KARLAWINDA: MORE WIDE, STRONG GOLD INTERCEPTS CONFIRM QUAILITY AND SCALE OF BIBRA OPEN PIT DEPOSIT

Latest in-fill drilling also confirm presence of significant higher grade zones

ASX ANNOUNCMENT

2 November 2016

Australian Securities Exchange Code: CMM

ABN: 84 121 700 105

Board of Directors:

Mr Guy LeClezio

Non-Executive Chairman

Mr Peter Thompson

Managing Director

Mr Peter Langworthy

Technical Director

Mr Heath Hellewell

Non-Executive Director

Issued Capital:

Shares 486.9M Options 17.3M Share Price A$0.115

Market Cap. A$56.0M

EXPLORATION OFFICE:

1 Coventry Parade

North Fremantle, WA 6159

REGISTERED OFFICE:

15 Lovegrove Close

Mount Claremont, WA 6010

T +61 8 9384 3284

F +61 8 9284 3801

E [email protected]

www.capmetals.com.au

KEY POINTS

• Latest results from ongoing in-fill resource drilling continue to confirm the quality of the Bibra Deposit as a highly-continuous, large-scale open pit mining opportunity.

• Results received to date match expectations and, importantly, consolidate the high-grade domains within the deposit. Recent results from one of these high-grade domains on Section 200100mN include:

  • KBRC412 33m @ 1.45g/t Au from 23m (including 5m @ 4.03g/t)

  • KBRC092 58m @ 1.44g/t Au from 58m (including 9m @ 3.50g/t)

  • KBRC393 46m @ 1.00g/t Au from 89m (including 18m @ 1.74g/t)

  • KBRC394 54m @ 1.09g/t Au from 87m (including 12m @ 2.60g/t)

  • KBRC395 42m @ 1.03g/t Au from 112m (including 6m @ 2.90g/t)

  • KBRC396 47m @ 1.27g/t Au from 129m (including 20m @ 3.10g/t)

• In-fill drilling of the near-surface laterite resource confirms the presence of significant zones of higher-grade mineralisation within the broader resource envelope. Results from Section 200100N include:

  • KBRC410 13m @ 1.40g/t Au from 5m (including 5m @ 2.93g/t)

  • KBRC085 18m @ 1.96g/t Au from 6m (including 7m @ 4.43g/t)

  • KBRC411 16m @ 2.68g/t Au from 8m

• Multiple zones of significant mineralisation also intersected in shallower, Hanging Wall positions. Intersections from Section 200100N include:

  • KBRC314 6m @ 2.30g/t Au from 74m

  • KBRC399 3m @ 2.40g/t Au from 138m

  • KBRC296 6m @ 1.80g/t Au from 89m

• The drilling program has been expanded, both to further evaluate the recently discovered Portrush and Southern Corridor Prospects with the objective of including these areas in an expanded resource, and to tighten up drill spacing in the high-grade laterite mineralisation.

• The Bibra Resource drilling programme is now more than 80% complete. The expanded drilling program is on track for completion by the end of November, at which point an update to the Mineral Resource estimate will commence.

• To date 373 holes for 54,500m of Reverse Circulation drilling have been completed in this programme.

• This drilling will allow the resource classification within the optimised Bibra pit shell to be upgraded from Inferred, to Indicated and Measured.

2nd November 2016: Capricorn Metals Ltd (ASX: CMM) is pleased to advise that it has expanded the ongoing resource in-fill drilling program at its 100%-owned Karlawinda Gold Project near Newman in WA (Figure 1), as latest results confirm the scale, quality and continuous nature of the mineralisation at the Bibra Deposit.

The latest drilling has returned some impressive broad zones of mineralisation while also consolidating the high-grade domains within the deposit, including significant thicknesses of mineralisation grading up to 4.43g/t Au within the near-surface laterite domain.

The in-fill program continues to confirm that the Bibra Deposit is a highly continuous, large-scale open pit mining opportunity which will underpin the Definitive Feasibility Study ("DFS") on the Karlawinda Gold Project due for completion in the second quarter of next year.

The current large resource drilling program is the cornerstone activity for the fast-tracked DFS which includes approximately 60,000m of RC and Diamond drilling both to expand and upgrade the classification of the Bibra Inferred Resource, which stands at 25.5Mt @ 1.1g/t Au for 914,000oz (see Appendix 1 for details).

Figure 1: Location Map: Karlawinda Gold Project

The current resource drilling program is designed to upgrade the classification from Inferred to higher confidence Measured and Indicated and to provide key geological, metallurgical and geotechnical data for the DFS. Drill spacing has been consolidated to a 25 x 25m spacing to define key areas and 25 x 50m throughout the rest of the resource.

A key component of the drilling has been to fully evaluate the higher-grade gold domains that are prominent throughout the broader lower-grade parts of the deposit, both in the laterite/oxide and primary domains. Based on the results to date, it is clear that the high-grade domains are robust, extensive and show excellent continuity and predictability.

The cross-section 200,100mN (Figure 2), which is located within the central part of the deposit (Figure 3), is used to illustrate the nature of the mineralisation within these higher-grade domains (see Appendix 2 for all drilling details).

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Figure 2: Bibra Cross Section 200100mN

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Figure 3: Drill hole locations

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