IRON BEAR RESOURCES LTD — Interim / Quarterly Report 2017

Mar 14, 2017

CAPE LAMBERT RESOURCES LIMITED

ABN 71 095 047 920

AND ITS CONTROLLED ENTITIES

Interim Financial Report For The Half-Year Ended 31 December 2016

==> picture [229 x 67] intentionally omitted <==

HALF YEAR REPORT – 31 DECEMBER 2016

CONTENTS

==> picture [160 x 48] intentionally omitted <==

Corporate Directory	1
Directors' Report	2
Auditor’s Independence Declaration	6
Consolidated Statement of Comprehensive Income	7
Consolidated Statement of Financial Position	8
Consolidated Statement of Changes in Equity	9
Consolidated Statement of Cash Flows	11
Notes to the Consolidated Financial Statements	12
Directors' Declaration	19
Independent Auditor’s Review Report	20

HALF YEAR REPORT – 31 DECEMBER 2016

CORPORATE DIRECTORY

==> picture [160 x 48] intentionally omitted <==

Directors

Mr Tony Sage - Executive Chairman Mr Tim Turner - Non-Executive Director Mr Jason Brewer - Non-Executive Director

Company Secretary Ms Melissa Chapman

Stock Exchange Listing Australian Securities Exchange ASX code: CFE

Website

www.capelam.com.au

Country of Incorporation Australia

Bankers

National Australia Bank 100 St George’s Terrace Perth, WA 6000

Australian Public Relations

Professional Public Relations David Tasker Tel: +61 8 9388 0944 Mobile: +61 433 112 936 E-Mail: david.tasker@ppr.com.au

Auditors

Ernst & Young 11 Mounts Bay Road Perth, WA 6000 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436

Registered Address

32 Harrogate Street West Leederville, WA 6007 Australia Tel: +61 8 9380 9555

Share Registry

Computershare Investor Services Pty Limited Level 11 172 St Georges Terrace Perth, WA 6000 AUSTRALIA Tel: 1300 85 05 05 (Australia) +61 3 9415 4000 (Overseas)

1

HALF YEAR REPORT – 31 DECEMBER 2016

DIRECTORS’ REPORT

==> picture [160 x 48] intentionally omitted <==

Your Directors submit the financial report of Cape Lambert Resources Limited ( Cape Lambert or Company ) and its controlled entities (together the Consolidated Entity ) for the half-year ended 31 December 2016.

DIRECTORS

The names of Directors who held office during or since the end of the half-year are set out below. Directors were in office for this entire period unless otherwise stated.

Tony Sage Timothy Turner Jason Brewer

COMPANY SECRETARY

Melissa Chapman

REVIEW OF RESULTS AND OPERATIONS

Principal Activity

The principal activity of the Consolidated Entity during the half-year was mineral investment, exploration and evaluation.

There were no significant changes in the nature of the principal activity during the half-year.

Review of Operations

Corporate

A summary of the most significant transactions is set out below:

• During the period, European Lithium Ltd (ASX: EUR) ( Euro Lithium ), a company Cape Lambert owns a 15.26% interest in, listed on the Australian Securities Exchange by way of reverse takeover. Following the listing, Euro Lithium announced a resource upgrade at it’s 100% owned Wolfsberg lithium project which is located in Carinthia, 270 kilometers south of Vienna, Austria.

• On 26 August 2016, the Company entered into a new consultancy agreement with Okewood Pty Ltd ( Okewood ) to provide the services of Chairman of Cape Lambert.

• On 15 December 2016, the Company issued 23,500,000 unlisted options at $0.05 each expiring on 31 December 2018 to Gulf Energy International Limited ( Gulf Energy ). These options were issued in accordance with the underwriting agreement executed between the Company and Gulf Energy in January 2016.

Project Information

As at 31 December 2016, the Company’s key projects were as follows:

• Marampa Iron Ore Project ( Marampa or Marampa Project ) located in Sierra Leone;

• Kukuna Iron Ore Project ( Kukuna ) located in Sierra Leone;

• Cote D’Ivoire Gold Project ( Cote D’Ivoire ) located in Cote D’Ivoire;

• Wee McGregor Copper Project ( Wee McGregor ) located in Queensland, Australia.

