IODM LIMITED — Capital/Financing Update 2011

Mar 7, 2011

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Suite 202, 122 Walker St W www.paradigmmetals.com.au North Sydney 2060 E info@paradigmmetals.com.au New South Wales T +61 2 9955 7130 AUSTRALIA F +61 2 8920 3576

ABN 28 102 747 133

ASX / Media Announcement 8 March 2011

Further oxide gold intersections at Yellow Mountain

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• Results of a 16-hole RC percussion drill program completed during February 2011 at the Quarry Hill prospect are presented. Most holes intersected wide zones of shallow gold mineralisation in oxidised material, with gold grades similar to previous air core holes. Best new drill results include 6m @ 1.8g/t Au from 34m in PRC005, and 4m @ 1.4g/t Au from 98m in PRC004.

• The focus will now be to test a number of under-explored gold prospects within 8km of Quarry Hill. One of these prospects, Quarry Hill South, has a 1980s drill intercept of 24m @ 2.2g/t Au.

• A new interpretation for the gold mineralisation at Yellow Mountain suggests gold is hosted by low-angle structures or “shear zones”, rather than by replacement of favourable beds as previously believed. Multiple repetitions of gold-bearing shear zones, or extensions of a single major shear, are possible and will be investigated in the next round of drilling.

• A cyanidation leach test of drill material returned favourable results. The sample assayed 1.26g/t Au in the leach test, nearly 50% higher than the original assay of 0.86g/t Au. This improvement will be investigated with further leach tests and laboratory checks.

• Cyanide leaching at a conventional gold P80 grind size of 75μm resulted in 91% gold dissolution within a short period of 7 hours with low cyanide consumption.

• Further air drilling is planned to test up to 8 of the other gold prospects at Yellow Mountain, aiming to start as soon as a suitable drilling rig can be mobilized.

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Quarry Hill RC drill results

Paradigm Metals Limited is pleased to report assay results of the February 2011 reverse circulation (RC) percussion program at Yellow Mountain, 70km north of Condobolin, New South Wales. Paradigm is earning an initial 30% interest in EL 6325 from Triako Resources (now CBH Resources) and Golden Cross Resources Ltd (GCR), and has the right to earn up to 51% of EL 6325. A new adjacent exploration license, EL 7697 (100% Paradigm), was recently granted covering a number of under-explored gold prospects.

A total of 16 RC holes were drilled during February at the Quarry Hill prospect, for an advance of 1,616 metres. The full results of the recent drilling are tabled in Appendix 1. A map showing the location of holes is presented in Figure 3.

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Drilling was designed to test the down-dip extensions of shallow oxide gold mineralisation dipping shallowly to the north, as discovered by previous air drilling programs. Sixteen vertical RC holes were drilled on 80m spacings.

Highlights of the recent drilling include:

• 22m @ 0.9g/t Au from 22m, including 6m @ 1.8g/t from 34m (oxide) in PRC005; and

• 37m @ 0.5g/t Au from 71m, including 4m @ 1.4g/t from 98m (sulphide) in PRC009;

Sulphide mineralisation in PRC009 occurs down-dip of the oxide zone, with gold associated with disseminated pyrite and arsenopyrite. The grades in the oxide zone appear to broadly reflect the sulphide gold grades, so secondary enrichment appears to be minimal, on this evidence.

Results of the recent drilling indicate that the tonnage potential at the Quarry Hill prospect is probably too small to be economic at that prospect alone. However, there are a large number of other prospects in the area under tenure within 8km of Quarry Hill, which could contribute to an economic deposit or series of deposits.

Figure 1. Interpretive cross section through Quarry Hill highlighting some of the drill results

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New ‘shear zone’ gold model

Gold mineralisation at Quarry Hill is believed to be hosted by low-angle shear zones (i.e., thrust faults) in metasiltstone-sandstone and schist. We previously thought gold was controlled by favourable rocks folded into a ‘syncline’. Whilst a syncline does exist, the low-angle structures are believed to be of greater importance.

The low-angle shear zones are difficult to recognise, in large part due to the lack of outcrop. However, a low-angle fault has been recently exposed in a road quarry only a few hundred metres from the gold prospect (see photo below) and we believe many other similar structures will undoubtedly occur.

Major shear zone -hosted gold deposits are not known in this region of NSW. A possible analogy to this style of gold deposit could be the McCraes deposit in the South Island of New Zealand, which has a resource of 87 Mt @ 1.4g/t Au for 3.9 million ounces contained gold (Oceana Gold Ltd, 2005).

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Low-angle shear zone in quarry, orientated top left to bottom right

Figure 2 shows an interpreted cross section of oxide gold mineralisation at Quarry Hill South. This prospect was drilled in the 1980s, returning an intercept of 24m @ 2.2g/t Au. It has not since been followed up. Mineralisation remains open along strike in both directions.

