IODM LIMITED — Interim / Quarterly Report 2012

Jan 24, 2012

ASX / MEDIA ANNOUNCEMENT 25 January 2012

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Quarterly Activities Report for the period ending 31 December 2011

HIGHLIGHTS

ABN 28 102 747 133

ASX: PDM

Contact details: Ph: +61 2 9955-7130 Fax: +612 8920-3576 Email: info@paradigmmetals.com.au Website: www.paradigmmetals.com.au Office and postal address: Suite 202, 122 Walker Street North Sydney, NSW 2060, Australia

Chief Executive Officer: Greg Curnow Non-executive Director: Dr Graham Carman Non-executive Director: John Gaskell NED / Co. Secretary: Stephen Lonergan Shares on issue: 148,881,492 12 month share price range: $0.014 to $0.05 Market capitalisation: $3 million (at $0.02) Cash at 31 December2011: $0.486 million

Gold-Base Metals Explorer Eastern Australia

Key projects

Frogmore copper project, NSW

• High-grade copper-silver intersections

• Well located close to infrastructure, markets

• Percussion drilling planned early 2012

Toolebuc project Cloncurry (PDM 50%)

• An eleven hole (500 metre) shallow air core drill program was completed in November 2011 at the Paradigm Exco joint venture, 40km east of Cloncurry, Queensland.

• A rare earth element (REE) drill intersection of 7m @ 0.65% REE was returned from drill hole LEV011.

• This follows on from LEV002 which was drilled in late 2010 and returned an intersection of 4m @ 0.31% REE

• Gravity geophysical survey carried out over the area covered by the Toolebuc drilling.

Corporate

• Paradigm announced the resignation of its founding Managing Director Graham Carman in Nov 2011.

• Paradigm also announced the appointment of Greg Curnow as its new Chief Executive Officer with Mr Curnow taking up the position in early December 2011.

• The Company’s Annual General Meeting was held on 25 November 2011 and all resolutions were passed.

Copper & Rare Earths, Cloncurry

• REE mineralisation found in initial drilling

Farm-outs

Yellow Mountain project, NSW

• Porphyry gold targets under cover

• • Shallow gold - 6m @ 3.1g/t Au from 5m

• Drilling after harvest

• Discussions are continuing with 3[rd] parties interested in farming in to the Company’s base metals and tungsten projects in southern NSW.

Base Metals & Tungsten, NSW

• Available for joint venture

• Tungsten-magnetite JORC resource

• Kangiara Zn-Pb-Ag JORC resource , oxide cap

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TOOLEBUC RARE EARTHS PROJECT, QLD (PDM 50%)

Recent Work

Paradigm and its joint venture partner Exco Resources Ltd completed an eleven hole (500 metre shallow aircore drill program at the Toolebuc project, EPM 16073, 40km southeast of Cloncurry. The 11 holes were mostly designed to test the lateral potential of mineralisation highlighted in LEV002 which intersected 4m @ 0.31% REO from 37m depth.

Drillhole LEV011, a 51m air core hole, intersected 7m @ 0.65% total rare earth oxides (REO) from 35-42m, including 3m @ 1.06% REO from 35m, beneath 35m of soft sedimentary cover and is located approximately 160m from LEV002. Mineralisation remains open along strike.

The Toolebuc project has potential for both rare earth element (REE) mineralisation as well as iron oxide copper-gold mineralisation. Paradigm believes the carbonate-altered intrusive rocks in the hole may be part of a much larger REE-bearing intrusion system and as the drilling in the area so far is sparse additional holes should quickly determine the potential for a REE deposit.

The dominant REE’s in LEV011 are neodymium (Nd), lanthanum (La) and yttrium (Y). The ratio of neodymium (Nd) to total REE’s is high, at approximately 0.3/1. Neodymium is an important REE used in the high tech industry, for example in the making of strong permanent magnets and for uses in electric/hybrid vehicles.

Neodymium plus the high-value heavy REEs make up more than 50% of the total contribution of REE’s in the recent intercept. Importantly, levels of the radioactive elements uranium (U) and thorium (Th) are very low, being around 20 ppm for each element. Table 2 highlights the detailed REE analyses from LEV011.

The REE drill intersection is attractive because it contains >50% of its total REEs as high-value heavy REEs including yttrium and dysprosium, with additional neodymium which is also high value.

As follow up work to the November drilling PDM also completed a ground gravity survey in early December which covered a 1km[2] area (see Fig 2), covering the drilling area, and was carried out to see if any geophysical markers controlling the REE mineralisation could be recognised and to assist in targeting future drilling. To date the raw data has been received but no interpretation of the data has been completed.

