ELEMENTOS LIMITED — Interim / Quarterly Report 2010

Jan 28, 2010

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29 January 2010

QUARTERTLY REPORT DECEMBER 2009

Key Highlights

• Elementos successfully debut’s on ASX following its fully-subscribed Initial Public Offering.

• Manantiales Environmental Impact Report – Exploration Stage lodged with San Juan Mines Department.

• Land access agreement at Manatiales signed with Troy Resources.

• Manantial main vein system mapped over a strike length of over one kilometre and interpreted as a parallel system to Julietta vein system.

Elementos successfully debut’s on ASX

Elementos Limited (ASX: ELT) (“Elementos” or the “Company”) made its debut on the Australian Securities Exchange (ASX) on 23 December 2009, following its fullysubscribed Initial Public Offering (IPO).

Elementos offered 33 million fully paid ordinary shares at an issue price 25 cents, to raise $8.25 million.

Highlights of the IPO included:

• total applications for the offer substantially exceeded the $8.25 million upper limit for the issue;

• the full over-allocation option of $2 million has been exercised, resulting in Elementos raising $8.25 million from the IPO;

• the Orocobre Priority Offer was strongly supported by Orocobre shareholders; and,

• Elementos’ share register now comprises approximately 500 new shareholders, including retail and institutional investors.

Orocobre Limited is Elementos’ largest shareholder with 21 million shares until it distributes these in-specie to its shareholders in early 2010.

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MANANTIALES

Environmental Impact Assessment Lodged

The Environmental Impact Report – Exploration Stage for Manantiales was lodged on 14 December 2009. The Mining Code stipulates that the State Secretariat of Mines has 60 days to make an approval decision on the EIS.

Access Agreement with Troy Resources

Elementos has signed an access agreement with Troy Resources to facilitate entry to the Manantiales project. Troy is the owner of the surface land adjacent to Elementos’ Manantiales project.

Key aspects of the agreement include:

• access to the Manantiales project utilising Troy’s 21 kilometre access road from the Kamila deposit to the Julieta vein system which is adjacent to Elementos’ Manantial vein target;

• agreement for construction of internal access roads, drill pads and any facility related with the exploration activities of the Manantiales property; and

• sharing of maintenance costs on the Kamila to Julieta road.

The agreement has resulted in significant cost savings to Elementos, and enabled immediate access to the project site.

Manantiales First Phase Exploration Program

The December site visit combined a comprehensive review of the historical exploration data with a field visit during December 2009. The field visit incorporated detailed mapping of the vein systems at Manantial in preparation for a first phase detailed sampling program.

The first sampling program will include mapping of the vein systems, localising historical saw blade channel sampling undertaken by Marifil, and rock chip sampling by Silex. The sampling program is planned to check the previous sampling methodologies and includes twinning of previous sawn channel and rock chip samples and a comparison of gold grades generated from both sampling methodologies. Additionally, new vein zones will be sampled to provide an accurate and representative grade assessment of outcropping mineralization for drill targeting purposes.

Interpretation of vein systems in the Manantial area

During the December 2009 site visit, some new interpretations of the vein systems in the Manantial area were made. The most important quartz vein system is north-south trending and dips 70 to 85 degrees to the east. Vein widths range between 1 to 5 metres (Figure 1). The most common vein textures are banding, including opaline and chalcedonic bands with a central suture of bladed texture calcite which in places has been replaced by silica. These are all textural indicators of boiling, transportation and precipitation of metals, potentially including gold-silver mineralisation.

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Additionally, there are also narrow north-south quartz veins (0.3 to 0.5 metres width) parallel to the main system configured as a sheeted array. If mineralised, and present in sufficient volume, these may represent further potential

The main massive vein body mapped to date has an exposed length of nearly 275 metres north-south, however, vein occurrences can be mapped over another 800 metres along the trend. The mapping also demonstrated that the main vein system discussed above is sub-parallel to the Julieta vein, which is located some 1.7 kilometres east.

