MCS SERVICES LIMITED - Capital/Financing Update 2014

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Prospectus

Red Gum Resources Limit e d ACN 119 641 986

A renounceable pro-rata ri g hts issue to Eligible Shareholders of thr e e New Shares for every two Shares held b y Eligible Shareholders on the Record Date, at an issue price of $0.003 per New S h are to raise up to approximately $0.582 m illion before costs of the Offer. The Off e r will include one attaching option exerci s able at 1 cent and expiring on 15 Novem b er 2017 for every four New Shares subscribed for ( Offer ).

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

The Offer is fully underwritten

Underwriter to the Offer: DJ Carmichael Pty Ltd

Your Entitlement and Acceptanc e Form must be received by the Share Registry w ith your payment no later than 5:00pm (AEDT) 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 t h e contents of this document, you should consult your stockbroker, solicitor, banker, financial advis o r or accountant as soon as possible. The sec u rities offered by this Prospectus are considered to be speculative.

Prospectus

Offer Statistics

Number of Shares on issue prior to Offer	129,338,312
Maximum number of New Shares to be issued	194,007,468
Maximum number of Options to be issued under the Offer	48,501,867
Offer Price	$0.003 per New Share

Timetable for important dates

Announcement of Offer	10 March 2014
Lodgement of Prospectus with ASIC	10 March 2014
Lodgement of Prospectus and Appendix 3B with ASX	10 March 2014
Notice sent to Optionholders	10 March 2014
Notice sent to Shareholders containing Appendix 3B information	12 March 2014
Shares commence trading on an ex rights basis and rights trading starts	13 March 2014
Record Date for the Offer	19 March 2014
Prospectus and Entitlement and Acceptance Form sent to Shareholders	24 March 2014
and Opening Date of Offer
Rights trading ends	31 March 2014
Shares quoted on a deferred settlement basis	1 April 2014
Closing Date of Offer	5pm, 7 April 2014
Advise ASX of any under subscriptions	9 April 2014
Issue Date and deferred settlement trading ends	14 April 2014
Commencement of trading of New Shares on ASX	15 April 2014

Some of these dates are indicative only and subject to change without notice. The Company may extend the period of the Offer or bring forward the Closing Date at its discretion whether or not the Offer has been fully subscribed. This may have a consequential effect on the other dates.

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 28 days 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 10 March 2014 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 is a transaction specific prospectus for an offer to Eligible Shareholders of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with Section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult.

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.

Applications for Shares offered pursuant to this Prospectus can only be submitted on an original Entitlement and Acceptance Form.

The Offer is made only to those Eligible Shareholders with registered addresses in Australia and New Zealand and only those Eligible Shareholders will be offered New Shares. In making this Offer to Eligible Shareholders in New Zealand, the Company is relying on the Securities Act (Overseas Companies) Exemption Notice 2013 (NZ) , by virtue of which this Prospectus is not required to be registered in New Zealand.

The Company has not investigated the regulatory requirements that may prevail in any country in which the Company’s Shareholders may reside outside of Australia and New Zealand. The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe those restrictions. Any failure to comply with restrictions might constitute a violation of applicable securities laws.

Important information for Shareholders with registered addresses outside Australia and New Zealand

The Company has decided that it is unreasonable to make offers under this Prospectus to Shareholders with registered addresses outside Australia and New Zealand having regard to the number of Shareholders in those places, the number and value of the New Shares they would be offered and the cost of complying with the legal and regulatory requirements in those places. Accordingly, the Offer is not being extended to, and does not qualify for distribution or sale, and no New Shares will be issued, to Shareholders having a registered address outside Australia and New Zealand. See Section 2.9 for further details on how the entitlements of Foreign Shareholders are to be dealt with.

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 Sections 1.12 and 5. The Company gives no

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assurance that the anticipated results, performance or achievements expressed or implied in those forward-looking statements will be achieved.

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 ...................................................................................................................13
3.	Information on Red Gum .........................................................................................................17
4.	Effect of Offer on Red Gum .....................................................................................................20
5.	Risk factors ...............................................................................................................................23
6.	Material contracts.....................................................................................................................31
7.	Additional information .............................................................................................................34
8.	Definitions & glossary .............................................................................................................43
Corporate Directory ..............................................................................................................................46

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Chairman’s letter

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to provide you with an update on the Company, and offer you an opportunity to invest in the Company.

Under this Prospectus, the Company offers all existing shareholders the opportunity to participate in the renounceable rights issue, on the basis of three New Shares for every two existing Shares held, with one free attaching Option for every four New Shares subscribed for. The issue will be fully underwritten by D J Carmichael.

Our shareholders have, in recent times, witnessed a sustained decline in the share price, in concert with the difficult market conditions affecting the junior exploration mining sector. Your Company, like many other junior exploration companies, has had difficulty in maintaining investor support and raising further funds to advance its operations. This is despite our exploration strategy having resulted in two new discoveries, and the Company acquiring interests in areas that we believed would substantially improve shareholder value. Recent outcomes for the Company have been disappointing. The Company's efforts to refocus its strategy on copper-gold exploration in Chile, through proposed strategic alliances and the disposal of our Peruvian assets, have to date not proven fruitful.

The Board considers that there are now insufficient levels of investor interest in the Company’s activities to permit the Company to continue with its current business strategy. Following consultation with key advisers and other stakeholders, the Board has determined that your Company needs to refocus and seek to grow future shareholder value in other ways, which may well include assessing new opportunities from sectors outside of the Company's traditional resource sector.

The recent placement, the converting loan facility and the Offer made under this Prospectus form part of a funding package, which is designed to enable your Company to review its current strategy and rebuild shareholder value.

The Board intends to identify and assess possible new opportunities for the Company as a priority, as well as reviewing how to maximise the Company's return from its existing operations. The Company will do so in a cost effective manner. Recent changes to your Board have been made with a view to assisting this process, with the directors now collectively having strong backgrounds in corporate restructuring, commercial practice, funding and project management.

This Offer is an opportunity for existing Shareholders to make a further investment in the Company, as well as the ability to sell or transfer all or any part of their Entitlements. Please read the Prospectus carefully and seek appropriate independent advice before making a decision to invest or to trade in your Entitlement.

Yours faithfully,

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 Investment Highlights

Board members and management with extensive experience in commercial negotiations, corporate restructuring, acquiring and developing projects in different sectors and managing longer term goals;
Implementing a broader focus to acquire new projects in order to better utilise the skills within, and structure of, the Company;
Strong support of DJ Carmichael as an investment and retail broker house; and
Access to “deal-flow” through the Board's contacts and DJ Carmichael’s investor networks.
1.2 The Offer

This Prospectus is for the pro-rata renounceable rights issue offer to Eligible Shareholders of the New Shares at an issue price of $0.003 per New Share with one free attaching option expiring on 15 November 2017, (the Attaching Options ) for every four New Shares subscribed for, to raise up to approximately $582,000 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 by D.J. Carmichael Pty Limited ( Underwriter ). Further details of the underwriting are set out in section 6.1 of this Prospectus.

There is no minimum subscription to the Offer.

Commencement of trading of the New Shares is expected to occur on 15 April 2014.

1.3 Shortfall Offer

Any Entitlements not taken up pursuant to the Offer will form the Shortfall Offer which is a separate offer made pursuant to this Prospectus.

Eligible Shareholders may apply for additional Shares (including Attaching Options) under the Shortfall Offer by completing the prescribed area on the Entitlement and Acceptance Form designated to the Shortfall Offer and by paying the appropriate Application Monies in accordance with the instructions set out in the Entitlement and Acceptance Form.

The Shortfall Offer will remain open for up to three months following the Closing Date. The issue price for each Share to be issued under the Shortfall Offer shall be $0.003 being the price at which Shares have been offered under the Offer. The Directors, in conjunction with the Underwriter, reserve the right to issue Shortfall Securities at their absolute discretion and as such there is no guarantee that participating parties will receive any additional Securities applied for under the Shortfall Offer.

