MCS SERVICES LIMITED — Capital/Financing Update 2012

Dec 19, 2012

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20 December 2012

Final Report Supports Potentially Large Sulphidic Mineral System at Cerro Huancash, Peru

Red Gum Resources Limited (ASX: RGX, “Red Gum” or “the “Company”) is pleased to announce that it has received the final results and report from the recently completed induced polarization (IP) geophysical survey at the Company's 100% owned Cerro Huancash Project located in central Peru.

HIGHLIGHTS

• Final results and report very positive for the overall prospectivity of Cerro Huancash

• Strong chargeability anomalies, corresponding to both low resistivity and high resistivity zones, support extensive sulphide system beneath the Ariana Corridor

• Fugro Geophysical’s report highlights the correlation between some strongly chargeable zones and zones of high resistivity (silica?). These zones possibly indicate concealed porphyry stockworks feeding the overlying skarn/replacement metal system

• Highly chargeable zones extend from surface to +250 metres; open at depths exceeding IP penetration

• Consistent strongly anomalous geophysical responses along successive traverses confirms kilometric-scale strike length of the system

Managing Director Paul Pearson commented , “Fugro’s final report is very positive and underpins the Company’s interpretation of the IP survey results revealing a concealed, large scale, sulphidic mineral system at Cerro Huancash, focused along the Ariana Corridor. In addition, it has highlighted that some highly chargeable zones correspond with highly resistive zones (possible silica), augmenting the case for the existence of a concealed porphyry system on the property (in addition to high grade skarn and replacement styles demonstrated on surface). The results further support the Company’s conclusion that Cerro Huancash has very good potential for the discovery of a significant base and precious metal system at economic depths. The Company is rapidly working towards the development of drill targets based on these results and other field studies".

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Discussion of results

In the previous press releases dated 19 and 23 November 2012, highly chargeable zones were reportedly well developed and consistent over kilometric scale along the strike of the Ariana Corridor. Figure 2 clearly conveys this consistency in the form of stacked sectional depictions.

Previously the Company highlighted the correlation between zones of high chargeability and low resistivity, but Fugro’s report has also drawn our attention to the zones of combined high chargeability and high resistivity. Fugro’s report concludes: “ The induced polarization indicates the presence of anomalies in the study area; polarizable bodies where the range of chargeability is between 15 – 45mV/V, indicating a probable zone rich in sulphides. ”

Fugro goes on to state “ On section L28000 the chargeable bodies show a range of 15 – 20 mV/V, superimposed on a highly resistive zone (silica?-see Figure 3). The results of the IP/RES have indicated geophysical patterns on lines L28000 and L30000 that are considered to be important anomalies. In the same way and no less important are the anomalies observed on lines L54000 and L58000; the correlation between high chargeability and high resistivity suggests to us a zone with a large amount of sulphides. ”

These variations probably reflect a large sulphidic mineral system whose physical properties vary from place to place, partly determined by differing mineralogic combinations and by variable amounts of fracturing. The highly resistive and highly chargeable zones possibly map zones of silica stockworking with disseminated sulphides, i.e. a potential mineralized porphyry stock/s. As noted in the earlier ASX release dated 19 November 2012, the cross-cutting geometry of some of these zones is consistent with such an intrusive stock model. In contrast, many of the lower resistivity zones probably reflect more permeable rocks, induced by faulting and fracturing along the Ariana Corridor.

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CERRO HUANCASH CERRO HUANCASH
OVERVIEW DETAIL OF SOUTHERN SECTOR
IP LINE LOCATIONS IP LINE LOCATIONS WITH ROCK
GEOCHEM. AND MAGNETIC ANOMALIES
FOR REFERENCE
Ariana 0 1
Norte km
Ariana
Sur
Zn+Pb+Cu
in rocks (%)
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Figure 1 : General location of IP lines, Cerro Huancash. The area shown in light blue is Red Gum’s claim.

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Figure 2: 3D Chargeability inversion sectional depictions, Cerro Huancash geophysical survey. Top figure is looking towards the southwest; bottom figure is looking towards the northeast. Anomaly colour scale is the same as Figure 3 below.

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CERRO HUANCASH PROJECT
CHARGEABILITY INVERSION SECTION 28000 (SEE MAP)
High
Chargeability
High
Chargeability
High
Chargeability
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CERRO HUANCASH PROJECT RESISTIVITY INVERSION SECTION 28000 (SEE MAP)

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High
Chargeability
High
Chargeability
High
Chargeability
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Figure 3: Example chargeability and resistivity inversion sections, showing combined high chargeability/high resistivity features on Line 28000. For reference the highly chargeable zones (>35 mv/V) are traced as heavy dotted lines on the corresponding resistivity section.

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About the Cerro Huancash Project

Red Gum’s 100% owned Cerro Huancash Project consists of an exploration claim covering an area of 575.6 hectares. It is located approximately 45 km west of smelting facilities at La Oroya and 20 km north-northwest of Glencore’s Casapalca Zinc-Lead-Silver Mine. Cerro Huancash is readily accessible on a year round basis from the capital Lima, located 100 km to the southwest, via the Central Highway.

Previous exploration in the Cerro Huancash area revealed frequent occurrences of iron-stained gossans and mineralised float containing banded base metal sulphides over 8 km of strike length. Red Gum’s Cerro Huancash claim covers over 3 km of this highly prospective belt and given its close proximity to major mining operations at Morococha and Casapalca, this mineralised trend has been heavily targeted by exploration companies.

Geochemical assays of surface samples collected by Red Gum from Cerro Huancash reported high grades of precious and base metals, confirming historical surface metal grades previously reported (ASX announcement dated 19 September 2012). In addition, the Company’s recently completed ground magnetic survey identified a number of strong magnetic anomalies potentially associated with economic skarn and replacement-style base/precious metal mineralisation.

In recent years, Southern Peaks Mining (a private company), has completed extensive drilling immediately north on their 'Ariana' property. Given that Southern Peaks has recently made known in the public domain that significant mineralised resources exist at their Ariana Norte and Ariana Sur prospects, Red Gum has placed a high priority on further exploration at Cerro Huancash.

Overview of Induced Polarisation Program

The Induced Polarisation survey was carried out by the Peruvian subsidiary of FGG, a leading Australian-based geophysical contractor with international operations and offices in five countries.

The IP pole-dipole survey consisted of 10.1 line kilometres of 100 metre ‘a’ dipole spacing, n=1 to 10, in 8 lines. GPS readings for each station were acquired using a hand-held GPS receiver. Fugro utilised an Iris Instruments ElectroPro IP receiver for data collection, and an Elliot, Huntec or Edimel transmitter with compatible motor generator for signal generation.

Inversion sections for each line have been generated using the Res2Dinv software, and these can be interpreted in a more direct way as geological sections.

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Competent Persons Statement

The information in this document that relates to Exploration Results is based on information compiled by Dr Paul Pearson, who is Fellow of The Australasian Institute of Mining and Metallurgy and Member of the Australian Institute of Geoscientists. Dr Pearson is the Managing Director of Red Gum Resources Limited.

Dr Pearson 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 Pearson consents to the inclusion in this document of the matters based on his information in the form and context in which it appears and verifies that it is based on and fairly and accurately reflects in the form and context in which it appears, the information in my supporting documentation relating to Exploration Results, Mineral Resources and/or Ore Reserves.

*ENDS***

For Further information please contact:

Paul Pearson, Managing Director Victoria Thomas, Six Degrees Investor Relations

• 61 8 8212 5724 + 61 3 9645 7567