CAPRICORN METALS LTD — Capital/Financing Update 2013

Jan 28, 2013

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_**“CLOSING

IN
ON
WORLD-­‐CLASS
MINERAL DEPOSITS
IN MADAGASCAR
“ Operations
Update
–
January
2013**_

25% partner in the world-class Molo Graphite Deposit

Total Indicated and Inferred Resource 124mt @ 6.3%C

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Targeting high-grade graphite deposits in 100% owned ground – sampling to date has returned exceptionally high grade results

50.8%C, 20.5%C, 24.9%C, 14.7%C, . 12.9%C, 28.1%C, 23.1%C

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Confirmation of a potential large-scale nickel-copperplatinum group element (Ni-Cu-PGE) mineralising system.

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Advanced volcanic hosted massive sulphide (“VHMS”) targets identified and ready for testing.

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Exploration strategy identified and exploration activities including drilling, airborne and ground geophysical surveys, geochemical surveys and mapping planned for 2013 exploration season.

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

SUMMARY

Malagasy
Minerals
Limited
(ASX:
MGY)
is
an Australian
exploration
company
that
has developed
a
significant
portfolio
of
high
quality exploration
assets
and
a
strategic
low-­‐cost operational
base
in
southern
Madagascar (Figure
1).

Madagascar
is
a
developing
country
with
a strong
mineral
endowment
that
provides access
to
world-­‐class
exploration
opportunities across
a
number
of
commodities.
Recent
major resource
development
projects
including
the Ambatovy
Nickel
Laterite
Project
(Sherritt
Int.) and
the
QIT
Madagascar
minerals
(QMM
-­‐RIO) Anosy
Minerals
Sands
Project,
demonstrate
key support
for
the
resource
sector
by
both
the Madagascan
Government
and
the
Malagasy People.

==> picture [231 x 219] intentionally omitted <==

Figure
(1)
–
Project
Location
Plan

Malagasy’s
current
focus
in
southern
Madagascar
is
to
identify
high
value
exploration
and
development opportunities
within
its
existing
project
portfolio
for
world-­‐class
nickel-­‐copper-­‐PGE
deposits,
graphite deposits
and
volcanic
hosted
massive
sulphide
deposits
(“VHMS”).
This
is
being
undertaken
both
on
a 100%
basis
and
through
joint
venture.

Following
a
period
of
strategic
review
and
planning
in
the
latter
stages
of
2012
Malagasy
Minerals
has developed
a
comprehensive
exploration
strategy
for
2013.
In
summary
this
will
include:

• Supporting
  Joint
  Venture
  partner
  Energizer
  Resources
  Inc.
  (TSX;
  EGZ
  –
  “Energizer”)
  in
  advancing
  the world-­‐class
  Molo
  Graphite
  Deposit.
  Molo
  has
  now
  been
  established
  as
  one
  of
  the
  largest
  “jumbo”
  flake graphite
  deposits
  in
  the
  world,
  and
  is
  considered
  by
  Energizer
  to
  be
  a
  potential
  fast
  track
  development opportunity.
  An
  Indicated
  and
  Inferred
  resource
  of
  124mt
  @
  6.3%C
  has
  currently
  been
  estimated (Table
  1)
  for
  the
  Molo
  Deposit
  at
  a
  2%
  cut-­‐off-­‐grade;

• Identifying
  high-­‐grade
  (+15%C)
  deposits
  of
  quality
  flake
  graphite
  on
  prospective
  ground
  held
  100%
  by Malagasy
  Minerals.
  The
  opportunity
  is
  to
  define
  graphite
  deposits
  that
  would
  potentially
  enhance,
  or be
  enhanced
  by,
  the
  development
  of
  the
  already
  world-­‐class
  Molo
  Graphite
  Deposit;

• Rapid
  advancement
  of
  exploration
  for
  large-­‐scale
  mafic-­‐ultramafic
  intrusion
  related
  nickel-­‐copper-­‐PGE deposits
  across
  the
  Ampanihy
  Project.
  The
  project
  has
  been
  identified
  as
  having
  the
  regional
  structural framework
  to
  host
  a
  large
  nickel-­‐copper-­‐PGE
  mineralising
  system.
  This
  premise
  is
  also
  supported
  by
  the presence
  of
  an
  extensive
  suite
  of
  mafic-­‐ultramafic
  intrusive
  rocks
  and
  the
  presence
  of
  nickel-­‐copper sulphides;

