IONIC RARE EARTHS LIMITED — Interim / Quarterly Report 2013

Oct 29, 2013

QUARTERLY REPORT FOR THE PERIOD ENDING 30 SEPTEMBER 2013

EXPLORATION HIGHLIGHTS

The quarter was highlighted by the acceleration of geophysical, geochemical and mapping programs on the three acquired quality exploration projects for porphyry Cu and iron oxide-copper-goId (“IOCG”) deposits (Timon, San Pedro and Alma).

TIMON

• The target is a buried porphyry copper deposit whose surface expression is a highly leached lithocap ridge similar to other large deposits on trend, such as El Salvador and Escondida, in the southern portion of the giant porphyry copper belt of northern Chile.

• OVL’s geophysical and geochemical programs have confirmed the Timon lithocap ridge to be a substantial porphyry copper target with the possibility of a significant chalcocite enrichment blanket over primary sulphides. Induced Polarisation (IP) data outlines a strong chargeability anomaly that is at least 1km wide, 3.5km long, extending to greater than 800m depth, and is coincident with a stream sediment copper anomaly over the ridge. Historical mineragraphic data of lithocap material has also detected fine grained copper minerals (chalcopyrite, chalcocite) within lithocap iron oxides.

• At the end of the quarter, track access and pads were being prepared for first pass 1,800m reverse circulation (RC) drilling to test the IP anomaly underlying the lithocap. This work became sufficiently advanced to allow drilling to commence on 24 October 2013.

ALMA

• The target is a large north west trending, 3km by 2km, unexplored aeromagnetic anomaly lying under cover, that may represent an IOCG deposit associated with the Atacama Fault Zone system that is similar in size to Manto Verde, 85km south of Alma.

• Exploration target detailed by ground magnetics with positive results during the quarter.

• The structurally disturbed, western flank of the main eastern dipping magnetic body appears to be prospective for hosting copper mineralisation. A program of Mobile Metal Ion (“MMI”) soil geochemistry with subsequent IP geophysical lines over the mostly covered prospective target zone is proposed in the near future to detect buried sulphide mineralisation for possible drilling in the next 6 months.

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The Board of Oro Verde Limited (ASX:“OVL”) (“Oro Verde” or “the Company”) is pleased to provide its Quarterly Report for the period ended 30 September 2013.

EXPLORATION

During the quarter the Company continued its evaluation of new projects on hand, the Timon and San Pedro Projects located in the Late Eocene to Oligocene Giant Porphyry Copper Belt of Chile which targets porphyry copper deposits and the Alma Project located in the Coastal Cordillera Copper Belt of Chile which targets iron oxide, copper, gold (“IOCG”) deposits, refer Figure 1. All projects are located in areas of good infrastructure and access.

A. CURRENT PROJECTS

Timon Project

The 50km[2] Timon Project, comprising 17 Exploitation Concessions, is located 75km southeast of the city of Copiapo in Region 3 of Chile in the southern extension of the Late Eocene to Oligocene Giant Porphyry Copper Belt of Chile, refer Figure 2.

The primary target area of interest is the central, 1 to 2km wide by 3.5km long, portion of the northsouth trending Sierra El Timon ridge at 3,200m elevation. The target has a moderate to strongly leached gossanous iron oxide cap, termed a “lithocap”, that usually defines and overlays the shallow oxide parts of porphyry copper sulphide systems, typically above the main Cu-(Au/-Mo) zone.

Since the project’s acquisition in early June 2013, Ore Verde has fast tracked exploration activities, specifically geochemical and geophysical programs over the target. Geophysical surveys IP and magnetics) have returned very favourable results. A prominent area of demagnetisation, a typical magnetic response over a porphyry system, is coincident with the lithocap, whilst the IP data outlines a strong chargeability anomaly that is at least 1km wide and 3.5km long. Depending on topography, the chargeability anomaly commences from 50 to 150m depth and appears to extend to depths of more than 800m, the limit of the IP survey. The Company’s geophysical consultant considers the IP anomalies observed on Timon ridge, over the lithocap, to be consistent with expected anomalies in this geologic belt over a leached lithocap underlying a copper or copper-gold porphyry system at depth, with the probable chargeable source being primary sulphide mineralisation (typically pyrite-chalcopyrite).

A stream sediment sampling program over the project area has also defined a copper anomaly over the ridge, specifically over the area of the central IP anomaly, refer Figure 3. Historic, mineragraphic results of iron oxide lithocap samples, taken over 4km of ridge strike also supports the probable presence of a copper mineralised porphyry system at depth. Seven of 12 iron oxide lithocap samples revealed trace to scarce fine grained copper sulphide minerals, chalcopyrite and chalcocite within the iron oxide matrix. Four of these samples lie within the copper anomaly and to a lesser extent the IP anomaly, refer Figure 3.

