Cape Lambert Resources : Binding JV Agreement for Cobalt Mining & Tailings Operations

ASX Announcement 21 February 2017

Binding Joint Venture Agreement for Cobalt Mining and Tailings Processing Operations Highlights

• Agreement to form 50/50 JV to develop cobalt and copper projects in the DRC including near production asset and 3 further projects
• JV to focus initially on the Kipushi Cobalt Tailings Project and the Kasombo Copper-Cobalt Project, with several other high grade cobalt projects under review by management
• JV to operate the fully constructed and commissioned Kipushi Processing Plant to process the Kipushi tailings and treat additional hard rock cobalt and copper material
• Kipushi Processing Plant commissioned in 2016, comprises a +1Mtpa flotation plant designed to produce 4,000tpa of cobalt, 10,000tpa copper and 2,000tpa of zinc in concentrate from the Kipushi Tailings
• Mining fleet including trucks and heavy equipment already on site
• Detailed mine planning and optimisation work underway on the Kipushi Cobalt Tailings Project, with the JV aiming to commence mining activities/tailings retreatment within 6 months
• Offtake discussions for the sale of cobalt, copper and zinc concentrates already underway
• Projects located in the world's major cobalt mining region, with excellent regional infrastructure and some of the highest-grade cobalt mines in the world that account for ~50% of the world's cobalt reserves and ~60% of global cobalt supply
• Cobalt prices currently exceed US$41,000/t and major mining companies are aggressively acquiring cobalt projects in the DRC

• Established in-country management team already supported by the Company's significant African operating experience in South Africa, Republic of Congo, Sierra Leone, Cote d'Ivoire and Guinea.

Australian resource and investment company, Cape Lambert Resources Limited (ASX: CFE) (Cape Lambert or the Company) is pleased to announce that it has entered into a Binding Heads of Agreement (Agreement) with Congolese company, Paragon Mining SARL (Paragon) to form a 50/50 Joint Venture (JV) to develop the Kipushi Cobalt Copper Tailings Project, the Kasombo Copper-Cobalt Projects and operate the Kipushi Processing Plant in the Democratic Republic of Congo (DRC).

Cape Lambert Resources Limited (ASX: CFE) is a fully funded mineral development company with exposure to iron ore, copper, gold, uranium, manganese, lithium and lead-silver- zinc assets in Australia, Europe, Africa and South America.

Australian Securities Exchange

Code: CFE

Ordinary shares 720,686,586

Unlisted Options

23,500,000 ($0.05 exp 18 Dec 2018)

Board of Directors

Tony Sage Executive Chairman

Tim Turner

Non-executive Director

Jason Brewer

Non-executive Director

Melissa Chapman Company Secretary

Cape Lambert Contact

Investor Relations Phone: [phone]

Email: [e-mail]

Australian Enquiries

Professional Public Relations David Tasker

Phone: [phone]

Mobile: [phone]

Email: [e-mail]

www.capelam.com.au

Cape Lambert Resources Limited ABN 71 095 047 920

Corporate - 32 Harrogate Street, West Leederville WA 6007

On the execution of the Agreement and proposed JV, Cape Lambert Executive Chairman, Mr Tony Sage, said: "Cape Lambert has built a successful track record of identifying commodities and projects at the right time. By applying our technical, financial and marketing support we can add immediate value to these projects and return significant value to the Company, its shareholders and all stakeholders."

"We believe Cobalt, as a commodity, has an extremely positive future and with this transaction and the proposed joint venture, we believe we are well placed to benefit from significant demand and price increases in this commodity sector.

"This Agreement paves the way for a JV that will benefit from advanced, highly attractive and prospective cobalt and copper projects and that will be supported by a well credentialed joint in-country and Australian based technical and operation team that includes geologists, mining engineers, process engineers, local logistics, government and community relations professionals. With our strong combined track record of project delivery and a corporate team highly capable of accessing sufficient capital to advance the nearterm production assets, we look forward to our partnership with Paragon.

"I believe our shareholders will see immediate and long term value from this proposed joint venture."

Advanced and Near Production Cobalt Projects

The proposed JV with Paragon will initially include the Kipushi Cobalt Tailings Project (Kipushi) and Kasombo Copper-Cobalt Project (Kasombo).

Both projects are located on granted mining licenses in the Katanga Copper Belt, the location of some of the world's largest and highest grade copper and cobalt mines.

Location of Kipushi Processing Plant, Kipushi Tailings Project and Kasombo Copper-Cobalt Projects

The projects are approx. 25km from the DRC's second largest city, Lubumbashi, that is accessed by a well maintained sealed road. The projects benefit from excellent, established infrastructure Lubumbashi is the main service centre for the cobalt and copper mining industry in Haut- Katanga Province.

Kipushi is located on granted mining license PER 12347 and Kasombo, comprising Kasombo 7, Kasombo 6 and Kasombo 12 are located on granted mining licenses PE 4886 and PE 481 respectively. The Kipushi Processing Plant is located approx. 8km by road from the Kipushi Cobalt Tailings Project on PE 4886.

Kipushi Processing Plant

Construction of the Kipushi Processing Plant commenced in July 2014, with final mechanical and power installation testing completed in March 2016. Total construction costs of approx. US$20m have been spent on the establishment of the plant and mining equipment.

Kipushi Processing Plant - Flotation Cells and Ball Mill

The Kipush Processing Plant comprises a fully permitted, conventional flotation plant with a throughput of 150 tonnes per hour (annual throughput of +1.0 million tonnes) and has a design capacity is to produce 4,000tpa of cobalt, 10,000tpa copper and 2,000tpa of zinc in concentrate.

Kipushi Processing Plant - Main Plant Building and Conveyors to Waste Dump

The processing plant has been designed and constructed to treat the Kipushi cobalt tailings. Extensive metallurgical testwork was completed in China and in South Africa prior to the commencement of construction activities.

The Kipushi Processing Plant has been designed to produce three separate concentrates. A copper concentrate, a cobalt concentrate grade and a zinc concentrate grade.

The Company will complete a detailed review of the Kipushi Processing Plant and the metallurgical testwork that has been completed, as part of its technical due diligence review.

Kipushi Processing Plant - Mine Equipment and On-Site Administration Offices

The Company is already in preliminary and non-binding discussions with a number of commodity trading groups in respect to potential offtake agreements for the cobalt, copper and zinc concentrates.

Kipushi Cobalt Tailings Project

The Kipushi tailings are located 8km from the Kipushi Processing Plant and immediately adjacent to TSX listed Ivanhoe Mines's Kipushi Project, which is based on the high grade underground zinc- copper mine which operated between 1924 and 1993 and which is considered the world's highest

grade zinc project with NI43-101 measured and indicated resources of 10.2Mt grading 34.9% zinc (refer TSX:IVN announcement dated 23 November 2016), and which Ivanhoe Mines are currently completing mine redevelopment.

The Kipushi tailings extend for over 1.2km in length and over 400m in width. The tailings have a maximum depth of approx. 12m in the centre of the tailings dam and 5m at the boundaries of the tailings dam, with average depths of approx. 8m.

The Kipushi Tailings located 8km from the Kipushi Processing Plant

Paragon has secured the right to mine the Kipushi tailings under an existing agreement with State owned copper and cobalt mining company, La Générale des Carrières et des Mines (Gecamines).