REDSTONE RESOURCES LIMITED — Interim / Quarterly Report 2007

Apr 29, 2007

REDSTONE RESOURCES LTD ABN 42090169154

ASX CODE RDS

QUARTERLY REPORT FOR THE PERIOD ENDING MARCH 31st 2007

HIGHLIGHTS

• Redstone commenced its 2007 field season in the second half of the Quarter.
• Infill sampling at the Halleys target has highlighted a second area of peak anomalism $\bullet$ within the trend, 1.7km NW of Halleys Hill and associated with an EM anomaly. Peak values from this area are 712ppm Ni and 23ppb PGE (in the centre of one of the EM anomalies identified and reported in the last quarter), 583ppm Cu and 377ppm Zn (300m east of the EM anomaly).
• Strong Ni-PGE anomalism (without surficial Cu) has been extended for a further 2km along strike to the NW, under a clay-rich drainage depression, making the total strike of the principal target at Halleys about 4.5km.
• Following the definition in the last quarter of the Ni-Cu- PGE system at Halleys, the copper anomaly at Titan (both of which are in the Blackstone Range project) and the Cu-Pb anomaly at Aladdin in the Tollu Project Area, gridding was undertaken at these areas in preparation for the drilling programme, which commenced in the first week of April.

EXPLORATION ACTIVITY STATEMENT

During the Quarter, Redstone continued its exploration activity on the Tollu, Blackstone Range and Mt Muir Projects. On-ground activity commenced in the second half of the Quarter. As at the end of the Quarter:

• Further results and interpretation were obtained for exploration data obtained in the ٠ previous Quarter;
• Gridding was completed in preparation for RAB and RC drilling at Halleys and Titan; ٠
• Gridding was completed in preparation for RAB and RC drilling around the Tollu Mining Centre, and for RAB drilling at Aladdin;
• Rock chip sampling was conducted at Halleys and Dione (also in Blackstone Range $\bullet$ project) over prospective iron stones:
• Clearances for the Discovery Metals farmin and joint venture were scheduled for late April/early May:
• The company's exploration team was expanded with the hiring of three new field assistants.

BLACKSTONE RANGE PROJECT (FARM-IN AGREEMENT WITH RMC TO EARN 75% -ASX:RMI)

In March, gridding was completed at the Halleys and Titan targets in preparation for RAB and RC drilling scheduled for April.

Rock chip sampling was also conducted at Halleys and Dione over prospective ironstones.

Clearances commenced in late March with several days spent clearing areas in the Blackstone Range Project. The Titan grid was rotated and drill areas extended NW along the Halley's trend and second order anomalies were cleared for closer spaced sampling.

Although severe rainfall in the district hampered clearances, during the Quarter, six prospects (including Halleys North, Titan North and Dione) were cleared for RAB drilling with 10m radius, geochemical sampling. EM (100m radius) and IP, ground magnetics and gravity, and the entire areas were cleared for mapping and rock chip sampling. No exclusion zones were found in any of the prospect areas.

Hallevs

Rock chip sampling of the ironstone hill at Halleys during the previous Quarter has yielded peak values from rock chip samples (reported previously) of 0.91%Cu, 0.52% Ni, 181ppb Pt and 61ppb Pd (279ppb PGE+Au: Pt:Pd ratio of 1:1 to 3:1).

Infill sampling has highlighted a second area of peak anomalism within the trend, 1.7km NW of Hallevs Hill and associated with an EM anomaly. Peak values from this area are 712ppm Ni and 23ppb PGE (in the centre of one of the EM anomalies identified and reported in the last quarter), 583ppm Cu and 377ppm Zn (300m east of the EM anomaly).

Strong Ni-PGE anomalism (without surficial Cu) extends for a further 2km along strike to the NW, under a clay-rich drainage depression, making the total strike of the principal target at Halleys about 4.5km.

92 rock chip samples were assaved utilising the handheld XRF machine in the Halleys area. This Niton sampling highlighted peak rock chip values of 0.51% Cu (2 values above 0.1% Cu) and 0.27% Ni (2 values above 0.1%Ni). The peak values were identified 1.4km NE along the Halley's trend and are coincident with outcropping ironstone striking over 350m. Based on these results eight additional shallow RC holes have been cleared to test the zone.