Figure 2. Cross section interpretation at Quarry Hill South

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Multiple gold prospects to be drill tested

The recognition of low-angle, east-west trending, shear zones as probable controls to the gold mineralisation at the Yellow Mountain project is significant because it opens up the possibility for repetitions and extensions of the oxide gold mineralisation discovered so far.

Past explorers carried out extensive soil sampling, collecting over 3000 samples. These geochemical data have uncovered a large number of gold prospects within 8km of the Quarry Hill prospect area, all located within our large tenement holding or of our partners. The prospects are shown on a simplified geological map in Figure 4.

Paradigm has studied these data, and we have highlighted what we consider are the 12 best prospects (see Table 1 below). The majority of the prospects (labeled Q1 to Q5, and M1 to M7) have received minimal past drilling.

Table 1. Gold prospects within 8km of Quarry Hill currently under Paradigm or partner tenure

	Prospect name	Gold soil anomaly ppb (max)	Number of drill holes	Best drill result Au (g/t)
1	Q1 “QuarryHill”	709	108	6m@1.8
2	Q2 “QuarryHill South”	65	11	24m@2.2
3	Q3	290	5	4m@0.16
4	Q4	44	0	-
5	Q5	46	0	-
6	M1	1050	8	20m@0.24
7	M2	224	2	48@0.1
8	M3	79	0	-
9	M4	92	0	-
10	M5	124	0	-
11	M6	121	0	-
12	M7	72	0	-
13	Fountaindale	- (under cover)	89	1m@9.0; 0.7m@13.0

Favourable leach tests

A cyanidation leach test was carried out on an oxide sample from Quarry Hill. The 2m sample from PRC001, originally assayed at 0.86g/t Au, returned 1.26g/t Au in the leach test assay, nearly 50% higher than the original. This improvement in grade could be significant if found to be repeatable, as it could add considerable value to the project. Further leach tests and laboratory checks will be done to investigate this.

The leach results were also favourable. Cyanide leaching at a conventional gold P80 grind size of 75μm resulted in 91% gold dissolution which appeared complete within 7 hours, leaving a residue which assayed 0.12 g/t Au. Reagent consumptions were low, which bodes well for ultimate mining costs.

Program going forward

Air drilling of a number of the gold prospects adjacent to Quarry Hill will be carried out as soon as a suitable drill rig can be located.

In the meantime, exploration is continuing at the Temora project to advance gold prospects there to a point where they are drill-ready. Surface rock and soil sampling will be carried out at the Barron and Maid of Judah gold prospects during March.

For further information contact Dr Graham Carman, Managing Director: Ph: 61-2-9955-7130

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr Graham Carman who is a Member of the Australasian Institute of Mining and Metallurgy. Dr Carman is a full-time employee of the Company, and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he 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”. Dr Carman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Figure 3. Map of the Quarry Hill gold prospect showing significant drill intersections and interpreted surface trace of shear zone structures.

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Figure 4. Simplified geological map showing the location and interpretation of gold targets at Yellow Mountain (EL 6325) and Marranoonbah (EL 7697) projects

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Appendix	1. Summary of gold results	1. Summary of gold results	1. Summary of gold results	from the February 2011 percussion drill program at Quarry Hill	from the February 2011 percussion drill program at Quarry Hill
HOLE	int	Au g/t	From	To m	comments
					*previously reported but grade
*PRC001	10	0.69	12	22	50% higher in met tests
*PRC001	4	0.35	50	54
*PRC001	2	0.71	96	98
PRC002	4	0.56	100	104
PRC003	20	0.45	18	38
PRC004	20	0.38	0	20
PRC004	8	0.28	40	48
PRC005	4	0.85	4	8
PRC005	4	0.66	12	16
PRC005	22	0.9	22	44
incl	6	1.8	34	40
PRC005	4	0.42	60	64
PRC006	4	0.61	0	4
PRC006	2	0.5	22	24
PRC006	8	0.43	56	64
PRC006	2	0.54	68	70
PRC006	4	0.35	74	78
PRC007	16	0.34	4	20
PRC007	28	0.33	40	68
PRC008	20	0.45	0	20
PRC008	10	0.56	32	42
PRC008	8	0.26	58	66
PRC008	3	0.4	81	84
PRC009	37	0.51	71	108
incl	4	1.4	98	102
PRC010	12	0.31	16	28
PRC010	8	0.48	44	52
PRC010	12	0.38	62	74
PRC010	12	0.39	103	115
PRC011	4	0.29	16	20
PRC011	4	0.26	32	36
PRC012	3	0.4	56	59
PRC012	2	0.35	91	93
PRC013	4	0.37	28	31
PRC013	6	0.41	56	62
PRC014	4	0.9	16	20
PRC014	12	0.6	38	50
PRC014	7	0.6	64	71
PRC015	4	0.35	36	40
PRC016	4	0.62	14	18
PRC017	10	0.5	16	26
PRC017	2	0.5	46	48

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