.005	0.026	0.005	0.015	0.002	0.013	0.002	0.155
0.5	0.093	0.213	0.026	0.102	0.024	0.001	0.024	0.004	0.024	0.005	0.014	0.002	0.012	0.002	0.145
0.4	0.084	0.194	0.024	0.093	0.022	0.001	0.022	0.004	0.022	0.005	0.013	0.002	0.011	0.002	0.132
0.3	0.077	0.176	0.022	0.084	0.020	0.000	0.020	0.003	0.020	0.004	0.012	0.002	0.010	0.001	0.121
0.2	0.072	0.166	0.020	0.079	0.018	0.000	0.019	0.003	0.019	0.004	0.011	0.002	0.010	0.001	0.113

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In August 2013, the Company announced results of the first phase of metallurgical testing on representative mineralization samples from the Olserum.  Magnetic separation and flotation tests completed by the Geological Survey of Finland (GTK) in Outokumpu produced a mineral concentrate with REE recovery in excess of 90% within a concentrate mass between 6% and 7% of the original sample.  This represents a very encouraging increase in REE grade of approximately 14 times.  A very high grade magnetite concentrate was also produced as a by-product during testing.  This metallurgical research, and the ongoing testing, was conducted and paid for under the European Commission’s EURARE research project as was press released by Tasman on July 10, 2013.

A well selected and homogenized sample of 75 kg of drill core was provided to GTK for metallurgical testing.  Core was selected from across the deposit and is believed to reflect grade and mineralogical variation well.  Following a series of grinding tests, a suitable grind size was determined to be -75 μm (P80 75 μm) which was achieved by rod mill. A testing flow sheet of low intensity magnetic separation (LIMS) followed by REE mineral flotation proved to be the most effective, for which 6 tests were performed.  In addition, direct flotation of biotite was tested but did not improve quality or grade of the REE concentrate sample.

As anticipated, the LIMS was extremely efficient in the separation of magnetite from other minerals present.  In test 8 the magnetic concentrate comprised 2.93% of the rock mass and showed a grade of Fe 65.5%, being very close to the iron content of pure magnetite.  The best REE recovery results were obtained where highest REE recovery was achieved in the lowest concentrate mass (mass pull) as described below:

Table 11: REE recovery for various tests from Olserum

Test	Concentrate Mass (Mass Pull)	Ce Recovery (%)	La Recovery (%)	Y Recovery (%)
3A	6.80%	88.4 %	88.8 %	92.7 %
3B	8.42%	89.6 %	90.1 %	93.8 %
8	5.99%	87.9 %	85.3 %	91.2 %

Recovery data for all REE’s is not available at this time, however heavy REE recovery is anticipated to follow Y recovery due to chemical and physical similarity.  Additional testing is underway to improve the proposed flowsheet and better understand the processing behavior of the Olserum mineralization.

Finland

In Finland, Tasman has a total of 96 claims and claim applications.

Korsnäs 

As announced on February 3, 2010 seven 100% owned claim applications cover and surround the historic Korsnäs mine.  The Korsnäs REE-Pb mine was operated as a mixed open pit and underground operation by Outokumpu Oy from 1959 and closed in 1972 due to falling Pb prices.

As announced June 11, 2012 the Korsnäs South project was acquired from arms-length Finnish party Magnus Minerals Oy, and is comprised of five claim applications securing approximately 1300 Ha.  These claims cover the southeastern prospective trend of the historic Korsnäs mine that is owned by Tasman.  Within the claim areas gained under this acquisition, clusters of several hundred REE-rich boulders and two REE-mineralized outcrops are known, with historic grades of up to 13% TREO.  Elevated REE grades in boulders have been recently confirmed by Tasman using handheld Niton XRF devices, which indicate the project to be strongly dominated by light REE’s.

No significant additional work has been completed.  During fiscal 2013 the Company determined to proceed with the relinquishment of the Korsnäs and other Finnish licenses.

Otanmäki

The Otanmäki project consists of 24 claim applications two REE - niobium (Nb) - zirconium (Zr) prospects, named Katajakangas and Kontioaho.  A total of 59 diamond drill holes for a total of 8,862 metres have been drilled within the claimed area.  Katajakangas and Kontioaho were discovered in 1982, following the identification of REE-bearing

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boulder trains by the GTK.  The discoveries were followed up with various geochemical and geophysical methods, and with drill testing by Rautaruukki Oy between 1983 and 1985.  The REE mineralized horizon at Katajakangas was located by drilling in 1983, and at Kontioaho the year after.  Tasman has access to all previous publically available exploration data and drill core from GTK and Rautaruukki Oy.

To facilitate exploration at Otanmäki, on October 5, 2010 the Company announced the completion of a 1300 line km airborne magnetic and radiometric survey.  The survey was conducted by Precision GeoSurveys Inc. of Vancouver, Canada, with flight line spacing a combination of 50 and 100 metres, and an aircraft elevation of 40 metres.  The detailed helicopter-borne survey measured total field magnetic intensity and radiometric data consisting of uranium, thorium, and potassium.

The Company completed a drilling program at Otanmäki during early 2011 with 12 holes drilled to identify extensions to known mineralization and test new areas of anomalism identified by the airborne radiometric and magnetic survey.

During fiscal 2013 the Company determined to record an impairment charge of $340,766 on the Otanmäki licenses and is proceeding with its relinquishment.

