MCS SERVICES LIMITED — Capital/Financing Update 2013

May 8, 2013

Red Gum Resources Limited

Prospectus

Red Gum Resources Limited ACN 119 641 986

For a renounceable pro-rata rights issue to Eligible Shareholders of one New Share for every two Shares held by Eligible Shareholders on the Record Date, at an issue price of $0.03 per New Share to raise up to approximately $1.125 million before costs of the Offer ( Offer ). The Offer will include one free attaching option exercisable at 7 cents and expiring on 15 November 2013 for every two New Shares subscribed for and one free attaching option exercisable at 10 cents and expiring on 1 March 2016 for every two New Shares subscribed;

AND

For the issue of up to 5,000,000 Long Dated Options to DJ Carmichael Pty Ltd (or its nominees) in part satisfaction of the lead manager and underwriting fee detailed in Section 6.1 of this Prospectus ( Fee Options );

AND

For the issue of up to 37,489,364 Long Dated Options to sub-underwriters of the Offer in accordance with the Mandate detailed in Section 6.1 of this Prospectus ( Sub-underwriter Options ).

This document is important and it should be read in its entirety

The Offer is fully underwritten and managed by DJ Carmichael Pty Ltd

Your Entitlement and Acceptance Form must be received by the Share Registry with your payment no later than 5:00pm (ACST) on the Closing Date. Please refer to the timetable set out in this Prospectus for the important dates.

If you are in any doubt as to the contents of this document, you should consult your stockbroker, solicitor, banker, financial advisor or accountant as soon as possible. The securities offered by this Prospectus are considered to be speculative.

Prospectus

Offer Statistics

Number of Shares on issue prior to Offer	74,978,727
Maximum number of New Shares to be issued	37,489,364
Maximum number of Short Dated Options to be issued under the Offer	18,744,682
Maximum number of Long Dated Options to be issued under the Offer	18,744,682
Offer Price	$0.03 per New Share

Timetable for important dates

Announce Entitlement Issue and Appendix 3B	6 May 2013
Lodgement of Prospectus with ASIC	9 May 2013
Notice sent to Option holders who are unable to participate	9 May 2013
Notice sent to Shareholders containing Appendix 3B information	13 May 2013
Shares commence trading on an ex rights basis and rights trading starts	14 May 2013
Record Date for the Offer	20 May 2013
Prospectus and Entitlement and Acceptance Form despatched to	22 May 2013
Shareholders
Opening Date of Offer	22 May 2013
Rights trading ends	29 May 2013
Securities quoted on a deferred basis	30 May 2013
Closing Date of Offer*	5 June 2013
Advise ASX of any under subscriptions	7 June 2013
Expected date of despatch of holding statements for Securities	13 June 2013
Commencement of trading of Securities on ASX*	14 June 2013

*The Directors may extend the Closing Date by giving at least 6 Business Days notice to ASX prior to the Closing Date. As such the date the Securities are expected to commence trading on ASX may vary.

The Directors may at any time decide to withdraw this Prospectus and the Offer made under this Prospectus, in which case the Company will return all Acceptance Monies (without interest) within 1 month of giving notice of such withdrawal.

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Important notice

Investors should read this document in its entirety and, if in doubt, should consult their professional advisors. The Shares the subject of this Prospectus should be considered highly speculative.

This Prospectus is dated 9 May 2013 and was lodged with ASIC on the same date. Neither the ASIC nor ASX takes any responsibility as to the contents of this Prospectus. No securities will be issued on the basis of this Prospectus any later than 13 months after the date of issue of this Prospectus.

This Prospectus for an offer to Eligible Shareholders of continuously quoted securities (as defined in the Corporations Act) has been prepared in accordance with Section 713 of the Corporations Act.

No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer.

Overseas Shareholders

This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus.

It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of Securities these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Securities will not be issued to Shareholders with a registered address which is outside Australia or New Zealand.

The Offer is being made in New Zealand pursuant to the Securities Act (Overseas Companies) Exemption Notice 2013.

However, pursuant to ASX Listing Rule 7.7, the Company has appointed a nominee, DJ Carmichael Pty Ltd, to sell the Entitlements to which ineligible Shareholders are entitled. The nominee will have the absolute and sole discretion to determine the timing and price at which the Entitlements may be sold and the manner of any such sale.

Any interest earned on the proceeds of the sale of these Entitlements will firstly be applied against expenses of such sale, including brokerage, and any balance will accrue to the relevant ineligible Shareholders as described below.

The net proceeds of the sale of these Entitlements will then be forwarded by the Company as soon as practicable to the ineligible Shareholders, in proportion to their share of such Entitlements (after deducting brokerage commission and other expenses). If any such net proceeds of sale are less than the reasonable costs that would be incurred by the Company for distributing those proceeds, such proceeds may be retained by the Company.

Notwithstanding that the nominee may sell Entitlements, ineligible Shareholders may nevertheless receive no net proceeds if the costs of the sale are greater than the sale proceeds.

Neither the Company nor the nominee will be subject to any liability for failure to sell the Entitlements or to sell them at a particular price. If, in the reasonable opinion of the nominee, there is no viable market for the Entitlements of the ineligible Shareholders, or a surplus over the expenses of the sale cannot be obtained the Entitlements that would have been offered to the ineligible Shareholders, then those Entitlements will be allowed to lapse. The Securities not taken up will form part of the Shortfall.

Shareholders resident in Australia or New Zealand holding Shares on behalf of persons who are resident overseas are responsible for ensuring that taking up an Entitlement under the Offer does not breach regulations in the relevant overseas jurisdiction. Return of a duly completed Entitlement and

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Acceptance Form will be taken by the Company to constitute a representation that there has been no breach of those regulations.

Risk Factors

Potential investors should be aware that subscribing for New Shares in the Company involves a number of risks. The key risk factors of which investors should be aware are set out in section 5 of this Prospectus. These risks together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the New Shares in the future. Accordingly, an investment in the Company should be considered highly speculative. Investors should consider consulting their professional advisers before deciding whether to apply for New Shares pursuant to this Prospectus.

Competent Person’s Statement

The information in this document is based on information compiled by Dr Paul Pearson, who is a Fellow of The Australasian Institute of Mining and Metallurgy. 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.

Forward Looking Statements

Certain statements in this Prospectus constitute forward looking statements. Investors should note that these statements are inherently subject to uncertainties in that they may be affected by a variety of known and unknown risks, variables and other factors which could cause actual values or results, performance or achievements to differ materially from anticipated results, implied values, performance or achievements expressed, projected or implied in the statements. These risks, variables and factors include, but are not limited to, the matters described in Section 5. The Company gives no assurance that the anticipated results, performance or achievements expressed or implied in those forwardlooking statements will be achieved and have no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law.

Warning

No person named in this Prospectus, nor any other person, guarantees the performance of Red Gum, the repayment of capital or the payment of a return on the New Shares.

Please read this document carefully before you make a decision to invest. An investment in the Company has specific risks which you should consider before making a decision to invest.

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TABLE	OF CONTENTS
Chairman’s letter .................................................................................................................................... 6
1.	Investment Overview ................................................................................................................. 7
2.	Details of the Offer ...................................................................................................................11
3.	Information on Red Gum .........................................................................................................16
4.	Effect of Offer ...........................................................................................................................18
5.	Risk factors ...............................................................................................................................19
6.	Material contracts.....................................................................................................................26
7.	Additional information .............................................................................................................29
8.	Definitions & glossary .............................................................................................................38
Corporate Directory ..............................................................................................................................41

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Chairman’s letter

Dear Shareholders,

Your Company is undertaking this fully underwritten capital raising primarily to fund its exploration program, including geophysical surveys and an initial round of drilling, in the Majada Project area located in Region IV of Chile.

Majada is strategically positioned on a regional iron oxide copper-gold (IOCG) trend, which includes Glencore’s Punitaqui mine to the north and Pucobre’s El Espino mine to the south. Significant third party exploration projects at San Lorenzo (some 2km to the east of Majada) and Manuelito (some 3 km to Majada’s west) bear testament to this trend’s local prospectivity. Although never previously subject to drilling, Majada itself has been the site of extensive artisanal workings. These collectively delineate potentially significant copper oxide mineralisation zones of several kilometres of strike length.

Red Gum has completed comprehensive magnetic and induced polarisation surveys and field mapping since signing option agreements with the tenement holders earlier this year. The results of these surveys have formed the basis for target selection of a diamond core hole drilling program which has just commenced.

This capital raising is being undertaken with the assistance of a leading Perth based stock broking house – DJ Carmichael. Red Gum has entered into a mandate with DJ Carmichael to fully underwrite the rights issue to raise a total of approximately $1.125 million. These funds will be used towards the Company’s short term exploration program commitments at the Majada Project and overheads.

The Board, through this Prospectus, is offering all existing shareholders the opportunity to participate in this renounceable rights issue on the basis of one New Share for every two existing Shares held with one free attaching Short Dated Option and one free attaching Long Dated Option for every two New Shares subscribed for. The Offer is fully underwritten and managed by DJ Carmichael.

The Board believes that Majada represents a great opportunity for Red Gum to participate in a truly exciting project offering the potential for discovery of significant greenfields copper-gold mineralisation. We recommend that you give serious consideration to supporting this capital raising.

Dr. Raymond D Shaw Chairman

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1. Investment Overview

The information set out in this section is not intended to be comprehensive and should be read in conjunction with the full text of this Prospectus.

1.1 The Offer

This Prospectus is for the pro-rata renounceable rights issue offer to Eligible Shareholders of New Shares at an issue price of $0.03 per New Share with one free attaching option (expiry 15 November 2013, the Short Dated Option ) for every two New Shares subscribed for, and one free attaching option (expiry 1 March 2016, the Long Dated Option , together with the Short Dated Option, the Attaching Options ) for every two New Shares subscribed for, to raise up to approximately $1.125 million before the costs of the Offer. The terms of the Attaching Options are set out in Section 7.4 of this Prospectus.

The Offer is fully underwritten and managed by DJ Carmichael Pty Ltd ( Underwriter ). Further details of the underwriting are set out in section 6.1 and 6.2 of this Prospectus.

There is no minimum subscription to the Offer.

On the same date as announcing the Offer, the Company applied to the ASX for the New Shares and Long Dated Options to be granted Official Quotation on the ASX. Official quotation of the New Shares and Long Dated Options is expected to occur on or about 14 June 2013.