The Directors and Underwriter reserve the right to issue a lesser number of Shortfall Securities than the number which is applied for by the Eligible Shareholder, or to reject an application, or to not proceed with placing the Shortfall. In that event, Application Monies will be refunded by the Company (without interest) in accordance with the provisions of the Corporations Act.

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1.4 Capital Structure

The capital structure of the Company following the issue of New Shares and Attaching Options will be as follows:

	Shares	Options
Total on issue on date of Prospectus	129,338,312	67,234,053(2)
Shares and Options to be issued under the Offer(1)	194,007,468	48,501,867
Options to be issued to Broker	Nil	40,000,000
Total on issue after the Offer(1)(3)	323,345,780	155,735,920

Notes:

(1) This assumes that the maximum number of New Shares and Attaching Options are taken up under the Offer.
(2) Figure includes 61,234,053 quoted Options exercisable at $0.10 expiring 1 March 2016, 5,000,000 unquoted Options exercisable at $0.15 expiring 30 April 2016 and 1,000,000 unquoted Options exercisable at $0.25 expiring 9 June 2014.
(3) The Company announced on 3 March 2014 that it had negotiated unsecured converting loans to various parties of an aggregate of $530,000 ( Loans ) the conversion of which are subject to shareholder approval at the Company’s General Meeting. If shareholder approval is obtained, the Loans will convert into 176,654,220 Shares ( Converting Loan Shares ) at $0.003 together with one quoted option for each four Shares converted ( Converting Loan Options ) on the same terms as the Attaching Options (exercisable at $0.01 each expiring on 15 November 2017). The figures in the table above exclude the Converting Loan Shares and the Converting Loan Options. Following conversion of the Loans, the total issued capital in the Company will be 500,000,000 Shares and 199,899,475 Options. Refer to Section 5.2(a) for further details.

1.5 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 Attaching Options.

1.6 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 13 March 2014. Sale of your entitlement must be completed by 31 March 2014 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 will form part of the Shortfall. The Shortfall Offer will be offered at the discretion of the Directors to Eligible Shareholders and any remaining Shortfall Securities not taken up by Eligible Shareholders under the Shortfall Offer will be taken up by the Underwriter pursuant to the terms of the Underwriting Agreement.

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1.7 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 moneys for those New Shares which form part of any Shortfall Securities that are not taken up by Eligible Shareholders under the Shortfall Offer. A summary of the material terms of the Underwriting Agreement is set out in Section 6.1 of this Prospectus.

1.8 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.

1.9 Additional Shares

Applications for, and Acceptance of, New Shares 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 to you (without interest). Shareholders wishing to apply for further New Shares in addition to the Entitlement as shown on the Entitlement and Acceptance Form may apply for New Shares under the Shortfall Offer or purchase additional Entitlements on the ASX during the Entitlement trading period. Refer to Section 1.3 above for further details on the Shortfall Offer.

1.10 Purpose of the Offer and use of funds

The purpose of the Offer is to raise up to approximately $582,000.

The funds raised from the Offer are planned to be used in accordance with the table set out below:

Purpose	$
Working Capital including extracting value from existing assets	300,000
Identification of new corporate opportunities	217,701
Costs of the offer and contingency1	64,299
TOTAL(1)	$582,000

Notes :

(1) If Shareholder approval is not obtained at the General Meeting the Company must repay the value of the Loans, being $530,000, by issuing such number of Shares under the Company’s 15% capacity and the remaining balance out of the proceeds of the Offer. This will result in there being a reduction in the funds available for the purposes set out above. For further details, refer to Section 5.2(a).

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(2) Refer to section 7.12 of this Prospectus for further details relating to the estimated expenses of the Offer.

The above table is a statement of current intentions as of the date of this Prospectus. In the event that the Company does not raise the maximum amount under the Offer, circumstances change, business opportunities vary from expected, or other beneficial opportunities arise, the Directors reserve the right to vary the proposed use of funds to maximise the benefit to Shareholders.

1.11 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		Existing Options	Entitlement under the Offer	Entitlement under the Offer
	Direct	Indirect*		Shares	Options
Dr Raymond Shaw(1)	Nil	7,537,804	Nil	11,306,706	2,826,677
Ms Jennifer Tobin	181,667	Nil	Nil	272,501	68,125
Mr Edwin Bulseco	Nil	10,000(2)	Nil	15,000	3,750

Notes :

(1) Held indirectly through Raymond Douglas Shaw and Rita Barbara Jones as trustee for the Shaw Jones Super Fund.

(2) Held indirectly through Allison Maree Bulseco.

1.12 Key Risk Factors

Investing in the Company involves risk which could result in a possible loss of income and principal invested. There are factors, both specific to the Company and of a general nature, which may affect the future operating and financial performance of the Company. Some of these factors can be mitigated by appropriate commercial action. However, many are outside the control of the Company, dependent on the policies adopted and approaches taken by regulatory authorities, or cannot otherwise be mitigated. If you are unsure about subscribing for New Shares, you should first seek advice from your stockbroker, accountant, financial or other professional adviser.

The following sets out a summary of some of the key risks relevant to the Company and its operations (further details are contained in Section 5):

Converting Loan Risk	If Shareholder approval is obtained at the Company’s
	proposed General Meeting for conversion of the Loans to the
	Converting Loan Shares and Converting Loan Options, there
	will be a further dilution to each Shareholder’s proportion of
	their ownership in the Company. Following conversion, the
	number of Shares in the Company will increase from
	323,345,780 to 500,000,000 resulting in further dilution to
	Shareholders of approximately 35%.
	In addition, if Shareholder approval is not obtained, the
	Company will be required to convert part of the Loans by
	issuing to the lenders the maximum number of Shares and
	Options allowable under ASX Listing Rule 7.1. Any residual
	amounts left outstanding under the Loans will be repaid in
	cash from proceeds raised under this Offer. This will have the
	effect of reducing thefunds availableforuse as contemplated

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	by this Offer.
Additional Capital Requirements	The Company is engaged in growing its business opportunities. As such it may continue to require funding through its cash reserves, equity capital or debt. Furthermore, the Company’s ability to continue to pay its debts as and when they fall due is dependent upon the Company successfully raising additional working capital. The Directors’ believe that upon successful completion of the Offer, the Company will have sufficient funds to adequately meet the Company’s current commitments and short term working capital requirements. However, it is highly likely that further funding will be required to meet the medium to long term working capital costs of the Company. In the event the Offer is not completed successfully and the Shareholder approval referred to in the “Converting Loan Risk” is not obtained, there is uncertainty as to whether the Company can continue as a going concern, which is likely to have a material adverse effect on the Company’s activities.
Achievement of Objectives/Funding Risk	The Company may not be successful in acquiring a new business or project of sufficient merit, strength or potential and as such the Directors are unable to provide investors with information as to the ultimate investments to be made by the Company. The raising of additional funds to acquire and support the acquisition of a new business or project may not be possible or not on sufficiently attractive terms.
Industry Risk	The Company is not yet in a position to determine in which new industry or industries it may invest all or any funds raised by this Offer. Each industry in which the Company elects to invest carries with it individual risks associated with that industry.Some funds are anticipated to be applied to the Company's existing mineral exploration operations in Latin America which have inherent risks, and are also subject to the broader risks which affect the exploration and mining industry, and those operations are considered speculative.
Timing	The Company has not presently identified any new suitable asset or project. The timing of such asset identification is unknown and the Directors can give no assurance as to the ultimate timing.
Limited History	The Company has a limited performance history and related financial information. The Company’s prospects must be considered in light of the risks, expenses and difficulties encountered by companies with assets in the early stages.
Dilution Risk	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 129,338,312 currently on issue to 323,345,780. This means that each Share will represent a significantly lower proportion of the ownership of the Company.