Siilinjärvi

The Siilinjärvi project was also purchased from Magnus Minerals Oy as announced June 11, 2012.  The project consists of two claim applications totaling 450 ha covering outcrops of alkaline intrusive and carbonatite, rock units which are elsewhere known to host REE mineralization.

During fiscal 2013 the Company determined to proceed with relinquishment of the Siilinjärvi project.

Laivajoki

The Laivajoki project was purchased from Magnus Minerals Oy as announced June 11, 2012 where a single 390 ha claim covers a 300 m x 4 km carbonatite intrusion that lies on a major structural boundary between mafic volcanics and granite, approximately 100 km southeast of the city of Rovaniemi.

During fiscal 2013 the Company determined to proceed with relinquishment of the Laivajoki project.

Other

During fiscal 2013 the Company relinquished certain exploration claims in Finland and Norway and recorded an impairment charge of $75,720.

Tungsten Projects

Sweden

As announced on October 10, 2013 Tasman secured a 100% interest in a portfolio of tungsten projects in the Bergslagen mining district of south-central Sweden.  This new tungsten portfolio includes several of the largest known tungsten occurrences in Scandinavia, including the former Yxsjöberg mine which accounts for more than 90% of the tungsten previously produced in Sweden.  The projects were purchased outright for a total consideration of 50,000 common shares in Tasman Metals Ltd and $45,000.  A further 50,000 common shares are issuable upon commencement of production from any of the tungsten projects.  All projects have extensive historic information including drilling, production and metallurgical data, and are supported by excellent road, rail and power infrastructure.

Based on its economic importance and high risk of supply disruption, tungsten has been named a “critical” metal in recent British Geological Survey (BGS) and European Commission (EC) publications.  Tungsten is an essential industrial element with hundreds of end-use applications.  It has the highest melting point (3,410°C) and highest tensile strength (19.3 gms/cc) of all pure metals and is therefore highly sought after for drilling and cutting equipment (termed hardmetals), specialty steels and aerospace applications.

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Today, greater than 80% of tungsten is sourced from Chinese mines, and therefore, demonstrating similar resource security challenges to rare earth elements.  Since 2008, Chinese domestic demand has exceeded its own supply, resulting in a near doubling of price for tungsten concentrate over this period, and a gradual increase in total traded volume.  Tungsten demand growth has consistently outperformed GDP growth.

The acquired tungsten projects are approximately centered on the Yxsjöberg mine where a mill and tailings dam remain on site.  Simple road access links all project areas.

Yxsjöberg

The Yxsjöberg mine is the by far largest known tungsten mineralization in Sweden, from which more than 90% of all tungsten produced in the country emanates.  The deposit is of a skarn-hosted tungsten-copper-beryllium–fluorite style consisting of three ore bodies (Kvarnåsen, Nävergruvan, Finngruvan) which lie in the same folded, skarn altered limestone horizon.  Earliest records of mining date back to 1728 and small scale mining for copper continued intermittently until the 19th century.  The tungsten mineral scheelite (CaWO4) was first identified in 1862 and the earliest recorded production of tungsten from 1918. A new concentrator was built in 1937, and a roasting furnace and gravity separator added in 1951.  A circuit for the production of fluorite concentrate was added in 1956.  Fluorite remains a potential by-product to any future operation.

The price of tungsten fell in the early 1960’s, and the mine was closed in 1963 and subsequently allowed to flood.  By the end of the 1960’s however, the tungsten price had recovered and interest was renewed. In 1969 the Swedish State-owned mining company AB Statsgruvor acquired the mine and constructed a new concentrator and head frame.  This new plant began with gravity separation, but was converted to selective flotation in 1977.  The mine and plant were closed again in 1989 due to low tungsten prices, when the deepest levels of the mine had reached approximately 600m.  A total of more than 5 million tonnes of ore averaging approximately 0.35% WO3 (with additional copper and fluorite) were extracted during the life of the Yxsjöberg mine.  Significant mineralization remained in situ at the final closure in 1989.

Apart from remediation and environmental management, the plant has largely been left untouched since the closure of the mine, as have two large tailings dams estimated to contain a total of 4.6 million metric tonnes of material.

Wigström (15 km SE of Yxsjöberg)

The historic tungsten mine of Wigströmsgruvan fed ore to the nearby Yxsjöberg mine mill.  Scheelite (CaWO3) and fluorite (CaF2) mineralization occur in garnet-diopside skarn within mafic metavolcanics.  Approximately 0.13 million tonnes of ore with 0.28% WO3 was mined and transported to Yxsjöberg between the years 1978-1981.  Mineralization is documented to remain open along strike and at depth at the time of the mine closure.

Sandudden (7 km NE of Yxsjöberg)

The Sandudden deposit was tested by more than 30 drill holes between 1978 and 1979 by AB Statsgruvor.  In 1979 test mining and processing of approximately 17,000 tonnes with 0.22% WO3 was completed.  The mineralization is scheelite-fluorite with similar characteristics to Wigströmsgruvan and Yxsjöberg.  A small resource was estimated in 1979.

