Capricorn Metalscapmetals.com.au/wp-content/uploads/2017/10/171005...Snapshot of Capricorn – DFS...

Capricorn Metals

CMM AU

5 October, 2017

Last price: A$0.085 Target price: A$0.15

Prepared by Tamesis Partners LLP See final two pages for important disclosures

1

Initiating Coverage: Imminent DFS to herald robust project

Capricorn is on the cusp of completing a DFS for its wholly-owned Karlawinda

gold project in WA. The project is a straightforward, low-cost open pit operation,

with favourable metallurgy and Capricorn is fully funded through to a decision to

mine. The Karlawinda exploration tenements are underexplored and show

potential to become a new gold camp, with multi-million-ounce potential.

Clear path. Capricorn is aiming to complete the DFS on Bibra, the main deposit at

Karlawinda, imminently. WA is a low-risk jurisdiction and the project has a granted Mining

Lease and Native Title Agreement. Capricorn aims to finalise debt and equity funding in Q1-

Q2 2018, and with a short 12-month build, Bibra could be pouring its first gold in mid-2019.

Simple, low strip pit. Bibra has a 1.1Moz resource (92% Indicated) and 713koz reserve

at 1.1g/t Au. Mining is a refreshingly simple proposition with a low strip, large scale, multi-

staged open pit. Geotechnical conditions are good, and significant optionality around

equipment and scheduling is likely to keep mining costs very low. No pre-strip is required

and the higher-grade laterite ore will boost production and cash flow in the early years of

mine life. Mineralisation is exceptionally continuous, and the scope for expansion is excellent.

Bibra’s metallurgical advantage. Bibra is not high-grade and it doesn’t need to be, as

along with favourable geology for mining, the ore has excellent metallurgy - with no nasties.

Testwork indicates 92.6% LOM recoveries utilising standard, low risk CIL. The real hook

though is that around 45% of the gold should fall out in the gravity circuit. The latest DFS

testwork also coarsened the grind size, without recovery loss, and further optimisation work

will be undertaken post-DFS.

Robust base case. We forecast first production in H2 2019, ramping up to 95koz pa over

the 7 full years of mine-life. We see LOM average C1 cash costs at A$900/oz, and AISC of

A$1,030/oz including an industry-competitive A$800/oz for the first two full years of

production due to the higher grade and low strip ratio of the Stage 1 pit. We forecast capex

at A$130m. Our NPV8% for Bibra is A$120m at US$1,300/oz gold (A$1,630/oz), with a

compelling 30% IRR and we see significant leverage to higher grades, gold price, and LOM

extensions, whilst remaining robust at lower gold prices.

Exploration upside. The exploration potential is impressive, with a full spectrum of targets

ranging from upside opportunities inside the resource shell (Portrush), near-mine satellites

and greenfield regional targets in an emerging, underexplored greenstone province.

Valuation. Our target price is A$0.15/sh on a fully funded/ fully diluted basis, based on a

Net Asset Value (P/NAV) multiple of 0.8x, a return of 1.75x the current share price, or 2.4x

from our unfunded valuation of A$0.21/sh. Once the DFS de-risks key metrics, we see

Capricorn has an attractive M&A target for both cashed-up Australian mid-tiers, or global

golds looking to diversify portfolio risk and add low-cost base-load production to the growth

profile.

We initiate with near term target price of A$0.15/sh. We see considerable scope

for price appreciation as Capricorn continues to de-risk development by

completing the DFS and progressing funding. The company is trading at a deep

discount to its NAV and gold development peers. With a 1.1Moz resource, a

refreshingly simple production scenario, and both near-mine and district

exploration potential, Capricorn will not stay under the radar for much longer.

Analyst: Phil Swinfen

Summary

Last price (A$) 0.085

Target price (A$) 0.15

Projected return (%) 75%

Karlawinda Project

Commodity Gold

Status DFS pending

Avg. LOM Production (koz) 85

Avg. Prod - 7 years (koz) 95

LOM C1 cash costs (A$/oz) 900

LOM AISC (A$/oz) 1,030

Tamesis NPV8% A$120m

Post tax IRR 30%

Share Data

Shares o/s (mm, b/ f.d) 572/628

52-week high/low (A$) 0.15/0.07

3-mth avg. daily vol (‘000) 335

Market cap (basic) (A$m) A$49.0m

Net cash (debt) (A$m) A$5.5m

Enterprise value (A$m) A$43.5m

Share Price Performance

Contact Details

Phil Swinfen

[email protected]

David Butler

[email protected]

Charlie Bendon

[email protected]

Charles Vaughan

[email protected]

Richard Greenfield

[email protected]

Mitch Limb

[email protected]

mailto:[email protected]







2

Contents Capricorn Metals – low-risk gold development in Western Australia ....................... 3

Snapshot of Capricorn – DFS imminent, construction next year, gold in 2019 ..... 3

Summary of main project parameters .......................................................... 3

Key catalysts and newsflow ............................................................................ 5

Capital Structure ........................................................................................... 6

Valuation ......................................................................................................... 8

Sensitivity Analysis ........................................................................................... 13

Upside scenarios and sensitivity ........................................................................ 15

Key Risks ........................................................................................................ 17

Putting Capricorn into context; comps and charts ............................................... 18

Karlawinda Overview ....................................................................................... 30

Location. ..................................................................................................... 30

Infrastructure .............................................................................................. 31

Licences and Permitting ............................................................................... 31

Next Development Steps: DFS imminent ........................................................ 31

Exploration and ownership history ................................................................. 32

Geology and mineralisation ........................................................................... 33

Resources .................................................................................................. 37

Reserves ..................................................................................................... 40

Mining ........................................................................................................ 42

Processing ................................................................................................... 43

Environmental – a relatively benign landscape ................................................ 46

Expansion opportunities – large scale system ready for growth ............................ 47

Appendix 1: Shareholders ............................................................................. 51

Appendix 2: Board and Management.............................................................. 52

Appendix 2: Capricorn Metals Ltd, Financials .................................................. 54


3

Capricorn Metals – low-risk gold development in Western Australia

Snapshot of Capricorn – DFS imminent, construction next year, gold in 2019

Capricorn is focused on bringing the Karlawinda gold project into production. The company plans to commence construction at Bibra,

the main deposit at Karlawinda in Q1-Q2 2018 and commission the plant by the mid-2019, subject to funding. Bibra has a robustly

drilled-out 1.1Moz resource, and a maiden 713koz reserve, with multiple opportunities for growth.

Bibra is permitted with the grant of Mining Lease valid for 21 years and a Land Access Agreement with the local Native Title holders.

Bibra will be a simple low strip, low-cost open-pit operation, and due to the favourable metallurgy of the ore, requires only a

conventional, off-the-shelf 3Mtpa CIL plant. High upfront gravity recovery and a coarse grind size feeds through to low operating

costs. The higher-grade laterite resource front-ends the cashflows over the initial years of mine life. Previous wide-spaced drilling

has demonstrated that the Bibra system remains open, with significant untested potential, particularly to the south, with excellent

potential to delineate satellite orebodies. Capricorn is fully funded through to a decision to mine.

Figure 1 - Location of the Bibra deposit and other near-mine prospects

Source: Capricorn

Summary of main project parameters

Figure 2 - Bibra main project parameters

*Tamesis forecasts/estimates Source: Capricorn, Tamesis

Karlawinda (Bibra deposit)

Ownership 100%

Country Western Australia

Main deposit Bibra

Stage DFS

Permits Mining Lease granted, a few ancilliary permits required

Resource 31Mt at 1.1g/t Au for 1.1Moz (92% Indicated), 0.5g/t cut-off

Reserve 21Mt at 1.06g/t Au for 713koz

Mine type Open pit

LOM* 8

Strip ratio 4.7 LOM (2.9 Stage 1 pit)

Processing Conventional CIL, high gravity recovery

Anticipated plant capacity 3.75Mtpa (oxide), 3Mtpa (fresh)

Metallurgical recovery 92.60%

LOM average gold production* 85koz pa LOM, 95koz pa main 7 years of operation

LOM production* 730koz

Capex* A$130m

Cash cost* A$900/oz

AISC* A$1030/oz

Start of Construction* Q2 2018

Start of Production Ramp-Up* Q2-Q3 2019


4

Summary production profile

Our model forecasts LOM production of 730koz, LOM average of 80kozpa, or 95kozpa over the 7 full years of mine life, and indicates

LOM average C1 cash costs at A$900/oz, total cash costs of A$975/oz and AISC of $1,030/oz.

Figure 3 - Bibra production and cost profile – Tamesis forecasts

Source: Tamesis estimates

Summary sensitivity analysis

Our NPV8% for Capricorn’s wholly-owned Bibra deposit (the main focus within the broader Karlawinda tenement area) is A$120m

with a project IRR of 30%, using spot gold at US$1,300/oz (A$1,630/oz). The sensitivity of our base-case NPV to various changes

in major parameters is shown below.

Figure 4 - Sensitivity - % change to base-case Bibra NPV to corresponding change in major parameter – Tamesis estimates


500

600

700

800

900

1,000

1,100

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0

20

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2019 2020 2021 2022 2023 2024 2025 2026 2027

Op

era

tin

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osts (

A$

/o

z)

Go

ld p

rod

ucti

on

(k

oz)

Gold production C1 AISC

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

+10%gold price

+10%grade

-10%opex

+1 year toLOM

+2% Metrecovery

% change to base-case NPV


5

Key catalysts and newsflow

Capricorn has set out a clear development path that should see Karlawinda transitioning into the construction phase before mid-

2018, if everything goes to plan. The main catalyst to watch for is the completion of the DFS in early Q4 2017. We believe this could

drive a considerable re-rating in the company’s shares as the DFS will be the first time that key operational and economic parameters

are released to the market. Due to ASX disclosure rules, the scoping study outcomes were highly redacted in the company’s July

2016 Scoping Study ASX release. Thus, forthcoming newsflow will offer the market opportunities to evaluate the economics and

development potential fully, for the first time.

Figure 5 - Key news catalysts and events

Source: Capricorn, Tamesis estimates

A clear, low-risk pathway to production

Capricorn has set out a clear pathway to production at Karlawinda. The company is fully funded up to a decision to mine and the

project only has minor permitting steps remaining. The main outstanding item on the critical path is the completion of the DFS. The

deposit is robustly drilled out and the ore reserve statement demonstrates considerable confidence in the main project parameters.

As such, we view the path to production as more of a process driven timeline. Karlawinda is a simple project, being a straightforward

shallow open pit operation with simple metallurgy and early access to higher-grade ore. Coupled with the location in Western Australia

we view the project as low-risk build.

Capricorn is fully-funded through to the production decision, meaning that subject to the DFS, the last remaining hurdle will be

securing project funding. Capricorn’s current schedule envisages construction commencing in late Q1 2018 / early Q2 2018, with an

11-month construction period, translating to first commissioning in early Q2 2019 and production ramp up from mid-late 2019.


6

Corporate Structure

Capricorn is quoted on the Australian Stock Exchange (ASX) under the ticker CMM. The company originally traded as Malagasy

Minerals Ltd (ASX: MGY). Subsequent to the acquisition of Greenmount Resources Pty Ltd initiated in late 2015, Malagasy changed

its name to Capricorn and the ticker to CMM in February 2016. This change reflected the primary focus of the company on the

Karlawinda gold project.

The corporate structure is very simple, with Capricorn Metals Ltd holding a 100% interest in the Karlawinda project, through wholly-

owned subsidiary; Greenmount Resources. The company has various non-core graphite assets in Madagascar held through various

subsidiaries which are currently going through a disposal process.

Figure 6 - Simplified Corporate/Project Structure

Source: CMM, Tamesis

Clawback and royalties

In addition to a 2% NSR royalty South32 retains a clawback option on the project (IGO acquired the project from BHPB), whereby

South32 can elect to buy back a 70% interest. However, we deem this as highly unlikely as the clawback can only be triggered if the

Karlawinda resource exceeds 5Moz gold. Even if this was achieved the buy-back would be at 3x costs, which would almost certainly

be post any mine build, meaning the buyback cost would include costs to date, plus capex, which could easily run to c.A$500m+,

versus the current market capitalisation of A$49m. The present value of the 2% NSR at an 8% discount rate is A$15m. There is

potentially scope for Capricorn to buy back the royalty, either partially for fully, or negotiate a royalty holiday. Discussions are

underway, prior to the completion of the DFS.

Capital Structure

Capricorn has 572.4m ordinary shares on issue as of the end of September 2017. Directors and Officers hold approximately 25% of

the company, institutional holdings are 27%, and retail holdings 48%. The company currently has c.55.7m unlisted options

outstanding. The Hawke’s Point options are represented by: 28.49m options (A$0.15 exercise, May 2021 expiry). The remaining

management, employee and other options are 7m (A$0.20, May 2020), 9.4m (A$0.15, May 2021) and 10.8m (A$0.10, May 2020).


7

Rapid progress from acquisition to development

Since acquiring the Karlawinda project in 2016, Capricorn has made rapid progress in moving the project into production. The

company has made significant in-roads in de-risking the project with large focus on improving the continuity and expanding the

resource base through considerable drilling (75,000m in-fill and extensional drilling) and completing a positive scoping study. Major

permitting items such as the grant of the mining lease and the Native Title Access Agreement have also been completed.

Figure 7 - CMM potted history

CMM.AX share price vs. major Karlawinda milestones

Source: CMM, Company reports, Tamesis, ASX

Oct-2015

Dec-2015

Feb-2016

Mar-2016

Apr-2016

Apr-2016

May-2016

May-2016

Jun-2016

Jul-2016

Jul-2016

Jul-2016

Aug-2016

Oct-2016

Nov-2016

Dec-2016

Dec-2016

Jan-2017

Feb-2017

Feb-2017

Mar-2017

Mar-2017

Apr-2017

Jun-2017 Improved metallurgical testwork - recoveries up to 92.6% and 45% gravity recovery

Aug-2017 Drill results expand Bibra system and maiden 713koz Ore Reserve statement

Final results from maiden drill programme inc 13m at 1.63g/t Au

Drilling commences at Karlawinda, 48 hole 8,000m RC programme to expand the 650koz resource, work starts on scoping study

1st results from drilling inc. 9m at 5.1g/t, 21m at 1.33g/t, 19m at 1.37g/t and 9m at 3.32g/t

$12.6m equity raise at 13c/sh. Funds used to fast-track Karlawinda

First-stage asset sale process commenced for Molo graphite desposit in Madagascar, with sale of 1.5% NSR for C$3m cash plus C$1m on 1st production

New shallow zone of broad gold mineralisation intersected 20m below surface at the Bibra Gold Deposit, 19 metres at 1.33g/t Au from 20m

Resource / drilling

Resource upgrade: 25.5Mt at 1.1g/t Au for 914koz gold, within optimised pit-shell using A$1,750/oz to a dpeth of 240m. 40% increase in gold content

Series of high-potential exploration targets defined in close proximity to the Bibra Inferred Resource, 60,000m in-fill drilling planned

Scoping Study completed and Feasibility study commences

Final acquisition payment for Karlawinda, project now 100%-owned

Exploration drilling immediately south of the Bibra Gold Deposit intersects thick near-surface mineralisation at Southern Corridor Target

Native Title land access agreement completed and Mining Lease granted for a term of 21 years

Jonathan Shelabear appointed as NED

RC drill results from Esky prospect, Consistent shallow oxide mineralisation delineated 500m west of Bibra. In-fill drilling reveal significant down-dip extension at Bibra

Further in-fill drilling results. High-grade component of HW lode confirmed at the souithern end of the Bibra deposit

Near-surface laterite mineralisation delineated over 1.1km strike and 500m width, from 1-5m from surface

Board/management restructure - Heath Hellewell - Executive Chairman, Stuart Pether - NED. Board Step-downs: Peter Thompson moves to COO, Peter Langworthy moves

to Exec GM, Jonathan Shellabear moves to CFO

Lithium Australia NL’s (ASX: LIT) subsidiary, BlackEarth Minerals NL acquires the exploration rights to Capricorn's Madagascan graphite assets

Resource upgrade. 31Mt at 1.1g/t Au for 1.114 Moz

Corporate / other

$10m cornerstone investment with Hawke's Point at 11.7c/sh.

