ASX RELEASE

16 October 2015

ASX CODE: KAS

OUR PRIME COMMODITY IS TIN

LME TIN PRICE (15/10/15)

US$16,240/t

(CASH BUYER)

ABOUT KASBAH

KASBAH IS AN AUSTRALIAN LISTED MINERAL EXPLORATION AND DEVELOPMENT COMPANY.

THE COMPANY IS ADVANCING THE ACHMMACH TIN PROJECT IN THE KINGDOM OF MOROCCO TOWARDS PRODUCTION.

PROJECTS

ACHMMACH TIN PROJECT BOU EL JAJ TIN PROJECT

CAPITAL STRUCTURE

MAJOR SHAREHOLDERS

CONTACT US

: +61 8 9463 6651

: [email protected]

: www.kasbahresources.com

@kasbahresources

SEPTEMBER 2015 QUARTERLY REPORT

Kasbah Resources Limited (ASX: KAS) is pleased to report its activities for the September 2015 Quarter. The highlights include:

• Small Start Option (SSO) being investigated as alternative pathway to production for Achmmach

• Due diligence commenced over Sn-Ta prospects in Rwanda

  
  

• Two new non-executive Director appointments:

  
  

  • Mr Giles Robbins, Chairman of Thailand Smelting and Refining Company

    
    

  • Mr Mike Brook, Manager African Lion Funds

    
    

• LME tin stocks fall below 5000 t and tin price breaks through

  US$16,000 / t

  
  

• Cash position at 30 September is $3.3M.

Wayne Bramwell, Managing Director of Kasbah Resources said:

'Kasbah is assessing a smaller scale, lower capital start up scenario for our Achmmach Tin Project. The Small Start Option (SSO) is focussed on mining higher grade material at a lower annual throughput.

If successful, the SSO could provide a lower capital cost basis to commence commercial production at Achmmach and provide a platform to expand the mine and the mill to the full scale 1Mtpa option later in the project's life.'

OVERVIEW

SEPTEMBER QUARTERLY REPORT

During the Quarter Kasbah made the following significant ASX releases:

• 07 July 2015 Change of Corporate Address;

• 27 July 2015 June Quarterly Report;

• 03 August 2015 New Director Appointments; and

• 22 September 2015 2015 Annual Report.

  
  

  These releases can be viewed at www.kasbahresources.com.

  10,000

  Tin Stocks (t)

  Tin Price (US/t)

  Metal market volatility continued throughout the quarter, driven largely by a weak outlook on world economic growth which as accentuated by new concerns over China's economic growth targets. LME tin has performed poorly during 2015, yet positively, LME tin stocks have now fallen to levels under 5000 t and the metal has attempted a price recovery, testing the US$16,000 / t price level several times in October 2015 (Figure 1).

  
  

  14,000

  $25,000

  
  

  $23,000

  12,000

  
  

  $21,000

  
  

  $19,000

  8,000

  
  

  
  

  6,000

  $15,000

  
  

  Tin Stocks

  LME TIN $US/tonne

  
  

  4,000

  01/2014

  $13,000

  
  

  $17,000

  04/2014

  07/2014

  10/2014

  01/2015

  04/2015

  07/2015

  Figure 1: LME Tin Price vs. LME Tin stocks - Jan 2014 to Sept 2015

  
  

  Tin demand, particularly in China, has been weak. As such the tin price has needed a producer response (i.e. supply cuts) to counter the falling tin price. The change in the curves above (including the rapid fall in LME stockpiles to levels not seen in some 7 years) are indicative of a supply side response.

  Indonesia is the second largest tin producer in the world. The consequences of multiple layers of new export regulations coming into force in Indonesia has disrupted tin supply in 2015. Additional 'Clean and Clear' legislation, set to become enacted in November 2015, is likely to further disrupt and constrain tin exports from Indonesia into 2016. Further reductions in tin exports from Indonesia should be price positive for a tin market still forecasting a growing deficit for 2015.

  While the tin price is being reset Kasbah's prime focus remains to investigate alternative development scenarios for the Achmmach Tin Project. The current low tin price has virtually halted development of many competitor projects and Achmmach, with all its major approvals in place and with a completed feasibility study, will be strategically placed to benefit from changing market sentiment and increasing global tin demand.

  
  

  PROJECT DEVELOPMENT UPDATE

  
  

• Achmmach Tin Project (75% Kasbah, 20% Toyota Tsusho Corp, 5% Nittetsu Mining Co. Ltd)

  During the quarter Kasbah re-engaged Entech, our Mining Consultants to evaluate the Enhanced Definitive Feasibility Study (EDFS) mine design to identify a higher grade, smaller scale option that could support production at Achmmach.

  This Small Start Option (SSO) seeks to define a lower capital development / higher run of mine ore grade model which would see smaller scale mining commence at Achmmach. The SSO design aims to provide a suitable starter platform from which the project can be expanded on a mining and processing basis to the full EDFS scale (e.g. 1Mtpa) later in the mine life.

