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1 Friday, 2 November 2012 ASX release Cape Alumina sells Hey Point bauxite tenements and makes placement In a transaction valued at approximately $3.4 million, Cape Alumina Limited (ASX Code: CBX) has reached agreement with Racle Resources Pty Ltd (Racle Resources), a Melbourne-based resources company, for the sale of its Hey Point bauxite tenements and its mineral sands interests on western Cape York. Completion of the sale is subject to the satisfaction of certain conditions precedent. In addition, Cape Alumina will make a placement of approximately 7.1 million shares to Racle Resources at $0.14 per share, a 12 percent premium to the last closing price of Cape Alumina shares on the ASX, to raise $1 million. The Hey Point bauxite tenements are located on the west coast of Cape York, approximately 5 kilometres south of Weipa. The tenements are estimated to contain Inferred Resources of 3.8 million tonnes (Mt) 1 of bauxite and have potential for development as a small-scale, direct-shipping bauxite project. The size and location of the tenements mean that there is no benefit in developing Hey Point in conjunction with Cape Alumina s Pisolite Hills mine and port project and, accordingly, it is considered a non-core asset. Consideration for the sale of Hey Point includes cash payments totalling $1.5 million and a two to three percent royalty on all bauxite sold. In addition, Cape Alumina will retain the marketing rights to the bauxite and will receive a marketing fee. The net present value of the Hey Point sale consideration has been estimated to be $3.4 million or approximately $0.90 per Inferred Resource tonne of bauxite. Cape Alumina s mineral sands interests are located at its Duyfken tenement, approximately 25 kilometres north-west of Weipa. The terms of sale of the mineral sands interests to Racle Resources preserve the rights to all bauxite mineralisation contained within the tenement for Cape Alumina. As consideration for the sale, Cape Alumina will be entitled to a 25 percent interest in the profits generated by the sale of mineral sands from Duyfken. Cape Alumina will not contribute to capital or operating costs in relation to the development of the mineral sands mineralisation. Cape Alumina s Managing Director, Graeme Sherlock, said the transaction is a fantastic deal for Cape Alumina. The Inferred Resource of 3.8 Mt of in-situ bauxite at Hey Point, based on a 16 hole 320 x 320m hand auger survey and limited bulk sampling to determine beneficiation recovery, is expected to yield 2.5 Mt of bauxite on a dry-product basis at average beneficiated grade of 55.3 per cent Alumina (Al 2O 3) and 9.8 per cent Silica (SiO 2).

2 This deal means that we can get on with the job of developing our Cape York bauxite resources which currently stand at approximately 200 Mt 2 and include our flagship project, Pisolite Hills, which was recently declared a significant project by the Queensland Government, Mr Sherlock said. We can also turn our attention to the development of a pipeline of other major bauxite projects based on our 1,900 square kilometres of mineral tenements on western Cape York. The deal demonstrates the increased interest in bauxite resources on western Cape York and the significant value of Cape Alumina s resources, Mr Sherlock said. Hey Point is a non-core asset for Cape Alumina and represents less than two percent of the company s bauxite resources. It is a small deposit and does not fit the company s strategy of developing large-scale projects. The transaction also provides additional capital as we transition from explorer to developer of major bauxite projects in the world-class western Cape York bauxite province, he said. Figure 1: (Right) Location of Cape Alumina s Hey Point and Duyfken tenements near Weipa on western Cape York, Queensland. 2 The Mt of in-situ bauxite defined to date by Cape Alumina across all of its tenements on western Cape York is expected to yield Mt (112.8 Mt Inferred Mt Indicated Mt Measured) of bauxite on a dryproduct basis at average beneficiated grade of 52.9 per cent Alumina (Al 2 O 3 ) and 11.4 per cent Silica (SiO 2 ).