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Photo 1: Elementos’ South America Exploration Manager, Gustavo Delendatti, inspecting the main north-south trending vein at Manantial prospect

A second vein system that is generally sub-vertical, trending N30E to N40E is formed by both massive chalcedonic bodies (1 to 4 metres width) and narrow banded veins (0.3 to 0.5 metres in width). Some of the most outstanding gold grades in veins (including the 9.01 g/t gold peak) come from these narrow northeasterly veins. This

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vein system seems to be controlled by a major structural trend which is visible in the satellite imagery.

The co-occurence of these two orientations of mineralised veins signifies that the veins probably formed within a tensional system with the potential to form multiple structures in either orientation with large total volumes. This is a common feature in many larger vein deposits, such as Cerro Vanguardia (AngloGold Ashanti, Southern Argentina).

Exploration considerations

The Manantial vein target is not limited to the obvious traces of the north-south and north-east veins sampled to date. Based on the positioning of the main vein systems, a target zone of at least 2 kilometres north-south by 2 kilometres east-west will be evaluated initially. The first vein system to be extensively sampled is located in the western side of the main Manantial creek whereas the Julieta vein is placed in the east side, some 1.7 kilometres to the east.

The main zone to be tested is internally more complex and there is the potential to find sub-parallel veins under shallow overburden material, as well as extensions along strike. These aspects will be evaluated through trench sampling and detailed ground magnetic geophysics. If more veining is identified, including veinlets, there is potential to develop a large-scale sheeted/stockworked mineralised system amenable to bulk mining methodologies.

Manantiales March 2010 quarter exploration activities

Based on the new understanding of the vein systems in the Manantial area, exploration activities for the March quarter will incorporate the following key activities:

• on-going detailed mapping of vein systems in order to assess the distribution of the main veins in the Manantial and La Puerta zone areas, and identify further vein systems;

• sampling of veins, either through saw blade channel or conventional rock chip sampling;

• trenching (manually), oriented east-west in order to test the potential of sheeted veining parallel to the north-south and north-east vein systems;

• ground magnetic geophysics in order to target hidden veins and to follow extensions along strike of visible veins;

• interpretation of geochemical data (including comparison with previous sampling) in conjunction with textural and wall rock mapping is warranted aiming to identify the exposed epithermal level;

• structural mapping aimed at recognising intersections that could potentially host ore shoots as well as potential post-mineral block movements; and,

• preparation for drilling of the main target vein systems identified through systematic ground mapping and sampling, once the EIS is approved.

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SANTO DOMINGO

During the December quarter Elementos completed its first detailed exploration program at Santo Domingo. The Santo Domingo property covers a large area of copper-gold-molybdenum porphyry-style mineralisation in three target areas: El Arriero, Alunita and Divisoria. The target zones have all be delineated through Aster satellite imagery and high level reconnaissance sampling and mapping.

During the quarter exploration activities comprised:

• review of all the Orocobre Limited historical exploration data including geological maps, soil and stream sediment sampling, results of a Terraspec VIS/SWIR survey, and ASTER satellite imagery used to assist in outlining the three target alteration areas;

• detailed five week field mapping and sampling program in November at the El Arriero prospect. All the samples were assayed with ICP-Mass Spectrometry[1] at AcmeLabs in Vancouver; and,

• compilation of a geochemistry database to produce geological, alteration, and mineralogical distribution maps in Mapinfo software package.

Elementos exploration strategy at Santo Domingo was to undertake its initial field program at El Arriero on the basis of:

• better quality project access compared to Divisoria and Alunita which are situated further from the foothills of Sierra de Chucuma (the mountain range surrounding the target areas);

• the historical review outlining the strong presence of hydrothermal alteration and mineralisation (elevated copper and gold values and some visible copper mineralisation); and,

• the positive results from the Terraspec VIS/SWIR survey over surface samples confirming the presence of an oxidised porphyry copper spectral signature.

