REDSTONE RESOURCES LIMITED — Interim / Quarterly Report 2016

Jul 28, 2016

29 July 2016

QUARTERLY REPORT

For the Period Ending 30 June 2016

Redstone Resources Limited (ASX Code: RDS) ("Redstone" or "the Company") presents its quarterly report for the period ending 30 June 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 mineralised area and the volume of hydrothermal mineralisation to increase significantly with further drilling.

HIGHLIGHTS

• Initial JORC 2012 resource of 3.8 million tonnes at 1% Cu, containing 38,000 tonnes of copper at the Tollu Project defined
• The Tollu JORC resource includes 8,000 tonnes approx. of copper oxide, which provides scope for the evaluation of a low cost expedited development path as part of the broader development of higher grade sulphide prospects.
• Review and significant upgrade of the Conceptual Exploration Target for the Tollu Project resulting in a significant increase in size to 31 to 47 million tonnes of mineralisation at a conceptual grade range of 0.8 to 1.3% Cu, containing 259,000 to 626,000 tonnes of copper. The potential quantity and grade of this target is conceptual in nature. It is important to note that there has been insufficient exploration to estimate a Mineral Resource for the Target and it is uncertain if further exploration will result in the estimation of a Mineral Resource for the Target.
• Significant upgrade of the Forio Prospect at the Tollu Project following the success of the 2015 drilling program, which identified mineralised strike over 250m open in all directions, despite displaying limited surface expression and not yet being effectively drilled out below 50m. Results at Forio displayed the widest and strongest copper mineralisation discovered at this depth to date at the Tollu Project.

• Identification of seven additional new Forio analogues and three existing Forio analogue prospects
• Prospectivity of tenement further increased
• 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.
• WA Government awards EIS co‐funded drilling grant of up to $200,000 for the Tollu Project, planned to be used for a single deep diamond drill hole of approximately 1,000m at the Chatsworth Prospect.

TOLLU PROJECT

Maiden Mineral Resource Estimate

During the Quarter the Company announced its first Mineral Resource estimate, reported in accordance with the 2012 JORC Code, for its 100% owned Tollu Project in the West Musgrave, Western Australia. The initial Mineral Resource estimate at Tollu is 3.8Mt @ 1.0% copper, which equates to 38,000 tonnes of contained copper (the "Mineral Resource") (Tables 1 and 2). The Tollu Mineral Resource was prepared by BM Geological Services Pty Ltd, a Kalgoorlie based, independent geological consulting group and is reported in line with the guidelines of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 edition (JORC 2012).

The definition of a maiden resource at Tollu represents a major milestone for Redstone and for the advancement of the Project.

Tollu Project
	Mineral Resource Estimate – June 2016
Prospect	Tonnes	Cu%	Contained
			Copper
Chatsworth	798,308	1.6%	12,780
Forio	671,898	1.1%	7,233
Main Reef	850,210	0.7%	5,633
Hamptons	266,576	0.9%	2,436
Eastern Reef	1,309,138	0.8%	10,047
Total	3,896,130	1.0%	38,129

Table 1 Mineral Resource Estimate by Prospect
-----------------------------------------------	--	--	--	--

The defined Mineral Resource also includes 8,000 tonnes of JORC oxide resource. Accordingly, there is excellent potential to significantly expand the Mineral Resource with future drilling, both to extend the mineralisation in the near‐surface, open pittable environment as well as targeting extensions of the higher grade sections of mineralisation.

The Board is confident that after further drilling, evaluation can commence of the economic viability of the near surface copper mineralisation at Tollu. If studies prove it to be viable, the near surface copper oxide may present short term development options generating early cash flow with significantly lower up front capital expenditure.

	Tollu Project
	Mineral Resource Estimate – June 2016
Resource	Prospect	Tonnes	Cu%	Contained
Classification	ChatsworthForio			Copper
Indicated		394,607	1.6%	6,323
		69,268	1.1%	759
	Sub‐Total	463,875	1.5%	7,081
Inferred	Chatsworth	403,701	1.6%	6,458
	Forio	602,630	1.1%	6,474
	Main Reef	850,210	0.7%	5,633
	Hamptons	266,576	0.9%	2,436
	Eastern Reef	1,309,138	0.8%	10,047
	Sub‐Total	3,432,255	0.9%	31,048
Total	Chatsworth	798,308	1.6%	12,780
Indicated	Forio	671,898	1.1%	7,233
+ Inferred	Main Reef	850,210	0.7%	5,633
	Hamptons	266,576	0.9%	2,436
	Eastern Reef	1,309,138	0.8%	10,047
Total Indicated and Inferred		3,896,130	1.0%	38,129

