ABN 68 100 287 385 Level 9, BGC Centre, 28 The Esplanade, Perth WA 6000

Tel: + 618 9322 6322, Fax: + 618 9322 6558

QUARTERLY REPORT TO THE AUSTRALIAN SECURITIES EXCHANGE FOR THE PERIOD ENDING 30 JUNE 2007

The Board of Echelon Resources Limited (“Echelon” or “the Company”) is pleased to present its quarterly report for the period ending 30 June 2007. The Company continues to focus on advancing its existing uranium projects in Queensland and Western Australia and is seeking opportunities to create value from its other copper/gold projects in Queensland.

During the quarter the Company commenced field exploration activities at its Valhalla North Uranium Project, with geological mapping, soil and rock chip sampling commencing at the Duke Batman prospect. Samples have recently been dispatched from site with assay results expected in the September quarter. A high resolution airborne radiometric and magnetic survey was completed over the Valhalla North and Andersons South Projects in Queensland and Yeelirrie South Projects in WA, which are considered highly prospective for uranium mineralisation. The survey comprised a total of 12,721 line kilometres flown at 100 metre spacing and has significantly increased the radiometric and magnetic data that is currently available. The initial data has recently been received and is currently being processed and interpreted. The airborne data will aid in the identification of uranium and gold/copper exploration targets and refinement of existing targets within the Valhalla North and Andersons South Projects. This will allow prioritisation in the mapping and sampling in the field program currently underway. Once assay results from the mapping and sampling program have been received, the data will be integrated with the interpreted airborne survey data. This will allow drill targets to be refined, identified, and prioritised for drill testing which is expected to commence by the end of the September quarter. The Company has engaged Haywood Securities to act as the Company’s exclusive lead agent for an intended listing on the Toronto Stock Exchange (“TSX”) later this year. The dual listing on both the ASX and TSX is intended to provide increased liquidity to the Company’s current and future shareholders and provide increased access to the larger Canadian and other northern hemisphere capital markets. The Company also recently completed a placement of 12 million shares at A$1.50 each to European and North American clients of Haywood Securities and London based institutions to raise A$18 million before costs. Shareholders approved the placement at a general meeting held on 20 July 2007.

Enquiries: David Berrie Managing Director Contact Details: Phone: +61 8 9322 6322

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OPERATIONS Echelon has direct and joint venture interests in a portfolio of uranium and copper/gold exploration tenements covering a total area of approximately 5,156 square kilometres. The project areas are hosted in geological environments that are considered highly prospective for the formation of uranium and copper/gold deposits.

The Company is focused on implementing an aggressive exploration program, with a strong emphasis on the application of modern exploration technologies and targeted drilling, to evaluate the potential of its uranium exploration projects in Queensland and Western Australia.

Figure 1: Project Location Map

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QUEENSLAND URANIUM PROJECTS Echelon is focussed on uranium exploration in the world class Mount Isa province in northwest Queensland. With approximately 2,528 square kilometres (1,858 km2 granted and 670 km2 under application) in the Mount Isa region that are considered prospective for uranium. Echelon’s uranium projects in Queensland include Valhalla North, Andersons South and Mary Kathleen South. Each project will be progressively explored and drill tested as rigs become available.

Figure 2: Location of Queensland Uranium Tenements

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Valhalla North Uranium Project (EPM 12572, EPMA 15677 and EPMA 16006) The Valhalla North Project is located 45 kilometres to the north of the Valhalla and Skal Uranium Projects operated by Summit Resources. Summit has reported 57 million pound U3O8 JORC Compliant Inferred/Indicated Mineral Resource Estimate for the Valhalla Project (refer Summit ASX release dated 22 August 2006). In addition, Summit has reported encouraging uranium intersections at their Watta and Warwai prospects which are located 20 kilometres southeast of the Valhalla North Project. The results of a detailed report by external consultants into the Company’s Queensland tenements indicated that the Valhalla North Project has a number of highly prospective areas for uranium mineralisation. Historical Drilling In 1971 Queensland Mines Ltd carried out a percussion drilling program on the Batman prospect within the Greenstone tenement with the best assay results from the 5 hole program being:

• 17.8m @ 0.123% U3O8 - Hole PNB 5 • 6.97m @ 0.091% U3O8 - Hole PNB 3 • 2.7m @ 0.048% U3O8 - Hole PNB 2

In 1974 Agip Australia Pty Ltd carried out a core drilling program on the Duke and Batman prospects within the Company’s Valhalla North Project with the best results from the program being:

• 4.0m @ 0.308% U3O8 - Hole DBNX 02 • 3.0m @ 0.139% U3O8 - Hole DuD 1 • 7.0m @ 0.061% U3O8 - Hole DNB 03

These drill results confirm the prospectivity of the Company’s Valhalla North Project and have highlighted drill intersected mineralisation over a strike length of one kilometre

Figure 3: Historical Drilling on Valhalla North Project

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Public Domian Airborne Data Figures 4 and 5 below illustrate the radiometric signature over the licence area. Figure 5 in particular highlights the three main prospects of Batman, Duke and Lily. In addition to these prospects, a major 4.2 kilometre long structure has been identified in the northern central portion of the licence area.