Timon ridge is now considered to be a substantial porphyry copper target with the possibility of a significant chalcocite enrichment blanket over primary sulphides at depth. Track access and pads are still being prepared to allow testing of aspects of the IP anomaly underlying the lithocap by an 1,800m first pass RC drilling, refer Figure 4. However, this work has advanced to the extent that drilling has been able to commence post quarter on 24 October 2013. The drilling program is outlined on Figure 3. The Company will keep Shareholders informed of drilling progress and results as they occur.

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Alma Project

The 36km[2 ] Alma Project is located in the Coastal Cordillera, 40km east of the coastal city of Taltal in Region 2 of Chile, refer Figure 1. The region near Alma is affected by the Atacama Fault Zone system that contains significant IOCG deposits related to the development of the Jurassic-Lower Cretaceous magmatic arc coring the Cordillera. The project area itself lies within the central portion of the Lower Cretaceous Cerro del Pingo Batholith, a major igneous body, 110km long and up to 40km wide, composed of a number of stocks of diverse composition, ranging from diorites to granites with associated copper-gold, copper-gold-iron and iron mineralisation.

The Alma project is targeting a north-west trending, 2km by 3km, unexplored magnetic anomaly which possibly represents a large IOCG deposit at depth associated with the Atacama Fault Zone system, a similar setting to the huge Manto Verde copper mine, 85km south of Alma. In the northern area of the project, subtle colour features on satellite imagery are present within calcrete covered diorites on the northern nose of the regional aeromagnetic anomaly. A geological examination of this area by Company staff has explained the colour anomalies by the location of copper mineralised float from prospective, small, concealed, altered felsic porphyry intrusives into diorite.

OVL completed a detailed ground magnetic survey (186 line km of continuous magnetic profiling on 100m line spacing) of the project area at the end of the June 2013 quarter. This has broken down the aeromagnetic anomaly into a 2km by 1km southwest magnetic high, separated by a magnetic low from a smaller northern high. First pass reconnaissance mapping and geochemical sampling programs (stream sediments and rock samples over the main magnetic anomaly) have also been completed in the current quarter.

Interpretation of the magnetic results over the large southwest anomaly, suggests a 400m thick, easterly dipping, magnetic body to be an intrusive with a magnetite content similar to diorite. The interpreted intrusive appears to be bounded to the west by large, important faults that appear to either intersect or inflect sharply near the center of the magnetic body. Limited outcrops of the magnetic intrusive material are present and appears to be relatively fresh diorites and granodiorites with no obvious signs of disseminated mineralisation. Consequently, the large magnetic intrusive is not considered the primary target. Rather, the zone of alteration present on the structurally disturbed western flank of the magnetic body appears more prospective for hosting copper mineralisation. As this area is mostly covered with colluvial material and caliche, a program of MMI geochemistry with subsequent IP geophysical lines over the prospective target zone is proposed in the near future. This should detect any buried sulphide mineralisation (if present) for possible drilling in the next 6 months.

San Pedro Project

An ASX announcement of 26 June 2013 outlined the acquisition of the San Pedro Project (Figure 1) under a very favourable, low cost option. The project is located in Region 2 of Northern Chile, 100km northeast of the city of Calama which services Codelco’s giant Chuquicamata complex of mines. Four pending Exploration Concessions, Volcan San Pedro 1 to 4, comprise the 12km[2] San Pedro Project area. Regionally the project is situated within the northern portion of the Eocene to Early Oligocene Copper Belt of northern Chile which contains significant porphyry Cu deposits from approximately 28[0] to 20[0] south latitude. Northwards from Calama, is a cluster of giant porphyry Cu (Mo) deposits, from south to north; Mina Ministro Hale (Mina Mansa), Mina Sur (Exotica) Chuquicamata, Radomiro Tomic, El Abra,

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Quebrada Blanca and Collahuasi-Ujina. All are related to the development of an Eocene - Lower Oligocene magmatic arc with emplacement of mineralised porphyries between 36-31Ma. A striking feature of these deposits is the structural control on mineralisation by the regional north-south Domeyko Fault system which runs for approximately 800km. The fore mentioned deposits occur in dilatational structural settings related to strike-slip movement on the major faults and also subsidiary splays of the Domeyko Fault system. Southeast trending splay faults can be traced into the San Pedro area off the Domeyko Fault system. The structural setting of San Pedro is similar to the nearby Abra - Conchi mines to the southwest and to the Collahuasi - Rosario - Ujina mines to the north.