Acquisition approved, Malagasy announce plans to fast-track Karlawinda. Malagasy Minerals changes name to Capricorn Metals Ltd, new ticker ASX: CMM

A$1.5m placing at 3.3c/sh. Regis Resources comes on board as new shareholder (9.9%).

Malagasy Minerals (ASX:MGY) announces HOA with Greenmont Resources to acquire the Karlawinda project

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.20

Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17

CMM.AX (A$/sh)

Malagasy changes name

to C apricorn Metals

Resource

upgrade25.5Mt at 1.1g/t for 914koz

Drilling commences

at Karlaw inda

48 hole, 8,000m RC

Malagasy announces

Greenmount acquisition

"rights to Karlaw inda"

Malagasy closes

Greenmount

acquisition

F irst results from

maiden drill programme

inc 9m at 5.1g/t$12.6m share

placement

Madagascar

asset sale

process started

New shallow

mineralisation zone

discov ered

New exploration

targets

Scoping study

completed

F inal acquisition

pay ment

New discov ery

at Southern C orridior

prospect

Nativ e Title agreement

Mining lease

granted

High grade

results from

in-fill drilling

Easky intercepts

suggest satellite

potential

$10m share

placement

Board &

Management

restructure

BlackEarth acquires

rights to Madagascar

graphite assets

Resource

upgrade31Mt at 1.1g/t for 1.1Moz

Maiden Reserves21Mt at 1.06g/t for 713koz

Improv ed met

test work


8

Valuation

Fully-funded Valuation at spot - A$0.15/sh target

We initiate with a A$0.15/sh target price based on a 0.8x NAV multiple of our base-case Bibra (Karlawinda) operating NAV driven by

our Bibra DCF, in addition to a sum-of-the parts valuation. This represents an uplift of 1.75x the current share price. We see significant

scope for further value accretion as Capricorn transitions into a producer. Being a single asset pure gold company, the future value

of the company is highly leveraged to the gold price, in addition to small incremental changes in key operating parameters such as

grade and metallurgical recovery.

Our NPV8% for Capricorn’s wholly-owned Bibra deposit (the main focus within the broader Karlawinda tenement area) is A$120m

with a project IRR of 30%, using spot gold at US$1,300/oz (A$1,630/oz). We set our base-case valuation using an 8% discount rate,

in line with the Australian junior gold space. We provide a full sensitivity at various discount rates which demonstrates the robust

nature of our base-case valuation. Our NPV5% (Some peers such as Regis Resources use 5%) increases to A$155m.

Figure 8 - Sum of the parts – fully funded NAV valuation


Our forward-looking, rolled-over NPV and NAV valuation assumes that Capricorn will trade as a producer at a 1x multiple.

Figure 9 - Bibra NPV, CMM NAV progression as the company transitions into a producer


Tamesis Fully-funded Valuation

Unrisked NAV Disc Rate NAV (%) A$m A$/sh

Bibra NPV 8% 82% 120 0.11

Resources ex-mine plan - 15% 21 0.02

Exploration - 5 0.00

Subtotal 146 0.13

Risked NAV NAV multiple NAV (%) A$m A$/sh

Bibra NPV 0.80x 96 0.08

Resources ex-mine plan - 17 0.02

Exploation - 4 0.00

Sub-total 117 0.10

Cash B/S + funding 146 0.13

Cash from option exercise 8 0.01

Debt -90 (0.08)

Forward Corporate G&A / Other (12) (0.01)

NAV VALUATION A$168m A$0.15

Shares on issue (basic) 572.4m

Shares on issue (diluted) 628.1m

Shares (basic) post-financing 1,077.4m

Shares (diluted) post-financing 1,133.1m

A$0.05

A$0.10

A$0.15

A$0.20

A$0.25

A$0.30

0

50

100

150

200

250

300

2018E 2019E 2020E 2021E

A$

m

Bibra Risked NPV (A$m) CMM NAV (A$/sh)

0.8x NAV 1.0x NAV 1.0x NAV 1.0x NAV


9

Our base-case DCF assumptions

In deriving our base-case NAV for Bibra, we use a combination of assumptions based on the 2016 scoping study, the 2017 resource

and reserve statements, the DFS preliminaries released in the maiden reserve statement, discussions with management, and our

own assumptions.

• 3Mtpa operation, 8-year LOM. Based on Capricorn’s aim to finalise financing in Q1 2018, and with a projected 12-month

construction period, this equates to first gold in March/April 2019. However, we push out first production in our model to

H2 2019 (calendar), with mining of only the stage 1A pit (mainly laterite/oxide) in 2019, followed by full ramp-up in 2020.

• We model our production profile on the grade, tonnes and strip ratio of the Bibra reserve staged open pit ore profile. We

model 23Mt of ore being mined at an average grade of 1.05g/t Au over LOM. Recoveries are based on the latest metallurgical

testwork, dependent on ore type but averaging 92.6% over LOM.

• Our model forecasts LOM production of 730koz, LOM average of 80kozpa, or 95kozpa over the 7 full years of mine life.

• We incorporate construction capex of A$130m, benchmarked against the capital intensity of similar operations and process

plants. Our opex is based on a mining cost of $2.40/t material, oxide processing $11.50/t, fresh processing $14/t, and G&A

at $2/t. We model closure costs of A$5m.

• We model a flat-forward spot gold price of US$1,300/oz, or A$1,630/oz using flat USD:AUD FX rate of 1.254.

Sum-of-the-parts assumptions

Operating NAV

Our sum-of-the-parts valuation starts with our A$120m NPV8% for Bibra. We also incorporate value for the portion of Indicated

Reserves that did not make it into the final reserve mine plan, largely due to the lower gold price used for the reserve pit shell

(A$1,500/oz vs resource A$1,750/oz). This amounts to 309koz, which we assign a conservative A$69/oz placeholder value based on

our calculated EV/oz for Australian developers, equating to A$21m. We also incorporate a nominal $5m to reflect the value of

Capricorn’s exploration tenements. This is likely a gross underestimate of the option value of the Karlawinda tenements, but we

retain our conservative view, as the focus remains on financing and building Bibra. Note that we include no value for Capricorn’s

Madagascar assets which are undergoing a disposal process.

We risk adjust our Bibra NPV and operational NAV by using a 0.8x P/NAV multiple. We generally value advanced exploration and

development companies in the range of 0.25-1.0x NAV, in line with industry averages. We believe that Capricorn deserves to trade

towards the upper-end of this range with an advanced, low-risk, low-cost, feasibility level-project, with significant growth potential.

This is off-set by risks around development, financing, timelines, and project execution. Our overall NAV valuation on the same fully

funded, fully diluted basis at 1x NAV would be A$0.17/sh.

Funding and other adjustments

Corporately, we adjust for current cash and cash from option exercise and adjust for forward corporate G&A (DCF basis) and related

costs. As this represents an all-in funded valuation we include funds coming in from equity and debt, and adjust for the assumed

debt liability and equity dilution.

We model equity being raised at a level of A$0.10, similar to current share price which adds 505m shares, based on our 65% debt,

35% equity base-case, from a $50m equity financing. We assume a peak funding requirement of A$140m, comprised of our A$130m

capex assumption, plus allowance for a A$10m overrun. We include $3m in ongoing development costs to complete the DFS and

through to a construction decision.

Given that we expect the company’s shares to gain traction on the back of the DFS and debt funding, we realistically view this

punitive dilution scenario as the floor. We provide sensitivity to equity dilution levels and pricing, later in our note.

Our all-in risk-adjusted, post-financing NAV is $168m, or A$0.15/sh, based on the total diluted share capital of 1.13bn shares,

including exercise of out of the money options (which would be in the money at our target price). This implies an uplift of 1.75x the

current share price of A$0.085/sh. Put another way, this suggests Capricorn shares are currently trading at a 0.57x multiple to our

risked NAV at spot gold prices.


10

Our equity and debt targets are achievable

Notwithstanding Capricorn’s relatively weak share price over the last 12 months, we have a reasonably high level of confidence that

an equity financing of A$50m magnitude could be achieved, given that Bibra is a quality, low-risk project, Capricorn has a top-rate

management team with a solid track record, and the company has good cornerstone support. Post DFS, the project will be further

de-risked and the full suite of cost and production metrics will be available to the market, and we believe that the mine-build fund

raise will be of interest to both existing and new institutional shareholders.

Gascoyne Resources Ltd (ASX: GCY), one of Capricorn’s closest peer companies, successfully completed a A$55m equity financing in

February 2017, which was apparently heavily oversubscribed. GCY’s Dalaranga project is a close comparator to Bibra having a

1.32Moz resource, 6-year LOM, LOM average production of 100kozpa, AISC A$1,000/oz. Note that GCY has not secured a debt

package yet, as post-feasibility drilling necessitated a revision to the mine plan and schedule which has prompted a delay, however

the company reported on 18th September that two Australian banks had been mandated to arrange a debt facility of up to A$60m.

Dacian Gold (ASX: DCN) secured a A$150m project debt facility for its Mount Morgans Gold Project, which based on the A$220m

capex implies 68% debt funding.


11

Unfunded Valuation NAV valuation at spot – A$0.21/sh

On a current, unfunded basis, our sum-of-the-parts valuation starts with our A$120m NPV8% for Bibra. The operating assumptions

are the same as the funded valuation described previously, and uses spot gold at US1,300/oz (A$1,630/oz).

We adjust for current cash on the balance sheet and cash from option exercise and adjust for forward corporate G&A (DCF basis)

and related costs. As the valuation is on an unfunded basis, we exclude cash from debt/equity funding, and exclude the debt liability

and equity dilution. We apply the same 0.8x NAV multiple to our Bibra NPV and value for the Indicated Resources not in the mine

plan, plus exploration.

Our unfunded NAV is A$118m or A$0.21/sh based on the current fully diluted share capital of 628.1m shares (572.4m shares on

issue, plus 55.7m options). This represents an uplift of 2.4x the current share price. At a 1x NAV multiple, our unfunded NAV would

be A$0.26/sh.

Figure 10 - Sum of the parts risked NAV valuation – unfunded


Valuation sense-checks

• Forward CF. If we apply an average sector cashflow multiple of 5x to Capricorn’s first full year of normalised cash flow

and production in FY20, this implies a forward CF valuation of A$0.20/sh.

• Sector - EV/oz resource. If we apply the average EV/oz resource of A$69/oz from Australian developers, this implies an

indicative value of A$77m (A$0.135/sh). Applying the producer average of A$125/oz would value CMM's EV at A$139m

(A$0.24/sh).

• Sector - EV/oz reserve. Applying the average EV/oz reserve metric we calculate for developers at A$220/oz, would value

CMM's EV at A$157m (A$0.27/sh). Applying the producer average of A$400/oz would value CMM's EV at A$285m

(A$0.49/sh).

• Close comparators - EV/oz. If we apply the average EV/oz from close development comparators (DCN, GOR, GCY) at

A$85/oz, this values CMM’s EV at A$94m (A$0.165) and EV/Reserve at A$238/oz values CMM’s EV at $169m (A$0.29/sh).

Tamesis Unfunded Valuation

Unrisked NAV Disc Rate NAV (%) A$m A$/sh

Bibra 8% 82% 120 0.19

Resources ex-mine plan - 15% 21 0.03

Exploration 5 0.01

Subtotal 146 0.23

Risked NAV NAV multiple NAV (%) A$m A$/sh

Bibra 0.80x 96 0.15

Resources ex-mine plan 17 0.03

Exploration - 4 0.01

Sub-total 117 0.19

Cash B/S 6 0.01

Cash from option exercise 8 0.01

Debt 0 0.00

Forward Corporate G&A / Other (12) (0.02)

NAV VALUATION A$118m A$0.21

Shares on issue (basic) 572.4m

Shares on issue (diluted) 628.1m


12

Forecast Bibra LOM production and financials - Tamesis modelled forecasts

Production. We model first gold in H2 2019 (calendar year) and conservatively assume that only c.550kt of ore is mined,

corresponding to the Stage 1A pit. For the main 7 years of mine life, we model annual average production of 95kozpa. Peak production

of 100kozpa is in 2020 due to the higher grade (1.2g/t) of pit Stage 1B.

Costs. We incorporate various unit costs as outlined earlier, depending on the type of ore being processed through the plant. Our

model indicates LOM average C1 cash costs at A$900/oz, total cash costs of A$975/oz and AISC of A$1,030/oz. However, we forecast

average AISC of A$800/oz for the first two full years of production due to the higher grade and low strip ratio of the Stage 1A and

1B pit. This implies an AISC margin over LOM of A$620/oz, and A$850/oz over the first two full production years, based at current

spot and FX.

Financial outputs. We forecast annual average revenue of A$132m over LOM and A$155m over the main 7 years of operation. We

forecast annual average EBITDA of A$53m, and A$63m over the main 7 years. Similarly, we forecast LOM average FCF at A$36m

and A$48m over the 7 years.

Figure 11 - Bibra LOM production profile, Calendar year (Tamesis estimates)


Figure 12 - Bibra LOM financial outputs, Calendar year, (Tamesis estimates)


500

600

700

800

900

1,000

1,100

1,200

0

20

40

60

80

100

120

2019 2020 2021 2022 2023 2024 2025 2026 2027

Op

era

tin

g c

osts (

A$

/o

z)

Go

ld p

rod

ucti

on

(k

oz)

Gold production C1 AISC

-100.0

-50.0

0.0

50.0

100.0

150.0

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

AU

D $

m

Revenue EBITDA FCF Total capex Total Opex


13

Sensitivity Analysis

Bibra NPV sensitivity

Our sensitivity analysis suggests that Bibra is extremely robust over a wide range of inputs. Being a relatively low-grade deposit,

Bibra shows very high sensitivity to the gold price and metallurgical recovery. Our NPV for Bibra increases by 42% for a 10% increase

in our long-term gold price assumption.

Figure 13 - Sensitivity analysis – Bibra NPV (in A$m)


Figure 14 - Bibra NPV (A$m) – Discount rate vs Gold price


Figure 15 - CMM.AX share price vs Gold price (A$/oz), YTD 2017

Source: Tamesis, WGC, ASX

0

50

100

150

200

250

-20% -10% Base 10% 20%

NPV (

A$m

)

Gold Price Discount Rate Opex Capex Metallurgical recovery Forex

Discount rate Equity raise price (A$/sh)

1 5% 8% 10% 12% 15%

1,000 19 4 -5 -12 -20

1,100 64 42 30 20 7

1,200 110 81 65 51 34

1,300 155 120 100 83 61

1,400 201 158 135 114 88

1,500 246 197 169 146 116

1,600 292 236 204 177 143

1,700 338 274 239 209 170

1,800 383 313 274 240 197

Gold

Price

(US$/o

z)

1,400

1,450

1,500

1,550

1,600

1,650

1,700

1,750

1,800

0.05

0.07

0.09

0.11

0.13

0.15

0.17

0.19

Gold

Price

(A

$/o

z)

CM

M.A

X (A

$/s

h)

CMM.AX Gold Price (A$/oz)


14

Valuation sensitivity – Fully-funded scenario

The tables below set out the sensitivity to our A$0.15/sh fully-funded valuation, using a range input discount rates and gold prices.

Figure 16 - Funded Valuation – Sensitivity – gold price vs. discount rate


Figure 17 - Funded Valuation – Sensitivity – debt mix (%) vs. equity raise price (A$/sh)


Valuation sensitivity – Unfunded scenario

The tables below set out the sensitivity to our A$0.21/sh unfunded valuation, using a range input discount rates and gold prices.