Geological mapping program

Mapping at 1:10,000 scale over areas of outcrop including rock-type, alteration and mineralisation has been conducted over the El Arriero prospect. The main alteration –mineralization area is elongated east-northeast and takes place in the intersection of north and east-northeast trending regional structures – see Figure 2.

1 Unlike atomic absorption spectroscopy, which can only measure a single element at a time ICP-MS has the capability to scan for all elements simultaneously

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Figure 2: General view of El Arriero prospect looking to the northeast.

Sampling program

A total of 255 samples were taken over an area of 1 kilometre by 0.4 kilometre, elongated east-northeast.

The main exposed porphyry zone was tested with 131 rock samples, 70 talus fine samples and six stream sediment samples which returned 40 assays higher than 200 ppm[2] copper (Cu) including two peaks of 0.37 % Cu and 0.24 % Cu for two rock samples, associated to copper oxides and chalcopyrite. Copper is accompanied by slightly anomalous gold (12 samples above 10 ppb[3] gold including a peak of 108 ppb) and molybdenum (16 samples above 50 ppm Mo including a peak of 0.18 % Mo).

Soil sampling included 48 samples arranged in a 50 metre by 50 metre grid, aiming to test the potential eastern extension of the mineralization below quaternary overburden. Soil sampling returned 12 samples higher than 70 ppm Cu (including a peak of 213 ppm Cu) accompanied by Au credits (21 samples above 4 ppb including 3 samples higher than 10 ppb) and traces of Mo (two samples higher than 5 ppm)

Interpretation of the results

El Arriero prospect is an oxidized porphyry copper system where early porphyry alteration (potassic, phyllic and propilitic) have been overprinted by argillic assemblages of supergene origin. Porphyry mineralization is hosted in or close to dacitic porphyry stocks and sills-dykes complexes potentially connected with a larger magmatic body at depth all intruding metamorphic rocks.

2 Parts per million

3 Parts per billion

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Surface sampling conducted to date has highlighted low grade copper mineralization (associated with gold and molybdenum credits), in the order of 200 to 300 ppm with four peaks ranging between 0.16 % to 0.37 %, associated with copper oxides and chalcopyrite – see Figure 4.

Copper, gold and molybdenum mineralization is associated with pyrite, chalcopyrite and molybdenite contained in sulfide veinlets and as disseminations in both, porphyry and wall rock. The most abundant sulfide is pyrite, accompanied by chalcopyrite. Copper oxide staining is a common feature in intrusive and wall rock.

Mapping and sampling work confirmed that the system is still open along strike and to the south, to the east and northeast below quaternary cover and to the west – southwest according with the projection of both the potassic alteration belt and copper-gold mineralization.

The weak copper - gold mineralization outlined at surface in El Arriero to date in addition with the large amount of pyrite in the host rock and the discrete potassic nucleus related with dacite stock suggest that the periphery of the porphyry system is exposed and that drilling will be required to identify the core of the porphyry system.

Santo Domingo June quarter 2010 exploration activities

Access to the Santo Domingo is restricted between December and March due to the hot weather and potential for flash flooding during tropical storms. In April, a new exploration program will be undertaken and include:

• further sampling to test potential extensions of the El Arriero porphyry system along strike;

• deep penetration geophysical surveys (Broad band Magneto Telluric MT, MIMDAS or ground magnetic if possible) looking for deep mineralized targets related to a larger magmatic body at depth; and,

• systematic mapping and sampling will be conducted in the surrounding east to northeast areas in close proximity to Divisoria aimed at improving the prospectivity of El Arriero as part of a larger cluster of targets.

