ELEMENTOS LIMITED — Interim / Quarterly Report 2017

Jul 30, 2017

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31 July 2017

JUNE 2017 QUARTERLY REPORT

HIGHLIGHTS:

• $2m Capital Raising announced to advance the Cleveland Tin Project

• Site Preparation for Diamond Drilling Programme Commenced

• LME Tin Price of US$20,800/t at time of reporting

Elementos Limited (ASX: ELT) (“Elementos” or the “Company”) is pleased to report on activities during the June 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 UP DATE

E x p l o r a t i o n

The Company has commenced an exploration programme that is targeting an increase in the size of the open-pit mineral resource. The exploration programme will focus 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).

By focusing on the open pit potential of Cleveland, the new exploration program has the potential to significantly de-risk any future project development, and significantly enhance the economics of the project, including:

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Figure 1. Cleveland Project Location

• Drawing on a larger, open-cut tin-copper resource;

• Creating a longer mine life project with higher-grade ore from the open-cut;

• Early cash flows will be generated through simple, open-cut mining techniques;

• Lowering forecast dilution and ore losses through the design of one open-cut; and Creating a lower risk profile to finance the project.

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The Company has recently completed a ground magnetic survey which identified a number of new exploration targets along strike from the historical workings and within the mine sequence to the north of the historical workings at the Cleveland mine. The Company has commissioned Mira Geoscience to model the recently identified ground magnetic anomalies, to enable accurate siting and orientation of proposed diamond drill holes to test the anomalies.

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Figure 2. Processed magnetic data showing magnetic anomalies and 1[st] phase infill exploration drilling plan

The process of gaining MRT approval and completion of drill testing the ground magnetic anomalies is scheduled to occur during the next quarter.

The Company has previously received approval from Mineral Resources Tasmania (“MRT”) to proceed with the drilling programme at Cleveland. The Company plans to commence drilling in August 2017. Preparation of access to the drill sites and construction of the drilling pads for the diamond drilling program have commenced. A drilling contractor has been selected that has equipment that is suitable to complete the proposed programme with minimal environmental impact.

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Figure 3. Proposed Infill Drilling Cross Sections

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Figure 4. Cross Section showing proposed near surface dill hole plan for Line 17 (limited historical drill hole data depicted to avoid clutter)

The Company has rented suitable accommodation and storage facilities in Waratah to carry out the drilling programme in a safe and secure manner.

Permitting

Renewal of EL7/2005 was successfully completed during the quarter.

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

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CAPITAL RAISING

The Company announced a capital raising of up to $2.0 million to progress the development of the Cleveland Project, comprising:

• (a) a private placement to sophisticated investors, raising $600,000 before costs ( Placement ), including $480,00 from ASX listed Jervois Limited; and

• (b) a non-renounceable rights issue to raise up to $1,423,947 (before costs) ( Rights Issue )

Money raised from the Placement and the Rights Issue is to be used for the purposes of:

• Completing a diamond drilling programme targeting an increase in the Cleveland Open Cut Resource;

• Metallurgical testing, geotechnical studies and environmental compliance studies on the proposed Cleveland open cut development; and

• Corporate costs, working capital and costs of the issue.

The Placement

Under the terms of the Placement, 100,000,000 new shares have been issued at $0.006 per share to sophisticated investors raising a total of $600,000 before costs ( Placement ) including the issue of 100,000,000 attaching options having an exercise price of $0.006 and an expiry date of 30 June 2018 ( Attaching Options ).

Junior exploration company, Jervois Mining Limited (ASX: JRV) ( Jervois ) has subscribed for $480,000 under the Placement.

The shares and options issued under the Placement have been issued under the Company’s placement capacity under ASX Listing Rules 7.1 and 7.1A and no shareholder approvals are required. The Attaching Options issued under the placement will be unlisted options.

The Rights Issue

The Company also announced a non-renounceable rights issue (ongoing) to eligible shareholders, on the basis of 1 new fully paid ordinary share for every 4 shares held at an issue price of $0.006 per share ( New Shares ), to raise up to $1,423,947 (before costs) ( Rights Issue ) with the issue of 1 attaching option for each share applied for having an exercise price of $0.006 and an expiry date of 30 June 2018 (the same terms as the Placement)( Attaching Options ). Assuming no existing options on issue in the Company are exercised, approximately 237,324,456 New Shares and 237,324,456 Attaching Options will be offered under the Rights Issue.

The Rights Offer includes a debt conversion facility that will be used to repay a loan of $500,000, plus interest, which will leave the company debt free.

If fully subscribed, at the completion of the Rights Offer, the Company anticipates gross proceeds of $1,851,720 before costs. The funds raised from the Rights Issue, together with the funds from the Placement, will be used to:

• Complete a diamond drilling programme targeting an increase in the Cleveland Open Cut Resource;

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• Metallurgical testing, geotechnical studies and environmental compliance studies on the proposed Cleveland open cut development; and

• Corporate costs, working capital and costs of the issue.

CORPORATE

The Company continues to be encouraged by the LME tin price, being US$20,800 per tonne at the time of reporting.

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.

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

At the end of the quarter, there were 949,297,823 fully paid ordinary shares and 20.3 million unlisted options on issue.

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 AN D 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

Total Tin-Copper Mineral Resource(at 0.35% Sn cut-off)	Total Tin-Copper Mineral Resource(at 0.35% Sn cut-off)	Total Tin-Copper Mineral Resource(at 0.35% Sn cut-off)	Total Tin-Copper Mineral Resource(at 0.35% Sn cut-off)	Total Tin-Copper Mineral Resource(at 0.35% Sn cut-off)	Total Tin-Copper Mineral Resource(at 0.35% Sn cut-off)	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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