CAPRICORN METALS LTD — Capital/Financing Update 2014

Mar 30, 2014

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31[st] March 2014

ASX Announcement ASX:MGY

NEW NICKEL-COPPER-PGM TARGETS IDENTIFIED 100% owned Ampanihy Project – Southern Madagascar

HIGHLIGHTS

• Final results of the systematic regional mapping and geochemical sampling program have now been received. The results confirm and extend the presence of an extensive suite of mafic-ultramafic intrusive rocks associated with the regionally significant Ampanihy Suture Zone in the southern Maniry Area;

• Extensive zones of coincident nickel-copper soil geochemistry associated with a number of the intrusions have been defined; and

• Interpretation of the data at hand suggests strong similarities with the geological setting that hosts the worldclass Voisey’s Bay Nickel-Copper Deposit.

BACKGROUND

Malagasy Minerals Limited (ASX Code: MGY / “Malagasy”) has established a large exploration project in Southern Madagascar that is prospective for both mafic-ultramafic intrusive related nickel-copper-platinum group metals (PGM) deposits and high-grade high-quality graphite deposits (Figure 1). This is being undertaken both on a 100% basis and through joint venture.

The Ampanihy Project has been confirmed as a host for a significant suite of mafic-ultramafic intrusive rocks that have demonstrated potential to host nickel-copper-PGM mineralisation. Having established that the application of systematic regional geochemical sampling and programs of mapping and rock chip sampling is the most effective way of exploring the entire 110km strike of the project a work program involving the collection of approximately 4,000 soil samples has been completed across the entire project: the results of which have confirmed the potential of the project to host a significant mafic-ultramafic intrusive related Ni-Cu-PGM deposit.

NICKEL-COPPER-PGM EXPLORATION RESULTS

Exploration for NI-Cu-PGM has been focused along a major documented structural zone referred to as the “Ampanihy Suture Zone”. This feature has been the focus of a substantial intrusive event that has seen a suite of intrusive rocks ranging from anorthosite, through gabbro to ultramafic peridotite and dunite. These intrusive rocks are now referred to as the “Ampanihy Plutonic Suite”. This geological setting is interpreted to be analogous to that described at Voisey’s Bay.

Key results of the recent exploration initiative include:

• Identification of 3 clusters of mafic-ultramafic intrusive rocks in close proximity to the Ampanihy Suture Zone. Individual intrusions are up to ~5km long but are more typically ~2km long (Figure 2);

• Strong coincident Ni-Cu geochemical anomalies associated with a number of the intrusions; and

• Rock chip results that in general support the presence of the nickel-copper soil anomalism. The results are not as strong as the previous results collected to the south but nonetheless are considered important. (Figure 3).

Malagasy Minerals Ltd. (ACN 121 700 105), 15 Lovegrove Close, Mount Claremont WA 6010 Tel: +61 8 9286 1219, Fax: +61 8 9284 3801

Table 1: Results of Rock Chip Samples

Table 1: Results of Rock Chip Samples	Table 1: Results of Rock Chip Samples	Table 1: Results of Rock Chip Samples	Table 1: Results of Rock Chip Samples	Table 1: Results of Rock Chip Samples	Table 1: Results of Rock Chip Samples	Table 1: Results of Rock Chip Samples
	Sample No	Nickel (ppm)	Copper (ppm)	Platinum (ppb)	Palladium (ppb)	Sulphur (ppm)
	MD12450	1366	121	10	6	9338
	MD12461	1403	26	5	13	547
	MD12319	1366	22	10	6	172
	MD12323	1337	25	3	2	1521
	MD12329	1372	56	10	31	134
	**Previously reported: **
	MD9306	3722	1666	129	27	5430
	MD9303	3650	308	44	216	1757
	MD9286	1606	469	39	36	3537
	MD9287	1184	661	68	57	11794

Note:

Assaying of rock chips was undertaken by Intertek-Genalysis in Perth. Samples were pulverized, representatively sampled, digested by 4 acids and then analyzed by mass spectrometer for 53 elements including PGE’s. Internal laboratory QAQC procedures were adhered to with results later checked by the MGY Senior Geologist.

XRF analysis of the soil samples was undertaken with a handheld Innov-X Delta Premium XRF unit. The machine was routinely calibrated and CRM material inserted into sample runs for QAQC purposes. Reading time varied for different batches of samples between 30 seconds or 90 seconds (3 beams). Data was routinely checked with internal QAQC standards met.

See Appendix (2) for JORC Code 2012 Edition commentary on Sampling Techniques and Data

See Appendix (1) for full details.