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Contractual Risk	The Company’s ability to efficiently conduct its operations in a number of respects depends upon a number of contracts. 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.
Tenure Risk	The Company’s current mineral interests in Chile and Peru are variously held under licences or permits for specified terms that carry annual expenditure and reporting commitments which, if not met, could result in the Company forfeiting title to its interest in those tenements.
Environmental Regulation and Risk	The Company's interests 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.
Currency Risk	Adverse movements in the exchange rate may materially impact on the Company’s competitiveness, cost base, revenue streams and on the commercial viability of specific projects or investments as a whole.
Reliance on Key Management	The Company is dependent on its Directors’, managers’ and consultants’ ability to implement the Company’s strategy in respect of its current and future activities. A number of factors, including the departure of senior management of the Company, could adversely affect the Company’s ability to implement its business strategies.
Sovereign Risk and Foreign Country Risk	Future government actions in jurisdictions in which the Company currently has, or may have, interests and concerning the economy, ownership of businesses or operations – including mineral tenements, repatriation of profits, corporate policies, taxation policies, environmental policies, changes in political conditions or the operation and regulation of the commercial enterprises generally could affect the Company and its financial performance.
Insurance Risk	The Company intends to adequately insure its business activities in accordance with industry practices. 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 Company’s activities may not always be available and where available the costs can be prohibitively high preventing such insurance coverage.

In addition, there are a number of general risks that are common to all investments in shares and are not specific to the business model and operations of the Company.

The New Shares offered under this Prospectus carry no guarantee of profitability, dividends, return of capital or the price at which they may trade on ASX. The past performance of the Company should not necessarily be considered a guide to their future performance.

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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 194,007,468 New Shares at $0.003 per New Share to raise up to approximately $582,022.40 before costs of the Offer. Eligible Shareholders of Red Gum are entitled to subscribe for three New Shares for every two Shares held on the Record Date, with one free attaching option (expiry 15 November 2017) for every four New Shares subscribed for ( Attaching Options ). Only those Shareholders shown on the share register at 7:00pm (AEDT) 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 6.1 of this Prospectus.

There is no minimum subscription to the Offer.

Red Gum will apply to the ASX for the New Shares and the Attaching Options to be granted Official Quotation on the ASX. Commencement of trading of the New Shares is expected to occur on 15 April 2014.

2.2 Important dates

Refer to the Timetable of Important Dates set out on page 2 of this Prospectus.

2.3 Additional Shares

Applications for, and Acceptances of, New Shares 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 to you (without interest). Shareholders wishing to apply for further New Shares in addition to the Entitlement as shown on the Entitlement and Acceptance Form may apply for Shortfall Securities under the Shortfall Offer or purchase additional Entitlements on ASX during the Entitlement trading period. Refer to Section 1.3 for further details on the Shortfall Offer.

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).

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 in full or in part by completing and returning the Entitlement and Acceptance Form which accompanies this Prospectus in

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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 (AEDT) on the Closing Date.

The Offer Price of $0.003 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, 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 the cheque, bank draft or money order for the amount of your Acceptance Monies - calculated by multiplying the number of New Shares applied for by the Offer Price.

If paying by cheque, it must be in Australian currency and made payable to “Red Gum Resources Limited – Entitlement Offer A/C” and crossed “not negotiable”.

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.

Payment will only be accepted in Australian currency and cheques, bank drafts, money orders and BPAY® payments must be drawn on an Australian bank.

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 or 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 13 March 2014 – 4 business days before the record date. Sale of your entitlement must be completed by 31 March 2014 – at least 5 business days before the applications closing date for New Shares under the Rights Issue when Entitlement trading is expected to cease.

(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 complete the section marked “Instructions to Your Stockbroker/Agent” on the back of the form in respect of that part of your Entitlement you wish to sell.

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Forward the form to your stockbroker together with your cheque or bank draft for the total amount payable in respect of the New Shares accepted.

Cheques or bank drafts should be in Australia dollars and made payable to “Red Gum Resources Limited – Entitlement Offer” and crossed – “Not Negotiable”.

Entitlement trading will commence on 13 March 2014 – 4 business days before the record date]. Sale of your entitlement must be completed by 31 March 2014 – at least 5 business days before the applications closing date for New Shares under the Rights Issue] when Entitlement trading is expected to cease.

(d)

Entitlement not taken up

If all or part of your Entitlement lapses, you will receive no benefit. Any Shortfall Securities will form part of the Shortfall Offer and will pass to the Underwriter pursuant to the terms of the Underwriting Agreement if not taken up by Eligible Shareholders under the Shortfall Offer.

Your Entitlement may have value. You are advised to deal with your Entitlement rather than allow them 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 New Shares as soon as possible after the Closing Date and receiving ASX permission for Official Quotation of the New Shares and Attaching 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 Securities in accordance with the Shortfall Offer and any remaining Shortfall Securities not taken up under the Shortfall Offer will be issued in accordance with the Underwriting Agreement.

Successful Applicants will be notified in writing of the number of New Shares 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

The Company will apply to the ASX for the New Shares and Attaching 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 Attaching Options will commence as soon as practicable after allotment of the New Shares and Attaching Options to Applicants.

Should the New Shares and Attaching Options not be granted official quotation on the ASX within 3 months after the date of this Prospectus, none of the New Shares and Attaching Options 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.

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2.7 CHESS

Red Gum will apply to the ASX Settlement for the New Shares to participate in the Securities Clearing House Electronic Subregister System known as CHESS. After issue of the New Shares, those who are issuer sponsored holders will receive an issuer sponsored statement and those who are CHESS holders will receive an allotment advice.

The CHESS statements, which are similar in style to bank account statements, will set out the number of New Shares issued to each successful applicant pursuant to this Prospectus. The statement will also advise holders of their Holder Identification Number. Further statements will be provided to holders which reflect any changes in their holding in Red Gum during a particular month.

2.8 Minimum subscription

There is no minimum subscription to the Offer.

2.9 Foreign Shareholders

The Offer will not be extended to any Shareholder with a registered address outside of Australia or New Zealand ( Foreign Shareholder ) as at the Record Date.

However, in order for the Offer to satisfy Listing Rule 7.7.1(c) in respect of a renounceable entitlement offer, the Company is required to do each of the following:

(a) appoint a nominee ( Nominee ) to arrange for the sale of the entitlements that would have been given to the Foreign Shareholders and to account to them for the net proceeds of the sale; and
(b) advise each Foreign Shareholder not given the entitlement that the Nominee will arrange for the sale of the entitlements and, if they are sold, for the net proceeds to be sent to the Foreign Shareholder.

The Company has appointed DJ Carmichael Pty Limited the Underwriter for the Offer, as the Nominee for Foreign Shareholders to undertake the matters set out in paragraphs (a) and (b) above and also Section 9A of the Corporations Act. The Company will advise the Foreign Shareholders of the matters set out in Listing Rule 7.7.1(c) shortly after the date of this Prospectus.

2.10 Electronic Prospectus

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

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) was incorporated on 11 May 2006. The Company adopted the name Red Gum Resources Limited on 9 October 2008, and became a listed public company on 17 January 2012.

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

The Company has been focused on base and precious metal exploration in Latin America, where it holds concessions and applications for concessions in Peru and Chile.

Particularly over the past year, and despite new mineralisation discoveries made by the Company in its drilling campaign at the Majada Project located in Region IV of Chile, the junior exploration mining sector has become largely bereft of investors - to the extent that the Board now believes that there is insufficient interest to support the short to medium term value drivers of Red Gum’s business strategy in its current form.

As a result Red Gum is now looking to refocus its strategy through new projects, which are not necessarily in the resource sector. Opportunities will need to meet the Company’s shorter term objectives. As outlined in Section 1.10, the Company will use the funds raised in this Offer for the purposes of identifying new opportunities, funding its working capital and the costs of the Offer.