• Advancing
  exploration
  for
  volcanic
  hosted
  massive
  sulphide
  deposits
  at
  the
  highly
  prospective
  Vohibory Project.
  High
  priority
  targets
  have
  been
  identified
  that
  require
  follow-­‐up
  reconnaissance
  exploration and
  ranking
  prior
  to
  drilling;
  and

• Consolidation
  and
  expansion
  of
  the
  Company’s
  “In-­‐Country”
  commercial
  operations.
  Malagasy’s commercial
  operations
  located
  in
  the
  capital
  of
  Antananarivo
  provide
  a
  unique
  ability
  to
  fund
  the majority
  of
  local
  administrative
  and
  exploration
  costs.
  Funding
  is
  sourced
  from
  commercial
  leases
  and royalties.

2

Malagasy
Mineral’s
exploration
assets
in
southern
Madagascar
provide
the
opportunity
to
participate
in
the discovery
and
development
of
world-­‐class
mineral
opportunities
in
a
relatively
low-­‐cost
environment.
The company
has
an
experienced
exploration
team
based
in
Madagascar
supported
by
Perth
based
technical and
corporate
expertise,
which
will
implement
the
2013
exploration
strategy.

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Figure
(2)
–
Ampanihy
and
Vohibory
Project
Location
Plan

==> picture [485 x 123] intentionally omitted <==

Ampanihy
Project
–
July
2012
Field
Visit

3

**MOLO

GRAPHITE
DEPOSIT
(EGZ
75%
/
MGY
25%) _Emerging
World-­‐Class
Development
Opportunity**_

The
maiden
resource
announced
by
joint
venture
partner
Energizer
Resources
Inc.
in
December
2012
( see ASX
Announcement
–
5[th] December
2012 )
ranks
the
Molo
Graphite
Deposit
as
one
of
the
largest
known contained
graphite
deposits
in
the
world.
The
JORC
and
NI
43-­‐101
compliant
resource
reported
at
a
2%
C cut-­‐off
grade
currently
stands
at
(see
Table
(1)
for
details):

• **Indicated

and
Inferred
Resource:
124
million
tonnes
grading
6.3%
C**

Significantly
two
high-­‐grade
zones
identified
within
the
broader
resource
reported
at
a
4%
cut-­‐off
grade currently
stands
at
(see
Table
1
for
details):

• **Indicated

and
Inferred
Resource:
60
million
tonnes
grading
8.1%
C**

**Key

points:**

• The
  Molo
  Graphite
  Deposit
  is
  owned
  in
  joint venture
  with
  Energizer
  Resources
  Inc.
  (TSX: EGZ).
  Energizer
  are
  managers
  and
  hold
  a
  75% interest
  and
  Malagasy
  retains
  a
  25%
  free-­‐ carried
  interest
  in
  a
  defined
  set
  of
  industrial minerals
  (including
  graphite
  and
  vanadium) through
  to
  completion
  of
  a
  Bankable
  Feasibility Study.
  Malagasy
  retains
  100%
  interest
  for
  all other
  minerals.

• The mineralized zones in the resource estimation
  start
  from
  surface
  and
  continue
  to
  a maximum depth of 385 metres. The mineralisation
  also
  remains
  open
  along
  strike and
  at
  depth
  with
  potential
  for
  near-­‐surface high-­‐grade
  extensions.

• All
  assays
  were
  done
  by
  Genalysis-­‐Interteck, Perth
  and
  are
  reported
  as
  total
  carbon
  values.

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Figure
(3)
–
Molo
Graphite
Deposit
Plan

• Preliminary small-­‐scale tests of selected samples
  have
  indicated
  that
  “Jumbo
  Flake” graphite
  (i.e.+50
  mesh)
  to
  a
  purity
  of
  93%C
  can be
  easily
  liberated
  through
  a
  simple
  crushing process.

