Ann: Investor Update March 2012 , page-7

Outback,

I take a general interest in junior Iron Ore plays in Australia as well as up and coming producers like Iron Clad in SA.

So I do a lot of research and reading,including the latest update by CAP.

From what I read in the update my opinion is that you would be well advised to check the veracity of some of the key points in it. I think it's always wise for any shareholder in any company to sort out the reality from the optimism a number of players in this game come out with from time to time.

I would question the Port Pirie solution in particular...especially with a power point type slide stating:

"Start Up 5-10Mtpa"

13 Mtpa using EXISTING rail to Port Pirie.

20Mtpa port capacity available at Port Pirie * subject to Port Pirie bottleneck solved."

Could you phone the company and get them to back up these optimistic suggestions and what time frame and cost would be invloved in providing these facilities.

It's almost as optimistic as the Iron Clad floating port facility in Spencer gulf.

At least Port Pirie is on land.

I have been to Port Pirie and have checked out the infrastructure situation and unless CAP have done deal with WPG for their port allocation,then I can say CAP would be pushing the proverbial uphill to get anywhere near 3.3Mtpa from that port. You also need to consider the current rail set up running through the guts of the town and its impact on the local town centre.

All rail based loads coming into town (on a light Guage) have to go through the centre of the CBD 24/7. The locals would love it ..not!

Do some maths and see how many tons per carriage(enclosed dumper) of Iron ore can be legally loaded per unit and then work out the maximum number of enclosed carriages can be hauled from Broken Hill to Port Pirie by a locomotive and the total length of the train in question.

You might find that the train may need to be split into three sections and each section will need to be fed through the CBD according to the traffic in town and peak hour limitations.

A barge solution that works needs to be overcome as well ..it's not that simple as it seems.It will take many years to get to 20Mtpa let alone 13Mtpa .. unless CAP have a massive,cashed up gorilla ready to re-invent Port Pirie if and only if the SA and local gov't fast track approvals including the EPA.

By the way , the WPG allocation was for only a max of 3.3 Mtpa and that is contentious.Have a look at the WPG website in the announcement section last year.

I also think their comparative FOB cost chart is inaccurate especially in relation to Grange Resources Southdown project.

Granges Southdown project is an Iron Pellet project not Magnetite fines. This incurs a greater opex but also gets a premium above the Fe3O4 69% FOB prices.

Irons Ores ain't Iron ore pellets and irons ain't irons'...Magnetite is not haematite.

I do note that the chart used figures from Q2 2011 FOB cash cost curve UBS/Metalytics.It's 2012 going into Q2 .. a more accurate assesment would be useful rather than a cut and paste.

But don't worry,I am as equally scathing/pedantic on other Oz Iron Ore explorers wannabe producers power points that do not contain exacting information to back up claims .. it seems to be par for the course with a lot of them.

The golden rule is do you own digging and research .. If you don't believe me ..so be it.

Just my views from my experience.. yours may be different but this is not meant to be a downramp...more a call for execting back up of the "Optimisic broad brush stroke" paint involved in Power Point presentations/updates.

CAP SP has done well to get back to where it is..let's hope it can carry through on the infrastructure/port solutions.

Cheers

HR

No advice given or intended ..it's your money not mine , invest how you like. Strictly my opinions above.As always DYODD.I just react to what I consider glossy and very light on fact overviews by many ASX listed companies.