1.2

Capital Structure

The capital structure of the Company following the issue of New Shares and Attaching Options (assuming the maximum number of New Shares and Attaching Options are issued under the Offer) will be as follows:

	Shares	Options
Total on issue on date of Prospectus	74,978,727(2)	4,000,000(3)
Issued under the Offer	37,489,364	37,489,364(4)
Issued to Sub- underwriters	Nil	37,489,364(5)
Issued to the Underwriter	Nil	5,000,000(5)
Total on issue after the Offer (1)	112,468,091	83,978,728

Note:

1 This assumes that the maximum number of New Shares and Attaching Options are taken up under the Offer.

2 The total shares on issue is made up of 44,552,795 quoted shares and 30,425,932 restricted shares.

3 1,000,000 exercisable at $0.25 on 25 November 2014, 1,000,000 exercisable at $0.30 or $0.35 expiring on 25 November 2016, 1,000,000 exercisable at $0.35 or $0.40 expiring on 25 November 2017, and 1,000,000 exercisable at $0.40 or $0.60 expiring on 25 November 2018.

4 18,744,682 exercisable at $0.07 expiring on 15 November 2013 and 18,744,682 exercisable at $0.10 expiring on 1 March 2016.

5 These Options are exercisable at $0.10 expiring on 1 March 2016.

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1.3 New Share and Attaching Option terms

Upon issue, each New Share will rank equally with all existing Shares then on issue. A summary of the rights and liabilities attaching to the New Shares is set out in Section 7.3 of this Prospectus.

The Attaching Options will be issued on the terms set out in Section 7.4 of this Prospectus. The Company will apply to the ASX for quotation of the Long Dated Options. The Short Dated Options will not be quoted.

1.4

Renounceable Offer and entitlements trading

The Offer is renounceable. Accordingly, there will be trading of Entitlements on ASX meaning Shareholders may choose to sell or transfer all or any part of their Entitlement instead of paying the subscription price for the Offer.

Entitlement trading will commence on 14 May 2013. Sale of your Entitlement must be completed by 29 May 2013 when Entitlement trading is expected to cease. This does not mean that you have to sell your existing Shares. Your right to subscribe for the Offer may be sold or transferred without selling the Shares you presently hold.

Shareholders who do not take up their Entitlement will find that their Entitlement lapses and the Shortfall will be dealt with by the Underwriter pursuant to the terms of the Underwriting Agreement.

1.5 Underwritten Offer

The Offer is fully underwritten by the Underwriter. Therefore, if any Shareholder or any person who has an Entitlement to acquire New Shares elects not to subscribe for their full Entitlement, the Underwriter will, subject to the provisions of the Underwriting Agreement, ensure that the Company receives applications and subscription monies for those New Shares which form part of any Shortfall. A summary of the material terms of the Underwriting Agreement are set out in Section 6.2 of this Prospectus.

1.6

Acceptance of Entitlement to New Shares and trading of Rights

The number of New Shares to which an Eligible Shareholder is entitled, and the total amount an Eligible Shareholder would have to pay if they choose to take up all of their Entitlements to subscribe for New Shares, is shown on the Entitlement and Acceptance Form accompanying this Prospectus. This Prospectus is for the information of Eligible Shareholders who are entitled and may wish to apply for the New Shares. Fractional entitlements will be rounded up to the nearest whole number.

Entitlements to New Shares can be accepted in full, or in part, by completing and returning the Entitlement and Acceptance Form which accompanies this Prospectus in accordance with the instructions set out below and on the Entitlement and Acceptance Form.

Acceptance Monies for the New Shares must be received by the Company at its Share Registry by the Closing Date. Please refer to the timetable for the important dates of the Offer set out on page 2 of this Prospectus.

1.7 Additional Shares

Shareholders wishing to apply for further New Shares in addition to the Entitlement as shown on their Entitlement and Acceptance Form may purchase additional Entitlements on ASX during the Entitlement trading period and apply for Shortfall Securities in accordance with Section 2.10.

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1.8 Purpose of the Offer and use of funds

Purpose	$
Initial Tenement Acquisition Costs & Option Fees	300,000
Geophysical, Geological and Metallurgical studies	190,000
Drilling Program (approx. 1500m of diamond core)	470,000
Cost of Capital Raising	153,901
Overheads and Admin	10,780
TOTAL	$1,124,681

If the Company raises less than the full subscription ($1,124,681) under the Offer, the amount raised (after expenses of the Offer) is intended to be applied by way of priority to the following: exploration and initial drilling program at the Majada Project, administration costs and overheads.

The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis.

1.9 Directors’ interests

As at the date of this Prospectus, all of the Directors of Red Gum have a direct or indirect interest in Shares. Set out below is a table summarising the current holding and entitlement of each Director.

Director	Shares	Shares	Existing Options	Entitlement Shares	Entitlement Shares	Entitlement Short Dated Options	Entitlement Long Dated Options
	Direct	Indirect(1)		Direct	Indirect*
Dr Raymond Shaw	288,054	7,249,750	Nil	144,027	3,624,875	1,884,451	1,884,451
Dr Paul Pearson	Nil	1,100,000	3,000,000(2)	Nil	550,000	275,000	275,000
Mr Torey Marshall	106,612	13,509,500	Nil	53,306	6,754,750	3,404,028	3,404,028
Notes

1 Indirect holdings held by associates of the Directors.

2 1,000,000 exercisable at $0.25 on 25 November 2014, 1,000,000 exercisable at $0.30 or $0.35 expiring on 25 November 2016, 1,000,000 exercisable at $0.35 or $0.40 expiring on 25 November 2017, and 1,000,000 exercisable at $0.40 or $0.60 expiring on 25 November 2018.

1.10 Investment Highlights

• Funds to be used primarily for exploration of the Majada Project.

• Majada Project is located in the premium Iron Oxide Copper Gold (IOCG) Belt of northern Chile, close to power and road infrastructure.

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• Majada Project encompasses two separate Copper-Gold mineralised trends totalling over 5km in length; target is high grade Copper-Gold mineralisation localised along intrusivevolcanic regional shear-contacts.

• Inaugural drilling program underway, initial core assay results expected towards the end of June 2013.

• Red Gum has exclusive right to explore and acquire 100% of the Majada Copper-Gold Project over 3 years on favourable terms.

• Two significant, third-party, exploration programs lie within a few kilometres of the Majada Project.

• Red Gum’s recently completed geophysical surveys show strong anomalies, consistent with subsurface sulphide mineralisation beneath old copper-gold workings at Majada.

• Majada represents lower scale greenfields exploration risk, given extensive artisanal workings and coincident geophysical anomalies.

• Red Gum has positioned itself for future growth through exploration and development of copper-gold and polymetallic assets located in Chile and Peru.

1.11

About the Majada Project

The Majada Copper-Gold Project is located within the IOCG Belt of northern Chile, approximately 120 kilometres south of La Serena in Region IV. The project consists of 587 hectares of third party exploitation mineral claims, distributed in two geographically separated areas; Majada Este and Majada Oeste. As announced to the ASX on 27 March 2013, Red Gum executed formal purchase agreements enabling it to acquire a 100% interest over three years by making staged cash payments to the current owners. In addition, Red Gum has applied for new exploration claims adjoining the Majada Oeste area, totalling an additional 400 hectares. Artisanal mining has identified a number of copper oxide pit workings coincident with a shear zone mapped on surface. Beneath the oxide zone at several locations evidence exists for sulphide mineralisation (including bornite and chalcopyrite).

As announced to the market on 22 April 2013, Red Gum had acquired magnetic and induced polarisation geophysical data, and has subsequently contracted a drilling company, HSB Sondajes, to undertake an inaugural program involving a minimum of 1500 metres of diamond coring within the Majada Project area. This drilling has now commenced and is programmed to be completed in June. Initial core assay results for the drill cores should be available towards the end of June 2013.

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2. Details of the Offer

2.1 Offer to Eligible Shareholders

The Directors of Red Gum have approved a pro-rata renounceable rights issue to Eligible Shareholders of up to approximately 37,489,364 New Shares at $0.03 per New Share to raise up to approximately $1.125 million before costs of the Offer. Eligible Shareholders of Red Gum are entitled to subscribe for one New Share for every two Shares held on the Record Date, with one free attaching option (expiry 15 November 2013) for every two New Shares subscribed for ( Short Dated Option ) and one free attaching option (expiry 1 March 2016) ( Long Dated Option ) for every two New Shares subscribed for. Only those Shareholders shown on the share register at 7:00pm (AEST) on the Record Date will be entitled to participate in the Offer.

The Offer is fully underwritten by the Underwriter, details of which are set out in Sections 6.1 and 6.2 of this Prospectus.

There is no minimum subscription to the Offer.

Red Gum has applied to the ASX for the New Shares and Long Dated Options to be granted Official Quotation on the ASX. Official Quotation of the New Shares and Long Dated Options is expected to occur on or about 14 June 2013. The Short Dated Options will not be quoted.

2.2 Fee Options and Sub-underwriter Options

This Prospectus also includes an offer of:

• (a) up to 5,000,000 Long Dated Options to DJ Carmichael Pty Ltd (or its nominees) in part satisfaction of the lead manager and underwriting fee detailed in Section 6.1 of this Prospectus ( Fee Options ); and

• (b) up to 37,489,364 Long Dated Options to sub-underwriters of the Offer in accordance with the Mandate detailed in Section 6.1 of this Prospectus ( Sub-underwriter Options ).

The offer and the issue of the Fee Options and the Sub-underwriter Options are subject to the receipt of Shareholder approval for their issue at a general meeting.

• 2.3

Additional Shares

Shareholders wishing to apply for further New Shares in addition to the Entitlement as shown on the Entitlement and Acceptance Form may purchase additional Entitlements on ASX during the Entitlement trading period and apply for Shortfall Securities in accordance with Section 2.10.

2.4 How to accept your Entitlement

• (a) If you wish to take up all of your Entitlement

Eligible Shareholders may accept their Entitlement either in whole or in part. The number of New Shares which Eligible Shareholders are entitled to is shown on the Entitlement and Acceptance Form which accompanies this Prospectus.

Acceptances cannot exceed your Entitlement as shown on the Entitlement and Acceptance Form. If it does, acceptance will be deemed to be for your maximum Entitlement and any surplus subscription funds will be returned (without interest). Eligible Shareholders should refer to section 2.10 if they wish to apply for additional Shares under the Shortfall Offer.

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If Eligible Shareholders take no action in respect of their Entitlement they will have no right to subscribe for the New Shares pursuant to this Offer.

Entitlements to New Shares can be accepted by completing and returning the Entitlement and Acceptance Form which accompanies this Prospectus in accordance with the instructions set out on the Entitlement and Acceptance Form and forwarding the completed Form together with the full amount payable so as to reach the Share Registry by no later than 5:00pm (ACST) on the Closing Date.

The Offer Price of $0.03 per New Share is payable in full on acceptance of part or all of your Entitlement.

