EXHIBIT 99.1

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

TASMAN METALS LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED

NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

Page 1

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of these condensed consolidated interim financial statements they must be accompanied by a notice indicating that the condensed consolidated interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

Page 2

TASMAN METALS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited - Expressed in Canadian Dollars)

	Notes		November 30, 2013 $			August 31, 2013 $
ASSETS
Current assets
Cash				4,412,395			5,601,492
Amounts receivable				25,214			13,444
GST/VAT receivables				60,065			56,240
Prepaids				115,063			69,302
Total current assets				4,612,737			5,740,478
Non-current assets
Investment		5		12,798			24,805
Property, plant and equipment		6		161,994			175,485
Exploration and evaluation assets		7		8,311,281			7,883,939
Bond deposit				31,708			31,646
Total non-current assets				8,517,781			8,115,875
TOTAL ASSETS				13,130,518			13,856,353
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities				520,871			645,492
TOTAL LIABILITIES				520,871			645,492
SHAREHOLDERS’ EQUITY
Share capital				20,351,302			20,299,802
Share-based payments reserve				9,171,302			9,056,102
Deficit				(16,789,931	)		(16,034,024	)
Accumulated other comprehensive loss				(123,026	)		(111,019	)
TOTAL SHAREHOLDERS’ EQUITY				12,609,647			13,210,861
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				13,130,518			13,856,353

Event after the reporting period - Note 13

These condensed consolidated interim financial statements were approved and authorized for issue by the Board of Directors on January 10, 2014 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 condensed consolidated interim financial statements

Page 3

TASMAN METALS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited - Expressed in Canadian Dollars)

			Three Months Ended
	Notes		November 30, 2013 $			November 30, 2012 $ (Note 3)
Expenses
Accounting and administration				34,472			32,416
Audit				51,117			33,650
Corporate development				54,261			50,983
Depreciation				13,491			15,129
General exploration				8,382			27,539
Investor relations				24,000			10,500
Legal				144,423			24,927
Management				40,500			40,500
Office				47,322			50,782
Professional				82,919			139,942
Regulatory				22,647			18,120
Rent				14,300			16,805
Salaries and benefits				69,678			81,844
Shareholder costs				1,794			3,666
Share-based compensation		8(d)		115,200			594,394
Transfer agent				2,638			2,984
Travel				39,680			58,110
				766,824			1,202,291
Loss before other items				(766,824	)		(1,202,291	)
Other items
Impairment of exploration and evaluation assets		7(a)		(6,599	)		(10,438	)
Interest income				17,799			28,208
Foreign exchange				(283	)		(345	)
				10,917			17,425
Net loss for the period				(755,907	)		(1,184,866	)
Other comprehensive loss				(12,007	)		(25,974	)
Comprehensive loss for the period				(767,914	)		(1,210,840	)
Basic and diluted loss per common share				(0.01	)		(0.02	)
Weighted average number of common shares outstanding				60,860,982			60,094,315

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

Page 4

TASMAN METALS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited - Expressed in Canadian Dollars)

	Three Months Ended November 30, 2013
	Share Capital
	Number of Shares		Amount $		Share- Based Payments Reserve $		Deficit $			Accumulated Other Comprehensive Loss $			Total Equity $
Balance at September 1, 2013		60,850,982		20,299,802		9,056,102		(16,034,024	)		(111,019	)		13,210,861
Common shares issued for:
Exploration and evaluation assets		50,000		51,500		-		-			-			51,500
Share-based compensation on share      options		-		-		115,200		-			-			115,200
Unrealized loss on investment		-		-		-		-			(12,007	)		(12,007	)
Net loss for the period		-		-		-		(755,907	)		-			(755,907	)
Balance at November 30, 2013		60,900,982		20,351,302		9,171,302		(16,789,931	)		(123,026	)		12,609,647

