December 2015 Quarterly Report 31 March 2016

29 April 2016

QUARTERLY REPORT - 31 March 2016

Please find attached the Quarterly Activities Report and Appendix 5B for the period ended 31 March 2016.

Yours faithfully

Cape Lambert Resources Limited

Tony Sage

Executive Chairman

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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

7,675,000 ($0.088 exp 18 Dec 2016)

Board of Directors Tony Sage Executive Chairman

Tim Turner

Non-executive Director

Jason Brewer

Non-executive Director

Melissa Chapman Company Secretary

Key Projects and Interests

Marampa Iron Ore Project Pinnacle Group Assets

Cape Lambert Contact

Tony Sage Executive Chairman

Eloise von Puttkammer Investor Relations

Phone: +61 8 9380 9555

Email: [email protected]

Australian Enquiries

Professional Public Relations David Tasker

Phone: +61 8 9388 0944

Mobile: +61 433 112 936

Email: [email protected]

UK Enquiries

Tavistock Communications Emily Fenton / Jos Simson Phone: +44 (0)207 920 3150

Mobile: +44 (0)7899 870 450

www.capelam.com.au

Cape Lambert Resources Limited March 2016 Quarterly Report

September

HIGHLIGHTS

• As at 31 March 2016, the Company had approximately A$6.56 million in cash at bank.

• Completion of $4m fully underwritten placement

• Cote d'Ivoire tenements sold to Newcrest subsidiary.

  CORPORATE

  Strategy and Business Model

  Cape Lambert Resources Limited (ASX: CFE) (Cape Lambert or the Company) is an Australian domiciled, fully funded, mineral development company. Cape Lambert has interests in several exploration and mining companies, providing exposure to iron ore, copper, gold, uranium, manganese, lithium and lead-silver-zinc assets in Australia, Asia, Europe, Africa and South America (refer Figure 1).

  Cape Lambert's strategy is to acquire and invest in undervalued and/or distressed mineral assets and companies (Projects) and:

  • improve the value of these Projects, through a hands on approach to management, exploration, evaluation and development; and

  • retain long-term exposure to these Projects through a production royalty and/or equity interest.

Cape Lambert aims to deliver Shareholder value by adding value to these undeveloped Projects. If Projects are converted into cash, the Company intends to follow a policy of distributing surplus cash to Shareholders.

Capital Management

African Minerals Limited Shareholding

As previously announced, the Company advised Shareholders that administrators had been appointed to manage the affairs, business and property of African Minerals Limited (AML). There has been no change in the quarter and AML continues to be a substantial shareholder of the Company with a holding of 105,808,628 shares.

Investments

Timis Mining Corporation Royalty

As previously announced, Cape Lambert will receive a royalty of US$2 per tonne of iron concentrate (Royalty) exported from the Timis Marampa Iron Ore Mine (Mine), which is payable on a quarterly basis. The Royalty of US$2 per tonne is payable on production of 24mt from the Mine.

There has been no change during the quarter and the Mine remains on care and maintenance. The payment from Timis Mining to Cape Lambert of US$2,566,420 for the March 2015 quarter royalty also remains unpaid.

September

Timis Mining Corporation Bridging Finance

The Company provided Bridging finance of US$8 million to Timis Mining which was repayable to the Company in October 2015 and incurs interest of 3 month US LIBOR (London interbank offered rate) + 6%. The principal and interest was due to be repaid to Cape Lambert in one payment on 21 October 2015 and could be extended by the parties on mutually agreed terms.

There has been no change during the quarter and repayment of the bridging finance is yet to be received by the Company.

Fully Underwritten Placement

The Company announced during the quarter that it had entered into an underwriting agreement with Gulf Energy International Limited (Gulf) for the placement of approximately

94 million shares at 4.25c per share to raise $4m (before expenses) (refer ASX Announcement 11 and 12 January 2016) (Underwriting Agreement).

The placement completed during the quarter whereby Cape Lambert received $3,795,250 (after placement costs) in cash and the Company issued 94,000,000 shares to Gulf thereby increasing the number of ordinary shares on issue to 720,686,586.

