IRON BEAR RESOURCES LTD — Interim / Quarterly Report 2019

Jan 30, 2020

Quarterly Report

Q4

31 December 2019

==> picture [259 x 75] intentionally omitted <==

31 January 2020

QUARTERLY ACTIVITIES AND CASH FLOW REPORT FOR THE QUARTER ENDED 31 DECEMBER 2019

CORPORATE

Strategy and Business Model

Cape Lambert Resources Limited ( ASX: CFE ) ( Cape Lambert or the Company ) is an Australian domiciled mineral development company. Cape Lambert has interests in several exploration and mining companies, providing exposure to iron ore, copper, gold, uranium, cobalt, lithium and lead-silver-zinc assets in Australia, Europe, Africa and South America (refer Figure 1).

Cape Lambert’s strategy is to acquire and invest 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

• retain 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

Cash Balance

As at 31 December 2019, the Company had approximately A$89,000.

Magna Financing Facility

As previously announced, the Company established a A$7.5m finance facility with MEF I, L.P. ( Magna ) of which A$750k (548,310 convertible notes) was drawn down on 19 December 2018.

During the quarter, Magna converted 31,255 notes which resulted in the issue of 10,000,144 fully paid ordinary shares in the Company. As at 31 December 2019, Magna had 176,731 convertible notes remaining.

Winance Finance Facility

On 31 July 2019, the Company announced that it had secured an A$15m finance facility with Winance Investment LLC ( Winance ) for mining exploration and general working capital purposes.

Cape Lambert Resources Limited ABN 71 095 047 920

32 Harrogate Street, West Leederville WA 6007

Phone: +61 8 9380 9555 Email: admin@capelam.com.au

www.capelam.com.au

==> picture [141 x 141] intentionally omitted <==

ASX: CFE

– Quarterly Report 31 December 2019 31 January 2020

==> picture [120 x 35] intentionally omitted <==

The initial tranche of A$1.2m (1,200 convertible notes) was drawn down on 8 August 2019 with the conversion of initial tranche A notes ($480k or 480 convertible notes) unconditional and the conversion of initial tranche B notes ($720k or 720 convertible notes) subject to prior approval by Cape Lambert shareholders. Further tranches of A$13.8m is available in tranches of A$500k each upon full conversion of the notes from the previous drawdown, subject to a cooling off period.

Full terms and conditions of the convertible securities are included in the announcement released on 31 July 2019.

During the quarter, Winance converted 80 notes which resulted in the issue of 16,000,000 fully paid ordinary shares in the Company. As at 31 December 2019, Winance had 990 convertible notes remaining.

Chairman’s Contract Extension

The Company previously entered into a contract with Okewood Pty Ltd ( Okewood ) to provide the services of Chairman to Cape Lambert. This contract expired on 28 August 2019. Since the expiry of this contract, the Cape Lambert Remuneration Committee ( Remuneration Committee ) has been in discussion with Okewood regarding terms and conditions of a new contract. Negotiations are ongoing and terms are yet to be finalised however in the interim, the Remuneration Committee extended the existing contract with Okewood until 31 October 2019.

Figure 1: Group Structure 31 December 2019

==> picture [546 x 347] intentionally omitted <==

----- Start of picture text -----

Exploration Projects Investments
(in listed entities)
Fe limited (ASX: FEL)
Kukuna Iron Ore Project 29.84% interest
CFE Iron Ore, Gold, Lithium, Base Metals
Sierra Leone (Yilgarn WA, Australia)
International Goldfields Limited
(Unlisted)
18.82% interest
Gold (Australia / Cote d'Ivoire / Brazil)
Cauldron Energy Limited
Wee MacGregor Copper Project (ASX: CXU)
CFE - 100% 15.30% interest
Australia Uranium (Australia / Argentina)
European Lithium Limited
(ASX: EUR)
10.40% interest
Lithium (Austria)
----- End of picture text -----

Cape Lambert Resources Limited ASX: CFE

Page 2 of 6

– Quarterly Report 31 December 2019 31 January 2020

==> picture [120 x 35] intentionally omitted <==

PROJECTS

Marampa

Marampa is an iron ore project at the development stage, and is located 90 km northeast of Freetown, Sierra Leone, West Africa ( Marampa or Marampa Project ). The Marampa Project comprised one mining licence (ML05/2014) comprising 97.40km2 and one exploration licence (EL46A/2011) comprising 145.86km2. The status of these tenements is as follows:

ML05/2014

In 2014, Marampa Iron Ore (SL) Limited ( Marampa SL ), a wholly owned subsidiary of Cape Lambert was granted the mining and environmental licences for ML05/2014 (together the Mining Licence ). The Company has spent circa US$62.7m on exploration and development to date on the Marampa Project.