The project area is underlain by an inlier of Late Cretaceous to Palaeocene age red sandstones and conglomerates which have been exposed by erosion of overlying younger Upper Miocene to Pliocene volcanic cover which is related to the evolution of the over 6,000m high San Pablo and San Pedro strata volcano complex, 10km to the south. The inlier in detail represents a partly exposed caldera feature containing highly altered red conglomerates and sedimentary breccias which have been intruded by altered intermediate intrusive breccias.

Copper mineralisation is present within the caldera feature, mainly in the north, as a 1 to 2m wide polymetallic vein trending east southeast for 600m. Assay results for vein material have returned values to 1.24% Cu, 0.63%Pb, 0.57% Zn, 1.52 g/t Au and 55 g/t Ag.

The exploration target at San Pedro is a buried mineralised intrusive in the caldera feature. An acquired satellite image with a combination of spectral bands illustrates the strong hydrothermal alteration affecting the rocks underlying the project area, especially over the 1km by 1.5km area of the inlier. As part of OVL’s diligence in May 2013, 55 stream sediment samples were taken and a detailed ground magnetic coverage (9km[2] ) was completed as 99 line km of continuous magnetic profiling on 100m line spacing, confirming the caldera outline with some shallow intrusive features within the caldera.

During the September 2013 quarter, a more detailed analysis of all the geochemical and magnetic data gathered was carried out. Specifically, there is no direct evidence of a deep mineralised system in the magnetic data, notwithstanding the presence of sporadic base metal mineralisation in structures within the survey area that may suggest the presence of a much deeper mineralised system and the circular shape of the magnetic anomaly. This lack of evidence in the magnetic data may be due to the strong anomalies on the surface masking a magnetic response from a deep system. However, this mineralisation, if present, is probably at depths of 800 to 1,000m. In order to test for the presence of a deep mineralised system, OVL’s consultant geophysicist has recommended a deep-penetrating IP survey to 1,000m depth across the centre of the magnetic anomaly. A decision on whether to proceed with this survey is pending.

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B. ABANDONED PROJECTS

Domeyko East Project

The Domeyko East Project comprises three Exploration Concessions (9km[2] ) taken up by OVL in the porphyry sub-belt in the southern portion of the Coastal Cordillera Copper Belt in Region 4 of Chile (Figure 1). The project was targeting a porphyry Cu system as per the nearby Dos Amigos mine (4km southeast) and the new porphyry Cu discovery, Frontera, made by Hot Chile Limited, about 30km on trend to the south.

The project area lies just northeast of the visually prominent Domeyko Alteration Zone, a north-south, fault bounded lithocap ridge, 6km in a north-south direction and 1 to 1.5km in a east-west direction which contains late Cretaceous age Cu mineralised porphyries (Dos Amigos and Tricolor) and Cu mineralised breccias (Mirasol) that have intruded Lower Cretaceous Bandurrias Group andesitic lavas and volcanic breccias. The lithocaps define and overlie the shallow oxide parts of the porphyry copper sulphide systems.

Similar age porphyries appear to be present in the adjacent fault bound depression containing the East Domeyko Prospect, but have been concealed by west sloping terraces of Miocene Atacama gravels whilst those mineralised porphyries associated with the nearby Domeyko ridge have been subject to extreme weathering over millions of years and have developed prominent lithocaps. North-south trending, small inliers of altered Cretaceous intrusive porphyries are currently being exposed by erosion of the overlying terrace gravels within the project area and constitute a target for geophysical exploration for buried porphyry copper mineralisation.

As advised last quarter, reconnaissance mapping was carried out by the field crew in the June 2013 quarter. Contrary to the assumption that this area appeared not to have been explored in detail for primary porphyry Cu deposits because of the thick gravel cover, and warranted detailed geophysical surveys to detect buried primary porphyry mineralisation, signs of detailed geophysical grid coverage (IP and probably magnetics) was discovered, as well as a 130-150m deep RC drill hole from possibly 5-10 years ago. Samples of cuttings with visible sulphides, pyrite with trace chalcopyrite(?) were taken from weathered piles of laid out hole metreage for analyses. These samples returned low order Cu values.

Unfortunately statutory reporting of exploration by title holders to Sernageomin (the Chilean government mining regulatory agency) is not obligatory as in Australia. Further work in the quarter on obtaining information on past exploration results from title searching and follow up of title holders has had some success. It is suspected a major Canadian company ran detailed geophysics (IP and magnetics) over the ground and was responsible for the drilling. In view of the possibility of the Company repeating similar activities with possibly the same result, a decision has been made to discontinue exploration activities at Domeyko East and concentrate on higher potential projects in hand.

