MCS SERVICES LIMITED — Interim / Quarterly Report 2014

Oct 30, 2013

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Appendix 5B – September 30, 2013

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Red Gum Resources Limited (ASX : RGX) Appendix 5B – Sept 2013

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HIGHLIGHTS

• ￭ Promising exploration results during the Reporting Period.

• ￭ Drilling confirms strong grades in new Copper‐ Silver‐Gold discovery at Majada West and in a new Copper‐Gold‐Silver‐Molybdenum discovery at Majada East.

• ￭ Mineralisation at Majada West associated with a shear zone that extends for at least 800 m along strike, is approximately 15 m thick and has a down‐dip width of at least 150m.

• ￭ Zones of high Molybdenum tenor identified; Majada East reported up to 3 m grading 1800 ppm including a 1 m thick interval grading 2340 ppm Molybdenum.

• ￭ Consolidation of acreage position following Majada discovery with application for additional exploration concession areas.

• ￭ All resolutions approved at General Meeting of Shareholders held on 25 July 2013.

• ￭ Currently in negotiations with third parties – for strategic alliances with respect to exploration, funding and/or development opportunities.

￭

Table of Contents

OPERATIONAL ACTIVITIES .......................................................................................................................... 1 COMPETENT PERSON’S STATEMENT ......................................................................................................... 6 CORPORATE AND FINANCIAL ..................................................................................................................... 7 Mining exploration entity quarterly report ........................................................................................ 8 Consolidated statement of cash flows .................................................................................................. 8 Payments to directors of the entity and associates of the directors ............................................... 9 Payments to related entities of the entity and associates of the related entities ......................... 9 Non‐cash financing and investing activities ..................................................................................... 10 Estimated cash outflows for next quarter ......................................................................................... 10 Reconciliation of cash ........................................................................................................................... 10 Changes in interests in mining tenements ........................................................................................ 11 Issued and quoted securities at end of current quarter ................................................................. 11 Compliance statement .......................................................................................................................... 12 Notes ........................................................................................................................................................ 13

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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Operational Activities

Majada Project

The Majada Project drilling program was completed and several announcements were lodged with the ASX during the Reporting Period. As announced to the ASX on 17 September 2013, the highlights of that program, which resulted in two, new separate mineral discoveries being made, at Majada East and Majada West, were as follows:

• Drill results confirmed strong grades in Copper-Silver-Gold Discovery at Majada West, where a mineralised shear zone extends for at least 800 metres along strike, is approximately 15 metres thick and has a down-dip width of at least 150 metres.

• Majada West mineralised target zone open in all directions and the recent discovery of new

• outcropping zones of mineralisation also provide encouragement for an expanded mineralised footprint.

• Drill results confirmed Copper-Gold-Silver-Molybdenum Discovery at Majada East; high grade

• vein plus disseminated-style mineralisation identified.

• Zones of high Molybdenum tenor identified at Majada East, reporting up to 3.0 metres grading

• 1,800 ppm Molybdenum and including a 1 m thick interval grading 2,340 ppm Molybdenum.

• Strong intersected Copper grades exceeded expectations; at Majada West intercepts up to 18 m wide grading 0.67% Copper including higher grade intervals of up to 3.0 m grading 1.72% Copper. At Majada East, intercepts up to 7.0 m grading 1.37% Copper, 0.19 g/t Gold, 2.5 g/t Silver and 139 ppm Molybdenum (including an interval of 1.15 m grading 5.54% Copper, 0.67 g/t Gold, 10.5 g/t Silver and 47 ppm Molybdenum).

About the Majada Copper‐Gold Project

The Majada Project encompasses two separate Copper-Gold mineralisation trends, totalling over 5 km in length. The Majada Copper-Gold Project is located within an established IOCG Belt of northern Chile, approximately 120 km south of La Serena in Region IV. The project consists of 587 hectares of third party exploitation mineral claims, distributed in two geographically separated areas; Majada Este (East) and Majada Oeste (West). The Majada Project is close to two significant IOCG discoveries – Manuelito and San Lorenzo. It is proximal to both power and road infrastructure and lies at relatively low altitudes (~600 m) where it is not impacted by adverse weather windows.

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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The Majada Copper-Gold Project is located within the IOCG Belt of northern Chile, approximately 120 kilometres south of La Serena in Region IV. Red Gum has the right to earn a 100% interest in the nine claims comprising the Project. The nine claims total 587 hectares of third party exploitation mineral claims, distributed in two geographically separated areas; Majada Este and Majada Oeste.

