ELEMENTOS LIMITED — Interim / Quarterly Report 2016

Jul 28, 2016

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29 July 2016

JUNE QUARTERLY REPORT

HIGHLIGHTS:

• Progression of Mining Lease and Environmental approval work.

• Discussions with strategic partners ongoing.

• Sale of non-core Millennium leases to continue focus on development of the Company’s Cleveland Project.

Elementos Limited (ASX: ELT) (“Elementos” or the “Company”) is pleased to report on activities during the June quarter, including actively progressing the Cleveland tin and tungsten project in Tasmania towards development. The Company’s objective is to move quickly towards production and cash flow, through a low-capital, staged development strategy, with the lowest possible dilution of shareholders.

CLEVELAND PROJECT UPDATE

A p p r o v a l s a n d a p p l i c a t i o n s

The Cleveland environmental permitting process and Mining License Application are progressing towards completion.

The Tasmanian government is very supportive and working with the Company to progress the Cleveland Project towards development.

C o s t r e d u c t i o n s i n i t i a t i v e s

A number of initiatives for reducing the initial capital cost of the tailings retreatment project are being assessed. This includes moving the Tailings Storage Facility (TSF) to a new location. A Scoping Study on the conceptual plan is nearing completion and has indicated a meaningful capital cost saving is achievable.

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CORPORATE

Since the completion of a positive Pre-Feasibility and two Scoping Studies on the Cleveland assets during 2015, the resource equity and commodity markets have been depressed, creating a difficult environment for raising new equity capital. As a consequence, the Company believed the appropriate development strategy for Cleveland was to secure a funding and/or off-take partner for the project, and avoid a high level of shareholder dilution whilst the shares traded at low prices.

The Company is continuing to advance its strategic off-take and partnering process, and a number of companies are undertaking due diligence and/or site visits.

Despite the on-going difficult operating environment, the Company is encouraged by the recent increase in the LME tin price from US$13,810 in January 2016 a recent high of US$18,145 per tonne a 31% increase. The Company is also encouraged by the recent increase in equity capital raisings in the junior resources sector. The combination of improved prices and market sentiment will hopefully result in attracting a development partner for the Cleveland project.

Details of the Company’s financial activities during the quarter are set out in the Appendix 5B cash flow report.

M a n a g e m e n t c h a n g e s

The Company continues to maintain a very low-cost corporate overhead and preserve its cash resources. Subsequent to the end of the quarter, the Company accepted the resignation of Chief Executive Officer, Tim McManus.

Non-Executive Director, Chris Dunks, will continue the permitting and partnering process in an Executive Director capacity.

C a p i t a l s t r u c t u r e

At the end of the quarter, there were 767,479,642 fully paid ordinary shares and 38.85 million unlisted options on issue.

EXPLORATION

C l e v e l a n d M i n e , T a s m a n i a , A u s t r a l i a

No exploration activities were undertaken at Cleveland during the quarter whilst the Company focused on the approvals process and negotiating with potential strategic investors.

S e l w y n R a n g e P r o j e c t , Q u e e n s l a n d , A u s t r a l i a

During the previous quarter, the Company’s joint venture partner, Jason Resources, withdrew from the joint venture agreement. The Company is considering its options in regard to the project.

M i l l e n n i u m P r o j e c t , Q u e e n s l a n d , A u s t r a l i a

During the quarter Elementos announced the dissolution of its joint venture with Chinalco Yunnan Copper Resources Ltd (ASX:CYU) and the subsequent sale of its Millennium Mining Leases to Hammer Metals Limited (ASX:HMX).

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Hammer Metals Limited paid Elementos $57,950 (including the replacement of an environmental bond) for the leases.

The Millennium Mining Leases that were sold are set out below.

Tenements Sold	Tenement Number Area (Hectares)	Elementos Interest Location of Tenements
Millenium	ML 2512 4	100% Queensland
	ML 2761 20	100% Queensland
	ML 2762 16	100% Queensland
	ML 7506 50	100% Queensland
	ML 7507 45	100% Queensland

E x p l o r a t i o n T e n e m e n t s

Elementos Ltd held the following interests in tenements at the end of the quarter:

Tenement Name Tenement Number Area (Hectares)	Elementos Interest Location of Tenements
Cleveland EL7/2005 5993	100% Tasmania
Selwyn Range EPM 19371 3732	100% Queensland
EPM 19375 6220	100% Queensland
EPM 19426 622	100% Queensland

No new tenements were acquired during the quarter.