Chuminga Copper / Gold Project

Oro Verde holds a 20% interest in Compania Minera Chumi (“CMC”), title holder of the Chuminga Copper-Gold Project, situated on a coastal location, approximately 120km south of Antofagasta in Region 2 of Chile (Figure 1). Operatorship reverted to the 80% shareholder of Compania Minera Chumi

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(“CMC”) in December 2012 after OVL did not exercise its option to become the 100% owner of CMC as drilling by OVL suggested a small, low grade Cu (Au) resource is present that is subject to complex faulting and compartmentisation.

During the quarter the operator failed to renew the underlying tenements and as a legal consequence OVL has taken ownership of 100% of CMC. CMC has changed its company status and has been renamed Oro Mining SpA. Oro Mining’s sole assets are the considerable tax losses and VAT credit (totaling US$4 million) incurred in exploring the Chuminga Project which may be offset against future mining activities by the Company.

New Project Development

OVL is continuing to evaluate further new mineral exploration and development opportunities in Chile. Details of further acquisitions will be released as they occur.

Corporate

During the quarter the Company raised $1,144,000 (net of expenses) by a partially underwritten rights issue to shareholders. At quarter end the Company had 179,011,012 shares on issue and $1,175,000 cash on hand.

ENDS

For enquiries contact:

Dr Wolf Martinick Brett Dickson Chairman / Managing Director Company Secretary 0614 179 42466 61 8 9481 2555

Notes:

1. Any potential quantity and grade of Exploration Targets is conceptual in nature as there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

2. The information contained in this report that relates to Exploration Results and Exploration Targets is based on information compiled by Dr Brad Farrell, BSc Hons Eco Geol, MSc, PhD, a consultant to the company. Dr Farrell 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. This qualifies Dr Farrell 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 Farrell consents to the inclusion in the report of the foregoing matters based on his information in the form and context in which it appears. Dr Farrell is a Fellow of the Australasian Institute of Mining and Metallurgy, a Chartered Professional Geologist of that body and a Member of the Mineral Industry Consultants Association (the Consultants Society of the Australian Institute of Mining and Metallurgy).

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Figure 1

Figure 2

Figure 3

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D8 engaged in track construction between pads, dozing in argillic altered porphyry. Red and yellow colours due to iron oxides and jarosite after pyrite.

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Pad 3. Strongly leached, silicified and argillic altered porphyry with jarosite and iron oxides after pyrite on the face of drill pad 3.

Figure 4. Preparation of tracks and drill pads on Timon Ridge

Appendix 5B Mining Exploration Entity Quarterly Report

Appendix 5B

Mining Exploration Entity Quarterly Report

Name of entity

	Oro Verde Limited
	ABN 84 083 646 477 Consolidated statement of cash flows
			30 September 2013
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and 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 1.7 Other NetOperating Cash Flows		Current quarter $A’000		Year to date (3 months) $A’000
		- (187) - - (496) - 4 - - -		- (187) - - (496) - 4 - - -
		(679)		(679)
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)		- - - - - - - - -		- - - - - - - - -
		-		-
		(679)		(679)

Appendix 5B Page 1

Appendix 5B Mining Exploration Entity Quarterly Report

1.13 Total operating and investing cash flows (brought forward)	(679)	(679)
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 – security deposits Net financing cash flows	1,145 - - - - -	1,145 - - - - -
	1,145	1,145
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	466 720 (11)	466 720 (11)
	1,175	1,175

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	Curent quarter $A'000
		205
		-
1.25	Explanation necessaryfor an understandingof the transactions
	Item 1.23 includes aggregate amounts paid to directors including salary, consulting fees, directors’ fees and superannuation.

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

N/A

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

N/A

Appendix 5B Page 2

Appendix 5B Mining Exploration Entity Quarterly Report

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
	NIL	NIL
	NIL	NIL

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	656
	-
	-
	278
Total	934

Reconciliation of cash

Total Reconciliation of cash
Reconciliation of cash at the end of the quarter (as	Current period	Previous period
shown in the consolidated statement of cash flows) to	$A’000	$A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank	1,142	687
5.2 Deposits at call	33	33
5.3 Bank overdraft
5.4 Other (provide details)
Total: cash at end of quarter(item 1.22)	1,175	720

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
	-
	-

Appendix 5B Page 3

Appendix 5B Mining Exploration Entity Quarterly Report

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 note 3) (cents)	Amount paid up per security (see note 3) (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	179,011,012	178,637,678
	91,428,595	91,428,595
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 7.10 Expired during quarter	24,364,459 2,500,000 3,250,000	- - -	Exercise price $0.27 $0.20 $0.04	Expiry date _3_1 December 2014 10 January 2016 31 March 2016
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

Appendix 5B Page 4

Appendix 5B Mining Exploration Entity Quarterly Report

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 give a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 30 October 2013 Company Secretary

Print name: Brett Dickson

Notes

• 1 The report provides a basis for informing the market how the entity’s activities have been financed for the past period 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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Appendix 5B Page 5