The status of these assets during the half-year ending 31 December 2016 was as follows:

2

HALF YEAR REPORT – 31 DECEMBER 2016

DIRECTORS’ REPORT

==> picture [160 x 48] intentionally omitted <==

Marampa

• The Marampa Project remained on care and maintenance.

Kukuna

• The Kukuna Project remained on care and maintenance.

Wee McGregor

• Argosy Minerals Limited (Argosy)(ASX: AGY) requested a 6 month extension to the Expenditure Period for meeting its expenditure commitments as required by the Farm-in Agreement. The extension was granted.

• In August 2016, the Company executed a Farm-in Agreement with Firebird Minerals Pty Ltd (Firebird) for tenement ML 2771. Firebird has conducted a sampling program and is investigating the possibility of developing a boutique mining operation by toll treating ore through the process plant of a nearby copper operation.

• In August 2016, the Company finalised a Cultural Heritage Management Agreement with the native title holders over ML2771.

The board intends to continue to follow its strategy of acquiring and investing in undervalued and/or distressed mineral assets and companies ( Projects ) and improve the value of these Projects, through a hands on approach to management, exploration, evaluation and development and retaining a long-term exposure to these Projects through a production royalty and/or equity interest. Cape Lambert aims to deliver shareholder value by adding value to these undeveloped Projects. If Projects are converted into cash, the Company intends to follow a policy of distributing surplus cash to Shareholders.

Result

The Consolidated Entity made a loss after income tax for the half-year ended 31 December 2016 of $777,317 (31 December 2015: loss of $12,691,805).

EVENTS SUBSEQUENT TO BALANCE DATE

The following significant events and transactions have taken place subsequent to 31 December 2016:

• On 13 February 2017, the Company announced that it had sold its 100% owned royalty, in the form of a deferred consideration deed, in the Mayoko iron ore project for A$1,000,000 cash, subject to the formality of the new owners signing off the transaction.

• On 21 February 2017, the Company announced that it has entered into a binding heads of agreement with Congolese company, Paragon Mining SARL to form a 50/50 joint venture to develop the Kipushi Cobalt copper tailings project, the Kasombo copper-cobalt projects and operate the Kipushi processing plant in the Democratic Republic of Congo.

DIVIDEND

No dividend was declared or paid during the half year ended 31 December 2016.

3

HALF YEAR REPORT – 31 DECEMBER 2016

DIRECTORS’ REPORT

==> picture [160 x 48] intentionally omitted <==

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 6 for the half -year ended 31 December 2016.

This report is signed in accordance with a resolution of the Board of Directors.

==> picture [84 x 60] intentionally omitted <==

___ Tony Sage Director

Dated this 15 day of March 2017

4

Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au

==> picture [61 x 72] intentionally omitted <==

Auditor’s Independence Declaration to the Directors of Cape Lambert Resources Limited

As lead auditor for the review of Cape Lambert Resources Limited for the half-year ended 31 December 2016, I declare to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review ; and

b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Cape Lambert Resources Limited and the entities it controlled during the financial period.

