June 2016 Quarterly Report 29 July 2016

29 July 2016

QUARTERLY REPORT - 30 June 2016

Please find attached the Quarterly Activities Report and Appendix 5B for the period ended 30 June 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 June 2016 Quarterly Report

September

HIGHLIGHTS

• As at 30 June 2016, the Company had approximately A$5.63 million in cash at bank.

• Sale of 20% interest in Central African Resources Limited for US$400k

• Increased shareholding in Cauldron Energy Limited (ASX: CXU) to 18.21%

• European Lithium Limited to list on the ASX via reverse takeover with Paynes Find Gold Limited (ASX: PNE)

  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

Sale of Central African Resources Limited

On 17 May 2016, the Company advised Shareholders that it had sold it's 20% interest in Central African Resources Limited (CAR) which has iron ore tenements in Gabon. The Company received cash proceeds of US$400,000 in consideration for the sale of CAR.

September

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 however the Company does note the positive changes in the iron ore price during the period. The payment from Timis Mining to Cape Lambert of US$2,566,420 for the March 2015 quarter royalty also remains unpaid. The Company is in negotiations with Timis to expeditate a resolution regarding the unpaid amount.

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. The Company is in negotiations with Timis to expeditate a resolution regarding the facility.

Cauldron Energy Limited

The Company's shareholding in Cauldron Energy Limited (ASX: CXU) (Cauldron) increased during the quarter to 18.21% following the offmarket acquisition of 9,498,318 shares (subject to 6 month escrow period expiring on 5/1/2017). Please note that the cash payment for the acquisition of these shares was effected on 1 July 2016. Based on the current Cauldron share price of $0.075 the Company's investment in Cauldron is worth approximately A$3.93 million.

FE Limited

Cape Lambert owns a 49.78% 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 advised shareholders that it had received correspondence from the ASX in regards to its application for reinstatement to the official list of the ASX. In this letter, ASX advised that they are not satisfied that FEL is able to lawfully conduct its operations in all juridictions in which it proposes to carry on business and that it will not conditionally approve FEL's reinstatement until this condition is satisfied. In reaching this decision, the ASX highlighted the uncertainty created by the Australian Governments audit of the Norfolk Island Gaming Authority (NIGA). FEL advised shareholders that it is of the opinion that licenses granted to Cardinal House Group Pty Ltd by NIGA are valid.

On 1 July 2016, FEL advised shareholders that on 30 June 2016 the Australian Securities and Investment Commission (ASIC) had issued a final stop order in respect to the

September

proposectus issued by FEL on 23 March 2016. The effect of the final stop order is that no offers, issues, sales or transfers of securities in FEL can be made under this prospectus.

FEL has advised shareholders that they are currently assessing their options which include an application for review of the decision to the Administrative Appeals Tribunal and will continue to update the market accordingly.

European Lithium Limited

On 11 May 2016, the Company announced that Euro Lithium Limited (Euro Lithium) is aiming to list on the ASX by way of reverse takeover with Paynes Find Gold Limited (ASX: PNE) (Paynes). Cape Lambert owns a 26.2% of the pre-raising capital in Euro Lithium.

Euro Lithium is the 100% owner of the Wolfsberg lithium project which is located in Carinthia, 270 kilometers south of Vienna, Austria (Wolfsberg). Wolfsberg has a JORC compliant inferred resource of 3,700,000 tonnes at 1.5% Li²O (55,000 tonnes contained lithium) with additional drilling due to commence before completion of the transaction with a view of upgrading the resource. Euro Lithium has spent EUR€11.53 million on acquiring and exploring Wolfsberg which includes the completion of 17,000 metres of drilling and 1,400 metres of declines, drives and crosscuts. Wolfsberg has a planned production profile of 15 to 20 months following the proposed acquisition by Paynes.

Subsequent to the quarter end, Paynes shareholders approved the resoulutions to proceed with this transaction which is expected to complete in September 2016.