Figure 4: Valhalla North radiometric

anomalies

Figure 5: Duke & Batman prospects radiometric anomalies

Work Completed During the Quarter During the quarter, rock chip and soil sampling commenced at the Duke and Batman prospects. Samples from the initial sampling program have recently been dispatched from site with assay results expected in the September quarter. Follow up surface mapping and sampling of the 4.2 kilometre anomaly in the central northern part of the licence area, identified in the public domain data, will be carried out in the September quarter. A high resolution airborne radiometric and magnetic survey was completed over the Valhalla North Project area. This comprised a total of 6,504 line kilometres flown at 100 metre line spacing and has significantly increased the radiometric and magnetic data that is currently available. The additional radiometric data will aid in the delineation of potential uranium targets within the Valhalla North Project area and help prioritise mapping and sampling in relation to the field work currently underway. Once the final airborne data have been received and interpreted, mapping will be carried out and drill targets will be refined ahead of drill Testing. The drill program is expected to commence in the September 2007 quarter.

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Andersons South Uranium Project (EPM 12208 and EPMA 15908) The Andersons South Project is located approximately 20 kilometres southeast of Mount Isa and directly south of the Summit Resources’ tenement containing the Andersons Uranium Project known to contain a 4.7 million pound U3O8 JORC Compliant Inferred Mineral Resource Estimate (refer Summit ASX release dated 30 March 2007). Together the tenements cover approximately 449 square kilometres. A review of available data indicates that the tenements contain at least three significant radiometric anomalies (Figure 6). These target areas are significantly larger (total strike length of approximately 15km) than the radiometric signatures of the Andersons Uranium Project (strike length of approximately 1km). The host rocks to these anomalies are a suite of lithologies that are particularly favourable for uranium mineralisation. Follow up surface mapping and sampling of this anomaly will be carried out in the September 2007 quarter. During the quarter the Company flew a magnetic and radiometric survey over the Project area. The addition of the data will assist in the delineation of potential targets within the Andersons South Project. The results of the survey will be released in the September 2007 quarter.

Figure 6: Radiometric Signature

over Andersons South

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Mary Kathleen South Uranium Project (EPM 11490) The results of a review of available radiometric data have indicated that Mary Kathleen South has a number of prospective areas of uranium mineralisation. The tenement is located approximately nine kilometres south east of the Mary Kathleen mine previously operated by Mary Kathleen Uranium Limited (of which Rio Tinto Limited was a majority shareholder). Over the life of the mine, Mary Kathleen produced in total 19.5 million pounds of U3O8. The tenement currently has two target areas that display radiometric anomalism, and contain rocks from the same geological formation found at the Mary Kathleen mine (Figure 7). These targets are considered geologically prospective for uranium and it is planned to conduct follow up surface mapping and sampling of these anomalies. No field work was carried out on this tenement during the quarter.

Figure 7: Radiometric Signature over Mary Kathleen South

Kidston, Black Mountain and Yellow Waterhole Projects (EPM’s 11879, 11880, 12194, 12475, 12479, 12735, and 12656) The Company is currently reviewing the uranium potential of its Kidston, Black Mountain and Yellow Waterhole tenements, which are located in Queensland.

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Government Uranium Policy At its biennial National Conference in May this year the Federal Labor Party abandoned its previously held policy of “no new uranium mines”. This means that there are no Federal barriers to the development of new uranium mines in Australia. However, the State Government in Queensland is currently maintaining its stance prohibiting the establishment of uranium mines in Queensland. The Company will continue, along with other companies, to lobby for a change to this policy. The Company faces a similar situation in Western Australia. WESTERN AUSTRALIA URANIUM PROJECTS Yeelirrie South Uranium Project (E36/566, E36/567 and E36/568) The Yeelirrie South Project is located approximately 65 kilometres south west of Wiluna, Western Australia and is approximately 10 kilometres south of BHP Billiton’s Yeelirrie uranium deposit. Together the tenements cover approximately 430 square kilometers. During the quarter an airborne radiometric and magnetic survey was completed over the tenements comprising a total of 7,750 line kilometres flown at a line spacing of 100 metres. The results are anticipated in the September quarter. QUEENSLAND GOLD/COPPER PROJECTS Echelon holds approximately 2,628 square kilometers (1,957 km2 granted and 671 km2 under application) in Queensland that are considered prospective for copper/gold mineralisation. The Mt Isa region is endowed with mineral deposits that include Mt Isa, Century, Cannington, Osborne and Ernest Henry. The company has joint ventures with BHP Billiton and Newcrest Operations Ltd, in addition to its 100% managed ground. During the quarter the Company reviewed a number of opportunities to create value from its existing portfolio of gold/copper tenements in Queensland. As a result, the Company has recently entered into a joint venture agreement with Sovereign Metals Limited in relation to the Tate River Project (refer below). During the Quarter the Company continued to progress with the transfer of previously acquired exploration leases into Echelon’s name. Tate River Project (EPM 11866, EPM 12120 and EPM 14349) Subsequent to the end of the quarter, Echelon signed an agreement to enter into a joint venture with Sovereign Metals Limited (“Sovereign”) in relation to the Company’s Tate River Project. Under the terms of the agreement, Sovereign, by spending $50,000 on a review of the Project, has the option to elect to earn an initial 50% interest in the Tate River Project tenements by spending $1.45 million. Echelon will be free carried up to the date that Sovereign earns this 50% interest. Echelon can then elect to maintain its 50% interest going forward. If Echelon