In September 2018, Marampa SL received a letter from the Sierra Leone Ministry of Mines ( SLMOM ) cancelling the Mining Licence. In 2018, Marampa SL commenced legal action in Sierra Leone to challenge SLMOM’s decision to cancel the Mining Licence ML05/2014, however, the Board has agreed to place legal action against the SLMOM on hold.

The Company reconfirms that it does not currently have tenure over ML05/2014. Whilst no formal application has been made to date, the Company has, and will continue to be, engaged in dialogue with the relevant Sierra Leonean authorities in an attempt to have the Mining Licence reinstated or reissued by mutual agreement.

Whilst there can be no guarantee that the SLMOM will agree to reinstate or reissue a Mining Licence, if Marampa SL were to successfully recover the Mining Licence, the Board is committed to working with the relevant parties to secure access to the necessary plant and equipment and infrastructure to enable the ramp up of the Marampa Project upon the reissuance of the Mining Licence for the benefit of our shareholders as well as, importantly, the Government and People of Sierra Leone.

EL46A/2011

In 2014, Marampa SL was granted exploration license EL46A/2011. In June 2014 the SLMOM extended EL46A/2011 for a further 2-year term from 31 July 2015 until 31 July 2017. Marampa SL has not paid renewal fees to the SLMOM in respect of EL46A/2011 since 31 July 2017. However, Marampa SL has not received any termination documentation or request for information from the SLMOM, therefore is of the view that EL46A/2011 remains a valid license. Marampa SL has contacted the SLMOM asking them to confirm the status of EL46A/2011 however no response has been received to date therefore tenure over EL46A/2011 remains uncertain. Marampa SL will continue to follow up with the SLMOM to determine the status of EL46A/2011.

The Board confirms that given the inherent uncertainties relating to the future of the Marampa Project, the carrying value of the Marampa Project in Cape Lambert’s audited accounts was fully impaired as at 30 June 2016 and remains fully impaired.

The Company is currently committing minimum expenditure on the Marampa Project and no exploration activities are currently underway at the Marampa Project.

Cape Lambert Resources Limited ASX: CFE

Page 3 of 6

– Quarterly Report 31 December 2019 31 January 2020

==> picture [120 x 35] intentionally omitted <==

Kukuna

Dempsey Resources Bermuda Limited holds the Kukuna Iron Ore Project located in Sierra Leone ( Kukuna or Kukuna Project ).

The Kukuna Project is located 120 km northeast of Freetown in the northwest of Sierra Leone and consists of one exploration licence (EL22/2012) covering 68km2. The licence comprises rocks known to host specular hematite mineralisation.

The Kukuna Project remains under care and maintenance.

Mining International Pty Ltd

Mining International Pty Ltd ( Mining International ), is a wholly owned subsidiary of Cape Lambert. The Company holds tenure to 4 mining leases at the Wee MacGregor Project located 40 km southeast of Mt Isa in Queensland (refer Figure 2).

The tenements are located within in the Eastern Fold Belt of the Mt Isa inlier. The tenements are located in the Mary Kathleen Zone/Wonga Subprovince. This area is prospective for a variety of deposit types, most notably structurally controlled epigenetic copper and gold deposits.

Cohiba Minerals Limited ( Cohiba ) has a Farm-in agreement with the Company for mining licences ML 2504, ML 2773 and ML 90098, while the Firebird Minerals Pty Ltd ( Firebird ) Farm-in agreement for mining licence ML 2771 has lapsed.

No activities were reported for the quarter.

