IRON BEAR RESOURCES LTD — Capital/Financing Update 2008

Feb 25, 2008

26 February 2008

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The Company Announcements Office ASX Limited Via E Lodgement

Cape Lambert signs MoU with Chinese conglomerate for sale of namesake Iron Ore Project

Key points :

• Cape Lambert signs Memorandum of Understanding (“MoU”) with Chinese conglomerate, China Metallurgical Group Corporation (“MCC”),

• MCC is a substantial, vertically integrated conglomerate with turnover of approximately US$18 billion in 2007, which owns 20% of the A$5.2 billion Sino Iron Project located 120km from Cape Lambert,

• MCC has until 30 April 2008 to complete due diligence and obtain Chinese government approvals for the acquisition of the Cape Lambert Iron Ore Project,

• As part of the MoU, MCC has paid a deposit of A$10 million (A$5 million non-refundable),

• Key terms of the proposed sale have largely been agreed, with a sale consideration of A$400 million payable in three tranches, and

• The sale is subject to successful completion of due diligence by MCC, approvals by Cape Lambert shareholders, the Foreign Investment Review Board (“FIRB”), the Chinese government and any other necessary approvals.

Australian iron ore exploration and development company, Cape Lambert Iron Ore Limited (“Cape Lambert” or the “Company”) (ASX: CFE , AIM: CLIO ) has signed an MoU with Chinese conglomerate, China Metallurgical Group Corporation (“MCC”), for the sale of the Company’s namesake iron ore project (the “Project”) located in the Pilbara region of Western Australia (refer Figure 1).

Under the terms of the MoU, MCC has secured an exclusive right (until 30 April 2008) to conduct due diligence for the acquisition of the Project.

MCC has paid a deposit of A$10 million, with A$5 million of this being non-refundable if MCC withdraws. The entire deposit will be offset from the sale consideration when MCC complete the acquisition of the Project.

The key terms of the proposed sale have largely been agreed. MCC will purchase the Company’s entire Project land package (Exploration Licenses 47/1462, 47/1271, 47/1248 and 47/1233), other than Exploration License Application 47/1493, for a total consideration of A$400 million. The consideration will be paid in three tranches; A$240 million or 60% at settlement, A$80 million or 20% sixty (60) days after settlement and A$80 million or 20% on the grant of a mining lease. Importantly, the Company will receive 80% of the sale consideration, or A$320 million, within 60 days of settlement.

MCC has total assets of approximately US$20 billion (145 billion Yuan) and in 2007 the revenue and total profit of the group totalled approximately US$18 billion (126 billion Yuan) and US$1 billion (7.2 billion Yuan) respectively. It has completed design and construction assignments for approximately two thirds of the iron ore projects in China and undertaken

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Cape Lambert Iron Ore Limited ASX Release

26 February 2008 Page 2 of 4

design and construction work for more than 90% of the steel mills in China. Its stated objective is to become a Fortune 500 company by 2010.

In Australia, MCC owns 20% of Citic Pacific Mining’s A$5.2 billion Sino Iron Project, located near Cape Preston, approximately 120km south west of the Cape Lambert iron ore project (refer Figure 1). MCC has also been awarded the EPC construction contract at the Sino Iron Project.

Cape Lambert Chairman Ian Burston said, “Our commitment has at all times focussed on the development of what we believe is a world-class iron ore project at Cape Lambert. However, this opportunity has the potential to deliver significant upfront value to shareholders and it was therefore incumbent on us to look at it.”

“MCC as a substantial, vertically integrated conglomerate clearly has the technical and financial capacity to develop the Cape Lambert iron ore project. Importantly, MCC has a good understanding of large, Australian iron ore projects through its investment and construction involvement in the Sino Iron Project.”

The proposed sale is subject to the successful completion of due diligence by MCC, approvals by Cape Lambert shareholders, FIRB, the Chinese government and any other necessary approvals.

On successful completion of the proposed transaction with MCC, the Board intends to follow an investment strategy to acquire assets at either company or project level. Cape Lambert will have significant cash reserves and will be ideally placed to pursue this strategy in an uncertain market where access to capital is tightening. The Company has recently reviewed a number of assets in West Africa and throughout Australia, and intends to step up the review of opportunities in the near term whilst assisting MCC with its due diligence.

The Company has excluded Exploration License Application E47/1493 from the proposed MCC sale. This tenement contains a 3km long, untested magnetic anomaly, which is thought to represent the southern strike extension of the Cape Lambert resource and lies within the highly prospective Cleaverville geological formation. Once granted (expected to take approximately 4 months) this tenement will become the focus of the Company’s Pilbara exploration program.

Full details and information regarding the proposed sale will be sent to shareholders in the near future.

Yours faithfully Cape Lambert Iron Ore Limited

Ian Burston Executive Chairman

Cape Lambert Iron Ore Limited ASX Release

26 February 2008 Page 3 of 4

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 Adrian Hadden +44 (0)20 7523 8353 Oliver Quarmby +44 (0) 20 7523 8354

Conduit PR:

Jos Simson +44 (0)20 7429 6603/+44 (0)7899 870 450 Jane Stacey +44 (0)20 7429 6606

Website:

www.capelam.com.au

About MCC:

MCC, under the direct supervision of the central government, has more than 70 fully owned and controlled subsidiaries, including nearly 20 overseas companies worldwide. It has a workforce of more than 47,600 technical and managerial employees. Further information about MCC may be found at www.mcc.com.cn.

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400 000mE 600 000mE 800 000mE Iron Ore mine
Iron Ore deposit
Indian
Port
CITIC PACIFIC CAPE LAMBERT Ocean
SINO IRON PROJECT 1.6 BILLION TONNE Existing Iron Ore Railway
20% MCC RESOURCE
Iron Ore Railway under
BHP Billiton construction
Port Proposed Iron Ore Railway7 800 000mN
Rio Tinto
Rio Tinto Port Natural Gas pipeline
Port
PORT HEDLAND Highway
DAMPIER CAPE LAMBERT
Fortescue
Cape
Preston Proposed Public
Access Port
Citic Pacific
Proposed Public
Access Port
P I L B A R A
7 600 000mN
Cloud Break
Christmas Creek
MT TOM PRICE
PARABURDOO
MT NEWMAN
7 400 000mN
WESTERN
AUSTRALIA 100km BHP AND RIO TINTO
MINES
Figure 1
Tom Price
Paraburdoo
Newman
Karratha
Marble Bar
Onslow
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