Gensgruvan (25 km N of Yxsjöberg)

The small Gensgruvan tungsten mine operated briefly in the 1940’s.  Production figures from 1944 record 1,600 tonnes of ore were mined with an average grade of 0.3% WO3.  A second mine was also operated, named Molybdengruvan, with grades of 0.34% WO3.  Geological mapping at the time discovered numerous outcrops containing scheelite mineralization which remain untested, along with a large number of mineralized boulders the source of which remains unknown.  Outcrops with grades similar Molybdengruvan mine have been recorded.

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Gussarvet (70 km NE of Yxsjöberg)

A 15 hole diamond drill program was completed at Gussarvet in the early 1980’s.  Results included GAH06 which intersected high grades of tungsten including 7.75 m at 0.64% WO3 and 31.3 m grading 0.37% WO3.  The tungsten mineralization occurs in skarn and epidote-quartzite associated within a 100m wide NE-SW trending carbonate horizon.

Gustavsberg (50 km SE of Yxsjöberg)

Several old iron mines are located within the Gustavsberg claim area.  The iron lodes were documented to have an adjacent skarn alteration zone containing copper and tungsten mineralization.  Mine geologists reported discoveries of “up to football-sized patches of scheelite” in the footwall skarn.  No modern exploration for tungsten has been conducted in the area although prospectors have reported scheelite in the remnant waste dumps.

Tasman is currently compiling historic data for this tungsten portfolio.

Iron Projects

Tasman retains a 25% interest in four claims following the joint venture of iron ore projects to an Australian Stock Exchange listed company.  In addition, Tasman retains a 2% net smelter royalty on two claims following the sale of iron ore projects to a London Stock Exchange listed company.

2014 Exploration Budget

During the 2014 fiscal year the Company’s exploration program will focus on the expanded metallurgical testing programs as the Company continues with the optimization studies on how to most efficiently process the material from Norra Kärr.  The Company will also conduct further environmental baseline studies and collect data for mine permitting plus general site works.  The Company has budgeted $445,000 for metallurgical research which includes further assay costs, $86,000 for environmental and permitting and $25,000 for general site work.

The Company is not incurring significant costs on the Olserum project and does not intend to incur significant costs until a further financing is completed.  The Company is, however, continuing with certain costs mainly through continued metallurgical research, which costs are being largely funded through the Company’s participation in a European Union funding initiative studying supply of critical materials.

Qualified Person

The qualified person for Tasman’s projects, Mr. Mark Saxon, the Company’s President and Chief Executive Officer, a Fellow of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists, has reviewed and verified the contents of this document.

Selected Financial Data

During fiscal 2013 the Company changed its accounting policy with respect to exploration and evaluation expenditures.  In prior years the Company’s policy was to expense mineral exploration and development costs as incurred until such time as either mineral reserves are proven or permits to operate the mineral resource property are received and financing to complete the development are obtained.  The Company has elected to change this accounting policy to now capitalize by property all costs relating to the exploration and evaluation of mineral properties classified as exploration and evaluation assets, effective with the presentation of these consolidated financial statements, on a retrospective basis.

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The following selected financial information is derived from the audited annual consolidated financial statements of the Company prepared in accordance with IFRS and the change in accounting policy.

	For the Years Ended August 31,
		2013 $			2012 $			2011 $
Operations:
Revenues	Nil			Nil			Nil
Expenses		(3,093,770	)		(6,230,713	)		(6,142,350	)
Other items		(387,472	)		121,400			753,180
Net loss before deferred income tax		(3,481,242	)		(6,109,313	)		(5,389,170	)
Deferred income tax	Nil				(27,746	)		27,746
Net loss		(3,481,242	)		(6,137,059	)		(5,361,424	)
Other comprehensive (loss) gain		(56,057	)		(223,536	)		176,496
Comprehensive loss		(3,537,299	)		(6,360,595	)		(5,184,928	)
Basic and diluted loss per share		(0.06	)		(0.10	)		(0.10	)
Dividends per share	Nil			Nil			Nil
Balance Sheet:
Working capital		5,094,986			9,267,844			14,961,243
Total assets		13,856,353			16,549,682			18,093,878
Total long-term liabilities	Nil			Nil			Nil

The following selected financial information is derived from the unaudited condensed consolidated interim financial statements of the Company prepared in accordance with IFRS and the change in accounting policy.

	Fiscal 2013				Fiscal 2012
Three Months Ended	Aug. 31, 2013 $	May 31, 2013 $	Feb. 28, 2013 $	Nov. 30, 2012 $	Aug. 31, 2012 $	May 31, 2012 $	Feb. 29, 2012 $	Nov. 30, 2011 $
Operations:
Revenues	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Expenses	(679,723)	(576,014)	(635,742)	(1,202,291)	(484,837)	(1,198,315)	(3,602,958)	(944,603)
Other items	(462,602)	22,139	35,566	17,425	34,943	27,199	22,381	36,877
Net loss before deferred      income tax	(1,142,325)	(553,875)	(600,176)	(1,184,866)	(449,894)	(1,171,116)	(3,580,577)	(907,726)
Deferred income tax	Nil	Nil	Nil	Nil	9,254	(3,600)	600	(34,000)
Net loss	(1,142,325)	(553,875)	(600,176)	(1,184,866)	(440,640)	(1,174,716)	(3,579,977)	(941,726)
Other comprehensive (loss)      gain	(27,800)	(3,129)	846	(25,974)	(105,920)	(24,998)	1,748	(94,366)
Comprehensive loss	(1,170,125)	(557,004)	(599,330)	(1,210,840)	(546,560)	(1,199,714)	(3,578,229)	(1,036,092)
Basic and diluted loss per      share	(0.01)	(0.01)	(0.01)	(0.02)	(0.00)	(0.02)	(0.06)	(0.02)
Dividends per share	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Balance Sheet:
Working capital	5,094,986	6,241,592	7,242,130	8,200,394	9,267,844	11,086,472	12,546,328	14,208,523
Total assets	13,856,353	13,595,076	14,520,301	15,818,835	16,549,682	15,670,038	16,911,052	17,630,396
Total long term liabilities	Nil	Nil	Nil	Nil	Nil	Nil	Nil	Nil