Cape Lambert Resources Limited ASX: CFE

Page 4 of 6

– Quarterly Report 31 December 2019 31 January 2020

==> picture [120 x 35] intentionally omitted <==

Figure 2 – Wee McGregor Project Location

==> picture [433 x 627] intentionally omitted <==

Cape Lambert Resources Limited ASX: CFE

Page 5 of 6

– Quarterly Report 31 December 2019 31 January 2020

==> picture [120 x 35] intentionally omitted <==

APPENDIX 1: TENEMENT STATUS

The mining tenements held at the end of each quarter, acquired and disposed of during the quarter and their location:

Tenement reference	Project & Location	Acquired interest during the quarter	Disposed interest during the quarter	Interest at the end of quarter
Kukuna Project - EL 22/2012 ML 90098 ¹ ML 2504 ¹ ML 2771 ML 2773 ¹	Kukuna – Sierra Leone	-	-	100%
	Wee MacGregor - Queensland	-	-	100%
	Wee MacGregor - Queensland	-	-	100%
	Wee MacGregor - Queensland	-	-	100%
	Wee MacGregor - Queensland	-	-	100%

¹ Subject to the Cohiba (Cobalt X) Farm-in agreement, refer to ASX March 2017 Quarterly Report for details.

There were no mining tenements with beneficial interest earned/lost in farm-in/farm-out agreements at the end of the quarter.

For further information please contact:

Investor Relations +61 (0) 8 9380 9555 ir@capelam.com.au

Follow us @Cape_Lambert cape-lambert-resources-limited

Cape Lambert Resources Limited ASX: CFE

Page 6 of 6

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Name of entity

Cape Lambert Resources Limited

ABN

Quarter ended (“current quarter”)

71 095 047 920

31 December 2019

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other (transfer cash restricted to non- restricted) 1.8 Other (legal matters) 1.9 Net cash from / (used in) operating activities	- (120) - - (12) 48 - - - - - - -	11 (342) - - (26) (168) - - - (260) - - (124)
	(84)	(909)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10)	- -	- -

• See chapter 19 for defined terms. 01/09/2016

Appendix 5B Page 1

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
(c) investments (d) other non-current assets 2.2 Proceeds from the disposal of: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other 2.6 Net cash from / (used in) investing activities	- - - - - - - - -	- - - - - - - - -
	-	-
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (Magna default payment) 3.10 Net cash from / (used in) financing activities	- - - (40) - - - - (65)	- 1,200 - (183) - - - - (229)
	(105)	788
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above)	278 (84)	210 (909)

• See chapter 19 for defined terms. Appendix 5B Page 2

01/09/2016

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	- (105) -	- 788 -
	89	89
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	89 - - -	278 - - -
	89	278
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 - 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		-
		-

• See chapter 19 for defined terms. 01/09/2016

Appendix 5B Page 3

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

7. Payments to related entities of the entity and their associates Current quarter $A'000 7.1 Aggregate amount of payments to these parties included in item 1.2 - 7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2	7. Payments to related entities of the entity and their associates Current quarter $A'000 7.1 Aggregate amount of payments to these parties included in item 1.2 - 7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2	Current quarter $A'000
		-
		-
8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 8.1 Loan facilities 15,000,000 1,200,000 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.
	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	15,000,000	1,200,000
	-	-
	-	-

The Company has established a convertible note facility with Winance Investment LLC. Full terms and conditions of this facility are included in the ASX announcement dated 31 July 2019.

9. Estimated cash outflows for next quarter	$A’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other (ATO payment) 9.6 Other (Magna repayments) 9.7 Total estimated cash outflows	(163) - - (12) (667) (520) (66)
	(1,428)*

• This is an estimate of the total cash outflows of the Company for the next quarter and does not take into account proceeds from any proposed placements or debt financing.

• See chapter 19 for defined terms. Appendix 5B Page 4

01/09/2016

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced	-	-	-	-
10.2 Interests in mining tenements and petroleum tenements acquired or increased	-	-	-	-

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

==> picture [70 x 23] intentionally omitted <==

Sign here: ............................................................ Company Secretary

Date: 31 January 2020

Print name: Melissa Chapman

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms. 01/09/2016

Appendix 5B Page 5