Capricorn Metals : Amended Quarterly Activities Report/Appendix 5B

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27 July 2022

ACTIVITIES REPORT

JUNE 2022 QUARTER

HIGHLIGHTS

OPERATIONS

• Record quarterly gold production of 32,018 ounces (Q3: 31,769 ounces) for the June 2022 quarter completes an outstanding first full year of operations.
• Annual gold production of 118,432 ounces at the top end of FY22 guidance of 110,000 - 120,000 ounces and all in sustaining cost AISC of $1,112 per ounce for the nine months ended 30 June 2022 at the lower end of guidance range of $1,100 - $1,200/oz.
• AISC for the quarter of $1,199 per ounce was higher than Q3 ($1,086/oz) primarily due to higher stripping ratio of 6.1 (Q3: 3.3) as waste was preferentially mined to open stages 3 and 4 of the pit for higher ore supply (and normalisation of strip) in coming quarters.
• Strong cash flow generation from operations continues with $38.1 million (Q3: $35.1m) taking cashflow from operations for the full year to $141.0 million.
• FY23 guidance of 115,000 - 125,000 ounces at AISC of $1,160 - $1,260 per ounce and growth capital of $10 - 14 million.
• AISC at Karlawinda continue to be amongst the lowest in the Australian gold industry despite industry wide cost pressures and Capricorn expects to continue its industry leading cashflow generation per ounce of production in FY2023.

CORPORATE

• Cash and gold on hand at quarter end $65.9 million (Q3: $45.0m) reflecting cash build of $20.9 million
  (Q3: $25.0 million).
• Net cash of $0.9 million at end of June 2022 quarter, up from net debt of $20.0m at end of the previous quarter. Achieving a net cash position within first year of operations reflects the strong operating performance and cashflow generation of KGP.
• Gold sales of 33,818 ounces at average price of $2,611/oz generated $88.3 million in revenue with a further 1,664 ounces of gold on hand at the end of the quarter valued at $4.4 million (Q3: 2,567oz's).
• Acquisition of the Mumbakine Well Project located 10 kilometres from the KGP processing plant provides outstanding opportunity to add satellite resources and mill feed to the KGP.
• Shortly after the end of the quarter, the Company converted its project loan facility with Macquarie bank into a general-purpose corporate loan facility and made an early repayment of $15 million reducing the outstanding principal to $50 million.

EXPLORATION

Mt Gibson

• A total of 50,282 metres (326 holes) of RC resource definition and extension drilling programme completed in the June 2022 quarter.
• Assays received during the quarter from 280 holes continue to return exceptional results within and extensional to the resource including:

Outside current resource
∙ 4 metres @ 118.74g/t from 142 to 146m	∙ 35 metres @ 1.55g/t from 200 to 235m
∙ 10 metres @ 6.08g/t from 48 to 58m	∙ 5 metres @ 8.09g/t from 199 to 204m
∙	12 metres @ 3.44g/t from 78 to 90m	∙	10 metres @ 4.07g/t from 85 to 95m
∙	24 metres @ 2.27g/t from 256 to 280m	∙	16 metres @ 2.52g/t from 202 to 218m

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Within current resource
∙ 16 metres @ 3.15g/t from 170 to 186m	∙ 17 metres @ 3.61g/t from 37 to 54m
∙ 20 metres @ 2.72g/t from 107 to 127m	∙ 5 metres @ 17.23g/t from 79 to 84m
∙	11 metres @ 6.75g/t from 98 to 109m	∙	34 metres @ 2.93g/t from 121 to 155m
∙	10 metres @ 4.48g/t from 58 to 68m	∙	12 metres @ 6.85g/t from 144 to 156m

• Drilling on the unmined Saratoga and Orion North trends (east of the main Gibson trend) has defined zones of better grade within the resource shell and extending below the resource shell.
• Capricorn has expanded the programme from 81,000m to 105,000m in order to follow up and extend strong results returned both within and outside current resource optimisation shells.
• Results from this extended programme of drilling will be included in the updated Mineral Resource Estimate (MRE) in September 2022 and maiden Ore Reserve Estimate (ORE) in October 2022.
• In an important step for development of the project, Capricorn's application for a mining lease over the area required for a mining operation has been granted for an initial term of 21 years.

Karlawinda

• 18,308 metres (85 holes) of resource infill and extension RC drilling programme completed in the June 2022 quarter.
• Assays have been returned from 51 holes with encouraging gold results including:

∙ 10 metres @ 5.04g/t from 99 to 109m*	∙ 18 metres @ 1.36g/t from 197 to 215m*
∙ 3 metres @ 11.16g/t from 169 to 172m*	∙ 26 metres @ 1.19g/t from 168 to 194m
∙	22 metres @ 1.20g/t from 152 to 174m	∙	6 metres @ 4.36g/t from 54 to 60m
∙	18 metres @ 1.40g/t from 140 to 158m	∙	26 metres @ 0.97g/t from 175 to 201m*

• • intercept outside the current 2020 MRE
• High grade intercepts have been returned near the base of, below and along strike of current resource pit optimisations, which remain open down dip and south along strike.
• Results to form part of update to the Karlawinda MRE targeted for September 2022 and ORE in October 2022.

