MCS SERVICES LIMITED - Interim / Quarterly Report 2013

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Red Gum Resources Limited Operations Report for the Third Quarter

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HIGHLIGHTS

MAJADA NORTHERN CHILE

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RED GUM SIGNS OPTIONS TO ACQUIRE MAJADA COPPER-GOLD PROJECT – As part of the Company’s strategy of balancing its commodity weighting towards copper and gold, Red Gum entered into eight separate option agreements with a number of private individuals to acquire the Majada Copper-Gold Project located 120 kilometres south of La Serena in Region IV of northern Chile. Legal due diligence was completed during the Quarter.
EXTENSIVE IRON OXIDE COPPER-GOLD SYSTEM INTERPRETED AT MAJADA – Commenced IP and magnetic surveys. Preliminary field results suggest the presence of an extensive sulphidic copper-gold system located beneath strings of old artisanal pits, which in turn occur along the sheared contacts between intrusive and volcanic rocks.. A 1,500 metre first pass drilling program is programmed to start in April 2013.

CERRO HUANCASH, CENTRAL PERU

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DEVELOPMENT OF DRILL TARGETS AND ENVIRONMENTAL PERMITTING- Following successful completion of geological, geochemical and geophysical studies in 2012, the project is being prepared for a drilling program in late 2013 along an extension of the Ariana Corridor trend which is currently being developed by Southern Peaks Mining immediately to the north.

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CAPITAL

During the Reporting Period:

The Company had the following securities on issue at 31 March 2013:

Quoted ordinary shares Escrowed ordinary shares Total ordinary shares Unquoted stock options on issue	Number
	44,552,795 30,425,932
	74,978,727
	4,000,000

OPERATIONAL ACTIVITIES - CHILE

Operational activities in Chile during the Reporting Period were as follows:

Evaluation of new Copper-Gold Opportunities in Region IV of Chile

As part of the Company’s strategy of balancing its commodity mix in favour of copper and gold, the Company has pursued a number of new copper-gold opportunities that will feed the Company’s project pipeline into the future. The Company’s field base at Combarbala in Region IV has served as a springboard for active project generation operations and the Company’s personnel have reviewed a considerable number of third party exploration projects during the Reporting Period.

In addition to having superior geotechnical attributes, project selection has emphasised access to infrastructure and proximity to existing processing operations, in order to take advantage of potential operational and future supply chain infrastructural solutions.

Agreement Signed for Majada Copper-Gold Project

As outlined in the ASX release dated 27 March 2013, after successful completion of due diligence, the Company entered into eight separate and binding option agreements with a number of private individuals for an option to acquire the Majada project.

The Agreement gives Red Gum access to the Majada Copper-Gold Project which consists of 587 hectares located in the Iron Oxide Copper Gold (IOCG) Belt of northern Chile approximately 120 kilometres south of La Serena in Region IV (Figures 1 and 2). Majada represents the first new project to be potentially acquired as the continuation of the Company’s corporate strategy of balancing its commodity mix in favour of copper and gold.

Under the terms of the Option Agreements, Red Gum will have the right to earn a 100% interest in the nine claims, comprising the Project, by making staged, six monthly, option payments totalling 679.5 million Chilean pesos (A$ 1.44 million at current exchange rate) to the owners over a 3 year period from the date of signature. Should Red Gum elect to exercise the final option and acquire the properties at any time during the next 3 years, the owners would also have the right to receive an additional, and once only, payment of 600 million Chilean pesos (A$ 1.27 million at current exchange rate) upon Red Gum achieving commercial production.

Geological and Geophysical Activities at Majada

As part of the technical due diligence field geological studies were conducted on the Majada Project during the Reporting Period, following the establishment of a digital photometric data-base.

During the Quarter, digital compilation was completed of the 1:5,000 geological mapping completed over the whole area of the Majada Project. Figure 3 shows the mapped hard geology.

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Figure 1 : Location of the Majada Project in the Chile IOCG belt

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Figure 2 : More detailed location map of the Majada Project in the Chile IOCG belt

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