• A
  preliminary
  economic
  assessment
  (“PEA”)
  is currently
  being
  prepared
  and
  is
  scheduled
  for completion
  in
  early

==> picture [191 x 119] intentionally omitted <==

Figure
(4)
–
Molo
Graphite
Deposit
3D
Image

Energizer
recently
attended
and
presented
at
the
2nd
Annual
Graphite
Conference
held
in
London.
The event
was
organized
by
London-­‐based
Industrial
Minerals
(IM),
a
leading
industry
resource
for
graphite
and non-­‐metallic
minerals
intelligence,
with
coverage
of
over
40
minerals
from
mine
to
market.
In
attendance were
over
20
graphite
resource
exploration
companies,
major
graphite
producers
(excluding
China)
and prominent
battery
anode
producers
from
around
the
world,
with
a
density
in
North
America,
Europe, Australia,
South
America,
South
Africa,
Japan,
India
and
the
Middle
East.

4

**MALAGASY

REGIONAL
GRAPHITE
EXPLORATION
(MGY
100%)**

_**Potential

for
High-­‐Grade,
High-­‐Quality
Graphite
Deposits**_

Malagasy
Minerals
retains
100%
of
rights
to
graphite
on
its
tenements
outside
of
the
Molo
Graphite
JV.
This represents
approximately
60%
of
the
company’s
entire
project
area
and
presents
an
excellent
opportunity to
discover
additional
high-­‐grade,
high-­‐quality
graphite
deposits
that
would
have
the
potential
to
either enhance,
or
be
enhanced
by,
the
development
of
the
Molo
Deposit.

Malagasy
has
commenced
the
assessment
and
exploration
of
the
110km
strike
of
prospective
stratigraphy that
has
been
identified
through
the
Company’s
project
area.
The
target
deposit
criteria
is

5,000,000 tonnes
at
a
graphite
grade
of
+15%C.

Exploration
to
date
is
comprised
of
reconnaissance
mapping
and
rock
chip
sampling
to
identify
prospective areas
that
warrant
more
detailed
follow-­‐up
programs
of
exploration
based
on
the
stated
target
criteria.
The 2
priority
areas
identified
to
be
prospective
for
this
high
grade
graphite
are
(see
Figure
5):

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Figure
(5)
–
Malagasy
Graphite
Targets

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July
2012
Field
Trip

• **Magrama

Camp
Prospect**

This
prospect
is
located
on
the
southeast margin
of
the
Ianapera
Anorthosite
intrusion and
is
located
in
the
same
graphite
schist
that hosts
the
Molo
Deposit
along
strike
to
the south.
Initial
rock
chip
sampling
identified outcrops
with
extremely
high
graphite
grades up to 44.5%C . Subsequent exploration including
mapping
and
systematic
rock
chip sampling
has
now
identified
10
targets
that have
the
potential
to
meet
the
tonnage criteria.
Assay
results
for
the
sampling
of these
locations
are
expected
by
the
end
of March
2013.
Dependent
on
assay
results
the next
phase
of
exploration
may
include trenching
and
drilling.

• **Maniry

Prospect**

The
Maniry
Prospect
covers
the
southern margin
of
the
Maniry
Anorthosite
intrusion
in the
southern
part
of
Malagasy’s
project
area. To
date
only
reconnaissance
exploration
has been
undertaken.
The
result
of
this
work
was the
collection
of
a
series
of
very
high-­‐grade graphite rock chip samples. Previously reported
grades
include 50.8%C,
20.5%C, 24.9%C, 14.7%C, 12.9%C, 28.1%C and 23.1%C.

The
next
phase
of
exploration
will
involve
a program of detailed outcrop mapping, estimation
of
potential
tonnages
and
the collection
of
systematic
rock
chip
channel samples
to
establish
grade
criteria.
This
work is
anticipated
to
be
completed
as
soon
as
the current
wet
season
concludes
and
access
is re-­‐established.

5

**AMPANIHY

PROJECT
-­‐
NICKEL-­‐COPPER-­‐PGE
EXPLORATION
(MGY
100%) _Targeting
a
Major
Nickel
Discovery**_

A
key
objective
for
Malagasy
Minerals
in
2013
is
the
rapid
advancement
of
exploration
for
large-­‐scale mafic-­‐ultramafic
intrusion
related
nickel-­‐copper-­‐PGE
deposits
across
the
Ampanihy
Project.
A
detailed review
of
the
company’s
projects
during
2012
has
confirmed
the
potential
for
the
region
to
host
a
large nickel-­‐
copper-­‐PGE
mineralising
system.

