ANDROMEDA METALS LIMITED — Capital/Financing Update 2012

Oct 16, 2012

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Wednesday 17 October, 2012

Company Announcements Office Australian Securities Exchange Limited PO Box H224 Australia Square NSW 1215

PASKEVILLE UPCOMING DRILLING PLANS AND GEOPHYSICAL RESULTS.

Summary

• Diamond drilling to follow up strong copper mineralisation and test a compelling target at Paskeville is currently scheduled to commence before the end of the month.

• A recently completed airborne electromagnetic (REPTEM) survey at Paskeville has identified a number of conductive features semi-coincident with discrete geochemical anomalies adding further confidence in the quality of these exploration targets.

• The REPTEM survey also appears to have accurately mapped the western limit of a wedge of Adelaidian aged sediments which occur beneath thin surficial cover but above the prospective basement rocks which host mineralisation in the district.

• The interpreted western boundary of the Adelaidian sediments coincides with the eastern limit of geochemical anomalism at Paskeville. Surface geochemistry is not considered to be effective in areas where Adelaidian sediments are present. Consequently mineralisation in the host sequence can persist to the east beneath the Adelaidian despite a lack of surface geochemical encouragement.

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Background

The company’s Moonta Project is located on the Yorke Peninsula of South Australia and falls towards the southern end of the Olympic Copper Gold Province, a world class geological belt that is highly prospective for copper and gold deposits of Iron Oxide Copper Gold (IOCG) style (Figure 1).

From an economic viewpoint, copper is currently the most important metal won from the Olympic Copper Gold Province. Copper remains a metal critical to the transition of economies undergoing modernisation and industrialisation such as China and other nations located in Australia’s geographic region. The demand for copper has grown significantly in recent years and copper producers and forecasters alike anticipate this growth will continue into the future.

The quality of the mineral assets in the Olympic Copper Gold Province, and its perceived outstanding prospectivity, is evidenced by the presence of large copper mining companies like BHP Billiton Limited, Rio Tinto Limited and Oz Minerals Limited. Exploration success achieved by Rex Minerals Limited at the Hillside discovery on the Yorke Peninsula has seen that company’s market capitalisation increase from less than $20 million upon listing in 2007 to greater than $120 million today. Adelaide Resources therefore views the Olympic Copper Gold Province as a region where exploration success can translate into outstanding growth opportunities for its shareholders.

The Paskeville Prospect is located in the 100% owned eastern part of the project tenement and is defined by a cluster of copper and gold geochemical anomalies, a number of which were targeted by a drilling program in the first half of 2012 (Figures 1 and 2).

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Drilling at the “Discovery Area” (Figure 2) defined a coherent body of low to moderate grade mineralisation (using a minimum 0.1% copper grade) with a confirmed strike length of 300

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metres and with widths varying from around 15 metres to in excess of 130 metres. The mineralised body remains open along strike and at depth. Higher grade intervals are present with intersections including 10 metres at 1.06% copper, 9 metres at 1.27% copper, 7 metres at 1.16% copper, 42 metres at 1.10% copper, and 5 metres at 1.88% copper.

Upcoming Diamond Drilling Program

Interpretation of the 2012 first half aircore drilling results defines a compelling exploration target at depth and centred on the most south easterly drill traverse completed at the prospect (Figures 2 and 3).

Figure 3 shows interpreted copper grade contours on this section to be increasing with depth, most notably down sub-zones within the mineralisation. Should the grade continue to increase down dip, a thick and potentially attractive grade target presents beneath the limit of current drilling. A short program of diamond drilling is planned as an initial test of this exciting target. A drill contractor has been secured, landowner approvals have been obtained, and government approvals to complete the drilling are anticipated shortly, allowing drilling to commence before the end of the month.

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Electromagnetic Geophysical Survey

Electromagnetic (EM) surveys map the earth’s conductivity and are commonly used in mineral exploration. Conductive zones can be due to saline groundwater, graphitic rocks, zones of hydrothermal alteration, and importantly, bodies of massive sulphide or zones of sulphide veining. EM surveys played a significant role in the discovery of the Poona and Wheal Hughes copper-gold mines near Moonta. As different rock types often have different conductivities the technique can also be used to assist in interpreting subsurface geology.

A helicopter-borne airborne electromagnetic survey (REPTEM) was flown over the Paskeville Prospect area in late September. The survey covered a total area of 14.5 km[2] and comprised north-south oriented survey lines spaced 100 metres apart. The location of the REPTEM survey is shown on Figure 2 and interpretation of the REPTEM data is now complete.

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The REPTEM survey has discovered a number of conductive features which persist to late times. Figure 4 presents an image of late-time conductivity (coloured background - conductive features are orange and red), overlain by outlines of the surface geochemical anomalies and the drillholes at Paskeville.

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The area of known mineralisation coincides with a moderate conductivity feature which appears to develop to the southwest, while several of the conductive features to the west and northwest of the “discovery area” coincide with geochemical anomalies, significantly increasing confidence in the quality of these undrilled targets.

The REPTEM data also reveals conductivity contrasts interpreted to be due to variations in the underlying geology. Figure 5 presents a plan together with a schematic cross section of the interpreted geology at Paskeville based upon the REPTEM and drilling results.

A zone of very low conductivity (purple colours in Figure 4) in the south western part of the surveyed area likely defines the boundary of a granite body intersected by a traverse of aircore holes completed in the 2012 drilling program. The granite is considered likely to a member of the Hiltaba Suite, the igneous suite implicated in the genesis of copper-gold mineralisation in the Olympic Copper Gold Province.

Another zone of low conductivity in the east of the survey appears to accurately map the western limit of a wedge of Adelaidian aged sediments which occur beneath thin surficial cover but above the prospective basement rocks which host mineralisation in the district.

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Significantly, the interpreted western boundary of the Adelaidian sediments coincides with the eastern limit of geochemical anomalism at Paskeville (Figure 5). Surface geochemistry is not considered to be effective in areas where an obscuring layer of Adelaidian sediments is present. Consequently, mineralisation in the host sequence can persist to the east beneath the Adelaidian despite a lack of surface geochemical encouragement.

Reprocessing of Airborne Magnetics

Reprocessing and modelling of 2002 high resolution airborne magnetic data reveals the presence of a significant magnetic anomaly at the Paskeville Prospect (Figure 6). Geophysical modelling suggests the depth to the top of the magnetic body sourcing the anomaly is likely to be several hundred metres.

The nature of the magnetic source rock, and the role (if any) it has played in the location of the Paskeville mineralisation is presently unknown, however deep seated magnetic anomalies are known to be associated with other deposits in the Olympic Copper Gold Province.

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Chris Drown Managing Director

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Chris Drown, who is a Member of The Australasian Institute of Mining and Metallurgy and who consults to the company on a full time basis. Mr Drown has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Drown consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Enquiries should be directed to Chris Drown. Ph (08) 8271 0600 or 0427 770 653.

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