	Three Months Ended November 30, 2012
	Share Capital
	Number of Shares		Amount $		Share- Based Payments Reserve $			Deficit $			Accumulated 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		1,175,000		293,750		-			-			-			293,750
Share-based compensation on share      options		-		-		594,394			-			-			594,394
Transfer on exercise of share      options		-		164,500		(164,500	)		-			-			-
Unrealized loss on investment		-		-		-			-			(25,974	)		(25,974	)
Net loss for the period		-		-		-			(1,184,866	)		-			(1,184,866	)
Balance at November 30, 2012 (Note 3)		60,745,982		20,266,802		8,995,791			(13,737,648	)		(80,936	)		15,444,009

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

Page 5

TASMAN METALS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in Canadian Dollars)

	Three Months Ended
	November 30, 2013 $			November 30, 2012 $ (Note 3)
Operating activities
Net loss for the period		(755,907	)		(1,184,866	)
Adjustments for:
Depreciation		13,491			15,129
Share-based compensation		115,200			594,394
Impairment of exploration and evaluation assets		6,599			10,438
		(620,617	)		(564,905	)
Changes in non-cash working capital items:
Decrease (increase) in amounts receivable		(11,770	)		31,180
Decrease (increase) in GST/VAT receivables		(3,825	)		24,649
Increase in prepaids		(45,761	)		(55,441	)
Decrease in accounts payable and accrued liabilities		(160,207	)		(531,898	)
		(221,563	)		(531,510	)
Net cash used in operating activities		(842,180	)		(1,096,415	)
Investing activities
Additions to exploration and evaluation assets		(346,855	)		(672,548	)
Increase in bond deposit		(62	)		-
Net cash used in by investing activities		(346,917	)		(672,548	)
Financing activity
Issuance of common shares		-			293,750
Net cash provided by financing activity		-			293,750
Net change in cash		(1,189,097	)		(1,475,213	)
Cash at beginning of period		5,601,492			9,778,040
Cash at end of period		4,412,395			8,302,827

Supplemental cash flow information - see Note 12

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

Page 6

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

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 November 30, 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 November 30, 2013 the Company had working capital of $4,091,866.  These condensed consolidated interim 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 condensed consolidated interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”), and in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”).  These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended August 31, 2013, which have been prepared in accordance with IFRS as issued by the IASB.  The accounting policies followed in these condensed consolidated interim financial statements are consistent with those applied in the Company’s consolidated financial statements for the year ended August 31, 2013.

Basis of Presentation

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue and expenses.  The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods.

Page 7

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

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, 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

Page 8

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

3. Change in Accounting Policy (continued)

	As at November 30, 2012
	As previously reported $			Effect of change in accounting policy $		As restated $
ASSETS
Current assets
Cash		8,302,827			-		8,302,827
Amounts receivable		13,401			-		13,401
GST/VAT receivables		133,622			-		133,622
Prepaids		125,370			-		125,370
Total current assets		8,575,220			-		8,575,220
Non-current assets
Investment		54,888			-		54,888
Property, plant and equipment		240,209			-		240,209
Exploration and evaluation assets		212,037			6,732,985		6,945,022
Bond deposit		3,496			-		3,496
Total non-current assets		510,630			6,732,985		7,243,615
TOTAL ASSETS		9,085,850			6,732,985		15,818,835
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		374,826			-		374,826
TOTAL LIABILITIES		374,826			-		374,826
SHAREHOLDERS’ EQUITY
Share capital		20,266,802			-		20,266,802
Share-based payments reserve		8,995,791			-		8,995,791
Deficit		(20,470,633	)		6,732,985		(13,737,648	)
Accumulated other comprehensive loss		(80,936	)		-		(80,936	)
TOTAL SHAREHOLDERS’ EQUITY		8,711,024			6,732,985		15,444,009
TOTAL LIABILITIES AND      SHAREHOLDERS’ EQUITY		9,085,850			6,732,985		15,818,835