Figure 18 - Unfunded Valuation – Sensitivity – gold price vs. discount rate


CMM - Funded valuation (A$/sh) Uplift vs.current share price

Discount rate Discount rate

1 5% 8% 10% 12% 15% 1 5% 8% 10% 12% 15%

1,000 0.08 0.07 0.06 0.05 0.05 1,000 0.9x 0.8x 0.7x 0.6x 0.6x

1,100 0.11 0.09 0.08 0.08 0.07 1,100 1.3x 1.1x 1.0x 0.9x 0.8x

1,200 0.14 0.12 0.11 0.10 0.09 1,200 1.7x 1.4x 1.3x 1.2x 1.0x

1,300 0.17 0.15 0.13 0.12 0.11 1,300 2.0x 1.7x 1.6x 1.4x 1.3x

1,400 0.21 0.18 0.16 0.14 0.13 1,400 2.4x 2.1x 1.9x 1.7x 1.5x

1,500 0.24 0.20 0.18 0.17 0.15 1,500 2.8x 2.4x 2.2x 2.0x 1.7x

1,600 0.27 0.23 0.21 0.19 0.16 1,600 3.2x 2.7x 2.4x 2.2x 1.9x

1,700 0.30 0.26 0.23 0.21 0.18 1,700 3.6x 3.0x 2.7x 2.5x 2.2x

1,800 0.34 0.29 0.26 0.23 0.20 1,800 3.9x 3.4x 3.0x 2.7x 2.4x

Gold

Price

(US$/o

z)

Gold

Price

(US$/o

z)

Equity raise price (A$/sh) Discount rate

416 0.08 0.10 0.12 0.14 0.16 0.18 0.20

45% 0.12 0.14 0.15 0.16 0.18 0.18 0.19

50% 0.12 0.14 0.15 0.17 0.18 0.18 0.19

55% 0.13 0.14 0.16 0.17 0.18 0.18 0.19

60% 0.13 0.15 0.16 0.17 0.18 0.18 0.19

65% 0.13 0.15 0.16 0.17 0.18 0.18 0.19

70% 0.14 0.15 0.16 0.17 0.18 0.19 0.19

75% 0.14 0.15 0.16 0.17 0.18 0.19 0.19

80% 0.15 0.16 0.17 0.17 0.18 0.19 0.19

85% 0.15 0.16 0.17 0.18 0.18 0.19 0.19

%debt

fundin

g

CMM - Unfunded valuation (A$/sh) Uplift vs.current share price

Discount rate Discount rate

1 5% 8% 10% 12% 15% 1 5% 8% 10% 12% 15%

1,000 0.07 0.04 0.03 0.02 0.01 1,000 0.8x 0.5x 0.4x 0.3x 0.1x

1,100 0.13 0.10 0.08 0.07 0.05 1,100 1.5x 1.2x 1.0x 0.8x 0.6x

1,200 0.19 0.15 0.13 0.11 0.09 1,200 2.3x 1.8x 1.5x 1.3x 1.0x

1,300 0.26 0.21 0.18 0.15 0.12 1,300 3.0x 2.4x 2.1x 1.8x 1.5x

1,400 0.32 0.26 0.23 0.20 0.16 1,400 3.8x 3.1x 2.7x 2.3x 1.9x

1,500 0.38 0.31 0.28 0.24 0.20 1,500 4.5x 3.7x 3.2x 2.9x 2.4x

1,600 0.45 0.37 0.32 0.29 0.24 1,600 5.3x 4.3x 3.8x 3.4x 2.8x

1,700 0.51 0.42 0.37 0.33 0.28 1,700 6.0x 5.0x 4.4x 3.9x 3.3x

1,800 0.57 0.48 0.42 0.37 0.31 1,800 6.8x 5.6x 5.0x 4.4x 3.7x

Gold

Price

(US$/o

z)

Gold

Price

(US$/o

z)


15

Upside scenarios and sensitivity

Summary

Figure 19 - Sensitivity - % change to base-case Bibra NPV to corresponding change in parameter


Highly leveraged to grade

Bibra is a relatively low-grade deposit, and has a moderately short mine life. Our NPV for the project is thus highly sensitive to

increases in grade. Whilst in reality we would not expect a 20% or 25% increase in grade once mining commences, our chart below

illustrates the point that even relatively small grade increases over LOM (5-10%) produce a significant increase in NPV. This means

that a sustained positive reconciliation between ore to the mill and the reserve grade could be potentially very lucrative.

Figure 20 - Bibra NPV upside to higher grades


0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

+10%gold price

+10%grade

-10%opex

+1 year toLOM

+2% Metrecovery

% change to base-case NPV

100

120

140

160

180

200

220

Base case(LOM 1.06g/t Au)

+5%(LOM 1.1g/t Au)

+10%(LOM 1.15g/t Au)

+15%(LOM 1.21g/t Au)

+20%(LOM 1.26g/t Au)

+25%(LOM 1.31g/t Au)

NPV A

$m

at

8%

dis

c. r

ate

LOM grade increase (%)

30% IRR

32% IRR 34% IRR 36% IRR 38% IRR 40% IRR

NPV +$15m

NPV +$34m

NPV +$56m

NPV +$75m

NPV +$94m

A mere 10% increase in LOM gradeadds $34m to NPV


16

LOM additions are also beneficial

Adding extra years to the LOM, most likely through the process of pushing the pit deeper also has a significant impact on Bibra’s

NPV. Even adding a conservative three years, by assuming the c.300koz balance of Indicated resources at the base of pit is moved

into the mine plan and incorporating the cost of the pushback, increases our modelled NPV by A$31m. We believe these additional

ounces will be economic to extract at a future juncture.

Figure 21 - NPV upside from adding extra years to the mine life


Metallurgical Recovery – plenty of scope for further optimisation

Small increases in metallurgical recovery will naturally boost the NPV. However, we believe the real value-add would be gained from

any realised increase in the gravity gold recovery. This has important flow-through benefits for the overall circuit including lower

residence time and reagent consumption (lime, cyanide), increased throughput and ultimately lower operating costs.

Recent optimisation work has confirmed the potential to increase the primary ore grind size to 120μm, from 106μm, without recovery

loss. This is important, considering that 72% of LOM ore is represented by primary.

Small incremental gains in various areas will have a considerable impact on the economics of the operation. Once mining

commences at Bibra, tight focus on grade control combined with small improvements in gravity recovery, or coarsening of the grind,

will flow straight through to the bottom line, given that the head-grade is a modest c.1g/t Au.

Figure 22 - NPV upside from higher metallurgical recovery


100

125

150

Base case +1 year LOM +2 year LOM +3 year LOM

NP

V A

$m

at

8%

dis

c. r

ate

NPV +$13m

NPV +$24m

NPV +$31m

825koz

920koz

1,015koz

731koz

100

110

120

130

Base case 92.6% Recovery 93% 94% 95%

NP

V A

$m

at

8%

dis

c. r

ate

NPV +$7m

NPV +$12m

NPV +$2m


17

Feeding a hungry mill

Given that the maximum throughput of the planned processing plant at Karlawinda is 3Mtpa for primary fresh ore, but up to 3.75Mtpa

for oxide ore, it raises the possibility that Capricorn could supplement the mill feed with additional oxides once the plant is up running

at steady-state and has moved on to fresh ore. The company has several near-mine satellite targets which may satisfy this

requirement. E.g. the recent drilling at Portrush which has been targeting a broad shoot of near-surface oxide mineralisation.

WA Royalty Changes

In September 2017, The Western Australian Government unveiled proposed changes to the tax regime which includes a proposed

increase to gold royalties to 3.75% from the current 2.5% from January 2018. The changes have not been implemented yet, and

could potentially be blocked in the Upper House of State Parliament. We retain 2.5% government royalty in our model, for the time

being. The increase in royalties would have a negative impact on our valuation of Bibra, reducing our base-case NPV by 5.8% from

A$120m to A$113m (and our fully-funded valuation from A$0.15/sh to A$0.14/sh).

Key Risks

Gold Price

Large fluctuations in gold prices may materially affect revenues and returns. Gold prices have seen significant volatility in recent

years. A change in forecast gold prices could materially affect our valuation, either positively or negatively.

Financing

Financing is a key risk for all resource development companies. Capricorn has a significant funding requirement to develop Bibra. We

believe the project is economically and technically attractive, the company has supportive cornerstone investors, and discussions

with various financing institutions have been initiated. However, assumptions on funding mix and the level of equity funding and

resultant equity dilution are preliminary at this stage. There is no certainty that Capricorn will be able to secure sufficient funding to

satisfy its capex requirements.

Accuracy

Bibra has been subject to a scoping study, although ASX disclosure requirements resulted in only minimal information being disclosed

to the market. The recent maiden reserve statement provided more information on production scale, but detailed information will

not be available until the publication of the DFS during early Q4 2017.

Execution

A standard risk in building any mining project. Although unforeseen technical challenges could materially affect development

timelines, we see little scope for this given the straightforward, shallow open pit, good geotechnical conditions and a favourable

project location. We see little process risk due to the favourable non-refractory, high-gravity recovery nature of the Bibra ore.

Permitting Risk

There is low permitting risk at Bibra as the project already has a granted Mining Lease and a signed Native Title Agreement.

Geological risk, Resources and Reserves

Overall, we see little geological and mining risk, with a shallow, open pit, and predictably dipping orebody. Whilst the majority of

Bibra’s resource is classified in the Indicated Category, the mineralisation is nuggety and poor repeatability of assays stopped the

resource being classified into the Measured Category. We believe the risk here is largely to the upside, and Capricorn is planning a

5,000m grade control drilling programme to close the spacing on the variography.

Political, Sovereign, Labour Risks

Western Australia is a favourable jurisdiction with a solid fiscal, legal and policy framework, and we see limited scope for risk in this

category. The main risk is the proposed change to the gold royalty rates in WA from 2.5% to 3.75%, which could be implemented

from January 2018.

Foreign Exchange

Variation in the exchange rate may materially affect earnings, especially with local costs in Australian dollars, and gold prices

determined by reference to the US dollar gold price.


18

Putting Capricorn into context; comps and charts Production

Apart from Gruyere (Gold Road Resources ASX: GOR), Bibra is becoming one of the largest development projects in terms of proposed

production with LOM annual production anticipated to average 85koz pa, and 95koz pa over the main 7-years of the operation. We

model peak production at 100koz in year 2 due to the mining and processing of the higher-grade laterite/oxide portion of the deposit

in the Stage 1 pit.

Figure 23 - ASX - WA gold development peer projects – LOM average annual production

Bibra production main 7 years of LOM. Source: Tamesis

Resources – contained gold – sub 2Moz deposits

Bibra’s 1.1 Moz resource has surpassed the 1Moz critical mass level and we believe the project has potential to move up the curve

as Capricorn drills out the tenement area, which is highly prospective for satellite deposits.

Figure 24 - ASX WA - gold peer’s projects – Resources, contained gold, Sub 2Moz

Developers in gold. Source: Tamesis

0

50

100

150

200

250

LOM

Avg k

oz

pa

Uly

sses

West

Pauls

ens

Turn

er

Riv

er

Cra

cow

Indee

Deflect

or

Leonora

LG

P

Andy W

ell

Edna M

ay

Mt

Carlto

n

Juliu

s (p

hase

1)

Turn

er

Riv

er +

Indee

Gle

nburg

h

Moola

rt w

ell

Bib

ra

Nulla

gin

e

Dalg

ara

nga

Mount

Bundy

Mt

Raw

don

Jundee

Fort

num

Davyhurs

t

Mungari

Gard

en W

ell

McP

hillam

ys

0.0

0.5

1.0

1.5

2.0

Moz

gold


19

Figure 25 - ASX WA - gold peer’s projects – Resources, contained gold- inc 2Moz +


Permitting and development status - Bibra one of the next cabs off the rank

Figure 26 - ASX WA gold peer projects, main metrics and development stage

Source: Tamesis

Uly

sses

West

Pauls

ens

Turn

er

Riv

er

Cra

cow

Indee

Deflect

or

Leonora

LG

P

Andy W

ell

Edna M

ay

Mt

Carlto

n

Juliu

s (p

hase

1)

Turn

er

Riv

er +

Indee

Gle

nburg

h

Moola

rt w

ell

Bib

ra

Nulla

gin

e

Dalg

ara

nga

Mount

Bundy

Mt

Raw

don

Jundee

Fort

num

Davyhurs

t

Mungari

Gard

en W

ell

McP

hillam

ys

Hig

gin

sville

Mount

Morg

ans

Kalg

oorlie

Ops

South

Kalg

oorlie

Gw

alia

Ravensw

ood

Cow

al

Matild

a (

Phase

1)

Gru

yere

Centr

al M

urc

his

on

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Moz

gold

Ticker Company Location Project Resource Production Capex Stage Plant Size Type Permitted

Moz Koz p.a. A$m Mtpa

CMM Capricorn Aus (WA) Bibra 1.11 95 130 DFS 3-3.75 OP Mining Lease & Native title agreement

GOR Gold Road Resources Aus (WA) Gruyere 6.61 270 514 Construction (prod Q4 2018) 7.5 OP Mining Lease, Native Title agreement

RRL Regis Resources AUS (NSW) McPhillamys 2.30 192 215 DFS (Prod Q2 2019) 7 OP Exploration Licence

DCN Dacian Gold Aus (WA) Mount Morgans 3.32 150 220 Construction (prod Q1 2018) 2.5 OP/UG Mining Lease , No Native Title claim

GCY Gascoyne Resources Aus (WA) Dalgaranga 1.23 100 86.2 Construction (prod Q2 2018) 2.5 OP Mining Lease

PGO Primary Gold AUS (NT) Mount Bundy 1.24 91.6 155 Scoping 3 OP/UG Mining Lease

DEG De Grey Mining Aus (WA) Turner River + Indee 1.00 90 - Scoping - OP Mining Lease

EGS Eastern Goldfields Aus (WA) Davyhurst 1.75 80 - Commissioning 1.2 OP Mining Lease

GCY Gascoyne Resources Aus (WA) Glenburgh 1.00 73 70.4 PFS 1.2 OP/UG Mining Lease, Native Title finalised

WGX Westgold Aus (WA) Fortnum 1.75 70 15 Commissioning 1 OP Mining Lease

WGX Westgold AUS (NT) Rover 0.38 60 100 PFS - OP Exploration Licence

KIN Kin Mining Aus (WA) Leonora LGP 0.72 48 56.7 DFS 1.2 OP Exploration Licence, ML application

EAR Echo Resources Aus (WA) Julius (phase 1) 0.96 31.95 17.5 BFS 2 OP Mining Lease


20

Resources grade – Western Australian peers

Bibra’s total resource grade at 1.1g/t is rather low in terms of the peer group. However, the grade of Bibra’s laterite is 1.4g/t and

will contribute plant feed in the first year of operation, front-ending cash flow. It’s also worth noting that evaluating on a grade-only

basis is not very instructive, as Bibra’s relatively low grade is compensated for by the deposit being amenable to a shallow low-cost

open pit with a low-strip ratio, and favourable metallurgy which indicates high gravity and overall recoveries.

Figure 27 - ASX gold peer projects – Total resource grade, g/t Au

Developers in gold. Rover is in NT Source: Tamesis

Resource – Western Australian peers – tonnage/Moz plot

Bibra sits at around the mid-point point on a tonnage basis, and sits firmly within the cluster of 1-2Moz deposits that are typical of

Western Australia.

Figure 28 - ASX WA gold peer projects – Tonnage-Moz plot

Developers in gold. Tonnage axis is logarithmic Source: Tamesis, company reports

Mt

Raw

don

Moola

rt w

ell

Ravensw

ood

Gard

en W

ell

Cow

al

McP

hillam

ys

Bib

ra

Nulla

gin

e

Dalg

ara

nga

Gru

yere

Edna M

ay

Bib

ra (

late

rite

)

Turn

er

Riv

er

Gle

nburg

h

Mount

Bundy

Turn

er

Riv

er +

Indee

Rover

Indee

Juliu

s (p

hase

1)

Fort

num

Leonora

LG

P

Hig

gin

sville

Uly

sses

West

Centr

al M

urc

his

on

Mount

Morg

ans

South

Kalg

oorlie

Mungari

Davyhurs

t

Mt

Carlto

n

Jundee

Matild

a (

Phase

1)

Andy W

ell

Kalg

oorlie

Ops

Pauls

ens

Deflect

or

Cra

cow

Gw

alia

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Reso

urc

e g

rade g

/t

Julius

Fortnum

Dav y hurst

Mount Morgans

Gruy ere

Leonora LGP

Bibra

Dalgaranga

GlenburghPaulsens

C racow

Edna May

Mt C arlton

Moolart well

Mt Rawdon

Jundee

Mungari

Higginsv ille

Kalgoorlie O psSouth KalgoorlieGwalia

Rav enswood

C owal

C entral Murchison

Nullagine

Garden Well

A ndy Well

Deflector

Matilda (Phase 1)

Uly sses West

Turner Riv erIndee

Turner/Indee

Mt.Bundy

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1 10 100

Mo

z go

ld

Tonnage (Mt)

McPhillamys


21

Resource confidence

Bibra’s resource is classified as 92% of ounces sitting within the Indicated category, which demonstrates the simply geology and

robust nature of Capricorn’s in-fill drilling. In terms of total M&I resources as a percentage of total resource, Bibra has the highest

percentage of all current Western Australian development projects in our database.

