IODM LIMITED — Interim / Quarterly Report 2009

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Ph: 02 9955-7130 Fax: 02 8920-3576 Email: [email protected] Suite 202, 122 Walker St, North Sydney NSW 2060 www.paradigmmetals.com.au

QUARTERLY REPORT FOR THE PERIOD ENDING 31 DECEMBER 2008

Highlights

Kangiara gold – silver - base metal prospect NSW

A new tenement application was made at the Kangiara gold – silver - base metal prospect 20km south of Boorowa and 130km south of Cadia, central NSW (ELA 3617). Kangiara was a small but high grade historic gold-silver and lead-copper underground mine with head grades of 2g/t Au, 280g/t Ag, 16% Pb and 3% Cu.

The Kangiara prospect has considerable exploration potential. Drill intercepts by an explorer in 1987 include 12m @ 1.2g/tAu, 10g/t Ag and 2.8% Pb+Zn from 74m and 4m @ 200g/t Ag and 4% Pb+Zn from 78m. These holes lie within an elongate IP chargeability anomaly extending for 500m south of the old Kangiara mine. Mineralisation occurs within an epithermal vein-breccia along a north-northeast trending structure. The old drill holes are widely enough spaced to have drilled the edge of a target ore body.

The new tenement is expected to be granted during February, after which the Company will carry out immediate surface work including costeaning to sample bedrock across the IP anomaly and continue the soil grid.

Democrat gold – silver prospect NSW

Reconnaissance surface rock sampling of float, outcrop and mullock returned widely anomalous gold values up to 3.2 g/t Au in quartz - chlorite altered felsic volcanics at the Democrat prospect, 2km southwest of Kangiara. Costeaning to expose and sample the mineralised bed rock beneath soil cover is planned for the current quarter.

Frogmore copper – silver project NSW

Ground electromagnetic (EM) geophysics has located a conductor, likely to be a sulphide body, on a reconnaissance EM line 1km south of the main mineralised lode at ‘Pride of Frogmore’. A follow up EM geophysical program is planned to fully define the extent and source of the conductor, with soil sampling and costeaning if warranted.

Corporate

The Company expended $161,000 during the December quarter and had $875,000 in cash at 31 December 2008. We are projecting close to zero cash outflow for the March 2009 quarter due to the sale of the North Cadia tenement. During the March quarter the Company will continue to explore the Kangiara and Democrat gold-silver-base metals projects with low-cost sampling and trenching programs. The Company is also seeking, and continuing to review, new project opportunities.

Kangiara gold - silver - base metals prospect (100% PDM)

New application

The Company staked an application for a new Exploration Licence (ELA 3617) over the Kangiara precious and base metal prospect, immediately east of the Company’s Democrat prospect in eastern NSW, after the ground became available in November 2008 (see Figure 1 ). Kangiara was a precious metal and base metal mine which produced about 40,000 tonnes of ore at an overall grade of 16% lead, 279g/t silver, 2g/t gold, 3% copper, and 5% zinc mostly between 1909 and 1927. The mine worked two sub-parallel north-south lodes to a depth of 120 metres.

Drilling by a previous explorer (Noranda 1987) intersected significant gold-silver mineralisation with combined lead-zinc mineralisation along strike to the south of the Kangiara workings (see Figure 2 ). The best drill results reported by Noranda are listed below, with holes located on Figure 2.

PDH-11: 26m @ 0.82g/t Au, 10g/t Ag & 3% Pb+Zn from 70m incl 12m @ 1.2g/tAu, 10g/tAg & 2.8%Pb+Zn; PDH-12: 4m @ 200g/tAg and 4% Pb+Zn from 78m; DDH-1: 12m @ 0.8g/t Au, 12g/tAg and 3% Pb+Zn from 58m; DH-1B: 12m @ 0.25g/tAu, 11g/tAg and 2.7% Pb+Zn from 67m;

The Noranda drill intersections are widely enough spaced to have drilled the edge of a target ore body.