Figure 3 below displays an image of the 1[st] vertical derivative of the gravity survey as well as the relevant drilling.

Future Work

PDM is waiting on the geophysical interpretation of the gravity survey, which is expected to be completed in the current quarter, before planning any more work at Toolebuc following the rainy season in NW Queensland.

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Figure 1: Location of the Toolebuc project near Cloncurry, NW Queensland

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Figure 2: Location of Aircore Drilling Overlaying the Magnetic Image

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Figure 3: Toolebuc Gravity Survey

Hole-ID	Northing (GDA94)	Easting (GDA94)	Depth (m)	Azimuth	Dip
LEV008	7,689,176	486,489	48	-	-90°
LEV009	7,689,287	486,693	45	-	-90°
LEV010	7,689,403	486,928	51	-	-90°
LEV011	7,689,175	486,925	51	-	-90°
LEV012	7,689,111	487,248	42	-	-90°
LEV013	7,689,353	486,770	42	-	-90°
LEV014	7,689,247	486,823	48	-	-90°
LEV015	7,689,194	486,951	42	-	-90°
LEV016	7,689,152	486,905	48	-	-90°
LEV017	7,689,118	486,972	42	-	-90°
LEV018	7,689,688	486,255	32	-	-90°

Table 1 – Drillhole Location

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Hole-ID	From	To	Length	Y	La	Ce	Pr	Nd	Sm	Eu	Gd	Tb
	m	m	m	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **
LEV011	35	38	3	177	3330	132.5	899	3260	583	104	319	37
LEV011	38	40	2	252	478	24.8	118.5	461	97.4	22.3	105.5	16.2
LEV011	40	41	1	3430	730	61.8	160	643	153.5	39.4	287	46.8
LEV011	41	42	1	289	258	93.4	53.7	205	38.4	7.5	38	5.2
LEV011	42	45	3	60.9	112	90.8	25.8	94.8	17.6	3.3	13.5	1.9
LEV011	45	48	3	57.4	116.5	130	27.4	235	152.5	3.7	15.7	2.6
LEV011	48	51	3	42.3	50.7	98.4	11.3	40.4	7.4	1.2	6.8	1.1
Hole-ID	From	To	Length	Dy	Ho	Er	Tm	Yb	Lu	Th	U
	m	m	m	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **	**ppm **
LEV011	35	38	3	128	16.6	33.5	4	26	4.1	23	25.3
LEV011	38	40	2	83.7	16.5	45.4	6.3	40.7	6.5	13	20.3
LEV011	40	41	1	295	80	236	28.4	150.5	25.5	16	22
LEV011	41	42	1	27	6.8	20	2.4	12.5	2.2	17	15
LEV011	42	45	3	9.4	2	5.9	0.8	4.8	0.8	17	14.3
LEV011	45	48	3	36.6	2.3	6.3	0.9	5.3	0.9	12	28
LEV011	48	51	3	5.6	1.4	4.2	0.6	3.5	0.6	15	19

Table 2 – REE Results for LEV011

Note on sampling and analysis: LEV011 was analysed for rare earth elements, using method ME-MS82 at ALS Minerals Brisbane. If high Y results were obtained using the portable XRF analyser in the field, initial samples were collected as 1m splits. Otherwise samples from LEV011 were collected as either 2m or 3m composites. Method ME-MS82 uses a lithium borate fusion prior to acid dissolution and ICP-MS analysis.

About the Toolebuc joint venture: The Toolebuc project (EPM 16073) is a 50:50 JV between Paradigm and Exco Resources Ltd 40km southeast of Cloncurry, well located only 2km from the Landsborough Highway. Paradigm is the manager of the JV, which is funded on a 50:50 basis by both parties. The joint venture has been in operation since late 2007.

FROGMORE COPPER-SILVER PROJECT, NSW (PDM 100%)

No exploration was carried out during the December quarter.

A deep RC drilling program of 2-3 holes, approximately 350 metres in depth, was due to commence in December but delays in the availability of the drill rig and in the granting of necessary permits saw the drilling postponed. PDM expects to carry out the drilling in early 2012.

Past drill results from Frogmore have included some high copper grades, sufficient we believe, to be economically extracted by underground mining methods if a deposit of sufficient size can be defined. Some of the past intercepts include 25m @ 2.0% copper and 11g/t silver from 275m in FDD001, 5m @ 2.3% copper & 16g/t silver from 197m in FRC027, and 6m @ 2.1% copper & 29g/t silver from 129m in FRC020.

About the Frogmore project: Frogmore was a small scale copper mine and smelter in the late 19[th] century, however the copper lode found by Paradigm is a new discovery. The project is located 25km northeast of the township of Boorowa, and is well located close to markets and infrastructure. The Frogmore exploration licence EL 6590 covers 300km[2] and is 100% owned by Paradigm.

