CAULDRON ENERGY LIMITED — Capital/Financing Update 2012

Oct 24, 2012

25 October 2012

New High Grade Uranium Zone Discovered at Yanrey in Western Australia

HIGHLIGHTS

• 5,000m drilling program commenced at the Yanrey Uranium Project in Western Australia

• First hole of program discovers a new shallow mineralised palaeochannel, returning preliminary field results[1] of:

Cauldron Energy Limited

ABN 22 102 912 783 32 Harrogate Street, West Leederville WA 6007

PO Box 1385, West Leederville WA 6901

• 2.7m @ 1,021 ppm eU3O8 from 40.6m

• Peak result of 2,267 ppm eU3O8

• New channel significantly shallower than main resource area and will provide addition to the Bennett Well resource

• Result underpins the potential of the area, which includes an exploration target[2] of:

• 25M - 35M lbs eU3O8 at between 300-900 ppm eU3O8; with

• Numerous palaeochannels identified yet to be drill tested

ASX code: CXU

155,335,245 ordinary shares 12.6M listed options 4.3M unlisted options

• Drilling to continue until mid-November, with results presented to the market as they become available

• In tandem with this drilling, Cauldron is accelerating exploration activities at its new base metal discovery in South Australia

Australian diversified exploration company Cauldron Energy Limited ( ASX: CXU ) (“Cauldron” or “the Company”) is pleased to announce that a recently commenced 5,000 metre rotary-mud drilling program at the Yanrey Uranium Project in Western Australia has commenced, delivering immediate success.

This drilling program 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.

Board of Directors

Tony Sage Executive Chairman

Brett Smith Executive Director

Qiu Derong Non-Executive Director

Claire Tolcon Company Secretary

The first hole in this program intersected strong uranium mineralisation at between 40.6 and 43.3 metres below surface. The preliminary field result of a wireline gamma probe of this hole has confirmed an intersection of 2.7m @ 1,021 ppm eU3O8 from 40.6m , with a peak result of 2,267 ppm eU3O8 .

This intersection is in a new area, close to the Bennet Well resource, but at approximately 20 to 30 metres above the depth at which the resource sits.

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).

1. 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 PO Box 1385 West Leederville WA 6901 PHONE +61 8 6181 9796 FAX +61 8 9380 9666

www.cauldronenergy.com.au

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This drilling also intersected a layer of silcrete sitting above the mineralisation; a feature common to similar deposits such as Beverly and Four Mile currently being mined in South Australia.

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.

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Figure 1 :- Yanrey Project and Prospect Location Plan

32 Harrogate Street, West Leederville WA 6007 PO Box 1385 West Leederville WA 6901 PHONE +61 8 6181 9796 FAX +61 8 9380 9666

www.cauldronenergy.com.au

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

Cauldron head of operations, Mr Simon Youds, said the results had enormous implications for the Bennet Wells exploration target[3] , which currently sat at 25Mlb - 35Mlbs eU3O8 at between 300-900ppm.

“Confirmation of grades will undoubtedly result in a significant revision of both the resource and exploration target at Bennet Wells,” he said.

“Results such as these have the potential to lift the project into an entirely different category, so these are very exciting times for Cauldron.”

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 PO Box 1385 West Leederville WA 6901 PHONE +61 8 6181 9796 FAX +61 8 9380 9666

www.cauldronenergy.com.au

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Exploration Target

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 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

32 Harrogate Street, West Leederville WA 6007 PO Box 1385 West Leederville WA 6901 PHONE +61 8 6181 9796 FAX +61 8 9380 9666

www.cauldronenergy.com.au

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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 PO Box 1385 West Leederville WA 6901 PHONE +61 8 6181 9796 FAX +61 8 9380 9666

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 PO Box 1385 West Leederville WA 6901 PHONE +61 8 6181 9796 FAX +61 8 9380 9666

www.cauldronenergy.com.au