Ann: Quarterly Activities Report, page-2

1. BCC is an established, profitable medicinal cannabis company headquartered in British Columbia, Canada. It was incorporated in 2013 and has grown to become one of Canada’s leading medicinal cannabis producers and distributors. BCC is licensed under Canada’s Controlled Drugs and Substances Act, and adheres to Canada’s Access to Cannabis for Medicinal Purposes regulations.
   
   Capital will remain a mineral resources exploration company whose business model is focused on the exploration and development of demand-driven commodities. This will continue to be the Company’s core business focus.
   
   In order to best position Capital for potential future investment in BBC’s medicinal cannabis business (and other potential medicinal cannabis opportunities), the Company established an unlisted public company, Capital Cannabis Limited, which would own and manage any material medicinal cannabis opportunities secured by Capital.
   
   Capital’s participation in the medicinal cannabis sector is entirely conditional on it proceeding to provide further investment in BCC, pursuant to its settlement agreement with BCC. The Company is of the view that an appropriate entry into the medicinal cannabis sector has the potential to be significantly value accretive for Capital shareholders.
   
   Subsequent to the quarter (ASX announcement 20 April 2017), the Company advised that directors of Capital were currently in North America to undertake further negotiations in person with BCC executives in relation to its potential investment in BCC. The Company will update the market on any material progress and outcomes of its negotiations.