  The SSO review is ongoing.

  
  

  EXPLORATION

  Kasbah's exploration activities for the September Quarter are summarised below.

  
  

• Morocco Regional Exploration

  Exploration activity in Morocco continued. Mapping of areas of interest in the Smaala-Oulmes Fault Zone was completed during the quarter with stream sediment sampling producing minor tin anomalies. Further work during the coming months will inform a decision to retain or relinquish permits held in this area.

  Four new exploration permits were awarded to Kasbah subsidiaries in the Ment area during the quarter.

  
  

• Central African Tin Strategy - Rwanda

  Rwanda has a long history of tin, tantalum and tungsten (the 3T metals) production back to the Belgian colonial times. Mineral exports since the 1930's have been largely dominated by 3T minerals and the Rwandan government has a clear plan under the National Export Strategy to increase mineral exports by transitioning the informal artisanal small miners (ASMs - which dominate the sector), towards more sustainable and commercially productive small scale mining (SSM).

  Kasbah's Central African Tin Strategy ties into this national strategy and focusses on identification of small scale, low capital development opportunities that can transition ASM operators in Rwanda towards SSM operations. Kasbah's Exploration Manager has signed five exclusive due diligence agreements with local mine operators and has completed preliminary, low cost investigations over the high priority targets with a view to potential low cost joint ventures with local mine owners and operators.

  Kasbah is concurrently investigating alternative financing options that minimise Kasbah's financial exposure if the Company seeks to advance selected Rwandan opportunities.

  TIN MARKET OVERVIEW

  The CRU Tin Monitor of October 2015 reported that while LME tin prices had firmed to US$16,000 / t and visible stock levels continued to decline, weakness in China and concerns about the demand outlook could constrain further rises of the LME tin price in the short term. The CRU opines that 'while demand worries may delay price gains, falling mine production around the world (down 5% in the first half of this year - refer Figure 2) should limit downside risks.'

  
  

  
  

  Figure 2: World Tin Mine Production Changes - first half 2015 (source ITRI)

  
  

  The massive fall in LME tin stocks (refer Figure 1) since the beginning of the year is a strong signal of a recalibration of the tin market. The CRU Tin Monitor states 'while the run down in LME stocks this year is in line with our estimates of the world supply/demand position (a forecast annual supply deficit of some 11,000 tonnes) and the technical indicators are mainly positive, few observers are expecting an immediate take-off in prices.'

  Other signals supporting a cautiously optimistic view on the direction of the tin market include:

• falling Chinese mine production (with lower cost feed largely sourced from Myanmar);

• falling South American production (Minsur's San Rafael Mine and Pitinga Operation both announcing production cuts);

• falling Central African tin production - as the lower tin price sees the ASM operators switch to more profitable ore sources such as coltan;

• falling chinese refined tin production - currently only two small Chinese tin smelters (accounting for perhaps 2-3% of national tin production) now having official EICC-GeSI Conflict Free Status. The largest Chinese tin producer (Yunnan Tin) failed their audit and are currently undergoing a corrective action plan; and

• increasing legislation in Indonesia focussing on reducing illegal mining constraining exports.

  The next phase of legislation to impact Indonesian tin producers is the 'Clean and Clear (CnC) certification. The CnC requirements have been in the pipeline since 2011 and companies must have Permission to Export (PE) letters and CnC certification for each mining concession to get their licence to export (ET) renewed by the 1 November 2015 deadline.

  Companies that do not have the licence to export (ET) by 1 November 2015 will have to stop exporting.

  CORPORATE

• Relocation of Corporate Head Office

  As per the Corporate Cost Reduction programme previously announced to the market, Kasbah relocated its Corporate Head office to 11 Moreau Mews, Applecross, WA 6153.

• New Director Appointments

  On 03 August 2015 Kasbah announced the appointment of Mr Giles Robbins and Mr Mike Brook as Non-executive Directors to the Kasbah Board. As nominee directors for Thaisarco and African Lion, Mr Robbins and Mr Brook respectively, will not receive any remuneration from the Company for fulfilling these positions.

  • Mr Giles Robbins, MA, MBA, C Eng. MI Mech. Eng

    Group Managing Director, Amalgamated Metal Corporation plc and Chairman, Thaisarco.

    Giles Robbins has an MA in Engineering Science from the University of Oxford, an MBA specialising in Business Strategy from The University of Bradford and is a Chartered Mechanical Engineer. He has worked for the AMC Group since 1990 rising from a role in business development to the Group Managing Director.