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YELLOW MOUNTAIN GOLD PROJECT, NSW (PDM 30%)

No exploration was carried out during the December quarter.

LADY ROSE, CLONCURRY (PDM Application)

Lady Rose exploration permit application EPMA 19016 covers more than twenty small 19[th] century copper mines along a 2km trend between Cloncurry and Mt Isa. The Lady Rose project is well located in a very prospective belt, being 17km south of the Mary Kathleen mine, and approximately 40km southwest of Cudeco’s Rocklands copper project between Mount Isa and Cloncurry (see Fig 1).

The permit is still under application, with discussions continuing with the relevant native title parties. PDM believe the permit could be granted within 3-4 months.

FOUR MILE TANK, CLONCURRY (PDM 100%)

The Four Mile Tank project, EPMA 18294, is still under application.

Discussions are ongoing with the relevant Native Title parties.

BLUE BUSH, CLONCURRY (PDM 75%)

No exploration was carried out at Blue Bush, EPM 15324, during the quarter.

TEMORA GOLD PROJECT, NSW (PDM 100%)

No exploration was carried out during the quarter at EL 7443.

CORPORATE

Resignation of Managing Director

Dr Graham Carman, the founding managing director of Paradigm Metals, resigned effective 2 December 2011

Dr Carman remains a non-executive director of PDM and will continue to assist the Company as it develops its existing and future projects.

Appointment of Chief Executive Officer

Mr Greg Curnow commenced work as PDM’s Chief Executive Officer in early December 2011. Mr Curnow joins PDM from Morning Star Gold where he was the General Manager for Operations and the Chief Geologist and brings 25 years of experience in gold and base metal mining and exploration in both Australia and overseas.

Annual General Meeting

PDM’s 2011 Annual General Meeting was held on Friday 25 November and all resolutions put to the meeting were approved.

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Farm-outs

Paradigm is continuing its discussions with parties interested in farming-in to its non-core base metals and silver projects in NSW. These projects include the White Rock tungsten-iron skarn project EL 6274, Kangiara lead-zinc-copper-silver-gold project, and Kangiara silver-gold oxide project, EL 7273.

Yours sincerely,

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Greg Curnow Chief Executive Officer

20 January 2012 Phone: (02) 9955-7130 Email: info@paradigmmetals.com.au Website: www.paradigmmetals.com.au

Competent Person statement:

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 nonexecutive director of the Company. Dr Carman 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.

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Appendix 5B Mining exploration entity quarterly report – December 2011

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

PARADIGM METALS LIMITED ABN 28 102 747 133

Quarter ended (“current quarter”) 31 December 2011

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid / GST refund 1.7 Other (provide details if material) Recruitment $38; Auditor $38; GDC Leave $21 Net Operating Cash Flows	Current quarter $A’000	Year to date ( 6 Months ) $A’000
	1 (62) (74) 7 6 (97)	1 (265) (183) 28 34 (97)
	(219)	(482)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	(17)
	(17)
	(236)	(482)

• See chapter 19 for defined terms.

31/12/2001

Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report – December 2011

1.13 Total operating and investing cash flows (brought forward)	(236)	(482)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(236) 722	(482) 968
	486	486

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		24
1.25	Explanation necessaryfor an understandingof the transactions
	Directors’ Fees - $24,200

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

• See chapter 19 for defined terms.

31/12/2001

Appendix 5B Page 2

Appendix 5B Mining exploration entity quarterly report – December 2011

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements

Amount available $A’000	Amount used $A’000

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	30
	80
Total	110

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	46	37
	440	685
Total: cash at end of quarter(item 1.22)	486	722

• See chapter 19 for defined terms.

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Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report – December 2011

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

• See chapter 19 for defined terms.

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Appendix 5B Page 4

Appendix 5B Mining exploration entity quarterly report – December 2011

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note3) (cents)	Issue price per security (see note3) (cents)	Amount paid up per security (see note3) (cents)	Amount paid up per security (see note3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	148,881,492	148,881,492
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter	22,110,294 unlisted options 2,000,000 unlisted options			Exercise price $0.10 $0.20	2	Expiry date 30 November 012 7May2013

• See chapter 19 for defined terms.

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Appendix 5B Page 5

Appendix 5B Mining exploration entity quarterly report – December 2011

7.10 Expired during quarter
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed.

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Sign here: ______ Date: 25 January 2012 (Director) Print name: Mr Stephen J Lonergan

Notes

1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

31/12/2001

Appendix 5B Page 6