CAULDRON ENERGY LIMITED — Capital/Financing Update 2012

Oct 28, 2012

29 October 2012

Drilling at Yanrey confirms presence of 1.6km long high grade uranium channel at Western Australian project HIGHLIGHTS

• Recently commenced 5,000m drilling program at Yanrey Uranium Project in Western Australia continues to hit high-grade intersections,

• 100% of holes drilled to date intersect uranium, with 11 of 15 holes intersecting high grade uranium,

ABN 22 102 912 783

32 Harrogate Street, West Leederville WA 6007

PO Box 1385, West Leederville WA 6901

• Preliminary peak (intersection) field results[1] of:

• 3706 ppm eU3O8 (1.3m @ 1,210 ppm eU3O8 from 40.6m)

• 2156 ppm eU3O8 (1.9m @ 777 ppm eU3O8 from 43.4m)

• Results confirm presence of new high grade paleo-channel, approximately 1.6km long 120m wide and open to both north and south,

• Identification of new paleo-channel confirms current 25-30 Mlb Exploration Target[2] at project.

Australian diversified exploration company Cauldron Energy Limited ( ASX: CXU ) (“Cauldron” or “the Company”) has identified a high grade paleo-channel approximately 1.6km long 120m wide and open to both the north and south at the Yanrey Uranium Project in Western Australia, as a result of results from a recently commenced 5,000 drilling program.

Commenting on these results, Cauldron head of operations, Mr Simon Youds, said:

“It is clear from these results that we have identified a new high grade paleochannel that is significant in terms of its grade and its length. Currently it confirms the current Exploration Target at the project, however we now expect a positive revision with further results

“To be clear, this is a new discovery of a high grade uranium channel that extends for some kilometres, all within Cauldron tenements, and one that has everyone involved in the company genuinely excited.”

ASX code: CXU

12.6 M listed options 4.3M unlisted options

Board of Directors

Tony Sage Executive Chairman

Brett Smith Executive Director

Qiu Derong Non-executive Director

Claire Tolcon Company Secretary

The drilling program, which only commenced in recent weeks, is focussed in the Bennet Well east area (BWE - Figure 2) within the Yanrey Uranium Project and proposed to test for potential extensions to the Bennet Well deposit and explore other identified palaeochannels within the project.

1. Preliminary Results: These results are preliminary and have yet to be validated by experts to provide precise grade-thickness measurements. Preliminary results have been provided by a qualified technician operating a wireline gamma logging tool and are expected to be within 5% - 10% of the final results. Errors may occur and these results should only be used as an indicator of possible mineralisation. Gamma ray readings are converted to equivalent U3O8 readings by using the calibration factors (please refer to attached disclosure statements).

2 Exploration Target: Under clause 18 of the JORC code the exploration targets (excluding the portion already classified into JORC inferred resource) outlined in this announcement are conceptual in nature as there has been insufficient exploration (namely drilling) to define a mineral resource and it is uncertain if further exploration will result in the determination of any additional mineral resources.

32 Harrogate Street, West Leederville WA 6007Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au

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A high grade intersection, within a previously unexplored area away from the main Bennet Well resource, was identified in the first hole completed in this program (see ASX announcement dated 25 October 2012). This result was followed up by further drilling, which intersected further high grade uranium and in the process defined a new paleo-channel. Of 15 holes drilled and analysed, all have intersected uranium, with 11 intersecting the highgrade channel (refer Table 1. Note these grades are well in excess of the average grade (300ppm) of the Bennet Well Resource.

The channel orientated in an approximate new north south direction (shown in Figure 2 – New Discovery Area) and is understood to be 1.6km in length and 120m wide, being open in both north and south directions.

The orientation of the axis of this channel has significance for potential Exploration Target size. The predominant direction at Yanery has been understood to be approximately east west. The apparent continuous nature of this channel, its direction along the target zone and the different geology in these shallower channels is notable as it potentially increases the uranium exploration potential of this section of the Yanery region. More drilling is required but discovering the direction of this channel in a persistent north south orientation can lead to a significant upgrade in the current 25-30Mlb Exploration Target[3] size.