Results of Operations

Three Months Ended August 31, 2013 Compared to the Three Months Ended August 31, 2012

During the three months ended August 31, 2013 (the “2013 Quarter”) the Company reported a net loss of $1,142,325 ($0.01 per share), compared to a net loss of $440,640 ($0.00 per share) for the three months ended August 31, 2012 (the “2012 Quarter”), an increase in loss of $701,685.  The increase in loss in the 2013 Quarter was attributed primarily to the following:

(i) recognition of an impairment of exploration and evaluation assets in the 2013 Quarter of $481,040 compared to $nil in the 2012 Quarter; and

(ii) legal expense of $187,737 in the 2013 Quarter compared to $21,683 in the 2012 Quarter as a result of legal services rendered on the base shelf prospectus.

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Year Ended August 31, 2013 Compared to the Year Ended to August 31, 2012

As the Company is in the exploration stage of investigating and evaluating its unproven mineral interests, it has no revenue.

During the year ended August 31, 2013 (“fiscal 2013”), the Company incurred a net loss of $3,481,242 ($0.06 per share), a decrease in loss of $2,655,817, compared to a loss of $6,137,059 ($0.10 per share) for the year ended August 31, 2012 (“fiscal 2012”).  The decrease in loss during fiscal 2013 was attributed primarily to the recognition of share-based compensation of $654,705 in fiscal 2013 compared to $3,699,139 in fiscal 2012.  During fiscal 2012 the Company granted 2,270,000 share options compared to 230,000 share options granted in fiscal 2013.   In addition during fiscal 2013 the Company recorded $491,230 for share-based compensation on the re-pricing of 1,706,500 share options.

Excluding share-based compensation, general and administrative expenses decreased by $92,509 from $2,531,574 during fiscal 2012 to $2,439,065 during fiscal 2013 period.  Specific general and administrative expenses of note during fiscal 2013 are as follows:

·      incurred $126,793 (2012 - $71,528) for accounting and administration of which $48,650 (2012 - $48,000) was charged by Chase Management Ltd. (“Chase”), a private corporation controlled by Mr. Nick DeMare, a director of the Company and $78,143 (2012 - $23,528) was charged by a third party accounting service in Sweden commencing June 1, 2012.  Prior to June 1, 2012 the accounting and administration services in Sweden were conducted by salaried employees;

·      general exploration costs of $88,577 (2012 - $48,085) relating to general exploration and property due diligence in Sweden and Finland;

·      $194,759 (2012 - $277,123) for travel expenses, primarily for Company personnel to oversee the Company’s ongoing property exploration programs, attend international investment conferences and meet with consumers of REE production to establish working relationships.  Travel expenses were lower during fiscal 2013 compared to fiscal 2012 period due to less corporate travel by management and directors;

·      legal fees of $260,129 (2012 - $123,599) were incurred.  During fiscal 2013 legal services were mainly related to the base shelf prospectus whereas in fiscal 2012 legal services were related to obtaining a listing on the NYSE MKT;

·      office expenses of $206,279 (2012 - $305,653) of which $66,728 (2012 - $168,020) was for the maintenance of the exploration office in Sweden.  During fiscal 2012, office expenses in Sweden were higher as the Company was incurring costs to set up a new exploration office;

·      the Company had retained Mining Interactive Corp. (“Mining Interactive”) to provide market awareness and investor relation activities.  During fiscal 2013 the Company paid Mining Interactive $10,500 (2012 - $42,000).  Effective November 30, 2012 the Company terminated its arrangement with Mining interactive;

·      incurred $699,141 (2012 - $708,443) for professional services, of which the Company incurred $307,742 (2012 - $302,759) by directors and officers of the Company, $252,990 (2012 - $243,375) by consultants in Sweden and $138,409 (2012 - $162,309) by consultants for general corporate services;

·      $162,000 (2012 - $162,000) for management fees charged through Sierra Peru Pty (“Sierra”) for remuneration of Mr. Mark Saxon, the Company’s President and CEO;

·      audit fees of $41,947 (2012 - $72,091) for the year-end audit.  The change between fiscal 2013 and fiscal 2012 was solely due to the timing of billings by the auditors for services rendered in respect to auditing the Company’s year-end accounts;

·      salaries and benefits of $290,616 (2012 - $204,970) for employees in the exploration office in Sweden.  The increase was due to increased personnel during fiscal 2013;

·      corporate development of $110,374 (2012 - $214,946) were incurred for services and costs relating to corporate development and market awareness.  These expenses were lower during fiscal 2013 compared to fiscal 2012 due to the Company scaling back on these activities during this current economic period;

·      regulatory fees of $69,403 (2012 - $126,355) were incurred.  During fiscal 2012 the Company listed on the NYSE MKT in December 2011 and paid significant registration filing fees to list on the NYSE MKT; and

·      rent of $59,414 (2012 - $48,623) were incurred for offices in Canada and Sweden.  During fiscal 2013 the Company increased their office space in Sweden to accommodate additional consultants and salaried employees.

