ELEMENTOS LIMITED — Interim / Quarterly Report 2017

Oct 25, 2017

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26 October 2017

SEPTEMBER 2017 QUARTERLY REPORT

HIGHLIGHTS:

• Diamond Drilling Programme Commenced on the Cleveland Project

• 3D Modelling of Ground Magnetic Anomalies Completed

• LME Tin Price of US$19,725/t at time of reporting

Elementos Limited (ASX: ELT) (“Elementos” or the “Company”) is pleased to report on activities during the September 2017 quarter, including actively progressing the Cleveland tin, copper and tungsten project in Tasmania towards development. The Company has commenced an exploration diamond drilling programme targeting an increase in the shallow open cut resources. The Company’s objective is to lower investment risk and move quickly towards production and cash flow, through a low-capital, staged development strategy, commencing with open cut production, with the lowest possible dilution of shareholders.

CLEVELAND PROJECT UPDATE

E x p l o r a t i o n D r i l l i n g

The Company is pleased to announce that the diamond drilling programme, within the Cleveland project in northwest Tasmania, is progressing well. The programme has experienced some delays due to late season snow falls, which have on occasion made vehicle access to the site unsafe. The exploration programme is focused on defining and testing new targets and infill, strike and depth extensions to the current 800,000 tonnes at 0.81% Tin and 0.27% Copper open-pit Indicated Mineral Resource estimate (ASX announcement 03 March 2015).

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Figure 1. Cleveland Project Location

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At the time of reporting, eight drill holes had been completed. The drill core has been transferred to a processing facility in Waratah where the core is being geologically and geotechnically logged. The core is then sampled for assay with the first batch of samples having been transported to the ALS laboratories in Burnie. Sample assays will be reported as soon as possible after receipt by Elementos.

The drill holes completed to-date are part of the initial 16 hole diamond drilling programme to test for infill, depth and along strike extensions to the known near surface mineralisation at Cleveland.

Figure 2. Drilling C2107

Collar ID	Planned ID	**AMG94E_Zone 55 **	AMG94N_Zone 55	Azimuth_mag	Dip	Total Depth(m)
C2100	P1701	365290	5407110	300	‐35	68.9
C2101	P1705	365270	5407097	300	‐30	89.7
C2102	P1708	365045	5406944	300	‐15	67.9
C2103	P1710	365002	5406901	300	‐15	47.8
C2104	P1712	364974	5406855	300	‐40	107.7
C2105	P1734	364974	5406855	300	‐5	104.4
C2106	P1716	365161	5406894	300	‐30	60
C2107	P1714	365226	5407048	300	‐30	101
		Drill Collar Co‐ordinates not Surveyed

Table 1. Drill holes completed at the time of reporting

3D Ground Magnetic Modelling

The Company commissioned Mira Geoscience, of Brisbane, to carry out magnetic modelling of three magnetically anomalous areas/bodies that resulted from a ground magnetic survey that was completed at Cleveland in January 2017. The tin mineralisation at Cleveland is accompanied by a magnetic form of pyrrhotite (sulphide mineral). A fourth target, identified from geological mapping as a mafic dyke, was also assessed. The aim being to identify anomalies along the dyke which may potentially be associated with mineralisation. 3D wireframes were developed for each of the defined targets. The wireframes were adjusted to improve the fit between measured and calculated responses over the bodies. An overview of the modelled wireframes, superimposed on a LIDAR topographic surface, is shown in Figure 3.

A 12 hole diamond drilling programme has been approved by Mineral Resources Tasmania as an initial test of the magnetic anomalies for mineralisation. Drilling will commence as soon as access tracks and drill pads have been constructed.

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Figure 3. Perspective view of the transparent LIDAR topography surface with the location of the 3D modelled targets

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Figure 4. TMI Image (1VD over 2VD RTP) with Location of Initial 16 hole programme at Cleveland

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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(km²)	Elementos Interest	Tenement Location
Cleveland	EL7/2005	55	100%	Tasmania

No new tenements were acquired during the quarte

CORPORATE

Capital Raising and Capital Structure

On 29 June 2017, the Company announced that:

• it had received commitments to complete a private placement of 100,000,000 shares to be issued at 0.61 cents per share (and 100,000,000 attaching options having an exercise price of 0.6 cents per option and expiring on 30 June 2018) to raise a total of $600,000 (before costs) ( Placement ); and

• it would proceed with a non-renounceable rights issue to raise up to $1,423,947 (before costs) on the same conditions as the abovementioned Placement, by issuing up to 237,324,456 shares and 237,324,456 attaching options ( Rights Issue ).