If Eligible Shareholders wish to take up part or all of their Entitlement, calculated by multiplying the number of New Shares applied for by the Offer Price, payment may be made by cheque, bank draft, money order or by using BPAY®.

If paying by cheque, bank draft or money order, Entitlement and Acceptance Forms must be accompanied by a cheque, bank draft or money order in Australian dollars, crossed “Not Negotiable” and made payable to “Red Gum Resources Limited – Offer A/C”.

If an Eligible Shareholder elects to make payment using BPAY®, they must contact their bank, credit union or building society to make payment of the Acceptance Monies from their cheque or savings account. Refer to the Entitlement and Acceptance Form for the Biller Code and Customer Reference Number. Eligible Shareholders who have multiple holdings will have multiple Customer Reference Numbers.

The Company shall not be responsible for any postal or delivery delays or delay in the receipt of the BPAY® payment.

No stamp duty, brokerage or handling fees are payable by the Applicant for New Shares offered by this Prospectus. Completed Entitlement and Acceptance Forms and accompanying cheques should be forwarded to the following address:

Red Gum Resources Limited Rights Issue C/- Computershare Investor Services Pty Limited GPO Box 2987 Adelaide SA 5001

The amount payable on acceptance will not vary during the period of the Offer and no further amount is payable on allotment. Acceptance Monies will be held in trust in a subscription account until allotment of the New Shares. The subscription account will be established and kept by Red Gum on behalf of the Applicants. Any interest earned on the Acceptance Monies will be retained by the Company irrespective of whether allotment takes place.

(b) If you wish to sell all of your Entitlement

Follow the instructions in the section “Sale of your Entitlement in full by your Stockbroker/Agent” on the Entitlement and Acceptance Form, which accompanies this document.

Entitlement trading will commence on 14 May 2013. Sale of your entitlement must be completed by 29 May 2013 when Entitlement trading is expected to cease.

There is no guarantee that an Eligible Shareholder will be able to sell all or any part of their Entitlement on ASX or that any particular price will be paid for the Entitlements sold on ASX.

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(c) If you wish to take up part of your Entitlement and sell the balance

Please complete the Entitlement and Acceptance Form, which accompanies this document, by inserting the number of New Shares for which you wish to accept (being less than as specified on the Entitlement and Acceptance Form) and follow the instructions in the section “Sale of your Entitlement in part by your Stockbroker/Agent and acceptance of the balance” on the form in respect of that part of your Entitlement you wish to sell.

(d) Entitlement not taken up

If all or part of your Entitlement lapses, you will receive no benefit. Any Shortfall will pass to the Underwriter pursuant to the terms of the Underwriting Agreement.

Your Entitlement may have value. You are advised to deal with your Entitlement rather than allow it to lapse.

If you do not wish to take up or trade any part of your Entitlement you are not required to take any further action. The Company and the Underwriter will deal with the New Shares in accordance with the Underwriting Agreement.

2.5 Allotment and allocation policy

Red Gum will proceed to allocate Securities as soon as possible after the Closing Date and receiving ASX permission for Official Quotation of the New Shares and Long Dated Options.

In the case that there is less than full subscription by Shareholders of their Entitlements under this Prospectus, the Directors, will issue any Shortfall in accordance with the Underwriting Agreement.

Successful Applicants will be notified in writing of the number of Securities allocated to them as soon as possible following the allocation being made.

It is the responsibility of Applicants to confirm the number of New Shares allocated to them prior to trading in New Shares. Applicants who sell New Shares before they receive notice of the number of New Shares allocated to them do so at their own risk. No New Shares will be allotted or issued on the basis of this Prospectus later than 13 months after the date of issue of this Prospectus.

2.6

ASX listing

On the same date as announcing the Offer, the Company applied to the ASX for the New Shares and Long Dated Options to be issued pursuant to this Prospectus to be listed for Official Quotation by the ASX. If granted, quotation of the New Shares and Long Dated Options will commence as soon as practicable after allotment of the Securities to Applicants. The Company will not be seeking quotation of the Short Dated Options.

Should the New Shares and Long Dated Options not be granted official quotation on the ASX within 3 months after the date of this Prospectus, none of the Securities offered under this Prospectus will be issued and all Acceptance Monies will be refunded without interest to Applicants within the time prescribed by the Corporations Act.

2.7

CHESS and Issuer Sponsorship

The Company is a participant in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation.

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Electronic registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with a statement (similar to a bank account statement) that sets out the number of Securities allotted to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

2.8 Minimum subscription

There is no minimum subscription to the Offer.

2.9 Overseas Shareholders

Refer to page 3 for further details.

2.10 Shortfall Offer

The offer of the Shortfall is a separate offer pursuant to this Prospectus. Shares not taken up by Eligible Shareholders will form part of the Shortfall Offer. The issue price of any Shares offered pursuant to the Shortfall Offer will be $0.03 each, which is the issue price at which the Offer has been made to Eligible Shareholders.

Eligible Shareholders

Eligible Shareholders may, in addition to their Entitlement, apply under the Shortfall Offer, regardless of the size of their present holding.

Eligible Shareholders who wish to apply for Shortfall Securities above their Entitlement can complete the appropriate boxes on the Entitlement and Acceptance Form accompanying this Prospectus and return it together with a cheque for the value of those Shortfall Securities (at $0.03 per Shortfall Security) to the Share Registry or make a BPAY® in excess of the total value of your Entitlement.

Other Investors

Other investors identified by the Underwriter can apply for Shortfall Securities by completing the Shortfall Application Form attached to this Prospectus and returning it together with a cheque for the value of those Shortfall Securities (at $0.03 per Shortfall Share) to the Share Registry.

Allocation of the Shortfall Securities is at the discretion of the Underwriter and is subject to the terms of the Underwriting Agreement and sub-underwriting agreements. There is no guarantee that Eligible Shareholders will receive the Shortfall Securities applied for.

Shortfall Securities will only be issued if the Offer is undersubscribed and will only be issued to the extent necessary to make up any shortfall in subscriptions. The Directors and the Underwriter reserve the right to reject any application for Shortfall Securities or to allot a lesser number of Shortfall Securities than applied for or not proceed with the issuing of the Shortfall Securities or part thereof. If the number of Securities issued is less than the number applied for in an Entitlement and Acceptance Form or Shortfall Application Form, surplus Acceptance Monies will be refunded in full as soon as practicable after the Closing Date of the Shortfall Offer. Interest will not be paid on Acceptance Monies refunded.

The Directors reserve the right to place the Shortfall at their discretion within 3 months after the close of the Offer subject to the Listing Rules and any restrictions under any applicable

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law. The Company reserves the right to allot to an Applicant a lesser number of Shortfall Securities than the number for which the Applicant applies, or to reject an Application, or to not proceed with the Shortfall Offer or issue of any Shortfall Securities.

2.11 Electronic Prospectus

An electronic version of this Prospectus is available online at the Company’s website at www.redgumresources.com.

The Entitlement and Acceptance Form may only be distributed together with a complete and unaltered copy of the Prospectus. The Company will not accept a completed Entitlement and Acceptance Form if it has reason to believe that the investor has not received a complete paper copy or electronic copy of the Prospectus or if it has reason to believe that the Entitlement and Acceptance Form or electronic copy of the Prospectus has been altered or tampered with in any way.

While the Company believes that it is extremely unlikely that in the Offer period the electronic version of the Prospectus will be tampered with or altered in any way, the Company cannot give any absolute assurance that it will not be the case. Any investor in doubt concerning the validity or integrity of an electronic copy of the Prospectus should immediately request a paper copy of the Prospectus directly from the Company, the Share Registry or a financial advisor.

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3. Information on Red Gum

3.1 Company overview

ASX-listed Red Gum Resources Limited (ASX: RGX) listed on the Australian Securities Exchange on 17 January 2012 following a public offering which raised $4.0 million through the issue of 20 million shares at 20 cents each. These funds have been used to explore its portfolio of projects which are located in Chile and Peru. During 2012, the Company successfully completed its maiden drilling program on the La Negra Project involving approximately 2,400m of diamond core drilling that resulted in the intersection of significant shallow zones of polymetallic mineralisation. Additionally, the Company completed surface sampling, field geological studies and an induced polarisation survey which substantially increased the prospectivity of its Cerro Huancash Project - located in Peru.

More recently the Company has set a course to balance its commodity mix in favour of coppergold projects. In November 2012, the Company announced that it had signed Letters of Intent with a number of owners of mineral claims clustered in an area referred to as the Majada Project area.

On 6 May 2013, the Company announced its present intention to lodge this Prospectus and undertake the current capital raising. The funds raised will be used to cover general administrative overheads, acquisition costs of geophysical surveys and a first round of diamond core drilling at the Majada Project, as well as initial payments under the option purchase agreement with the Majada tenement holders.

For the Company’s most recent and up-to-date filings please refer to the Company’s announcement platform on the ASX website or to the Company’s website at www.redgumresources.com.

3.2 Board of Directors

Dr Raymond Shaw (Non-Executive Director and Chairman)

Dr Raymond Shaw is a geologist and geophysicist with more than 30 years’ experience in the resources and energy sector. He is a founding director of Red Gum Resources Limited and has been Chairman since its listing in January 2012.

Dr Shaw has consulted extensively to industry, government, and international aid agencies on a variety of resource projects throughout Australia and Asia, including the World Bank, Asia Development Bank and Ausaid. Dr Shaw was a non-executive director of Hillgrove Gold Limited in 1993-1995, a part time consultant with the New South Wales Department of Mineral Resources for 7 years providing input for industry initiatives during the late 1990′s and early 2000’s as well as a general consultant to industry. Dr Shaw was founding Managing Director of Great Artesian Oil and Gas Limited prior to its listing on the ASX in 2003 until April 2007.

In May 2007, Dr Shaw became Executive Chairman of ASX listed Enterprise Energy Limited. In 2008, Dr Shaw oversaw the merger and backdoor listing of some $250 million of coal assets into Enterprise Energy as part of a restructuring and change in business to form Bandanna Energy Limited, of which he was Managing Director until 5 March 2012. Dr Shaw is also a director of ASX listed Earth Heat Resources Ltd and holds a B.Sc (Hon), Ph.D (Sydney University) and Dip Law (SAB) and is a Member of the Australasian Institute of Mining and Metallurgy.

As announced on 29 April 2013, Dr Shaw will be appointed Executive Chairman following Dr Pearson’s resignation as Managing Director. It is anticipated that Dr Pearson’s resignation will take effect in early June 2013.

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Dr Paul Pearson (Managing Director)

Dr Paul Pearson has over 25 years’ industry experience working with major (Mount Isa Mines, North Ltd., Teck Cominco) and junior (El Misti Gold, Alturas Minerals) exploration groups within Australasia and in Latin America. Dr Pearson is a specialist structural geologist who has successfully applied those principles to exploration at all scales, from regional targeting down to mine-scale grade distribution issues.