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Figure 1 . Paradigm’s gold-silver and base metal projects in central NSW.

Existing IP chargeability data covering the Kangiara and Democrat prospects are plotted in Figure 2 (from Austminex, 2002). Mineralisation at Kangiara is associated with a strong north-northeast trend of elevated chargeability which can be traced for 1-2 km within ELA 3617. Significant Au-Ag-Pb-Zn drill intersections are associated with this broad zone of chargeability especially south of the old Kangiara mine site.

Mineralisation at Kangiara occurs as disseminations and veins of sulphides hosted by chlorite and epidote altered felsic volcanic rocks. Veinlets and breccias consisting of quartz-carbonate with K-feldspar suggest an epithermal association.

Upcoming work

We expect that the new exploration licence will be granted in February 2009. Once the tenement is granted, trenching will be carried out in several locations across the IP anomaly south of Kangiara to expose bedrock beneath a thick soil horizon for detailed sampling – there is virtually no outcrop over the elongate IP anomaly. A Pb soil anomaly south of PDH-12 remains open, and requires further sampling to define its full extent. This work will prioritise areas for later drilling. Drill core from the previous holes stored at the Department’s Londonderry core farm will also be examined to better characterise mineralisation being targeted at Kangiara.

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Figure 2 : IP chargeability image of the Kangiara – Democrat mineralised trend (data from Austminex 2002). Previous drill holes with significant intersections are marked. Red areas represent chargeable zones likely to contain disseminated sulphide.

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Democrat gold – silver prospect (100% PDM)

The Democrat gold – silver prospect (EL 6274), 2km southwest of Kangiara, is associated with a northnortheast trending IP anomaly 1 km in length (see Figure 2 ). The prospect has seen limited drilling (see Figure 2 for locations of past drill holes). A large number of small exploration pits are dotted around the prospect, and visible copper carbonates occur at a number of these. Mineralisation occurs with quartz and chlorite alteration of the host Silurian acid volcanic rocks, while outcrop over the area is generally sparse.

Strong gold results in rock samples

A number of rock samples were recently collected within the Democrat trend with those assays now received. The samples were a mix of outcrop, float, and representative chips from mullock dumps. The gold results for samples are highlighted in Table 1. Gold values are strongly anomalous in all samples up to 3.2 g/t Au with silver up to 46g/t Ag.

Table 1: Rock samples collected at Democrat prospect during recent reconnaissance sampling

EM Geophysics

The Company carried out a number of lines of EM geophysics at Democrat to test for massive base metal sulphide mineralisation at depth. No significant anomalies were found.

Upcoming work

Further rock sampling and mapping is currently being completed. This will be followed by trenching / costeaning to expose bedrock for detailed sampling.

Frogmore copper project (100% PDM)

EM Geophysics

Ground electromagnetic (EM) geophysics carried out by the Company during December found a conductor, possibly associated with a buried sulphide body, on a reconnaissance EM line 1km south of the ‘Pride of Frogmore’ prospect. Further work is planned to fully define this anomaly.

Ground EM was acquired over several lines at the Pride of Frogmore prospect to see whether down-hole EM anomalies found in 2008 could be detected from surface. This proved unsuccessful, due to the high noise levels caused by surface cultural effects (e.g. fence lines, telephone cables) overlying the mineralised zones.

Upcoming work

An EM program to accurately define the conductor recently found at Frogmore South is scheduled for February.

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Blue Bush copper gold target, Cloncurry (100% PDM)

Drill fund

Paradigm has applied for drill funding from the Queensland Department of Natural Resources and Mines under their collaborative drill funding program to carry out 2 diamond drill holes at Blue Bush to test a coincident EM-magnetic-gravity anomaly within EPM 15324 (see Figure 3). The Kamileroi anomaly is located 120km north-northwest of Cloncurry. A previous drill hole (CRA, 1983) intersected semi-massive magnetite with minor copper mineralisation in the centre of the magnetic body. The sedimentary cover thickness is approximately 100m.

