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    BBY Research - 14 October 14

    Capital Mining Limited


    Author: Russell Wright

    Contact Client Sales & Solutions

    Phone: 1800 551 212

    Email: css@bby.com.au

    Capital Mining Ltd. explores for deposits of gold, base metals and rare metals in central and southern New South Wales.

    Being used to backdoor list the Beijing-based intelligent cloud-learning platform, HexStudy

    Capital Mining Limited (CMY) used to explore for deposits of gold, base metals and rare metals in central and southern New South Wales.

    On 7 October, CMY signed a Memorandum of Understanding (MoU) with Beijing Xingang Zhiyuan Technology Co. Ltd (XGZY), a company incorporated in the Peoples Republic of China. This was signed to back-door list the HexStudy Platform (HexStudy), as the acquisition will constitute a change in the nature and scale of CMYs activities from mining exploration to incorporate both mining exploration and a supplier of Cloud-based education.

    CMY is to commence due diligence to consider the initial acquisition of a 10% interest in XGZY for A$5.7m with a 35% shareholding to be acquired in XGZY company progressively within a twelve month period for total consideration of A$20m (inclusive of the initial 10% interest).

    The acquisition is subject to various conditions precedent, including shareholder approval and CMY will be required to re-comply with Chapter 1 and 2 of ASX Listing Rules if the acquisition is to be completed.

    XGZY owns, develops and operates HexStudy. HexStudy is an intelligent Cloud-learning platform, which integrates advanced internet technology with the latest teaching concepts through the experience of intelligent teaching and digital textbooks, providing an individualised, comprehensive, collaborative education solution.

    XGZY was established in 2012 and is headquartered at Tsinghua University near Beijing. XGZY employs over 50 people in China and the team has a broad mix of experience in the technology, education and publishing sectors.

    The HexStudy platform works to digitise curriculums by allowing lectures and tutorials to be conducted remotely and provides teachers with the ability to track their students progress. 60 textbooks are currently in the process of being digitised and stored on the HexStudy Cloud platform.

    XGYZ holds registered intellectual property over the computer software for delivery of this education material.

    The Chinese education market is experiencing growth with competition in the labour market intensifying as a result of the countrys recent economic prosperity. This competition is forcing large sections of the Chinese population to seek ways to improve their knowledge and skill sets and increase their value in the labour market.

    We are initiating coverage on CMY with a 12-month price target of A$0.028/sh and a SPECULATIVE BUY recommendation.

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    BBY Technical View - as at 14/10/2014

    Short Term Uptrend Resistance $0.011

    Long Term Uptrend Support $0.006

    * DDM Ranking: n\a For enquiries, please email research@bby.com.au

    This Research has been prepared and issued by BBY Ltd and remains the property of BBY Ltd. No material contained in this Research may be reproduced or distributed without prior written approval of BBY, except as allowed by the Copyright Act. This Research is current at the date of publishing. For updates or further information regarding this research, please contact your advisor. BBY does or seeks to undertake business with companies covered in its research and therefore, Investors should consider this report as only a single factor in making their investment decisions. For explanations regarding ratings and other important disclosures, please refer to the disclosure section at the end of this document.

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