Dr Pearson is a dual Australian/Peruvian citizen and fluent Spanish speaker who was based in Lima, Peru for over 14 years and has been involved in the evaluation of numerous gold and base metals exploration projects in Peru, Mexico, Chile, Argentina, Brazil, Bolivia and Ecuador. Whilst serving as Exploration Manager - Peru for El Misti Gold in 1997, Dr Pearson was directly involved in the discovery of the Sinchao skarn-breccia deposit in northern Peru. During his time with North Limited between 1997 and 2000, Dr Pearson evaluated, acquired and tested numerous polymetallic carbonate-hosted replacement deposits in central Peru and northern Mexico. Dr Pearson has been an Executive Director and Managing Director of Red Gum Resources since 1 July 2011 and holds a B.Sc (Hon) and Ph.D in Economic Geology from the University of Queensland and is a Fellow of the Australasian Institute of Mining and Metallurgy.

As noted above, Dr Pearson intends to resign as Managing Director, which is intended to take effect in early June 2013. Following his resignation, Dr Pearson will continue to play a supporting consulting role with the Company.

Mr Torey Marshall (Non-Executive Director)

Mr Torey Marshall has broad based geotechnical experience having been involved in mining, petroleum and geothermal sectors for some ten years. In addition to his directorship in Red Gum, Mr Marshall is the Managing Director of Earth Heat Resources Ltd.

Mr Marshall’s initial experience was gained in the mining sector, working on various contract roles as a mineral exploration geologist. From 2002 until 2005, Mr Marshall was a geologist with the Northern Territory Geological Survey, based in Darwin. During that time he was responsible for a wide range of mineral and petroleum related projects and gained good working knowledge of the Northern Territory geology including the Amadeus Basin. From 2005 until 2008, Mr Marshall was a senior explorationist with Great Artesian Oil and Gas Limited. Since that time, Mr Marshall has been consulting to both domestic and international companies on a range of aspects from prospect reviews to exploration and development strategies and corporate plays.

Mr Marshall holds a B.Sc (Hon) and M.Sc in Geology from the University of South Australia, and is a Chartered Professional Geologist of the Australasian Institute of Mining and Metallurgy, and Associate Member of the American Association of Petroleum Geologists.

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4. Effect of Offer

4.1 Effect of the Offer on the Company

The primary effect of this Offer on the Company is that there will be an increase in the number of Shares and Options on issue. This will have the effect that any earnings will be divided by a greater number of shares, and this will therefore be dilutive. In addition, if all the Attaching Options are exercised this will have a dilutionary impact on the Company’s share capital but will also result in the Company receiving further funds from the Option holders as a result of the exercise of the Attaching Options.

After payment of the costs and expenses of the Offer, the proceeds of the Offer will be used to provide working capital and enable the Company to focus on its exploration opportunity within the Majada Project area in central Chile. Funds raised by this Offer will strengthen the balance sheet and enable the Company to meet its short term obligations which arise as a result of its proposed exploration program (refer to use of funds).

4.2 Pro-forma Financial Statement of financial position (assuming the maximum amount is raised under the Offer)

Based uponthe auditreviewed accounts as at 31 December 2012	Based uponthe auditreviewed accounts as at 31 December 2012	Based uponthe auditreviewed accounts as at 31 December 2012	Based uponthe auditreviewed accounts as at 31 December 2012
	Historical as at 31 December 2012 (reviewed) $,000	Offer Fully Subscribed less expenses of the Offer$,000	Pro Forma Statement of Financial Position $,000
Current Assets
Cash & Equivalents	284	971	1,255
Trade & other receivables	1,007	-	1,007
Total Current Assets	1,291	971	2,262
Non-Current Assets
Property& equipment	2	-	2
Mineral interests	3,532	-	3,532
Total Non-Current Assets	3,534	-	3,534
Total Assets	4,825	971	5,796
Liabilities
Trade and other payables	208	-	208
Provisions for employee benefits	28	-	28
Total Liabilities	236	-	236
Net Assets	4,589	971	5,560
Equity
Issued capital	6,050	971	7,021
Share reserve	46	-	46
Foreign exchange reserve	(1)	-	(1)
Accumulated losses	(1,506)	-	(1,506)
Total Equity	4,589	971	5,560

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5. Risk factors

5.1 Introduction

There are risks which may impact on the operating and financial performance of the Company and, therefore, on the value of the New Shares offered under this Prospectus. Some of these risks can be mitigated by the Company’s systems and internal controls, but many are outside of the control of the Company and of the Board. There can be no guarantee that the Company will achieve its stated objectives or that any forward-looking statements will eventuate. An investment in a business with limited operating history, such as Red Gum, is considered speculative and an investor could lose most or all of any investment. There are also general risks associated with any investment in shares.

More specifically, the risks are that:

• the price at which the Applicant is able to sell the New Shares is less than the price paid due to changes in market circumstances;

• the Applicant is unable to sell the New Shares or the Shares issued on exercise of the Attaching Options;

• the Company is placed in receivership or liquidation making it reasonably foreseeable that Shareholders could receive none, or only some of their initial investment; and

• the Company fails to generate sufficient profit in order to pay dividends.

In the event of insolvency, the holders of fully paid ordinary Shares would not normally be liable to pay money to any person.

Potential investors should therefore carefully consider all associated risks before applying for New Shares under this Prospectus and should consider their personal circumstances (including financial and taxation issues) and seek advice from their stockbroker, accountant, solicitor or other professional advisers before deciding whether to invest.

A number of material risk factors which may adversely affect the Company and the value of the New Shares offered under this Prospectus are set out in this Section. This is not an exhaustive list and there may be other factors which have an adverse effect on the Company and the value of the Shares offered under this Prospectus.

5.2 Key risks specific to an investment in the Company

• (a) Potential for significant dilution

Upon implementation of the Offer, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, the number of Shares in the Company will increase from 74,978,727 currently on issue to 112,468,091. This means that each Share will represent a significantly lower proportion of the ownership of the Company.

It is not possible to predict what the value of the Company or a Share will be following the completion of the Offer being implemented and the Directors do not make any representation as to such matters.

The last trading price of Shares on ASX prior to the prospectus being lodged is not a reliable indicator as to the potential trading price of Shares after implementation of the Offer.

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(b) Tenure Risk

The Company:

• is the registered holder of its La Negra, Chongos and Cerro Huancash projects in Chile and Peru; and

• is not the registered holder of mineral claims of its Majada Project,

(together the Mineral Interests ).

The Mineral Interests held by the Company, and in which the Company has an interest, are subject to applicable laws regarding exploration, expenditure and renewal of such interests in the jurisdictions in which the Company holds those Mineral Interests.

If a Mineral Interest is not granted or renewed (as the case may be) or access cannot be secured to carry out operations, the Company could be adversely affected as a result of the consequential loss of opportunity to discover and develop the Company’s Mineral Interests.

Licenses and permits for Mineral Interests are for a specified term and carry annual expenditure and reporting commitments and, if not met, the holder could lose title to its interest in the tenements. In the case of the underlying concession periodic payments are made which equates to 'good financial standing' under the tender. Equally, activities are required (work program commitments), to keep the concession in good administrative standing. There is a risk that these permits could be terminated or reduced if the holder is unable to show cause for the delay in payment.

(c)

Option Agreement

As announced on 10 April 2013, the Company entered into eight option agreements ( Option Agreements ) to acquire the right to earn a 100% interest in nine claims comprising the Majada Copper-Gold Project. There is no guarantee that the Company will exercise its option under the Option Agreements and this will be decided after the Company has undertaken exploration activities during the three year option period. If the Company does not exercise its option under the Option Agreements by the end of the said period, the Company would no longer be able to explore the land covered by the Majada Copper-Gold Project.

(d)

Peru and Chile

The Company’s La Negra, Chongos and Cerro Huancash projects are located in Chile and Peru.

Peru has been a stable democracy for a number of years with a democratically elected government that is supportive of foreign investment and mining which forms a significant portion of the country’s foreign revenue. However, there are always risks for companies operating in countries such as Peru and the Company cannot guarantee access, surety of title and tenure of its Peruvian-based assets and cannot guarantee that government policy in Peru will remain supportive of the mining and resources sector as it currently is.

While Chile is considered to be one of South America’s most politically stable and prosperous nations, it may nevertheless be subject to social and economic uncertainty. Civil and political unrest and outbreaks of hostilities in Chile could affect the Company’s access to the Majada Project and subsequent exploration and development. Adverse changes in government policies or legislation in Chile affecting foreign ownership of mineral interests, taxation, profit repatriation, royalties, land

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access, labour relations, and mining and exploration activities may affect the operations of the Company.

(e)

Evaluation Risk

The current and future operations of the Company may be affected by a range of factors, including:

• (1) limitations on activities due to seasonal weather patterns;

• (2) alterations to exploration programs and budgets;

• (3) unanticipated operational and technical difficulties encountered in its exploration programs including drilling;

• (4) mechanical failure of exploration equipment or late supply thereof;

• (5) adverse weather conditions, industrial and environmental accidents, industrial disputes and an event of force majeure;

• (6) unavailability of exploration equipment including drilling and other equipment;

• (7) unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment and labour;

• (8) prevention of access by reason of inability to obtain regulatory or landowner consents or approvals, or indigenous and cultural issues;

• (9) terms imposed by government on project development including conditions such as environmental rehabilitation, royalty rates and taxes;

• (10) risks of default or non-performance by third parties providing essential services.

The ultimate success and financial viability of the Company depends on securing or maintaining title to tenure, the discovery and delineation of economically recoverable reserves and resources, and implementation of development and economic extraction. Even given these outcomes the Company cannot guarantee that it can be profitably exploited.

On-going exploration and any subsequent development of a resource or reserve is also dependent on the Company's ability to acquire or obtain and maintain necessary titles and governmental and other regulatory, including but, not limited to, environmental approvals on a timely basis. Extraction will also be dependent on the Company’s ability to establish and have constructed basic infrastructure such as (but not limited to) road, port and or rail transport, processing facilities, power connections, water, and appropriate markets.

(f)

Environmental Regulation and Risk

The interests of the Company are or may be subject to various laws and regulations regarding environmental matters and the discharge of hazardous waste and materials. These include standards and obligations to remediate current and former facilities and locations where operations are or were conducted.

The Company may be required to comply from time to time with environmental management issues that arise from factors beyond its control. The conduct of power production activities, if any ultimately takes place, on the Mineral Interests are subject to receipt of all necessary environmental approvals. There can be no guarantee that

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such approvals will be forthcoming. Furthermore, the conditions imposed for the grant of such approvals may be so onerous that they render the project uneconomic.