Dione

16 rock chips were assaved utilising the handheld XRF machine. Niton sampling highlighted peak rock chip values of 858ppm Cu (13 values above 270ppm Cu) and one assay returned 427ppm Ni. The area of interest is an ENE trending ironstone ridge with 5 metres of topographic relief that is very similar to the Halleys discovery outcrop. Massive hematite and specular hematite is common.

TOLLU PROJECT (100% REDSTONE)

In January, results were returned for the bulk of the sampling completed on the Tollu Licences last Quarter, with a moderate Cu-Ni anomaly on 800 x 200m spaced sampling defined at Araplats (NE of Scarab) on the northern border of tenement E69/1527 (trending into a Redstone EL 69/2197) and a moderate Cu anomaly along the Tollu Fault, to the south of the Tollu Mining Centre.

On-site XRF assaying of regional lag geochemical samples at Aladdin revealed a 569ppm Pb anomaly adiacent to the regional NE-trending Lupton Hills Fault. Peak rock-chip values from the anomaly returned from the lab in January are 448ppm Cu. 35ppm Mo and 284ppm Pb.

During March, following the commencement of the 2007 field season, gridding on the Tollu Project (around the Tollu Mining Centre) was completed in preparation for RAB and RC drilling scheduled for April.

Gridding was also completed in preparation for RAB drilling at Aladdin in April.

Two additional Exploration Licence Applications adiacent to the Tollu and Blackstone Range projects, were granted to Redstone during the Quarter (EL69/2197 and EL69/2198).

MT MUIR E69/1629 (100% REDSTONE)

Results from all Lag geochemical samples at Mt Muir were received and plotted. In addition to the three anomalies identified and reported last Quarter, two additional anomalies have been identified as being present which require follow-up work;

• 1. Moly Hill Very strong As, Mo, Sb anomaly with elevated PGE, Cu, Te and Ag occurs over a circular magnetic high in very poor sampling country, dominated by plateau calcrete and sand dunes. Mo. As and Sb values over this anomaly are the best values recorded to date, with peaks of 53ppm As, 49.4ppm Mo and 1.3ppm Sb. Four samples over 800m have very high values of As, Mo, Sb.
• 1. South of Carman is a broad Pb anomaly with extremely high REE. The peak Ce value is 0.42% Ce, with three other samples in the area >0.1% Ce. The high Ce correlates with a weak Pb anomaly and high Mn values. Elsewhere in the district, high Mn samples do not contain high Ce.

RAB drilling was scheduled and commenced in April.

DISCOVERY METALS (FARM-IN AGREEMENT WITH DMLTO EARN 75% - ASX:DML)

EM anomalies defined by previous surveys were reprocessed by Redstone's geophysical consultants.

During the Quarter, a work programme for this area was developed for submission to the Ngaantyatjarra Council. Clearance work has been scheduled for late April/early May.

GLOBAL TARGETING

Redstone continued activity to further its global targeting strategy during this Quarter, particularly focusing on South America. During the Quarter, the targeting team identified several targets in Brazil which will be applied for in the near future.

The company has received advice that its applications for nickel targets in Brazil (as reported in the last quarterly report) have priority for granting.

A. AILAKIS CHAIRMAN

30 April 2007

Investor Enquiries:

Telephone: Facsimile: Email: Website: Address:

(08) 9328 2552 (08) 9328 2660 contact@redstone.com.au www.redstone.com.au PO Box 8646, Perth Business Centre WA 6849

ATTRIBUTION

The information in this report that relates to exploration results is based on information compiled by Professor David Groves, a member of the Australian Institute of Geoscientists. Professor Groves has sufficient experience relevant to the style of mineralisation 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 Exploration Results, Mineral Resources and Ore Reserves'. Professor Groves consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Appendix 5B

$Rule 5.3$

Mining exploration entity quarterly report

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

Name of entity

Redstone Resources Limited

ABN

42 090 169 154

Quarter ended ("current quarter")

Year to date

$(9$ months)

