ELEMENTOS LIMITED — Interim / Quarterly Report 2012

Apr 26, 2012

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27 APRIL 2012

QUARTERLY REPORT MARCH 2012

Highlights

• Mercedes and Tamaya project acquisitions in Chile diversify the Company‟s portfolio of exploration projects

• First phase geophysics programs completed and sampling programs underway at both Tamaya and Mercedes

• Phase II-Extended drilling program at Manantiales due for completion during the second quarter, calendar year 2012

• Elementos will seek a joint venture partner to help advance its Santo Domingo project

Elementos Limited’s (ASX: ELT) (“Elementos” or the “Company”) quarterly activities concentrated on the commencement of exploration activities at the recently acquired Tamaya and Mercedes projects in Chile, the Phase II-Extended drill program at Manantiales, and partnering of the Santo Domingo project in Argentina.

NEW PROJECT ACQUISITIONS IN CHILE

Elementos has been pursuing new project opportunities in the Andes region of South America over the last eighteen months. The strategy has been aimed at extending the Company‟s portfolio to provide a number of high quality projects at various stages throughout the discovery to development life cycle.

The Chilean acquisitions not only create diversification benefits, but deliver a number of additional advantages, including:

• Substantial land packages in close proximity to major copper-gold deposits and mines, with the potential to discover copper oxide, sulphide and porphyry-style mineralisation;

• Excellent infrastructure, ensuring maximum investment in the ground;

• Benign work environments - low to moderate altitudes and stable climates - enabling year-round exploration;

• Politically stable, pro-mining jurisdiction;

• Short lead times to the delivery of exploration results; and

• Strong synergies with the Company‟s internal geological expertise and experience, especially in vein and porphyry styles of mineralisation.

The Company remains committed to advancing and realising value from its projects in Argentina. The established team is actively advancing both the Manantiales and Santo Domingo projects, building on the success of recent exploration programs.

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MERCEDES, CHILE

Mercedes Acquisition

During the quarter, the Company secured an option to acquire a 90% interest in the Mecha[1] , Marcelita, Maria and Elvira copper properties (“The Mercedes Project”) in northern Chile.

The 8,175 hectare project area comprises four groups of exploration and mining concessions strategically located 60 kilometres east of the world-class Chuquicamata mining district. Significant mines and deposits include Chuquicamata, Ministro Hales, Radomiro Tomic, El Abra, Gaby and Spence. The district has excellent exploration, mining and development infrastructure.

Mercedes‟ prospective features include:

• Located close to a cluster of world-class porphyry deposits which includes both copper oxide heap leaching and copper-gold-molybdenum sulphide processing;

• Extensive structurally hosted, copper oxide mineralisation on surface with associated stratabound mantos in a volcanic sequence. The average grade of mined copper oxide material in 2011 was 1.6%[2] ;

• A suite of rock types and relationships including structures, alteration and mineralisation assemblages associated with porphyry deposits.

No modern exploration has been undertaken at Mercedes. Small-scale intermittent mining has targeted high-grade copper oxides across the property. Elementos‟ exploration activities include mapping, sampling, geophysical surveys and drilling of advanced targets. Mercedes has a number of targets that can be drilled quickly.

Mercedes is an exciting new opportunity for the Company with the potential to discover copper oxide and porphyry-style deposits in a world-class, proven mining district with stable jurisdiction.

Mercedes Phase I Geophysical Survey

The aero-geophysical survey comprising 3,153 line-kilometres, flown at a 125 metre line spacing and 100 metre nominal height, was completed at the beginning of March. The survey covers the majority of the 29,789 hectare project area.

The aim of the program was to assist in identifying copper mineralisation not exposed on surface, throughout the project area. The principle objectives were:

• Locating extensions to the sub-vertical structures hosting the copper oxide mineralisation under shallow surface cover;

• Testing for copper mineralisation within porphyry host-rock, as identified on surface at the Elvira prospect; and

• Testing for mineralised contact zones between subvolcanic intrusives and the sedimentary sequence, as sampled at the Mecha prospect.