3.2 Mission and Objectives

The Company’s mission is to raise sufficient funds to enable it to seek out and evaluate new investment opportunities suitable for a publicly listed company. The Directors will utilise their collective experience in finance and corporate enterprise when assessing business and investment opportunities for the Company to invest in. Each of the Directors will be available to the Company on an as required basis to ensure investment opportunities are properly assessed.

The Directors intend to investigate and select potential assets or projects based on one or a combination of the following criteria:

(a) the project or asset should be of a sufficient size and development to be capable of generating support in the market place to raise further funds;
(b) the project should have the capacity to add value to the Company in the medium term; and
(c) the project or asset should have quality management in place or have the ability to attract such people.

The Board intends to commence its review of projects immediately. However, the Board is unable to determine with any accuracy how long it will take to identify a particular project that is suitable for investment or acquisition.

There are no pre-determined financial criteria that will be used by the Board in assessing potential business opportunities other than following any acquisition and any associated capital raising, the Company would have sufficient net tangible assets and have available to it sufficient working capital to properly exploit the relevant project that is invested in or acquired. The Company's financial position will need to satisfy the ASX requirements for listed companies.

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The financial data that will be taken into account in assessing potential projects will include but not be limited to an assessment of the past and projected earnings and profits of any business, the nature of the assets of the business, the cash flow attributes, projected rate of return on equity employed, the projected earnings metrics, the future capital raising capacity of the business and the amount of capital expenditure required to further develop the business.

3.3 Board of Directors & Company Secretary

Dr Raymond Shaw (Executive Director and Chairman)

Dr Raymond Shaw has more than 30 years’ experience in the resources and energy sectors including the oil, gas and coal industries. He has worked extensively throughout Australia and Asia in the private sector and has consulted extensively to industry, government, and international aid agencies on a variety of resource projects including the World Bank, Asia Development Bank and Ausaid. He was a part time consultant with the New South Wales Department of Mineral Resources for 7 years.

Dr Shaw has extensive experience as a director of listed public companies. He was founding Managing Director of Great Artesian Oil and Gas Limited and subsequently Managing Director of Bandanna Energy Limited from 2009 until 2012, is a non-executive director and Chairman of Rampart Energy Limited (ASX : RTD) and is a founding director and currently executive Chairman of Red Gum Resources Ltd. He was also a director of Wiggins Island Coal Export Terminal Stage 1 development at Gladstone during the period of project financing and letting of contracts for this major ~$3 billion infrastructure coal loading port facility.

Dr Shaw holds a B.Sc (Hons) and Ph.D from the University of Sydney, and a Dip Law (SAB) and is a Member of the AusIMM.

Ms Jennifer Tobin (Non-Executive Director)

Ms Tobin is a partner with the law firm Minter Ellison, with more than 20 years’ experience in corporate law and mining, oil and gas law. Her specialities are in corporate law (mergers and acquisitions, corporate governance, ASX compliance, IPOs and other capital raisings, risk management and general commercial matters) and mining, oil and gas law.

Her corporate experience includes a broad range of commercial and resource projects, including advising on major projects, corporate restructures, international transaction and foreign investment, capital raisings, and acquisition of companies and businesses. Ms Tobin has also been a director of a number of public companies and is well acquainted with corporate governance issues.

In 2013, she was selected as one of Australia’s ‘Best Lawyers’ for Corporate/Governance and Oil & Gas.

Ms Tobin holds LL.B and B.A. degrees from the University of Adelaide, and is a member of AICD, the Corporations Committee of the Business Law Section of the Law Council of Australia and the SA Branch of the the Resources and Energy Law Association (AMPLA).

Mr Edwin Bulseco (Non-Executive Director)

Mr Bulseco has a wealth of experience in capital markets and corporate strategic planning. From 2010 to 2014 he served as senior equity research analyst at two of Australia's oldest stockbrokers. During this period, Mr Bulseco’s considerable capital markets and corporate experience resulted in over $100 million of new capital being raised, in addition to a number of successful corporate restructures.

Prior to working in capital markets Mr Bulseco held various internal consulting, corporate/strategic planning and commercial roles with Royal Dutch Shell where he spent seven years, resulting in the maturation and commercialisation of a number of global projects.

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During this period, Mr Bulseco gained valuable international experience in Europe, South East Asia and Africa.

Mr Bulseco was appointed Non-Executive Director of Red Gum in March 2014. He holds a Bachelor of Commerce (Graduating with Merit) from the University of Wollongong in NSW.

Mr Bulseco is an employee of DJ Carmichael Pty Limited, the Underwriter.

Mr Mal Lucas-Smith (Company Secretary)

Mr Lucas-Smith has over 40 years’ experience in finance, executive and non-executive management, property development, corporate secretarial and administrative services.

During that period he spent 12 years with State Bank of New South Wales and 18 years with the property finance and the property joint venture divisions of Australian Guarantee Corporation Limited ( AGC ), at the time a listed subsidiary of Westpac Bank.

Mr Lucas-Smith left AGC of his own accord in September 1987 to form a corporate services business and has since worked within and consulted to the corporate sector, often assisting new start ups and existing operations proposing to list on the Australian Securities Exchange, and also providing local representative and registered office services for offshore entities.

He is a Non-Executive Director and Company Secretary of Rampart Energy Limited, an ASX listed company.

3.4 Role of Directors and Management

The Directors and Company Secretary together have broad experience in finance and corporate enterprise within a number of industries, which will be relevant to the assessment of potential new projects for the Company. The Directors and Company Secretary consider that their contacts and experience will provide great assistance in attracting and securing new projects for investment/acquisition.

As disclosed above in Section 3.3, some of the Directors and the Company Secretary are also directors or the company secretary (as the case may be) of other companies and are mindful of their fiduciary duties to the Company as well as to these other entities. This may result in opportunities identified by the Directors or the Company Secretary not necessarily being offered to the Company, where the individual is bound by the duty owed to another entity. The Directors and Company Secretary will discharge their duties in accordance with the Corporations Act and principles of good corporate governance.

3.5 Availability of Directors and Company Secretary

The Directors and Company Secretary will make themselves available to review projects as needed. The time required by each Director and Company Secretary will depend largely on the number and nature of reasonable projects that are presented to the Company for review.

Each of the Directors and the Company Secretary have committed to making available as much time as may reasonably be required to ensure that the Company is able to identify a suitable project for investment/acquisition in the shortest time possible. However, as noted elsewhere in this Prospectus, the Directors and Company Secretary are unable to provide any reasonable estimate of how long this process may take.

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4. Effect of Offer on Red Gum

4.1 Effect of the Offer on the Company

The effect of this Rights offer on the Company, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, will be to increase the primary number of shares on issue from 129,338,312 Shares to 323,345,780 Shares. 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.

The Company does not anticipate that there will be any material change of control consequences to the current Offer. Refer to Section 4.5 for further details.

After payment of the costs and expenses, the proceeds of the Offer will be used to provide working capital and enable the Company to investigate a broader range of opportunities for its longer term focus. Additionally, funds raised by the Offer will strengthen the balance sheet and enable the Company to meet its short term obligations (refer to use of funds in Section 1.10).

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

The unaudited balance sheet as at 31 December 2013 and the unaudited pro-forma balance sheet as at 31 December 2013 shown below have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position.

The pro-forma balance sheet has been prepared assuming all Entitlements are accepted, no Options are exercised prior to the Record Date and including expenses of the Offer.

