IODM LIMITED — Capital/Financing Update 2012

Oct 17, 2012

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18 October 2012

Company Announcements Office Australian Securities Exchange Level 4, Exchange Centre 20 Bridge Street Sydney NSW 2000

Dear Sir / Madam

PDM Entitlement Issue; Letters to Shareholders and Optionholders

Enclosed are copies of letters which have been despatched today to Shareholders and Optionholders.

Yours Faithfully

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Stephen J Lonergan Company Secretary

Paradigm Metals Ltd ABN 28 102 747 133 Suite 202, 122 Walker Street, North Sydney, AUSTRALIA 2060 Ph: +61 (2) 9955-7130 Fax: +61 (2) 8920-3576

E-mail: info@paradigmmetals.com.au

18 October 2012

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Name & Address Name & Address Name & Address Name & Address Name & Address Name & Address

Dear Shareholder

NON-RENOUNCEABLE ENTITLEMENT ISSUE

Paradigm Metals Limited (Company) has announced to ASX Limited (ASX) a non- renounceable entitlement issue of one (1) fully paid ordinary share in the capital of the Company (Share) for every one (1) Share held by eligible shareholders at an issue price of $0.008 per Share to raise approximately $1,694,215 (Entitlement Issue) (Offer).

The Entitlement Issue is fully underwritten jointly by Cunningham Peterson Sharbanee Securities Pty Ltd trading as “CPS Securities” and Taylor Collison Limited (together the Underwriters). The Company has agreed to pay the Underwriters (following the completion of the Offer) each:

• (a) an underwriting fee of 2.5% (excluding GST) of the value of the Offer, being $42,355 per Underwriter; and

• (b) a management fee of 0.5% (excluding GST) of the capital raised under the Offer, being $8,471 per Underwriter.

The Offer will result in the issue of 211,776,860 new shares. The Company’s directors (Directors) have indicated that it is each Director’s present intention to subscribe for part of his respective entitlements.

The Offer is being made only to shareholders of the Company (Shareholders) named on its register of members at 5.00pm on 26 October 2012, whose registered address is in Australia or New Zealand.

New Shares will rank equally with all fully paid ordinary shares in the capital of the Company (Shares) already on issue.

The prospectus relating to the Offer has been lodged with the Australian Securities and Investments Commission and ASX and is available on the ASX website at asx.com.au for inspection. The timetable and important dates of the Offer* are set out below:

Lodgement of Prospectus with ASIC	16 October 2012
Notice sent to Shareholders	18 October 2012

Paradigm Metals Ltd ABN 28 102 747 133

Suite 202, 122 Walker Street, North Sydney, AUSTRALIA 2060 Ph: +61 (2) 9955-7130 Fax: +61 (2) 8920-3576

E-mail: info@paradigmmetals.com.au

Ex Date	22 October 2012
Record Date for determining Shareholder entitlements	26 October 2012
Prospectus despatched to Shareholders	30 October 2012
Closing Date of Offer	15 November 2012
Despatch date/Shares entered into shareholders security holdings	19 November 2012

* These dates are indicative only and subject to change. The Company reserves the right, subject to the Corporations Act, the ASX Listing Rules and other applicable laws, to vary the dates of the Offer, including extending the Closing Date or accepting late applications, either generally or in particular cases, without notifying you. You are encouraged to submit your application as soon as possible. Any extension of the Closing Date will have a consequential effect on the date of the issue of the securities. The Offer does not require the approval of shareholders.

The purpose of the Offer is to raise approximately $1,694,215 and the Company intends to apply the funds raised from the Offer towards:

Proceeds of the Offer (full subscription)	$
Exploration work at the Yellow Mountain Gold Project	300,000
Exploration work on other existing projects	200,000
Assessment and acquisition of new project opportunities	600,000
Working capital	466,206
Expenses of the Offer	128,009
Total	1,694,215

The use of funds set out above is a “best estimate” only. It is important to recognise that the use of funds may be subject to change in line with results, circumstances and other opportunities.