Page 9

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

3. Change in Accounting Policy (continued)

Reconciliation of Statement of Comprehensive Loss

	Three Months Ended November 30, 2012
	As previously reported $			Effect of change in accounting policy $			As restated $
Mineral exploration costs		788,117			(788,117	)		-
Expenses
Accounting and administration		32,416			-			32,416
Audit		33,650			-			33,650
Corporate development		50,983			-			50,983
Depreciation		15,129			-			15,129
General exploration		27,539			-			27,539
Investor relations		10,500			-			10,500
Legal		24,927			-			24,927
Management fees		40,500			-			40,500
Office		50,782			-			50,782
Professional fees		139,942			-			139,942
Regulatory fees		18,120			-			18,120
Rent		16,805			-			16,805
Salaries and benefits		81,844			-			81,844
Shareholder costs		3,666			-			3,666
Share-based compensation		594,394			-			594,394
Transfer agent		2,984			-			2,984
Travel		58,110			-			58,110
		1,202,291			-			1,202,291
Loss before other items		(1,990,408	)		788,117			(1,202,291	)
Other items
Impairment of exploration and evaluations assets		(10,438	)		-			(10,438	)
Interest income		28,208			-			28,208
Foreign exchange		(345	)		-			(345	)
		17,425			-			17,425
Net loss for the period		(1,972,983	)		788,117			(1,184,866	)
Other comprehensive loss		(25,974	)		-			(25,974	)
Comprehensive loss for the period		(1,998,957	)		788,117			(1,210,840	)
Basic and diluted loss per common share		(0.03	)					(0.02	)
Weighted average number of common shares outstanding		60,094,315						60,094,315

Page 10

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

3. Change in Accounting Policy (continued)

Reconciliation of Statement of Cash Flows

	Three Months Ended November 30, 2012
	As previously reported $			Effect of change in accounting policy $			As restated $
Operating activities
Net loss for the period		(1,972,983	)		788,117			(1,184,866	)
Adjustments for:
Depreciation		15,129			-			15,129
Share-based compensation		594,394			-			594,394
Impairment of exploration and evaluation assets		10,438			-			10,438
		(1,353,022	)		788,117			(564,905	)
Changes in non-cash working capital items:
Decrease in amounts receivable		31,180			-			31,180
Decrease in GST/VAT receivable		24,649			-			24,649
Increase in prepaids		(55,441	)		-			(55,441	)
Decrease in accounts payable and accrued liabilities		(408,151	)		(123,747	)		(531,898	)
		(407,763	)		(123,747	)		(531,510	)
Net cash used in operating activities		(1,760,785	)		664,370			(1,096,415	)
Investing activity
Additions to exploration and evaluation assets		(8,178	)		(664,370	)		(672,548	)
Net cash used in investing activity		(8,178	)		(664,370	)		(672,548	)
Financing activity
Issuance of common shares		293,750			-			293,750
Net cash provided by financing activity		293,750			-			293,750
Net change in cash		(1,475,213	)		-			(1,475,213	)
Cash at beginning of period		9,778,040			-			9,778,040
Cash at end of period		8,302,827			-			8,302,827

4.           Significant Accounting Policy

The preparation of financial data is based on accounting principles and practices consistent with those to be used in the preparation of the audited annual consolidated financial statements as at August 31, 2013.  The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended August 31, 2013.

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TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

5. Investment

	November 30, 2013
	Number of Shares		Cost $		Accumulated Compre- hensive Loss $			Carrying Value $
Hannans Reward Limited (“Hannans”)		2,647,059		135,824		(123,026	)		12,798

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

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 7(b)(i).  As at November 30, 2013 the quoted market value of the Hannans shares was $12,798.

6.           Property, Plant and Equipment

Cost:	Computers $			Office Furniture and Equipment $			Field Equipment $			Vehicles $			Total $
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 and      November 30, 2013		18,032			19,767			98,081			134,475			270,355
Accumulated Depreciation:
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	)
Depreciation		(874	)		(958	)		(5,055	)		(6,604	)		(13,491	)
Balance at November 30, 2013		(9,416	)		(8,001	)		(39,142	)		(51,802	)		(108,361	)
Carrying Value:
Balance at August 31, 2013		9,490			12,724			63,994			89,277			175,485
Balance at November 30, 2013		8,616			11,766			58,939			82,673			161,944

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TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

7. Exploration and Evaluation Assets

	November 30, 2013
	Acquisition Costs $		Deferred Exploration Costs $		Total $
Rare Earth Properties
Norra Kärr		23,045		7,501,004		7,524,049
Olserum		124,846		500,312		625,158
Other		47,669		10,680		58,349
Other Properties		98,906		4,819		103,725
		294,466		8,016,815		8,311,281

