Capital Mining LimitedASX: CMY, CMYO

Level 11, 216 St Georges Tce

Perth WA 6000

Telephone +61 8 9481 0389

Fax +61 8 9463 6103

www.capitalmining.com.au

Directors

Mr Peter Torney Mr Peter Dykes

Mr Anthony Dunlop

Company Secretary

Mrs Elizabeth Hunt

ASX Release

5 May 2016

Update on proposed transaction

The directors of Capital Mining Limited (Company) refer to both the Company's request to place the Company in a trading halt on 29 April 2016 and its request to suspend trading in its securities on 3 May 2016. The directors wish to update shareholders on matters and developments which led to those requests and the suspension of the Company's securities from trading over that period.

As shareholders may be aware, there has been recent media speculation concerning the Company and a proposed transaction with Livn Holdings Pty Limited (Livn), a tour and activities booking company. The directors confirm that the Company had engaged in discussions with the directors of Livn and entered into a terms sheet (Terms Sheet) under which it was proposed the Company would acquire 100% of the issued capital in Livn (Proposed Transaction).

Regrettably, the directors advise shareholders that yesterday, Livn advised the Company that it does not intend to proceed with the Proposed Transaction at this time, and gave official notice to terminate the Terms Sheet. Completion of the Proposed Transaction would have seen the Livn business achieve a "backdoor listing" which would have resulted in significant growth and revenue opportunities for the Company, ultimately maximising value and rewarding the Company's shareholders.

Whilst this result is disappointing for the Company, the directors are pursuing opportunities to culminate in a transaction which will ultimately generate value for shareholders. Specifically the directors are progressing the planned exploration at the Company's two project areas. Additionally, the Company notes it is concurrently continuing to work with Chapmans Limited, which the Company has engaged for the purposes of assessing investment opportunities in the technology sector.

The directors will keep the market informed of all material developments as and when they arise.

Peter Dykes Director