To mitigate environmental risk, the Company intends to ensure that it has appropriate insurance cover to mitigate any environmental risk, however, in certain circumstances the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered by insurance could have a material adverse effect on the Company.

(g) Changes in Government Policy and Laws

Changes in government laws, regulations, policies and administrative regimes, particularly those affecting ownership of tenure, taxation, royalties, land access, labour relations, the development and production of fossil fuels, environmental pollution and mining and exploration activities, may adversely affect the financial performance or the current and proposed operations generally of the Company. These changes may increase operating costs and have a material adverse effect on the Company.

(h)

Taxation

In all places where the Company has operations, in addition to the normal level of income tax imposed on all industries, the Company may be required to pay government royalties, indirect taxes, goods and services tax and other imposts which generally relate to revenue or cash flows. Industry profitability can be affected by changes in government taxation policies.

(i)

Economic Risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities and potential future revenues.

(j)

Exploration and Operational Risks

Potential investors should understand that mineral exploration and development are high risk undertakings. While the Company has attempted to reduce this risk by maturing projects through successive stages of exploration ultimately there can be no guarantee of success. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

If the Company decides to develop and commission a mine or participate in a joint venture for such purposes, the operations of the Company including mining and processing may be affected by a range of factors. These include failure to achieve predicted grade in exploration, mining and processing, technical difficulties encountered in commissioning and operating plant and equipment, mechanical failure, metallurgical problems which affect extraction rates and costs, adverse weather conditions, industrial and environmental accidents, industrial disputes, unexpected shortages or increase in the costs of consumables, spare parts, plant and equipment

(k)

Reliance on Key Management

As announced on 29 April 2013, Dr Pearson intends to resign as Managing Director, which is intended to take effect in early June 2013. The Company is dependent on its Directors’, managers’ and consultants’ abilities to implement the Company’s strategy in respect of the exploration and possible development of the Company’s interests. A number of factors, including the departure of senior management of the Company, could adversely affect the Company’s ability to implement its strategy. Dr Pearson will

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continue to play a supporting consulting role with the Company following his resignation.

The success of the Company’s operations may also depend on continued access to competent management and technical expertise, prudent financial administrators and the availability of appropriately skilled and experienced employees, contractors and consultants operating in relevant sectors. In the event that the Company is unable to source such personnel, the Company could be adversely affected.

(l)

Commodity and Market Risk

Red Gum’s possible future revenues (if any) will mainly be derived from the sale of commodities such as copper, gold zinc, lead, and silver (Commodities) and/or from royalties gained from potential joint ventures or from mineral projects sold. Consequently, Red Gum’s potential future earnings could be closely related to the price of the Commodities.

The prices of the Commodities fluctuate and are affected by numerous industry factors including demand for the Commodities, forward selling by producers, production cost levels in major producing regions and macroeconomic factors, e.g. inflation, interest rates, currency exchange rates and global and regional demand for, and supply of, the Commodities. If the market price of the Commodities sold by Red Gum were to fall below the costs of production and remain at such a level for any sustained period, the Company would experience losses and could have to curtail or suspend some or all of its proposed mining activities. In such circumstances, Red Gum would also have to assess the economic impact of any sustained lower commodity prices on recoverability.

Emerging markets such as Chile and Peru are potentially subject to more volatility and greater risk than more mature markets. It should be noted that the emerging markets are frequently subject to change and therefore some of the information set out in this Prospectus may become outdated.

The political climates in Chile and Peru are currently stable and generally held to offer a favourable outlook for foreign investments. There is no guarantee that they will remain so in the future. Changes in government, regulatory and legislative regimes, potentially leading to expropriation of mining rights cannot be ruled out.

(m)

Additional Capital Requirements

The Company is an exploration company and will need further financing for the development of projects. Accordingly it must continue to fund its exploration, feasibility, design and construction planning programs through its cash reserves, equity capital or debt. The viability of the Company is therefore dependent upon:

• the success of the Offer; and

• the Company’s access to further capital through debt or equity.

There can be no guarantee that the Company will be able to successfully raise project debt or equity finance.

Furthermore, any additional equity financing may dilute shareholdings, and debt financing may involve restrictions on financing and operating activities.

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(n) Contractual Risk

The Company’s ability to efficiently conduct its operations in a number of respects depends upon a number of contracts. As in any contractual relationship, the ability for the Company to ultimately receive the benefit of the contract is dependent upon the relevant third party complying with its contractual obligations. To the extent that such third parties default in their obligations, it may be necessary for the Company to enforce its rights under any of the contracts and pursue legal action. Such legal action may be costly and no guarantee can be given by the Company that a legal remedy will ultimately be granted on appropriate terms.

(o) Currency Risk

Adverse movements in the exchange rate may materially impact on commodity prices and the commercial viability of specific projects.

The revenues, earnings, assets and liabilities of the Company may be exposed adversely to exchange rate fluctuation. In particular, it is likely that most of the costs payable by the Company in relation to its operations in foreign countries will be paid in US dollars or other local currencies. Any shift in those exchanges against the Australian dollar could affect the financial performance and results generally of the Company.

(p) Insurance Risk

The Company intends to adequately insure its operations in accordance with industry practice and applicable laws in the jurisdictions it operates. However, in certain circumstances the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered by insurance could have a material adverse effect on the Company. Insurance of all risks associated with the geothermal industry is not always available and where available the costs can be prohibitive.

(q)

Indigenous Land Rights Risk

Where the jurisdictions in which the Company holds interests have laws governing the rights of indigenous peoples to land, the Company may be subject to such laws and any restrictions imposed by such laws on the Company. Such restrictions may impact on the ability of the Company to carry out operations and manage projects in these countries.

5.3 General risks

(a) Share Market Investments

The New Shares are to be quoted on the ASX, where their price may rise or fall in relation to the Offer Price. The New Shares carry no guarantee in respect of profitability, dividends or return of capital, or the price at which they may trade on the ASX. The value of the Shares will be subject to the ASX market and hence a range of factors outside of the control of the Company and the Directors and officers of the Company. Such factors include the demand for and availability of Shares, movements in domestic and international interest rates and inflation rates, economic conditions and general economic outlook, exchange rates, fluctuations in the Australian and international share markets, taxation, government and monetary policies and demand and supply for capital. Returns from an investment in the New Shares offered under this Prospectus may also depend on general share market conditions, as well as the performance of the Company. Investors who decide to sell their New Shares may not receive the entire amount of their original investment. There can be no guarantee that

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an active market in the Shares will develop or that the price of the New Shares will increase.

(b) General Economic Conditions

Factors such as inflation, currency fluctuations, interest rates, supply and demand, industrial disruption, government policy and legislation have an impact on operating costs, commodity prices, and the parameters in which the Company operates. Factors that may be beyond the control of the Company include:

• general economic conditions in Australia and its trading partners and, in particular, inflation rates, interest rates, exchange rates, commodity supply and demand factors;

• financial failure or default by a participant in any of the joint ventures or other contractual relationship to which the Company is, or may become, a party;

• insolvency or other managerial failure by any of the contractors used by the Company in its activities; and

• industrial disputes.

These as well as other conditions can affect the Company’s future revenues and profitability and the price of its securities.

• (c) Industrial Risk

Industrial disruptions, work stoppages and accidents in the course of the Company’s operations could result in losses and delays, which may adversely affect profitability.

(d) Management Actions

The Directors will, to the best of their knowledge, experience and ability (in conjunction with management) endeavour to anticipate, identify and manage the risks inherent in the activities of the Company, but without assuming any personal liability for same, with the aim of eliminating, avoiding and mitigating the impact of risks on the performance of the Company and its securities.

(e) Interest Rate Risk

Financial prospects could be affected by changes in the level of interest rates. The magnitude of this effect will depend on the degree of gearing and the interest rate management strategies implemented by the Board.

5.4

Speculative nature of investment

The above list of risk factors is not to be taken as exhaustive of the risks faced by the Company or by Shareholders in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the New Shares offered under this Prospectus.

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6. Material contracts

6.1 Lead Manager and Underwriter Mandate

The Company has entered into a mandate with DJ Carmichael to act as lead manager and underwriter to the Offer ( Mandate ).

As part of the Offer, the Company will be required to issue up to 37,489,364 Long Dated Options to sub-underwriters engaged by DJ Carmichael on the basis of one free attaching option for every one share of sub-underwriting subscriptions committed by sub-underwriters.

The Company will pay DJ Carmichael the following for its services:

• (a) management fee of $60,000;

• (b) underwriting fee of 5.5% of the total amount raised under the Offer. All subunderwriting fees will be paid by DJ Carmichael from this underwriting fee; and

• (c) 5,000,000 Long Dated Options (subject to Shareholder approval).

In addition, the Company will also cover the costs of all reasonable out of pocket expenses incurred by DJ Carmichael relating to the Offer.

In the event that no Shareholders take up their Entitlements or apply for Shortfall under the Offer, the Underwriter could technically end up with a shareholding in the Company of approximately 33%. However, the Underwriter has arranged for its underwriting commitment to be fully subscribed by unrelated sub-underwriters and investor clients of the Underwriter.

It is intended that neither the Underwriter, nor any sub-underwriters, investor clients of the Underwriter or any of their associates will end up holding a post-Offer relevant interest in the Company that will exceed 20%.

6.2 Underwriting Agreement

The Company has entered into an agreement with the Underwriter to exclusively manage and fully underwrite the Offer ( Underwriting Agreement ).

In consideration for its services, the Company has agreed to pay the Underwriter those fees as set out in Section 6.1 above.