These new results now confirm the widespread presence over at least an 80 kilometre strike length of a suite of highly prospective mafic-ultramafic intrusive rocks that have demonstrated nickel-copper-PGM sulphide potential. This first time recognition of this major, province scale nickel-copper-PGM exploration opportunity is rated by Malagasy as one of the most exciting early stage exploration plays in the world for these types of deposits

FUTURE WORK

• Detailed evaluation of each of the main identified target areas by detailed mapping, sampling, trenching and infill geochemical sampling;

• Planning of initial geophysical programs that most likely include airborne magnetics and ground based electromagnetic; and

• Dependent of results initial programs of drilling.

For and on behalf of the Board

Peter Langworthy Technical Director

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 is a full time Director of Malagasy Minerals Limited and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 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.

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Figure (1) – Regional Location Plan

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Figure (2) –Location Plan: Central Ampanihy Project

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Figure (3) – Target F: Schematic Geology and Rock Chip Results

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APPENDIX (1) – Target E & F Rock Chip Sampling Details

Sample No.	Easting	Northing	Ni_ppm	Cu_ppm	Pd_ppb	Pt_ppb	S_ppm	Co_ppm	Cr_ppm
MD12319	497,108	7,319,614	1366	22	6	10	172	172	2407
MD12323	491,188	7,313,273	1337	25	2	3	1521	1521	1377
MD12329	490,794	7,311,459	1372	56	31	10	134	134	1219
MD12450	500,272	7,324,650	1954	121	15	11	9338	934	3510
MD12461	498,576	7,321,700	1403	26	13	5	547	547	3218

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JORC Code, 2012 Edition – Table 1 report template

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary
Sampling	 Nature and quality of sampling (eg cut	Soil samples – 4110 collected – were
techniques	channels, random chips, or specific	taken on a pre-designated grid with GPS
	specialised industry standard	used to locate the sample location. A
	measurement tools appropriate to the	representative piece of ground was
	minerals under investigation, such as	chosen in the vicinity of the location with
	down hole gamma sondes, or handheld	any loose debris and vegetation
	XRF instruments, etc). These examples	removed. The top 5cm of ‘topsoil’ was
	should not be taken as limiting the broad	removed from an area measuring 50 x
	meaning of sampling.	50cm with a further pit dug within with
	 Include reference to measures taken to	the resultant soil suitably homogenized.
	ensure sample representivity and the	Soil was then sieved to 177µm (#80
	appropriate calibration of any	mesh) with approximately 120g of
	measurement tools or systems used.	sample collected in a paper bag and
	 Aspects of the determination of	stored appropriately.
	mineralisation that are Material to the
	Public Report.	Rock chips – 204 collected - were taken
	 In cases where ‘industry standard’ work	from locations identified as prospective
	has been done this would be relatively	by the field geologist. Approximately
	simple (eg ‘reverse circulation drilling	2.5kg of sample was taken and placed
	was used to obtain 1 m samples from	in a calico bag. Samples may have been
	which 3 kg was pulverised to produce a	from one single point or from a number
	30 g charge for fire assay’). In other	of points within a 5-10m radius
	cases more explanation may be
	required, such as where there is coarse	An Innov-X Delta Premium XRF
	gold that has inherent sampling	analyzer was used to analyze all soil
	problems. Unusual commodities or	samples whilst rock chips were assayed
	mineralisation types (eg submarine	at a laboratory.
	nodules) may warrant disclosure of
	detailed information.
Drilling	 Drill type (eg core, reverse circulation,	No drilling has been undertaken that
techniques	open-hole hammer, rotary air blast,	relates to this announcement.
	auger, Bangka, sonic, etc) and details
	(eg core diameter, triple or standard
	tube, depth of diamond tails, face-
	sampling bit or other type, whether core
	is oriented and if so, by what method,
	_etc). _
Drill sample	 Method of recording and assessing core	No drilling has been undertaken that
recovery	and chip sample recoveries and results	relates to this announcement.
	assessed.
	 Measures taken to maximise sample
	recovery and ensure representative
	nature of the samples.
	 Whether a relationship exists between
	sample recovery and grade and whether
	sample bias may have occurred due to
	preferential loss/gain of fine/coarse
	material.
Logging	 Whether core and chip samples have	No drilling has been undertaken that
	been geologically and geotechnically	relates to this announcement.
	logged to a level of detail to support
	appropriate Mineral Resource estimation,
	mining studies and metallurgical studies.
	 Whether logging is qualitative or
	quantitative in nature. Core (or costean,
	channel, etc) photography.
	 The total length andpercentage of the

