FIOL Rail Update April 2012

FIOL Rail UPDATE

April 2012

Cabrals tenement portfolio sits within close proximity to the FIOL Rail Line (FIOL), also commonly known as the East West Rail Line, in the State of Bahia, Brazil. FIOL is being fully funded by the State and Federal Governments of Brazil. Phase One of FIOL is currently under construction with a current commissioning date of late 2013. FIOL will link directly with the proposed new deep water port of Porto Sul to be located north of the existing port of Ilhus.

FIOL will be a heavy haulage rail line dedicated to bulk commodities, such as iron ore, in this new frontier and, to a lesser extent, agricultural products such as grains and soy beans. Cabral is fortunate in that its iron ore tenement portfolio is located immediately on the FIOL rail corridor. Indeed, the concrete sleeper manufacturing plant recently commissioned near the town of Ubiraaba is situated within a few kilometres from Cabrals most promising magnetite tenement at Morro do Gergelim.

Phase One of the FIOL rail line will be constructed 536 kilometres inland from Porto Sul and will extend due west to within close proximity to the township of Caetit. Cabrals iron ore tenement portfolio is located within Phase One and before Caetit. Phase One construction is divided into 4 zones which are currently under construction via 4 separate construction consortiums who are building each zone in parallel as follows:

Zone 1 for 125 kms

Zone 2 for 118 kms

Zone 3 for 115 kms

Zone 4 for 178 kms VALEC Engenharia, Construes e Ferrovias S.A. (VALEC), a Federal Government owned Rail Ministry company, is coordinating the construction process and managing the construction consortiums for each zone. The annual capacity of FIOL will initially be approximately 52 million tonnes per annum but with significant expansion capabilities. Phase One will have passing loops or sidings of approximately 2,300 metres every 13 kilometres or so. With debottlenecking and efficient operatorship FIOL is likely to achieve significantly higher volumes over and above 52 million tonnes per annum in the medium to long term.

Eventually FIOL will extend a further 860 kms or so inland with the idea of opening up economic development and creating jobs and prosperity in the region. Cabral has signed a Protocol of Intentions with the State of Bahia which proposes rail and port allocations of up to 15.0mtpa of Cabrals future iron ore products. On the following pages you can see pictorial progress on each of the 4 zones which comprise Phase One of FIOL.

1 FIOL ZONE 1 125kms

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FIOL Rail Update April 2012

Documents

FIOL Rail Update April 2012