The Underwriting Agreement makes provisions for certain circumstances in which the Underwriter may terminate the Underwriting Agreement. These termination events include the following:

• (a) if the S&P/ASX Small Resources Index is, at on the close of trading, on any day after the date of the Underwriting Agreement, at a level that is 10% or more below its respective level as at the close of trading on the business day prior to the date of the Underwriting Agreement;

• (b) if the Company’s Shares have a closing price at any time after the date of the Underwriting Agreement less than the price of the Shares issued pursuant to the Offer for two consecutive days;

• (c) the Offer under the Prospectus is withdrawn;

• (d) ASX notifies that Official Quotation will not be granted, or once granted, is withdrawn;

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• (e) the Company fails to lodge a supplementary prospectus (if requested by the Underwriter), or lodges a supplementary prospectus without the prior written agreement of the Underwriter;

• (f) the Prospectus does not contain all of the information required by section 713 of the Corporations Act;

• (g) it transpires that there is a statement in the Prospectus that is misleading or deceptive or likely to mislead or deceive, or that there is an omission from the Prospectus;

• (h) the Company is prevented from allotting the Shares and attaching Long Dated and Short Dated Options within the time required by the Underwriting Agreement;

• (i) a person who had previously provided their consent to the inclusion of their name in the Prospectus, withdraws that consent (other than the Underwriter);

• (j) an application is made by ASIC for an order under section 1324B of the Corporations Act (or any other section in relation to the Prospectus);

• (k) ASIC gives notice of its intention to hold a hearing under section 739 of the Corporations Act (or any other section in relation to the Prospectus) or ASIC makes an interim or final stop order in relation to the Prospectus under section 739 of the Corporations Act;

• (l) the Takeovers Panel makes a declaration of unacceptable circumstances in relation to the Company, or an application for such a declaration is made;

• (m) there is an outbreak of hostilities or a material escalation of hostilities after the date of the Underwriting Agreement involving various countries (including Australia);

• (n) any authorisation which is material to anything referred to in the Prospectus is repealed, revoked or terminated or expires or is modified or amended in a manner unacceptable to the Underwriter;

• (o) a director or a senior manager of the Company or its subsidiary is charged with an indictable offence in their capacity as director or senior manager of the Company;

• (p) a suspension or material limitation in trading of securities generally on ASX occurs or any material adverse change or disruption occurs in the existing financial markets, political or economic conditions of Australia, Japan, the United Kingdom, North Korea, the United States of America, India, the Peoples Republic of China or other international financial markets;

• (q) if the Company fails to rectify any material breach of the Mandate; or

• (r) the Company is removed from the Official List or the Shares become suspended from Official Quotation without the prior consent of the Underwriter and that suspension is not lifted within 24 hours following such suspension.

The Underwriting Agreement also contains additional provisions which are customary and standard for this type of agreement.

6.3 HSB Sondajes Drilling Contract

The Company has recently engaged HSB Sondajes to undertake its initial drilling program at the Majada Project. Based in Chile, HSB Sondajes has previously been engaged by Red Gum for the drilling of its La Negra Project in 2012. The current contract provides for the supply of a truck mounted Explorer 1500D rig, with capacity to drill NQ core to 1,500 metres. HSB

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Sondajes has been contracted to conduct a minimum program of cored drilling of 1,500 metres. Contract fees are metreage based and rates will also include supply of the drill rig, support vehicle, two 4 x 4 vehicles, crew, food and accommodation as well as consumables.

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7. Additional information

7.1 Transaction specific prospectus

Red Gum is a disclosing entity and therefore subject to regular reporting and disclosure obligations under the Corporations Act. Under those obligations, Red Gum is obliged to comply with all applicable continuous disclosure and reporting requirements in the ASX Listing Rules.

This Prospectus is issued under Section 713 of the Corporations Act. This section enables disclosing entities to issue a prospectus in relation to securities in a class of securities which has been quoted by ASX at all times during the 3 months before the date of the Prospectus or options to acquire such securities. Apart from formal matters this Prospectus need only contain information relating to the terms and conditions of the Offer, the effect of the Offer on the Company and the rights and liabilities attaching to the Securities.

Copies of the documents lodged by Red Gum with ASIC may be obtained from, or inspected at an office of ASIC.

The Company will provide a copy of any of the following documents, free of charge, to any person who asks for a copy of the document before the Closing Date in relation to this Prospectus:

• (a) reviewed financial statements for the Company for the half-year ended 31 December 2012;

• (b) audited financial statements for the Company for the period ending 30 June 2012; and

• (c) any other financial statements lodged in relation to Red Gum with ASIC and any continuous disclosure notices given by Red Gum to ASX, in the period starting immediately after lodgement of the audited financial statements for the Company for the year ended 30 June 2012 and ending on the date of lodgement of this Prospectus with ASIC.

7.2 ASX Information and Share Information

The ASX Announcements that the Company has made to date since its last Annual Report are set out below.

• 08/05/2013 Revised Renounceable Rights Issue Timetable 06/05/2013 RGX timetable change and appendix 3B amended 06/05/2013 RRI timetable change and Appendix 3B 06/05/2013 Renounceable Issue 02/05/2013 Poised for Growth presentation - amended 02/05/2013 Poised for Growth presentation 01/05/2013 Trading Halt 30/04/2013 Quarterly Activities Report 29/04/2013 Management Changes and Drilling Commences at Majada 22/04/2013 Drilling to commence at Majada Copper Gold prospect 10/04/2013 Gearing up for Drilling at Majada 27/03/2013 Consolidation of Chilean Copper Gold Play 14/03/2013 Half Yearly Report and Accounts 13/03/2013 Corporate Presentation to Asia Mining Conference 18/02/2013 Investor Presentation

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13/02/2013 Spotlight on Peruvian Copper Play 31/01/2013 Quarterly Activities Report and Appendix 5B 20/12/2012 Potentially Large Sulphidic Mineral System at Cerro Huancash 19/12/2012 Acquisition of Majada Copper Gold Project Advanced 07/12/2012 Listing Rule 4.10.19 29/11/2012 Results of Meeting 29/11/2012 Managing Director Presentation to AGM 28/11/2012 Red Gum signs LOIs to acquire Copper Gold Project Chile 23/11/2012 Extensive Sulphidic Mineral System confirmed at Cerro Huancash 19/11/2012 Sulphides Extend to Depth at Cerro Huancash Peru 06/11/2012 Geophysical Survey Underway at Cerro Huancash Peru 02/11/2012 Next Phase of Exploration Commences at Cerro Huancash 30/10/2012 Quarterly Activities Report and Appendix 4C 29/10/2012 Appendix 3B 26/10/2012 Notice of Annual General Meeting/Proxy Form 08/10/2012 Expiry of Escrow Period 28 October 2012 28/09/2012 Annual Report to Shareholders

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest, lowest and last market sale prices of the Shares on ASX during the three months immediately preceding the date of lodgement of this Prospectus with the ASIC and the respective dates of those sales were:

Highest	$0.08	13	February 2013
Lowest	$0.041	5	February 2013
Last	$0.055		8 May 2013

The Offer Price represents a discount of $0.025 per share to the last market price of Shares on 8 May 2013, being the date before lodgement of this Prospectus (disregarding the value of the Attaching Options). The Offer of up to 37,489,364 New Shares and discount with respect to the last market price is highlighted against historical share value and liquidity (volume of shares traded) in recent months (refer to table above).

7.3 Rights and liabilities attaching to New Shares

There is only one class of shares on issue in the Company, fully paid common shares. The rights attaching to Shares in the Company are as set out in the Constitution of the Company and regulated by the Listing Rules, ASX Settlement Operating Rules and the general law.

The principal rights attaching to the New Shares are summarised below.

Meetings and Notice

Each Shareholder is entitled to receive notice of and to attend general meetings of the Company and to receive all notices, accounts and other documents required to be send to Shareholders under the Company’s Constitution.

Voting

Shareholders present in person or by proxy, attorney or representative at a meeting of shareholders has one vote on a vote taken by a show of hands and on a poll Shareholders

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who are present in person or by proxy, attorney or representative has one vote for every Share held by the Shareholder. A poll may be demanded by the chairman of the meeting, by any five Shareholders present in person or by proxy, attorney or representative, or by one or more Shareholders who are together entitled to not less than 5% of the total voting rights of the Shares of all those Shareholders having the right to vote at that meeting.

Dividends

Dividends are payable out of the Company’s profits and are declared by the Directors. There is no current proposal to pay a dividend.

Transfer of Shares

Shareholders may transfer Shares in accordance with any system applicable in the place where the relevant share register is maintained, including in Australia any computerised or electronic system established by the Listing Rules, including a transfer that may be affected pursuant to the ASX Settlement Operating Rules, or in a form approved by the Board.

Issue of new Shares and options

The Directors may (subject to any restrictions under the Listing Rules) allot, grant options in respect of Shares on such terms and conditions as they see fit.

Variation of rights

The rights, privileges and restrictions attaching to Shares can be altered with the consent in writing of the holders of 75% of the issued shares of that class or the approval of a special resolution passed at a separate meeting of holders of shares of that class.

Winding up

Subject to any future special or preferential rights attaching to any class or classes of shares, members will be entitled, in the event of the winding up of the Company, to share in any surplus assets of the Company in proportion to the Shares held by them.

For more particular details of the rights attaching to ordinary Shares in the Company, investors should refer to the Constitution of the Company.

7.4

Rights attaching to Options

As outlined above, the Short Dated and Long Dated Options are those Options issued for every two and two New Shares subscribed. The Short Dated Options and Long Dated Options have different Exercise Prices and different Strike Prices (differences noted below), however the rights attaching to the Attaching Options are substantially the same (apart from as noted above) and are set out below:

• (a) The Attaching Options are issued for no consideration and vest on the date that they are issued;

• (b) The Short Dated Options will be exercisable either wholly or in part at an Exercise Price of $0.07 each;

• (c) The Short Dated Options will expire on 15 November 2013 ( Short Dated Option Expiry Date ), unless exercised earlier;

• (d) The Long Dated Options will be exercisable either wholly or in part at an Exercise Price of $0.10 each;

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• (e) The Long Dated Options will expire on 1 March 2016 ( Long Dated Option Expiry Date );

• (f) The Short Dated Options will not be transferable in whole or in part and may not be exercised by any other person (except, in the case of the Option holder’s death, by his or her legal personal representative);

• (g) The number of Options that may be exercised at any one time must not be less than 20,000 unless the total number of Options held is less than 20,000 then that number of Options;

• (h) Upon the valid exercise of either or both of the Attaching Options and payment of the Exercise Price, the Company will issue fully paid ordinary shares ranking pari passu with the then issued ordinary shares;

• (i) Option holders do not have any right to participate in new issues of securities in the Company made to shareholders generally. The Company will, where required pursuant to the ASX Listing Rules, provide Option holders with notice prior to the books record date (to determine entitlements to any new issue of securities made to shareholders generally) to exercise the Options, in accordance with the requirements of the Listing Rules;

• (j) Option holders do not participate in any dividends unless the Options are exercised and the resultant shares of the Company are issued prior to the record date to determine entitlements to the dividend;

• (k) In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company:

• (1) the number of Options, the Exercise Price of the Options, or both will be reconstructed (as appropriate) in a manner consistent with the ASX Listing Rules as applicable at the time of reconstruction, but with the intention that such reconstruction will not result in any benefits being conferred on the holders of the Options which are not conferred on shareholders; and

• (2) subject to the provisions with respect to rounding of entitlements as sanctioned by a meeting of shareholders approving a reconstruction of capital, in all other respects the terms for the exercise of the Options will remain unchanged;

• (l) The Company will apply for quotation of the Long Dated Options. The Short Dated Options will not be quoted. The Company will apply for listing of the resultant Shares of the Company issued upon the exercise of any Option;

• (m) If there is a pro rata issue (except a bonus issue), the Exercise Price of an Option may be reduced according to the following formula:

O[n] = O – E [P-(S + D)]

N + 1

Where:

• O[n] = the new exercise price of the Option;

• O = the old exercise price of the Option;

• E = the number of underlying securities into which one Option is exercisable;

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• P = the average market price per security (weighted by reference to volume) of the underlying securities during the 5 trading days ending on the day before the ex right date or the ex entitlements date;

• S

• = the subscription price for a security under the pro rata issue;

• D = dividend due but not yet paid on the existing underlying securities (except those to be issued under the pro rata issue);

• N

• = the number of securities with rights or entitlements that must be held to receive a right to one new security.