Figure 29 - ASX WA gold peer projects – % of resource classified as Measured and Indicated

Developers in gold. Source: Tamesis, company reports

Reserves

Bibra’s 713koz maiden reserve stacks up well against peers.

Figure 30 - ASX WA gold peer projects – Total Reserves, Moz contained gold

Development projects in gold. Source: Tamesis, company reports

Bib

ra

Leonora

LG

P

Gru

yere

Fort

num

Mount

Bundy

Mount

Morg

ans

Dalg

ara

nga

Indee

Davyhurs

t

Turn

er

Riv

er +

Indee

Juliu

s (p

hase

1)

Turn

er

Riv

er

Gle

nburg

h

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

M&

I R

eso

urc

e a

s a %

of Tota

l Reso

urc

e

Uly

sses

West

Pauls

ens

Juliu

s (p

hase

1)

Baneygo

Andy W

ell

Nulla

gin

e

Cra

cow

Moola

rt w

ell

Glo

ster G

old

Deflect

or

Fort

num

South

Kalg

oorlie

Hig

gin

sville

Edna M

ay

Dalg

ara

nga

Matild

a (

Phase

1)

Mungari

Mt

Carlto

n

Bib

ra

Jundee

Gard

en W

ell

Mt

Raw

don

Kalg

oorlie

Ops

Mount

Morg

ans

Ravensw

ood

Gw

alia

Centr

al M

urc

his

on

McP

hillam

ys

Cow

al

Gru

yere

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

P+

P R

ese

rves

(Moz

Au)


22

Bibra will be a low strip ratio mine

Due the geometry of the Bibra orebody whereby the pit slope essentially follows the dip of the main footwall lode, the strip ratio is

low in relative terms, being 4.7 over the LOM, but a very low 2.9 during mining of the Stage 1 pit. This has important implications

for Bibra’s economics during the initial years of paying back project capital.

Figure 31 - ASX WA gold peer projects – strip ratio


Set against a selection of global gold development projects and recent start-ups, Bibra’s low strip ratio stands out.

Figure 32 - Global gold development peer projects – strip ratio

Source: Tamesis

Ravensw

ood

Mount

Bundy

Gru

yere

Bib

ra S

tag

e 1

pit

Glo

ster G

old

Moola

rt w

ell

Nulla

gin

e

McP

hillam

ys

Teal

Bib

ra (

LO

M)

Leonora

LG

P

Juliu

s (p

hase

1)

Gard

en W

ell

Baneygo

Dalg

ara

nga

Mount

Morg

ans

Gle

nburg

h

Rose

mont

Matild

a (

Phase

1)

Uly

sses

West

Andy W

ell

0

2

4

6

8

10

12

14

16

LOM

str

ip r

atio

25

BibraLOM

strip 4.7

BibraStage 1 pit

strip 2.9

Casp

iche (oxi

de)

Bom

bore

Rav

ensw

ood

Maricu

nga

Mount

Bundy

Am

uls

ar

Dugbe

Gru

yere

Bib

ra

Sta

ge

1 p

it

Cert

ej

Glo

ster

Gold

Banfo

ra

Moola

rt w

ell

Karm

a

Rain

y R

iver

Nulla

gin

e

Sham

besa

i

Volte G

rande

Teal

Fekola

Bib

ra

(L

OM

)

Leonora

LG

P

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hase

1)

Runru

no

Nkra

n

Donlin

Gold

Wa

Coff

ee

Gard

en W

ell

Baney

go

Yaoure

Manic

a

Auro

ra

Dalg

ara

nga

Haile

Mount

Morg

ans

Gle

nburg

h

Baom

ahun

Chaara

t

Rose

mont

Matild

a (P

hase

1)

La I

ndia

Nato

ugou

New

Lib

ert

y

Uly

sses

West

Andy

Well

0

2

4

6

8

10

12

14

16

LOM

str

ip r

atio

25 25


23

Opex

We model Bibra’s AISC at A$1,030/oz (C1 cash costs A$900/oz), which places the project towards the lower end of WA peer

development projects and operating mines.

Figure 33 - ASX WA gold peer projects – AISC (A$/oz)


Capital Intensity vs AISC Margin

Taking a slightly different approach to capture both the capital construction costs of development projects and the projected AISC

margin (at A$1,750/oz and assuming LOM average AISC), we demonstrate that Bibra has a significant advantage over the majority

of other Western Australian development projects.

Figure 34 - ASX WA gold peer projects – Capital intensity vs. AISC margin

Source: Tamesis

Mt

Carlto

n

Deflect

or

Dalg

ara

nga

Gru

yere

Cow

al

Moola

rt w

ell

Gle

nburg

h

McP

hillam

ys

Kalg

oorlie

Ops

Mungari

Bib

ra

Mount

Morg

ans

Gard

en W

ell

Mt

Raw

don

Jundee

Mount

Bundy

Glo

ster G

old

Matild

a (

Phase

1)

Gw

alia

Cra

cow

Ravensw

ood

Leonora

LG

P

Juliu

s (p

hase

1)

Nulla

gin

e

Centr

al M

urc

his

on

Edna M

ay

Andy W

ell

Fort

num

Hig

gin

sville

South

Kalg

oorlie

Pauls

ens

500

600

700

800

900

1,000

1,100

1,200

AIS

C (A

$/o

z)

Matilda (Phase 1)

Dalgaranga

Bibra

Gruyere

Mount Morgans

Leonora LGP

Mount Bundy

Nullagine

Glenburgh

Deflector

Julius (phase 1)

400

500

600

700

800

900

1000

50 100 150 200 250 300

AIS

C M

Arg

in (

A$

/o

z)

Capital Intensity ($/oz LOM production)

High A ISC margin

Low C apital intensity

McPhillamy


24

Capital intensity

Based on our modelled production profile and capex assumption of A$130m, we calculate a capital intensity of A$162/oz, which puts

Bibra in the mid to low position on the curve compared to peer projects. We have benchmarked our development capex assumption

against ASX-peers and global developers, based on throughput, production and plant configuration.

Figure 35 - ASX gold peers - capital intensity A$/annual production

Source: Tamesis

Using a much wider group of global gold development projects and recent start-ups, Bibra stacks up very well, demonstrating the

attractiveness of a low-cost open pit operation in Western Australia.

Figure 36 - Global golds - capital intensity US$/LOM production

Note: Capital intensity in US dollars Source: Tamesis

0

50

100

150

200

250

300

Ca

pit

al i

nte

nsit

y A

$/LO

M p

rod

ucti

on

ASX gold peers - capital intensity A$/LOM production

Fort

num

re-f

urb

Matild

a (

Phase

1)

Kyzy

l

Gro

ss

Ravensw

ood

Manic

a

Volte G

rande

Dugbe

Gard

en W

ell

Curr

aghin

alt

Auro

ra

Hope B

ay

Dalg

ara

nga

Yaoure

Buritica

Yanfo

lila

Esa

ase

Gru

yere

Nkr

an +

Ess

ase

Yara

moko

Tulu

Kapi

Nkr

an

Chaara

t

Coff

ee

Bib

ra

Feko

la

Maricu

nga

Mount

Morg

ans

Leonora

LG

P

Mount

Bundy

Pakr

ut

Nulla

gin

e

Banfo

ra

New

Luik

a

Ench

i

Stu

rec

Karm

a

Phoenix

Gle

nburg

h

La I

ndia

Am

uls

ar

New

Lib

ert

y

Sham

besa

i

Deflect

or

Nato

ugou

Red R

abbit

Cononis

h

Runru

no

Bulla

bulling

Haile

Bom

bore

Angost

ura

Cononis

h

Casp

iche (oxid

e)

Haile

Juliu

s (p

hase

1)

Cert

ej

Donlin

Gold

Bla

ckw

ate

r

Wa

Baom

ahun

Rain

y R

iver

Tim

ok

0

50

100

150

200

250

US$/o

z LO

M P

roduct

ion

Average capital intensity LOM production basis US$160/oz

Bibra US$130/oz


25

EV/Oz – Capricorn is trading at a considerable discount to peers

On an enterprise value per resource ounce, and reserve ounce, Capricorn appears to be trading at a considerable discount to most

of the other companies in the Australian gold space. Capricorn is currently trading at A$44/oz resources, versus the average of

$69/oz we calculate for comparable development companies. The discount is particularly marked at the EV/Reserve level where

Capricorn is trading at A$68/oz, compared to the average of A$220/oz we calculate for developers.

Whilst, we are not the biggest fan of EV/oz methodology (we view it as a bit of a blunt instrument), it is still useful as a broad-brush

indicator of value, and the value disconnect for CMM shares is striking. We are cognisant that until the DFS is published, Capricorn’s

disclosure of opex and capex is limited. Post-DFS, once metrics are in the market and the project is further de-risked, we anticipate

that this discount will start to unload. Back-calculating EV using peer metrics produces some interesting indicative values:

• If we apply the average A$69/oz EV/oz resource metric for developers to Capricorn, it implies a value CMM’s EV at A$77m

(A$0.135/sh). Applying the producer average of A$125/oz would value CMM’s EV at A$139m (A$0.24/sh).

• Applying the average EV/oz reserve metric we calculate for developers at A$220/oz, would value CMM’s EV at A$157m

(A$0.27/sh). Applying the producer average of A$400/oz would value CMM’s EV at A$285m (A$0.49/sh).

• Using the average EV/oz resource only for Capricorn’s close comparators (DCN, GOR, GCY) at A$85/oz values CMM’s EV at

A$94m (A$0.165) and EV/Reserve at A$238/oz values CMM’s EV at $169m (A$0.29/sh).

Figure 37 - Australian Golds – EV/oz Resource

*Developers in gold, Producers in black Source: Tamesis

Figure 38 - Australian Golds – EV/oz Reserves

*Developers in gold, Producers in black Source: Tamesis

BLK DEG PGO SLR WGX EXGCMM EAR RMS RSG GCY BDR DRM MOY GOR EGS DCN SAR SBM GMD RRL NST EVN

0

50

100

150

200

250

300

EV

/R

eso

urc

es (

A$

/o

z)

Dev eloper A v g. $69/oz

Producer A v g. $125/oz

CMM RSG GOR PGO WGX BDR BLK SLR DRM GCY RMS DCN SBM MOY EVN SAR NST RRL

0

100

200

300

400

500

600

700

800

900

1,000

EV

/R

ese

rve

s (A

$/o

z)

Dev eloper A v g. $220/oz

Producer A v g. $400/oz


26

Major players in the Australian gold scene are building cash and reducing debt – M&A for growth?

Some of the major Australian based, or Australian gold producers have been building cash and reducing debt over the last couple of

years, which reaffirms that another round of M&A is now achievable. After some challenging years, Australian gold producers have

finally started to capitalise on the shifting macro and operational environment. Depreciation of the Australian dollar against the US

dollar helped drive a divergence between USD and AUD gold prices which started in mid-2013, but gathered pace from 2015 onwards.

Lower input costs as the iron-ore led boom fizzled out also provided opportunities to renegotiate contracts and take advantage of

lower costs for consumables, labour, drilling, oil etc. Combined with a raft of restructuring, Australian producers have been bringing

down AISC with a renewed focus on cost management and sweating assets hard. This naturally has boosted FCF and allowed the

sector to start working down the millstone of debt that hung around the neck of some of the largest producers.

Figure 39 - The senior Australian golds are re-stocking the treasury – cash build and debt reduction

NST=Northern Star, RRL=Regis Resources, SBM=Saint Barbara, RSG=Resolute, WGX=WestGold, OGC=OceanaGold, NCM=Newcrest

Source: Tamesis

Burning a hole?? Our analysis shows that cash balances have improved materially for a selection of the larger Australian gold

companies, and at the same time, sector indebtedness has been reducing. The paucity of quality new development projects, and the

long-lead times from discovery to production, presents a problem for the larger producers. Whilst shareholders are increasingly

demanding dividend growth, resource and production growth is the engine that ultimately drives this. The problem for mid-tier and

senior golds is finding (or acquiring) deposits of sufficient scale to move the needle.

Thus, we believe that companies like Capricorn will increasingly come into play, with a low-risk project, in a low-risk jurisdiction.

Deposits like Bibra, whilst currently only 1.1Moz, provide a useful base-load production, but with the added kicker of highly-

prospective exploration tenements. For a potential acquirer, Capricorn provides a mix of the near-term production growth, plus the

land package to continue greenfields and organic growth.

Also, it is worth pointing out that Capricorn is slightly cash constrained in terms of pure exploration spend, a mid or top tier gold

producer would have a significantly larger budget to step back and revaluate the terrain and unlock the full potential of a new gold

camp at Karlawinda.

We have illustrated the cash-build of some of the Australian gold miners above to illustrate the general return to health of the

industry, but clearly M&A activity will continue to have global scope – Reference Goldfields’ (JSE:GFI) acquisition of 50% of Gold

Road’s Gruyere project in November 2016, a useful move to dilute down perceived South African and underground mine risk. The

Australian portfolio is Goldfield’s largest cash generator. The A$350m deal valuation metrics for Gruyere translated to A$113/oz

resources and A$200/oz reserves.

-350

-250

-150

-50

50

150

250

350

450

FY15 FY16 Now FY15 FY16 Now FY15 FY16 Now FY15 FY16 Now FY15 FY16 Now FY15 FY16 Now

A$m

Debt Cash

Debt

Cash

NST RRL SBM RSG WGX OGC

+168%

+54% +109%

+437%

+1020%+19%

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

500

FY15 FY16 Now

A$m

Debt Cash

Debt

Cash

NCM +148%


27

One-gram ore works in Australia – Capricorn is a start-up analogue to Regis Resources

The adage “Grade is king” is true for some deposits, but in Western Australia it is only a component of the mix. Margins and

profitability, are the key metrics and if executed correctly, a c.1g/t operation can be highly lucrative. The leader in producing gold

from this type of deposit is Regis Resources, in our view. Regis (ASX: RRL) is a A$1.7bn gold company operating the Duketon

operations in Western Australia.

Duketon has numerous similarities to Karlawinda – low strip, low cost open pit operations. Note the head-grade averages around

1g/t Au, similar to Capricorn’s 1.1g/t overall resource grade. Recoveries are also similar at around the 90% mark. Clearly, the overall

magnitude of the projects is larger, but Duketon North is a close analogue to the proposed operation at Karlawinda with 3Mt ROM

throughput- this operation had a A$666/oz AISC margin in 2016.

Figure 40 - Regis Resources – 2016 operating metrics for the Duketon operations in WA

Source: Regis Resources

The satellite and organic growth model has been highly successful

The key point which supports our positive outlook on Karlawinda is that the Duketon operations follow the model of a primary deposit

and central process plant, supported by additional production from a number of satellites. Duketon has two operating centres;

Duketon North where deposits such as Moolart Well and Gloster are processed through the Moolart Well processing plant; and

Duketon South where deposits such as Garden Well and Rosemont are processed through the Garden Well processing plant.

With processing infrastructure place, Regis has been able to bring on new satellite deposits at an exceptionally low incremental

capex. For example, the Gloster satellite adds 3-years of mill feed (total of 226koz) at a very low capex of A$7m, equivalent to a

capital intensity of A$31/oz. The results speak for themselves. Regis has paid out A$205m in dividends since dividend payments

started in 2013. In 2016, EBITDA was A$234m and NPAT was A$112m.