The Yanrey Project covers 3,371sq km (Figure 1) of Mesozoic sediments which are highly prospective for sandstone hosted uranium mineralisation, amenable to In-Situ Recovery (ISR) mining, similar to Paladin Resources Ltd’s ( ASX: PDN ) adjoining Manyingee deposit. Included in the Company’s project is the Bennet Well deposit, containing an inferred JORC compliant resource of 4.8 million pounds of eU3O8 at a grade of 300ppm eU3O8. Mineralisation is generally flat lying and sits at the base of sand-filled palaeo river channels.

3 Exploration Target: Under clause 18 of the JORC code the exploration targets (excluding the portion already classified into JORC inferred resource) outlined in this announcement are conceptual in nature as there has been insufficient exploration (namely drilling) to define a mineral resource and it is uncertain if further exploration will result in the determination of any additional mineral resources. 32 Harrogate Street, West Leederville WA 6007 Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au

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Figure 1 :- Yanrey Project and Prospect Location Plan

32 Harrogate Street, West Leederville WA 6007 Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au

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Figure 2 :- Bennet Well location and drilling over gravity image

32 Harrogate Street, West Leederville WA 6007 Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au

Web: www.cauldronenergy.com.au

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Exploration Target

							Maximum eU308 (ppm)
Hole Number					Thickness (m)	eU308 (ppm)		Grade Width
	Easting	Northing	From	to
YNMR018	302878	7508647	40.6	43.3	2.7	1021	2269	2756.7
YNMR022	302816	7508836	43.42	45.32	1.9	777	2156	1476.3
YNMR023	302641	7508783	67.77	69.09	1.32	332	799	438.24
YNMR024	302864	7508458	47.72	49.03	1.31	1210	3706	1585.1
YNMR025	303191	7507885	63.1	65.53	2.43	556	986	1351.08
YNMR026	302695	7509227	43.26	44.4	1.14	514	1255	585.96
YNMR028	302834	7508232	65.67	66.06	0.39	324	531	126.36
YNMR029	303191	7507885	63.1	65.53	2.43	556	986	1351.08
YNMR030	302953	7508263	57.96	58.66	0.7	402	824	281.4
YNMR031	302905	7509278	39.39	39.98	0.59	411	775	242.49
YNMR032	302695	7509227	43.26	44.4	1.14	514	1255	585.96

Table 1 – Recent Drill intersection of new High Grade Paleo Channel

The Exploration Target is for sandstone hosted, roll front uranium mineralisation. It is based on work which has identified over 70 kilometres of redox front in the Yanrey area with associated palaeochannels. Work carried out by Cauldron has identified at least 11 palaeochannels, which are highly prospective for uranium mineralisation. The Exploration Target has yet to be fully drill tested and is conceptual in nature. There has been insufficient exploration (i.e. drilling) to define a mineral resource and it is uncertain if future exploration will result in the determination of a mineral resource.

Cauldron Energy announced its maiden resource at the Bennet Well prospect in 2008. It was calculated by Hellman and Schofield from 174 air core, 8 diamond, and 8 mud rotary holes over a small area of 1.2sq km. The results returned an inferred resource of 4.8 million pounds of eU3O8 at a grade of 300 ppm eU3O8 using a cut-off grade of 150 ppm. To date, the area of the mineralisation at Bennet Well is small in comparison to that of Manyingee, and there is a good indication to suggest it has the potential to grow with additional drilling.

There are many areas around Bennet Well that contain potential uranium mineralisation, as shown by the Company’s drilling program conducted in late 2008. The Exploration Target is based on previous exploration of the project area, including:

• Gravity surveys conducted by CRAE in the 1970s and interpretation of palaeochannels and redox boundaries.

• Previous drilling by CRAE and others from the late 1960s to early 1980s.

• Gravity surveys conducted by Cauldron completed in 2006 covering the Bennet Channel and the Main Road Channel for a total of 75sq km.

• Three Airborne EM surveys conducted by Cauldron covering over 1,430sq km

32 Harrogate Street, West Leederville WA 6007 Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au

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completed in 2006, 2007 and 2009.

• Over 280 aircore, mud rotary and diamond drill holes for 30,000 metres of drilling conducted by Cauldron resulting in the definition of a JORC classified inferred resource at Bennet Well in 2008.

The Company now believes it has over 90sq km of untested prime target areas which are favourable to uranium mineralisation. These include, but are not limited to:

• The Bennet Well channel has had both gravity and EM surveys, as well as 174 holes over seven programs drilled by Cauldron. The area of the current resource is small (1.2sq km) compared to Manyingee (approximately 7sq km).