31 March 2007

Current quarter

$A'000

Consolidated statement of cash flows

Cash flows related to operating activities

			$A'000
1.1	Receipts from product sales and related debtors
1.2	Payments for
	(a) exploration and evaluation	(485)	(1,255)
	(b) development
	(c) production
	(d) administration	(244)	(798)
1.31.4	Dividends received
	Interest and other items of a similar naturereceived	48	82
1.5	Interest and other costs of finance paid		(17)
1.6	Income taxes paid
1.7	Other (provide details if material)		(172)
	Net Operating Cash Flows	(681)	(2,160)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	оf(a)prospectsAcquisition$\Delta\mathbf{x}$
	interests in mining tenements	(27)	(404)
	(b) equity investments(c)other fixed assets	(44)	(252)
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
1.13	Net investing cash flowsTotal operating and investing cash flows	(71)	(656)
	(carried forward)	(752)	(2,816)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows(brought forward)	(752)	(2,816)
1.141.151.161.17	Cash flows related to financing activitiesProceeds from issues of initial public offerProceeds from sale of forfeited sharesProceeds from borrowingsRepayment of borrowings	۰	5,14987(237)
1.181.19	Dividends paidOther – Payment of share issue costs	(13)	(164)
	Net financing cash flows	(13)	4,835
	Net increase (decrease) in cash held	(765)	2,019
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	3,123	339
1.22	Cash at end of quarter	2,358	2,358

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

		$\sim$ current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	83
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions

Managing Director Salary - $38,500

Non Executive Directors Fees - $22,358

Director Consulting Fees - $22,330

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

Nil

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

Nil

+ See chapter 19 for defined terms.

Financing facilities availableAdd notes as necessary for an understanding of the position.

		Amount available$A'000	Amount usedSA'000
3.1	Loan facilities
3.2	Credit standby arrangements	m.

Estimated cash outflows for next quarter

		$A'000
4.1	Exploration and evaluation	600
4.2	Development
		$\overline{\phantom{a}}$
	Total	600

Reconciliation of cash

	Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.	Current quarterSA'000	Previous quarter$A'000
5.1	Cash on hand and at bank	63	57
5.2	Deposits at call	2,295	3,066
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	2,358

Changes in interests in mining tenements

		Tenementreference	Nature of interest(note (2))	Interest atbeginningof quarter	Interest atend ofquarter
6.1	Interests in miningtenements relinquished,reduced or lapsed	Nil
6.2	Interests in mining	EL/2197	Granted	Nil	100%
	tenements acquired or	EL/2198	Granted	Nil	100%
	increased	EL/2010	Granted	Nil	100%
		EL/2200	Granted	Nil	100%
		EL/2053	Granted	Nil	100%
		EL/1640	Joint Venture – Farm in	Nil	$0%$
		EL/1641	Joint Venture – Farm in	Nil	$0%$
		EL/1642	Joint Venture – Farm in	Nil	$0%$
		EL/1662	Joint Venture – Farm in	Nil	$0%$
		EL/1663	Joint Venture – Farm in	Nil	$0%$

$+$ See chapter 19 for defined terms.

Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price per	Amount paid up per
				security (see note	security (see note 3)
				$3)$ (cents)	(cents)
7.1	Preference
	r securities
	(description)
7.2	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns
	of capital, buy-
	backs,
	redemptions
7.3	+ Ordinary
	securities	74,368,860	74,368,860		Fully paid
7.4	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns
	of capital, buy-
	backs
7.5	+ Convertible
	debt securities
	(description)
7.6	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through
	securities
	matured,
	converted
7.7	Options			Exercise price	Expiry date
	(description and
	conversion			25 cents
	factor)	3,450,000		50 cents	31/12/08
		2,950,000			31/12/09
		8,000,000		25 cents	31/12/09
		3,000,000		25 cents	03/08/09
		50,000		75 cents	30/03/10
7.8	Issued during
	quarter	50,000		75 cents	30/03/10
7.9	Exercised during
	quarter	w	u.
7.10	Expired during
	quarter
7.11	Debentures
	(totals only)

+ See chapter 19 for defined terms.

7.12	Unsecured
	notes (totals
	only)

Compliance statement

$\mathbf{I}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to $\text{ASX}$ (see note 4).

......................................

$\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Wort

(Company secretary)

30 April 2007

Sign here:

Miranda Conti

_______________________________________

Print name:

Notes

• $\mathbf{I}$ 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.
• $\overline{2}$ 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.

+ See chapter 19 for defined terms.