CAPRICORN METALS LTD — Capital/Financing Update 2011

Mar 7, 2011

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8[th] March 2011 ASX Announcement

MALAGASY IDENTIFIES SIX PRIORITY EXPLORATION ZONES AT FOTADREVO VANADIUM PROJECT – MADAGASCAR

PROSPECTIVE AREAS WITHIN 10km TREND TO BE SAMPLED AND COSTEANED AHEAD OF DRILLING

• Interpretation of radiometric data completed

• Six high-priority zones identified over a cumulative strike of 11 km

• Exploration scheduled to start in late March-early April 2011

International minerals company Malagasy Minerals Ltd (ASX Code: MGY ) is pleased to advise that a new exploration programme will commence shortly at its 100%-owned Fotadrevo Vanadium Project in southern Madagascar following completion of target interpretation and programme design based on a comprehensive review of radiometric responses and recent exploration data for the project area.

A total of six high-priority areas have been identified within an overall 10km trend within the Project tenements. At its northernmost extent, this trend continues directly along strike from the neighbouring Green Giant (‘G-G’) Project, which is operated by the Canadian-listed Company Energizer Resources Inc (‘EGZ’).

In late 2010, Energizer announced an NI43-101 compliant resource of 59.2 million tonnes grading 0.683% V2O5 combined Indicated and Inferred categories using a 0.50% V2O5 lower cut-off grade ( refer Figure 1 ). This was updated in January 2011 with additional information relating to metallurgical recoveries of 82% from G-G material using a combination of roast and pressurized alkaline leaching processes.

The vanadium mineralisation in the belt, unlike magnetite-hosted vanadium deposits, is sediment-hosted and therefore requires a different metallurgical approach to the standard physical beneficiation traditionally used with magnetite-associated vanadium mineralisation. Additionally, exploration to date has confirmed a strong association between specific radiometric background levels and vanadium mineralisation tenor.

The ‘ Jaky ’ zone contains the highest-grade vanadium mineralisation within the G-G Project (i.e. 0.712% V2O5) and continues southward into Company tenements – part of an overall southward trend of increasing vanadium tenor (i.e. 0.581% V2O5 to 0.712% V2O5 – refer Figure 1 attached ). Given the potential for similar mineralisation to occur within Malagasy’s tenements, this has positive implications for the prospectivity of the Fotadrevo Project.

First-pass surface (soil) geochemistry and costeaning programmes undertaken by Malagasy in 2009 successfully identified the margins of the extension of the ‘ Jaky ’ trend. Interpretation of results in 2011 using published radiometric data has identified several core target areas adjacent to and along strike from the ‘ Jaky ’ resource. The planned soil geochemistry programme is designed to comprehensively test each of these areas as well as intercalated / associated zones of lower but still anomalous radiometric response.

The programme will test an average 800-metre wide corridor, for a cumulative strike of 11 kilometres. Samples will be collected at 25m and 50m intervals along lines spaced 400m apart, prior to being submitted to IntertekGenalysis Madagascar and Perth for analysis. Initially, only the 50-metre spaced samples will be submitted.

As previously reported, the programme is expected to commence in late March or April 2011 (weather permitting) and will take two to three weeks to complete. Approximately 900 samples will be collected, with 450 – 500 samples being sent for analysis in the first instance – the remainder to be held in reserve for in-fill in areas of identified geochemical anomalism.

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Radiometrics
Radiometric Target
Summary
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Figure 1: Radiometric data showing MGY anomalous zones in the context of defined EGZ resource areas within the same trend. Purple areas denote high-response zones (with inferred associated vanadium mineralisation). Note also south-trending increase in (V2O5) grade.

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Targets generated from this programme will be either costeaned and / or drilled as appropriate. The Company operates its own Longyear 34 drilling rig, which is capable of drilling to in excess of 400 metres depth with NQ core. This allows Malagasy to conduct first-pass drilling assessment of prospective areas without incurring the heavy costs associated with third-party drilling contractors.

The Company will provide additional information on an ongoing basis as it continues to develop this exciting project.

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Steven Goertz
Managing Director
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Competent Persons Statement

The information in this report that relates to Exploration Results or Mineral Resources is based on information compiled or reviewed by Mr. Steven Goertz, Managing Director Malagasy Minerals Ltd., who is a Member of the Australasian Institute of Mining and Metallurgy and of the Australian Institute of Geoscientists. Mr. Goertz has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Goertz consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

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