**The

established
criteria
include:**

• The
  presence
  of
  a
  crustal
  scale
  suture-­‐structural zone
  with
  evidence
  of
  mantle
  derived
  intrusive activity;

• A
  widespread
  intrusive
  suite
  of
  mafic
  and
  ultramafic dykes
  and
  sills;

• The
  critical
  presence
  of
  nickel-­‐copper
  sulphides located
  at
  a
  number
  of
  locations
  has
  demonstrated critical
  levels
  of
  sulphur
  saturation
  have
  been reached.

The
initial
phase
of
exploration
in
2013
will
involve detailed
field
evaluation
of
at
least
10
defined
targets comprising
mapping,
rock
chip
sampling
and
detailed surface
geochemical
sampling.
This
phase
of
work
will form
the
basis
for
programs
of
follow-­‐up
exploration that may include airborne magnetic and electromagnetic
surveys
(VTEM),
more
specifically targeted
ground
electromagnetic
surveys
(MLEM), gravity
surveys
and
drilling.

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Figure
(6)
–
Ampanihy
Project
Ni-­‐Cu
Corridor

==> picture [192 x 281] intentionally omitted <==

Photos
from
July
2012
Field
Trip
–
Ampanihy
Project

==> picture [268 x 305] intentionally omitted <==

6

**VOLCANIC

HOSTED
MASSIVE
SULPHIDE
EXPLORATION
(MGY
100%) _High-­‐Grade,
High-­‐Value
Copper-­‐Gold
Exploration
Target**_

The
Vohibory
Project
is
located
within
the
Vohibory
Geological
Domain
to
the
north
west
of
the
company’s main
Ampanihy
Project
(Figure
2).
The
domain
is
characterised
by
bi-­‐model
volcanism
that
is
characteristic of
a
back-­‐arc
basin
and
island
arc
environment. This
setting
is
considered
highly
prospective
for
the formation
of
VMS
deposits.

Malagasy
is
targeting
high-­‐value
copper-­‐gold (zinc-­‐lead)
volcanic
hosted
massive
sulphide deposits
across
an
area
with
demonstrated prospectivity.

**Prospectivity

is
demonstrated
by:**

Widespread
surface
mineralisation
(up
to
29% Cu,
8.33g/t
Au
and
206g/t
Ag)
has
been identified
at
a
number
of
priority
targets
and limited
previous
drilling
has
returned
wide zones
of
anomalous
copper,
gold
and
silver.
It is
also
worth
noting
that
Sunridge
Gold
Corp Besakoa
Project
lies
to
the
immediate
south in
the
same
stratigraphic
position.

Exploration
at
Vohibory
will
commence
in 2013
as
soon
as
access
is
possible
at
the
end of
the
wet
season.
Programs
will
initially consist
of
detailed
collection
of
geochemical samples,
mapping
and
gossan
sampling.
This work
will
identify
key
targets
that
will
then potentially
be
targeted
with
detailed
ground electromagnetic
surveys
(MLEM),
gravity surveys
and
drilling.

The
Vohibory
Project
will
also
be
assessed
for its
potential
to
host
nickel
and
copper deposits as significant areas of Ni-­‐Cu geochemical
anomalism
in
proximity
to
a series
of
VTEM
conductors
have
been delineated.

==> picture [254 x 455] intentionally omitted <==

----- Start of picture text -----

Targeted VMS
Horizon
Targeted VMS
Horizon
Figure
(7)
–
Vohibory
VMS
Project
----- End of picture text -----

**COMMERCIAL

ACTIVITIES**

Malagasy
Minerals
Limited
has
established
a
significant
source
of
internal
cash
flow
in
Madagascar
through the
receipt
of
Royalties
from
the
mining
of
Labradorite
from
three
groups,
rental
income
from
commercial leases
at
its
base
in
Antananarivo.
This
income
stream
generates
revenues
to
assist
in
supporting
local operating
costs.