• (n) If there is a bonus issue to the holders of shares in the Company, the number of shares over which the Option is exercisable may be increased by the number of shares which the Option holder would have received if the Option had been exercised before the record date for the bonus issue; and

• (o) The terms of the Options shall only be changed if holders (whose votes are not to be disregarded) of ordinary shares in the Company approve of such a change. However, the terms of the Options shall not be changed to reduce the Exercise Price, increase the number of Options or change any period for exercise of the Options.

7.5

Corporate Governance

The Company has adopted various corporate governance policies and charters that can be obtained, at no cost, from the Company’s registered office and are also available on the Company’s website, www.redgumresources.com.

The Company reports on its compliance with the recommendations made by the Corporate Governance Principles and Recommendations in its various annual reports. Where the Company’s corporate governance practices do not comply with the practices recommended by the ASX Corporate Governance Council, the Company is working towards compliance, although it does not necessarily consider that all practices are appropriate for the Company due to the size and scale of operations.

7.6

Directors’ interests

The nature and extent of the interest (if any) that any of the Directors of the Company holds, or held at any time during the last 2 years in:

• (a) the formation or promotion of the Company;

• (b) property acquired or to be acquired by the company in connection with:

• (1) its formation or promotion; or

• (2) the Offer; or

• (c) the Offer,

is set out below or elsewhere in this Prospectus.

Other than as set out below or elsewhere in this Prospectus, no one has paid or agreed to pay any amount, and no one has given or agreed to give any benefit to any director or proposed director:

• (a) to induce them to become, or to qualify as, a Director of the Company; or

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• (b) for services provided by a director in connection with:

• (1) the formation or promotion of the Company; or

• (2) the Offer.

7.7 Substantial Holders

The following are details of those Shareholders who hold more than 5% of the Shares on issue prior to the date of this Prospectus:

Substantial Holder	Number of Shares	%
Torey Marshall & Robert Marshall Marshall Family A/C>	13,616,112	18.16
Norman Joseph Zillman and related parties	9,728,000	12.97
Mr Raymond D Shaw + Ms Rita B Jones	7,537,804	10.05

As at the date of this Prospectus, there are no other Shareholders who hold more than 5% of the Shares on issue.

7.8 Related Party Transactions

From time to time the Company may be party to transactions with related parties including:

• (a) employment and service arrangements; and

• (b) payment of directors’ fees.

The Company believes that it has made appropriate disclosure of past related party transactions. Other than any further disclosure specifically set out below or made elsewhere in this Prospectus the Company does not intend to make any further disclosure of such transactions which will have proceeded either on an “arms length" basis, reasonable remuneration basis or been approved by Shareholders in general meeting.

The Company discloses the following transactions with related parties which have either proceeded on an “arms length" or reasonable remuneration basis. The transactions are:

• (a) proposed capital issues to Directors or interests associated with Directors;

• (b) employment agreements with related parties; and

• (c) payment of directors’ fees to Non-Executive Directors.

Payment of Non-Executive Directors’ fees

The Non-Executive Directors of the Company are entitled to be paid directors fees. The aggregate amount that may be paid to Non-Executive Directors in directors fees is $240,000 per annum. The actual amount currently paid is $54,000 per annum.

The Board considers that these fees are reasonable remuneration pursuant to Section 211 of the Corporations Act and accordingly, member approval is not required.

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7.9 Interests of experts and advisers

This section applies to persons named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, promoters of the Company and stockbrokers or arrangers to the Offer (collectively Prescribed Persons ).

Other than as set out below or elsewhere in this Prospectus, no Prescribed Person has, or has had in the last 2 years, any interest in:

• (a) the formation or promotion of the Company;

• (b) any property acquired or proposed to be acquired in connection with the formation or promotion of the Company or the Offer; or

• (c) the Offer of New Shares under this Prospectus.

Other than that as set out below or elsewhere in this Prospectus, no benefit has been given or agreed to be given to any Prescribed Person for services provided by a Prescribed Person in connection with the:

• (a) formation or promotion of the Company; or

• (b) offer of New Shares under this Prospectus.

Steinepreis Paganin is acting as legal advisor to the Offer and has performed work in relation to the Prospectus. In doing so, Steinepreis Paganin has placed reasonable reliance upon information provided to it by the Company. Steinepreis Paganin does not make any statement in this Prospectus. In respect of this work, the Company estimates that it will pay approximately $15,000 (excluding disbursements and GST) to Steinepreis Paganin. Further amounts may be paid to Steinepreis Paganin in accordance with its normal time based charges.

Computershare is acting as Share Registry to the Offer and has performed work in relation to the Prospectus. In doing so, Computershare has placed reasonable reliance upon information provided to it by the Company. Computershare does not make any statement in this Prospectus.

DJ Carmichael is acting as the Underwriter and Lead Manager to the Offer. In doing so, the Underwriter has placed reasonable reliance upon information provided to it by the Company. The Underwriter does not make any statement in this Prospectus. In consideration for the Underwriters role as Underwriter and Lead Manager to the Offer it will receive fees as set out in Section 6.1 of this Prospectus.

7.10

Subsequent events

There has not arisen, at the date of this Prospectus, any item, transaction or event of a material or unusual nature not already disclosed in this Prospectus which is likely, in the opinion of the Directors of the Company to affect substantially:

• (a) the operations of the Company,

• (b) the results of those operations; or

• (c) the state of affairs of the Company.

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7.11 Litigation

The Company is not engaged in any litigation which has or would be likely to have a material adverse effect on either the Company or its business.

• 7.12 Privacy

By submitting an Entitlement and Acceptance Form for shares you are providing to the Company personal information about yourself. If you do not provide complete and accurate personal information, your application may not be able to be processed.

The Company maintains the register of members of the Company through Computershare, an external service provider. The Company requires Computershare to comply with the National Privacy Principles with performing these services. The Company's register is required under the Corporations Act to contain certain personal information about you such as your name and address and number of shares and options held. In addition the Company collects personal information from members such as, but not limited to, contact details, bank accounts and membership details and tax file numbers.

This information is used to carry out registry functions such as payment of dividends, sending annual and half yearly reports, notices of meetings, newsletters and notifications to the Australian Taxation Office. In addition, contact information will be used from time to time to inform members of new initiatives concerning the Company.

The Company understands how important it is to keep your personal information private. The Company will only disclose personal information we have about you:

• (a) when you agree to the disclosure;

• (b) when used for the purposes for which it was collected;

• (c) when disclosure is required or authorised by law;

• (d) to other members in the Red Gum group of companies;

• (e) to your broker;

• (f) to external service suppliers who supply services in connection with the administration of the Company's register such as mailing houses and printers, Australia Post and financial institutions.

You have the right to access, update and correct your personal information held by the Company and Computershare, except in limited circumstances. If you wish to access, update or correct your personal information held by Computershare or by the Company please contact our respective offices.

If you have any questions concerning how the Company handles your personal information, please contact the Company.

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7.13 Expenses of the Offer

All expenses connected with the Offer are being borne by the Company. Total expenses of the Offer are estimated to be in the order of $153,901 and are expected to be applied towards the items set out in the table below:

ASIC fees ASX fees Underwriting and Lead Management fees Legal fees Printing and distribution Miscellaneous Total	$ 2,171 8,873 121,857 15,000 5,000 1,000
	153,901

7.14 Consents and disclaimers

Written consents to the issue of this Prospectus have been given and at the time of this Prospectus have not been withdrawn by the following parties:

Computershare has given and has not withdrawn its consent to be named in this Prospectus as the Share Registry of the Company in the form and context in which it is named. It takes no responsibility for any part of the Prospectus other than the references to its name.

Steinepreis Paganin has given, and has not withdrawn, its consent to be named in this Prospectus as solicitors to the Offer in the form and context in which it is named. It takes no responsibility for any part of the Prospectus other than references to its name.

DJ Carmichael has given, and has not withdrawn, its consent to be named in this Prospectus as Underwriter to the Offer in the form and context in which it is named. It takes no responsibility for any part of the Prospectus other than references to its name.

KS Black & Co has given its written consent to the inclusion of the reviewed balance sheet as at 31 December 2012 in section 4.2 of this Prospectus, in the form and context in which it is included.

7.15 Directors’ statement

This Prospectus is issued by Red Gum Resources Limited. Each Director has consented to the lodgement of the Prospectus with ASIC.

Signed on the date of this Prospectus on behalf of Red Gum Resources Limited by

Dr Raymond D Shaw Chairman

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8. Definitions & glossary

Terms and abbreviations used in this Prospectus have the following meaning:

Acceptance	An acceptance of Entitlements
Acceptance Monies	The Offer Price multiplied by the number of New Shares
	accepted for
AEDT	Australian Eastern Daylight Savings Time
Applicant	A person who submits an Entitlement and Acceptance Form
Application Form	means an Entitlement and Acceptance Form or Shortfall
	Application Form as the context requires.
ASIC	Australian Securities & Investments Commission
Attaching Options	means a Short Dated Option and a Long Dated Option
ASX	ASX Limited
ASX Listing Rules	The official listing rules of the ASX
ASX Settlement Operating Rules	The official settlement operating rules of the ASX
Board	The board of directors of Red Gum from time to time
Business Day	A day, other than a Saturday or Sunday, on which banks are
	open for general banking business in Adelaide
Closing Date	means the date specified in the timetable set out at the
	commencement of this Prospectus (unless extended).
Company or Red Gum	Red Gum Resources Limited ACN 119 641 986
Computershare	Computershare Investor Services Pty Limited (ABN 48 078 279
	277)
Constitution	means the constitution of the Company as at the date of this
	Prospectus.
Corporate Governance Principles
and Recommendation	Corporate Governance Principles and Recommendation 2nd
	Edition released by the ASX Corporate Governance Council in
	August 2007 (as amended)
Corporations Act	Corporations Act 2001(Cth)