Figure 41 - Regis Resources – 2016 operating metrics for the Duketon operations in WA

Source: Regis Resources, Tamesis

Regis Resources 2016 results Duketon North Duketon South Total Duketon

Ore mined Mt 2.98 7.81 10.79

Strip ratio x 3.9 5.4 4.89

Ore mined Mt 2.92 7.34 10.25

Head grade g/t Au 0.9 1.08 1.03

Recovery % 91% 90% 90%

Gold production koz 76 229 305

Cash cost (inc royalty) A$/oz 778 867 845

AISC A$/oz 934 924 927

AISC margin A$/oz 666 676 673

200

300

400

500

600

2014 2015 2016

Revenue (A$m)

0

20

40

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2014 2015 2016

NPAT (A$m)

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2014 2015 2016

EBITDA (A$m)

0

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14

2014 2015 2016

Dividends (c/sh)


28

Western Australia remains a first-class, low-risk jurisdiction

Investors looking at exposure to gold development assets have a wide variety of choice, with gold deposits located all over the globe.

It’s worth pointing out that Karlawinda is located in Western Australia, which has consistently been ranked in the top 5 global

jurisdictions (out of 122), in terms of investment attractiveness, by the Fraser Institute.

The ranking is based on a variety of detailed rankings with the overall Investment Attractiveness Index constructed by combining

the Best Practices Mineral Potential index, which rates regions based on their geological attractiveness, and the Policy Perception

Index, a composite index that measures the effects of government policy on attitudes toward exploration investment.

Figure 42 - Fraser Institute – Investment attractiveness rankings 2016

Source: Fraser Institute, Tamesis

0 10 20 30 40 50 60 70 80 90 100

Jujuy

Neuquen

Venezuela

Chubut

Afghanistan

La Rioja

Mendoza

India

Zimbabwe

Mozambique

Uruguay

Malaysia

Dominican Republic

Myanmar

Panama

Honduras

Guatemala

Sierra Leone

Kenya

Hungary

Washington

Bolivia

Greece

Mongolia

South Sudan

France

Indonesia

Catamarca

Ecuador

Bulgaria

South Africa

Kazakhstan

Santa Cruz

Nicaragua

Uganda

Romania

Ethiopia

New Zealand

Philippines

Colombia

Tanzania

Turkey

New South Wales

Brazil

Serbia

Papua New Guinea

San Juan

Victoria

Tasmania

Greenland

China

Namibia

Nova Scotia

French Guiana

Mexico

California

Burkina Faso

Alberta

Colorado

Guyana

Russia

Salta

Mali

Fiji

New Brunswick

Chile

Spain

Norway

Portugal

Montana

Poland

Eritrea

Northern Ireland

Nunavut

Zambia

Democratic Republic of Congo

Peru

British Columbia

Minnesota

Michigan

New Mexico

Wyoming

Ghana

Northwest Territories

Northern Territory

Botswana

Ontario

Ivory Coast

Newfoundland & Labrador

Yukon

Alaska

South Australia

Idaho

Utah

Queensland

Ireland, Republic of

Sweden

Arizona

Quebec

Finland

Nevada

Western Australia

Manitoba

Saskatchewan

Investment attractiveness (%)

Increasing investment

attractiveness


29

One of the marks of a top tier investment destination is stability and consistency of the ranking. Western Australia has placed in the

top 5 of the rankings every year over the last several years. We believe that Western Australia will maintain its high rank, as the

state continues to increase regulatory transparency, and streamline and accelerate its resource licence application timelines. The

state also provides financial incentives for greenfields exploration, where eligible companies can claim back a percentage (c.50%) of

direct drilling costs.

Figure 43 - Fraser Institute – Investment attractiveness rankings – last 5 yeas


Western Australia takes the top spot in the Australia/Oceania region in terms of overall investment attractiveness. It is also worth

noting that Western Australia is such a high ranked destination due to the combination of the fiscal, legal and policy framework with

the inherent geological prospectivity of the region.

In terms of mineral potential which ranks the jurisdictions based on which region’s geology “encourages exploration investment”,

Western Australia ranks at the very top globally. The index is composite which combines pure geology prospectivity in the context

of best practice, i.e. world class regulatory environment, competitive taxation, minimal political risk or uncertainty, and a fully stable

mining regime. Western Australia is also deemed by the Fraser Institute and other observers to have the best and most accessible

geological database, globally. However, although the current royalty rate for gold is 2.5%, the WA Government has proposed an

increase to 3.75% from 1st January 2018 (effectively an additional A$20/oz in royalty payments). The changes have not been

implemented as yet, and could still be blocked in the Upper House of State Parliament. Corporation tax for miners in WA is 30%.

Figure 44 - Australia/Oceania – Investment attractiveness (LHS), and overall geological potential (RHS)


The track record speaks for itself…

Ultimately, the proof is in the pudding. Western Australia accounts for c.70% of Australia’s gold production, producing 6Moz per

annum. Western Australia hosts an impressive number of world-class gold deposits including Tropicana (450-490koz pa), St Ives

(362 koz pa), Telfer (462koz pa), Jundee (216 koz pa), Boddington (800 koz pa) and Kalgoorlie superpit (750koz pa) to name but a

few. Simply, Western Australia hosts some of the largest, lowest cost mines globally.

WA is also host to some of the most significant deposit discoveries in recent years eg. Gruyere (Gold Road Resources), Tropicana

East (Beadell Resources discovery), Nova-Bollinger Ni-Cu (IGO) amongst others.

…which stems from the inherent prospectivity of the region’s geological terrain

The geology of WA spans the entire spectrum of the geological timescale, with the tectonic setting producing ideal conditions for the

formation of word-class orebodies. WA contains two (Yilgarn and Pilbara) of the three largest Archean cratonic shields in Australia,

forming a highly prospective granite-greenstone terrane. The extensive superficial cover means that further discoveries are likely, in

our view.

2012 2013 2014 2015 2016

1 Yukon Western Australia Finland Western Australia Saskatchewan

2 Finland Nevada Saskatchewan Saskatchewan Manitoba

3 Nevada Newfoundland Nevada Nevada Western Australia

4 Sweden Finland Manitoba Ireland Nevada

5 Western Australia Alaska Western Australia Finland Finland

0 20 40 60 80 100

Malaysia

Indonesia

New Zealand

Philippines

New South Wales

Papua New Guinea

Victoria

Tasmania

Fiji

Northern Territory

South Australia

Queensland

Western Australia

Investment attractiveness (%)

Increasing investment

attractiveness

75.0 77.5 80.0 82.5 85.0 87.5 90.0

Philippines

Ivory Coast

Nevada

Democratic Republic of Congo (DRC)

Arizona

Quebec

Queensland

Saskatchewan

Manitoba

Western Australia

Mineral Potential Index (%)

Increasing mineral potential

Geology

encourages investment


30

Karlawinda Overview

Location – close to infrastructure and gas pipeline.

The Karlawinda gold project is located in the Pilbara, Western Australia. The nearest major population centre is the town of Newman

located 60km to the north west. Karlawinda is advantageously located close to regional infrastructure, notably the Great Northern

Highway which links south to Perth, and north to Port Hedland. The tenements are also proximal to the Goldfields Gas Pipeline, a

1,380km natural gas transmission pipeline, which transports gas from the Carnarvon Basin in NW Western Australia to the Kalgoorlie

and goldfields region. The pipeline also feeds the Newman 186MW gas-fired power station which supplies the Roy Hill mine amongst

others, 120km north of Newman. Bibra is the main deposit of interest, within the wider Karlawinda tenement project.

Figure 45 - Location of Bibra, the main deposit within the Karlawinda tenement

Source: Capricorn


31

Infrastructure: Minimal, but no impediment to development

Essentially, there is not much in the way of existing infrastructure at the Karlawinda site, it’s virgin territory, which is a positive aspect

in that the near-surface gold resource has not been mined by historical or artisanal groups. Site infrastructure is limited to exploration

tracks, a water bore and sample storage yard.

Roads. No access by sealed road as yet, however, the project could be connected relatively quickly and easily to the excellent

regional infrastructure. The town of Newman is only 55km to the north-west and is more than capable of supporting local mining

operations, given the extensive iron ore mining activity in the region. As part of the DFS, Capricorn will investigate establishing an

improved, all-weather access road to Newman from the Bibra site by upgrading existing tracks.

Camp. Capricorn envisage that when Bibra is developed, the workforce could be accommodated in a relocated second-hand camp,

of which there are many such camps available for purchase in Western Australia.

Water. It is intended that process water will be sourced from local ground water close to Bibra. Capricorn has made good progress

in this regard and a groundwater source with significant flows of low salinity, sub-potable water has been identified from drilling to

the west and south, within 8km of Bibra. The presence of a major groundwater source will ultimately reduce project capex, with less

emphasis on water recovery in the circuit.

Tailings. A tailings dam will be required to contain waste materials from the process plant. Capricorn has identified potential sites

and expects the capacity of any dam to be enhanced given the evaporation/rainfall ratio for the Newman area.

Power. The total peak site requirement is c.13MW. Power will be generated either on site using diesel or gas (LNG or reticulated

from the GGT). Alternatively, power could be transmitted from the Newman power station which has spare capacity but will require

the construction of a 63km powerline.

Licences and Permitting – Mining Lease granted, Native Title addressed

The Karlawinda project is comprised of seven granted exploration tenements, four exploration tenement applications and a granted

mining lease covering a total area of c. 290km2 along the southern margin of the Sylvania Dome.

Native title: A Land Access Agreement has been executed with the only Native Title claimant (Nyiyaparli People) over the deposit,

which addresses compensation, heritage and environment protocols, and allows the issue of a Mining Lease. Agreement with the

Nyiyaparli people was reached within 6 months and Capricorn had agreed to involve Nyiyaparli people in both cultural heritage and

environmental surveys and studies, and provide access to contracting opportunities.

Mining Lease: Subsequent to the Land Access Agreement, Capricorn was granted the Mining Lease, M52/1070 in November 2016,

which is shown in green in the above map. The Mining Lease is valid for 21 years, and may be renewed for further terms. The holder

of a mining lease is entitled to carry out all activities necessary in order to carry out mining operations. Thus, the grant of the licence

represents a key de-risking milestone for the project.

Next Development Steps: DFS imminent

Now that the maiden reserve statement has been completed, the Karlawinda DFS is scheduled to be released shortly. The main work

stream is focusing on activities to support the DFS such as pump-testing of the process water borehole, completion of metallurgical

optimisation and testwork and process engineering design, and completion of the baseline environmental studies.

With the recent drilling now complete at the Portrush and Easky Prospects, exploration work has now been scaled back to focus

efforts on the completion of the DFS.

By the end of 2017, Capricorn expects to be in a position to appoint its preferred contractor for the EPC contract to build the project.

In early 2018, the company plans to start finalising the debt and equity funding components. With a 12-month construction period,

this would translate to first gold in March/April 2019 contingent on the completion of DFS milestones and funding.


32

Exploration and ownership history

Gold mineralisation was originally discovered in the area in 2005, by WMC Resources, with the discovery of the Francopan prospect,

which is located 5km south east of the latter Bibra discovery. The project was then acquired in 2008 by Independence Group

(ASX:IGO), a leading mid-tier miner, largely on the strength of the Francopan deposit.

Figure 46 - Exploration / Ownership history

Source: Tamesis estimates, Capricorn, IGO

Broad mineralised envelop combined with discrete high-grade zones were discovered in early exploration

In 2009, IGO made the Bibra discovery as part of an exploration strategy to define potential shallow extensions to the Francopan

mineralised system and repeats to the north, where Archean bedrock is not obscured by cover. Aircore drilling identified large east-

west trending zone of supergene mineralisation (1km x 4mm at +100ppb), which was subsequently followed up by RC drilling which

confirmed the primary source to the supergene mineralisation.

Key primary mineralisation discovery intersections included 8m at 1.9g/t Au from 32m, and 38m at 1.5g/t from 38m downhole

including 10m at 2.2g/t Au. This phase of drilling piqued IGO’s interest, due to the discovery of a broad mineralised zone, in

conjunction with discrete higher-grade zones in lithologies similar to that identified at Francopan. Nevertheless, exploration was not

easy as the geometry and continuity of mineralised zones was initially complicated by a series of late cross-cutting faults.

The work by IGO set Karlawinda on the development path.

After initially defining a 219koz supergene resource in 2011, IGO completed a scoping study on Karlawinda in 2012 which rolled in

an updated inferred resource of 674koz. The scoping study included a trade-off study between CIL and heap leach, from a 2-3Mtpa

operation. However, during the 2014 financial year, IGO made the decision to cease work on Karlawinda taking a A$17m write-down

in exploration and feasibility costs as the project was “unlikely to meet its size and economic thresholds for development”

We think this decision should be viewed in the context of IGO having bigger fish to fry at the time, including the commissioning and

ramp-up of Tropicana and feasibility work on the Stockman project in Victoria. Indeed, by the time of sale in 2015/2016 IGO had

rationalised exploration expenditure, cutting back on regional and greenfields exploration to focus capital allocation on the

development of the Nova deposit (Sirius acquisition announced May 2015) and IGO’s contribution to de-bottlenecking Tropicana.

By late 2015, Greenmount was contracted to acquire Karlawinda, while Malagasy announced the acquisition of Greenmount in October

2015. The acquisition of Karlawinda was completed by Capricorn in August 2016. By the time the project was acquired from IGO,

approximately A$12m had already been spent on resource evaluation work which include RC and diamond drilling and pre-feasibility

work.

It is worth noting that the pre-feasibility activities undertaken by IGO included a wealth of metallurgical test work, conceptual mine

design, process plant design, plus the initiation of the baseline environmental studies. In addition, the project area had been the

subject of a number of heritage surveys, with several agreements in place. The amount of work previously undertaken is one of the

key factors that should allow Capricorn to fast-track project development.


33

Geology and mineralisation

Geologically, the key element to understand is that Karlawinda is located in what was at the time of discovery in 2009, a previously

unrecognised Archean greenstone belt, occurring under a thin transported cover. The tenements cover a large area of the southern

margin of the Sylvania Dome, an Archean-aged outlier on the margin of the Pilbara Craton. The southern portion of the tenement

area is covered by Neo-Proterozoic aged sediments of the Bangemall Basin.

The mineralisation is typical of an orogenic, shear zone style, with wide zones of alteration and mineralisation associated with multiple

low-angle shear sets within a more competent mafic host rock. Mineralisation is associated with biotite-albite-pyrite-potassium

feldspar-calcite alteration and quartz veining. Visible gold mineralisation occurs in both the quartz veins and veinlets, and the biotite

altered host rock.

Figure 47 - Karlawinda – geological setting

Source: Capricorn

Supergene and primary mineralisation

At Bibra, the resource is hosted within a package of deformed meta-sediments that has developed on at least two parallel, shallow

dipping structures. The Bibra orebody dips shallowly at 30° to the north west. Primary gold mineralisation is stratabound with

lineations identified as controlling higher-grade shoots. The deposit is oxidized to average depths of 50-70m. This is significant as in

addition to the primary mineralisation, shallow supergene, laterite and saprolite zones have been identified, and which host some of

the highest grades at Bibra, particularly within the near-surface laterite zone within 20m of the surface. The laterite grades 1.4g/t

on average, above the global resource grade of 1.1g/t Au.

The presence of the shallow supergene mineralisation zone is clearly beneficial for the project economics, being easily amenable to

low-cost extraction early on in the mine life. Of the total 1.1Moz resource, 27% of the ounces are contained within the laterite,

saprolite and transitional domains. Expansion of the supergene zone would have a considerable impact on the project economics.

Figure 48 - Bibra primary gold mineralisation (LHS) and laterite gold mineralisation (RHS)

Source: Capricorn / IGO


34

1.1km mineralised strike length and open down-dip

To date, mineralisation at Bibra has been defined over a 1.1km strike length. One of the deposits compelling features is that it is

thick tabular mineralisation is developed over laterally extensive intervals, with a shallow (c. 30°) dipping geometry. This naturally

translates to a low strip ratio. This also means that primary mineralisation is fairly straightforward and predicable which should equate

to easy mining.