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

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TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

7.           Exploration and Evaluation Assets (continued)

	Rare Earth Element Properties										Other
	Norra Kärr $		Otanmaki $			Olserum $		Other $			Properties $		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
Exploration costs
Consulting		104,638		-			10,813		-			4,183		119,634
Exploration site		4,613		-			1,163		-			182		5,958
Geochemical		10,741		-					-			-		10,741
Geological		14,561		-					-			-		14,561
Metallurgical testing		169,804		-			-		-			-		169,804
Pre-feasibility study		15,820		-			-		-			-		15,820
Travel		923		-					-			-		923
		321,100		-			11,976		-			4,365		337,441
Acquisition costs
Issuance of common shares		-		-			-		-			51,500		51,500
Acquisition		-		-			-		-			45,000		45,000
		-		-			-		-			96,500		96,500
Impairment		-		-			-		(6,599	)		-		(6,599	)
Balance at November 30, 2013		7,524,049		-			625,158		58,349			103,725		8,311,281

(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.

Page 14

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

7.           Exploration and Evaluation Assets (continued)

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.

Other

During the three months ended November 30, 2013 the Company relinquished certain exploration claims in Sweden and recorded an impairment charge of $6,599 to exploration and evaluation assets.

As at November 30, 2013 the Company has been granted or made reservations on other rare earth element properties, as follows:

(i) 15 exploration claims and one mining lease in Sweden; and

(ii) 7exploration claims in Finland.

(b) Other Properties

(i) Iron Ore Properties

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.  Hannans has earned a 75% interest in the Iron Ore Claims and may earn a further 15% interest by funding a feasibility study on at least one Iron Ore Claim prior to June 30, 2018, including spending a minimum of AUS $100,000 per annum.

(ii) Tungsten Properties

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 at a fair value of $51,500.  A further 50,000 common shares are issuable upon commencement of production from any of the Tungsten Projects.  Tumi has two common directors.

8. Share Capital

(a) Authorized Share Capital

At November 30, 2013 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 the three months ended November 30, 2013.  See also Note 7(b)(ii).

(ii) No equity financings were conducted by the Company during fiscal 2013.

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TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

8. Share Capital (continued)

(c) Warrants

A summary of the number of common shares reserved pursuant to the Company’s warrants outstanding at November 30, 2013 and 2012 and the changes for the three months ended on those dates is as follows:

	2013				2012
	Number		Weighted Average Exercise Price $		Number			Weighted Average Exercise Price $
Balance, beginning of period		2,090,667		1.85		2,177,607			1.85
Expired		2,090,667		1.85		(86,940	)		1.85
Balance, end of period		-		-		2,090,667			1.85

(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 the three months ended November 30, 2013 the Company granted 220,000 (2012 - 75,000) share options and recorded compensation expense of $115,200 (2012 - $87,750).  In addition, the Company recorded $nil (2012 - $15,414) compensation expense on share options previously granted which had vested during the period.

The fair value of share options granted and/or vested during the three months ended November 30, 2013 and 2012 is estimated using the Black-Scholes option pricing model using the following assumptions:

	2013	2012
Risk-free interest rate	1.46%	1.09% - 1.26%
Estimated volatility	94% - 96%	100% - 130%
Expected life	3 years	2.5 years - 3 years
Expected dividend yield	0%	0%
Expected forfeiture rate	0%	0%

The weighted average fair value of all share options granted and/or vested during the three months ended November 30, 2013 was $0.52 (2012 - $1.03) per option.

During the three months ended November 30, 2012 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.

Page 16

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

8. Share Capital (continued)

A summary of the Company’s share options at November 30, 2013 and 2012 and the changes for the three months ended on those dates is presented below:

	2013				2012
	Number of Options		Weighted Average Exercise Price $		Number of Options			Weighted Average Exercise Price $
Balance, beginning of period		3,781,500		2.01		5,181,500			2.09
Granted		220,000		0.73		75,000			1.41
Exercised		-		-		(1,175,000	)		0.25
Expired		-		-		(200,000	)		2.11
Balance, end of period		4,001,500		1.94		3,881,500			2.04

The following table summarizes information about the share options outstanding and exercisable at November 30, 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
60,000	0.65	September 2, 2016
160,000	0.76	September 23, 2016
4,001,500

See also Note 13.