On 30 June 2017, 100,000,000 ordinary shares were issued, pursuant to the Placement, raising $600,000 (before costs).

The Rights Issue was made in accordance with section 713 of the Corporations Act with full details set out in a Prospectus sent to Eligible Shareholders on 6 July 2017. The Rights Issue contained a debt conversion facility.

During the quarter ended 30 September 2017, the following events were completed as part

of the Placement and Rights Issue:

• The Rights Issue was fully subscribed (after the entitlement and shortfall offers) resulting in 237,324,642 shares and 237,324,642 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) being issued. 45,371,137 of these shares and options were issued to the Company’s Chairman and largest shareholder, Andy Greig, utilising the debt conversion facility to take up his Rights Issue entitlement ($272,226);

• 100,000,000 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were issued pursuant to the Placement;

• 45,371,137 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were exercised into 45,371,137 shares by the Company’s Chairman and largest shareholder, Andy Greig, using debt conversion ($272,226); and

• a further 3,387,948 unlisted options (exercisable at 0.60 cents per option expiring on 30 June 2018) were exercised into 3,387,948 shares, raising $20,328.

At the end of the quarter, there were 1,235,381,550 fully paid ordinary shares and 308.9 million unlisted options on issue.

O t h e r

The Company continues to review new business development opportunities as they arise. Details of the Company’s financial activities during the quarter are set out in the Appendix 5B cash flow report.

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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.

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 following announcements:

• “Cleveland Tailings Ore Reserve” released on the 3 August 2015;

• “Cleveland JORC Resource Significantly Expanded” announced to the ASX on 5 March 2014; and

• “Cleveland Open Pit - High-Grade Mineral Resource Defined” announced on 3 March 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

Open Pit Tin‐Copper Mineral Resource (at 0.35% Sn cut‐off) NOTE: this Open Pit Tin‐Copper Mineral Resource is a sub‐set of the Total Tin‐Copper Mineral Resource noted below	Open Pit Tin‐Copper Mineral Resource (at 0.35% Sn cut‐off) NOTE: this Open Pit Tin‐Copper Mineral Resource is a sub‐set of the Total Tin‐Copper Mineral Resource noted below	Open Pit Tin‐Copper Mineral Resource (at 0.35% Sn cut‐off) NOTE: this Open Pit Tin‐Copper Mineral Resource is a sub‐set of the Total Tin‐Copper Mineral Resource noted below	Open Pit Tin‐Copper Mineral Resource (at 0.35% Sn cut‐off) NOTE: this Open Pit Tin‐Copper Mineral Resource is a sub‐set of the Total Tin‐Copper Mineral Resource noted below	Open Pit Tin‐Copper Mineral Resource (at 0.35% Sn cut‐off) NOTE: this Open Pit Tin‐Copper Mineral Resource is a sub‐set of the Total Tin‐Copper Mineral Resource noted below	Open Pit Tin‐Copper Mineral Resource (at 0.35% Sn cut‐off) NOTE: this Open Pit Tin‐Copper Mineral Resource is a sub‐set of the Total Tin‐Copper Mineral Resource noted below
Category	Tonnage	Sn Grade	Contained Sn	Cu Grade	Contained Cu
Indicated	0.80 Mt	0.81%	6,500t	0.27	2,300t
Inferred	0.01 Mt	0.99%	140t	0.34	50t

Table subject to rounding errors; Sn = tin, Cu = copper	Table subject to rounding errors; Sn = tin, Cu = copper	Table subject to rounding errors; Sn = tin, Cu = copper	Table subject to rounding errors; Sn = tin, Cu = copper	Table subject to rounding errors; Sn = tin, Cu = copper	Table subject to rounding errors; Sn = tin, Cu = copper	Table subject to rounding errors; Sn = tin, Cu = copper
Total Tin‐Copper Mineral Resource(at 0.35% Sn cut‐off)
Category	Tonnage		Sn Grade	Contained Sn	Cu Grade	Contained Cu
Indicated	5.00 Mt		0.69%	34,500t	0.28%	14,000t
Inferred	2.44 Mt		0.56%	13,700t	0.19%	4,600t
Table subject to rounding errors; Sn = tin, Cu = copper
Tailings Ore Reserve(at 0% Sn cut‐off)
Category	Tonnage		Sn Grade	Contained Sn	Cu Grade	Contained Cu
Probable	3.7 Mt		0.29%	11,000t	0.13%	5,000t
Table subject to rounding errors; Sn=tin, Cu=copper
Underground Tungsten Mineral Resource(at 0.20% WO3 cut‐off)
Category		Tonnage		WO3 Grade
Inferred		4 Mt		0.30%

Table subject to rounding errors; WO3 = tungsten oxide

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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