==> picture [151 x 51] intentionally omitted <==

Ernst & Young

==> picture [132 x 46] intentionally omitted <==

G H Meyerowitz Partner

15 March 2017

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

GHM:JT:CAPELAMBERT:006

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2016

Note Revenue 4a Other income 4b Share based payments expense Directors remuneration and employee benefits expenses Consulting and professional services expenses Occupancy expenses Compliance and regulatory expenses Travel and accommodation Depreciation and amortisation expense Gain/(loss) on fair value of financial assets through profit and loss Exploration and evaluation expenditure Impairment of capitalised exploration 8 Other expenses (Reversal of)/impairment of investment in associate 9 Impairment of investment Impairment of receivable Impairment of loans 6b Impairment of interest receivable Impairment of fixed assets Impairment of unlisted investment 7c Share of net losses of associates accounted for using the equity method 9b Net gain on dilution of interest in associates 9b Loss before income tax Income tax benefit / (expense) Loss after income tax Other comprehensive income/(expenditure) net of tax Items that may be reclassified subsequently to profit or loss: Foreign exchange differences arising on translation of foreign operations Share of reserves of associate accounted for using the equity method 9b Net fair value gain/(loss) on available for sale financial assets Total comprehensive income / (loss) for the period Loss after income tax attributable to: Members of Cape Lambert Resources Limited Non-controlling interests Total comprehensive income / (loss) attributable to: Members of Cape Lambert Resources Limited Non-controlling interests Loss per share attributable to members of Cape Lambert Resources Ltd Basic loss per share (cents per share) Diluted loss per share (cents per share) The accompanying notes form part of this financial report.	For the six months ended 31 December 2016 31 December 2015 $ $ 342,878 478,854 152,227 301,765 (81,103) (92,172) (641,012) (836,188) (672,768) (474,959) (294,531) (900,853) (133,407) (103,247) (83,538) (97,754) (185,398) (349,021) 165,873 (87,648) (1,224,998) - - (5,857,097) (237,744) (368,216) 2,678,748 (1,977,294) - (274,948) (67,460) (185,838) (529,250) (824,724) (178,200) (84,516) - (630,579) (30,000) - (1,252,834) (327,370) 1,495,200 -
	(777,317) (12,691,805) - -
	(777,317) (12,691,805) (92,853) 865,109 99,367 159,156 (1,500) 500
	(772,303) (11,667,040)
	(732,427) (12,534,215) (44,890) (157,590)
	(772,317) (12,691,805)
	(727,413) (11,509,450) (44,890) (157,590)
	(772,303) (11,667,040)
	(0.10) (2.00) (0.10) (2.00)

6

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE HALF-YEAR ENDED 31 DECEMEBER 2016

Note CURRENT ASSETS Cash and cash equivalents 15 Restricted cash 5 Trade and other receivables 6 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets 7 Investments accounted for using the equity method 9 Restricted cash 5 Plant and equipment Exploration and evaluation expenditure 8 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Application Funds Provisions TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Provisions TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 10 Reserves Accumulated loss Parent interests Non-controlling interest TOTAL EQUITY	As at 31 December 2016 30 June 2016 $ $ 3,114,814 5,614,871 12,500 1,001,470 535,297 1,264,580
	3,662,611 7,880,921
	1,405,204 1,519,276 4,556,370 1,371,805 81,833 81,833 187,976 389,333 1,196 -
	6,232,579 3,362,247
	9,895,190 11,243,168
	5,371,589 5,278,247 - 968,131 155,323 558,916
	5,526,912 6,805,294
	- 4,454
	- 4,454
	5,526,912 6,809,748
	4,368,278 4,433,420
	193,581,578 193,581,578 23,350,279 23,054,799 (212,899,592) (212,167,165)
	4,032,265 4,469,212
	336,013 (35,792)
	4,368,278 4,433,420

The accompanying notes form part of this financial report.

7

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [161 x 48] intentionally omitted <==

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF- YEAR ENDED 31 DECEMBER 2016

Balance at 1 July 2016 Loss for the year Other comprehensive income Share of associate’s foreign currency translation reserve Foreign exchange differences arising on translation of foreign operations Other comprehensive income Total comprehensive income for the half-year Transactions with owners in their capacity as owners Share based payments Increase in non-controlling interest Transactions with equity holders in their capacity as equity holders Balance at 31 December 2016	Issued Capital Accumulated Loss Share Based Payment Reserve Available for Sale Reserve Foreign Currency Translatio n Reserve Business Combinatio n Reserve Parent Equity Interest Non- controlling Interest Total $ $ $ $ $ $ $ $ $ 193,581,578 (212,167,165) 2,434,680 1,750 22,007,507 (1,389,138) 4,469,212 (35,792) 4,433,420 - (732,427) - - - - (732,427) (44,890) (777,317) - - - - 99,367 - 99,367 - 99,367 - - - - (92,853) - (92,853) - (92,853) - - - (1,500) - - (1,500) - (1,500)
	- (732,427) - (1,500) 6,514 - (727,413) (44,890) (772,303)
	- - 81,103 - - - 81,103 - 81,103 - - - - - 209,363 209,363 416,695 626,058
	- - 81,103 - - 209,363 290,466 416,695 707,161
	193,581,578 (212,899,592) 2,515,783 250 22,014,021 (1,179,775) 4,032,265 336,013 4,368,278