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Directors	The directors of Red Gum from time to time
DJ Carmichael	means DJ Carmichael Pty Ltd (ABN 26 003 058 857) AFSL No.
	232571.
Eligible Shareholder	A Shareholder of the Company with a registered address in
	Australia or New Zealand that holds Shares in the Company on
	the Record Date
Entitlement and Acceptance
Form or Form	An entitlement and acceptance form in the form accompanying
	this Prospectus
Entitlements	The entitlement to accept New Shares under this Prospectus
IOCG	Iron Oxide Copper Gold mineralisation
Long Dated Option	The free attaching option issued for every two New Shares
	subscribed for exercisable at $0.10 expiring on 1 March 2016.
New Shares	The Shares offered under this Prospectus
Offer	The offer and issue of New Shares and Attaching Options in
	accordance with this Prospectus
Offer Price	$0.03 for each New Share applied for (this shall include the
	Attaching Options).
Official List	The official list of entities that ASX has admitted and not
	removed
Official Quotation	Quotation on the Official List
Options	Options on issue in Red Gum from time to time
Oxide	Shallow near surface mineral deposits subject to oxidisation
Prospectus	This prospectus dated 8 May 2013 as modified or varied by any
	supplementary prospectus made by the Company and lodged
	with ASIC from time to time and any electronic copy of this
	prospectus and supplementary prospectus
Record Date	means the date specified in the timetable set out at the
	commencement of this Prospectus (unless extended).
Register	Company Register of Red Gum
Securities	Has the same meaning as in Section 92 of the Corporations Act

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Share Registry	Computershare Investor Services Pty Limited (ABN 48 078 279
	277)
Shares	The ordinary shares on issue in Red Gum from time to time
Shareholders	The holders of Shares from time to time
Short Dated Option	The free attaching option issued for every two New Shares
	subscribed for exercisable at $0.07 expiring on 15 November
	2013.
Shortfall	means the Securities not applied for under the Offer (if any).
Shortfall Offer	means the offer of the Shortfall on the terms and conditions set
	out in section 2.10 of this Prospectus.
Shortfall Securities	means those Securities issued pursuant to the Shortfall.
Sophisticated Investors	Investors who qualify as sophisticated investor pursuant to
	Section 708(8) of the Corporations Act
Underwriter	DJ Carmichael
Underwriting Agreement	The underwriting agreement entered into between the
	Company and the Underwriter dated 9 May 2013

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Corporate Directory

Directors and Company Secretary	Solicitors to the Offer
Dr Raymond D Shaw (Non-Exec Director & Chairman) Dr Paul J Pearson (Executive Director & Managing Director) Mr Torey Marshall (Non-Exec. Director ) Mr Malcolm Lucas-Smith (Company Secretary)	Steinepreis Paganin Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Street Perth WA 6000
Administration and Registered Office	Share Registry
Red Gum Resources Limited Suite 9, Lester Court 75a Angas Street Adelaide SA 5000 Tel: +61 8 8223 1680 Fax: +61 8 8212 2230 www.redgumresources.com	Computershare Investor Services Pty Limited Level 5, 115 Grenfell Street Adelaide SA 5000 Tel: 1300 556 161 Fax: +61 8236 2305 www.computershare.com
Underwriter and Lead Manager
DJ Carmichael Pty Ltd Level 3, London House 216 St Georges Terrace, Perth WA 6000 Tel: +618 9263 5200 Fax: +618 9263 5280 www.djcarmichael.com.au

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For all enquiries:

Red Gum Resources Limited ABN 66 119 641 986

==> picture [15 x 15] intentionally omitted <==

Phone:

(within Australia) 1300 556 161 (outside Australia) 61 3 9415 4015

Web:

www.investorcentre.com/contact

T 000001 000 RGX MR SAM SAMPLE 123 SAMPLE STREET SAMPLETOWN VIC 3000

Make your payment:

See over for details of the Offer and how to make your payment

Renounceable Rights Issue - Entitlement and Acceptance Form (including Additional Shares)

 [Your payment must be received by 5:00pm (ACST) 5 June 2013] This is an important document that requires your immediate Step 4: Make Your Payment attention. It can only be used in relation to the shareholding represented by the details printed overleaf. If you are in doubt about how to deal with this form, please contact your financial or other professional adviser. ASX will quote a market for rights between 14 May 2013 and 29 May 2013. Please refer to the Prospectus for details on how to renounce your rights. 9 May 2013. Step 1: Registration Name Please check the details provided and if any of the details are BPAYPAY incorrect please go to www.investorcentre.com for information on making payment using BPAYPAY . how to update them. By Mail: Step 2: New Shares Accepted You can apply to accept either all or part of your Entitlement. Enter overleaf the number of New Shares you wish to accept from your Entitlement. Cash is not accepted. Step 3: Additional Shares Applied for Enter overleaf, the number of Additional Shares you wish to apply for (if any). No Eligible Shareholder is assured of receiving any Additional Shares applied for in excess of their Entitlement, and any we need to contact you. amount by which applications from Eligible Shareholders exceed their Entitlement may be scaled back at Red Gum Resources Limited's discretion.

This is an important document that requires your immediate attention. It can only be used in relation to the shareholding represented by the details printed overleaf. If you are in doubt about how to deal with this form, please contact your financial or other professional adviser. ASX will quote a market for rights between 14 May 2013 and 29 May 2013. Please refer to the Prospectus for details on how to renounce your rights.

Step 4: Make Your Payment

You can apply to accept either all or part of your Entitlement. If you accept your Entitlement in full, you can also apply for Additional Shares. Enter the number of New Shares, and any Additional Shares, you wish to apply for and the amount of payment for these. By making your payment you confirm that you agree to all of the terms and conditions as detailed in the Prospectus dated

Choose one of the payment methods shown below. BPAYPAY ®: See overleaf. Do not return the payment slip if you are making payment using BPAYPAY . By Mail: Complete the reverse side of this payment slip and detach and return with your payment. Make your cheque or bank draft payable in Australian dollars to "Red Gum Resources Limited - Offer A/C". The cheque must be drawn from an Australian bank. Cash is not accepted.

Payment will be processed on the day of receipt. Receipts will not be forwarded. Funds cannot be debited directly from your account.

Entering your contact details is not compulsory, but will assist us if we need to contact you.

Turn over for details of the Offer è

Sale of your Entitlement in full by your Stockbroker/Agent

If you wish to sell your rights entitlement in full, you should instruct:

• your Stockbroker personally and provide details as requested which appear overleaf.

DO NOT forward your requests for sale to the Share Registry.

Sale of your Entitlement in part by your Stockbroker/Agent and acceptance of the balance

If you wish to sell part of your rights entitlement and accept the balance you should instruct:

• Your Stockbroker personally and provide details as requested which appear overleaf, AND

• Forward the payment slip to the Share Registry with your Acceptance Monies OR make payment using BPAY if you wish to accept the balance of your Entitlement.

Disposal of your Entitlement other than through a Stockbroker for Rights held on the Issuer Sponsored Subregister

A Standard Renunciation Form must be used for an off market transfer of rights. These forms may be obtained from your Stockbroker or the Share Registry.

Red Gum Resources Limited Renounceable Rights Issue Payment must be received by 5:00pm (ACST) 5 June 2013

® Registered to BPAY Pty Ltd ABN 69 079 137 518

916CR_0_Sample_CA/000001/000001/i

Entitlement and Acceptance Form with Additional Shares - subject to Shortfall

==> picture [160 x 11] intentionally omitted <==

----- Start of picture text -----

X 9999999991 I ND
----- End of picture text -----

Registration Name & Offer Details

MR SAM SAMPLE Registration Name: 123 SAMPLE STREET SAMPLETOWN VIC 3000

[For your security keep your SRN/] HIN confidential.

Entitlement No: 12345678

==> picture [117 x 75] intentionally omitted <==

----- Start of picture text -----

4,000
1
$0.01
----- End of picture text -----

Offer Details:

Existing shares entitled to participate as at 20 May 2013:

Entitlement to New Shares on a 1 for 2 basis:

Amount payable on acceptance at $0.03 per New Share:

STEP 4 Make Your Payment

Biller Code: 99999999 Pay by Mail:

Ref No: 1234 5678 9123 4567 89  Make your cheque, money order or bank draft payable to Red Gum Resources Limited. Contact your financial institution to make your Return your cheque with the below slip to: payment from your cheque or savings Computershare Investor Services Pty Limited account. GPO BOX 2987 Adelaide South Australia 5001 Australia Lodgement of Application If you are applying for shares and your payment is being made by Bpay, you do not need to return the slip below. Your payment must be received by no later than 5:00pm (ACST) 5 June 2013. Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment, and should therefore take this into consideration when making payment. It is the responsibility of the applicant to ensure that funds submitted through BPAYPAY are received by this time. If you are paying by cheque, bank draft or money order, the slip below must be received by Computershare Investor Services Pty Limited (CIS) by no later than 5:00pm (ACST) 5 June 2013. You should allow sufficient time for this to occur. Return the slip below with cheque, bank draft or money order attached. Neither CIS nor the Company accepts any responsibility if you lodge the slip below at any other address or by any other means. Privacy Statement Personal information is collected on this form by CIS as registrar for the securities issuers (the issuer), for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal information may be disclosed to our related bodies corporate, to external service companies such as print or mail service providers, or as otherwise permitted by law. If you would like details of your personal information held by CIS, or you would like to correct information that is inaccurate, incorrect or out of date, please contact CIS. In accordance with the Corporations Act 2001, you may be sent material (including marketing material) approved by the issuer in addition to general corporate communications. You may elect not to receive marketing material by contacting CIS using the details provided above or email privacy@computershare.com.au

If you are applying for shares and your payment is being made by Bpay, you do not need to return the slip below. Your payment must be received by no later than 5:00pm (ACST) 5 June 2013. Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment, and should therefore take this into consideration when making payment. It is the responsibility of the applicant to ensure that funds submitted through BPAYPAY are received by this time. If you are paying by cheque, bank draft or money order, the slip below must be received by Computershare Investor Services Pty Limited (CIS) by no later than 5:00pm (ACST) 5 June 2013. You should allow sufficient time for this to occur. Return the slip below with cheque, bank draft or money order attached. Neither CIS nor the Company accepts any responsibility if you lodge the slip below at any other address or by any other means.

Red Gum Resources Limited - Payment Details

STEP 2 Entitlement taken up: Number of Additional New STEP 3 Shares applied for subject to Shortfall: Amount enclosed at $0.03 per New Share: A$

Payment must be received by 5:00pm (ACST) 5 June 2013

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12345678

Entitlement No: 12345678

MR SAM SAMPLE 123 SAMPLE STREET SAMPLETOWN VIC 3000

Contact Details

Contact Daytime Name Telephone

Cheque Details

Drawer

Cheque Number BSB Number Account Number Amount of Cheque

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123456789123456789+0000000001-5002+15