Page 17

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

9. 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 the three months ended November 30, 2013 and 2012 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 $
Management fees	40,500	40,500
Professional fees	31,500	43,500
	72,000	84,000

As at November 30, 2013, $19,500 (2012 - $2,500) 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 November 30, 2013 the amount payable under the agreement would be $324,000.

(b)          Transactions with Other Related Parties

(i) During the three months ended November 30, 2013 and 2012 the following amounts were incurred with respect to the Company’s non-management directors of the Company:

	2013 $	2012 $
Professional fees	31,500	31,500

As at November 30, 2013, $42,500 (2012 - $10,500) of the above amounts remained unpaid and has been included in accounts payable and accrued liabilities.

(ii) In addition, during the three months ended November 30, 2013 the Company incurred a total of $14,900 (2012 - $14,500) 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 $1,005 (2012 - $1,200) for rent.  As at November 30, 2013, $8,835 (2012 - $7,900) remained unpaid and has been included in accounts payable and accrued liabilities.

(c) During the three months ended November 30, 2013 the Company incurred $6,190 (2012 - $4,850) for shared administration costs with public companies with common directors and officers.  As at November 30, 2013, $4,120 (2012 - $2,000) of the amount remained unpaid and has been included in accounts payable and accrued liabilities.

(d) During the three months ended November 30, 2013 the Company recorded a recovery of $23,894 (2012 - $24,955) for shared office personnel and costs from public companies with common directors and officers.  As at November 30, 2013, $20,004 (2012 - $10,361) of the amount remained outstanding and has been included in amounts receivable.

(e) See also Note 7(b)(ii).

Page 18

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

10.           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:

	November 30, 2013
	Canada $		Scandinavia $		Total $
Current assets		4,405,080		207,657		4,612,737
Investment		12,798		-		12,798
Property, plant and equipment		-		161,994		161,994
Exploration and evaluation assets		-		8,311,281		8,311,281
Bond deposit		-		31,708		31,708
		4,417,878		8,712,640		13,130,518

	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

11. 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	November 30, 2013 $			August 31, 2013 $
Cash	FVTPL		4,412,395			5,601,492
Investment	Available-for-sale		12,798			24,805
Amounts receivable	Loans and receivables		25,214			13,444
Accounts payable and accrued liabilities	Other liabilities		(520,871	)		(645,492	)

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.

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TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

11. Financial Instruments and Risk Management (continued)

               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 November 30, 2013
	Less than 3 Months $			3 - 12 Months $		1 - 5 Years $		Over 5 Years $		Total $
Cash		4,412,395			-		-		-		4,412,395
Investment		-			-		12,798		-		12,798
Amounts receivable		25,214			-		-		-		25,214
Accounts payable and      accrued liabilities		(520,871	)		-		-		-		(520,871	)

	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	)

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.

Page 20

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

11.           Financial Instruments and Risk Management (continued)

(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 November 30, 2013, 1 Canadian Dollar was equal to 6.19 SEK.

Balances are as follows:

	Swedish Kronors			CDN $ Equivalent
Cash		720,676			116,426
Amounts receivable		423,947			68,489
Accounts payable and accrued liabilities		(1,714,677	)		(277,008	)
		(570,054	)		(92,093	)

Based on the net exposures as of November 30, 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 $8,000 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.

12.           Supplemental Cash Flow Information

During the three months ended November 30, 2013 and 2012 non-cash activities were conducted by the Company as follows:

	2013 $		2012 $
Operating activity
Increase in accounts payable and accrued liabilities	147,023		123,747
Financing activity
Issuance of common shares	51,500		-
Investing activity
Additions to exploration and evaluation assets	(198,523	)	(123,747	)

Page 21

TASMAN METALS LTD.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2013

(Unaudited - Expressed in Canadian Dollars)

13.           Event after the Reporting Period

Subsequent to November 30, 2013 share options to acquire 1,011,500 common shares with exercise prices ranging from $1.40 to $3.45 per share expired without exercise.

Page 22