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During fiscal 2013 the Company recorded $654,705 (2012 - $3,699,139) for share-based compensation comprised of $154,000 (2012 - $3,307,750) for the immediate vesting of 230,000 (2012 - 2,270,000) share options granted and $9,475 (2012 - $391,389) for vesting of options granted in prior periods.  In addition the Company recorded $491,230 (2012 - $nil) for share-based compensation on the re-pricing of 1,706,500 share options.

During fiscal 2013 the Company received $301,250 (2012 - $620,642) from the exercise of warrants and share options for 1,250,000 (2012 - 1,052,947) common shares.  No equity financings were conducted in either fiscal 2013 or 2012.

During fiscal 2013 the Company issued 30,000 (2012 - 37,746) common shares to acquire exploration and evaluation assets.

Interest income generated in fiscal 2013 was $95,935, a decrease of $55,363 from $151,298 earned in fiscal 2012.  The decrease in income in fiscal 2013 was due solely to reduced levels of cash compared to the fiscal 2012.  The Company only holds its cash in chequing accounts, savings accounts or cashable guaranteed investment certificates (“GICs”) issued by major Canadian financial institutions.

Investment

The Company holds 2,647,059 common shares of Hannans Reward limited (“Hannans”), a public company listed on the Australian Stock Exchange, and have been designated as available-for-sale for accounting purposes.  To date there have been no dispositions of the Hannans shares.  As at August 31, 2013 the quoted market value of the investment was $24,805.

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Exploration and Evaluation Assets

During fiscal 2013 the Company incurred a total of $2,222,888 (2012 - $3,872,099) on the acquisition, exploration and evaluation of its unproven resources assets, of which $1,890,245 (2012 - $3,490,326) on the Norra Kärr property and $332,643 (2012 - $381,773) on other properties.  In addition during fiscal 2013 the Company recorded an impairment of exploration and evaluation assets of $498,114 (2012 - $nil) on certain properties.  Details of the exploration activities conducted during fiscal 2013 are described in “Exploration Projects” in this MD&A.

	Rare Earth Element Properties										Iron Ore Projects
	Norra Kärr $		Otanmaki $			Olserum $		Other $			Other $		Total $
Balance at September 1, 2011		1,817,142		318,043			-		149,021			2,860		2,287,066
Exploration costs
Consulting		847,733		21,791			54,407		8,104			-		932,035
Core cutting		49,498		-			-		-			-		49,498
Database		2,350		-			-		2,086			-		4,436
Drafting		3,331		-			1,603		-			-		4,934
Drilling		1,348,072		-			123,017		-			-		1,471,089
Environmental		6,236		-			-		-			-		6,236
Exploration site		96,272		113			2,008		-			-		98,393
Fuel		7,878		303			650		-			-		8,831
Geochemical		275,352		-			21,834		-			-		297,186
Geological		13,568		-			7,121		-			-		20,689
Maps		50		-			-		670			-		720
Metallurgical consulting		27,262		-			-		-			-		27,262
Metallurgical testing		377,605		-			-		-			-		377,605
Preliminary economic assessment		203,904		-			-		-			-		203,904
Pre-feasibility study		103,612		-			-		-			-		103,612
Salaries		52,623		-			-		-			-		52,623
Sample preparation		34,900		-			-		-			-		34,900
Travel		40,080		516			2,009		420			-		43,025
		3,490,326		22,723			212,649		11,280			-		3,736,978
Acquisition costs
Mining rights		5,236		-			103,488		26,397			-		135,121
Balance at August 31, 2012		5,312,704		340,766			316,137		186,698			2,860		6,159,165
Exploration costs
Consulting		400,543		-			186,511		-			-		587,054
Core cutting		13,837		-			-		-			-		13,837
Database		3,707		-			3,698		-			-		7,405
Drilling		74,950		-			-		-			-		74,950
Exploration site		21,779		-			119		-			-		21,898
Fuel		1,253		-			668		-			-		1,921
Geochemical		385,093		-			35,306		-			-		420,399
Geological		92,398		-			31,511		-			-		123,909
Maps		-		-			-		1,920			-		1,920
Metallurgical consulting		21,152		-			-		-			-		21,152
Metallurgical testing		692,637		-			-		-			-		692,637
Preliminary economic assessment		27,559		-			-		-			-		27,559
Pre-feasibility study		117,594		-			-		-			-		117,594
Salaries		13,486		-			-		-			-		13,486
Sample preparation		-		-			17,791		-			-		17,791
Travel		24,257		-			83		-			-		24,340
		1,890,245		-			275,687		1,920			-		2,167,852
Acquisition costs
Mining rights		-		-			21,358		33,678			-		55,036
Impairment		-		(340,766	)		-		(157,348	)		-		(498,114	)
Balance at August 31, 2013		7,202,949		-			613,182		64,948			2,860		7,883,939