Figure 49 - Bibra cross section showing main primary mineralisation lodes and oxide/laterite supergene mineralisation

Source: Capricorn

Multiple stacked lodes with high-grade shoots

Mineralisation is remarkably consistent. The strong stratabound and structural shear-control means that the dip and thickness of the

mineralised zone shows minimal variation. The Bibra shear zones are up to 50m wide and also contain a high-grade component,

typically in the middle or lower portion of the broader lower grade zone. Another key element is the presence of multiple stacked

lodes. This means that Capricorn has been highly successful in expanding the resource by identify and incorporating a parallel lode

at depth which previously sat outside of the previous optimised pit shell. Some of the high-grade zones within the main lode have

returned intercepts of 13m at 3.3g/t, 14m at 3.1g/t and 9m at 3.8g/t Au.

Figure 50 - Bibra – multiple stacked lodes dipping to the north west

Source: Capricorn


35

The recent confirmation of near-surface mineralisation is what really sets Bibra apart

We view the recent growth and confirmation of near-surface mineralisation at Bibra as a key differentiating factor versus other

development projects. Near-surface mineralisation is hosted in a variety of domains including supergene oxides and saprolites, with

the depth of oxidation typically down to 5-70m. We cover these various domains in the resource section later in this note. However,

it is the laterite domain which is instrumental in boosting Bibra’s economics.

The laterite domain is an extensive near-surface blanket of gold mineralisation that Capricorn has now demonstrated, extends over

at least 1.1km and 500m wide on the eastern margin of the Bibra deposit. The laterite mineralisation occurs at the surface projection

of the underlying shear zones. The laterite mineralisation is typically 1-10m thick and is covered by unconsolidated transported

sediments. The laterite domain has been fully defined on a close spaced 25x25m pattern, and thus confidence in the zone is high.

The laterite mineralisation is so valuation at Bibra because:

• It has a very low strip ratio

• The ore is free digging, i.e. no blasting required so

• It has not been subject to historical mining, 100% of the near-surface resource remains intact

• Typically hosts the highest grades at Bibra (1.4g/t versus the global resource at 1.1g/t)

• The laterite ore shows the highest metallurgical recovery

The laterite mineralisation will contribute to de-risking the initial production phase of the operation, by generating early cash flow

and reducing working capital requirements. There is no pre-strip required at Bibra!

Figure 51 - Grade contours of laterite mineralisation (LHS) and cross section showing grade and continuity of laterite mineralisation

Source: Capricorn

The laterite has a high-grade core

We believe there could be scope for the laterite zone to ultimately deliver more ounces than in the mine plan. We base this on the

fact that a recently, a significant high-grade component has consistently been intersected within the central core of the laterite.

Results reported in February 2017 include:

• 9m at 1.7g/t from 8m including 3m at 4.1g/t


• 21m at 1.3g/t from 9m inclosing 5m at 2.9g/t


Note the shallow depth that these high-grade intercepts start from. The laterite layer is remarkably consistent.


36

Francopan

Francopan is located approximately 5km south east of Bibra, with mineralisation covered by the northern margin of the Bangemall

Basin. Francopan at present is defined by broad zones of lower grade mineralisation containing narrow zones of higher grade

mineralisation. Francopan has only been subject to limited broad-spaced drilling beneath the 120m of cover sequences, as the focus

of exploration moved to Bibra, following the discovery by IGO.

Due to the depth of mineralisation compared to Bibra, Francopan is not a major focus at present, but Capricorn may in the future be

targeted to investigate the size of the mineralised system and determine any potential connection to the Bibra deposit. Nevertheless,

Francopan remains open to depth and along strike and of particular interest is that a second mineralised sequence has been identified

including zones of 15m at 3g/t Au, at depth below which prior holes were terminated. We think this opens up the potential for repeats

and a potentially deeper, higher grade, mineralised system.

Mineralisation has been recently postulated to be the down plunge extension of the K3 deposit which is situated to the north east,

which has seen limited drilling. The mineralisation at Francopan is too deep for open pit mining, and there is no indication as yet that

the grade would support an underground mine. However, the deposit has not been fully probed by drilling and if the discrete high-

grade zones within the broader low-grade zones can be expanded then the deposit starts to become more interestingly. Either way,

we view Francopan as one for Capricorn’s back pocket for now.

Figure 52 - Francopan mineralisation, drilling and aeromag (LHS) and cross section (RHS)

Source: Capricorn


37

Resources – a robust 1.1Moz resource base

In April 2017, Capricorn released an update to the Karlawinda resource, with the total resource now standing at 31Mt at 1.1g/t Au

for 1,114,000 ounces of gold. On the back of a highly successful 2016 in-fill drill programme, an impressive 92% of the resource

was classified into the Indicated category, whereas all previous resource estimates contained only Inferred Resources.

Figure 53 - Bibra JORC open pit resource – April 2017. Cut-off 0.5g/t Au, Gold Price A$1,750/oz

Source: Capricorn

Bibra is extremely well drilled out – the pit shell is based only on indicated resources

The latest resource update reflects a high level of confidence in the resource through a comprehensive in-fill drilling programme.

Although 92% of the resource sits in the indicated category, 100% of this makes up the entire resource within the optimised Bibra

pit shell. The inferred resources are actually new resources that are contained within additional, proximal prospects; Southern Corridor

and Easky prospects.

The indicated classification is based on programme of 25m x 25m and 50m x 25m nominal grid spacing which in our experience is

more than sufficient to provide the required confidence to define an Indicated resource, given the style and geometry of

mineralisation. In total, the resource is based on 880 RC holes (118,153m) and 77 diamond holes (12,330m).

Other key parameters to note: The resource has been constrained by a A$1,750/ounce conceptual optimal pit shell. The mineralisation

has been wireframe modelled using a 0.3g/t Au assay cut-off grade. The resource estimate has been reported above a block grade

of 0.5g/t Au.

Capricorn has delivered impressive resource growth

The April resource update represents a 22% increase over the previously published resource in July 2016. Furthermore, since

acquiring the project, Capricorn has increased the resource by 71% in terms of contained ounces. The grade of the resource during

its various iterations has remained markedly consistent at 1.1g/t Au. The resource growth within the Bibra open pit area, has been

driven by additional, and generally higher-grade, mineralisation at depth and by a number of zones of mineralisation in the hanging

wall of the main mineralised domains, plus more ounces have been added to the near-surface laterite and oxide-upper saprolite

domains.

Figure 54 - Capricorn has a solid track record of generating resource growth at Bibra

Source: Capricorn, Tamesis

Indicated Inferred Total

Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces

Mt g/t Au Moz Mt g/t Au Moz Mt g/t Au Moz

28.9 1.10 1.03 2.4 1.06 0.084 31.3 1.10 1.114

0

200

400

600

800

1,000

1,200

Mar 2011 Aug 2014 July 2016 April 2017

Tota

l Reso

urc

e (ko

z A

u)

Indicated Inferred

71% increase in resource since

C apricorn acquistion.

92% now in Indicated category

1.1g/t

1.1g/t

1.1g/t

1.1g/t


38

The orebody is not entirely well-behaved however…

Given the confidence in the geological interpretation of Bibra, the drill spacing and demonstrating continuity of mineralisation, it is

at first glance surprising that no Measured Resource has been defined. The reason for this is that the Bibra orebody has been found

to contain nuggety gold particularly in the 100-500μm range. Even using multiple fire-assays (up to 4) and averaging the results to

simulate a larger sample mass, the repeatability of assays has been poor. This is not the case with the sub 75μm size fraction which

shows good repeatability. Thus, the poor assay repeatability stops the resource from being classified as measured, not drill spacing

or other factors. We think the risk is probably to the upside, given the broad zones of well-defined lower grade mineralisation. 5,000m

of grade control drilling is planned for mid-year to further investigate this issue.

The Bibra resource is split into a number of domains, with 808koz or 73% contained within the fresh domain

Figure 55 - Bibra JORC resource by domain

Source: Capricorn

The laterite is an extensive near-surface blanket of mineralisation within the lateritic profile. Mineralisation in the saprolite and

transition domains is variable hosted by clays and weathered rock across the entire Bibra Deposit to a depth of approximately 70m.

The fresh domain mineralisation lies below the Saprolite-Transition Domain, and contains low levels of disseminated pyrite. It

comprises a central high-grade core of consistent mineralisation within a broader zone of lower grade mineralisation with sporadic

high grades.

The impact of the near-surface laterite gold resource is illustrated by the chart below which shows the ounces per vertical metre

(“ovm”). Note the spike between 5-15m from the surface in the laterite zone. The drop in ovm within the upper saprolite zone

between 10m and 20m depth represents the depletion zone, as typically found overlying deposits in these terrains. The remainder

of the resource behaves in a consistent manner down to the base of the resource at 240m.

Figure 56 - Bibra – ounces per vertical metre

Source: Capricorn

Domain Tonnes (Mt) Grade (g/t Au) Ounces (koz)

Laterite 1.5 1.4 67.6

Oxide - upper saprolite 2.3 1.0 73.0

Lower saprolite 3.1 1.0 99.9

Transitional 2.1 1.0 65.3

Fresh 22.3 1.1 808.4

Total 31.3 1.1 1.1


39

Resource drilling at Karlawinda

Figure 57 - Aerial photo showing extent and spacing of resource drilling

Bibra Resource and optimised pit shells

Source: Capricorn


40

Reserves

Maiden Reserves – 713koz, supports initial 7-year LOM

In August 2017, Capricorn released its maiden JORC-compliant (2012) reserve statement for Bibra. Ore reserves amount to 21Mt at

1.06g/t Au, containing 713koz. The reserve is contained entirely within the April 2017 open pit constrained resource and is based

entirely on Indicated Resources, using a variable cut-off grade of between 0.40-0.47g/t Au, depending on the ore type. The reserve

supports an initial 7-year LOM at the anticipated 100kozpa production rate.

Figure 58 - Bibra JORC open pit reserves – August 2017. Cut-off 0.40-0.47g/t Au, Gold Price A$1,500/oz

Source: Capricorn

70% conversion from resource to reserves – largely a function of the gold price

The ore reserve estimate represents a 70% conversion rate from the Indicated Resource, which we deem as a good result and in-

line with expectations. A significant proportion of the variance in ounces between the c.1Moz Indicated Resource and the 713koz is

a result of the pit optimisation and selection of gold price (in addition to dilution). The reserves are calculated using a pit constrained

at a gold price of A$1,500/oz, compared to A$1,750/oz used for the April 2017 resource statement. This drives the pit optimisation

and effectively excludes approximately 300koz of material at the base of the pit from the reserve. See cross-section below.

The shallow dip and consistency of the Bibra orebody means that the relationship between gold price and pit economics is

straightforward. The terminal position of the highwall at the western end of the pit is largely determined by gold price. Thus, if the

mine plan is updated in the future, under a period of sustained higher gold price, this would allow a deeper pushback of the highwall,

allowing the 300koz of gold contained in material at the base of the pit to be accessed.

Figure 59 - 300koz at the base of the pit didn’t make it into reserves due to the gold price


Dilution is modest

As part of the modifying, the reserve incorporates mining dilution and recovery factors. The addition of dilution results in only a 11%

reduction in tonnes, a 2% reduction in in-situ grade and a 13% reduction in contained metal. The dilution was modelled based on a

5 x 6.25 x 2.5 SMU (selective mining unit).

Proved Reserves Probable Reserves Total Reserves

Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces

Mt g/t Au Moz Mt g/t Au Moz Mt g/t Au Moz

- - - 21 1.06 0.713 21 1.06 0.713


41

The mining plan has been fine-tuned, strip ratio decreased

Part of the reason for the delay in releasing the reserve update (August 2017 vs. originally slated for May) was due to Capricorn fine-

tuning the mining plan. This was undertaken to smooth out the strip ratio, which increases over time in the later stage pits, and to

optimise the smaller pit generated by applying the A$1,500/oz gold price.

The pit now has a three-stage design. The stage 1 pit shell contains predominantly laterite and oxide mineralisation has a strip ratio

of 2.9. The strip ratio for stages 2 and 3 is 4.9 and 5.5 respectively. This averages out as a LOM strip ratio of 4.7, an improvement

over the previous estimate of 5.5 over LOM. Oxide and laterites will be treated mainly in the first two years of operation, with a ball

mill required for the treatment of fresh material at the end of year 2.

Figure 60 - Bibra Ore Reserve – detailed staged open pit ore profiles – ounces per stage vs. strip ratio


Other key take-aways from the reserve update

• Metallurgy - The reserve incorporates the improved gold recoveries from the results of improved metallurgical test-work

reported in June 2017 (see processing section later in this note). This includes the increase in gravity recoverable gold and

a coarsening of the grind size which has increased processing throughput to 3.75Mtpa (fresh) from 3.4Mtpa precisely.

• Tailings - New Integrated Waste Landform tailings disposal being contemplated – should lead to a reduction in ongoing

sustaining capital as tailings are encapsulated by mining waste, rather than having separate waste dumps. The smaller

footprint is anticipated to result in a lower sustaining capital cost.

• Power - options being considered are site-based diesel, gas trucked from the Goldfields Gas Pipeline, or grid power which

will require a 63km powerline to Newman.

Pit Stage Tonnes Grade Gold Strip

g/t Au koz w:o

Stage 1a 554,000 0.09 16 5.4

Stage 1b 1,630,000 1.2 63 3.1

Stage 1c 2,892,000 1.05 98 2.4

Stage 2 8,172,000 1.03 271 4.9

Stage 3 7,777,000 1.06 266 5.5

Total 21,025,000 1.06 713 4.7

16

63

98

271 266

1.0

2.0

3.0

4.0

5.0

6.0

0

50

100

150

200

250

300

Stage 1a Stage 1b Stage 1c Stage 2 Stage 3

Str

ip r

ati

o (

x)

Re

se

rve o

un

ces (

ko

z)

Reserve ounces Strip ratio

LOM strip 4.7


42

Mining – straightforward low strip pit

One of the main attractions of Karlawinda is the simplicity of mining, in our view. The operation will be a simple, single open pit

mining operation, developed in three stages 1(1a, 1b and 1c), 2 and 3, constrained by a A$1,500/oz gold price.

The strip ratio is extremely low compared to other operating mines and global gold development projects. Optimisation work as part

of the reserve estimate indicates a weighted average strip ratio of 2.9 during Stage 1 and 4.7 over the LOM. Stage 1 deals almost

entirely with the exploitation of the laterite and oxide ore.

Truck/shovel, shallow dipping, minimal dilution, a pit with significant optionality

The selected mining method, design and extraction sequence has been chosen to minimise dilution and ore loss, and defer waste

movement. Ore and waste is planned to be blasted on 5m benches, and excavated as 2.5m flitches as part of a simple, drill and

blast, excavator and truck operation. Capricorn assumes that the laterite will largely be free dig, but the overall requirement for

material blasting for the oxide mineralisation is c.40% and 100% in transition and fresh ore. This translates to a low mining cost over

the initial 1-3 years of mine life.

The 28° dip of the orebody means that the ramps can largely be driven along the footwall, minimising dilution. Geotechnical

conditions are excellent with an overall slope angle of 47° on the hangingwall, with the footwall slope of 25° following the natural

dip of the orebody. A final decision on final wall angle will not be decided until at least year 3, once the geotechnical behaviour of

the interim wall is known.

Contractor mining is the current plan, but flexing owner-operator model

The current mining operating costs are based on contractor mining and budgeted quotes for drilling, blasting, loading and haulage.

However, as part of the feasibility study we expect Capricorn to investigate various options to introduce elements of owner-operating

into the mix. To maximise cost effectiveness and the trade-off between capex and opex, we understand this may be a hybrid model

with elements of both contractor and owner operations to secure maximum benefit of prevailing economic climate for equipment or

contract rates.

Furthermore, Capricorn believes there is considerable scale and optionality around equipment size and schedules, which should flow

through to low mining costs.

Figure 61 - Bibra Ore Reserve, oblique view of detailed staged open pit designs

Source: Capricorn


43

Processing – simple process, high recoveries validate gravity circuit

Capricorn envisages a very simple process flowsheet for Bibra ore, utilising crush, grind, gravity recovery and conventional CIL

processing. The flowsheet incorporates the latest metallurgical testwork (press release 19th June) and has been developed to

Feasibility Study standards. High recoveries of 92.5%% over LOM have been demonstrated in the latest test-work.