• There is over 11sq km of potential mineralisation around Bennet Well with an area open to the north-east returning 4.32m at 488 ppm eU3O8.

• The Barradale channel was previously outlined by CRAE by gravity and drilling over an interpreted redox boundary with the best result of 1.7 m at 290ppm eU3O8.

•  The South and North Ballards have previous drill results of 1.3m at 580ppm and 3.7m at 107ppm eU3O8, respectively. Chemical analyses from the south Ballard channel produced a result of 2m at 700 ppm U3O8. They are known to contain a redox boundary and the historic gravity and the recent EM outlines the palaeochannels.

•  The Main Road Channel produced result of 1.05m at 566 ppm eU3O8. The recent EM program shows it is more extensive than previous interpretations.

•  A new palaeochannel, as yet unnamed, was interpreted from historic drill holes and EM surveys conducted by Cauldron. The area has been sparsely drilled and includes 2.66m at 161ppm and 0.35 at 580ppm eU3O8.

•  The Osborne channel was outlined by CRAE during the 1970s and has only been sparsely tested.

• North of Bennet Well there is potential along the redox boundary towards the Manyingee Deposit. Inadequately tested to date, however Cauldrons EM interpretation indicates the presence of potential palaeochannels.

•  North of Manyingee there are several other target areas including the extensions of the Manyingee channel, and the Spinifex channel, outlined by Cauldron’s EM and historic interpretations.

On-going Exploration

The Company is encouraged by these initial exploration results and has high expectations for the Bennet Well resource extensions and new channels proposed for testing. Drilling is expected to be completed by mid-November.

Cauldron is also proposing to accelerate its exploration activities at the new base metal discovery at the Marree Project in South Australia (refer ASX Announcement dated 17 October 2012). Immediate activities at Marree will include systematic coverage of the target zone with soil sampling and ground geophysics. Drilling of defined targets will be conducted as soon as possible.

End.

32 Harrogate Street, West Leederville WA 6007 Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au

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For further information, visit www.cauldronenergy.com.au or contact:

Simon Youds

Cauldron Energy Limited Ph: (08) 9380 9555

David Tasker/ Colin Jacoby Professional Public Relations Ph: (08) 9388 0944

Disclosure Statements

Analytical Method

All holes were gamma logged by Borehole Wireline P/L with an Geovista 38mm total count gamma tool. The gamma tool was calibrated in Adelaide at the Department of Water, Land and Biodiversity Conservation in calibration pits constructed under the supervision of CSIRO. The gamma tool measures the total gamma ray flux in the drill hole. Readings are averaged over 5 centimetre intervals and the reading and depth recorded on a portable computer. The gamma ray readings are converted to equivalent U3O8 readings by using the calibration factors derived in the Adelaide calibration pits. These factors also take into account differences in hole size and water content.

The results presented in this announcement are field readings and have yet to be validated by experts for grade/thickness intervals. Preliminary results have been provided by a qualified technician operating a wireline gamma logging tool and are expected to be within 5% - 10% of the final results. Errors may occur and these results should only be used as an indicator of possible mineralisation.

The gamma radiation used to calculate the equivalent U3O8 is predominately from the daughter products in the uranium decay chain. When a deposit is in equilibrium, the measurement of the gamma radiation from the daughter products is representative of the uranium present. It takes approximately 2.4M years for the uranium decay series to reach equilibrium. Thus, it is possible that these daughter products, such as radium, may have moved away from the uranium or not yet have achieved equilibrium if the deposit is younger than 2.4M years. In these cases the measured gamma radiation will over or under estimate the amount of uranium present. Sandstone hosted roll front mineralisation may not be in equilibrium due to one of the above factors.

Competent Person Statement

The information in this announcement to which this statement is attached that relates to Cauldron Energy Limited’s exploration results is based on information compiled by Mr Brett Smith who is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Mr Smith is a full time employee of Cauldron Energy Limited and has sufficient experience relevant to the styles of mineralisation and types of deposits under consideration. Mr Smith is undertaking 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 Smith consents to the inclusion in the announcement of the matters based on their information in the form and context in which it appears.

32 Harrogate Street, West Leederville WA 6007 Ph: (+618) 9380 9555 Fax: (+618) 9380 9666 PO Box 1385, West Leederville WA 6901 Web: www.cauldronenergy.com.au