MCS SERVICES LIMITED — Capital/Financing Update 2012

Jan 16, 2012

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17 January 2012

Drilling Commences at La Negra, Chile

Red Gum Resources Limited (ASX : RGX, “Red Gum” or “the Company”) is pleased to announce that drilling has now commenced at its La Negra Lead-Zinc-Silver Project, located in northern Chile.

HIGHLIGHTS

• 3,500 metre first phase drill program commences to evaluate the economic potential at depth of nearsurface high grade Lead-Zinc-Silver mineralisation exposed in old workings.

• Drilling to test targets within both base/precious metals-bearing tourmaline breccia structure and potential underlying porphyry target as suggested by induced polarization survey.

• La Negra has an Exploration Target in the range of 10 Mt to 70 Mt of potentially high grade (up to 20%) polymetallic mineralisation*.

• Drill program expected to take 3-4 months - first results expected in February.

• Drilling to be carried out by the Chilean subsidiary of Energold Drilling Corp., a Canadian-listed international drilling company.

Managing Director Paul Pearson commented, “With listing today on the ASX, it gives us great pleasure to report that drilling of Red Gum’s key La Negra Project in Chile has commenced on time”.

“The Company’s expertise in Latin America has expedited commencement of field activities in Chile. A number of parallel studies and associated geochemical, geophysical and geological projects have also been initiated which will ensure the continuous flow of new information to our shareholders. The drilling program is expected to take up to four months, with first results through in February. We look forward to reporting these results to shareholders as we progress.”

About La Negra Project

The La Negra Lead-Zinc-Silver (Copper-Gold) Project is located within Region IV in Chile, approximately 360 kilometres NNE of the capital, Santiago and approximately 10 kilometres ENE of the mining town of Combarbalá (Refer attached figure). Red Gum has an option to acquire 100% in the property, which comprises 11 separate mining and exploration concessions totaling approximately 2,600 hectares.

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The La Negra property has a long history, dating back to colonial times, of sourcing high grade lead-zinc-silver material. Modern day geochemical sampling verified the surface and subsurface continuity of high metal grades (zinc, lead, silver, copper, gold) over significant widths within the old workings.

Previous surface geochemistry defined a strong northerly trending (“principal”) zinc-lead anomaly, 1200 metres long x 400 metres wide, broadly corresponding with outcropping tourmaline-bearing hydrothermal breccias that host the old workings. Strong silver, copper and gold values are concentrated in the soils of the northern segment of this principal anomaly. These, and other geochemical anomalies, are underlain by large chargeability anomalies defined in the geophysics.

Overview of Drilling Program

Red Gum plans to drill approximately eight deep (each ~250-450 metres) diamond drill holes angled to the east and west and collared along the principal hydrothermal breccia. These holes are designed to test the strike extent and width of the mineralised zone down to an approximate vertical depth of 400 metres, at 100-150 metre intervals along the strike of the principal breccia. In addition, the Company will drill at least one deeper hole, to test for the possible existence of a porphyry system inferred from geophysical interpretation.

*ENDS***

For Further information please contact:

Victoria Thomas, Six Degrees Investor Relations +61 3 9674 0347

*The Exploration Target of 10 Mt - 70 Mt grading 0.21%-11.75% Pb, 0.21%11.55% Zn, and 0.03%-1.1% Cu has been ascribed to the La Negra Project.

The potential quantity and grade of the exploration target is conceptual in nature. To date 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.

The Exploration Target is constrained in dimensions based on the 3 dimensional induced polarisation survey that has been processed and interpreted, geological mapping and geochemistry (soil and rockchip), in addition to standard assumptions on density.

The relative abundance of metals expected to be encountered within the Exploration Target is constrained by available soil geochemical data, rock chip derived geochemical data and underground sampling (both historic and recent). Data used has been weighted towards recent information in preference for historically reported grades that are not adequately verifiable.

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Competent Persons Statement

The information in this document that relates to Exploration Targets 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 his supporting documentation relating to Exploration Results, Mineral Resources and/or Ore Reserves.

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Location Map of the La Negra area.