IRON BEAR RESOURCES LTD — Capital/Financing Update 2007

Aug 22, 2007

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23 August 2007

The Company Announcements Office Australian Stock Exchange Limited

Via E Lodgement

DRILLING AND SALE UPDATE FOR THE CAPE LAMBERT IRON ORE PROJECT (the “Project”).

KEY POINTS

• Three drill rigs (1 x diamond plus, 2 x reverse circulation) currently working at the Project;

• To 19 August 2007;

• 24 reverse circulation (“RC”) holes have been completed for an advance of 10,470 metres; and

• 6 diamond tails have been completed for an advance of 1,415 metres.

• Helimag survey over 210 km[2] (4,300 line kms) commenced on 11 August to produce high resolutions magnetic contours to assist in drill targeting; and

• Davis Tube Recovery (“DTR”) results for the first 5 RC holes received. Significant results include;

• MA302, 69m (from 53m) at an average DTR recovery of 35.7% mass to concentrate with a concentrate grade of 64% Fe and 8% silica; and

• MA301, 21m (from 128m) at an average DTR recovery of 22% mass to concentrate with a concentrate grade of 67.4% Fe and 4.7% silica.

• Payment of the first instalment of US$57.75 million for the purchase of a 70% interest in the Project is due on 31 August 2007.

BACKGROUND

Iron ore exploration and development company, Cape Lambert Iron Ore Limited (the “Company”) (ASX code: CFE , AIM: CLIO ) is pleased to update the market on drilling activities at its 100% owned Cape Lambert iron ore project (the “Project”), located in the Pilbara region, Western Australia (refer Figure 1).

RC drilling

Infill and extension reverse circulation (“RC”) drilling commenced at the Project on 9 May 2007. The Company is proposing to complete approximately 33,000 metres of RC drilling during 2007. The objective of the RC drilling is to infill to a hole spacing of 200 m by 100 m within the Central Target Area (“CTA”), and to extend the CTA to the north and east (refer Figure 2).

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Cape Lambert Iron Ore Limited ASX Release

23 August 2007 Page 2 of 6

The Company currently has two (2) RC drill rigs working at the Project. Up to 19 August 2007, a total of 24 RC holes had been completed for an advance of 10,470 metres. Most of these holes were designed to test the extent of mineralisation along strike to the north of significant intersections encountered in earlier holes on section 13,200 east (refer Figure 2).

The Company has received the DTR results from the first five RC holes, which are summarised in Table 1. Significant DTR results include;

• MA302, 69m (from 53m) at an average DTR recovery of 35.7% mass to concentrate with a concentrate grade of 64% Fe and 8% silica; and

• MA301, 21m (from 128m) at an average DTR recovery of 22% mass to concentrate at a concentrate grade of 67.4% Fe and 4.7% silica.

Diamond drilling

Up to 19 August 2007, the Company had completed 6 diamond tails for an advance of 1,415 metres.

A 10,000 metre diamond core drilling program is planned for 2007. Core from the diamond program will be used for metallurgical test work, geotechnical analysis, and to enhance the Company’s understanding of the stratigraphy and structural geology.

Helimag survey

A helimag survey commenced on 11 August covering a portion of the Cape Lambert Project tenement (EL47/1462), and adjacent tenements EL47/1271, EL47/1233 and EL47/1248 (refer Figure 1). The Company has an option to purchase the adjacent tenements and the helimag survey is part of evaluating these tenements.

A total of 4,300 line kms will be flown to cover an area of 210km[2] to produce high resolution images of magnetic contours.

The data acquired will be used for target generation to test for sub-surface extensions to magnetite mineralisation that may be overlain by sedimentary or volcanic units of the Cleverville formation. It is considered highly likely that thrust faulting along the eastern flank of the magnetite mineralisation may have produced near surface extensions that have yet to be detected.

The data will also be used for regional target generation of other magnetic anomalies that may occur within the tenements.

Sale of 70% interest

On 27 March 2007, the Company announced it had entered into a binding sale agreement with Mr. Ding Liguo or his nominee (hereafter Mr Ding) to sell 70% of the Project for a total consideration of US$192.5 million (“Sale Consideration”).

The Sale Consideration is to be paid over three instalments (refer Notice of General Meeting despatched to Shareholders on 15 June 2007 for full details). Following the provision of the full independent geologists report to Mr Ding on 1 August 2007, the first instalment of US$57.75 million is due to be paid on 31 August 2007.

