REDSTONE RESOURCES LIMITED — Interim / Quarterly Report 2014

Oct 30, 2013

31 October 2013

QUARTERLY REPORT

For the Period Ending 30 September 2013

The Board of Redstone Resources Limited (ASX Code: RDS) ("Redstone" or "the Company") is pleased to present its quarterly report for the period ending 30 September 2013 ("the Quarter").

Redstone's primary focus is the Tollu Copper Nickel Project in Western Australia. This Project has the potential to be a world class deposit (see Tollu Project Background, page 5). Intersections of copper sulphide mineralisation of greater than 1% Cu now extend over an area of 1.8km long and up to 1km wide. Depth of mineralisation now stands at 379m open at depth. Redstone expects the Project's mineralised area and the volume of hydrothermal mineralisation will increase significantly with further drilling.

Tollu Copper Nickel Project (Redstone 100%)

The Company's focus during the Quarter continued to be the development of a comprehensive strategic plan for the advancement of the Tollu project. Further details will be reported in the forthcoming quarter.

During the Quarter, the Tollu exploration licence was extended for a further period of 5 years to 18 September 2018.

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Saturn Project - PGE-Cu-Ni (Redstone earning 90%; RMI 10%)

No work was conducted on the Saturn Project during the Quarter.

The Saturn Project (previously Blackstone Range Project) covers an area of 338km2 approximately 25km east of the BHP-Billiton Babel and Nebo Ni-Cu-PGE discoveries and 15 km east of the recently reported BHP-Billiton Succoth copper discovery (200m @ approx. 1.3% Cu). High-resolution aeromagnetic surveys identified the 12km diameter elliptical layered complex named the Saturn Complex, interpreted to be a mafic cone-shaped feeder of Giles Intrusive Complex (Figure 1). This intrusion, and associated mafic complex cuts through the large layered mafic intrusions of the Blackstone and Cavanaugh Ranges and it is along these intrusive boundaries that the Halley and Halley NW Ni-Cu-PGE trend occurs. These magmatic boundaries are proving to be highly complex, containing multiple intrusions including fractionated magnetite-bearing layered intrusions rich in PGE mineralisation, and Plat Reefstyle bodies such as the Halley Cu-PGE-Ni body.

Figure 1. Saturn elliptical mafic complex showing concentric layers of gabbroic rocks

Baggaley Hills Project - Cu-PGE-Ni (RDS 20% free-carried to Decision to Mine)

The Baggaley Hills Sale and Farm-in Agreement between Redstone Resources Limited and HJH Nominees Pty Ltd (HJH or the farminee) was executed on 19 March 2009.

Under the terms of the agreement, HJH paid Redstone $505,000. HJH also earned an 80% interest in the Baggaley Hills project tenements by spending a minimum of $2.5 million over a three year period to 19 March 2012 and by keeping the tenements in good standing. Following this, HJH was required to sole fund exploration and development expenditure on the Project Tenements until a Decision to Mine based on a bankable feasibility study.

$\overline{2}$

In January 2013 the farmin parties surrendered Exploration Licences EL's 69/2053, 2054, 2339 & 2340.

Due to a number of factors, including the tenure of the tenements, a lack of significant exploration results to date and significant tenement holding costs the farmin parties surrendered the remaining tenements (Exploration licences 69/2200 and 69/2249) and agreed to terminate the farmin agreement and joint venture during the Quarter.

Apuí Phosphate, Amazonas State, Brazil - Field Exploration

The Company is actively pursuing farmin/joint venture opportunities. During the Quarter, negotiations were commenced with interested Brazilian entities. These negotiations are continuing.

Field work planned for the Quarter was delayed pending the outcome of farmin/joint venture negotiations and planned capital raising.

Apuí is a prime phosphate project (1,700km2), 100% owned by Redstone, strategically located near the large and booming agricultural belts in Mato Grosso and Rondônia States (see Figure $2).$

Figure 2 – Location of the Apuí Project in relation to two large agricultural areas

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CORPORATE

The Company is actively pursuing further capital raising and funding opportunities. The Board is in ongoing negotiations with several interested investor entities and a capital injection is planned for the forthcoming quarter.

