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1 Tuesday, 11 December 2012 ASX release Cape Alumina completes Pre-Feasibility Study for Bauxite Hills Highlights Cape Alumina Limited (ASX Code: CBX) engaged GHD in April 2012 to carry out a pre-feasibility study (PFS) for the company s Bauxite Hills Mine and Port project (Bauxite Hills) on western Cape York in far North Queensland. The PFS has confirmed the technical and economic feasibility of Bauxite Hills as a 5 million tonne per annum (Mtpa) bauxite mine producing high-quality, export-grade bauxite over a life of up to 10 years. Bauxite Hills is an attractive standalone project. However, Cape Alumina s main focus will initially be on developing the larger Pisolite Hills Mine and Port project (Pisolite Hills) which was recently declared by the Queensland Government to be a Significant Project There are significant synergies that could be captured between the Pisolite Hills and Bauxite Hills projects (which have not been included in the PFS), including: Common use of barging and transhipment operations in the Ducie River; Common infrastructure such as airstrip, electricity generation and other facilities; Managing the workforce across two operations, including specialist staff; Common site camp facilities, vehicles and beneficiation plant. The Bauxite Hills project will continue to be evaluated and progressed and is likely to be considered as a second stage development once Pisolite Hills is in production. 1. Bauxite Hills Project Overview Bauxite Hills is located approximately 95 km north of Weipa on Western Cape York, and extends from about 8 km to 25 km north of the proposed port location for Pisolite Hills. This location is only five kilometres south-east of an existing port at Skardon River. The bauxite is well suited for use in both low and high temperature alumina refineries. The Inferred Resources for Bauxite Hills plateaux BH1, BH2, BH6 are estimated to be 60.2 Mt 1 of bauxite. Combined Inferred Resources at Bauxite Hills BH1, BH2 and BH6 deposits total 60.2 Mt of in-situ bauxite to yield 41.3 Mt of bauxite on a dry-product basis at average beneficiated grade of 51.6 per cent Alumina (Al 2O 3) and 9.6 per cent Silica (SiO 2).

2 The shallow, free digging bauxite averages 2.4m thickness at BH1 and 1.8m at BH2 and BH6 and ranges up to 6m thickness, with a very low overburden thickness averaging 0.4m, resulting in very low strip ratios. It is proposed that Bauxite Hills would commence production at 2.5 Mtpa of dry beneficiated bauxite building to 5 Mtpa over 2 years. The mine fleet will include front-end loaders to load the bauxite, as well as mine trucks and road trains to transport the bauxite to the beneficiation plant. Run of mine bauxite will be washed in the 1,300 tonnes per hour beneficiation plant which incorporates crushing, sizing, screening and conveying. Transhipping of the bauxite product is key to unlocking the operation and the use of 4,000 tonne barges, loading 71,000 tonne Panamax or 166,000 tonne Cape-size vessels, has been incorporated in the design. Figure 1: Map of Bauxite Hills Bauxite Hills mine and port project area showing BH1, BH2 and BH6, EPM15376, EPM16899 (outlines shown in blue), and MLA (BH1), MLA (BH2), MLA (BH6 East) and MLA (BH6 West) (outlines shown in yellow). EPM = Exploration Permit for Minerals. MLA = Mining Lease Application Figure 2: Transhipment using self-unloading barges

3 2. Operating and Capital Costs Site cash operating costs are estimated to range from $24 to $27 per product tonne at full production, which includes transhipment costs but excludes the royalty of 10% of the FOB export price, payable to the Queensland State Government. Capital costs are estimated to be in the range of $234 to $250 million depending on the mine option chosen. This estimate includes a risk allowance for uncertainty of accuracy of quantities and unit rates; however, excludes contingency (which is expected to be more than offset by optimisations). 3. Further Optimisation Potential Opportunities to significantly reduce the capital and operating costs include: o Contractor operations have been assumed for bauxite transhipment. There are opportunities to engage contractors to own and operate the mine fleet, beneficiation plant, and infrastructure; this could significantly reduce the capital cost estimate. o Synergies could be realised by operating the project in conjunction with Pisolite Hills which incorporates a barge loading point to the south at the Ducie River. These include: No additional river dredging required (already undertaken for Pisolite Hills); Common use of barging and transhipment operations in the Ducie River; Increase barge size from 4,000 tn to 10,000 tn barges to give economies of scale; Common infrastructure such as airstrip, electricity generation, and other facilities; Optimisation of the workforce and management across two operations; and Common site camp facilities, vehicles and beneficiation plant. These synergies are subject to further investigation and evaluation. Further optimisation work will be undertaken to improve the project economics. 4. Project Economics Based on analysis at long-term FOB bauxite prices in the range between USD$45 and USD$50 per tonne and long-term exchange rate of 0.85 (AUD/USD), the Bauxite Hills project is commercially attractive and should provide a significant return to Cape Alumina. 5. Pisolite Hills In the first instance Cape Alumina intends to focus on the development of its flagship project, Pisolite Hills, which was granted Significant Project status by the Queensland Government on 3 October 2012.

4 Pisolite Hills has the following benefits over Bauxite Hills: Due to the extensive work already completed on Pisolite Hills, the project can be fast-tracked and will come into production prior to Bauxite Hills. The Pisolite Hills resource is twice the size of that at Bauxite Hills and is expected to sustain a 7 Mtpa operation with a 15 year mine life. The Pisolite Hills project has a ready and low-cost access to process water. It is currently intended that development of the Bauxite Hills project will follow Pisolite Hills and will incorporate a number of synergies through joint operations where feasible. Further information on the development of Pisolite Hills will be made to the ASX over the coming months. 6. International Bauxite Market Indonesian and Australian exports of bauxite to China have grown dramatically over the past six years to meet increasing demand. Prices have strengthened and continue to remain firm. Indonesia s 20% export tax (applied since July 2012) has added about US$4-5/t to the cost of Indonesian bauxite. Indonesia has legislated to ban bauxite exports from The higher alumina content of Cape Alumina s bauxite provides a pricing premium when compared to Indonesian bauxite prices. Figure 3: Historical volumes and prices of bauxite into China Source: CM Group

5 About Cape Alumina Cape Alumina is Australia's leading pure-play bauxite company, evaluating one of the country's largest under-developed, export-quality bauxite deposits. Brisbane-based, the company controls approximately 1,900 km 2 of exploration tenements in the worldrenowned western Cape York bauxite province. This is the largest tenement holding in the region outside the Rio Tinto Alcan (RTA) mining leases (see Figure 4 below). Figure 4: Cape Alumina s tenements on western Cape York, Queensland.

6 About western Cape York bauxite Key features of the bauxite resources defined at Cape Alumina s project areas and exploration tenements within the Weipa region, which are expected to have positive implications for potential project economics, include: Very shallow, free-digging bauxite with minimal overburden thickness and very low strip ratios, which suggests that mining costs will be low; Very close to coastal waters and international shipping routes, potentially lowering transport capital and operating costs; and High alumina content compared to other Australian bauxite provinces (outside the Weipa region) the lower Bauxite to Alumina ratio reduces overall shipping and refinery input costs. COMPETENT PERSON S STATEMENT Technical information about ore resources relating to Cape Alumina contained in this report has been compiled by Dr Paul Messenger who is a Principal Advisor to Cape Alumina Limited and a Fellow of the Australasian Institute of Mining and Metallurgy (F. AusIMM) with more than five years of relevant experience in the style of mineralisation being reported and qualifies as a Competent Person as defined by the Australasian Code for Reporting of Minerals, Resources and Reserves. Dr Messenger consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. More information: Cape Alumina Limited ENDS-