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

13 May 2016

CAPITAL MINING SIGNS AGREEMENT TO ACQUIRE PROSPECTIVE LITHIUM TENEMENTS IN WESTERN AUSTRALIA

HIGHLIGHTS

CMY enters into a binding Sale and Purchase Agreement to acquire Shaw River Lithium Pty Ltd, the holder of 13 prospecting licence applications in the Pilbara region of Western Australia.

Lithium prospective interests in major Western Australian locations in the Pilbara, a region proven to host hard rock lithium deposits of global significance.

Significant holding - 14 specific targets within 13 prospecting licence applications across 4 locations with 2,534 hectares covered.

Sophisticated method - Applications identified selectively and collated on the basis of fundamental geological analysis.

Lead project identified - Portfolio anchored by the Shaw River Group.

First in priority - Applications are "first in time" ahead of competing peers in the Shaw River and surrounding Pilbara provinces (including Sayona Minerals Ltd (ASX: "SYA")).

Cost effective holdings - Prospecting licences for enhanced value exploration. Future value upside - Prospectivity for other mineralization (tin and tantalum).

Minimal outlay by the Company to secure first interest in lithium prospective tenements, with the $150,000 in shares to be issued on completion and a further

$150,000 to be issued on grant of at least 50% of the licence applications.

CMY also reviewing other lithium assets in highly prospective regions, such as Argentine, Chile and Canada

Capital Mining Limited (ASX: CMY) ("CMY" or "Company") is pleased to announce that it has executed a binding Sale and Purchase Agreement to acquire 100% of the shares in Shaw River Lithium Pty Ltd ("SRL"), the holder of 13 prospecting licence applications that are prospective for lithium in Pilbara region of Western Australia.

Under the terms of the Sale and Purchase Agreement, CMY has agreed to issue the shareholders in SRL a total of 30 million shares at a deemed issue price of $0.005 at completion of the acquisition and a further 30 million shares at a deemed issue price of $0.005 upon at least 50% of the licence applications being granted.

The Company will also reimburse the shareholders of SRL for expenditure incurred in applying for the licences.

The Sale and Purchase Agreement remains subject to completion of due diligence and satisfaction by the Company of all regulatory requirements.

The Opportunity

Lithium is a high value product with strong supply and demand fundamentals as lithium ion batteries continue to experience explosive growth driven by technological advancements in the energy sector. Western Australia is a key region of current and future Lithium production.

SRL has applied for 13 prospecting licences across four locations in the Pilbara region which have been selectively geologically identified as having the potential for Lithium:

• Shaw River Group;

• South Yule Group;

• Railway Group; and

• Corunna Downs Prospect

These applications have been made ahead of existing competing peers.

The portfolio is anchored by the Shaw River Group. This group comprises four targets which principally have been prospective for tin and lithium minerals (spodumene, lepiodolite and zinnwaldite). These have been recorded in this area by Geological Survey of Western Australia (GSWA) (Guidebook to Pegmatites, 2007, page 51).

The nature of the targets lends themselves to relatively low cost and short time horizon exploration and with potential for fast track development.

Figure 1: Shaw River district from surveyor's helicopter (March 2016)

Tenement applications

The distribution of the group is shown in Figure 2 below and in Table 1 below.

A total of 14 targets in the Pilbara have been secured with 13 prospecting licence applications. Prospecting licences have been used as a cost effective "foot on it" way of securing the ground:

• Superfluous expenditure avoided: concentration on the targeted areas means a lower expenditure condition on each prospecting licence than larger comparative exploration licences over the same areas. As such, the Company does not need to incur excess or superfluous expenditure to maintain the titles in good standing.

• Licences fitting for surface mineralisation: as pegmatites and lithium resources are commonly surface lying, prospecting licences are appropriate. A prospecting licence allows excavation, extraction or removal of up to 500t of material (more if the Minister's approval is granted). As such, prospecting licences are fitting for the mineralisation targeted. That is, larger tonnages for deeper drilling programmes are less likely to be required.

Figure 2: Location of Pilbara prospecting licence applications