We believe that the past drilling did not adequately test the Kamileroi target. We expect to be advised of the success or otherwise of the funding application during the March quarter.

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Figure 3 : Magnetic image showing the proposed locations of 2 drill holes (PDM1 and PDM2) and gravity contours in black. The grid spacing is 100m.

White Rock Tungsten Project (100% PDM)

No significant exploration was carried out, apart from the rehabilitation of past drill holes and tidying up of the sites at the White Rock tungsten project (EL 6274).

Toolebuc joint venture, Cloncurry (50% PDM)

The Paradigm-Exco joint venture continued to review information found by the drilling of Toolebuc Formation rocks during 2008. No new work was carried out in the December quarter.

The joint venture is also reviewing available datasets from the point of view of copper-gold targets in the basement rocks.

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North Cadia project NSW

The Company is awaiting the final approval of the renewal of EL 6588 “North Cadia” from the NSW Department of Primary Industries. Once the approval is given, the Company will proceed to transfer the EL 6588 to Gold and Copper Resources Pty Ltd (GCR), a privately owned company 50% controlled by Mr Robert Friedland, founder and major shareholder of Ivanhoe Mines Ltd and Ivanhoe Australia Ltd. Pursuant to the agreement with GCR, Paradigm will receive a cash payment of $100,000 once the transfer has been affected. Additional cash payments may also be made in the future, contingent on the discovery of a mineral resource of a defined size.

Tenement relinquishments

The Company has chosen to relinquish the Auburn (EPM 15264 and EPM 15296) and Lighthouse Gully (EPM 13878) projects in southeast Queensland. Paradigm has tried unsuccessfully for a considerable period of time to find a partner to continue exploration on these projects. These tenements are to be relinquished to reduce holding costs and expenditure commitments for 2009.

Corporate

The Company expended $161,000 during the December quarter and had $875,000 in cash at 31 December 2008. We are projecting close to zero cash outflow for the March quarter due to the sale of the North Cadia tenement. The Company will continue to add value at the Kangiara and Democrat gold-silver-base metals projects with low cost sampling and trenching programs. The Company is also seeking and continuing to review new project opportunities.

Company overhead costs have been reduced where appropriate, including some cuts to salaried personnel from 1 January 2009. Two of our dormant Queensland projects have been relinquished (Lighthouse Gully, Auburn).

The Company held its Annual General Meeting of shareholders at the Company’s offices on 20 November 2008. All resolutions were passed unanimously on a show of hands.

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Graham D Carman Managing Director 27 January 2009

Please direct enquiries to: Graham Carman, Managing Director: Phone: 02 9955-7130 More information is available at our website: www.paradigmmetals.com.au

_________________ The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr Graham Carman who is a Member of the Australasian Institute of Mining and Metallurgy. Dr Carman is a full-time employee of the Company. Dr Carman has sufficient experience which is relevant to the style of mineralisation and type of deposit 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 of Exploration Results, Mineral Resources and Ore Reserves”. Dr Carman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

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

Consolidated statement of cash flows

• See chapter 19 for defined terms.

Appendix 5B Page 7

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Appendix 5B Mining exploration entity quarterly report

Payments to directors of the entity and associates of the directors

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

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

• 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 -

• See chapter 19 for defined terms.

Appendix 5B Page 8

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

Estimated cash outflows for next quarter

Reconciliation of cash

Changes in interests in mining tenements

• See chapter 19 for defined terms.

Appendix 5B Page 9

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Appendix 5B Mining exploration entity quarterly report

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.

• See chapter 19 for defined terms.

Appendix 5B Page 10

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Appendix 5B Mining exploration entity quarterly report

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 4).

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

Sign here: Date: 27 January 2009 Managing Director

Print name: Dr Graham D Carman

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 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.

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• See chapter 19 for defined terms.

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