NORTHERN NEW SOUTH WALES

Sydney Flat radar program

During the quarter, Elementos completed a sub-surface investigation of the deep lead channel system using Ground Penetrating Radar (GPR) at the Houpeton section of the Sydney Flat Exploration Lease (EL6918). Sydney Flat covers the gold prospect areas in a broad belt surrounding Uralla. The deep lead comprises a southwest to north-east trending belt of relict alluvial prospects (Figure 3). These are interpreted to be residual from a braided stream environment, which brought goldbearing sediments down from the Tenterfield area. The streams were subsequently in-filled by lava flows during the Tertiary period, trapping the gold-rich sediments beneath the flows

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Figure 3 – Sydney Flat project location and interpretation of the deep lead system

The initial exploration strategy for Sydney Flat is to determine the most continuous and prospective areas of the deep lead system and to use GPR to ascertain the profiles of the individual channels (width, and depth from surface and to the bottom of the lead system). The GPR is a non-destructive and non-invasive geophysical technique for rapidly imaging the shallow sub-surface (typically up to 10 metres in depth) and producing high-resolution colour sections in real time. The GPR survey consisted of continuous consecutive traverses recorded along a dirt access road to the property called Spring Creek, an area identified as being highly prospective by the number of shallow historical workings.

Figure 5 outlines the radar-gram for one of the major lines. The upper dashed white line represents the interpreted location of the top of the alluvials with the approximate depth shown on the right hand side of the radar-gram. The solid white line represents the interpreted location of the base of the alluvial channels. Typically the alluvial palaeochannels are six metres in thickness.

The GPR results will be used as a guide for establishing the location of future drilling programs to ensure that they intersect the deep lead sediments. It is planned to continue the GPR surveys along the channel system to intersect the channels and define a continuous body of sediments for testing.

MILLENIUM

Application for new Exploration Licences

Exploration license applications were made for 16 sub-blocks comprising 3 subblocks to the south-west, and 13 sub-blocks to the north-east of the existing Millenium Mining Licences. The applications cover extensions of the fault zone interpreted as

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hosting continuations of the cobalt-copper mineralisation at Millenium. Whilst there are small gaps between both the new north-east and south-west extensions at the Mining Licences, access is not anticipated to be a problem.

Historical data compilation

During the quarter, the Company completed a detailed search for all the available data from the previous companies’ mapping and drilling programmes. The data will be compiled and digitized to assist with planning of future exploration and drilling programmes. At completion of the current northern wet season (February to March), an initial field programme will have the objective of assessing the potential for additional mineralised areas parallel to the current known mineralised trend and also to investigate potential extensions of known mineralisation along strike and down-dip. Mapping, soil and outcrop geochemistry and ground geophysics will be involved.

For more information, please contact:

Corey Nolan

Managing Director Phone: +61 (7) 3871 3985 Email: admin@elementos.com.au

Elementos is an Australian, ASX-listed, exploration company, with a number of projects in Argentina and Australia, which offer an attractive investment environment with low sovereign risk. The properties are all in mineral rich, highly prospective provinces, with developed infrastructure nearby.

Please visit us at www.elementos.com.au

COMPETENT PERSON STATEMENT

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Neil Stuart a fellow of the Australasian Institute of Mining and Metallurgy. Mr Stuart is a Director of Elementos Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Stuart consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Figure 4 : Surface copper grades distribution (colour grid) and sample location with copper values for El Arriero Prospect, Santo Domingo. Bluish to reddish gradation indicates lower to higher values (in ppm copper). Arrows indicates the directions for potential extension of the mineralization as per surface data.

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6543000 mN 6543000 mN
6542500 mN 6542500 mN
Surface Geochemistry Legend
El Arriero Surface Geochemistry Total
Copper Values_PPM
160 to 10,000
80 to 160
40 to 80
25 to 40
15 to 25
0 to 15
6542000 mN Main outcropping alteration-mineralization area Copp El Arriero Surface Geochemistry Copper Gride r _ PPM 6542000 mN
10,000
Direction of potential extension of the mineralized system 250150
100
50
0 0.5 Km 20
mE mE mE mE
0026555 0002656 0026565 0002657
mE mE mE mE
5500265 6000265 6500265 7000265
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Figure 5: Sydney Flat GPR radargram

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