The pro-forma balance sheet has been prepared to provide investors with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

	Historical as at 31 December 2013 $	Offer Fully Subscribed less expenses of the Offer$	Pro Forma Statement of Financial Position $
Current Assets
Cash & Equivalents	24,450	517,723	542,173
Trade & other receivables	76,756	-	76,756
Total Current Assets	101,206	517,723	618,929
Non-Current Assets
Other receivables	287,270	-	287,270
Property& equipment	584	-	584
Mineral concession interests	554,623	-	554,623
Total Non-Current Assets	842,477	-	842,477
Total Assets	943,683	517,723	1,461,406

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	Historical as at 31 December 2013 $	Offer Fully Subscribed less expenses of the Offer$	Pro Forma Statement of Financial Position $
Liabilities
Trade and other payables	374,524	-	374,524
Total Liabilities(1)	374,524	-	374,524

Net Assets	569,159	517,723	1,086,882

Equity
Issued capital	7,338,075	517,723	7,855,798
Foreign exchange reserve	216,035	-	216,035
Share option reserve	69,386	-	69,386
Accumulated losses	(7,054,337)		(7,054,337)
Total Equity	569,159	517,723	1,086,882

Note :

(1) This figure does not include the balance of the Loans (being $530,000) as the balance sheet figures above are for the period ending 31 December 2013 and the liability did not arise within this accounting period.

4.3 Effect on capital structure

The effect of the Offer on the capital structure of the Company, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, is set out below.

	Number
Shares currently on issue	129,338,312
Shares offered pursuant to the Offer	194,007,468
Total Shares on issue after completion of the Offer(1)	323,345,780

Note :

(1) This figure excludes the176,654,220 Converting Loan Shares which will be issued if Shareholder approval is obtained at the General Meeting to be held in April 2014. Following completion of the Offer and if the Converting Loan Shares are issued, there will be 500,000,000 Shares on issue.

Options

	Number
Options currently on issue: (61,234,053 Quoted exercisable at $0.10 on or before 1/03/16) (5,000,000 Unquoted exercisable at $0.15 on or before 30/04/16) (1,000,000 Unquoted exercisable at $0.25 on or before 09/06/14)	67,234,053
New Options offered pursuant to the Offer (Quoted exercisable at $0.01 on or before 15/11/17)	48,501,867
Options to be issued to Broker	40,000,000
Total Options on issue after completion of the Offer(1)	155,735,920

Note :

(1) This figure excludes the 44,163,555 Converting Loan Options which will be issued if Shareholder approval is obtained at the General Meeting to be held in April 2014. Following completion of the Offer and if the Converting Loan Options are issued, there will be 199,899,475 Options on issue.

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The capital structure on a fully diluted basis as at the date of this Prospectus would be 196,572,365 Shares and on completion of the Offer (assuming all Entitlements are accepted and no Options are exercised prior to the Record Date) would be 479,081,700 Shares.

No Shares or Options on issue are subject to escrow restrictions, either voluntary or ASX imposed.

4.4 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	%
Mr Torey Marshall + Mr Robert Marshall Marshall FamilyA/c>	13,549,500	10.48%
WillowdaleHoldingsPtyLtd	13,249,999	10.24%
Mr Raymond D Shaw + Ms Rita B Jones Jones Super FundA/C>	7,499,750	5.80%
NormanJoseph Zillman	7,000,000	5.41%

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

The Underwriter has entered into agreements with several sub-underwriters who have agreed to sub-underwrite up to 194,007,468 Shares and 48,501,867 Attaching Options ( SubUnderwriting Commitments ). After completion of the Offer there will be no control issues that will result from these various Sub-Underwriting Commitments.

In the event all Entitlements are accepted by Eligible Shareholders there will be no change to the substantial holders on completion of the Offer.

4.5 Effect on control of the Company and potential dilution to Shareholders

The Underwriter presently is not a Shareholder or related party of the Company. The extent to which Securities are issued pursuant to the underwriting will determine the Underwriter’s voting power in the Company. If the Offer is fully unsubscribed, no Securities are issued to sub-underwriters of the Offer and none of the Shortfall Securities are placed by the Underwriter, and assuming no other Shares are issued or Options exercised, then the Underwriter will have an approximate voting power in the Company of 60%.

However, it is unlikely that no Shareholders will take up Entitlements under the Offer and that no sub-underwriters will take up their Sub-Underwriting Commitments. The underwriting obligation and therefore voting power of the Underwriter will reduce by a corresponding amount for the amount of Entitlements taken up under the Offer and Shortfall Securities issued to third parties.

The Underwriter’s present relevant interest (assuming none of the sub-underwriters take up their Sub-Underwriting Commitments, which is very unlikely) and changes under several scenarios are set out in the table below:

Event	Shares held by Underwriter	Voting power of Underwriter
Date of Prospectus	Nil	Nil
Completionofthe Offer
• Fully subscribed	Nil	Nil
• 75% subscribed	48,501,867	15%
• 50% subscribed	97,003,734	30%
• 0% subscribed	194,007,468	60%

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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:

(a) 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;
(b) the Applicant is unable to sell the New Shares or the Shares issued on exercise of the Attaching Options;
(c) 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
(d) 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) Converting Loan Risk

As announced on 3 March 2014 and noted in section 1.4, the Company will seek Shareholder approval at the General Meeting for the conversion of the Loans agreement.

If shareholder approval is obtained, the Loans will convert into 176,654,220 Shares at $0.003 together with one quoted option for each four Shares converted (exercisable at $0.01 each expiring on 15 November 2017) and there will be a further dilution to the existing shareholder’s ownership in the Company.

However, if Shareholder approval is not obtained, the Company will be required to convert part of the Loans by issuing to the lenders the maximum number of Shares and Options allowable under ASX Listing Rule 7.1. Any residual amounts left outstanding under the Loans will be repaid in cash from proceeds raised under this

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Offer. This will have the effect of reducing the funds available for use as contemplated by this Offer.

(b)

Additional Capital Requirements

The Company is engaged in growing its business opportunities and as such it may continue to require funding through its cash reserves, equity capital or debt. In part the viability of the Company is therefore dependent upon:

(1) the success of the Offer; and
(2) 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, the Company’s ability to continue to pay its debts as and when they fall due is dependent upon the Company successfully raising additional working capital. The Directors’ believe that upon successful completion of the Offer, the Company will have sufficient funds to adequately meet the Company’s current commitments and short term working capital requirements. However, it is highly likely that further funding will be required to meet the medium to long term working capital costs of the Company. In the event the Offer is not completed successfully and the Shareholder approval referred to in the “Converting Loan Risk” is not obtained, there is uncertainty as to whether the Company can continue as a going concern, which is likely to have a material adverse effect on the Company’s activities.

Any additional equity financing will dilute shareholdings, and debt financing may involve restrictions on financing and operating activities.

(c)

Achievement of Objectives/Funding Risk

The Company may not be successful in either realising sufficient value for its existing projects if divested or in acquiring a new business or project of sufficient merit, strength or potential.

The Directors are unable to provide investors with information as to the ultimate investments to be made by the Company, as no new investment has been selected. Investors must therefore make their decision to invest on the basis of the skills of the Directors.

The raising of additional funds to acquire and support the acquisition of a new business or project may not be possible or not on sufficiently attractive terms. This may be due to reasons such as general market conditions and investor sentiment and confidence.

No assurance can be given that future funding will be available to the Company on favourable terms, or at all.

(d)

Industry Risk

The Company is not yet in a position to determine in what new industry or industries it may invest any funds raised by this Offer. Each industry in which the Company elects to invest or currently invests in carries with it individual risks associated with that industry. The Company's existing mineral exploration operations in Latin America have inherent risks, which may have a material effect on the Company's future performance and the value of the New Shares, and those operations are considered speculative. Any new asset or project identified by the Company in a different industry will have specific risks as well as the broader risks which affect that industry, and those more

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general risks associated with investing in the share market, The Company is not yet in a position to identify the risks associated with any different industry in which the Company may elect to invest.

(e) Timing

The Company has not presently identified a new suitable asset or project. The timing of such asset identification is unknown and the Directors can give no assurance as to the ultimate timing.

(f)

Limited History

The Company has a limited performance history and related financial information. The Company’s prospects must be considered in light of the risks, expenses and difficulties encountered by companies with assets in the early stages.

(g) Dilution Risk

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 129,338,312 currently on issue to 323,345,780. 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 of $0.005 is not a reliable indicator as to the potential trading price of Shares after any acquisition of a new suitable asset or project.