1 The Mercedes prospect has been renamed Mecha to avoid confusion with the Mercedes Project.

2 Weighted average of certified returns for toll treated ore, Santa Margarita Plant, Minera Cerro Dominador S.A.

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Results from the survey will be announced on completion of an independent interpretation.

Mercedes Phase I Surface Sampling Program

Twenty-one rock-chip samples of exposed mineralisation in outcrop and artisanal mine workings in the Mecha prospect have returned high-grade copper values with anomalous silver and molybdenum. Highlights include:

• One kilometre long mineralised trend in the Mecha prospect; and

• New sampling at Mecha assaying up to 2.7% copper, 35 g/t silver, with eight out of ten samples over 1% copper.

Three distinct styles of copper oxide mineralisation have been identified at the Mecha prospect:

1. Contacts between the andesite subvolcanics and sedimentary host-rock;

2. Stratiform mantos along fault contacts and fold hinge zones; and

3. High-angle breccia and vein structures.

The consistently high copper values, variety of mineralisation and widespread distribution, all reinforce the potential to identify significant volumes of near-surface copper oxide mineralisation across the project.

Mercedes On-Going Exploration Activities

The mapping and sampling programs are continuing over the exposed high-grade targets and the deeper porphyry prospects, to aid in the generation of drill targets.

The recently completed airborne magnetometry survey and planned ground surveys should provide a rapid indication of the size and extent of the structures and mineralised bodies, as well as developing geological models for drill testing.

TAMAYA, CHILE

Tamaya Acquisition

During the quarter, the Company entered into an earn-in joint-venture with HMC Gold SCM on the Cerrillo Tamaya (“Tamaya”) copper project in Chile. Elementos can earn a 50% interest in the project by spending US$7 million on exploration and development within a three year period.

Tamaya comprises 5,690 and 1,200 hectares of mining concessions and exploration applications respectively. It is located in the Cerrillo Tamaya historic mining district, 55 kilometres south of the regional capital and port of Coquimbo. The district has excellent exploration, mining and development infrastructure.

Tamaya‟s prospective features include:

• Historic mining focused on high-grade copper ores – a reported production of 2 Mt at 12%[3] - leaving potentially significant volumes of lower grade material;

• Extensive oxide and sulphide mineralisation evident at surface over the main four kilometre long vein system;

3 Based on non-JORC-compliant historical data.

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• Potential for secondary veins and deeper mineralisation along the main trend, as well as bulk-tonnage breccia and stratiform mineralisation; and

• The area has never been explored using modern day techniques.

Exploration activities at Tamaya are testing the remnants of the known mineralisation whilst exploring for new targets. A number of targets can be drilled quickly.

Tamaya represents another exciting new opportunity for the Company in Chile, with the potential to discover bulk-tonnage, copper oxide and sulphide mineralisation in a proven mining district with stable jurisdiction.

Tamaya Geophysics Program

During the quarter, a ground-magnetometry survey comprising 755 line-kilometres, covering the majority of the four kilometre vein structure, initially at a 100 metre interline spacing, was completed.

The principle objectives of the program were to:

• Precisely locate the main vein structure that hosts the copper mineralisation, identified from the historic workings;

• Test for potential further structures not clearly exposed on the surface;

• Potentially locate the manto mineralisation identified both in surface exposures and in the abundant historic waste; and

• Look for evidence of potential porphyry mineralisation at depth.

The results of the survey will be announced on completion of an independent interpretation.

MANANTIALES, ARGENTINA

Phase II-Extended Drilling Program

The Phase II-Extended drilling program continued throughout the quarter. The aim of the program is to test the potential depth extensions of the Manantial vein and the new Manantial South vein.

The results of the program are expected to be available in the second quarter, and should provide important technical information for planning future drilling programs.