Process design summary – proven technology, metallurgical risk is very low

Bibra ore will be processed through a conventional CIL plant. The comminution circuit will utilise a single stage primary jaw crusher

followed by a 6.5MW SAG mill (2.5MW ball mill introduced in year 2-3). After the second year of operations, Capricorn envisages

installing a 2.5MW ball mill. This followed by a conventional gravity circuit (2x 48” Knelson concentrators with gravity leach reactors)

and finally a CIP process. The plant will have maximum throughput of 3Mtpa for primary (fresh) ore and up to 3.75Mtpa for processing

oxides.

Higher production option

If Capricorn is successful in making additions to mine-life, there may be opportunities to add a larger ball mill for fresh ore

comminution. This means that the 2.5MW ball mill that is planned to be incorporated for fresh ore in Year 2, could potentially be a

bigger mill of 3-3.5MW, which would allow for higher production throughput. The downstream components of the plant are already

sized for 3.75Mtpa oxide throughput, which means no further plant upgrades would be required.

Bibra’s metallurgical advantage

Considerable metallurgical testwork has been undertaken on Bibra ore, in particular from RC drill samples from 2010 to 2013, and

more recently, testwork as part of the ongoing DFS, with samples for testwork sourced from diamond and RC drilling completed by

Capricorn in 2016. Bibra ore has several characteristics that make processing extremely simple, with high recoveries:

• Non-refractory. Bibra ore is non-refractory, free-milling and amenable to cyanidation

• Gravity gold. A significant portion of gold is recovered via gravity early in the flow sheet – see below

• Low reagent consumption. Cyanide and reagent consumption is low, especially for the fresh ore. However, Lime

consumption is relatively high for the supergene ore, as expected.

• Coarse grind size. The fresh rock is highly competent, and overall the mineralisation has low to medium abrasion

characteristics. Grind optimisation suggests a grind size of 120um for fresh ore and 150um for oxide ore, which is a relatively

coarse grind size, thus requiring less residence time and energy in the milling phase.


44

Figure 62 - Karlawinda Process flowsheet – oxide (top) and fresh ore (bottom)

Source: Capricorn


45

June 2017 testwork confirmed and improved metallurgical performance

On 19th June, Capricorn released the results of metallurgical testwork completed as part of the DFS. The new round of testwork

improved key comminution results across the board. Importantly, the results indicated an increase in the proportion of gold in Bibra

ore that is gravity recoverable, and an overall increase in average LOM recoveries. This should feed through to potentially reduced

capital and processing costs for certain areas within the Karlawinda flowsheet.

Figure 63 - Recent improvements in comminution and metallurgical recovery


Comminution improved across the board

• SMC - a measure of the resistance to breakage of rock particles in a SAG mill. Small improvements for both oxide and fresh

ore.

• BBWI - a measure of the energy required to grind particles to a given size at the finer end of the ball mill grinding spectrum

– an indicator of the hardness of the ore type. Values have reduced for both oxide and fresh ore and significant

improvements have been achieved, without gold recovery losses, at coarser grind sizes.

• UCS - measure of the compressive strength of the rock - provides guidance on ore competency. A reduction from 150Mpa

to 54Mpa observed in recent testwork, which is expected to impact positively on the size of crusher required, throughput

rates and power usage with a commensurate reduction in both capex and opex.

• Abrasion Index - measures the abrasiveness of the ore which impacts on wear rates and equipment selection in the

grinding circuit. The abrasion rates were reduced on both oxide and fresh ore. This will result in in lower expected wear

rates during crushing and grinding.

A significant portion of gold at Bibra is recoverable by gravity

The latest testwork has without doubt demonstrated the benefits of including a gravity gold circuit. Gravity recoverable gold is

estimated to range between <10% for laterite, 25% for oxide and 45% for transition and fresh ore at a P80 grind size. This is vast

improvement over 1.) the original 2012 testwork which didn’t even include a gravity circuit and 2.) the scoping study which indicated

24% gravity recovery from fresh ore as a result a greater effort in recovering fine gold through Knelson concentrators.

The improvement in gravity recovery, particularly in the fresh ore (representing 72% of total resource) is an excellent result for

Capricorn. The high recovery of gravity gold is important because it leads to overall greater recoveries, with a lower residual gold in

the tailings.

The presence of coarse gold creates slower cyanide leaching rates, but the application of gravity gold extraction prior to cyanide

leaching actually results in vastly improved leach kinetics. The result of this is that leaching residence time is reduced from 48hours

to 28-32hours, with increased recovery and reduced reagent/consumable use (e.g. Cyanide, lime), and of course a lower requirement

for leaching tankage, reducing capex.

Test Ore Scoping DFS DSMC Test Oxide 87 89 2.30% Improved ✓

SAG Mill Comminution Test Fresh 28 30 7.14% Improved ✓

BBWI Oxide 16.7 kWh/t 13.0 kWh/t -22.16% Improved ✓

Bond Ball Mill Work Index Fresh 15.8 kWh/t 14.5 kWh/t -8.23% Improved ✓

UCS

Unconfined Compressive Strength Fresh 150 Mpa 54 Mpa -64.00% Improved ✓

Abraision Index Oxide 0.08 g 0.07 g -12.50% Improved ✓

Fresh 0.25 g 0.23 g -8.00% Improved ✓

Gravity Recovery Oxide - 25%

Fresh 24% 45% 87.50% Improved ✓

Overall average Recovery All ores 90.4% 92.6% 2.43% Improved ✓

Throughput Oxide 3.40 Mtpa 3.75 Mtpa 10.29% Improved ✓

Primary 3.00 Mtpa 3.00 Mtpa - No change


46

Overall recoveries have increased to 92.6%

The overall recovery has also increased. This represents the combination of the gravity recovery and recovery from cyanide leaching

in the CIL circuit. The estimated plant gold recovery ranges from 91.8% to 94.1%, depending on ore type. The overall average LOM

recovery has increased to 92.6% in the DFS, from 90.4% in the scoping study.

The overall recovery has not been sacrificed, notwithstanding a significantly coarser grind size for laterite, oxide and transitional

material (150 microns versus 125 microns in scoping studies). Further optimisation work on the crushing and grinding requirements

of the project is underway.

Environmental – a relatively benign landscape

The environmental landscape around Karlawinda and the Bibra project is relatively benign. The landscape is fairly flat and typified

by colluvial soils, spinifex grass and acacia/mulga scrub. A level 1 flora, vegetation and fauna study initiated in 2010 found no species

of particular concern for the project, and Level 2 survey undertaken in May 2016 recorded no Threatened or Declared Rare Flora.

None of the vegetation types recorded are considered to represent a State or Federal Threatened Ecological Community or Priority

Ecological Community.

Importantly, recent studies as part of the DFS have found no evidence of stygofauna or troglofauna. Subterranean species have

now been ruled out from being present in both the open pit and borefield areas. A second seasonal survey for Terrestrial Invertebrates

was scheduled for the June quarter, which will complete the remaining environmental survey items as part of the environmental

permitting process.

A note on the Scoping Study – July 2016

Capricorn issued a press release on 29th July 2016 stating that a scoping study had been completed and a full DFS was underway.

At the time, the Karlawinda resource was entirely categorised as Inferred Resources, insufficient to report a production target, and

ASX disclosure rules prevented the company from reporting the scoping study outputs in full. Thus, no indication of capex, opex or

production was given, except reporting that process design was investigating a 2.5-3Mtpa plant.


47

Expansion opportunities – large scale system ready for growth

Capricorn mobilised several drill rigs to Karlawinda for the 2017 drill programme. Whilst a portion of this drilling is focused on shallow

mineralisation within the pit shell, a large component focused on investigating and consolidating several prospects and targets outside

of the current resource envelope. Previous wide-spaced drilling has demonstrated that the Bibra system remains open, with significant

untested potential, particularly to the south.

We believe that there is excellent potential to expand the current resource, with the recent drilling likely to be reflected in any future

resource update. Capricorn is working on a number of key target zones all within 1-2km from the current Bibra resource. The

prospects to note include: Portrush Prospect, Easky Prospect and the Southern Corridor Prospect, a number of parallel trends

immediately west of the Bibra pit. See figure below. Portrush and Easky are the most important near-mine prospects.

Exploration has been scaled down whilst the team focus on delivery of the DFS, but this will be revisited once management time and

resources are less encumbered by the feasibility work stream.

Figure 64 - Near-mine expansion opportunities - Portrush Trend (LHS), Bibra Gold System (RHS)

Source: Capricorn

Acquisition of new magnetic data will help probe regional potential

Given the demonstrated magnetic association of the gold mineralisation at Bibra, Capricorn has acquired a new high-quality airborne

magnetic data set. The survey was flown in June 2017 and covered the Bibra Gold System and surrounding areas over a total area

of approximately 20km x 12km on a flight line spacing of 50m.

Understanding of the geological controls on Bibra is improving

Good progress has been made in 2017 in understanding the controls and the structures that host mineralisation. Capricorn now

believes that it understands the orientation of controlling structures, which should make it easier to predict and trace mineralisation

between different areas. Once the DFS is out of the way, the regional potential could really be put into play.


48

The Easky Prospect – shaping up to be a potential satellite, mineralisation remains open

New RC drilling in 2016 and 2017 indicate that Easky is shaping up to become a potential satellite deposit. Easky is situated a mere

500m west of Bibra, i.e. well within trucking distance and 800m south of Portrush. The recent drilling delineated a zone of strong,

continuous shallow-dipping mineralisation with up to 200m down-dip extent, over an area of 500m x 500m.

As a firm indication of the extent of the Karlawinda mineralising system, the mineralisation at Easky is identical to that at Bibra with

the same style and similar grades. Easky mineralisation appears as shallow, west-dipping lodes, hosted by weathered meta-

sediments, with evidence of supergene enrichment at the base of oxidation. The mineralisation intersected in recent drilling is present

in multiple stacked zones with strong high-grade shoot control.

The current drilling at Easky remains relatively wide-spaced and the mineralisation remains open to the east. There is also an

opportunity to expand the high-grade shoots within the broader mineralised system.

December 2016 drilling – key intercepts 2017 drilling – key intercepts • 8m at 1.4g/t Au from 51m

• 8m at 2.1g/t Au from 93m

Pre-2016 intercepts • 16m at 1.7g/t Au from 28m


• 20m at 1/0g/t Au from 36m


• 8m at 3.74g/t from 83m

• 22m at 1.35g/t from 52m

• 21m at 1g/t Au from 36m

• 5m at 3.39g/t from 73m.

Easky is potentially shaping up to be a very interesting prospect for Capricorn, with the recent work raising the possibly of a near-

mine, shallow source of mineralisation. Zones or ore grade mineralisation have already been identified, and if Capricorn can expand

on this it would provide additional feed for the proposed Karlawinda processing plant – either to extend mine-life, or more likely to

add/replace additional high-grade ore into the mill. Given that the mineralisation is of the same style and with the same host-rocks

so close to Bibra, we would expect the ore to have similar metallurgical characteristics and blend seamlessly into the ROM mill feed.

Figure 65 - Cross section through the Easky prospect (recent drilling black text, pre-resource drilling blue text)

Source: Capricorn


49

Portrush Discovery

First-pass RC drilling results from the Portrush prospect were reported in September 2016, confirming the prospect as a potential

source of shallow mineralisation situated in the immediate hangingwall of the Bibra deposit, partially within the existing proposed

Bibra pit design. The mineralisation at Portrush is near-surface (within 150m), in the HW, immediately west of the Bibra open pit.

Capricorn considers that due to the flat-lying, stacked geometry, the mineralisation is considered highly favourable for inclusion into

the Bibra resource as part of an expanded pit shell. Key results from drilling include:

2016 drilling – key intercepts 2017 drilling – key intercepts • 11m at 1.00g/t Au from 57m




• 12m @ 1.02g/t Au from 94m

• 14m at 2.06g/t Au from 2m • 10m at 1.41g/t Au from 56m • 28m at 1.47g/t Au from 65m • 25m at 2.28g/t Au from 77m • 16m at 1.43g/t Au from 73m

• 25m at 1.01g/t Au from 60m The mineralisation at Portrush remains open in the down-dip direction to the west and is interpreted to be structurally controlled

along a major mineralised fault (Portrush Zone) that has been interpreted to extend over a strike length of at least 2.5km.

If further drilling results stand up to scrutiny, we believe the prospect could have important implications for the future development

of Bibra, given the location within the hangingwall package, which may influence an expanded open pit or further push back. The

recent drilling targeted a broad shoot of oxide mineralisation located on the western margin of the Bibra Deposit. Capricorn says that

the recent drill results “suggest an improvement in widths and grade of the shoot at Portrush with depth and have the potential to

result in an expanded optimised pit design is this area”.

Figure 66 - Portrush Prospect, section 200175mN, recent drilling (black text) pre-Resource drilling (blue text).

Source: Capricorn


50

Southern Corridor – untested large-scale potential could add considerable ounces

In October 2016, Capricorn announced a new discovery at what was named the Southern Corridor Prospect, located within 500m to

the south of the main Bibra resource. Results from two initial RC holes drilled into the prospect returned a new zone of mineralisation

which Capricorn has interpreted to represent the southern extension of Bibra.

The Southern Corridor prospect extends over a 700m strike length which has to date, remained untested. The drill holes intersected

a broad zone of anomalous mineralisation over a width of 100m (100m at 0.47g/t Au), with higher grade mineralisation hosted in

discrete shear zones as at Bibra. The first two drill holes returned intercepts of:



In our view, the Southern Corridor prospect is of interest, foremost because of the proximity to Bibra, but also because the true

potential of this extension has not been tested. Drill spacing is currently very wide, with intersections approximately 140m apart, the

mineralisation extends to within 20m of the surface, and mineralisation remains open.

The potential scale of the deposit remains untested, as evidenced by previous drilling which intersected a series of stacked, flat-lying

gold lodes and returned significant grades at a location 700m to the south of the above-mentioned drilling. These intersections

included below, suggest that based on Capricorn’s current geological interpretation, that this mineralisation is part of the same

Southern Corridor, and likely to be contiguous.




Figure 67 - Southern Corridor; drilling plan view (LHS), and cross section 199900mN (RHS)

Source: Capricorn

Bundoran Prospect could be a Bibra analogue

Capricorn’s August 2017 drilling press release revealed a new high-priority exploration target called Bundoran located 3km east of

Bibra. An induced polarization (IP) feature has been modelled in close association with a large discordant magnetic anomaly. Wide-

spaced reconnaissance drilling in proximity to the new target area has previously returned several significant gold values.

Capricorn is particularly interested in Bundoran because gold mineralisation at Bibra shows a strong association with of both magnetic

and IP anomalies. The recently acquired detailed airborne magnetic data will be used to refine the existing target model ahead of

drill testing.


51

Appendix 1: Shareholders

Capricorn has solid backing, with a number of high-quality investors on the register. Notably Hawke’s Point with a 14.93% holding

and Centrepeak Resources Group with a 12.97% holding.

Figure 68 - Top 10 shareholders

Source: Capricorn

Centrepeak Resources Group

CRG founded Greenmount Resources, specifically to purchase the Karlawinda project, prior to its acquisition by Capricorn. CRG is a

private resource investment company run by a highly-experienced team of geoscientists and resource professionals. Capricorn’s

Executive Chairman, Heath Hellewell is Principal of Centrepeak Resources Group. The Centrepeak team collectively, has experience

spanning over 80 years from start-ups to large multi-nationals. CRG also holds a 6.4% interest in Trek Metals Limited (ASX: TKM).

Trek is farming into the Kroussou Zinc-Lead Project in Gabon.

Hawke’s Point - Capricorn passes through private equity due diligence

We view the new presence of Hawke’s Point on CMM’s register as a vote of confidence in the Karlawinda project. The Capricorn

investment would have gone through an extensive technical due diligence process. The Hawke’s Point team draws on investment

experience gained at major institutions such as Polygon and Och Ziff.

Recent financings

Capricorn’s recent financings are detailed below. We note that the company has shown restraint with equity financing, with proceeds

from share issues being highly focused towards moving Karlawinda along the development curve. The most recent financing in

February is particularly noteworthy with a A$10m cornerstone investment by Hawke’s Point Limited.

