PATERSON RESOURCES LTD — Interim / Quarterly Report 2014

Jul 30, 2014

==> picture [115 x 97] intentionally omitted <==

Quarterly Activities Report Quarter ended 30[th] June 2014

Corporate

In June 2014 Mr Neb Zurkic was appointed to the Board as Technical Director of Elysium after serving as Chief Technical Advisor to the board. Mr Zurkic is a graduate of RMIT University, with a Bachelor of Applied Science in Geology and holds a Masters in Mineral and Energy Economics from Macquarie University. He is a Member of the Australian Institute of Mining and Metallurgy (AusIMM) and a Registered Professional Geoscientist member of the Australian Institute of Geoscientists.

Mr Dean Pontin was appointed Project Development Manager for the Burraga Copper Project (Lloyds Mine). Mr Pontin is a graduate of Queensland University of Technology with a Bachelor of Applied Science in Surveying and holds a Graduate Diploma in Mining from Ballarat University. He is a member of the AusIMM, holds Mine Managers Certificates in Indonesia and PNG, and has a proven track record in mining and construction activities.

Exploration Activities

NSW

EL6463 (100%) EL6874 (100%) EL7975 (100%)

Development

Elysium Resources Limited (“Elysium” or "Company") (ASX:EYM) has previously announced that it is completing an Environmental Impact Study (EIS) to treat the tailings and slag dumps remaining from the mining of the historical Lloyds Copper Mine, along with an open cut at the surface of Lloyds. This work was commenced in April, with field surveys completed for Flora and Fauna, aboriginal and European heritage and ground and surface water underway.

The individual regulatory bodies responsible for granting the various permits have been made aware of the intended project as part of commencing the consultation process. A component of the EIS is a Community and Stakeholder Engagement process and as part of this process the Company met with Burraga residents at the Burraga Sports Hall on Thursday 28th May 2014 where more than 60 local residents attended. The general response to the proposed project was overwhelmingly positive.

With the EIS underway, preliminary mine planning is being undertaken concurrent with the upgrading of the JORC resources directly affecting the anticipated production. No JORC compliant resources have been estimated on the two slag dumps where systematic sampling has been carried out and the assay results have been received. A total of 95 samples were taken over the north and south dumps on a nominal 10 x 10m grid. From the 52 samples taken over the north dump, assay results averaged 2.2% Cu, considerably higher than the 2011 metallurgy result and the grade used in the financial model prepared for the 2011 pre-feasibility study

Elysium Resources Limited

ABN 45 115 593 005 Suite 705, 3 Spring Street, Sydney NSW 2000 PO Box H238, Australia Square NSW 1215 Phone: +61 2 9247 7744 Fax: +61 2 9247 7244 Email: info@elysiumresources.com.au Web: www.elysiumresources.com.au

(PFS)[1] .The metallurgy sample taken in 2011 resulted in a head grade of 0.9% Cu, 6.0 g/t Ag and 0.14 g/t Au. Along with the copper, mean zinc, lead, gold and silver results are also significantly higher than those from the metallurgy 2011 sample. From the 43 samples taken over the southern slag dump, the copper, gold and silver results were in line with the 2011 metallurgical sample result. Results for zinc are significantly better and economically relevant, although not used in the 2011 financial model.

There are two main slag dumps at Burraga; the older dump is situated to the north, closest to the Burraga township whereas the more recent dump is situated just to the north of the tailings dump. Originally all the ore mined was directly smelted in reverbatory furnaces but following the purchase of the mine by the Lloyd Copper – Mining Company in 1899, and the construction of the treatment plant in 1900, the smelter feed became acombination of high grade lump and gravity concentrate. Prior to smelting in the reverberatory furnace the sulphide ore was calcined. The larger and more recent slag dump is from the Lloyd period of mine ownership whereas the older smaller dump pre-dates that period.

The slag material contains visible native oxidized copper as well as copper sulphides. Sequential copper leach assays of six slag samples indicates that a significant proportion (more than 70%) of the copper in the samples is potentially amenable to either acid or ferric leaching. The metallurgical test-work for the slag completed in 2011 shows that 54.4% of the copper, 67.5% of the silver and 14.4% of the gold is recoverable with the planned flotation circuit

.

Tonnage estimates of the slag dumps range from 140,000t used in the 2011 PFS to 170,000t estimated by Jackson (also referenced in the PFS). Surveying of the dumps is anticipated in August to allow for JORC complaint resource estimates to be carried out.

Elysium's preliminary production schedule shows the slag being processed following the tailings and prior to an open pit being developed at the surface of the historic Lloyds Mine. Following the surveying and modelling of final volumes for the two slag and tailings dumps in June, a drill program is being planned for the second half of 2014 to increase the confidence of the Lloyds JORC resource[2] and to allow for detailed mine planning.

Exploration

As was previously announced, an airborne magnetic and radiometricsurvey was flown over the 3 contiguous tenements at Burraga. Also, the Induced Polarisation (IP) survey over the historical Lloyd’s Mine general area commenced late 2013, was completed during the quarter.

