CAPRICORN METALS LTD — Capital/Financing Update 2010

Nov 23, 2010

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24 November 2010

Dear Shareholder

Notice to Shareholders of Rights Issue

We write to you as the registered holder of Malagasy Minerals Limited ( Malagasy ) shares (ASX code: MGY) as at today's date.

As advised in an ASX announcement of earlier today, Malagasy is undertaking a nonrenounceable pro-rata offer to Eligible Shareholders on the basis of 1 share for every 4 shares held at the record date at an issue price of $0.068 cents per share ( Offer ).

Malagasy is also intending to undertake a placement of shares to sophisticated and professional investors ( Placement ). The Placement will comprise of the issue of up to 16,000,000 shares at an issue price of $0.068 per share to raise up to approximately $1,088,000 (before costs). Participants in the Placement will also be entitled to participate in the Offer.

Malagasy currently has 109,250,003 shares and 9,003,600 options on issue. On the basis that the options are not converted and the Placement is completed prior to the record date, the Offer is for 31,312,501 new shares. The Offer will raise up to approximately $2,129,250 (before the payment of costs associated with the Offer).

Upon completion of the Offer and the Placement, Malagasy will have 156,562,504 shares on issue, assuming no options are exercised.

The Offer is available to all Malagasy shareholders with an Australian or New Zealand registered address registered on the record date of 3 December 2010 (" Eligible Shareholders "). Where the determination of the entitlement of any Shareholder results in a fraction of a Share, such fraction will be rounded up to the nearest whole share.

The Offer is non-renounceable and is fully underwritten by Patersons Securities Limited. Patersons Securities Limited will be paid an underwriting fee of 5% and an issue management fee of $30,000.

The prospectus in relation to the Offer was lodged with ASIC on 23 November 2010 and is available on both the ASX website and on the Malagasy website.

A copy of the prospectus and entitlement form will be sent to Eligible Shareholders on 6 December 2010.

Malagasy Minerals Ltd. (ACN 121 700 105), Suite 7, 11 Colin Grove, WEST PERTH WA 6005 Tel: +61 8 9463 6656, Fax: +61 8 9463 6657

The proposed timetable for the Offer is set out below. The following key dates are indicative only:

Event	Date
Lodgement of prospectus with ASIC	23 November 2010
Notice sent to shareholders	24 November 2010
Existing shareholders quoted on an ex basis	29 November 2010
Record date for determining entitlements to the Offer	3 December 2010
Prospectus and entitlement and acceptance forms despatched to Shareholders	6 December 2010
Announce to ASX that prospectus has been sent to Eligible Shareholders	6 December 2010
Closing date	20 December 2010
New shares quoted on a deferred settlement basis	21 December 2010
Notify ASX of under subscriptions	23 December 2010
Issue of new shares and despatch of holding statements	29 December 2010
Trading in new shares commences	30 December 2010

The directors of Malagasy recommend that if you are in doubt as to the value of the Offer then you should contact your financial adviser.

Yours sincerely

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Max Cozijn Chairman

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