Figure 69 - Summary of recent financings


Organisation / Individual No. of shares % of total

HAWKE'S POINT HOLDINGS I LIMITED 85,470,085 14.93%

CENTREPEAK RESOURCES GROUP PTY LTD 74,221,378 12.97%

ACORN CAPITAL LIMITED 34,704,712 6.06%

NEDLANDS NOMINEES PTY LTD 28,536,277 4.99%

MERRILL LYNCH (Aus) NOMINEES 23,000,000 4.02%

RUNNING WATER LTD & ASSOCIATES 19,444,276 3.40%

ELLENBROOK INVESTMENTS PTY LTD 17,671,673 3.09%

HARMANIS HOLDINGS PTY LTD 17,451,616 3.05%

RESOURCE DISCOVERY PTY LTD 14,135,222 2.47%

JULES LECLEZIO 11,700,000 2.04%

Others: 246,044,219 42.99%

Total share in issue 572,379,458 100.00%

Date Financing size (A$m) Price Shares (m)

Feb-17 $10m 11.7c/sh 85.5

Inc. 1-for-3 options (28.5m options, 4-yr term, exercise price 15c/sh)

Apr-16 $12.6m 13c/sh 97.2

Dec-15 $1.5m 3.3c/sh 45.5


52

Appendix 2: Board and Management – An experienced team of mine developers

Capricorn has assembled a high-quality board and senior management team, in our view. The director and management biographies

demonstrate that each member of the team brings a wealth of skills and direct experience of the Australian gold mining sector. In

particular, the team has a solid track record of discovery, followed by the successful development of numerous mining projects

globally and within the Australia. Members of the Capricorn team have gained experience with some of the largest and most successful

Australian mining companies such as Independence Group (Tropicana) and Evolution Mining (Mt Carlton). The team’s track record

and experience in constructing and commissioning mines into production gives us confidence that Capricorn will press ahead with

the fast-track development of Karlawinda.

Board of Directors

Mr Heath Hellewell - Executive Chairman

Mr Hellewell is an exploration geologist with over 22 years’ experience in gold, base metals and diamond exploration predominantly

in Australia and West Africa. Mr Hellewell graduated from Curtin University with an Honours Degree in Geology and is a member of

the Australian Institute of Geoscientists. Mr Hellewell has previously held senior exploration positions with several successful groups

including DeBeers Australia Pty Ltd and Resolute Mining Limited. Mr Hellewell joined Independence Group NL in 2000 prior to the

Company’s IPO and was part of the team that identified and acquired the Tropicana project area, eventually leading to the discovery

of the Tropicana and Havana gold deposits. Most recently he was the co-founding Executive Director of Doray Minerals Limited. In

2014 Heath was the co-winner of the prestigious “Prospector of the Year” award. Mr Hellewell is currently an independent Non-

Executive Director of Core Exploration Ltd (ASX: CXO) and Duketon Mining Limited (ASX:DKM).

Mr Guy LeClezio - Non-Executive Director

Mr LeClezio holds a Bachelor of Arts from the University of Western Australia. He has had 20 years’ experience in the mining industry

and was an Executive Director of Eyres Reed Ltd and Canadian Imperial Bank of Commerce who were leading Western Australian

stockbrokers specialising in the mining industry. Mr LeClezio was a founding director of Madagascar Resources NL and previously a

director of ASX listed Windy Knob Resources Ltd.

Mr Stuart Pether - Non-Executive Director

Stuart Pether has over 25 years’ resources industry experience in project development, technical studies, mine operations and

corporate management. His experience spans open pit and underground mining in a range of commodities including gold, nickel and

lead and zinc. A qualified mining engineer, he holds a Bachelor in Engineer (Mining Engineering) from the Western Australia School

of Mines. Stuart was previously the CEO for Kula Gold, the owner of the advance development project the Woodlark Island Gold

Project in PNG. He held the position of COO at Catalpa Resources where he was responsible for the construction, commissioning and

operation of the A$92 million Edna May Gold Project. Following the merger of Catalpa Resources with Conquest Mining in November

2011, forming Evolution Mining, he took up the position of VP, Project Development where he was responsible for technical studies

and major capital projects, including the construction of the A$140m Mt Carlton Gold Project in Queensland. Stuart is a member of

the Australasian Institute of Mining and Metallurgy and a committee member of the WASM Alumni.


53

Senior Management

Mr Peter Thompson - Chief Operating Officer B.Sc, M.Sc, MAusIMM

Mr Thompson trained as a geologist in Trinity College Dublin and Leicester University, he came to Australia in 1988 and has had a

continuous career in exploration and mining for gold, nickel and copper. Employed by WMC, Anaconda Nickel, Jubilee Mines, St

Barbara Ltd, Beaconsfield Gold and Central Asia Resources in a range of roles, he has overseen several discoveries, project

developments, feasibility studies, acquisitions, divestments and company start-ups. Recent responsibilities as CEO of Beaconsfield

Resources and Central Asia Resources included operating deep underground gold and heap leach start-up operations. Peter is

currently a non-executive director of Marmota Ltd.

Mr Peter Langworthy Executive General Manager – Geology B.Sc Hons, MAusIMM

Mr Langworthy is a geologist with a career spanning 26 years in mineral exploration and project development in Australia and

Indonesia. He has specific expertise in building successful teams that have been responsible for significant mineral discoveries and

in integrating technically sound exploration and resource development strategies into corporate planning. His industry experience

includes 12 years in senior management roles with WMC Resources, four years with PacMin Mining as Exploration Manager, five

years with Jubilee Mines where he was responsible for numerous discoveries at the Cosmos Nickel Mine and the Sinclair nickel project,

and three years with Talisman Mining as Technical Director. At Jubilee, he was part of the corporate team responsible for the growth

of the company until it was taken over by Xstrata for $23/share. Mr Langworthy is a non-executive chairman of Syndicated Metals

Limited (March 2012 to present).

Mr Jonathan Shellabear - Chief Financial Officer

Jonathan Shellabear has over 25 years’ experience in the Australian and international resources industry as a senior corporate

executive and investment banker. Mr Shellabear holds a Bachelor of Science with Honours in Geology and a Master in Business

Administration from the University of Western Australia. He has extensive capital markets and advisory experience and has held

senior investment banking positions with NM Rothschild & Sons, Deutsche Bank and Resource Finance Corporation. Jonathan was

previously the Managing Director and Chief Executive Officer of Dominion Mining Ltd which was acquired by Kingsgate Consolidated

Ltd in 2011 to create, at that time, Australia’s second largest gold company by market capitalisation. He has also held senior corporate

roles with Portman Limited (now Cliffs Natural Resources) as General Manager, Business Development and Heron Resources Ltd as

Managing Director and Chief Executive Officer.

Exploration Manager - Mr Michael Martin

Mr Martin has 18 years’ experience in all aspects of resource projects through Western Australia and Queensland. Prior to joining

Capricorn Metals, Mr Martin has held senior positions at Pacmin, Sons of Gwalia, Sipa Resources, Jubilee Mines, Xstrata, Talisman

Mining and Syndicated Metals. He has undertaken a variety of senior and leadership roles in mineral exploration, resource

development, resource estimation and mining in multiple commodities such as gold, nickel, copper, lead and zinc. Mr Martin graduated

from the University of Ballarat with an Honours Degree in Geology and is a member of the Australian Institute of Geoscientists (AIG).

Mr Jean-Luc Marquetoux - Gerant and Chief Financial Officer - Madagascar

Mr Marquetoux has a French degree in accounting and finance. He has over 25 years’ experience in accounting, auditing and financial

control management functions. He has worked in Madagascar since 1993 and has previously held staff positions with Unima, one of

the highest industry profile companies in Madagascar. He is based full time in Madagascar as Country Manager and Chief Financial

Officer.


54

Appendix 2: Capricorn Metals Ltd, Financials

Figure 70 - Summary forecast financial statements (June year-end)


Key Metrics 2016 2017F 2018F 2019F 2020F 2021F 2022F 2023F

EPS (A$/sh) (0.01) (0.00) (0.00) (0.01) 0.03 0.04 0.02 0.02

P/E n.m n.m n.m n.m 3.3x 2.3x 4.3x 4.1x

CFPS (A$/sh) (0.01) (0.00) (0.00) (0.01) 0.04 0.06 0.04 0.04

P/CFPS n.m n.m n.m n.m 2.3x 1.7x 2.4x 2.3x

FCFPS (A$/sh) (0.01) (0.02) (0.06) (0.07) 0.04 0.05 0.04 0.04

P/FCFPS n.m n.m n.m n.m 2.4x 1.7x 2.6x 2.5x

FCF Yield -12% -27% -71% -74% 42% 59% 39% 40%

EV/EBITDA n.m n.m n.m n.m 0.7x 0.6x 0.9x 0.9x

EBITDA Margin n.m n.m n.m n.m 56% 55% 35% 35%

Return on Assets (ROA) n.m n.m n.m n.m 16% 21% 12% 13%

Return on Equity (ROE) n.m n.m n.m n.m 29% 29% 14% 13%

Return on Capital Employed (ROCE) n.m n.m n.m n.m 28% 34% 19% 19%

Gearing (Debt/Equity) 0% 0% 112% 125% 78% 38% 18% 0%

Interest Cover n.m n.m n.m -0.3x 6.6x 10.1x 8.3x 15.8x

Shares Outstanding, basic (m) 271.65 572.38 1,077.38 1,077.38 1,077.38 1,077.38 1,077.38 1,077.38

Production 2016 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Gold (koz) 0.0 0.0 0.0 0.0 68.7 94.2 94.7 94.7

C1 (A$/oz) 0 0 0 0 699 636 956 956

AISC (A$/oz) 0 0 0 0 811 744 1,079 1,079

Gold Price (A$/oz) - - 1,630 1,630 1,630 1,630 1,630 1,630

Income Statement (A$) 2016 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Revenue 1 0 0 0 112 154 154 154

Cost of Sales (0) (0) 0 0 (60) (84) (115) (115)

G&A (1) (1) (2) (2) (2) (3) (3) (3)

EBITDA (4) (1) (2) (2) 63 84 54 54

DD&A (0) (0) 0 0 (13) (17) (17) (18)

EBIT (4) (1) (2) (2) 50 67 37 37

Net Interest Expense 0 0 0 (7) (8) (7) (4) (2)

PBT (4) (1) (2) (9) 42 61 32 34

Other 0 0 0 0 0 0 0 0

Taxes/Recovery (0) (0) 0 1 (13) (18) (10) (10)

Net Profit (Loss) - attributable (4) (1) (2) (8) 30 42 23 24

Minority Interest 0 0 0 0 0 0 0 0

Cashflow (A$) 2016 2017 2018 2019 2020 2021 2022 2023

PBT 0 (0) (2) (2) 50 67 37 37

DD&A 0 0 0 0 13 17 17 18

Tax, interest, other (2) (1) 0 (6) (20) (25) (14) (13)

Cash Flow From Operations (2) (2) (2) (8) 42 59 40 42

Capital Expenditure (2) (12) (68) (65) (1) (1) (2) (2)

Other 1 (2) 0 0 0 0 0 0

Cash Flow From Investing (1) (14) (68) (65) (1) (1) (2) (2)

Equity Issues (Net of Costs) 14 10 51 0 0 0 0 0

New Debt (ST+LT) 0 0 90 0 0 0 0 0

Repayments / other 0 0 0 0 (10) (25) (25) (30)

Cash Flow From Financing 13 10 140 0 (10) (25) (25) (30)

Net Change in Cash 11 (6) 70 (73) 31 33 13 10

Free Cash Flow (3) (14) (70) (73) 41 58 38 40

Balance Sheet (A$) 2016 2017 2018 2019 2020 2021 2022 2023

Cash & Equivalents 12 6 76 3 34 67 80 90

Total Current Assets 12 6 76 3 34 67 80 90

PP&E & Mining Interests 5 26 94 159 148 132 117 101

Deferred taxation 0 0 0 0 0 0 0 0

Other 9 0 (0) 0 (0) 0 (0) (0)

Total Assets 25 32 170 162 182 199 197 191

Short Term Debt 0 0 0 0 0 0 0 0

Current Liabilit ies 2 1 1 1 1 1 1 1

Long Term Debt 0 0 90 90 80 55 30 0

Other Long Term Liabilit ies 0 0 0 0 0 0 0 0

Total Liabilities 2 1 90 90 80 55 30 1

Shareholder Equity 23 31 80 72 101 144 167 191

Total Liab. & S/Holder Equity 25 32 170 162 182 199 197 191

Working Capital 10 5 75 2 34 67 80 90

Net Debt (Cash) (12) (6) 14 87 46 (12) (50) (90)


55

Copyright and Risk Warnings

Capricorn Metals Limited. (the “Company”) is a corporate client of Tamesis Partners LLP.

Tamesis Partners LLP (“Tamesis”) has received remuneration for providing investment banking services and other services to the Company in the past twelve months and may continue to do so.

This note is a marketing communication and NOT independent research. As such, it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and this note is NOT subject to the prohibition on dealing ahead of the dissemination of investment research.

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Under no circumstances is this note to be construed to be an offer to buy or sell or deal in any security and/or derivative instruments. It is not an initiation or an inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000.

Note prepared in good faith and in reliance on publicly available information

Comments made in this note have been arrived at in good faith and are based, at least in part, on current public information that Tamesis considers reliable, but which it does not represent to be accurate or complete, and it should not be relied on as such. The information, opinions, forecasts and estimates contained in this document are current as of the date of this document and are subject to change without prior notification. No representation or warranty either actual or implied is made as to the accuracy, precision, completeness or correctness of the statements, opinions and judgements contained in this document.

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The persons who produced this note may be partners, employees and/or associates of Tamesis. Tamesis and/or its employees and/or partners and associates may or may not hold shares, warrants, options, other derivative instruments or other financial interests in the Company and reserve the right to acquire, hold or dispose of such positions in the future and without prior notification to the Company, or any other person.

Information purposes only

This document is intended to be for background information purposes only and should be treated as such. This note is furnished on the basis and understanding that Tamesis is under no responsibility or liability whatsoever in respect thereof, to the Company, or any other person.

Investment Risk Warning

The value of any potential investment made in relation to companies mentioned in this document may rise or fall and sums realised may be less than those originally invested. Any reference to past performance should not be construed as being a guide to future performance.

Investment in small companies, and especially mineral exploration companies, carries a high degree of risk and investment in the companies or minerals mentioned in this document may be affected by related currency variations. Changes in the pricing of related currencies and or commodities mentioned in this document may have an adverse effect on the value, price or income of the investment.

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This note is not for public distribution, nor for distribution to, or to be used by, or to be relied upon by any person other than the Company. Without limiting the foregoing, this note may not be distributed to any persons (or groups of persons), to whom such distribution would contravene the UK Financial Services and Markets Act 2000 or would constitute a contravention of the corresponding statute or statutory instrument in any other jurisdiction.

Disclaimer

This note has been forwarded to you solely for information purposes only and should not be considered as an offer or solicitation of an offer to sell, buy or subscribe to any securities or any derivative instrument or any other rights pertaining thereto (“financial instruments”). This note is intended for use by professional and business investors only. This note may not be reproduced without the prior written consent of Tamesis.

The information and opinions expressed in this note have been compiled from sources believed to be reliable but, neither Tamesis, nor any of its partners, officers, or employees accept liability from any loss arising from the use hereof or makes any representations as to its accuracy and completeness. Any opinions, forecasts or estimates herein constitute a judgement as at the date of this note. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied is made regarding future performance. This information is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company and its subsidiaries. Tamesis is not agreeing to nor is it required to update the opinions, forecasts or estimates contained herein.

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56

Further Disclosures for the United Kingdom

This note has been issued by Tamesis Partners LLP which is authorised and regulated by the Financial Conduct Authority. This note is not for distribution to private customers.

This note is not intended for use by, or distribution to, US corporations that do not meet the definition of a major US institutional investor in the United States or for use by any citizen or resident of the United States.

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Tamesis. Securities referred to in this note may not be eligible for sale in those jurisdictions where Tamesis is not authorised or permitted by local law to do so. In particular, Tamesis does not permit the distribution or redistribution of this note to non-professional investors or other persons to whom disclosure would contravene local securities laws. Tamesis expressly disclaims and will not be held responsible in any way, for third parties who affect such redistribution. © 2017

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