(h)

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.

(i) Tenure Risk

The Company:

(1) is the registered holder of mineral concessions in Peru and Chile;
(2) is the applicant for mineral concessions in Chile,

(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 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

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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 Mineral Interests. In the case of the underlying concession, periodic payments are made which equates to 'good financial standing' under the terms of grant of those Mineral Interests. Equally, activities are in some instances 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.

(j)

Peru and Chile

The Company’s Majada, 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 access, labour relations, and mining and exploration activities may affect the operations of the Company.

(k) 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.

As appropriate, and to mitigate environmental risk, the Company intends to ensure that it has 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.

(l)

Changes in Government Policy and Laws

Changes in government laws, regulations, policies and administrative regimes, particularly those affecting ownership of property, tenure, taxation, royalties, land access, labour relations, 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.

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(m) 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.

(n)

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.

(o)

Operating Risks

The operations of the Company may be affected by various factors including operational and technical difficulties, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated geotechnical and metallurgical problems which may affect extraction costs, adverse reservoir conditions, weather conditions, unexpected maintenance, unplanned capital expenditure, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment.The occurrence of any of these factors could result in substantial liability being incurred by the Company.

To mitigate the impact of the factors mentioned above which may affect the operations of the Company, it intends to ensure that appropriate insurance is maintained within ranges of coverage that the Company believes to be consistent with industry practice and having regard to the nature of activities being conducted. No assurance, however, can be given that the Company will be able to obtain such insurance coverage at reasonable rates or that any coverage it arranges will be adequate and available to cover any potential claims. Insurance cover may not be available for every risk faced by the Company. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

(p)

Reliance on Key Management

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.

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.

(q)

Competition Risk

Activities in which the Company is, or may be, involved are typically subject to country and global competition. Although the Company will undertake all reasonable due diligence in its business direction and operations, the Company will have no influence or control over the activities or actions of its competitors, which activities or actions

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may, positively or negatively, affect the operating and financial performance of the Company’s projects and business.

(r)

Sovereign Risk and Foreign Country Risk

Future government actions in jurisdictions in which the Company currently has or may have interests and concerning the economy, ownership or business or operations, repatriation of profits, corporate policies, taxation polices, environmental policies, changes in political conditions or the operation and regulation of commercial enterprises generally, could affect the Company and its financial performance. In addition the Company may be exposed to other risks pertaining to such foreign countries in which it has interests including labour disputes, corruption, uncertain political and economic environments, civil disturbances and crime and arbitrary changes in laws or policies.

In addition, the Company must conform to the taxation regimes in the foreign countries in which it has interests. These regimes may be subject to change. The foreign investment policies in the foreign countries in which the Company holds interests may affect the Company’s ability to conduct business in these countries, successfully repatriate funds to Australia and retain its foreign assets.

(s)

Currency Risk

Adverse movements in the exchange rate may materially impact on the Company’s competitiveness, cost base, revenue streams and on the commercial viability of specific projects or investments by the Company as a whole.

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 may be set 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.

(t)

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 any industry the Company will be operating in will not always be available and where available the costs may be prohibitive.

(u)

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.

(v)

Commodity and Market Risk

The Company’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, the Company’s potential future earnings could be closely related to the price of the Commodities.

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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 the Company 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, the Company 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.

5.3 General risks

(a) Share Market Investments

The New Shares and Attaching Options are to be quoted on the ASX. The price of the New Shares 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 and Attaching Options 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 and Attaching Options 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 or Attaching Options may not receive the entire amount of their original investment. There can be no guarantee that an active market in the Shares will develop or that the price of the New Shares or Attaching Options 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:

(1) general economic conditions in Australia and its trading partners and, in particular, inflation rates, interest rates, exchange rates, commodity supply and demand factors;
(2) financial failure or default by a participant in any of the joint ventures, activities or other contractual relationship to which the Company is, or may become, a party;
(3) insolvency or other managerial failure by any of the contractors used by the Company in its activities; and

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(4) 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 Underwriting Agreement

The Company has entered into the Underwriting Agreement with the Underwriter, appointing the Underwriter to exclusively manage the Offer and fully underwrite the subscription and sale of the Underwritten Securities. Under the Underwriting Agreement, the Underwriter is entitled to appoint a sub-underwriter to underwrite as much of the Rights Issue as it sees fit.

Set out below is a summary of the material terms of the Underwriting Agreement.

The obligations of the Underwriter under the Agreement to subscribe for the Shortfall Securities are subject to conditions precedent, namely:

(a) the Underwriter being satisfied with the due diligence investigations;
(b) the Underwriter being satisfied with the form of the Prospectus;
(c) a legal sign off letter being provided to the due diligence committee by the Company’s solicitors;
(d) the Prospectus being lodged with ASIC prior to 5:00pm on the lodgement date being 10 March 2014; and
(e) the Underwriter entering into sub underwriting agreements with sub underwriters on terms and conditions satisfactory to the Underwriter.

In consideration for undertaking its obligations under the Underwriting Agreement, the Company has agreed to:

(a) pay the Underwriter a management and underwriting fee of 6% of the Underwritten Amount, which is 6% of $582,022 (the Underwriting Fee ); and
(b) issue to the Underwriter 40,000,000 Options exercisable at $0.01 per Option and expiring on 15 November 2017 ( Underwriter Options ).

The Underwriting Fee shall only be payable by the Company in the event that the Offer proceeds. Any sub-underwriting and selling fees to third parties will be met from this fee by the Underwriter. In addition to this, in the event that the Company terminates the Underwriting Agreement, it must pay any expenses incurred or accrued up to the date of termination.

The Company has agreed to indemnify the Underwriter, in respect of all costs of and incidental to the Issue, and further indemnify the Underwriter and related parties against all losses, liabilities and claims in respect of the Prospectus, the Issue and associated documents to the Issue.

The Company makes standard representations and warranties to the Underwriter.

The Underwriting Agreement makes provisions for certain covenants to be observed by the Company and also circumstances in which the Underwriter may terminate the Underwriting Agreement. Some of those provisions which allow termination of the Underwriting Agreement are summarised as following:

(a) if the ASX All Ordinaries Index is at any time after the date of this 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;

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(b) if the Company’s Shares have a closing price at any time after the date of the Underwriting Agreement less than the $0.003 for the Shares under this Offer for two consecutive days;
(c) the Company does not lodge the Prospectus on the lodgement Date, or the Offer is withdrawn;
(d) the Company fails to provide 10 copies of the Prospectus (and any additional copies as requested) to the Underwriter;
(e) ASX notifies that Official Quotation will not be granted, or once granted, is withdrawn;
(f) 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;
(g) the Prospectus does not contain all of the information required by section 713 of the Corporations Act and 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 (having regard to the provisions of section 713 of the Corporations Act) or if any statement in the Prospectus is or becomes misleading or deceptive or likely to mislead or deceive or if the issue of the Prospectus is or becomes misleading or deceptive or likely to mislead or deceive;
(h) the Company is prevented from allotting the Shares, the Attaching Options and the Underwriter Options;
(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 and any of its subsidiaries is charged with an indictable offence in their capacity as a director or senior manager of the Company; or
(p) any of the termination events listed in 13.1(r) of the Underwriting Agreement occur.

The Underwriter has entered into arrangements with sub-underwriters for any Shortfall. Any sub-underwriter fees as a result of such sub-underwriting arrangements will be paid by the Underwriter out of the Underwriting Fee.

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6.2 Sub-underwriting Agreements

The Underwriter has entered into sub-underwriting letters ( Sub-underwriting Letters ) with other investors who are not related parties of the Company ( Sub-underwriters ), collectively up to a maximum of $582,022 worth of New Shares and 48,501,867 Attaching Options.

The obligations of the Underwriter under Sub-underwriting Letters will terminate if the Underwriting Agreement is terminated.

