ASX Announcement 29 March 2017

Cobalt Off-Take Discussions Advance Due Diligence Progresses Towards Positive Conclusion Highlights
  • Discussions underway with major global commodity trading houses on potential life-of-mine offtake agreements
  • Preliminary non-binding offers of off-take debt funding and pre- payment received and currently being reviewed by the Board
  • As part of off-take discussions a further 32kg tailings sample collected, with metallurgical testing in South Africa underway to determine final concentrate composition and characteristics
  • Assay results on earlier tailings samples received and support cobalt and copper grades determined by hand held XRF sampling
  • Assay results of concentrate sample (KT005) taken from simple artisinal operation at Kipushi Tailings reported 1.50% cobalt and 8.28% copper
  • Technical and legal due diligence progressing well and on track for a positive conclusion in April

Australian resource and investment company, Cape Lambert Resources Limited (ASX: CFE) (Cape Lambert or the Company) is pleased to provide an update on its activities in respect to the Binding Heads of Agreement (Agreement) entered into with Congolese company, Paragon Mining SARL (Paragon) to develop the Kipushi Cobalt Tailings Project, the Kasombo Copper-Cobalt Projects (together Projects) and operate the Kipushi Processing Plant, located near Kipushi in the Democratic Republic of Congo (DRC) (refer ASX announcement dated 21 February 2017).

Over the past month, the Company and its technical management have completed a number of site visits to the Projects and appointed key technical and legal advisors to progress its legal and technical due diligence, to meet with key stakeholders in the DRC and to prepare itself for the proposed development and commencement of production activities.

As part of this, the Company has also met and held discussions with five major global commodity trading houses, all of whom have expressed an interest to enter into life-of-mine cobalt and copper concentrate offtake agreement in respect to the Kipushi Cobalt Tailings Project.

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: +61 8 9380 9555

Email: info@capelam.com.au

Australian Enquiries

Professional Public Relations David Tasker

Phone: +61 8 9388 0944

Mobile: +61 433 112 936

Email: david.tasker@ppr.com.au

www.capelam.com.au

Cape Lambert Resources Limited ABN 71 095 047 920

Corporate - 32 Harrogate Street, West Leederville WA 6007

In addition, non-binding offers of off-take debt funding and pre-payment finance have also been received for amounts of up to a maximum US$10m. These are proposed to be made available for funding 100% of the anticipated capital and working capital requirements of the Projects and also fund the acquisition of additional advanced cobalt projects in the DRC. Management have also held several detailed meetings in Lubumbashi, in London and in Johannesburg to progress this. Further meetings are planned to continue in April in Hong Kong and Johannesburg, with a view of finalizing an off-take agreement and associated debt funding package over the coming months.

Whilst these meetings are preliminary in nature, and there is no assurance that a final binding life-of- mine cobalt and copper concentrate offtake agreement, or associated off-take debt funding and pre- payment finance agreement will be reached, the very high level of interest and significant offers received to date is considered by management to demonstrate the significant opportunity and value of the Kipushi Cobalt Tailings Project.

The Company's technical consultants collected 32kg of additional samples from various locations within the Kipushi Cobalt Tailings Project during their last site visit. This material has been despatched to the laboratory of Mintek in South Africa for characterisation and metallurgical testwork.

The results of this testwork and the concentrate characteristics and composition is critical to finalisation of the Company's proposed cobalt and copper concentrate offtake agreement and off- take debt funding and pre-payment finance, and has been requested by the major global commodity trading houses that the Company is in discussions with.

This testwork, which is currently underway in South Africa, is aimed at verifying previous work completed and aimed at producing both a bulk concentrate grading initially 10-12% copper and greater than 2% cobalt and three separate concentrates of copper, cobalt and zinc. A further objective of this testwork is to conduct gravity work to determine the potential for pre-concentration of a mill product and on tailings from rougher flotation. It is expected that the testwork will be completed in April 2017.

The Company is also pleased to report that assay results from the four tailings samples collected

during the recent site visit completed in February 2017 supports the grades determined by the handheld XRF readings (refer ASX announcement dated 1 March 2017). The Company's technical

consultants collected samples of the Kipushi tailings from various locations and at various depths (refer to Figure 2) and indicative grades of the tailings were determined using a handheld XRF and ranged between 0.40% to 0.75% cobalt and 0.50% to 0.86% copper. These collected samples were dispatched to Bureau Veritas Minerals laboratory in Perth for assay analysis, with the key results as presented in Table 1 and a complete table of all elements assayed included in Table 2. Sample number KT005 was a sample collected of some artisanally concentrated tailings using simple sluicing techniques (gravity concentration). This serves to demonstrate what may be achieved using gravity separation processes as an alternative or in addition to conventional flotation.

Sample ID

UTM

Easting

UTM

Northing

Estimated thickness

Co Grade (%)

Cu Grade (%)

KT001

529928

8698248

0.5m

0.43%

1.12%

KT002

529937

8698168

1.0m

0.46%

1.18%

KT003

530033

8698043

2.5m

0.35%

1.08%

KT004

530240

8697959

0.5m

0.41%

0.89%

KT005

529932

8698405

-

1.50%

8.28%

Table 1: Key Assay Results

In addition to the ongoing technical due diligence, the Company is close to finalizing its legal due

diligence on the various licenses and permits in place and approvals to commence commercial production and sales and export of concentrates. The Company's lawyers have further drafted the

Joint Venture Shareholders Agreement which is currently being reviewed by the parties.

The Company can confirm that at this stage it has not identified any fatal flaws or identified any material adverse findings that would prevent it from successfully concluding its due diligence. However, as a result of the additional testwork that is now being completed to assist the Company in finalizing a cobalt and copper concentrate offtake agreement and associated off-take debt funding and pre-payment finance, agreement has been reached with Paragon to have the date extended to 30 April 2017 for the due diligence and Joint Venture Shareholders Agreement to be executed.

Cape Lambert Executive Chairman, Mr Tony Sage, said: "It's great to see the assay results support what our team observed in the field. The metallurgical testwork now being conducted will also provide confidence in the product that can be produced and assist us greatly in finalizing a cobalt and copper concentrate offtake agreement and associated off-take debt funding and pre-payment

finance."

"The level of interest from some of the world's largest global commodity trading companies in entering into a life-of-mine cobalt and copper concentrate offtake agreement in respect to the Kipushi Cobalt Tailings Project, is very encouraging and clearly demonstrates the significance of this project and the strong market fundamentals for cobalt, where prices have risen to now exceed

US$50,000/tonne."

"There is still much work to be done by the Cape Lambert team and its advisors but I am confident

that over the coming weeks, we can move towards finalization of our due diligence and execution of the Joint Venture Shareholders Agreement."

Yours faithfully

Cape Lambert Resources Limited

Tony Sage

Executive Chairman

Figure 1 - Kipushi Location Map Figure 2 - Sample locations from Kipushi tailings

Cape Lambert Resources Ltd. published this content on 29 March 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 29 March 2017 03:15:13 UTC.

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