Table 2 Indicated and Inferred Mineral Resource Estimate by Prospect

Increased Conceptual Exploration Target

During the Quarter Redstone defined a significantly increased Conceptual Exploration Target for the Tollu Project of 31 to 47 million tonnes of mineralisation at a conceptual grade range of 0.8 ‐ 1.3% Cu, containing 259,000 to 626,000 tonnes of copper (the "Target"). This Target is based on the current geological understanding of the mineralised outcrop area at Tollu, coupled with geophysical evidence to suggest that the mineralised environment extends beneath cover to the north and south. Table 3 describes the Target breakdown by Prospect. This represents a substantial 41% increase to the upper range of the previously existing target (49% when the Mineral Resource is included).

Given the drilling data is constrained to less than 2% of the tenement area and only on one project (Tollu) out of six, the upside to the Mineral Resource remains unlimited.

	Tonnes	Tonnes	Grade	Grade	Contained	Contained
Prospect	Lower	Upper	Lower	Upper	Copper	Copper
			Cu%	Cu%	Lower	Upper
Huntington	1,872,000	2,808,000	0.9%	1.5%	16,800	42,100
Drummond	1,248,000	1,872,000	0.9%	1.5%	11,200	28,000
Stourhead	2,028,000	3042000	0.9%	1.5%	18,200	45,600
Exbury	520,000	780,000	0.9%	1.5%	4,600	11,700
Butchart	1,664,000	2,496,000	0.9%	1.5%	14,900	37,400
Main Reef South	4,784,000	7,176,000	0.8%	1.2%	38,200	86,100
Isola	936,000	1,404,000	0.9%	1.5%	8,400	21,000
Kilruddery	780,000	11,70,000	0.9%	1.5%	7,000	17,500
Bodnant	520,000	780,000	0.9%	1.5%	4,600	11,700
Sanssouci	1,456,000	2,184,000	0.9%	1.5%	13,100	32,700
Forio	1,976,000	2,964,000	1.2%	1.8%	23,700	53,300
Forio Deeps	1,393,000	2,090,000	1.2%	1.8%	16,700	37,600
Forio South	416,000	624,000	1.2%	1.8%	4,900	11,200
Eastern Reef	11,667,000	17,500,000	0.6%	1.0%	70,000	175,000
Dawyck	204,000	306,000	2.0%	3.0%	4,000	9,100
Hampton	175,000	262,000	0.8%	1.2%	1,300	3,100
Boboli	94,000	140,000	1.2%	1.8%	1,100	2,500
Tiergarten	42,000	62,000	1.2%	1.8%	400	1,100
	31,775,000	47,660,000	0.8%	1.3%	259,100	626,700

Table 3 ‐ Tollu Project ‐ Target – Prospect Breakdown

The Tollu deposit is located in a large, reverse fault system where Cu mineralisation is focused into low stress dilatational jog positions along a north‐south structural corridor (Figure 1). High grade Cu mineralisation appears to be constrained to late stage veining within the dilatational positions which results in a limited strike length of the mineralisation. Drilling at the Project has showed these mineralised jogs have a steep plunge competent which has been tested down to a vertical depth of 360 metres. Mineralised jog positions occur at relatively regular intervals of 100 – 300 metres along the structural corridor.

Figure 1 Prospect Location Map

Forio Prospect and Forio Analogues

Review of the success of the 2015 drilling program at the previously undrilled prospects, especially at Forio, highlighted the significant upside potential to identify further veins hosting near surface copper mineralisation and has validated the opportunity for repeat success on other veins of similarly minimal surface expression. With only limited drilling, the Forio Prospect shows significantly longer strike length than both the Chatsworth and Eastern Reef Prospects (Figure 2).

The mineralisation at Forio is very significant as it is located in a dilational zone to the north west of the Tollu Fault, which is in a different location to the previously discovered mineralisation. Its current strike length of over 250m remains open in all directions and as yet has not been effectively drilled out below 50m. The most recent drill results disclosed the widest and strongest copper mineralisation discovered at this depth to date at Tollu.

Figure 2 – Forio Long‐section

During the Quarter the Company identified five (5) new prospects, and three (3) existing prospects as Forio analogues within the area to the east of the main North‐South structures i.e.: the dilational zone. The new Forio analogue prospects include; Huntington, Drummond, Stourhead, Exbury, and Forio South, combined with the previously identified prospects of Kilruddery, Bodnant and Prater. A further two (2) new prospects to the west of Main Reef have also been identified, being the Isola and Butchart prospects.

Follow‐up RC Drilling at Tollu

During the Quarter the Company commenced 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 3), which have been elevated in priority for further testing following a full data review and the 2015 drilling results.

