MCS SERVICES LIMITED — Capital/Financing Update 2014

Mar 11, 2014

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12 March 2014

Dear Shareholder

Red Gum Resources Limited - pro-rata renounceable rights issue

As announced on 10 March 2014, Red Gum Resources Limited (ACN (119 641 986)) ( Company ) is undertaking a 3 for 2 pro rata renounceable rights issue ( Rights Issue or Offer ) of approximately 194,007,468 (subject to rounding) fully paid ordinary shares ( New Shares ) at an issue price of $0.003 cents per Share ( Issue Price ), to raise up to approximately $0.582 million. The Offer will include one free attaching quoted option exercisable at $0.01 each and expiring on 15 November 2017 ( Options ) for every four New Shares issued. New Shares will rank equally with all fully paid ordinary shares in the capital of the Company ( Shares ) already on issue.

The Company lodged a prospectus for the Offer ( Prospectus ) with ASIC and ASX on 10 March 2014. The Offer is being made to all shareholders of the Company ( Shareholders ) named on its register of members at 7:00pm (AEDT) on 19 March 2014, whose registered address is in Australia or New Zealand.

The Offer is fully underwritten by DJ Carmichael Pty Ltd ( Underwriter ). The Company must pay the Underwriter a management and underwriting fee of 6% of the total amount raised pursuant to the Offer. In addition, the Company must reimburse the Underwriter for costs incidental to the Offer. The Company has also agreed to issue 40,000,000 Options to the Underwriter (or nominee) as the broker. Following completion of the Offer, the Company will have issued approximately 194,007,468 New Shares (subject to rounding) resulting in total Shares on issue of approximately 323,345,780.

The funds raised will be used for the Company to identify new opportunities, working capital and costs of the issue. Shareholder approval is not required in relation to the issue of the Shares and Options pursuant to the Rights Issue.

Ineligible shareholders

A Shareholder who has a registered address outside Australia and New Zealand ( Ineligible Shareholder ) will not be eligible to participate in the Offer.

You are not eligible to participate in the Offer and you will not be sent a copy of the Prospectus. This decision has been made pursuant to Listing Rule 7.7.1(a) of the ASX Listing Rules after taking into consideration the costs of complying with legal and regulatory requirements in jurisdictions outside of Australia and New Zealand compared with the small number of Ineligible Shareholders and the number and value of New Shares to which they would otherwise be entitled.

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The Company has appointed DJ Carmichael Pty Ltd ( Nominee ) as nominee to sell the rights to subscribe for New Shares pursuant to the Prospectus ( 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 proceeds of the sale of these Entitlements will firstly be applied against expenses of such sale, including brokerage, and any balance will accrue to Ineligible Shareholders.

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.

There is no guarantee that the Nominee will be able to sell Entitlements of Ineligible Shareholders on ASX and Ineligible Shareholders may receive no value for the Entitlements. Both the Company and the Nominee take no responsibility for the outcome of the sale of such Entitlements or the failure to sell such Entitlements.

If you have any queries concerning the Rights Issue, please contact your financial adviser or Mal Lucas-Smith, Red Gum Resource Limited’s Company Secretary, on +61 0418 366 532.

Yours sincerely

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M E Lucas-Smith Company Secretary