SANTO DOMINGO, ARGENTINA

Partnering Strategy

The Company believes the two recent geophysical programs, in conjunction with the extensive investment in exploration over the last three years, have demonstrated that Santo Domingo has strong potential to host a world-class porphyry deposit. Defining and ultimately developing the potential resources will require a substantial investment, including additional geophysics, deep drilling and related infrastructure. The board considers that the best strategy is to seek a joint venture partner, with the financial capacity to explore and develop a large porphyry target, to complement the Company‟s technical understanding of the project.

Divisoria Phase II Geophysical Survey Results

The results of the second phase geophysical survey demonstrates a large, highchargeability anomaly closely correlated with the magnetic low, disseminated gold– copper mineralisation and contact-breccias already recognised on surface. The

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anomaly is 1,000 by 600 metres in size and interpreted as approximately 300 metres deep, remaining open to the north, south and at depth.

The survey incorporated four lines totalling 7.5 linear-kilometres of both Pole-Dipole Induced Polarisation (“PDIP”) and Audio Magneto Telluric (“AMT”) geophysics.

The aim of the PDIP survey was to identify chargeability anomalies (potential zones of sulphide mineralisation) at shallow to moderate depths beneath the surface. The results are highly encouraging and demonstrate a pattern of chargeability and resistivity within magnetic low areas. This potentially relates to porphyry mineralisation over a larger area than mapped on surface.

The AMT survey tested the resistive response of the rock down to approximately 800 metres depth, beyond the depth potential of the PDIP. Unfortunately, this survey produced poor quality data and lacked resolution at depth on three of the four lines, and was considered unreliable.

Yvette Trenching Program

Sampling has been carried out to expose mineralisation under shallow talus cover along the poorly exposed Yvette Norte gold–silver structure. The aim was to increase the sample density over specific areas where there is no surface outcrop, test the potential widths of the system, identify parallel structures and sample at different topographic levels.

Infill sampling over a 700 metre segment has returned additional high-grade gold and silver results, with credits of lead, zinc and copper. Infill and representative (fixed length, traverse and continuous channel) rock chip sample highlights include:

• 1.0 metre at 20.8 g/t gold and 82 g/t silver;

• 0.5 metres at 46.2 g/t gold and 541 g/t silver;

• 0.4 metres at 32.2 g/t gold and 20 g/t silver;

• 0.6 metres at 9.2 g/t gold and 18 g/t silver; and

• 0.6 metres at 9.07 g/t gold and 15 g/t silver.

The sampling has confirmed the continuity of the high-grade gold-silver grades over the main north-south, sub-vertical trend. However, at surface level, the widths of the structure are still quite narrow even over approximately 150 metres of topographic displacement. A number of smaller parallel structures have also been identified, typically separated between 3 and 20 metres from the main structure.

A vertical gradation from low-grade gold-silver at shallow levels to high-grade goldsilver at the deeper levels has been observed. Additionally, low-grade gold-silver anomalies were detected in a number of host rock samples adjacent to the main system and within the main shear zone. Anomalous zinc is dispersed throughout the main shear zone, well correlated with the magnetic low delineated through the ground magnetic survey, highlighting the potential of a larger system at depth.

The first phase geophysics highlighted the structure down to 100 metres, where oxidation is stronger. Deeper penetration geophysics will be required to test the vertical and horizontal extent of the system.

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MILLENIUM, AUSTRALIA

There were no exploration activities at Millenium during the quarter.

CATHEDRAL ROCKS, AUSTRALIA

There were no exploration activities at Cathedral Rocks during the quarter.

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 Chile, Argentina 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 Consolidated statement of cash flows		Quarter ended (“current quarter”) 31 MARCH 2012	Quarter ended (“current quarter”) 31 MARCH 2012
			31 MARCH 2012
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
		10 (929) (487) 49		10 (3869) (1677) 249
		(1357)		(5287)
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)		(3)		(87)
		(3)		(87)
		(1360)		(5374)

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(1360)	(5374)
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	(1360) 5298 19	(5374) 9317 14
	3957	3957

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
	800
	Nil
	Nil
	500
Total	1300

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)	1395	4736
	2562	562
Total: cash at end of quarter(item 1.22)	3957	5298

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	5,500,000 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 23 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: 27 April 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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