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elects not to maintain its 50% interest, Sovereign then has the option to earn a further 25% interest (up to a maximum of 75%) by spending a further A$1.5 million on the ground. This agreement allows mineral exploration on the under-explored Tate River Project to be accelerated by Sovereign whilst Echelon retains a direct interest in the project and focuses on its uranium projects. Fenian Joint Venture (Echelon diluting to 30%) The Fenian Joint Venture between Echelon and Newcrest comprises EPM 10203, which is located approximately 29 kilometres south of Charters Towers, Queensland. During the quarter Newcrest drilled an 786 metre RC percussion drill hole at the Matthew’s Pinnicle prospect. No significant mineralised intercepts were received from the assay results. BHP Eastern Succession Joint Venture (Echelon 49%) The Eastern Succession Joint Venture between Echelon and BHP Billiton comprises EPM 9462, which is located south of Cloncurry BHP Billiton has earned a 51% interest in the Eastern Succession Joint Venture through a farm in agreement. During the quarter BHP Billiton conducted a ground magnetic survey and drilled a 280 metre RC drill hole. No significant mineralisation was reported in the drilling. BHP Selwyn Joint Venture (Echelon 100%) During the quarter, BHP Billiton withdrew from the Selwyn Joint Venture comprising EPM 12499. The tenement has reverted to Echelon for nil consideration. Whilst BHP Billiton believes that the untested potential remains within the Perisher Range, the target type, size and location does not fit their current exploration strategy. Echelon will conduct a review of BHP Billiton’s exploration results over the last 12 months to determine a strategy going forward. WESTERN AUSTRALIAN IRON ORE PROJECTS Shovelanna Project The Court of Appeal of Western Australia completed the hearing of Cazaly Resources Ltd’s (“Cazaly”) application for prerogative and declaratory relief in March. Cazaly has applied to quash the decision of former Minister for Resources, John Bowler, to terminate Cazaly’s application for the Shovelanna tenement. At the conclusion of the hearing, the Court reserved its decision. A decision is expected in due course.

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CORPORATE Sale of Iron Ore Assets The sale of the Company’s wholly owned subsidiary, PEL Iron Ore Pty Ltd (“PEL”), to Iron Ore Holdings Limited (ASX Code: IOH) was completed in April. Echelon received 3.5 million IOH Shares in consideration for the sale of PEL. Canadian Listing

During the quarter, Echelon engaged Haywood Securities to act as the Company’s exclusive lead agent for an intended dual listing on the Toronto Stock Exchange (“TSX”) later this year. Haywood Securities was co-lead agent for the initial North American financing for Paladin Resources Limited in April 2005, immediately prior to their listing on the TSX. The Directors believe that a dual listing on the TSX represents an important milestone in the Company’s development and will further raise the profile and status of the Company within the global investment community. The dual listing on both the ASX and TSX is intended to provide increased liquidity to the Company’s current and future shareholders and provide increased access to the larger Canadian and other northern hemisphere capital markets. The Company will maintain its existing listing on the ASX as its primary listing. Further information and timing in relation to the proposed TSX listing will be provided in due course. Capital Raising Subsequent to the end of the quarter, the Company completed a placement of 12 million shares at $1.50 each to European and North American clients of Haywood Securities and London based institutions to raise $18 million before costs. The placement is anticipated to facilitate interest in the Company ahead of its TSX listing (refer above). Proceeds from the issue will enable the Company to expand and accelerate the exploration programs on its existing projects in Queensland and Western Australia, as well as to pursue new business development opportunities and provide general working capital.

The placement was subject to shareholder approval, which was received at a general meeting held on 20 July 2007. Change of Name The Directors have recently announced that, subject to shareholder approval, the name of the Company will be changed to “Fusion Resources Limited”. The information in this report that relates to Exploration Results is based on information compiled by Mr David Jones. Mr Jones is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Jones is a full-time employee of Vidoro Pty Ltd, a consultant of Echelon Resources Limited. Mr Jones 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’. Mr Jones consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

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