ELEMENTOS LIMITED — Interim / Quarterly Report 2012

Oct 28, 2012

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29 October 2012

QUARTERLY REPORT SEPTEMBER 2012

Highlights

• Tamaya drill target definition and planned advanced. Drilling expected to commence in October

• Inaugural JORC resource pending for the Manantiales project

• New zones of pottasic alteration identified at Divisoria prospect, Santo Domingo

• Discussions are continuing with potential partners for the Santo Domingo and Manantiales projects

Elementos Limited (ASX: ELT) (“Elementos” or the “Company”) activities this quarter have concentrated on exploration activities at the Tamaya project in Chile, and ongoing partnering discussions at the Santo Domingo and Manantiales projects, Argentina.

TAMAYA, CHILE

Early phase exploration activities – including sampling, mapping and geophysics – are demonstrating the exciting potential of the project. Significant progress has been made including the delineation of targets for a proposed drilling program in October 2012.

Exploration progress at Tamaya since February includes:

• Reconnaissance mapping – locating and assessing the extents and potential of the known structures, as well as identifying new structures across the property. Three major north-south trends have been identified and correlate strongly with copper and gold from the sampling programs. Approximately 70% of the property has now been covered by reconnaissance exploration;

• Sampling – more than 287 samples have been collected to date from reconnaissance sampling (outcrops, historic workings or from waste piles proximal to mines) and followed-up by 463 detailed, representative channel samples.

It is not possible to assess accurately the mineralisation from surface results, since the high-grade mineralisation at surface has been extracted, leaving only mineralised wallrock in outcrop and unsafe workings where sampling is not possible.

The mineralised wallrock still hosts economically significant mineralisation for modern mining methods.

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• Geophysics – two phases of geophysics have been completed including a ground based magnetometry and induced polarisation (IP) survey lines. The results of the IP survey are pending; and

• Target generation – six key target areas have been defined drilling, including Camponil, Tortallas, San Jose, Lecaros, Mollacas and San Francisco.

The drill targets represent a variety of oxide and sulphide targets, including:

• Lower grade, bulk-tonnage mineralisation in the broad shear and breccia structures that host the main veins. This material was not worked historically because of the lower grades;

• Remnants of the high-grade sulphide vein, which was selectively mined up to 700 metres below the Tamaya ridge; and

• High-grade sulphides below the old mine workings beneath the historical mining levels.

A 5,000 metre diamond drilling program has been planned to test the different targets that have been identified at surface throughout the project area.

The drilling is expected to intersect significant widths of moderate-grade copper mineralisation in the enveloping wallrocks, similar to the results encountered during this surface sampling program. It is may also may intersect remnant high-grade mineralisation within the broader structures, similar to that mined underground and in historic waste.

MERCEDES, CHILE

There were no exploration activities at Mercedes during the quarter. The Company has completed a number of phases of mapping and sampling, airborne magnetometry and Induced Polarisation (IP) surveys. The IP geophysical survey results highlighted a low-level chargeability anomaly (potential presence of sulphide mineralisation), located at depths considered uneconomic.

Whilst exploring the Elvira porphyry system, Elementos identified a number of near surface high-grade copper oxide targets including Mecha I, II, III, and Pamela. The biggest structure is at Elvira. The oxide potential remains highly prospective, although further exploration is required prior to committing to drilling.

Elementos believes there is significant potential for economic copper mineralisation in the exposed host rocks and beneath the extensive shallow ignimbrite cover throughout the project area. Additionally, there is potential for transition to sulphide mineralisation at depth.

Prior to commencing any further exploration activities at Mercedes, the Company is currently negotiating with the vendor to agree new commercial terms for the Mercedes joint venture given the diminished porphyry potential. Should new terms not be reached then the Company will allow the option to purchase to lapse.

MANANTIALES, ARGENTINA

There were no exploration activities at Manantiales during the quarter due to winter and the Company’s resources being allocated to preparing Tamaya in Chile, for drilling commencing in October. A key focus will be on desk top studies, including a compilation of all the results produced to date, for future drill planning purposes and delineation of a JORC resource.

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The Company remains in a unique position at Manantiales to monetise its discoveries through possible standalone development, should a resource of sufficient size be defined, or potentially in partnership with the adjacent Casposo operation. Elementos is in the early stages of assessing various options in relation to the project, including divestment and joint venture.

SANTO DOMINGO, ARGENTINA

During the quarter the Company completed a new mapping and sampling program over the northern extensions of the Divisoria porphyry zone exposed by seasonal flooding earlier in the year.