Cauldron Energy Limited

The Company owns a 15.84% interest in Cauldron Energy Limited (ASX: CXU) (Cauldron). During the quarter, Cauldron announced that it had successfully won legal proceedings against Beijing Joseph Investment Co. Ltd, Joseph Investment International Limited and Guangzhou City Guangrong Investment Management Co. Ltd (collectively the Plaintiff) which resulted in the payment of funds from the Plaintiff to Cauldron hence substantially increasing Cauldron's cash position.

FE Limited

Cape Lambert owns a 57.74% interest in FE Limited (ASX: FEL) (FEL). On 30 September 2015, FEL announced that it had signed a binding conditional terms sheet to acquire 100% of Cardinal House Group Pty Ltd who is a provider of online social gaming products and real money gambling platforms. During the quarter, FEL shareholders approved the resolutions to proceed with this transaction which is expected to complete in May 2016.

European Lithium Limited

Following the conversion of various loans and receivables, Cape Lamberts owns a 26.2% interest in European Lithium Limited (Euro Lithium). Euro Lithium's Wolfsberg lithium project is located in Carinthia, 270 kilometres south of Vienna, Austria. Cape Lambert notes the recent investor interest in lithium companies and that during the Quarter the Company was advised that Euro Lithium was in early stage, non-binding discussions with a number of parties regarding an equity raising, debt restructuring and a potential transaction that would see Euro Lithium achieve a stock exchange listing.

September

PROJECTS

Marampa (100% interest)

Marampa is an iron ore project at the development stage, and is located 90 km northeast of Freetown, Sierra Leone, West Africa (Marampa or Marampa Project) (refer Figure 2). Marampa comprises one granted mining licence (ML05/2014) comprising 79.40km2 and two granted exploration licences (EL46A/2011 - 159.78 km2 and EL46B/2011 - 66.00km2 (formerly EL46/2011 - 305.18km2)) held by Marampa Iron Ore (SL) Limited, which is indirectly, a wholly owned subsidiary of Cape Lambert.

The Marampa Project is currently under care and maintenance..

Dempsey Resources (100% interest)

Dempsey Resources holds the Kukuna Iron Ore Project located in Sierra Leone (Kukuna or

Kukuna Project).

The Project is located 120 km northeast of Freetown in the northwest of Sierra Leone and consists of one exploration licence (EL22/2012) covering 68km2 (refer Figure 2). The licence is located 70km due north of the Marampa Project and the Pepel Infrastructure and comprises rocks that correlate with the Marampa Group stratigraphy known to host specular hematite mineralisation.

The Kukuna Project is currently under care and maintenance.

Metal Exploration Limited (100% interest)

Metal Exploration (Mauritius) Limited, a wholly owned subsidiary of Cape Lambert, holds 15 granted exploration licences and one application in Sierra Leone covering approximately 1,688km2. This land package covers the region 70km to the north and south of Marampa and is referred to as the Rokel Iron Ore Project (Rokel or Rokel Project). Rocks from the Marampa Group exist throughout the licence areas, much the same as the Marampa Project, and are known to host specularite schist bearing units.

The Rokel Project is prospective for discovery of hematite schist deposits geologically similar to those at Marampa and is located proximal to the existing Pepel infrastructure (refer Figure 2). Regional mapping and geophysics has identified a number of prospective areas to be followed up with future targeted exploration.

The Rokel Project is currently under care and maintenance.

Cote D'I voir e ( 100% i nterest)

Metals Exploration Cote D'Ivoire SA Limited is a wholly owned subsidiary of Cape Lambert Resources. The Company holds three tenements in the highly prospective Birimian Gold Belt of Cote D'Ivoire. The tenements are named Boundiali North (400km2), Katiola (400km2) and Bouake (400km2) for a total land position of 1,200km2 (Tenements) (refer Figure 3).

The Tenements all contain, or are adjacent to, Birimian Greenstones and metasediments and have significant structural characteristics known to host high tenor gold mineralisation in the district. The Birimian Group is broadly divided into phyllites, tuffs and greywackes of the Lower Birimian (Type 2 metasediments), and various basaltic to andesitic lavas and