**POLITICAL

SITUATION**

The
political
situation
in
Madagascar
remains
uncertain,
with
international
mediation
continuing
to
assist
in the
negotiation
of
an
orderly
resolution.
This
is
aimed
at
achieving
free
elections
and
the
establishment
of normal
relations
with
the
international
community
and
donor
countries.
As
previously
advised,
the
current situation
in
Madagascar
has
the
potential
to
result
in
difficulties
in
obtaining
effective
legal
redress. Meanwhile,
continuing
delays
are
being
encountered
in
the
processing
of
tenement
applications
and

7

renewals,
and
the
registration
of
additional
minerals
on
permits.
If
the
political
situation
does
not
improve there
is
a
risk
that
the
Company
may
not
be
able
to
secure
the
grant
or
renewal
of
tenements
in
a
timely manner,
or
on
satisfactory
terms.
Presently
elections
are
planned
for
May
2013,
and
it
is
anticipated
that
a new
democratically
elected
government
will
be
established.
Both
the
incumbent
president,
installed
after the
coup
in
2010,
and
the
president
ousted
by
the
coup
have
announced
that
they
will
not
be
candidates
at the
elections.
This
has
been
reported
as
being
seen
by
the
international
community
as
a
positive development
for
the
transparency
of
the
elections
but
has
not
resolved
uncertainty
in
the
period
leading
to the
vote.

**CORPORATE

DIRECTORY**

Directors

Max
Cozjin
–
Chairman Guy
LeClezio
–
Director Peter
Woods
–
Director Graeme
Boden
–
Director
&
Company
Secretary

Country
Manager
-­‐
Madagascar Jean-­‐Luc
Marquetoux

**Registered

Corporate
Office**

Unit
7,
11
Colin
Grove
WEST
PERTH
WA
6005 Telephone
+61
89463
6656 Facsimile
+61
8
9463
6657 Internet:
www.malagasyminerals.com

**Postal

Address**

GPO
Box
2818
WEST
PERTH
WA
6872

**Madagascar

Operations
Office**

Batiment
L
Cite
ex-­‐BRGM,
Rue
Farafaty Ampandrianomby,
ANTANANARIVO 101
MADAGASCAR

Stock
Exchange
Listing ASX
Limited ASX
Code:
MGY

Auditor Crowe
Horwath,
Perth L6
256
St
Georges
Terrace
PERTH
WA
6000

**Solicitors

to
the
Company**

Hardy
Bowen
Lawyers
and
GTP
Legal L1
28
Ord
St
WEST
PERTH
6005

**Solicitors

(Madagascar)**

Lexel
Juridique
&
Fiscal

Zone
Tana
Waterfront
Ambodivona
ANTANANARIVO 101
MADAGASCAR

**Share

Registry**

Security
Transfer
Registers
Pty
Ltd 770
Canning
Highway
APPLECROSS
WA
6153 Telephone
+61
8
9315
2333 Facsimile
+61
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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.
Peter
Langworthy,
Consulting
Geologist,
who
is
a
Member
of
the
Australian
Institute
of
Mining
and
Metallurgy.
Mr.
Peter Langworthy
has
sufficient
experience,
which
is
relevant
to
the
style
of
mineralisation
and
type
of
deposit
under
consideration
and
to activities
undertaken,
to
qualify
as
a
Competent
Person
as
defined
in
the
2004
Edition
of
the
“Australasian
Code
of
Reporting
of Exploration
Results,
Mineral
Resources
and
Ore
Reserves”.
Mr.
Peter
Langworthy
consents
to
the
inclusion
in
the
report
of
the matters
based
on
the
information
in
the
form
and
context
in
which
it
appears.

Table
1
–
MOLO
GRAPHITE
DEPOSIT
RESOURCE
ESTIMATION
SUMMARY
((NI)
43-­‐101)

Table 1 – MOLO GRAPHITE DEPOSIT RESOURCE ESTIMATION SUMMARY ((NI) 43-101)	Table 1 – MOLO GRAPHITE DEPOSIT RESOURCE ESTIMATION SUMMARY ((NI) 43-101)	Table 1 – MOLO GRAPHITE DEPOSIT RESOURCE ESTIMATION SUMMARY ((NI) 43-101)	Table 1 – MOLO GRAPHITE DEPOSIT RESOURCE ESTIMATION SUMMARY ((NI) 43-101)
Classification	Tonnes (mt)	Grade (C%)*	Cut-off grade (C%)
Indicated	84.0	6.3	2%
Inferred	40.3	6.3	2%
TOTAL	124.4	6.3	2%
“High-grade” Indicated & Inferred	60.1	8.1	4%
*Note – Reported Carbon % = Total Carbon
For additional detail see MGY ASX announcement released 5thDecember 2012

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