The main zone of pottasic alteration has been extended to the south-east by 150 metres and new sheeted / stockwork veining (up to 2 cm width) have been observed, with at least three different pulses. The earliest pulse is of biotitemagnetite, the second of silica-magnetite and sulphides, and a third one of druzy quartz and iron oxides (after sulphides), similar in style to the Yvette prospect, which returned up to 19 g/t gold in selective sampling. Additionally, new phyllic-altered dacite porphyry occurrences were found south-east of the original mapped area at Divisoria. Thirty-one sample results over the new areas are currently pending.

Discussions are on-going with a number of potential joint venture partners with the financial capacity to explore and develop a large porphyry target.

MILLENIUM, AUSTRALIA

There were no exploration activities at Millenium during the quarter. The Company has been approached by a number of parties interested in forming a joint venture on the Millenium permits and discussions are on-going.

Forte Energy NL is currently renewing the Mining Licences subject to an Option-toPurchase contract with the Company.

CATHEDRAL ROCKS, AUSTRALIA

There were no exploration activities at Cathedral Rocks during the quarter. The EPMs are currently subject to renewal process.

CORPORATE ACTIVITIES – RIGHTS ISSUE

During the quarter, the Company announced an underwritten, non-renounceable rights issue to raise approximately $2.3 million (before costs) at 3.5 cents per new share, plus one free option exercisable at 6 cents for every two new shares acquired.

The Offer provided Shareholders with an opportunity to increase their investment in the Company at an attractive price. The Offer was strongly supported by existing shareholders and experienced resource investors, including:

• Andes Investors LLC (“Andes Investors”), an investment company associated with James D. Calaway, a non-executive director of Elementos, is acquiring its entitlements and sub-underwriting a further $0.77 million of the Offer; and

• Other major shareholders including Neil Stuart, a previous director of the Company, Belmont Park Investments Pty Ltd and Panorama Ridge Pty Ltd have committed to take up their full entitlements.

The funds raised from the Offer will be applied to geophysics and drilling at the Tamaya copper project in Chile during 2012, and the costs of the Offer.

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Full details of the Offer are set out in the Prospectus lodged with ASIC and the ASX.

CASH RESOURCES

At the end of the period, the Company had cash resources of approximately $1 million. In addition, the Company has a $0.5 million bank guarantee on deposit that will be released on completion of the first 5,000 metres of drilling at Tamaya.

For more information, please contact:

Corey Nolan

Managing Director Phone: +61 (7) 3221 7770 Email: admin@elementos.com.au

Elementos is an Australian, ASX-listed, copper and gold exploration company, with projects in Argentina, Chile and Australia. 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 Alistair Grahame, a member of the Australian Institute of Geoscientists. Mr Grahame is a full-time employee 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 it 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 Grahame 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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Appendix 5B Mining exploration entity quarterly report

4Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/2010.

Name of entity

ELEMENTOS LIMITED

ABN 49 138 468 756	Quarter ended (“current quarter”)
49 138 468 756	30 SEPTEMBER 2012

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows	Current quarter $A’000	Year to date $A’000
	(605) (456) 9	(605) (456) 9
	(1052)	(1052)
Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	(0)	(0)
	(0)	(0)
	(1052)	(1052)

• See chapter 19 for defined terms.

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30/9/2001

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(1052)	(1052)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other: Cost of share issue (adjust for IPO) Net financing cash flows	Nil Nil	Nil Nil
	Nil	Nil
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(1052) 2013 (1)	(1052) 2013 (1)
	960	960

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		104
		Nil
1.25	Explanation necessaryfor an understandingof the transactions

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

Nil

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Nil

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	Nil	Nil
	Nil	Nil

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	1000
	Nil
	Nil
	500
Total	1500

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	960	951
	Nil	1062
Total: cash at end of quarter(item 1.22)	960	2013

Changes in interests in mining tenements

Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference+securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital,buy-backs,redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital,buy-backs	82,383,526	82,383,526
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,converted
7.7 Options (description and conversion factor) Unlisted Options 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	4,500,000 1,500,000 1,200,000 500,000 1,000,000	Nil Nil Nil Nil Nil	Exercise price 23.3 cents 30.0 cents 25.0 cents 23.3 cents 33.3 cents	Expiry date 23 October 2015 17 December 2013 7 September 2015 30 November 2015 18 January 2017
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement gives a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 29 October 2012 (Director/Company secretary)

Print name: Paul Crawford

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

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30/9/2001