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Criteria	JORC Code explanation	Commentary
	_relevant intersections logged. _
Sub-sampling	 If non-core, whether riffled, tube	All samples were dry at point of
techniques	sampled, rotary split, etc and whether	collection
and sample	sampled wet or dry.	Field QC procedures for all soil and rock
preparation	 For all sample types, the nature, quality	chip sampling programs involve the use
	and appropriateness of the sample	of Certified Reference Material (CRM)
	preparation technique.	as assay standards and field duplicate
	 Quality control procedures adopted for all	samples at a frequency of 1 in every 30
	sub-sampling stages to maximise	samples.
	representivity of samples.	All QA/QC controls and measures are
	 Measures taken to ensure that the	routinely reviewed and reported on at
	sampling is representative of the in situ	the completion of the program.
	material collected, including for instance	External laboratory QA/QC checks are
	results for field duplicate/second-half	routinely monitored and stored in the
	sampling.	MGY database.
	 Whether sample sizes are appropriate to	Sample size is considered adequate for
	the grain size of the material being	the rocks encountered, mineralization
	sampled.	style and purpose of this program.
Quality of	 The nature, quality and appropriateness	Assaying of rock chips was undertaken
assay data	of the assaying and laboratory	by Intertek-Genalysis in Perth. Samples
and	procedures used and whether the	were pulverized, representatively
laboratory	technique is considered partial or total.	sampled, digested by 4 acids and then
tests	 For geophysical tools, spectrometers,	analyzed by mass spectrometer for 53
	handheld XRF instruments, etc, the	elements including PGE’s. Internal
	parameters used in determining the	laboratory QAQC procedures were
	analysis including instrument make and	adhered to with results later checked by
	model, reading times, calibrations factors	the MGY Senior Geologist.
	applied and their derivation, etc.	XRF analysis of the soil samples was
	 Nature of quality control procedures	undertaken with a handheld Innov-X
	adopted (eg standards, blanks,	Delta Premium XRF unit. The machine
	duplicates, external laboratory checks)	was routinely calibrated and CRM
	and whether acceptable levels of	material inserted into sample runs for
	accuracy (ie lack of bias) and precision	QAQC purposes. Reading time varied
	have been established.	for different batches of samples between
		30 seconds or 90 seconds (3 beams).
		Data was routinely checked with internal
		QAQC standards met.
Verification of	 The verification of significant	Data collected has been verified by both
sampling and	intersections by either independent or	MGY Geologists and Consultants OMNI
assaying	alternative company personnel.	GeoX Pty. Ltd.
	 Documentation of primary data, data	Malagasy internal procedures that meet
	entry procedures, data verification, data	Western Australian industry standards
	storage (physical and electronic)	were adhered to during all sampling.
	protocols.	All XRF analysis was undertaken by
	 Discuss any adjustment to assay data.	OMNI GeoX Pty. Ltd. and adhered to
		internal procedures.
		Assay and XRF data has been collected
		electronically and stored within a
		database.
		No data has been adjusted.
Location of	 Accuracy and quality of surveys used to	Sample location and altitude was
data points	locate drill holes (collar and down-hole	recorded with handheld GPS with an
	surveys), trenches, mine workings and	accuracy of ±4m horizontally.
	other locations used in Mineral Resource	The grid system used was UTM Zone
	estimation.	38S (WGS 84)
	 Specification of the grid system used.	Results are reported in Appendix 1.
	 Quality and adequacy of topographic
	control.
Data spacing	 Data spacing for reporting of Exploration	Soil samples were taken on a 1000m x
and	Results.	100m grid
	 Whether sample compositing has been	Rock chips were taken at the field