The objective of the planned RC drilling is to test veins hosting near surface copper mineralisation on the Tollu prospects displaying minimal surface expression analogous to that identified at the Forio Prospect. In addition, deeper holes have been planned to test mineralisation at Forio, at depths between 50m and 250mbelow surface, and to potentially extend mineralisation of Forio Deeps to below 250m.

The initial phase of the follow‐up RC drilling has been planned to commence later in the third quarter of this year, subject to availability of funding. This program will comprise 53 RC holes for a total of approximately 8,000m.

A Program of Works (POW) and Native Vegetation Clearing Permits are planned to be submitted to the Department of Mines and Petroleum (DMP) for approval.

Figure 3 Tollu Prospects to the east of Eastern Reef ‐ Forio analogues

Exploration Incentive Scheme Co‐funded Drilling Grant

During the Quarter Redstone was awarded a West Australian Government Exploration Incentive Scheme (EIS) grant to co‐fund drilling at its 100% owned Tollu Project.

Redstone has been awarded funding up to the value of $200,000 to assist with a single deep drill hole of approximately 1,000m at the Chatsworth Prospect (Figure 4). The deep drill hole has been designed to test the transition of Cu‐only hydrothermal mineralisation to a potential primary, magmatic Cu‐Ni‐(Co) mineralisation at depth and with the potential to considerably increase the copper resource at Tollu.

Figure 4 – Chatsworth Cross‐section

The Company would like to acknowledge the WA Government's ongoing support for exploration through the EIS initiative.

CORPORATE

During the Quarter the Company made a claim for a refundable Research and Development tax offset of approximately $226,000 ("the R&D Rebate"). The R&D Rebate amount of $226,000 was received in June 2016.

TENEMENT INFORMATION AS REQUIRED BY LISTING RULE 5.3.3

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

TENEMENT SUMMARY AS AT 30 JUNE 2016

West Musgrave, Australia

Project	Tenement	Registered HolderApplicant	RegisteredHolderInterest	ConsolidatedEntityInterest	Grant Date(ApplicationDate)	Expiry	Blocks	Areakm2
Tollu	E 69/2450	Redstone ResourcesLimited	100%	100%	19/09/2008	18/09/2018	41	125.0
							41	125.0

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 identified 16 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).

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 June 2016

ABN Quarter ended ("current quarter")

Consolidated statement of cash flows

		Current quarter	Year to date
	Cash flows related to operating activities	$A'000	(12 months)
			$A'000
1.1	Receipts from product sales and related debtors	-	-
1.2	Payments for(a) exploration & evaluation	(104)	(1,388)
	(b) development	-	-
	(c) production	-	-
	(d) administration	(50)	(618)
1.3	Dividends received	-	-
1.4	Interest and other items of a similar nature	-	57
	received
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Other (provide details if material)
	Net R&D Rebate	227	1,060
	Net Operating Cash Flows	73	(889)
	Cash flows related to investing activities
1.8	Payment for purchases of:(a) prospects	-	-
	(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	-	-
1.13	Total operating and investing cash flows
	(carried forward)	73	(889)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows
	(brought forward)	73	(889)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	-	1,251
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	(9)	(129)
	Net financing cash flows
		(9)	1,122
	Net increase (decrease) in cash held	64	233
1.20	Cash at beginning of quarter/year to date	230	61
1.21	Exchange rate adjustments to item 1.20
1.22	Cash at end of quarter*
		294	294

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	13
1.24	Aggregate amount of loans to the parties included in item 1.10	-
1.25	Explanation necessary for an understanding of the transactions

Director 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

		$A'000
4.1	Exploration and evaluation	55
4.2	Development	-
4.3	Production	-
4.4	Administration	50
	Total	105

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	238	40
5.2	Deposits at call	56	190
5.3	Bank overdraft	-	-
5.4	Other (provide details)	-	-
	Total: cash at end of quarter (item 1.22)	294	230

+ 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	Nil

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) Decreasesthrough
	securitiesmatured,converted
7.7	Options	Quoted Options	Exercise price	Expiry date
	(description andconversionfactor)	ASX: RDSOA55,631,193	3 cents	31/07/17
		Unquoted Options2,000,000	20 cents	04/12/17
7.8	Issued duringquarter
7.9	Exercised duringquarter
7.10	Expired duringquarter	Quoted OptionsASX: RDSO31,356,966	20 cents	28/02/16
7.11	Debentures
7.12	(totals only)Unsecured
	notes (totals
	only)

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.

29 July 2016

Sign here: ............................................................ Date: ............................

(Company secretary)

Miranda Conti

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.

+ See chapter 19 for defined terms.

• 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.