The accompanying notes form part of this financial report.

8

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [161 x 48] intentionally omitted <==

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF- YEAR ENDED 31 DECEMBER 2016

Balance at 1 July 2015 Loss for the year Other comprehensive income Share of associate’s share based payments reserve Share of associate’s foreign currency translation reserve Foreign exchange differences arising on translation of foreign operations Other comprehensive income Total comprehensive income for the half- year Transactions with owners in their capacity as owners Share based payments Increase in non-controlling interest Transactions with equity holders in their capacity as equity holders Balance at 31 December 2015	Issued Capital (Accumulated Loss) / Retained earnings Share Based Payment Reserve Available for Sale Reserve Foreign Currency Translation Reserve Business Combinatio n Reserve Parent Equity Interest Non- controlling Interest Total $ $ $ $ $ $ $ $ $ 189,786,328 (181,696,558) 2,079,450 - 21,116,525 (1,603,919) 29,681,826 76,596 29,758,422 - (12,534,215) - - - - (12,534,215) (157,590) (12,691,805) - - 188,643 - - - 188,643 - 188,643 - - - - (29,487) - (29,487) - (29,487) - - - - 865,109 - 865,109 - 865,109 - - - 500 - - 500 - 500
	- (12,534,215) 188,643 500 835,622 - (11,509,450) (157,590) (11,667,040)
	- - 92,172 - - - 92,172 - 92,172 - - - - - 224,237 224,237 207,223 431,460
	- - 92,172 - - 224,237 316,409 207,223 523,632
	189,786,328 (194,230,773) 2,360,265 500 21,952,147 (1,379,682) 18,488,785 126,229 18,615,014

The accompanying notes form part of this financial report.

9

HALF YEAR REPORT – 31 DECEMBER 2016

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

Note CASHFLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees (inclusive of GST) Payments for exploration and evaluation Interest received Net cash used in operating activities CASHFLOWS FROM INVESTING ACTIVITIES Payments for exploration and evaluation 8 Proceeds from sale of property, plant and equipment Purchase of equity investments 7a Payment for acquiring interest in associated entity Payment on subscription to convertible loan notes Proceeds from sale of equity investments Repayment of loans received Net cash from / (used in) investing activities CASHFLOWS FROM FINANCING ACTIVITIES Proceeds from share issue of subsidiary Proceeds from issuing loan note Net cash provided by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Foreign exchange difference Cash and cash equivalents at end of period 15	For the six months ended 31 December 2016 31 December 2015 $ $ (2,129,566) (2,438,490) (1,157,867) - 24,715 52,101
	(3,262,718) (2,386,389)
	(1,196) (2,777,984) 42,533 - (100,000) (30,000) (164,085) - - 156,750 340,000 201,270 - 40,000
	117,252 (2,409,964)
	645,409 - - 431,460
	645,409 431,460
	(2,500,057) (4,364,896) 5,614,871 9,033,714 - 21,208
	3,114,814 4,690,026

The accompanying notes form part of this financial report.

10

HALF YEAR REPORT – 31 DECEMBER 2016

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

==> picture [160 x 48] intentionally omitted <==

1. BASIS OF PREPARATION

General Information

This general purpose condensed financial report for the half-year ended 31 December 2016 has been prepared in accordance with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001 and was authorised for issue in accordance with a resolution of Directors on 15 March 2017.