The capital structure of the Company on completion of the Offer will be as follows:

Shares

	Number
Shares on issue at date of Prospectus	211,776,860
Shares offered pursuant to the Offer	211,776,860
Total Shares on issue after completion of the Offer	423,553,720

Options

	Number
Unlisted exercisable at $0.10 on or before 30 November 20121	22,110,249
Unlisted exercisable at $0.20 on or before 7 May 20131	2,000,000
Options offered pursuant to the Offer	Nil
Total Options on issue after completion of the Offer1	24,110,249

Note: 1 All of these Options may be exercised by the Option holders prior to the Record Date in order to participate in the Entitlement Issue.

In calculating entitlements under the Entitlement Issue, fractions will be rounded up to the nearest whole number.

Actions required of Eligible Shareholders

There are a number of actions Eligible Shareholders may take:

You may take up all of your rights to subscribe for new Shares pursuant to the Prospectus ( Entitlements ). To take up all of your Entitlements you will need to ensure your application money for the Entitlements is received by Boardroom Pty Limited ( Share Registry ) by no later than 5.00pm EDST on 15 November 2012, by either completing and returning your Entitlement and Acceptance Form together with your application money or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form. If you take up your full Entitlement, you may apply for shortfall shares in addition to your Entitlement in accordance with Section 5.8 of the Prospectus.

You may wish to accept part of your Entitlement. To take up part of your Entitlement you will need to ensure your application money for the Entitlements you wish to take up is received by the Share Registry by no later than 5.00pm EDST on 15 November 2012, by completing and returning your Entitlement and Acceptance Form by filling in the number of new Shares you wish to accept in the space provided on the Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the appropriate application monies or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form.

You may do nothing. If you choose to do nothing with your Entitlements, while you will continue to hold the same number of Shares, your interest in the Company will be diluted and you will receive no value for your Entitlement.

Full details of the Offer will be contained in the prospectus that will be mailed to all shareholders who are registered on the Record Date. Shareholders eligible to participate should read the Prospectus carefully.

If you have any queries concerning the Entitlement Issue, or the action you are required to take to subscribe for new Shares, please contact your financial adviser or, the Company, on (+61 2) 9955 7130.

Yours faithfully

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Stephen J Lonergan Company Secretary

18 October 2012

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Name and address Name and address Name and address Name and address Name and address Name and address

Dear Option Holder NON RENOUNCEABLE ENTITLEMENT ISSUE - NOTICE TO OPTIONHOLDERS

We are writing to you in relation to your option holding in Paradigm Metals Limited (Company).

The Company announced yesterday to the ASX Limited (ASX) a non-renounceable entitlement issue of one (1) fully paid ordinary share in the capital of the Company (Share) for every one (1) Share held by shareholders at an issue price of $0.008 per Share to raise approximately $1,694,215 (Entitlement Issue).

Pursuant to the terms of the options that were issued to you, the Company is required to notify you of your right to participate in any pro rata issue of securities if you exercise your options prior to the record date for the pro rata issue.

Accordingly, take notice that in order to participate in the Entitlement Issue, you will need to exercise your options prior to the record date for the Entitlement Issue, being 7.00pm EDST on 26 October 2012.

The Company has lodged a prospectus in relation to the Entitlement Issue at the Australian Securities & Investments Commission and this document will be despatched to shareholders of the Company on 30 October 2012. The prospectus outlines the Entitlement Issue in detail.

Should you have any queries in relation to this matter, please do not hesitate to contact the Company on (+61 2) 9955 7130.

Yours faithfully

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Stephen J Lonergan Company Secretary

Paradigm Metals Ltd ABN 28 102 747 133

Suite 202, 122 Walker Street, North Sydney, AUSTRALIA 2060 Ph: +61 (2) 9955-7130 Fax: +61 (2) 8920-3576

E-mail: info@paradigmmetals.com.au