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	As at August 31, 2013						As at August 31, 2012
	Acquisition Costs $		Deferred Exploration Costs $		Total $		Acquisition Costs $		Deferred Exploration Costs $		Total $
Rare Earth Properties
Norra Kärr		23,045		7,179,904		7,202,949		23,045		5,289,659		5,312,704
Otanmaki		-		-		-		801		339,965		340,766
Olserum		124,846		488,336		613,182		103,488		212,649		316,137
Other		49,088		15,860		64,948		86,288		100,410		186,698
Iron Ore Properties		2,406		454		2,860		2,406		454		2,860
		199,385		7,684,554		7,883,939		216,028		5,943,137		6,159,165

Cash Flows

During fiscal 2013 cash decreased by $4,176,548.  Operations utilized $1,912,254, investing activities mainly for expenditures on exploration and evaluation assets utilized $2,565,544 and financing activities from exercise of share options generated $301,250.

During fiscal 2012 cash decreased by $5,439,056.  Operations utilized $2,592,628, investing activities mainly for expenditures on exploration and evaluation assets utilized $3,467,070 and financing activities from exercise of share options and warrants generated $620,642.

Financial Condition / Capital Resources

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of mineral properties.  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 future development of the business.  The Company defines capital that it manages as share capital, cash and cash equivalents and short-term investments.  The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.  Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

To date the Company has not conducted any borrowing outside of its accounts payable and accrued liabilities incurred for operations and exploration activities.  The Company maintains its cash primarily in Canadian currency in a major Canadian financial institution.  The funds are held in interest-bearing accounts or cashable guaranteed investment certificates.  The Company is not exposed to significant credit or interest rate risk although cash is held in excess of federally insured levels.

The Company advances funds to its subsidiary as required to satisfy ongoing levels of operations.  There are no legal or economic restrictions on the ability of the Company’s subsidiary to transfer funds to the Company in the form of cash dividends, loans or advances.

As at August 31, 2013, the Company had working capital of $5,094,986.  The Company believes that it currently has sufficient financial resources to conduct anticipated exploration programs and meet anticipated corporate administration costs for the upcoming twelve month period.  The Company has prepared a budget of approximately $3,056,000 for fiscal 2014, comprising of $2,500,000 for corporate and general field administration and overheads and $556,000 for limited exploration, metallurgy and permitting activities on the Norra Kärr property.

The Company has filed a final short form base shelf prospectus with certain Canadian and US securities regulatory authorities.  The shelf prospectus will allow the Company to offer, from time to time over a 25-month period, up to $25,000,000 of common shares, units and warrants.  However, US securities law limits the issuance of securities, restricting the size of any offering to one-third of the aggregate market value worldwide of the Company’s common shares held by non-affiliates of the Company in any 12-month period.

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The Company intends to use any net proceeds received from any offering pursuant to such shelf prospectus to continue to advance the Norra Kärr and Olserum projects as well as for additional exploration at other non-material properties as opportunities arise and for general administrative and corporate purposes, except as otherwise may be disclosed in a prospectus supplement relating to such offering.  The Company expects that the proceeds from any offering under the shelf prospectus will be primarily used for funding of the exploration program for the Norra Kärr project, which will include, but not be limited to, ongoing metallurgical testing, geotechnical and hydrology studies, engineering, permitting and the preparation of a pre-feasibility study.  The Company may also use a portion of the proceeds from an offering for further drilling and metallurgical testing at the Olserum project.  The Company had a negative operating cash flow for the year ended August 31, 2013.  To the extent the Company has negative operating cash flows in future financial periods, the Company may need to deploy a portion of its existing cash reserves or identify additional sources of financing to fund such negative cash flows.

The Company is not required to offer or sell all or any portion of the securities pursuant to the shelf prospectus in the future and will only do so if it believes market conditions warrant it.

The Company has relied solely on equity financing to raise the requisite financial resources.  While it has been successful in the past, there can be no assurance that the Company will be successful in raising future financing should the need arise.

Contractual Commitments

The Company has no contractual commitments.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Proposed Transactions

The Company does not have any proposed transactions.

Critical Accounting Estimates

Critical Judgments and Sources of Estimation Uncertainty

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.  Actual outcomes could differ from these estimates.  These consolidated financial statements include estimates which, by their nature, are uncertain.  The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences.  Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods.  These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical Judgments

The following are critical judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements:

(i) The determination of categories of financial assets and financial liabilities has been identified as an accounting policy which involves judgments or assessments made by management.

(ii) Management is required to assess the functional currency of each entity of the Company.  In concluding that the Canadian dollar is the functional currency of the parent and its subsidiary companies, management considered the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates.  As no single currency was clearly dominant the Company also considered 

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secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained.

(iii) Management is required to assess impairment in respect of intangible exploration and evaluation assets.  The triggering events are defined in IFRS 6.  In making the assessment, management is required to make judgments on the status of each project and the future plans towards finding commercial reserves.  The nature of exploration and evaluation activity is such that only a proportion of projects are ultimately successful and some assets are likely to become impaired in future periods.

Management has determined impairment indicators were present in respect of the Otanmaki property and certain other exploration and evaluation assets and as a result an impairment test was performed.

Management has determined that there were no triggering events present as defined in IFRS 6 with the other properties as at August 31, 2013 and as such, no impairment test was performed.

