ANNUAL REPORT 2016

Advancing undervalued mineral assets

CONTENTS

Corporate Directory

1

Chairman's Letter

2

Principal Activities and Review of Operations

3

Directors' Report

8

Auditor's Independence Declaration

21

Corporate Governance Statement

22

Consolidated Statement of Comprehensive Income

23

Consolidated Statement of Financial Position

24

Consolidated Statement of Changes in Equity

25

Consolidated Statement of Cash Flows

27

Notes to the Consolidated Financial Statements

28

Directors' Declaration

71

Independent Auditor's Report

72

Additional Stock Exchange Information

74

CORPORATE DIRECTORY

Directors

Bankers

Mr Tony Sage - Executive Chairman

National Australia Bank

Mr Tim Turner - Non-Executive Director

100 St George's Terrace

Mr Jason Brewer - Non-Executive Director

Perth, WA 6000

Company Secretary

Australian Public Relations

Ms Melissa Chapman

Professional Public Relations

David Tasker

Stock Exchange Listing

Tel: +61 8 9388 0944

Australian Securities Exchange

Mobile: +61 433 112 936

ASX code: CFE

E-Mail: david.tasker@ppr.com.au

Website

Auditors

www.capelam.com.au

Ernst & Young

11 Mounts Bay Road

Country of Incorporation

Perth, WA 6000

Australia

Tel: +61 8 9429 2222

Fax: +61 8 9429 2436

Registered Address

32 Harrogate Street

Share Registry

West Leederville, WA 6007

Computershare Investor Services Pty Limited

Australia

Level 11

Tel: +61 8 9380 9555

172 St Georges Terrace

Perth, WA 6000

AUSTRALIA

Tel: 1300 85 05 05 (Australia)

+61 3 9415 4000 (Overseas)

1

Dear Shareholders,

CHAIRMAN'S LETTER

On behalf of the Board of Directors, I present the Annual Report of Cape Lambert Resources Limited (Cape Lambert or the Company) for the financial year ended 30 June 2016.

Despite another turbulent year for commodity prices, global equities and junior resource stocks, your Company remains committed to its core strategy of acquiring and investing in assets that are distressed or undervalued and adding value to these assets, retaining long-term exposure through royalty agreements or equity interests. As a result of this volatility, the Board was unable to provide dividend payments to shareholders during FY2016 however remains committed to the objective of driving value and returning surplus cash to shareholders in future.

During the year, Cape Lambert continued to employ cost reduction measures across the Company. In line with this, Cape Lambert announced divestments during the FY2016 period including:

  • The signing of an agreement with a subsidiary of Newcrest Mining for the sale of its three tenements in Cote D'Ivoire for US$332,500 plus a royalty.

  • The sale of the Company's 20% stake in Central African Resources Limited (CAR), which has iron ore tenements in Gabon, for US$400,000.

    Cape Lambert remains focussed on investing in assets to build value for its shareholders; these investments included:

  • The signing of a Farm-in Joint Venture Agreement with Argosy Minerals on part of its Wee MacGregor Project located in north-west Queensland in November 2015.

  • Increasing its shareholding in uranium company Cauldron Energy Limited (ASX: CXU) to 18.21% in early July 2016 following the off market acquisition of 9,498,318 shares.

The Company is also pleased to advise shareholders that European Lithium Limited, of which it currently owns a 13.57% stake in has successfully listed on the Australian Securities Exchange by way of reverse takeover with Paynes Find Gold Limited. European Lithium Limited's Wolfsberg lithium project, located 270 kilometers south west of Vienna, Austria, is a quality asset that can advantage from the very positive outlook for lithium. The transaction unlocked approximately $6 million of value, at the listing price, for our shareholders.

On the corporate front, Cape Lambert announced its first capital raising since 2005 with $3.79 million (after placement costs) raised from the issue of 94 million shares to Gulf Energy International Limited via a fully underwritten placement at a 300% premium to the market.

The Company's royalty agreement with Timis Mining remains in place. While the royalty of US$2 per tonne is payable on production of 24Mt from the Timis Marampa Iron Ore Mine, the mine remains on care and maintenance due to the currently low iron ore price. Cape Lambert is still awaiting payment from Timis Mining of US$2.6 for the March 2015 quarter royalty. Meanwhile, the bridging finance of US$8 million (plus interest) to Timis Mining, which was repayable to Cape Lambert in October 2015 is yet to be received by the Company. I wish to advise shareholders that Cape Lambert continues its negotiations with Timis to expedite a resolution regarding the facility.

In a sign of my own firm commitment and optimism in the future of Cape Lambert I significantly increased my shareholding in Cape Lambert from 6.96% to 11.61% in August 2015.

On behalf of the Board, I would like to thank shareholders of Cape Lambert for your continued support throughout the financial year.

Yours faithfully

Tony Sage Executive Chairman

2

Cape Lambert Resources Ltd. published this content on 29 September 2016 and is solely responsible for the information contained herein.
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