    Giles has detailed knowledge and experience of the tin industry gained as Chairman of both Thailand Smelting & Refining Co Ltd (Thaisarco) the tin smelter based in Phuket and of Amalgamated Metal Trading Ltd, which is a ring dealing member of the London Metal Exchange (LME). Thaisarco is the fifth largest tin smelter in the world and is an industry leader in the manufacture of tin, with its LME registered Thaisarco and Phuket brands, tin alloys and other tin- related, value-added products.

  • Mike Brook BSc (Mining Geology), CEng. MIMM, MAusIMM Fund Manager, African Lion Fund

    Mike Brook graduated with a BSc. (Hon.) Mining Geology from the University of Wales (Cardiff) in 1981 and has more than 30 years' experience in the resource sector incorporating mine geology, mining analyst and fund management roles.

    Mike joined African Lion in 2001 and has been focused on African resource company investment since this time. African Lion (AFL) has been an investor in African resource companies since 1999. Their investment in Kasbah is held in the second and third funds (AFL2 and AFL3).

    The African Lion Funds have attracted long term investors as shareholders. These investors include Lion Selection Group (ASX: LSX) and major development banks CDC (UK), Proparco (France) and European Investment Bank. These groups are significant participants in funding African opportunities. Other fund shareholders include commercial banks (Investec Bank in AFL2, Rand Merchant Bank in AFL3).

• 2015 Annual Report

  On 22 September 2015 Kasbah released its 2015 Annual Report to the market. A copy of the 2015 Annual Report can be downloaded from www.kasbahresources.com.

  
  

• Cash Reserves

  Cash reserves at 30 September 2015 were $3.3M.

  LOOKING FORWARD

  
  

  Kasbah will continue to advance the Interim Development Strategy at Achmmach and focus on the SSO whilst assessing other opportunities to create value for our shareholders.

  
  

  For and on behalf of the Board

  
  

  
  

  Wayne Bramwell Managing Director

  
  

  For further information please go to: www.kasbahresources.com

  Or email: [email protected]

  Follow us on twitter @kasbahresources

  
  

  
  

  ABOUT KASBAH RESOURCES

  Kasbah Resources Limited (Kasbah) is an Australian listed mineral exploration and development Company.

  Our commodity is tin.

  Kasbah has two tin projects (the Achmmach Tin Project and the Bou El Jaj Tin Project) located in the Kingdom of Morocco:

  • Achmmach Tin Project JV in Morocco (75% Kasbah, 20% Toyota Tsusho and 5% Nittetsu Mining)

    Kasbah is the manager and operator of the Achmmach Tin Project JV. Toyota Tsusho Corporation (TTC) and Nittetsu Mining Co. Ltd (NMC) of Japan are Kasbah's strategic development partners in this JV with the enhanced definitive feasibility study (EDFS) into the development of a 1Mtpa underground mine, concentrator and associated infrastructure at Achmmach completed in March 2015. The EDFS at the base case scale of annual production of approximately 5,850 tonnes of tin in concentrate, would make Achmmach the 8th largest tin mine in the world and the largest tin mine in Africa.

  • Bou El Jaj Tin Project in Morocco (100% Kasbah)

Kasbah retains a 100% interest in the prospective Bou El Jaj Tin Project. This project is 10km from the Achmmach Tin Project and is an early stage exploration opportunity that could become a satellite ore source for Achmmach. It is currently pre-resource and additional drilling is required on multiple targets within the Bou El Jaj permits.

FORWARD LOOKING STATEMENTS

This announcement contains forward-looking statements which involve a number of risks and uncertainties. These forward looking statements are expressed in good faith and believed to have a reasonable basis. These statements reflect current expectations, intentions or strategies regarding the future and assumptions based on currently available information. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary from the expectations, intentions and strategies described in this announcement. No obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments.

INTERESTS IN MINING TENEMENTS

MINING TENEMENT CHANGES DURING THE QUARTER

FARM-IN / FARM OUT AGREEMENT CHANGES

Appendix 5B Mining exploration entity quarterly report

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Rule 5.3

Consolidated statement of cash flows

+ See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 1

Appendix 5B

Mining exploration entity quarterly report

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

1.25 Explanation necessary for an understanding of the transactions

Details of Item 1.19A above 'Other - Transactions with non-controlling interests':

Cash call funds received from Toyota Tsusho Corporation and Nittetsu Mining Co Ltd in relation to their share of costs for the Achmmach Tin Project in Morocco (75% Kasbah Resources Limited, 20% Toyota Tsusho Corporation and 5% Nittetsu Mining Co Ltd).

Non-cash financing and investing activities

+ See chapter 19 for defined terms.

Appendix 5B Page 2 17/12/2010

Financing facilities available

Add notes as necessary for an understanding of the position.

Appendix 5B Mining exploration entity quarterly report

Estimated cash outflows for next quarter

Reconciliation of cash

+ See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 3

Appendix 5B

Mining exploration entity quarterly report

Changes in interests in mining tenements

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

+ See chapter 19 for defined terms.

Appendix 5B Page 4 17/12/2010