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Criteria	JORC Code explanation	Commentary
distribution	applied.	geologists discretion
		No samples have been composited
Orientation of	 Whether the orientation of sampling	Soil traverses were orientated
data in	achieves unbiased sampling of possible	across/perpendicular to the main
relation to	structures and the extent to which this is	geological trend.
geological	known, considering the deposit type.
structure
Sample	 The measures taken to ensure sample	During collection, samples were stored
security	security.	appropriately on site under the
		supervision of the Senior Geologist
		before being transferred to the in
		country office in Antananarivo. Samples
		were then freighted by DHL to Perth
		where they were held by Intertek-
		Genalysis laboratories for quarantine
		and some analysis before being
		transferred to Omni GeoX Pty. Ltd.
		warehouse for further analysis.
Audits or	 The results of any audits or reviews of	No reviews or audits have been
reviews	sampling techniques and data.	undertaken at this point.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary	Commentary
Mineral	 Type, reference name/number,		Work was undertaken upon permits: 21059,
tenement and	location and ownership including		21064, 13832, 16753, 38323, 38324, 21062,
land tenure	agreements or material issues with		19003, 16747, 21063, 28346, 31735, 21061,
status	third parties such as joint ventures,		14619, 38469, 38392, 25605, 38392, 31734,
	partnerships, overriding royalties,		25606, 21060, 13811, 3432
	native title interests, historical sites,		The tenements are located within the inland
	wilderness or national park and		South West of Madagascar approximately
	environmental settings.		centered on the townships of Fotradrevo and
	 The security of the tenure held at		Ampanihy.
	the time of reporting along with any		Tenements are held 100% by Mada Aust Ltd.
	known impediments to obtaining a		A wholly owned subsidiary of Malagsay
	license to operate in the area.		Minerals Ltd.
			No overriding royalties are in place
			There is no native title agreement required
			Tenure does not coincide with any historical
			sites or national parkland
			Semi-arid, thinly vegetated, relatively flat to
			low lying hills with sub-cropping rock.
			Tenements are currently secure and in good
			standing.
Exploration	 Acknowledgment and appraisal of		Regional mapping undertaken by BRGM.
done by other	exploration by other parties.		No other available data.
parties
Geology	 Deposit type, geological setting and		The deposit type and mineralization style
	style of mineralisation.		being explored for is Mafic-Ultramafic
			intrusive related Ni-Cu-PGE sulphides.
			The project overlies a prominent 20km wide
			zone of folded and assemblage of graphite
			and quartz-feldspar schists (<60% graphite),
			quartzite and marble units, with lesser
			intercalated amphibolite and leucogneiss.

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Criteria	JORC Code explanation	Commentary	Commentary
			This zone, termed the Ampanihy Belt is a
			core component of the Neoproterozoic
			Graphite System. The belt is interpreted as a
			ductile shear zone accreted from rocks of
			both sedimentary and volcanic origin.
Drill hole	 A summary of all information		No drilling has been undertaken that relates
Information	material to the understanding of the	to this announcement.
	exploration results including a
	tabulation of the following
	information for all Material drill
	holes:
	o easting and northing of the drill
	hole collar
	o elevation or RL (Reduced Level
	– elevation above sea level in
	metres) of the drill hole collar
	o dip and azimuth of the hole
	o down hole length and
	interception depth
	o hole length.
	 If the exclusion of this information is
	justified on the basis that the
	information is not Material and this
	exclusion does not detract from the
	understanding of the report, the
	Competent Person should clearly
	_explain why this is the case. _
Data	 In reporting Exploration Results,		For the purpose of reporting a minimum cut-
aggregation	weighting averaging techniques,		off grade for rock chips has been established
methods	maximum and/or minimum grade		at 1000ppm Ni.
	truncations (eg cutting of high
	grades) and cut-off grades are
	usually Material and should be
	stated.
Relationship	 These relationships are particularly		No drilling has been undertaken that relates
between	important in the reporting of	to this announcement.
mineralisation	Exploration Results.
widths and	 If the geometry of the mineralisation
intercept	with respect to the drill hole angle is
lengths	known, its nature should be
	reported.
	 If it is not known and only the down
	hole lengths are reported, there
	should be a clear statement to this
	effect (eg ‘down hole length, true
	_width not known’). _
Diagrams	 Appropriate maps and sections (with		See embedded diagrams and tables within
	scales) and tabulations of intercepts		body of text.
	should be included for any
	significant discovery being reported
	These should include, but not be
	limited to a plan view of drill hole
	collar locations and appropriate
	_sectional views. _
Balanced	 Where comprehensive reporting of		Refer to body of text.
reporting	all Exploration Results is not
	practicable, representative reporting
	of both low and high grades and/or
	widths should be practiced to avoid
	misleading reporting of Exploration
	_Results. _

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Criteria	JORC Code explanation	Commentary
Other	 Other exploration data, if meaningful	No other pertinent exploration data to be
substantive	and material, should be reported	reported.
exploration	including (but not limited to):
data	geological observations;
	geophysical survey results;
	geochemical survey results; bulk
	samples – size and method of
	treatment; metallurgical test results;
	bulk density, groundwater,
	geotechnical and rock
	characteristics; potential deleterious
	_or contaminating substances. _
Further work	 The nature and scale of planned	Refer to body of text
	further work (eg tests for lateral
	extensions or depth extensions or
	large-scale step-out drilling).
	 Diagrams clearly highlighting the
	areas of possible extensions,
	including the main geological
	interpretations and future drilling
	areas, provided this information is
	_not commercially sensitive. _

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