Cape Lambert Iron Ore Limited ASX Release

23 August 2007 Page 3 of 6

Yours faithfully CAPE LAMBERT IRON ORE LIMITED

Tony Sage Executive Director

For more Information please contact:

Cape Lambert Iron Ore Limited

Ian Burston +61 (0)8 9211 0600 Tony Sage +61 (0)8 9380 9555 Australian Enquiries: Professional Public Relations David Tasker +61 (0)8 9388 0944

UK Enquiries:

Collins Stewart Europe Limited Chris Rollason +44 (0)20 7523 8308

Conduit PR

Leesa Peters +44 (0)20 7429 6600 Jos Simson +44 (0)20 7429 6603

Website:

www.capelam.com.au

Cape Lambert Iron Ore Limited ASX Release

23 August 2007 Page 4 of 6

Table 1: Significant Davis Tube Recovery Results

Hole ID	LOCATION	LOCATION	SAMPLE	SAMPLE	SAMPLE	HEAD	DTR RESULT	DTR RESULT	DTR RESULT	DTR RESULT	DTR RESULT	DTR RESULT
	Easting	Northing	from	to	interval	Fe	Mass	Fe	SiO2	AI2O3	P	S
	(MGA94)	(MGA94)	(m)	(m)	(m)	(%)	(%)	(%)	(%)	(%)	(%)	(%)
MA300	510364	7708378	316	334	18	27.2	21.2	63.2	8.7	0.80	0.011	0.066
			352	370	18	32.4	34.4	67.8	4.4	0.30	0.008	0.027
MA301	510145	7709039	128	149	21	32.7	21.9	67.4	4.7	0.23	0.008	0.044
MA302	510031	7709203	53	122	69	33.3	35.7	63.9	8.0	0.51	0.007	0.021
	including		53	96	43	35.0	36.4	66.1	5.8	0.26	0.007	0.012
MA303	510080	7709481	184	201	17	31.4	35.7	62.7	8.7	0.74	0.010	0.251
MA306	510358	7709432	230	249	19	30.0	27.7	67.0	4.9	0.52	0.007	0.374
			303	344	41	33.6	34.9	67.6	5.1	0.28	0.004	0.070

Notes:

• All holes collared vertically.

• Sample intervals comprise 2-5m composites.

• Each composite is individually tested by DTR, with all composite results averaged for the interval.

• Sample interval is apparent, not true.

• DTR head samples prepared to nominally 100% passing 45 micrometers.

• DTR testing performed by AMDEL Limited (IML laboratory) and ALS Laboratory Group, with chemical analysis by X-ray Fluorescence Spectrometry (XRF).

• Minimum reported DTR interval is 16 metres at a 9% SiO2 concentrate grade top-cut.

The DTR information in this report is based on information complied by GV Ariti who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Ariti has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he 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 Ariti consents to the inclusion in this report of the matters based on his information in the form and the context in which it appears.

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7750000 mN
7740000 mN
7730000 mN
EL47/1271
(Option)
7720000 mN
Wickh am
7710000 mN Project
Area
EL47/1233
(Option)
Karratha
EL47/1462 Ro ebourne
7700000 mN EL47/1248
(Option)
7690000 mN
LocationMap Legend
KARRATHA Central Target Area
Project
Area Figure 1
Licence Boundary
 Tenement and Project Area
Licence Boundary (Option)
KALGOORLIE Author: Date: August 2007
Drawn: Revised:
PERTH
Helimag Survey Area
Dwg No.: CLIO 023 Report No.:
Datum: Scale: 1 : 350 000
480000 mE 490000 mE 500000 mE 510000 mE 520000 mE 530000 mE 540000 mE
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7716000 mN
7715000 mN
Mineralised Footprint Outlined
7714000 mN From Robe Drilling
7713000 mN
7712000 mN
Extension
Areas
7711000 mN
Section
13 200 E
7710000 mN
E47/1271
(Option)
MA 302
7709000 mN
MA 301
Central
Target
Area
7708000 mN
E47/1233
(Option)
7707000 mN
7706000 mN
E47/1248
7705000 mN E47/1462 (Option)
1 0 1 2
Location
Map
Kilometers
KARRATHA
Project
Area Legend Figure 2
Power Line CFE 2007 Drill Hole Drill Hole Locations

Railway Line CFE 2006 Drill Hole
KALGOORLIE Licence Boundary Robe Drill Hole Author: Date: August 2007
PERTH Licence Boundary (Option) Drawn: Revised:
Dwg No.: CLIO 015 Report No.:
Datum: GDA94 Scale: 1:50 000
506000 mE 507000 mE 508000 mE 509000 mE 510000 mE 511000 mE 512000 mE 513000 mE 514000 mE
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