REDSTONE RESOURCES LIMITED — Interim / Quarterly Report 2016

Oct 30, 2016

31 October 2016

QUARTERLY REPORT

For the Period Ending 30 September 2016

Redstone Resources Limited (ASX Code: RDS) ("Redstone" or "the Company") presents its quarterly report for the period ending 30 September 2016 ("the Quarter").

Redstone's primary focus is the advancement of the Tollu Project ("Tollu" or the "Project"), located in the southeast portion of the West Musgrave region of Western Australia. This Project hosts a giant swarm of hydrothermal copper rich veins in a mineralised system covering an area at least 5km2 . Copper mineralisation is exposed at the surface and forms part of a dilation system between two major shears.

Redstone expects the Project's initial JORC 2012 resource of 3.8 million tonnes at 1% Cu, containing 38,000 tonnes of copper, including 8,000 tonnes of Cu oxide resource, the mineralised area and the volume of hydrothermal mineralisation to increase significantly with further drilling.

SUMMARY OF ACTIVITIES

• Planning underway for follow‐up drilling at Forio and at four of the identified Forio analogues, which have been elevated in priority for further testing, with a proposed RC drilling program comprising 53 holes for a total of 8,000m.
• Commenced evaluation and near‐term development considerations of the Company's Cu oxide resource, following from the success of the 2015 drilling program.
• Continued focus on fundraising options to support the proposed follow‐up RC drilling program at the Tollu Project and for working capital requirements.
• Preparation commenced during the Quarter for a refundable Research and Development Tax Incentive claim (the R&D Rebate) in relation to the 2016 financial year. The R&D Rebate, which is anticipated to be lodged in the December quarter, will be determined under the ATO self‐ assessment system.

TOLLU PROJECT

Follow‐up RC Drilling at Tollu and Cu‐Oxide Development

The Company has progressed plans for a systematic follow‐up RC drilling program at Tollu, focusing on the Forio and Forio Deeps Prospect ("Forio") and a further four of the identified Forio analogues, namely the Forio South, Stourhead, Exbury and Killruddery Prospects (Figure 1), which have been elevated in priority for further testing following a full data review and the 2015 drilling results.

The initial phase of a follow‐up RC drilling program (Program) has been planned to commence upon availability of funding. This program will comprise 53 RC holes for a total of approximately 8,000m. The aim of the Program is to test veins hosting near surface copper mineralisation on Tollu prospects displaying minimal surface expression analogous to the mineralisation identified at the Forio Prospect from the 2015 drilling campaign. It is envisaged that further drilling will increase the Cu oxide potential at the Tollu Project.

In addition, deeper holes have been planned to test mineralisation at Forio, at depths between 50m and 250m below surface, and to potentially extend mineralisation of Forio Deeps to below 250m.

The Company's exploration strategy is initially focused on increasing the Cu oxide resource to enable a near term development pathway for the Tollu Project, which will then be followed by evaluation of the deeper high grade sulphide resources.

During the Quarter, the Company commenced evaluation of low cost processing options for the oxide ores including by cementation, precipitation by sodium hydrosulphide or glycine leach. This evaluation has also included discussions with potential JV partners.

TENEMENT INFORMATION AS REQUIRED BY LISTING RULE 5.3.3

The Company holds the following tenement at the end of the 30 September 2016 quarter.

TENEMENT SUMMARY AS AT 30 SEPTEMBER 2016

West Musgrave, Australia

Project	Tenement	Registered Holder Applicant	HolderInterest	ConsolidatedEntity Interest	Grant Date(ApplicationDate)	Expiry	Blocks	Areakm2
Tollu	E 69/2450	Redstone Resources Limited	100%	100%	19/09/2008	18/09/2018	41	125.0
Tollu	E 69/3456	Redstone Resources Limited			(18/07/2016)		36	110.0
							77	235.0

Redstone Resources Limited ABN 42 090 169 154 www.redstone.com.au 60 Havelock Street, West Perth WA 6005 Tel: 08 9328 2552 Fax: 08 9328 2660 Email: contact@redstone.com.au