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Figure 1 – Location of Majada and La Negra Projects in Region IV, Chile.

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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In addition, Red Gum has applied for new exploration claims adjoining the Majada Oeste area, totalling an additional 400 hectares. Despite numerous shallow surface workings there is no evidence of pre-existing drilling within the Majada area.

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Figure 2 – 2013 Drill Results Majada West Project.

The Majada Este area , comprising five mineral claims totalling 267 hectares, contains a number of oxide pit workings coincident with the surface outcrop of a belt of intensely sheared and altered andesite volcanics, along the contact of granitic intrusive rocks located to the west. In addition, dump material from a number of small underground adits, at topographically lower levels, display strong sulphide mineralisation (including bornite and chalcopyrite).

Majada Oeste area , comprising four claims totalling 320 hectares, is located on a broad N-S brittle-ductile shear zone, mapped along the contact between granitic intrusive rocks and andesitic volcanic rocks. The distribution of artisanal workings suggests that this zone controls copper-gold mineralisation within the area. Although there has been no previous historical exploration drilling on this area it was subject to geochemical sampling, and some magnetic and induced polarisation surveying, in 1999. Surface geochemistry sampling of the oxide mineralisation, which was being exploited in the pits, reported maximum copper values up to 2.53% and maximum gold values up to 4.04 g/t (although these have not been verified). Red Gum’s geological mapping has defined a NNW-SSE striking, moderately W-dipping shear zone structure over 3.0 km of strike length.

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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During the Reporting Period the Company announced that it had made application for new concessions located to the northeast of Majada West. Upon grant these concessions will substantially enhance the Company’s ability to benefit from the local knowledge already gained from mapping and drilling in order to apply it to the exploration across a regionally extensive granitic intrusive, the boundaries of which are known to host significant copper mineralisation just 12 kilometres along strike to the north at Glencore’s Punitaqui mine site.

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Figure 3 - Interpreted geological E-W section through drill holes RMD001 and RMD009 from Majada West. The holes successfully intercepted the west-dipping mineralised “manto” at +150m downdip beneath the Chinita Open Pit.

La Negra Project

In order to strengthen the long term interests of our holdings in the area, Red Gum is currently involved in the conversion of its current concessions covering La Negra exploration claims (concesiones) to exploitation claims (mesuras).

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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Cerro Huancash Project

During the Reporting Period a Canadian based consulting group, mandated to undertake a formal process on behalf of the Company, completed an information memorandum. This is being circulated to interested parties in order to garner expressions of interest for their participation in the Cerro Huancash Project. As previously mentioned a range of potential outcomes is envisaged. The Company’s preference is that, should it continue to retain an interest in this Project, it does so with no requirement to contribute to short and medium term exploration goals and expenditure.

Safety and the Environment

During the Reporting Period there were no safety or environmental issues reported as a result of the Company’s activities.

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Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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COMPETENT PERSON’S STATEMENT

The information in this Report, or where applicable the information in the Report to which this statement is attached, that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by independent consultant Mike Easdon. Mr Easdon holds B.Sc and M.Sc degrees from McGill University Canada and has more than 40 years industry experience, principally in North America and Latin America, in precious and base metal mineral exploration and development. Mr Easdon is not employed by the Company or by any other party, and is a consultant. He is a member of a "Recognised Overseas Professional Organisation" included in a list promulgated by the ASX from time to time, since he is a Certified Practicing Geologist (CPG07646) with the American Institute of Professional Geologists.

Mr Easdon has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Easdon consents to the inclusion in the Report of the matters based on his information in the form and context in which it appears.

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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CORPORATE AND FINANCIAL

Corporate Activities

• ￭ General Meeting of Shareholders

At an Extraordinary General Meeting of Shareholders held on 25 July 2013 both ordinary resolutions were carried with a show of hands. Resolution 1 related to the issue of Corporate Advisory service fee options and Resolution 2 with the issue of Underwriter’s and Broker’s fee options. Appendix 3B’s were lodged with the ASX in relation to the issue of options in accordance with these resolutions on 2 September and 5 September 2013, respectively.

￭ Cancellation of Unquoted Options

As announced to the ASX on 6 August 2013, 3 million unquoted restricted options (ASX: RGXAW) with various exercise prices and expiry dates were cancelled due to the terms of issue of those options having not been met.