Also during the Quarter, Redstone and QBE negotiated a confidential settlement of its claim for expenses indemnified by Redstone in relation to the District court proceedings against Mr Ailakis.

For further information please contact:

Anthony Ailakis Executive Director Redstone Resources Limited +61 (08) 9328 2552 contact@redstone.com.au

Miranda Conti Company Secretary Redstone Resources Limited +61 (08) 9328 2552 contact@redstone.com.au

About Redstone Resources Limited

Redstone Resources Limited is a Perth-based company focused on highly prospective nickel and copper exploration properties in the West Musgrave region of WA and phosphate in Brazil.

ATTRIBUTION

The information in this report that relates to exploration results is based on information compiled by Dr Joao Orestes Santos, a part-time employee of Redstone Resources Limited. Dr Santos is a member of the Australian Institute of Geoscientists and 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'. Dr Santos consents to the inclusion in the report of the matter based on his information in the form and context in which it appears.

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Tollu Project Background

Redstone has spent the past two years confirming its geological model at Tollu and has demonstrated a high grade copper system extending to depths of over 379m. The Company intends to continue its focus on low cost exploration methods to prove that the mineralised zones on surface cover a much greater area than that already explored and drilled by the Company to date.

The conceptual model of the Tollu Project suggests a hydrothermal Cu rich mineralised system which is derived from a typical Voisey's Bay Style magmatic Cu-Ni-(Co) system at depth. The Tollu Project's conceptual model is represented by Figure 3.

The Company's Tollu Project has visible copper outcropping mineralisation over much of the Project (Figure 4). Given the limited exploration undertaken by Redstone over this area, the potential for the Company to demonstrate large scale repeatability of its drilling programme to date exists. The Company is aiming to establish this repeatability over a number of target zones across Tollu.

Redstone Resources Limited ABN 42 090 169 154 Suite 3, 110-116 East Parade, East Perth WA 6004 Tel: 08 9328 2552 Fax: 08 9328 2660

www.redstone.com.au Email: contact@redstone.com.au

Drilling at the Central Zone (Subzone 1) of the Tollu Project has established the existence of a significant mineralised body with exceptional results that provide an average Cu grade of 2.68%. The Company also has obtained intercepts up to 5.0% Cu. Figure 5 shows an example cross section of Tollu mineralisation.

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Tollu Project Geology

The Tollu Project is located within the West Musgrave Region of Western Australia. A number of deposits and mineral occurrences are associated with intrusion-hosted Ni-Cu-PGE deposits and Ni-Co laterite deposits within the region.

Tollu is a hydrothermal Cu-rich mineralised system which is considered to represent the distal part of a Voisey's Bay Style magmatic Cu-Ni-(Co) system. Key indicators that support a mafic primary source of mineralising fluids in accordance with this model include the extent and volume of remobilised copper sulphides, hydrothermal copper sulphide mineralisation and the association of deeper mineralisation with cobalt.

The geological evolution of Tollu is interpreted as follows:

• $\mathbf{r}$ The ultramafic Giles Complex (1070Ma) intruded layered volcanic host rocks of the Tollu Group (1100Ma). This complex is the source of Ni-Cu-(Co) magmatic mineralisation which gave rise to known mineral deposits in surrounding properties throughout the region.
• The Peterman Orogeny (550Ma) provided the structural setting for the $\blacksquare$ development of regional strike-slip faults and associated dilational/en-echelon structures. These structures provided favourable pathways for hydrothermal fluids to migrate from deeper mafic source rocks into the overlying layered felsic volcanics of the Tollu Group.
• $\blacksquare$ The Tollu Group provided the source of sulphur to assist chalcopyrite and bornite deposition during fluid mixing/wall rock interaction from deeper fluids. This interaction resulted in a rich swarm of hydrothermal veins dominated by Cu mineralisation with Co association at depth. Mineralisation is hosted both within steep N5°E structures and parallel sets of dilatational/en-echelon structures throughout the property.