Figure 1 Tollu Prospects to the east of Eastern Reef ‐ Forio analogues

Competent Persons Statement

The information in this announcement that relates to exploration results, Exploration Targets and Mineral Resources was authorised by Mr Darryl Mapleson, a Principal Geologist and a full time employee of BM Geological Services, who are engaged as consultant geologists to Redstone Resources Limited. Mr Mapleson is a Fellow of the Australian Institute of Mining and Metallurgy. Mr Mapleson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration to act as a competent person as defined in the 2012 edition of the "Australasian Code for reporting of Exploration results, Mineral Resources and Ore Reserves". Mr Mapleson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Forward‐Looking Statements

This document may include forward‐looking statements. Forward‐looking statements include, but are not limited to statements concerning Redstone Resources Limited's (Redstone) planned exploration program and other statements that are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should", and similar expressions are forward‐looking statements. Although Redstone believes that its expectations reflected in these forward‐looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward‐ looking statements.

ABOUT REDSTONE RESOURCES

Redstone Resources Limited (ASX: RDS) is a Perth‐based company focused on highly prospective copper exploration properties in the West Musgrave region of Western Australia.

Redstone's 100% owned Tollu Project is located in the southeast portion of the West Musgrave region of Western Australia. The Project is approximately 20km south east of the Blackstone Community on the Company's 100% owned tenement E69/2450 (Figure 1). The Company has now identified 24 prospects within the Tollu Project (Figure 2).

The Company has also identified the potential for a number of other projects on the Tollu tenement (E69/2450) in addition to the Tollu Project (Figure 1).

5

Figure 1– Tollu Project and other Projects– Location Map Figure 2 – Tollu Project – Prospect Location Map

For further information please contact:

Richard Homsany Chairman Redstone Resources Limited +61 (08) 9328 2552 contact@redstone.com.au

Andrew Rowell /Warrick Hazeldine Cannings Purple +61 8 6314 6304 arowell@canningspurple.com.au

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas 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, 01/05/2013

Name of entity

Redstone Resources Limited

42 090 169 154 30 September 2016

ABN Quarter ended ("current quarter")

Consolidated statement of cash flows

		Current quarter	Year to date
Cash flows related to operating activities		$A'000	(3 months)
			$A'000
1.1	Receipts from product sales and related debtors	-	-
1.2	Payments for(a) exploration & evaluation	(27)	(27)
	(b) development	-	-
	(c) production	-	-
	(d) administration	(69)	(69)
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 (provide details if material)	(34)	(34)
	R&D Fee
	Net Operating Cash Flows	(130)	(130)
	Cash flows related to investing activities
1.8	Payment for purchases of:(a) prospects	(6)	(6)
	(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	(6)	(6)
1.13	Total operating and investing cash flows
	(carried forward)	(136)	(136)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought
	forward)	136	(136)
	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 - capital raising costs	-	-
	Net financing cash flows	-	-
	Net increase (decrease) in cash held	(136)	(136)
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	294	294
1.22	Cash at end of quarter*	158	158

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

		Current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	Nil
1.24	Aggregate amount of loans to the parties included in item 1.10	-
1.25	Explanation necessary for an understanding of the transactions

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

		$A'000
4.1	Exploration and evaluation	30
4.2	Development	-
4.3	Production	-
4.4	Administration	50
	Total	80

Reconciliation of cash

Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) to therelated items in the accounts is as follows.		Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	102	238
5.2	Deposits at call	56	56
5.3	Bank overdraft	-	-
5.4	Other (provide details)	-	-
	Total: cash at end of quarter (item 1.22)	158	294

+ See chapter 19 for defined terms.

Changes in interests in mining tenements and petroleum tenements

		Tenement reference andlocation	Nature of interest(note (2))	Interest atbeginningof quarter	Interest atend ofquarter
6.1	Interests in miningtenements and petroleumtenements relinquished,reduced or lapsed	Nil
6.2	Interests in miningtenements and petroleumtenements acquired orincreased	E 69/3456	In Application	0%	0%

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	326,047,245	326,047,245		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 OptionsASX: RDSOA55,631,193Unquoted Options2,000,000	Exercise price3 cents20 cents	Expiry date31/07/1704/12/17
7.8	Issued duringquarter
7.9	Exercised duringquarter
7.10	Expired duringquarter
7.11	Debentures(totals only)
7.12	Unsecurednotes (totalsonly)

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

31 October 2016

Sign here: ............................................................ Date: ............................ (Company secretary)

Miranda Conti Print name: .........................................................

+ See chapter 19 for defined terms.

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 and petroleum 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 or petroleum 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.