(iv) Although the Company takes steps to verify title to exploration and evaluation assets in which it has an interest, these procedures do not guarantee the Company’s title.  Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Estimation Uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year:

(i) Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors.  The Company reviews the adequacy of these provisions at the end of the reporting period.  However, it is possible that at some future date an additional liability could result from audits by taxing authorities.  Where the final outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.

(ii) The assessment of any impairment of exploration and evaluation assets, and property, plant and equipment is dependent upon estimates of the recoverable amount that take into account factors such as reserves, economic and market conditions and the useful lives of assets.  As a result of this assessment, management has carried out an impairment test on its Otanmaki property and certain other exploration and evaluation assets and an impairment charge of $498,114 was made in fiscal 2013.

Changes in Accounting Policies

During fiscal 2013 the Company changed its accounting policy with respect to exploration and evaluation expenditures.  In prior years the Company’s policy was to expense mineral exploration and development costs as incurred until such time as either mineral reserves are proven or permits to operate the mineral resource property are received and financing to complete the development are obtained.  The Company has elected to change this accounting policy to now capitalize by property all costs relating to the exploration and evaluation of mineral properties classified as exploration and evaluation assets, effective with the presentation of these consolidated financial statements, on a retrospective basis.

Transactions with Related Parties

A number of key management personnel hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities.  Certain of these entities transacted with the Company during the reporting period.

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(a) Transactions with Key Management Personnel

During fiscal 2013 and 2012 the following amounts were incurred with respect to the Company’s executive officers, comprising the President, Mark Saxon, Vice-President of Corporate Development (“VPCD”), James Powell, and Chief Financial Officer (“CFO”), Nick DeMare:

	2013 $	2012 $
Management fees - President	162,000	162,000
Professional fees - VPCD	126,000	151,009
Professional fees - CFO	30,000	30,000
Share-based compensation - President	-	432,000
Share-based compensation - VPCD	51,250	196,736
Share-based compensation - CFO	-	302,000
	369,250	1,273,745

As at August 31, 2013, $18,000 (2012 - $16,000) of the above amounts remained unpaid.

The Company has a management agreement with the President, which provides that in the event the President’s services are terminated without cause or upon a change of control of the Company, a termination payment of two years of compensation, at $13,500 per month, is payable.  If the termination had incurred on August 31, 2013, the amount payable under the agreement would be $324,000.

(b)           Transactions with Other Related Parties

(i) During fiscal 2013 and 2012 the following amounts were incurred with respect to the Company’s current and former non-management directors and/or officers of the Company:

	2013 $	2012 $
Professional fees - David Henstridge, director	48,000	48,000
Professional fees - Robert G. Atkinson, director	18,000	12,000
Professional fees - Gil Leathley, director	30,000	25,750
Professional fees - Michael Hudson, director	30,000	30,000
Professional fees - James Hutton, former director	-	6,000
Health Benefits - Mariana Bermudez, Secretary	631	659
Share-based compensation - David Henstridge, director	-	288,000
Share-based compensation - Robert G. Atkinson, director	-	147,000
Share-based compensation - Gil Leathley, director	-	415,000
Share-based compensation - Michael Hudson, director	-	288,000
Share-based compensation - James Hutton, former director	-	283,000
Share-based compensation - Mariana Bermudez, Secretary	-	113,250
	126,631	1,656,659

As at August 31, 2013, $32,500 (2012 - $21,500) of the above amounts remained unpaid.

(ii) In addition, during fiscal 2013 the Company incurred a total of $48,650 (2012 - $48,000) to Chase for accounting and administration services provided by Chase personnel, excluding the CFO, and $4,475 (2012 - $4,800) for rent.  As at August 31, 2013, $4,085 (2012 - $3,400) remained unpaid.

(c) During fiscal 2013 the Company incurred $25,110 (2012 - $7,068) for shared administration costs with Mawson Resources Ltd. (“Mawson”) and Tumi Resources Ltd., public companies with common directors and officers.  As at August 31, 2013, $2,640 (2012 - $930) of the amount remained unpaid.

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(d) During fiscal 2013 the Company recorded a recovery of $96,625 (2012 - $36,441) for shared office personnel and costs from Mawson and Flinders Resources Ltd., public companies with common directors and officers.  As at August 31, 2013, $9,821 (2012 - $41,083) of the amount remained outstanding.

(e) On October 7, 2013 the Company entered into a letter agreement with Tumi Resources Ltd. (“Tumi”) and acquired a 100% interest in seven exploration licenses (the “Tungsten Projects”) located in south-central Sweden by paying $45,000 cash and issuing 50,000 common shares of the Company.  A further 50,000 common shares are issuable upon commencement of production from any of the Tungsten Projects.  Tumi has two common directors, Mr. DeMare and Mr. David Henstridge.

Risks and Uncertainties

The Company competes with other mining companies, some of which have greater financial resources and technical facilities, for the acquisition of mineral concessions, claims and other interests, as well as for the recruitment and retention of qualified employees.

The Company is in compliance in all material regulations applicable to its exploration activities.  Existing and possible future environmental legislation, regulations and actions could cause additional expense, capital expenditures, restrictions and delays in the activities of the Company, the extent of which cannot be predicted.  Before production can commence on any properties, the Company must obtain regulatory and environmental approvals.  There is no assurance that such approvals can be obtained on a timely basis or at all.  The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations.