Drilling at Mt Gibson Gold Project

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JUNE 2022 QUARTER ACTIVITIES SUMMARY

Capricorn Metals Ltd (Capricorn) wholly owns the operating Karlawinda Gold Project (KGP) located 65 kilometres south-east of Newman in the Pilbara region of Western Australia and the Mount Gibson Gold Project (MGGP) located 65 kilometres north-east of Wubin in the Mid-West region of Western Australia.

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Karlawinda Gold Project

The KGP completed its third full quarter of steady state production in the June 2022 quarter. The operation continued to perform strongly with record gold production of 32,018 ounces (Q3: 31,769 ounces). This excellent result, which takes full year production to 118,432 ounces, sees Capricorn achieve the upper end of the annual production guidance range of 110,000 - 120,000 ounces. All-in sustaining cost (AISC) for the nine months ended 30 June 2022 was $1,112 per ounce, at the lower end of the AISC guidance range for the year of $1,100 - $1,200 per ounce.

Cash cost before royalties for the quarter was $1,067 per ounce and the AISC was $1,199 per ounce. The higher AISC was driven primarily by significantly higher mining volumes and strip ratio due to the utilisation of a third mining fleet to predominately mine waste material to open up stage 3 and 4 of the Bibra open pit and provide access to ore supply in the coming quarters. The strip ratio is expected to trend down towards life of mine average of 3.6 over the coming quarters.

Operating results for the KGP for the June 2022 quarter were as follows:

	Unit	Jun 22Q	Mar 22Q	Dec 21Q	Sept 21Q
Operations
Ore mined	BCM ('000)	546	750	892	602
Waste mined	BCM ('000)	3,357	2,505	1,582	1,511
Stripping ratio	w:o	6.1	3.3	1.8	2.5
Ore mined	t ('000)	1,153	1,589	1,998	1,200
Ore milled	t ('000)	1,172	1,149	1,150	978
Head Grade	g/t	0.89	0.92	0.90	0.84
Recovery	%	95.0	93.8	91.3	92.6
Gold production	Oz	32,018	31,769	30,316	24,329
Financial
Cash cost	A$/oz	1,067	942	842	N/A
Cash cost inc. royalties	A$/oz	1,196	1,054	963	N/A
All-in sustaining cost	A$/oz	1,199	1,086	1,048	N/A

Cash costs and AISC calculated on a per ounce production basis.

Mining

Mining continued in the Bibra open pit with total movement of 3.9 million BCM during the quarter up from 3.3 million BCM in the March 2022 quarter as the third mining fleet was optimised during the quarter.

Ore mining continued primarily as a blend of oxide from stage 2 and 3 of the Bibra open pit with laterite zones in stage 3 mined. The strip ratio for the quarter increased to 6.1 (w:o) as the third mining fleet predominately focussed on the mining of waste material to open up ore zones in stage 3 and 4 of the Bibra open pit. The higher strip mined in this quarter brings the full year strip ratio to 3.2 moving in line with the life of mine average of 3.6.

A total of 1.2 million tonnes of ore was mined during the quarter, with ore stocks steady at 2.1 million tonnes.

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Bibra open pit

Processing

Mill throughput was consistent with the previous quarter with a total of 1.17 million tonnes processed at a grade of 0.89g/t. The mill feed during the quarter was primarily a combination of laterite and oxide ores with a small proportion of transitional ore.

Operational Outlook

Mining volumes are expected to reduce over the September 2022 quarter with the current three mining fleets scheduled to move in the order of 3.6 million BCM.

A scheduled three-day shutdown to complete a mill reline in the September 2022 quarter will reduce processing plant throughput although the impact on gold production is expected to be marginal with expected production only slightly lower than the June 2022 quarter.

FY2023 Guidance

Capricorn expects to continue its strong operational performance in FY2023 with gold production guidance of 115,000 - 125,000 ounces at an AISC range of $1,160 - $1,260 per ounce.

KGP costs continue to be amongst the lowest in the Australian gold industry despite industry wide cost pressures. It is expected that the project's industry leading cashflow generation per ounce of production will continue in FY2023.

Total growth capital expenditure for FY2023 is expected to be in the order of $10 - 14 million and includes the second lift of the TSF embankment and the early pre-strip and cut back of stage 4 of the Bibra pit to provide ore access in FY24 and beyond.

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Corporate

Cash and Bullion

Another strong quarter of operating cashflow from the KGP of $38.1 million (Q3: $35.1 million) saw

Capricorn cash and bullion holdings increase to $65.9 million (Q3: $45.0m). Net cash of $0.9 million at the end of June 2022 was up from net debt of $20.0 million at the end of the previous quarter. The project generated $141.0 million in operating cashflow for the full year with strong conversion to cash on the balance sheet reflecting the robust operating performance and cashflow generation of KGP.

Financing Facility Restructure

Shortly after the end of the quarter, the Company repaid $15 million of its project loan facility with Macquarie Bank, taking cumulative repayments to $40 million since September 2021. The $15 million repayment included a $5 million early, unscheduled repayment and reduces the principal outstanding to $50 million.

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