Cape Lambert Resources Limited is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded in the ASX. The principal activity of the Consolidated Entity during the half-year was mineral investment, exploration and evaluation.

This half-year financial report is to be read in conjunction with the annual financial report for the year ended 30 June 2016 and any public announcements made by Cape Lambert Resources Limited and its controlled entities during the half-year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 .

The half-year financial report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the group as in the full financial report.

Going Concern

The consolidated financial statements of Cape Lambert have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

For the half-year ended 31 December 2016 the Consolidated Entity had cash and cash equivalents of $3,114,814 (30 June 2016: $5,614,871) and net current liabilities of $1,864,301 (30 June 2016: net current assets of $1,075,627).

Whilst sufficient cash is available to meet general and administrative requirements in the short term, the ability of the Group to fulfil its proposed activities in the next 12 months will likely depend on the realisation of certain of the Group’s assets, including deferred consideration and loans receivable, for which recovery is not a certainty. At the date of this report, the directors are satisfied there are reasonable grounds to believe that the Consolidated Entity will be able to continue its planned operations and the Consolidated Entity will be able to meet its obligations as and when they fall due because the directors are confident that the Consolidated Entity will be able to realise certain of its assets or seek alternative sources of funding if required.

Should the Consolidated Entity not achieve the matters set out above, there is uncertainty whether the Consolidated Entity would continue as a going concern and therefore whether it would realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The consolidated financial statements do not include any adjustment relating to the recoverability or classification of recorded asset amounts or to the amounts or classification of liabilities that might be necessary should the Consolidated Entity not be able to continue as a going concern.

Significant Accounting Policies

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

New and amended accounting standards and interpretations

The Company has adopted all Australian Accounting Standards and Interpretations effective from 1 July 2016. The adoption of new and amended standards and interpretations had no impact on the financial position or performance of the Company.

11

HALF YEAR REPORT – 31 DECEMBER 2016

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

==> picture [160 x 48] intentionally omitted <==

New accounting standards and interpretations issued but yet effective

The Company has not elected to early adopt any new accounting standards and interpretations.

Significant estimates and judgments

The Consolidated Entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Refer to the most recent annual financial report for the year ended 30 June 2016 for a discussion of the significant estimates and judgments.

2. SEGMENT INFORMATION

AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Chief Operating Decision Maker ( CODM ) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. In the case of the Group the CODM are the executive management team and all information reported to the CODM is based on the consolidated results of the Group as one operating segment, as the Group’s activities relate to mineral exploration.

Accordingly, the Group has only one reportable segment and the results are the same as the Group results.

3. INCOME TAXES Major components of income tax expense for the period are: Income statement Current income Current income tax charge / (benefit) Income tax (benefit) / expense reported in income statement Statement of changes in equity Income tax expense reported in equity Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items: Tax losses @ 30%	31 December 2016 31 December 2015 - -
	- -
	- -
	31 December 2016 30 June 2016 $ $
	64,614,054 61,667,892 19,384,216 18,500,368

Certain tax positions taken by the Group in the 2010 to 2015 financial years are under review by the Australian Taxation Office.

4. PROFIT FROM OPERATIONS (a) Revenue Interest Rental revenue (b) Other income Foreign currency gain / (loss) Other	31 December 2016 31 December 2015 $ $ 68,321 169,609 274,557 309,245
	342,878 478,854
	(20,847) 22,435 173,074 279,330
	152,227 301,765

12

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. RESTRICTED CASH Current Term deposits Application funds Movement Brought forward Application funds received by Fe Limited Application funds refunded by Fe Limited Payment of restricted cash in relation to office bond Exchange differences Non current Term deposits	31 December 2016 30 June 2016 $ $ 12,500 33,339 - 968,131
	12,500 1,001,470
	1,001,470 32,754 - 1,189,109 (968,131) (220,978) (20,839) - - 585
	12,500 1,001,470 81,833 81,833

Restricted cash relates to term deposits, which are not readily accessible to the Consolidated Entity, held with financial institutions as security for bank guarantees issued to:

(a) Environmental regulatory departments in respect of the potential rehabilitation of exploration areas; and

• (b) Landlords of leased properties.