6.3 Corporate Advisory Services Mandate Agreement

The Company and DJ Carmichael Pty Limited ( DJ Carmichael ) entered into a 12 month corporate advisory services mandate agreement on 28 February 2014 ( Mandate ). Pursuant to the Mandate, DJ Carmichael will provide advisory services to the Company, including identification of new opportunities, lead manage any potential capital raising associated with the acquisition of new ventures and general corporate advice ( Services ). The Company will pay DJ Carmichael for the Services, a corporate advisory fee of $8,500 (plus GST) per month and a success fee of $175,000 in the event of a successful new venture acquisition plus any out of pocket expenses.

6.4 Nominee Engagement Letter

The Company has appointed the Underwriter as the nominee ( Nominee ) for the purposes of Section 9A of the Corporations Act and the Listing Rules to sell the rights to acquire New Shares ( Excluded Shareholder Entitlements ) that would have otherwise been issued to Foreign Shareholders had they been entitled to participate in the Issue ( Excluded Shareholders ).

The Nominee must, upon having the Excluded Shareholder Entitlements issued to it, sell the Excluded Shareholder Entitlements (in such proportions and to such persons as it determines in its absolute and unfettered discretion) prior to the closing date of rights issue trading.

The Nominee will not be subject to any liability for failure to sell the rights or to sell them at a particular price. If, in the reasonable opinion of the Nominee, there is not a viable market for the rights or a surplus over the expenses of the sale cannot be obtained for the rights, then the rights will be allowed to lapse and they will form part of the shortfall.

The Nominee will charge a fee of $500.00 plus GST or 1% plus GST of the value of the sales executed, whichever is the greater.

6.5 Inspection

Copies of the above material contracts and the consents referred to in Section 7.13 may be inspected at the registered office of the Company.

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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 New Shares.

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) audited financial statements for the Company for the year ended 30 June 2013;
(b) 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 2013 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 since the date of lodgement of the Company’s latest annual financial report and before the lodgement of this Prospectus with the ASIC are set out below.

Date Announcement

03/03/2014 Initial Director’s Interest Notice 03/03/2014 Reinstatement to Official Quotation 03/03/2014 Renounceable Rights Issue Unsecured Loan New Director 03/03/2014 Appendix 3B 24/02/2014 Renounceable Entitlement Issue and Converting Loan Agreement 02/02/2014 Activities Report Clarification 10/02/2014 Corporate Update 03/02/2014 Corporate Update – Credit facility 03/02/2014 Activities Report and Appendix 5B 28/01/2014 Corporate Update 20/01/2014 Extension of Voluntary Suspension 17/01/2014 Appendix 3B for expiry of 2012 IPO restrictions 09/01/2014 Final Director’s Interest Notice 06/01/2014 Corporate Update 03/01/2014 Expiry of Restriction Period 27/12/2013 Suspension from Official Quotation 23/12/2013 Trading Halt

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Date

Announcement

19/11/2013 Notice under section 708A(6) 19/11/2013 Appendix 3B 18/11/2013 Cancellation of Unquoted Options 07/11/2013 Results of Meeting 07/11/2013 Chairman’s Address to Shareholders 05/11/2013 Placement completed at nil premium 31/10/2013 Trading Halt 31/10/2013 Operations Report and Appendix 5B 30/10/2013 Gateway Proposal for Significant Chilean IOCG Expansion

07/10/2013 Notice of Annual General Meeting/Proxy Form 30/09/2013 Annual Report to shareholders

The highest and lowest prices of shares in the Company on the ASX in the 6 month period before the date of this Prospectus and the respective dates of those sales are set out below.


	High		Low
	(cents)		(cents)
One month	$0.013	05/03/14	$0.003	07/03/14
Three months	$0.013	10/12/13	$0.013	11/12/13
Six months	$0.024	18/09/2013	$0.015	09/12/13

The last closing price of Shares as at 10 March 2014 was $0.005.

The Offer Price represents a discount of $0.002 per Share to the last closing price of Shares on 10 March 2014, being the date before lodgement of this Prospectus (disregarding the value of the Attaching Options). The Offer of up to 194,007,468 New Shares and discount with respect to the last closing 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

The rights attaching to Shares in the Company are set out in the Constitution of the Company.

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 who are present in person or by proxy, attorney or representative have 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.

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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 issue of any new Shares and Options is under the control of the Directors of the Company. Subject to restrictions on the issue or grant of Securities contained in the ASX Listing Rules, the Constitution and the Corporations Act (and without affecting any special right previously conferred on the holder of an existing share or class of shares), the Directors may issue Shares and Options as they shall, in their absolute discretion, determine.

Variation of rights

If at any time the share capital is divided into different classes of shares, preference capital (other than redeemable preference capital) shall not be repaid, and the rights attached to any class of shares (unless otherwise provided by the terms of issue of the shares of that class), shall not at any time be varied without the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the 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 Attaching Options

As outlined above, one Attaching Option is issued for every four New Shares subscribed on the terms as set out below:

(a) The exercise price of each Attaching Option is 1.0 cent per Share;
(b) each Attaching Option shall entitle the holder the right to subscribe (in cash) for one Share in the capital of the Company;
(c) the Attaching Options will expire at 5.00pm AEDT on 15 November 2017. Subject to clause (g), Attaching Options may be exercised at any time prior to the expiry date and Attaching Options not so exercised shall automatically expire on the expiry date;
(d) each Share issued as a result of the exercise of any Attaching Option will, subject to the Constitution of the Company, rank in all respects pari passu with the existing Shares in the capital of the Company on issue at the date of issue;
(e) a registered owner of an Attaching Option will not be entitled to attend or vote at any meeting of the members of the Company unless they are, in addition to being an Attaching Option holder, a member of the Company;

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(f) Attaching Options are transferable at any time prior to the expiry date. This right is subject to any restrictions on the transfer of Attaching Options that may be imposed by the ASX in circumstances where the Company is listed on the ASX;
(g) the method of exercise of an Attaching Option:
(1) the Company will provide to each Attaching Option holder a notice that is to be completed when exercising the Attaching Options ( Notice of Exercise of Options ). Attaching Options may be exercised by the Attaching Option holder by completing the Notice of Exercise of Options and forwarding the same to the Company Secretary to be received prior to the expiry date. The Notice of Exercise of Options must state the number of Attaching Options exercised and the consequent number of ordinary shares in the capital of the Company to be issued; which number of Attaching Options must be a multiple of 2,500 if only part of the Attaching Option holder’s total Attaching Options are exercised, or if the total number of Attaching Options held by an Attaching Option holder is less than 2,500 then the total of all Attaching Options held by that Attaching Option holder must be exercised;
(2) the Notice of Exercise of Options by an Attaching Option holder must be accompanied by payment in full for the relevant number of shares being subscribed, being an amount of 1.0 cent ($0.01) per Share;
(3) Subject to this clause (g), the exercise of less than all of an Attaching Option holder’s Attaching Options will not prevent the Attaching Option holder from exercising the whole or any part of the balance of the Attaching Option holder’s entitlement under the Attaching Option holder’s remaining Attaching Options;
(4) within 14 days from the date the Attaching Option holder properly exercises Attaching Options held by the Attaching Option holder, the Company shall issue to the Attaching Option holder that number of Shares in the capital of the Company so subscribed for by the Attaching Option holder;
(5) the Company will within 3 business days from the date of issue of Shares pursuant to the exercise of an Attaching Option, apply to the ASX for, and use its best endeavours to obtain, Official Quotation of all such Shares, in accordance with the Corporations Act and the Listing Rules of the ASX; and
(6) the Company will generally comply with the requirements of the Listing Rules in relation to the timetables imposed when quoted Attaching Options are due to expire. Where there shall be any inconsistency between the timetables outlined herein regarding the expiry of the Attaching Options and the timetable outlined in the Listing Rules, the timetable outlined in the Listing Rules shall apply;
(h) application for quotation of the Attaching Options on the ASX will be made;
(i) in the event of a reconstruction (including a consolidation, sub-division, reduction or return) of the issued capital of the Company, all rights of the Attaching Option holder will be changed to the extent necessary to comply with the Listing Rules applying to the reconstruction of capital, at the time of the reconstruction;
(j) there are no participating rights or entitlements inherent in the Attaching Options to participate in any new issues of capital which may be made or offered by the Company to its shareholders from time to time prior to the expiry date unless and until the Attaching Options are exercised. The Company will ensure that during the exercise period, the record date for the purposes of determining entitlements to any new such issue, will be at least nine (9) business days after such new issues are announced (or such other date if required under the Listing Rules) in order to afford the Attaching

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Option holder an opportunity to exercise the Attaching Options held by the Attaching Option holder;

(k) there are no rights to change the exercise price of the Attaching Options or the number of underlying Shares.