For more information, please contact:

Duncan Cornish

Company Secretary Phone: +61 7 3212 6299

Email: admin@elementos.com Please visit us at: www.elementos.com.au

C A U T I O N A R Y S T A T E M E N T S

F o r w a r d - l o o k i n g s t a t e m e n t s

This document may contain certain forward-looking statements. Such statements are only predictions, based on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which are beyond the company’s control. Actual events or results may differ materially from the events or results expected or implied in any forward-looking statement.

The inclusion of such statements should not be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that any forward-looking statements will be or are likely to be fulfilled. Elementos undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this document (subject to securities exchange disclosure requirements).

The information in this document does not take into account the objectives, financial situation or particular needs of any person or organisation. Nothing contained in this document constitutes investment, legal, tax or other advice.

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M i n e r a l R e s o u r c e s a n d O r e R e s e r v e s

Elementos confirms that Mineral Resource and Ore Reserve estimates used in this document were estimated, reported and reviewed in accordance with the guidelines of the Australian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code) 2012 edition.

Elementos confirms that it is not aware of any new information or data that materially affects the Mineral Resource or Ore Reserve information included in the “Cleveland Tailings Resource Upgrade” announced to the ASX on 17 June 2014, or the “Cleveland Open Pit - High-Grade Mineral Resource Defined” announced on 3 March 2015 and the “Cleveland Tailings Ore Reserve” released on the 3 August 2015.

The Company also confirms that all material assumptions and technical parameters underpinning the estimates in the Cleveland Mineral Resources and Reserves continue to apply and have not materially changed. Elementos also confirms the form and context in which the Competent Person’s findings are presented have not been materially modified from the date of announcement.

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MINERAL RESOURCES AND ORE RESERVES

Tailings Mineral Resource (at 0% Sn cut-off) 1	Tailings Mineral Resource (at 0% Sn cut-off) 1	Tailings Mineral Resource (at 0% Sn cut-off) 1
Category	Tonnage	Sn Grade	Cu Grade
Indicated	3.8 Mt	0.30%	0.13%

Table subject to rounding errors; Sn = tin, Cu = copper

Tailings Ore Reserve (at 0% Sn cut-off)2	Tailings Ore Reserve (at 0% Sn cut-off)2	Tailings Ore Reserve (at 0% Sn cut-off)2	Tailings Ore Reserve (at 0% Sn cut-off)2	Tailings Ore Reserve (at 0% Sn cut-off)2	Tailings Ore Reserve (at 0% Sn cut-off)2
Category	Tonnage	Sn Grade	Cu Grade	Contained Sn	Contained Cu
Probable	3.7 Mt	0.29%	0.13%	11 Kt	5 Kt

Table subject to rounding errors; Sn = tin, Cu = copper

Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off)[ 3]

Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off)3	Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off)3	Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off)3	Open Pit Tin-Copper Mineral Resource (at 0.35% Sn cut-off)3
Category	Tonnage	Sn Grade	Cu Grade
Indicated	0.8 Mt	0.81%	0.27
Inferred	0.01 Mt	0.99%	0.34

Table subject to rounding errors; Sn = tin, Cu = copper

Underground Tin-Copper Mineral Resource (at 0.35% Sn cut-off)[ 4]

Underground Tin-Copper Mineral Resource (at 0.35% Sn cut-off)4	Underground Tin-Copper Mineral Resource (at 0.35% Sn cut-off)4	Underground Tin-Copper Mineral Resource (at 0.35% Sn cut-off)4	Underground Tin-Copper Mineral Resource (at 0.35% Sn cut-off)4
Category	Tonnage	Sn Grade	Cu Grade
Indicated	4.2 Mt	0.67%	0.28%
Inferred	2.4 Mt	0.56%	0.19%

Table subject to rounding errors; Sn = tin, Cu = copper

Underground Tungsten Mineral Resource (at 0.20% WO3 cut-off)[ 5]

Category	Tonnage	WO3Grade
Inferred	4 Mt	0.30%

Table subject to rounding errors; WO3 = tungsten oxide

1 Announced per the JORC Code 2012 on 17 June 2014 “Cleveland Tailings Resource Upgrade”

2 Announced per the JORC Code 2012 on 3 August 2015 “Cleveland Tailings Ore Reserve”

3 Announced per the JORC Code 2012 on 3 March 2015 “Cleveland Open Pit - High-Grade Mineral Resource Defined”

4 Announced per the JORC Code 2012 on 3 March 2015 “Cleveland Open Pit - High-Grade Mineral Resource Defined”

5 This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

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