The survey was flown with a 60m line spacing at a nominal terrain clearance of 60m to provide higher resolution data than existing data from government and open file surveys over the area. At a project scale, it is anticipated that data from this survey in addition to results from the continuing induced polarisation (IP) survey, will help exploration in the vicinity of the historic Lloyds Mine ("Lloyds").Of particular interest are the areas of strong surface copper soil geochemistry to the north and south of Lloyds.

Further from Lloyds, the airborne survey is anticipated to provide valuable information over the Lucky Draw Mine[3] and aid the search for similar style high grade skarnoid gold deposits on the Burraga Granite contact, 90% of which is covered by the Company's tenements. Further from the granite contact, the survey will cover the gold prospect at Isabella (EL7975). The Company's gold prospects in the NE of EL6463, on EL6874 and on EL7975 are at varying stages of exploration, the airborne geophysics, if successful, will progress some of

12011 PFS is available on the Company website.

2Resource estimate details are available on the Company website.

3Further information for Lucky Draw and the Company’s other projects is available on the web site.

these prospects to being drill-ready targets with potential to add high quality gold ounces to the Elysium's resource base.

As announced on January 24[th] 2014, approximately 55% of the planned IP survey was completed prior to the Christmas holiday period with the most northerly line being over the historical Lloyds Mine. The final line was a shorter intermediate line, completed over the main tailings dump to assess whether the basement of the tailings could be mapped. Both a 5m and 10m dipole configuration was trialled.

With the success of the resistivity survey line over the tailings dump late in 2013, the survey re-commenced with a further nine lines surveyed in north-south and east-west directions to fully map the tailings basement. This was followed by carrying out the remaining eight, 200m spaced, lines of IP north of Lloyds.

The IP survey north of Lloyds is anticipated to complete the mapping of the north-south chargeability trend to the north of Lloyds and up to and including the historical Howards Shaft where the mullock dumps contain abundant visible malachite and azurite (common oxide copper minerals). The IP survey was carried out to see whether support exists for the strong surface soil sampling results. The Company is dialling in on Lloyds looka-like targets to develop its pipeline of potential additions to the known resource base at Lloyds. The addition to the knowledge base for surficial resources also provides insight for potential concealed mineralisation.

Indonesia – Malang Project

IUP(Industrial) number: 180/005/IUPE/421.302/2013 (earn to 67.5%)

No activity

WA

Horseshoe South Project EL52/2569 (100%)

Following the review of the available data and generation of drill targets (refer announcement 4th September 2013), a grass-roots logistical scoping study involving the planning of a future drill program was undertaken during a 5 day reconnaissance investigation. A proposed exploration activity and expenditure statement was prepared for a 3 hole / 10 day drilling campaign. The planning involved the organisation of accommodation and messing at the Horseshoe Range homestead, located 6kms south of the tenement, vehicle and transport logistics for personnel, supplies and equipment, as well as sample dispatch to Perth, drill site preparation and rehabilitation, and the procurement of a drilling tender by Foraco Australia Pty Ltd.

Follow-up field work during the reconnaissance investigation concentrated on previous recommendations of past reporting. A number of historic RAB holes (MRB482 –MRB485) drilled above the western magnetic body, which intersected anomalous gold mineralisation, were of interest, together with a discrete magnetic anomaly M1 identified from the re-interpretation of the 2010 XTEM geophysics by Alterrex Pty Ltd. An extensive review of previous exploration within E52/2569 has highlighted that the entire tenement has been comprehensively explored with RAB, shallow RC, soil geochemistry and regolith mapping; leaving only deep seated RC investigation to be conducted. The three most prospective sites worthy of follow-up are centred on the M1 target (as previously announced) and the western most magnetic anomaly. North-South inversion sections generated from the EM heliborne survey give an approximate location and calculated depth needed to cover these targets. Field location of the three sites positioned the collars in relatively clear, flat and easily accessible areas just shy off the main track.

Redmond Project E70/4073 (100%)

As part of the ongoing review of tenements inherited from previous management, no further work is warranted at E70/4073 and has therefore been relinquished.

Max Carling Director 31 July 2014

EYM tenements held as at 30[th] June 2014.

Permit Type	Permit Number	Location	Held Via	Beneficial %	Agreement Type
EL	6463	Australia, NSW	Burraga Exploration Ltd	100.0%
EL	6874	Australia, NSW	Burraga Exploration Ltd	100.0%
EL	7975	Australia, NSW	Burraga Exploration Ltd	100.0%
E	52/2569	Australia, WA	Elysium Resources Ltd	100.0%
IUPE	421.302/2013	Indonesia, JAVA	Malang Resources PtyLtd	67.5%	Farm-in

The information in this announcement that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore reserves is based on information reviewed or compiled by Neb ZurkicBAppSc(Geol), MSc(Min & Energy Economics), a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a Registered Professional Geoscientist with the Australian Institute of Geoscientists. Mr. Zurkic is employed by Zurkic Mining Consultants Pty Ltd. Mr. Zurkic has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr. Zurkic consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. Zurkic Mining Consultants Pty Ltd, which is owned and controlled by Mr. Zurkic, owns shares in Elysium Resources.

==> picture [98 x 202] intentionally omitted <==