• ￭ Annual Report and Announcement of Annual General Meeting

On 30 September 2013 the Company released its Annual Report for the 2013 Financial Year. Subsequent to the Reporting Period, on 7 October 2013 the Company issued a Notice and Information Memorandum to hold the Annual General Meeting in Adelaide on 7 November 2013.

Reconciliation of expenditure

This is the first quarterly report for Red Gum Resources Limited for the year ending 30 June 2014.

Exploration and evaluation

The estimated exploration and evaluation expenditure cash flows amounted to $255,000, and actual expenditure amounted to $428,000. The increase is due to higher exploration costs, including drilling costs, associated with the Majada Copper-Gold Project.

Administration

The estimated administration expenditure cash flows included in the previous report amounted to $150,000, actual expenditure amounted to $218,000. The increase is due to higher professional fees and travel costs.

Cash at the end of the Quarter

Cash at 30 September 2013 amounted to $99,395.

Attached is the Appendix 5B Consolidated Statement of Cash Flows for the period from 1 July 2013 to 30 September 2013.

Raymond D Shaw B.Sc (Hons), Ph.D (Univ of Syd) , Member of AusIMM

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

RED GUM RESOURCES LIMITED

ABN ABN 66 119 641 986	Quarter ended (“current quarter”)
ABN 66 119 641 986	30 September 2013

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors –sale of project 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other Net Operating Cash Flows	Current quarter $A’000	Year to date (3 months) $A’000
	- (428) - - (218) - 3 - - -	- (428) - - (218) - 3 - - -
	(643)	(643)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	- - - - - - - - -	- - - - - - - - -
	-	-
	(643)	(643)

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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	Current quarter $A’000	Year to date (3 months) $A’000
1.13 Total operating and investing cash flows (brought forward)	(643)	(643)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Share Issue Costs Net financing cash flows	- - - - - (29)	- - - - - (29)
	(29)	(29)
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(671) 771 -	(671) 771 -
	99	99

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		80
		-
1.25	Explanation necessaryforanunderstanding ofthe transactions
	Cash payment in respect of directors’ gross remuneration and fees.

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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Non‐cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

N/A

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit stand by arrangements	Amount available $A’000	Amount used $A’000
	Nil	Nil
	Nil	Nil

�

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	(75)
	-
	-
	(210)
Total	(285)

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as	Current quarter	Previous quarter
shown in the consolidated statement of cash flows) to	$A’000	$A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank	99	750
5.2 Deposits at call	-	-
5.3 Bank overdraft	-	-
5.4 Other (provide details)	-	-
Total: cash at end of quarter(item 1.22)	99	750

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note(2))	Interest at beginning of quarter	Interest at end of quarter
	N/A
	N/A

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities(description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs,redemptions	Nil	Nil
	Nil	Nil
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through Escrow release Share issue (b) Decreases through returns of capital, buy- backs	112,468,097 Includes 30,425,932 escrowed shares	82,042,165
	Nil Nil	Nil Nil
7.5 +Convertible debt securities(description)	Nil	Nil
7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	Nil	Nil

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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	Total	number	Number quoted	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.7 Options(description and conversion factor) RGXAI RGXO RGXAY New Class Total 7.8 Issued during quarter 05/08/2013 05/08/2013 05/08/2013 Total 7.9 Cancelled during quarter 7.10 Expired during quarter		18,744,690 61,234,053 1,000,000 5,000,000 85,978,743		Nil 61,234,053 Nil Nil 61,234,053	Exercise price $0.07 $0.10 $0.25 $0.15	Expiry date 15/11/2013 01/03/2016 06/09/2014 30/4/2016
		6,222,998 36,266,365 5,000,000 47,489,363		6,222,998 36,266,365 Nil 42,489,363	$0.10 $0.10 $0.15	01/03/2016 01/03/2016 30/4/2016
		1,000,000 1,000,000 1,000,000		Nil Nil Nil	$0.30 or $0.35 $0.35 or $0.40 $0.40or$0.60	25/11/2016 25/11/2017 25/11/2018
		Nil		Nil
7.11 Debentures (totals only)		Nil		Nil
7.12 Unsecured notes (totals only)		Nil		Nil

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Mr Malcolm Lucas Smith (Company Secretary) ...........................................................

Date: 31 October 2013

Red Gum Resources Limited (ASX : RGX) Appendix 5B – September 2013

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Notes

• 1 The Quarterly Report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.