The Company’s material mineral properties are located in Scandinavia and consequently the Company is subject to certain risks, including currency fluctuations which may result in the impairment or loss of mining title or other mineral rights, and mineral exploration and mining activities may be affected in varying degrees by governmental regulations relating to the mining industry.

Investor Relations Activities

The Company maintains a website at www.tasmanmetals.com .  The Company had retained Mining Interactive Corp. (“Mining Interactive”) to provide market awareness and investor relations activities under which the Company paid Mining Interactive $3,500 per month for such services.  During fiscal 2013 period the Company paid Mining Interactive $10,500 (2012 - $42,000).  Effective November 30, 2012 the Company terminated its arrangement with Mining Interactive.  All investor relations activities are now conducted by in-house personnel.

Outstanding Share Data

The Company’s authorized share capital is unlimited common shares without par value.  As at November 25, 2013, there were 60,850,982 outstanding common shares, 4,001,500 share options outstanding with exercise prices ranging from $0.65 to $4.22 per common share and 833,333 warrants outstanding with an exercise price of $1.85 per common share.

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to senior management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to permit timely decisions regarding public disclosure.

Management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that the Company’s disclosure controls and procedures, as defined in National Instrument 52-109 - Certification of Disclosure in Issuer’s Annual and Interim Filings (“52-109”), are effective to ensure that the information required to be disclosed in reports that are filed or submitted under Canadian Securities legislation are recorded, processed, summarized and reported within the time period specified in those rules.  Management relies upon certain informal procedures and communication, and upon “hands-on” knowledge of senior management.  Due to the small staff, however, the Company will continue to rely on

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an active Board and management with open lines of communication to maintain the effectiveness of the Company’s disclosure controls and procedures.

Internal Controls and Procedures over Financial Reporting

Management is also responsible for the design of the Company’s internal control over financial reporting in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles.

In the course of evaluating internal controls over financial reporting as at August 31, 2013 management has identified the following reportable deficiencies:

(a) there is limited segregation of duties which could result in a material misstatement in the Company’s financial statements.  Given the Company’s limited staff level, certain duties within the accounting and finance department cannot be properly segregated.  However, none of these segregation of duty deficiencies resulted in material misstatement to the financial statements as the Company relies on certain compensating controls, including periodic substantive review of the financial statements by the Chief Executive Officer, Audit Committee and Board of Directors.

(b) on occasion, the Company undertakes complex and non-routine transactions.  These are sometimes extremely technical in nature and require an in-depth understanding of IFRS.  The Company’s accounting staff have a reasonable knowledge of the rules related to IFRS but may not have the in-depth understanding required to properly account for these non-routine transactions.  To address this risk, the Company consults with its third party advisors as needed in connection with the recording and reporting of complex and non-routine transactions.

It should be noted that a control system, no matter how well conceived or operated, can only provide reasonable assurance, not absolute assurance, that the objectives of the control system are met.  The control framework the officers used to design the Company’s internal control over financial reporting is the Internal Control - Integrated Framework (“COSO Framework”) published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.

The Company is required to disclose herein any change in the Company’s internal control over financial reporting that occurred during the period beginning on September 1, 2012 and ending on August 31, 2013 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.  No material changes in the Company’s internal control over financial reporting were identified during such period that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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EX-99.3

EXHIBIT 99.3

CERTIFICATION OF ANNUAL FILINGS BY CEO

Form 52-109F1

Certification of Annual Filings

Full Certificate

I, Mark Saxon, Chief Executive Officer, of Tasman Metals Ltd., certify the following:

1. Review:I have reviewed the AIF, if any, annual consolidated financial statements and annual MD&A, including for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Tasman Metals Ltd. (the “issuer”) for the financial year ended August 31, 2013.

2. No misrepresentations:Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3.   Fair presentation:Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4.   Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.   Design:  Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework:  The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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5.2 ICFR - material weakness relating to design:  The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the end of the financial year end:

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have:

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A:

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii)           for each material weakness relating to operation existing at the financial year end

A. a description of the material weakness;

B. the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

C. the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

7. Reporting changes in ICFR:The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on September 1, 2012and ended on August 31, 2013 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee:  The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date:  November 25, 2013

“Mark Saxon”                                      

Mark Saxon

Chief Executive Officer

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EX-99.4

EXHIBIT 99.4

CERTIFICATION OF ANNUAL FILINGS BY CFO

Form 52-109F1

Certification of Annual Filings

Full Certificate

I, Nick DeMare, Chief Financial Officer, of Tasman Metals Ltd., certify the following:

1. Review:I have reviewed the AIF, if any, annual consolidated financial statements and annual MD&A, including for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Tasman Metals Ltd. (the “issuer”) for the financial year ended August 31, 2013.

2. No misrepresentations:Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3.   Fair presentation:Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4.   Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.   Design:  Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework:  The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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5.2 ICFR - material weakness relating to design:  The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the end of the financial year end:

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have:

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A:

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) for each material weakness relating to operation existing at the financial year end

A. a description of the material weakness;

B. the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

C. the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

7. Reporting changes in ICFR:The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on September 1, 2012and ended on August 31, 2013 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee:  The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date:  November 25, 2013

“Nick DeMare”                                          

Nick DeMare

Chief Financial Officer

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