The Project area hosts a giant swarm of hydrothermal copper rich veins as part of a 700-800m wide mineralisation corridor that extends over an area of at least $6km^2$ . Copper mineralisation comprises an oxidised assemblage of malachite, tenorite, cuprite and azurite within quartz veins to vertical depths between 30 to 80m. Quartz veins also display boxwork textures in areas of pervasive copper oxide mineralisation.

Oxide zones transition into sulphide mineralisation consisting of chalcopyrite, minor bornite and chalcocite in quartz veins. These veins are demonstrated to be continuous to vertical depths exceeding 379m based on the current limits of drilling at Tollu. Veins are repeated via en-echelon structures within the broader structural corridor which represent additional targets for copper mineralisation and point to the existence of a third major fault at the Tollu Project.

Appendix 5B

Rule 5.3

Year to date (3 mths)

$A'000

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Redstone Resources Limited

ABN Quarter ended ("current quarter")

42 090 169 154 30 September 2013

Current quarter $A'000

Consolidated statement of cash flows

Cash flows related to operating activities

1.1	Receipts from product sales and related debtors	-	-
1.2	Payments for(a) exploration & evaluation(b) development	(263)-	(263)-
	(c) production(d) administration	-(101)	-(101)
1.3	Dividends received	-	-
1.4	Interest and other items of a similar nature
	received	4	4
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Other – R&D Tax Refund	-	-
	Net Operating Cash Flows	(360)	(360)
	Cash flows related to investing activities
1.8	Payment for purchases of:(a) prospects	-	-
	(b) equity investments	(8)	(8)
	(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	(8)	(8)
1.13	Total operating and investing cash flows(carried forward)	(368)	(368)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows
	(brought forward)	(368)	(368)
	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)	-	-
	Net financing cash flows
		-	-
	Net increase (decrease) in cash held	(368)	(368)
1.20	Cash at beginning of quarter/year to date	741	741
1.21	Exchange rate adjustments to item 1.20	-	-
1.22	Cash at end of quarter	373	373

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

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

1.25 Explanation necessary for an understanding of the transactions

Director and Director Consulting Fees

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 available

Add notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
3.1	Loan facilities	-	-
3.2	Credit standby arrangements	-	-

Estimated cash outflows for next quarter

	Total	300
4.4	Administration	150
4.3	Production	-
4.2	Development	-
4.1	Exploration and evaluation	150
		$A'000

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 quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	343	161
5.2	Deposits at call	30	580
5.3	Bank overdraft	-	-
5.4	Other (provide details)	-	-
	Total: cash at end of quarter (item 1.22)	373	741

+ See chapter 19 for defined terms.

Changes in interests in mining tenements

		Tenement	Nature of interest	Interest at	Interest at
		reference	(note (2))	beginning	end of
				of quarter	quarter
6.1	Interests in miningtenements relinquished,reduced or lapsed
6.2	Interests in miningtenements acquired orincreased

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 persecurity (see note3) (cents)	Amount paid up persecurity (see note 3)(cents)
7.1	Preference+securities(description)
7.2	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough returnsof capital, buybacks,redemptions
7.3	+Ordinarysecurities	151,969,390	151,969,390		Fully Paid
7.4	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough returnsof capital, buybacks
7.5	+Convertibledebt securities(description)

+ See chapter 19 for defined terms.

7.6	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthroughsecuritiesmatured,converted
7.7	Options(description andconversionfactor)	Quoted Options30,356,966Unquoted Options1,500,000500,000500,0003,700,000600,000500,0001,100,000950,000850,0001,000,0001,000,0002,000,000	Exercise price20 cents25 cents30 cents35 cents50 cents50 cents50 cents50 cents35 cents45 cents30 cents30 cents20 cents	Expiry date28/02/1630/11/1430/11/1430/11/1419/10/1304/11/1301/12/1324/02/1406/07/1506/07/1521/12/1426/02/1504/12/17
7.8	Issued duringquarter	Quoted Options
7.9	Exercised duringquarter
7.10	Expired duringquarter
7.11	Debentures(totals only)
7.12	Unsecurednotes (totalsonly)

+ See chapter 19 for defined terms.

Compliance statement

Miranda Conti

• 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 5).
• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 October 2013............ (Company secretary)

Print name: .........................................................

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 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting 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.