6. TRADE AND OTHER RECEIVABLES Trade and other receivables – current Trade debtors Deferred consideration receivable (a) GST recoverable and other debtors Prepayments Interest receivable Loans receivable (b) Allowance for doubtful debts	31 December 2016 30 June 2016 $ $ 3,540,785 3,537,427 2,500,000 2,500,000 79,307 93,458 373,212 369,379 - 146,150 - 529,250 (5,958,007) (5,911,129)
	535,297 1,264,580

• (a) Deferred consideration receivable payable on the achievement of a production milestone. This receivable was provided for in full as at 31 December 2016.

• (b) Current loans receivable at balance date are made up as follows:

Interest rate Current Loan of $200,000 and US$150,000 10.0% Convertible loan note of $250,250 15.0% Loan of $370,000 10.0% Loan of USD$8,000,000 Libor + 6% Carrying value of loans Impairment of receivables Current carrying value at amortised cost at balance date	Carrying value of loans 31 December 2016 30 June 2016 $ $ 419,184 419,184 159,250 159,250 370,000 370,000 10,447,200 10,447,200
	11,395,634 11,395,634 (11,395,634) (10,866,384)
	- 529,250

13

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Reconciliation of movement in loans receivable

Opening balance Payment on subscription to/(receipts from) convertible loan notes Loans advanced/interest accrued Repayment of loans Conversion of convertible loan notes Impairment of loans receivable Foreign exchange movements Current carrying value at amortised cost at balance date 7. OTHER FINANCIAL ASSETS Non-Current Financial Assets at Fair value through Profit or Loss Shares in listed entities (a) Call Options Financial Assets Available-for-sale Shares in unlisted entity (b) Total Financial Assets	6 Months to 31 December 2016 Year ended 30 June 2016 $ $ 529,250 1,589,694 - (156,750) - 115,750 - (200,000) - (810,500) (529,250) (19,184) - 10,240
	- 529,250
	31 December 2016 30 June 2016 $ $ 1,335,204 1,350,477 - 68,799
	1,335,204 1,419,276
	70,000 100,000
	1,405,204 1,519,276

(a) Movements in the carrying amount of the non-current shares in listed entities

Brought forward Purchase of equity investments Reclassification of financial asset at fair value through profit or loss to associate Issue of shares as a result of conversion of interest on loan Gain/(Loss) on fair value of financial assets through profit and loss Exercise of call option Disposal of equity investments Other	6 Months to 31 December 2016 Year ended 30 June 2016 $ $ 1,350,477 1,515,864 100,000 30,000 - (332,172) 11,555 - 145,873 324,621 68,799 - (340,000) (189,586) (1,500) 1,750
	1,335,204 1,350,477

(b) Movements in the carrying amount of the shares in unlisted entities

Brought forward – at cost less impairment Impairment of investment	6 Months to 31 December 2016 Year ended 30 June 2016 $ $ 100,000 100,000 (30,000) -
	70,000 100,000

14

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8. EXPLORATION AND EVALUATION EXPENDITURE Exploration and evaluation phases Movement in carrying amounts Brought forward Exploration and evaluation expenditure capitalised Exploration assets divested during the year Exploration expenditure impaired during the period Exploration expenditure de-recognised during the period Foreign currency gains / (losses) Total exploration and evaluation phases	6 Months to 31 December 2016 Year ended 30 June 2016 $ $ 1,196 -
	- 15,683,601 1,196 6,740,613 - (456,543) - (3,295,324) - (19,116,791) - 444,444
	1,196 -

The value of the exploration expenditure is dependent upon:

• the continuance of the rights to tenure of the areas of interest;

• the results of future exploration; and

• the recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale.

Certain of Cape Lambert’s exploration properties may be subjected to claim(s) under native title, or contain sacred sites, or sites of significance to Indigenous people. As a result, exploration properties or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum of such claims.