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.au.

The Company reports on its compliance with the recommendations made by the Corporate Governance Principles and Recommendations in its 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 its 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
(b) for services provided by a director in connection with:
(1) the formation or promotion of the Company; or
(2) the Offer.

The interests of the Directors in the Company are set out in Section 1.11.

7.7 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.

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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 director’s fees. The aggregate amount that may be paid to Non-Executive Directors in director’s fees is $240,000 per annum. The actual amount currently paid is $72,000 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.

7.8 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.

DJ Carmichael Pty Limited ( DJ Carmichael ) has been appointed as Underwriter and will be paid an underwriting fee of approximately $34,921 in respect of this Offer. DJ Carmichael has also been appointed as the nominee under ASX Listing Rule 7.7 and will be paid for this service on standard industry terms and conditions. During the 24 months preceding lodgement of this Prospectus with the ASIC, DJ Carmichael has been paid fees totalling $275,592 by the Company.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer. The Company estimates it will pay Steinepreis Paganin $15,000 (excluding GST and disbursements) for these services. During the 24 months preceding lodgement of this

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Prospectus with the ASIC, Steinepreis Paganin has been paid fees totalling $18,785.35 (excluding GST and disbursements) for legal services provided to the Company.

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

7.9 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.

7.10 Litigation

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

7.11 Privacy

By submitting an Entitlement and Acceptance Form for New 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 Investor Services Pty Limited, an external service provider. The Company requires Computershare Investor Services Pty Limited 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; and

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(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 Investor Services Pty Limited, except in limited circumstances. If you wish to access, update or correct your personal information held by Computershare Investor Services Pty Limited 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.

7.12 Expenses of the Offer

In the event that all Entitlements are accepted, the total expenses of the Offer are estimated to be approximately $64,299 (excluding GST) and are expected to be applied towards the items set out in the table below:

ASIC fees ASX fees Underwriting fees Legal fees Printing and distribution Miscellaneous Total	$ 2,225 6,153 34,921 15,000 5,000 1,000
	64,299

7.13 Consents and disclaimers

Each of the parties referred to in this section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this section;
(b) to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section;
(c) DJ Carmichael Pty Limited has given, and has not withdrawn, its written consent to being named in this Prospectus as Underwriter to the Offer and the Company’s nominee under ASX Listing Rule 7.7 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; and
(d) Steinepreis Paganin has given, and has not withdrawn, its written consent to being 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.

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7.14 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
ASIC	Australian Securities & Investments Commission
Attaching Options	Attaching options issued under the Offer on the terms set out in
	Section 7.4
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	The date by which valid acceptances must be received by the
	Share Registry being 5pm (AEDT) 7 April 2014 or such other
	date determined by the Board
Company or Red Gum	Red Gum Resources Limited ACN 119 641 986 and its
	subsidiaries
Constitution	The Articles of the Company (equivalent to a constitution under
	the Corporations Act)
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)
Directors	The directors of Red Gum from time to time

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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
General Meeting	means a general meeting of Shareholders to be held on or
	around 15 April 2014.
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	$0.003 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
Opening Date	24 March 2014
Options	Options on issue in Red Gum from time to time
Prospectus	This prospectus dated 10 March 2014 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	19 March 2014
Register	Company Register of Red Gum
Securities	Has the same meaning as in Section 92 of the Corporations Act
Share Registry	Computershare Investor Services Pty Limited ABN 48 078 279
	277
Share	An ordinary fully paid share on issue in Red Gum from time to
	time
Shareholders	The holders of Shares from time to time
Shortfall Offer	has the meaning in Section 1.3 of this Prospectus.

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Shortfall Securities means those Securities issued pursuant to the Shortfall Offer. Sophisticated Investors Investors who qualify as sophisticated investor pursuant to Section 708(8) of the Corporations Act Underwriter or DJ Carmichael DJ Carmichael Pty Limited Underwriting Agreement The underwriting agreement entered into between the Company and the Underwriter dated 10 March 2014

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Corporate Directory

Directors and Company Secretary	Solicitors to the Offer
Dr Ray Shaw (Chairman and Executive Director) Ms Jennifer Tobin (Non-Executive Director) Mr Edwin Bulseco (Non-Executive Director) Mr Malcolm Lucas-Smith (Company Secretary)	Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth WA 6000 Tel: +61 8 9321 4000 Fax: +61 8 9321 4333 www.steinpag.com.au
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 8223 1685 www.redgumresources.com.au	Computershare Investor Services Pty Limited Level 5, 115 Grenfell Street Adelaide SA 5000 Tel: 1300 556 161 (within Australia) Fax: +61 3 9415 4000 www.investorcentre.com
Underwriter	Auditor*
DJ Carmichael Pty Limited Level 3, London House 216 St Georges Terrace, Perth WA 6000 Tel: +618 9263 5200 Fax: +618 9263 5280 www.djcarmichael.com.au	K.S. Black & Co Level 6, 350 Kent Street Sydney NSW 2000 Tel: +612 8839 3000 Fax: +612 8839 3055 www.ksblack.com.au

This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus.

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AI assistant

MCS SERVICES LIMITED — Capital/Financing Update 2014

65377_rns_2014-03-09_7d6b7093-9c0a-4795-8c13-40ab53df5a9b.pdf

Prospectus

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

The Offer is fully underwritten

Underwriter to the Offer: DJ Carmichael Pty Ltd

Offer Statistics

Timetable for important dates

Prospectus

Important notice

Important information for Shareholders with registered addresses outside Australia and New Zealand

Forward Looking Statements

Prospectus

Warning

Prospectus

Prospectus

Chairman’s letter

1. Investment Overview

1.1

Investment Highlights

1.3

Shortfall Offer

1.4 Capital Structure

Notes:

1.5

New Share and Attaching Option terms

1.6

Renounceable Offer and entitlements trading

1.7 Underwritten Offer

1.8 Acceptance of Entitlement to New Shares and Trading of Rights

1.9

Additional Shares

1.10

Purpose of the Offer and use of funds

Prospectus

1.11 Directors’ interests

1.12

Key Risk Factors

2. Details of the Offer

2.1 Offer to Eligible Shareholders

2.2

Important dates

2.3

Additional Shares

2.4

How to accept your Entitlement

Prospectus

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

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

(d)

Entitlement not taken up

2.5 Allotment and allocation policy

2.6

ASX listing

2.7 CHESS

2.8

Minimum subscription

2.9

Foreign Shareholders

2.10

Electronic Prospectus

3. Information on Red Gum

3.1 Company overview

3.2 Mission and Objectives

3.3 Board of Directors & Company Secretary

Dr Raymond Shaw (Executive Director and Chairman)

Ms Jennifer Tobin (Non-Executive Director)

Mr Edwin Bulseco (Non-Executive Director)

Prospectus

Mr Mal Lucas-Smith (Company Secretary)

3.4 Role of Directors and Management

3.5

Availability of Directors and Company Secretary

4. Effect of Offer on Red Gum

4.1 Effect of the Offer on the Company

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

4.3 Effect on capital structure

Shares

Options

MCS SERVICES LIMITED Capital/Financing Update 2014