3 Transaction details Hey Point bauxite tenements Cape Alumina has agreed to sell its Hey Point tenements (EPM and MLA 20611) to Green Coast Resources Pty Ltd, a wholly owned subsidiary of Racle Resources. The cash consideration of $1.5 million is to be paid in four tranches: $250,000 upon signing the binding Term Sheet; $250,000 upon completion of due diligence within six months; $500,000 on the second shipment of bauxite; and $500,000 on the third shipment of bauxite. In addition, Cape Alumina will be entitled to a two to three percent royalty on all bauxite sold and will retain the bauxite marketing rights, which will attract a further fee based on the FOB bauxite price. Should export sales of bauxite from Hey Point not commence within three years of completion of the transaction, Cape Alumina will have the right to repurchase the tenements for $1. Mineral sands interests Cape Alumina will be paid 25 percent of the profit generated from the sale of mineral sands from Duyfken (EPM15173). Cape Alumina is not required to make any contribution to the development, construction, or operating costs of the mineral sands project. Cape Alumina will retain the rights to all bauxite resources at Duyfken. Racle Resources must commence production of minerals sands within four years from completion of the agreement and has the first right of refusal to negotiate for other minerals sands rights within Cape Alumina s tenements. Placement Cape Alumina will place 7,142,857 shares to a wholly owned subsidiary of Racle Resources at a price of 14 cents per share to raise $1 million. The shares will be held in escrow for a period of one year from the date of issue and the funds are to be paid to Cape Alumina by 3 December About Racle Resources Pty Ltd Racle Resources is a Melbourne-based mining company involved in mineral sands exploration, project development, operations, logistics and marketing. Currently Racle Resources has mineral sands operations in Queensland and New South Wales. Racle Resources has a background in marine logistics, which will strengthen its position on Cape York. It is enthusiastic and determined to work through the stages required to bring its new projects on Cape York into production.

4 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 square kilometres of exploration tenements in the world-renowned western Cape York bauxite province. This is the largest tenement holding in the region outside the Rio Tinto Alcan (RTA) mining leases (see Figure 2 below). Figure 2: Cape Alumina s tenements on western Cape York, Queensland.

5 About Pisolite Hills mine and port project Cape Alumina's proposed Pisolite Hills integrated mine and port project is located on an elevated, open, dry bauxite plateau approximately 50 kilometres north-east of Weipa and 40 kilometres south-east of the community of Mapoon. It is between 2.8 and 15 kilometres from the Wenlock River. The Pisolite Hills resource of Mt, based on over 4,000 drill holes, has the potential to yield up to seven million tonnes per annum (Mtpa) of dry-product bauxite over a 15-year period. The bauxite resources at Pisolite Hills are estimated to yield 88.9 Mt (20.1 Mt Measured Mt Indicated Mt Inferred) of bauxite on a dry-product basis at an average beneficiated grade of 53.1 per cent Alumina (Al 2 O 3 ) and 12.3 per cent Silica (SiO 2 ), of which there is 7.5 per cent reactive silica at 150 degrees Celsius. On the 2nd of October 2012, the Queensland Government declared Pisolite Hills a 'significant project for which an Environmental Impact Statement (EIS) is required' under section 26 (1) (a) of the State Development and Public Works Organisation Act This is recognition of the strategic importance of the project to the State of Queensland and in particular the western Cape York region. As a result, Cape Alumina has restarted work on technical and environmental studies for the project and will commence negotiations with the Traditional Land Owners and local Aboriginal people of the project area with a view to finalising an Indigenous Land Use Agreement (ILUA). Subject to the successful completion of all environmental studies and the granting of all necessary State and Commonwealth government permits, Cape Alumina expects to commence construction in early 2014 followed by production in late Figure 3: Cape Alumina s Pisolite Hills mine and port project.

6 About Bauxite Hills mine and port project The proposed Bauxite Hills integrated mine and port project area is Cape Alumina s second largest project and is located approximately 95 kilometres north of Weipa on western Cape York, Queensland. The project lies within the bauxite plateau between the Ducie and Skardon Rivers and just five kilometres south-east of the existing port at Skardon River. Cape Alumina has defined 60.2 Mt of bauxite at this project site. A Pre-Feasibility Study (PFS) is presently being completed for the project. The Bauxite Hills resources are estimated to yield 41.3 Mt of bauxite on a dry-product basis at average beneficiated grade of 51.6 per cent Alumina (Al 2 O 3 ) and 9.6 per cent Silica (SiO 2 ). About western Cape York bauxite Figure 4: (Right ) Cape Alumina s Bauxite Hills mine and port project. Key features of the JORC-Code-compliant 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 suggest 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.

7 which 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 it appears. More information: Cape Alumina Limited