9. INVESTMENTS IN ASSOCIATED ENTITIES Investments in associates accounted for using the equity method (a) Investment details Percentage held at balance date 31 Dec 2016 30 June 2016 Cauldron Energy Limited1 15.9 14.6 European Lithium Limited1, 2 15.2 26.2 International Goldfields Limited 21.4 21.4	31 December 2016 30 June 2016 $ $ 4,556,370 1,371,805
	31 December 2016 30 June 2016 $ $ 1,150,766 1,205,718 3,405,604 - - 166,087
	4,556,370 1,371,805

1 Although the Company holds less than a 20% interest, these investments are equity accounted given the significant influence the Company has through Mr Sage’s role on the Boards of these companies and the interchange of management personnel.

² During the period, European Lithium Ltd listed on the Australian Securities Exchange by way of reverse takeover.

15

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(b) Movements in the carrying amount of the investment in associates

Balance at beginning of period Purchase of shares Conversion of convertible loan notes Share of losses of associates recognised during the period Share of reserves of associates recognised during the period Reclassification of financial asset at fair value through profit or loss to associate Net gain on dilution of interest in associates (Reversal of) / impairment of investment in associate1	31 December 2016 30 June 2016 $ $ 1,371,805 3,629,855 164,084 14,089 - 1,284,168 (1,252,834) (625,774) 99,367 164,843 - 332,173 1,495,200 - 2,678,748 (3,427,549)
	4,556,370 1,371,805

1 During the period the Company reversed previously recognised impairment on the investment in unlisted entity European Lithium Limited as the Company assessed that the conditions that gave rise to the impairment had reversed due to European Lithium Limited listing on the Australian Securities Exchange by way of a reverse takeover. The reversal of impairment represented the previously recognised impairment, net of the Company’s share of European Lithium Limited’s losses not recognised during the period that the investment was impaired.

10. ISSUED CAPITAL 720,686,586 fully paid ordinary shares (30 June 2016: 720,686,586)	31 December 2016 30 June 2016 $ $ 193,581,578 193,581,578

Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held and in proportion to the amount paid up on the shares held. At shareholders meetings, each ordinary share is entitled to one vote in proportion to the paid up amount of the share when a poll is called, otherwise each shareholder has one vote on a show of hands.

11. CONTINGENT ASSET

Contingent asset for future royalties payable from the Mayoko Iron Ore Project

In March 2012, Johannesburg Stock Exchange listed Exxaro Resources Limited completed a takeover offer for all of the shares and listed options in African Iron Limited, a company in which the Company held 126,700,000 shares, delivering $72.2 million in cash to the Company. African Iron Limited owns the Mayoko Iron Ore Project which is located in the Republic of Congo ( Mayoko Project ). As part of the takeover transaction, the Company retains a production royalty of AUD$1.00 (indexed annually to the CPI) per tonne of iron ore shipped from the Mayoko Project ( Mayoko Royalty ). On 13 February 2017, the Company announced that it had sold the Mayoko Royalty for A$1,000,000 cash, subject to the formality of the new owners signing off the transaction. As at 31 December 2016, the Company has not recognised any amount for the Mayoko Royalty as a receivable.

12. RELATED PARTY TRANSACTIONS

On 26 August 2016, the Company entered into a new consultancy agreement with Okewood Pty Ltd ( Okewood ), a company owned by Tony Sage, to provide the services of Chairman of Cape Lambert.

There were no other significant changes to the nature of related party relationships and transactions from those disclosed in the 30 June 2016 annual financial report.

16

HALF YEAR REPORT – 31 DECEMBER 2016

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

==> picture [160 x 48] intentionally omitted <==

13. FINANCIAL INSTRUMENTS

Financial Instruments

Set out below is an overview of financial instruments held by the Group:

Financial assets: Cash and cash equivalents Restricted cash Trade and other receivables Other financial assets Financial liabilities: Trade and other payables Application funds	31 December 2016 $ 30 June 2016 $ 3,114,814 5,614,871 94,333 1,083,303 535,297 1,264,580 1,405,204 1,519,276
	5,149,648 9,482,030
	5,371,589 5,278,247 - 968,131
	5,371,589 6,246,378

(a) Fair Value Estimation

The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values as the carrying value less impairment provision of trade receivables / other receivables and payables are assumed to approximate their fair values due to their short-term nature.

AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

• (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

• (b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and

• (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The following table presents the Consolidated Entity’s assets measured at fair value at 31 December 2016.

Financial assets Financial assets at Fair value through Profit and Loss Shares in listed entities	Level 1 $ Level 2 $ Level 3 $ Total $ 1,335,204 - - 1,335,204
	1,335,204 - - 1,335,204

The following table presents the Consolidated Entity’s assets measured at fair value at 30 June 2016.

Financial assets: Financial assets at Fair value through Profit and Loss Shares in listed entities	Level 1 $ Level 2 $ Level 3 $ Total $ 1,350,477 - - 1,350,477
	1,350,477 - - 1,350,477

14. EVENTS SUBSEQUENT TO REPORTING DATE

17

HALF YEAR REPORT – 31 DECEMBER 2016

==> picture [160 x 48] intentionally omitted <==

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following significant events and transactions have taken place subsequent to 31 December 2016:

• On 13 February 2017, the Company announced that it had sold its 100% owned royalty, in the form of a deferred consideration deed, in the Mayoko iron ore project for A$1,000,000 cash, subject to the formality of the new owners signing off the transaction.

• On 21 February 2017, the Company announced that it has entered into a binding heads of agreement with Congolese company, Paragon Mining SARL to form a 50/50 joint venture to develop the Kipushi Cobalt copper tailings project, the Kasombo copper-cobalt projects and operate the Kipushi proce3ssing plant in the Democratic Republic of Congo.

15. NOTE TO THE CASH FLOW STATEMENT

(a) Reconciliation of Cash and Cash Equivalents

For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks. Cash and cash equivalents at the end of the period as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:

Cash and cash equivalents Cash in banks and on hand Deposits at call Cash and cash equivalents per consolidated statement of cash flows Less: cash and cash equivalents classified as held for sale Cash and cash equivalents per consolidated statement of financial position	31 December 2016 31 December 2015 $ $ 3,114,814 4,690,026 - -
	3,114,814 4,690,026 - -
	3,114,814 4,690,026

(b) Non-Cash Activities

Current year

No significant non-cash investing or financing transactions occurred during the period ended 31 December 2016.

Prior year

No significant non-cash investing or financing transactions occurred during the period ended 31 December 2015.

18

HALF YEAR REPORT – 31 DECEMBER 2016

DIRECTORS’ DECLARATION

==> picture [160 x 48] intentionally omitted <==

In the opinion of the directors:

(a) The financial statements and notes of the Consolidated Entity for the half-year ended 31 December 2016 are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

(ii) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting, International Financial Reporting Standard, IAS 34 Interim Financial Reporting and the Corporations Regulations 2001

(b) Subject to the matters set out in Note 1, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

==> picture [84 x 60] intentionally omitted <==

---

Tony Sage Director

Dated this 15 day of March 2017

19

Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

==> picture [61 x 72] intentionally omitted <==

Report on the half-year financial report

We have reviewed the accompanying half-year financial report of Cape Lambert Resources Limited, which comprises the consolidated statement of financial position as at 31 December 2016, the consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and its performance for the halfyear ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Cape Lambert Resources Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Cape Lambert Resources Limited is not in accordance with the Corporations Act 2001 , including:

• a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

GHM:JT:CAPELAMBERT:005

==> picture [61 x 72] intentionally omitted <==

• b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Material uncertainty related to going concern

Without qualifying our conclusion, we draw attention to Note 1 in the financial report which describes the principal conditions that raise doubt about the consolidated entity’s ability to continue as a going concern. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

==> picture [151 x 51] intentionally omitted <==

Ernst & Young

==> picture [132 x 46] intentionally omitted <==

G H Meyerowitz Partner Perth 15 March 2017

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation