COLUMBOOLA JV

A.C.N. 141 993 535 A.C.N. 117 763 443 EPC 1165 “Columboola”

COLUMBOOLA PROJECT

ANNUAL REPORT FOR THE SEVENTH YEAR PERIOD

10/12/2013 to 9/12/2014

TENEMENT HOLDER: SINOCOAL RESOURCES PTY LTD 51%

METROCOAL LIMITED 49%

MANAGER: COLUMBOOLA JOINT VENTURE

AUTHORS: N. VILLA

MAP SHEETS: 1: 250 000 Chinchilla SG56 9

1: 100 000 Miles 8944, Guluguba 8945

COMMODITIES: COAL

GEOGRAPHIC COORDS: 26° 40'S / 150°11'E

DATE: 12 January 2015

1 Table of Contents

Page No.

1. SUMMARY ...... 4

2. INTRODUCTION ...... 6

3. LOCATION, ACCESS & SETTING ...... 7

ENVIRONMENTAL CONSIDERATIONS ...... 7 Endangered Regional Ecosystems ...... 7 Other Environmentally Sensitive Areas ...... 9 Cultural Heritage / Aboriginal Cultural Heritage / Heritage Sites...... 9 4. INDUSTRY BACKGROUND AND MARKET ...... 11

RECENT MINING HISTORY AND COAL UTILIZATION ...... 11 CONVENTIONAL MINING OPPORTUNITIES – OPEN CAST AND UNDERGROUND ...... 12 5. TENURE ...... 13

TENEMENT RESTRICTIONS ...... 13 NATIVE TITLE ...... 14 OVERLAPPING COAL SEAM GAS TENURE (PART 7AA OF THE MRA) ...... 14 RELINQUISHED SUB BLOCKS ...... 15 SYNTECH RESOURCES PTY LTD COOPERATION AREA ...... 15 6. GEOLOGICAL SUMMARY ...... 17

TARGET SEAMS ...... 22 7. PREVIOUS EXPLORATION ...... 24

8. TECHNICAL SUMMARY OF WORK COMPLETED IN THE SIXTH YEAR OF TENURE ...... 25

COMPLIANCE STATEMENT FOR PROGRAM OF ACTIVITIES ...... 25 2013 PROGRAM ...... 25 Planning ...... 25 Landholders...... 25 Cultural Heritage ...... 26 Environmental Management - Plan Site Works and Rehabilitation ...... 26 Gas Management Plan ...... 27 Drill Rig ...... 27 2011 DRILLING PROGRAM RESULTS ...... 28 Drill Hole Details & Locations ...... 28 Survey ...... 29 Wireline Logging ...... 29 Coal Quality ...... 29 GEOLOGICAL MODEL & RESOURCE ...... 29 ECONOMIC POTENTIAL OF EPC 1165 COLUMBOOLA ...... 30 9. EXPLORATION PROGRAM FOR YEAR 7 ...... 31

10. REFERENCES ...... 32

11. APPENDICES AND ENCLOSURES ...... 34

APPENDIX 1 ...... 34 Geological Model ...... 34 APPENDIX 2 ...... 35 2 Environmental Permit ...... 35 ENCLOSURE 1 ...... 36 EPC 1165 Columboola DH Plan ...... 36 ENCLOSURE 2 ...... 37 Syntech Pty Ltd Cooperation Area ...... 37

LIST OF TABLES

Table 1: Sub blocks in EPC1165 ...... 13

Table 2: Overlapping Petroleum Tenures ...... 14

Table 3: Cameby Downs Mining Leases on EPC 1165 ...... 16

Table 4: Drill Collar Data...... 28

LIST OF FIGURES

Figure 1: Location of the EPC 1165 ...... 8

Figure 2: EPA Environmentally Sensitive Areas ...... 10

Figure 3: Surat Basin Stratigraphy ...... 18

Figure 4: Typical Surat Basin Coal Seams ...... 20

Figure 5: Walloon Sub Group Stratigraphy ...... 21

Figure 6: Cameby Downs Representative Stratigraphic Column ...... 23

Note:

This report complies with the MRA reporting regulations as prescribed in sections 13B, 13C or 13D of the Mineral Resources Regulation 1989. The exploration work completed on these tenements complies with the Work Program in the tenure document. Expenditures on the tenements have been met or exceeded.

3 1. SUMMARY

The Columboola JV was established in late 2010 comprising SinoCoal Resources Pty Ltd (51%) and MetroCoal Ltd (49%) interest in Exploration Permit for Coal (EPC) 1165 ‘Columboola’. SinoCoal Resources Pty Ltd is the Australian subsidiary of the China Coal Group based in Beijing, China. MetroCoal Ltd is a listed company on the ASX (ASX Code MTE) with Metallica Minerals Ltd as the majority shareholder at the time of this report. The tenement is managed by the Columboola JV.

The Columboola Project covers the central east of the Surat Basin in South East Queensland. The JV is targeting the Juandah and Taroom Coal Measures within the Jurassic Walloon Sub-group.

Columboola EPC 1165 originally consisted of 294 sub blocks (now 280) and is located west of Chinchilla and covering the town of Miles. The tenement strategically covers the Juandah and Taroom Coal Measures from 100 to 800m depth.

The JV’s exploration philosophy is to identify coal seams suitable for conventional underground mining. The Objective of the sixth year’s program was to continue modelling of the resource based on previous years’ drilling programs across the tenement to quantify the prospective Juandah and Taroom Coal Measures and investigate identified areas where seams are thick, continuous and correlatable.

Field work ceased in October 2012 after which the 2013 program involved resource model development. Further works for the 2014 season were geared towards desktop resource model development and long term preparations for application for a higher form of tenure.

Whilst it was the original intention in 2014 to continue field oriented works, the downturn in the coal market at the end of 2013 saw unfavourable conditions for the justification of continued high levels of spend. As a result, focus was made on the consolidation of data and integration of this information into the resource model.

The cooperation agreement with Syntech Resources Pty Ltd (Syntech) to explore 4 sub-blocks within EPC 1165 established in 2007 continued, with Syntech conducting

4 no work within that area in the reporting period. Syntech has 3 Mining Leases within the Cooperation area, with one granted and 2 still under application.

The JV has identified coal resources of 1,757.6 Mt at both Indicated and Inferred levels of confidence primarily within the Macalister Upper Seam.

The JV has identified an area near Columboola Creek prospective to long wall mining, where Macalister Upper Seam is in excess of 4m in thickness and dips westward at 1° at depths between 80m and 200m below surface.

The JV has also identified a small shallow resource amenable to open cast mining at Goombi. The JV is yet to determine the likelihood of being able to extract the Goombi resource as significant challenges have arisen from overlapping tenure and infrastructure. Whilst at the time of the 2013 report it seemed likely that Goombi would provide a low cost rapid introduction to mining, it would appear that the potential for this has been hampered to the extent that it is no longer viable.

Year 8 will see the JV continue its development of the resource model as well as undertaking planning and development toward the prospective longwall project. Whilst expenditure is being minimised due to market condition, it has been identified that a Mineral Development Licence is a viable pathway for progression.

The area proposed for MDL application provides significant benefit as it lies directly over the existing railway proximal to the future proposed expansion of the Queensland Rail Service (in this case the Surat to Gladstone Link) and associated infrastructure which would enhance the economic viability of coal resources within the permit area.

Furthermore Port capacity at the Port of Brisbane is slated for an increase from 9Mtpa to 14Mtpa, thus potentially providing a second pathway to export outside of the Gladstone Port. This is a more proximate and direct route already utilised by mining proponents in the area such as Yancoal at Cameby Downs.

5 2. INTRODUCTION

The Columboola Joint Venture (JV) comprising SinoCoal Resources Pty Ltd (51%) and MetroCoal Ltd (49%) are the tenure holders in Exploration Permit for Coal (EPC) 1165, Columboola. The tenement is located proximal to other resources in the Surat Basin and covers the highly prospective Juandah and Taroom Coal Measures of the Jurassic Walloon Sub-group.

EPC 1165 was granted on the 10th December 2007 for a period of three (3) years. A Renewal of two (2) was lodged and approved in 2010 with the permit expiring in December 2012. A renewal for 5 years was lodged in July 2012 relinquishing sub blocks over the town of Miles with no relinquishments for 2 years as part of the Urban Restricted Areas which was in negotiation in 2011/12.

EPC 1165 comprises 280 (originally 294) sub-blocks within the Brisbane Block, and is largely located in a North West trending block west of the town of Chinchilla (see Figure 1). The Surat Project covers the northern and eastern ends of the Surat Basin in South East Queensland.

The Columboola Project is located directly atop of the town of Miles, and is accessed via the Warrego Highway and local roads which run through the tenement. Columboola is located on the Chinchilla SG56 9 1: 250 000 Map Sheet and the Miles 8944 and Guluguba 8945 1: 100 000 Map Sheets.

Columboola was considered attractive for exploration as it covers the down dip extensions of the identified Juandah Coal Measures currently forming the coal resource seams of the Cameby Down, Rywung and Sefton Park deposits.

To date, there has been 3 mining leases lodged on portions of the EPC, and 1.757 Bt of thermal coal identified within the balance. One Underground resource has been identified at Columboola and a potential open cut resource at Goombi.

6 3. LOCATION, ACCESS & SETTING

EPC 1165 is located in a north-west trending block 25 km west of Chinchilla and atop the town of Miles on the Warrego Highway and Western rail link (see Figure 1).

The nearest railway is located within the tenement which connects to the Brisbane and proposed Surat Basin Railway. This will enable a rail link to the Port of Gladstone, for potential future exports if the Surat Rail Project proceeds.

The average rainfall as recorded nearby at the Miles Post Office is 651.0mm per annum. The mean average temperature is 27.1°C which ranges from a July monthly average of 19.3°C through to a high with the January monthly average of 33.2°C.

Pastoral activities are mostly cattle grazing and minor forestry.

Environmental Considerations

The Columboola tenure holds Environmental Authority for EPC 1165, EPVX00908413. At this stage there are no significant additional conditions attached to the EA of EPC 1165, apart from a reminder to comply with the Code of Environmental Compliance for Exploration and Mineral Development Projects particularly in regards to the overlap with Category A, B and C environmentally sensitive areas.

Endangered Regional Ecosystems

Endangered Regional Ecosystems (EREs) are described in Sattler and Williams (1999) "The Conservation Status of Queensland Bioregional Ecosystems" as well as additional information and surveys conducted by the Queensland Herbarium. Such definitions were required following the proclamation of the Vegetation Management Act 1999. Endangered regional ecosystems are "Category B Environmentally Sensitive Areas" in the Codes of Environmental Compliance for Exploration, Mineral Development and Mining Projects for Level 2 Code Compliant Activities. For exploration projects, activities involving machinery cannot be undertaken in, or within 500 metres of an ERE.

7 Figure 1: Location of the EPC 1165

8 EPC 1165 has numerous areas (see Figure 2) and these constraints are not unusual for exploration permits in Queensland and are not anticipated to be a major impediment to exploration.

Other Environmentally Sensitive Areas

State Forests are classified as Category C ESAs in the Code of Environmental Compliance for Exploration and Mineral Development Projects for code-compliant (standard) activities. The legislation for State Forests is the Forestry Act 1959 which is administered by the NRW. Prior to carrying out activities in a Category C ESA, the relevant administering authority and the EPA must be consulted. Following consultation, additional conditions may be added to the EA. The Condamine State Forest covers the south western corner of the EPC.

Cultural Heritage / Aboriginal Cultural Heritage / Heritage Sites

Searches have shown that there are Aboriginal Cultural Heritage sites within this EPC, as recorded by the Department of Natural Resources and Water. MetroCoal understands that all significant Aboriginal cultural heritage in Queensland is protected under the Aboriginal Cultural Heritage Act 2003. MetroCoal takes all reasonable and practical measures to ensure that their activities do not harm Aboriginal Cultural Heritage, as required under the legislation.

9 Figure 2: EPA Environmentally Sensitive Areas

10 4. INDUSTRY BACKGROUND AND MARKET

MetroCoal is targeting attractive thermal coal resources suitable for conventional mining operations and Underground Coal Gasification opportunities.

Recent Mining History and Coal Utilization

There are four medium scale open cut mines operating currently in the Surat-Moreton Basin:

 Cameby Downs Mine, located 15 km east of Miles, is currently in production and is owned by Syntech Resources and produces 1.8mtpa to the ROM with 1.4 mtpa railed to Brisbane for export.  Wilkie Creek Mine (ML 5908) owned and operated by Peabody (Wilkie Creek) Pty Ltd. This mine produces a total of 2.5 mtpa of ROM raw coal which is beneficiated for both export and domestic steam coal utilization and is located 36 km west of Dalby.  Kogan Creek Mine (ML 50074) owned by Aberdare Collieries, a subsidiary of CS Energy. The planned production is 3.5 mtpa raw steam coal for use at an on site power station operated by CS Energy. The mine is run under contract by Goldings Contractors and is located 25 km south East of Chinchilla.  Commodore Mine (ML 50151) located 7 km to the south of Millmerran, supplying 3.3 mtpa raw coal to the Millmerran Power Station. This mining lease is held by Queensland Power Company and is currently operated under contract.  New Acland Mine, located 40 km north-west of Toowoomba, produces a beneficiated product for export. Current total raw coal ROM production is 4.5 mtpa. New Hope is currently expanding to 4.8 mtpa and investigating CTL opportunities for excess coal mining capacity that can’t be exported.

There are another four coal resources under evaluation for open cut mining with the most notable being Glencore’s (formerly Xstrata) billion tonne plus Wandoan Deposit. Glencore are proposing a 30 million tpa steaming coal operation with export through the Port of Gladstone. Other coal resources near development are Elimatta (New Hope Corporation Ltd), Woori (Cockatoo Coal Ltd) and The Range (Stanmore Coal Ltd).

11 Conventional Mining Opportunities – Open Cast and Underground

At present there is no significant underground mining in the Surat Basin and identifying areas with seam continuity and competent roof and floor structure will be key to a successful underground mining operation. Knowledge of the coal seams and depositional environment indicate underground mining in the basin would be possible in discrete areas containing 200 to 300 million tonnes using continuous miners in longwall operations. Economics would be attractive in shallower areas with higher productivity rates.

Extensive opencast mining areas are well known immediately up dip of the tenement boundaries. It is possible that small opencast pockets of coal will extend into the EPC 1165 presenting additional mining opportunities albeit on a moderate scale but facilitating underground access to shallow coal.

12 5. TENURE

EPC 1165 is held and managed by SinoCoal resource Pty Ltd (51%) and MetroCoal Ltd (49%), and is managed by the Columboola Joint Venture.

The Columboola tenement (EPC 1165) comprises 294 sub-blocks that were granted on 10th December 2007 for a term of three years and expiring on 9th December 2010. A renewal was lodged in 2010 and the tenure was extended for a further 2 years expiring on 9th December 2012 with no relinquishment requirements. This has been extended again for another 5 years to December 9 2017.

Table 1: Sub blocks in EPC1165

REGION BLOCK A B C D E F G H J K L M N O P Q R S T U V W X Y Z Number BRIS 2090 Q R V W X Y 6 BRIS 2162 A B C D F G H J L M N O Q R S T U V W X Y Z 22 BRIS 2234 A B C D E F G H J K L M N O P Q R S T U V W X Y Z 25 BRIS 2235 A B C D E F G H J K L M N O P Q R S T U V W X Y Z 25 BRIS 2236 L M N Q R S T V W X Y 11 BRIS 2307 A B C D E F G H J K L M N O P Q R S T U V W X Y Z 25 BRIS 2308 A B C D E F G H J K L M N O P Q R S T U V W X Y Z 25 BRIS 2309 A B C D F G H J L M N O Q R S T U V W X Y Z 22 BRIS 2310 Q R V W 4 BRIS 2379 B C D E H J K O P U 10 BRIS 2380 A B C D E F G H J K L M N O P Q R S T U W X Y Z 24 BRIS 2381 A B C D E F G H J K L M N O P Q R S T U V W X Y Z 25 BRIS 2382 A B C D F G H J L M N O P Q R S T U V W 20 BRIS 2452 C D E H J K N O P S T U X Y Z 15 BRIS 2453 A B C D E F G H J K L M N O P Q R S T U V W X Y Z 25 BRIS 2454 A B F G L M Q R V W 10 Total 294

A cash bond of $2,500 has been lodged with the Department. The required combined expenditure for the Seventh Year period was $40,000 however the actual expenditure well exceeded in the earlier years, as has been submitted in previous year’s expenditure reports.

Tenement restrictions

EPC 1165 is mainly freehold land. Further restrictions are covered in the ‘Environmental Considerations’ section of this report.

13

Native Title

There are no current native title claims over EPC 1165. The Barunggam People claim QC099/005 / QUD6004/99 which was current in the previous reporting period has been rejected.

Overlapping Coal Seam Gas Tenure (Part 7AA of the MRA)

If in the future a coal mining lease (“ML”) within any of the EPC is applied for, then Part 7AA of the Mineral Resources Act applies. In brief, Part 7AA requires the ML applicant to consider the overlapping petroleum interests, and to negotiate with petroleum tenure holders. Current overlapping petroleum tenures are tabulated in Table 2.

Table 2: Overlapping Petroleum Tenures

Tenure Tenure Rec Type Number Status Principal Holder 1 PL 216 GRANTED ORIGIN ENERGY CSG LIMITED 2 PL 267 GRANTED ORIGIN ENERGY CSG LIMITED 3 PL 247 GRANTED QUEENSLAND GAS COMPANY LIMITED 4 PL 226 GRANTED ORIGIN ENERGY CSG LIMITED 5 PL 211 GRANTED QUEENSLAND GAS COMPANY LIMITED 6 PL 201 GRANTED QUEENSLAND GAS COMPANY LIMITED 7 PL 72 SURRENDERED 8 PL 179 GRANTED QUEENSLAND GAS COMPANY LIMITED 9 PL 212 GRANTED QUEENSLAND GAS COMPANY LIMITED 10 PL 458 GRANTED BG INTERNATIONAL LTD 1 EPP 747 APPLICATION ARROW ENERGY LTD 2 EPP 676 GRANTED AUSTRALIAN CBM PTY LTD 3 EPP 610 GRANTED QUEENSLAND GAS COMPANY LIMITED 4 EPP 810 GRANTED ARROW ENERGY LTD 5 EPP 702 GRANTED ORIGIN ENERGY CSG LIMITED 6 EPP 692 GRANTED ORIGIN ENERGY CSG LIMITED 7 EPP 632 GRANTED QUEENSLAND GAS COMPANY LIMITED

14 Relinquished Sub Blocks

Due to Urban Restriction Areas’ policy attempted to be introduced by the State Government in 2011, sub blocks within 2km of the township of Miles were relinquished in 2012 in anticipation of this policy rolling out. This policy however failed to pass through parliament and Government changed as a result

Syntech Resources Pty Ltd Cooperation Area

In 2007, MetroCoal Ltd and Syntech Resources Pty Ltd (Syntech) entered a Cooperation agreement over four sub-blocks within EPC 1165 ‘Columboola’ which are adjacent to Syntech’s EPC 732 and ML 50233 ‘Cameby Downs’.

The "Cooperation Area" means the area comprising sub-blocks A, B, C and D in block number BRIS 2309. This area covers a stranded area of land between ML 50233 and the Warrego Highway and Western rail link.

The area was considered too small and physically constrained to be prospective for MetroCoal. As this area links ML 50233 to the established transport infrastructure, it is considered significant to Syntech for the development of the Cameby Downs deposit.

MetroCoal granted Syntech the right to enter EPC1165 comprising the Cooperation Area for the following purposes: 1. to conduct investigations in relation to the coal resources in the Cooperation Area 2. to conduct any other investigations in the Cooperation Area reasonably required by Syntech in order to apply for a mining lease over all or part of the Cooperation Area including, without limitation, environmental investigations and cultural heritage investigations 3. to apply for a prospecting permit over all or part of the Cooperation Area 4. to apply for a mining lease over all or part of the Cooperation Area

Syntech has provided exploration data acquired over the cooperation area to MetroCoal and exploration costs have been provided to be included in the expenditure reports for EPC 1165.

15 In 2009, Syntech lodged an additional two Mining Lease Applications over this area for their Cameby Downs Expansion Project.

Table 3: Cameby Downs Mining Leases on EPC 1165

Tenure Date Date Date Area in Status Name Number Lodged Granted Expires hectares

50233 GRANTED CAMEBY DOWNS 8-Jun-07 31-Jul-08 31-Jul-38 2722.15

CAMEBY DOWNS 50260 APPLICATION 16-Nov-09 2234.956 EAST

COLUMBOOLA CREEK 50269 APPLICATION 16-Nov-09 190.749 CROSSING

16 6. GEOLOGICAL SUMMARY

The Surat and Clarence Moreton Basins developed over part of the Tasman Geosyncline during the Early Triassic, Jurassic, and Cretaceous Periods. The Jurassic and Triassic were periods of continental deposition dominated by fluviatile sedimentation. Two marine incursions occurred during the Early Cretaceous. Contemporaneous andesitic volcanism was prevalent to the east during both the Jurassic and Cretaceous, and the sediments reflect that activity via a high volcanogenic provenance, and common pyroclastic rocks. The late Cretaceous and Early Tertiary were periods of erosion and deep weathering. The Oligocene and Miocene were marked by phases of intense basic volcanism around the eastern margins of the Basin. The present erosional remnant of the Basin consists of uplifted and tilted but relatively undisturbed Jurassic and Cretaceous strata overlying the Permo-Triassic sediments of the southern Bowen basin and Palaeozoic basement. The overall sedimentary development of both Basins was contemporaneous, and for the most part broad stratigraphic units can be correlated. However underlying tectonics and sources of sediment were different, which has resulted in differentiation of the sedimentary sequences, and in particular, the coal bearing sequences have different characteristics.

The sedimentary sequences of both the Basins vary in internal geometry and overall sediment provenance. The boundary between the basins accepted by most workers is marked by the position of the Kumbarilla Ridge, a basement ridge which controlled sedimentation to the east and west and is a logical divide between the two Basins. However, the sedimentary sequences in each Basin are differentiated in overall characteristics at significant distances from the dividing ridge, and the sequences at the position of the Ridge, are in practical terms similar to those sequences to the immediate west, within the Surat Basin. For this reason, and because EPC 1165 is located north of the axis of the Kumbarilla Ridge, discussion in this report assumes that the relevant Basin, the Surat Basin and its particular stratigraphy applies to all of EPC 1165. This report focuses on the Jurassic Period, within which occurred the coal depositions of interest. Description of the Surat Basin Jurassic stratigraphy of the area is contained in Figure 3.

17 Figure 3: Surat Basin Stratigraphy

18 In the Surat Basin, Jurassic sedimentation commenced with deposition of the Precipice Sandstone, Evergreen Formation, the Hutton Sandstone and Eurombah Formation. The reader is referred to descriptions of these units by Exon 1976. Lower fluvial sedimentation followed with deposition of the Walloon sub-group, divided into three units: the Taroom Coal Measures, Tangalooma Sandstone, and Juandah Coal Measures (Jones and Patrick 1981, Scott et al 2006). The Walloon Sub-group was followed by upper fluvial sedimentation of the Springbok Sandstone, Westbourne Formation and the Gubberamunda Sandstone (See Exon 1976).

Rocks deposited during the Middle Jurassic period contain coal seams of interest to coal explorers.

The Middle Jurassic Walloon Sub-group contains two episodes of coal deposition. The Juandah Coal Measures occurs at depths between subcrop and 500 metres within EPC 1165. The Taroom Coal Measures crop out to the east of the Juandah Coal Measures, and are positioned about 180 metres stratigraphically below the Juandah Coal Measures. EPC 1165 Columboola covers areas containing strata of both the Juandah Coal Measures and Taroom Coal Measures at depths suitable for both underground mining and UCG exploitation.

The coal “seams” occurring within the two coal bearing Formations are commonly described as “coal packages”, as distinct tabular coal seams are relatively uncommon, with seam splitting and variable thickness a common feature. Often a “coal package” will contain a number of coal seams, and that “package” can be recognized on a basin wide scale. Scott et al 2006 have recognized seven packages within the Juandah Coal Measures, and three packages within the Taroom Coal Measures, which can be correlated over most of the Surat Basin explored to date.

19 Figure 4: Typical Surat Basin Coal Seams

The Juandah Coal Measures contains, near the top of the Formation, a coal horizon which has been intensively drilled at a wide number of locations near the sub-crop. This seam is recognized geologically over a very wide area of the Basin, and is commonly referred to as the “Macalister Seam”. The preceding coal packages are characterized by much more common seam splitting, such that following exploration work with thousands of drill holes, no commercially interesting deposits have been located within these packages. The Taroom Coal Measures appear where best developed near Taroom, to contain only one package which has potentially economic characteristics. In other parts of the Basin, such as the Dalby-Acland region multiple seams with economic potential occur. At the present state of knowledge, these seams have not been definitely correlated with the “packages” identified by Scott et al 2007.

20 Figure 5: Walloon Sub Group Stratigraphy

21 The coal packages in the Juandah Coal Measures were formed in an environment where fluvial channels were from time to time relatively stable, enabling thick peat deposition with only minor interruption by overbank mud deposits and minor pyroclastic deposition. The geometry of swamp areas was such that the areas of thick peat deposition formed “pod shaped” deposits between channels, and channel migration and relocation restricted peat swamp development over large areas. The plan shape of significantly thick deposits outlined by drilling is commonly of restricted areal extent, rather than the very wide extent characterizing the seams of the Bowen and Sydney Basins (See Figure 4). This feature can be seen in the maps showing the Columboola target areas, where known resource outlines of previously explored coal deposits is shown.

The Taroom Coal Measures formed in a similar environment to the Juandah Coal Measures, with likely lower energy fluviatile activity. Three seams are consistently recognized occurring near the top of the Formation, the Auburn, Bulwer and Condamine coal packages.

Target Seams

Exploration has identified the Macalister Seam Package of the Juandah Coal Measures and the Condamine Seam Package of the Taroom Coal Measures as potentially economic.

The nearby Cameby Mine is mining the following Macalister Seams identified as MA1, MA2T, MA2B, MA3 and MA4 (See Figure 6). As the pit progresses, the Kogan Seams will become available as the LOX line moves up the stratigraphic sequence.

The Macalister Seam Package is a useful marker bed as it is laterally consistent and generally contains coal between 2 and 6m thick across the tenement.

22 Figure 6: Cameby Downs Representative Stratigraphic Column

23

7. PREVIOUS EXPLORATION

Using the Queensland Department of Mines & Energy (QME) ‘Interactive Maps’ (IRTM), MetroCoal identified fourteen (14) previous Exploration Permits (nee Authority to Prospect Coal) for coal which wholly or partially covered sub-blocks of EPC 1165 Columboola. Using the QME’s QDEX’ database, MetroCoal identified fifty four (54) ‘open file’ company reports available for review. These reports are generally progress reports and relinquishment reports.

MetroCoal identified 195 historic exploration drill holes within or nearby EPC 1165, and numerous CSG Wells within the EPC, a drill hole plan is in the Enclosures.

24 8. TECHNICAL SUMMARY OF WORK COMPLETED IN THE SEVENTH YEAR OF TENURE

Compliance Statement for Program of Activities

The Columboola JV complied with the ‘Program of Activities’ it outlined in the EPC Application.

2014 Program

Planning

2014 was re-designated for interrogation and integration of previous drilling results from 2013 into the resource model. Further planning in 2014 was conducted for working towards a Mineral Development Lease or Mining Lease Application designated for submission in 2015. Studies have shown a favourable bias toward MDL however submission is yet to be made.

All previous drill hole spacing was governed by the JORC Code http://www.jorc.org/jorc_code.asp and more specifically the “Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves”, 2003. This JORC code will see an update to the 2012 JORC Code with new, more stringent parameters and reporting obligations. As of early December 2013 this new JORC Code will be mandatory on all resource reporting.

Landholders

Amendments to the Mineral Resource Act 1989 (MRA) came into effect as exploration commenced in late 2010. This resulted in a change of landholder management strategy as the requirement for Compensation and Conduct Agreements (CCAs) proved to be significantly more onerous than anticipated.

While good relations were experienced with all landholders, the time taken and resources required to secure a signed CCA increased the difficulty of scheduling and accessing of property for drilling activities.

25 Cultural Heritage

The Barunggum People were identified as the last Native Title Claimant and agreements were put in place for them to conduct Cultural heritage Clearances for all proposed activities.

Clearances were conducted on an ad hoc basis as required using an agreed Archaeologist and Monitors provided by the Barunggum People.

A Conservative approach was taken with respect to drill hole locations, as creeks are the most likely place for locating cultural heritage and all drilling was relocated away from creek environs to reduce the risk of disturbance.

Environmental Management - Plan Site Works and Rehabilitation

An Environmental Management Plan (EMP) has been established based on the EPC Environmental License conditions. It has been augmented with industry best practise and conditions outlined in the ‘Code of Conduct’ for Landholder explorer relations.

Equipment used if/when preparing for a drilling program is primarily a 15 ton Excavator and a skid steer loader, which were supported by a Body Truck and Tipper.

Drill sites were sited on flat easily accessible ground which would minimise earthworks required for site preparation. All loose timber, large and sharp rocks was cleared. If topsoil was removed, it was ‘windrowed’ on the downhill side of the drill pad for storage and to act as a sediment trap and diversion wall for small rain events.

Drill sumps were excavated using an excavator. At the completion of drilling, remaining sump water was pumped to a tanker for recycling off site at a designated settlement pond.

The excavator re-filled the drill sumps, re-levelled the drill site and spread the topsoil. The skid steer loader occasionally completed a final finish if required.

Drill sites were left as a stable landform, and constructed to be as resistant as possible to erosion and channelling when grass returned.

26

Regular future site inspections are planned to ensure rehabilitation is satisfactory and remediation work will be conducted if required.

Gas Management Plan

Coal Seam Gas is known to occur within the tenement and the JV identified coal seam gas as a hazard to drilling. As some drilling was within active Coal Seam Gas areas, groundwater pressures had been reduced which increased the desorption of the gas from the coal seam and with the good permeability of the coal, the likelihood of pressured gas has increased.

An annular bag was used to manage any unexpected gas kicks and provide a secondary control mechanism if gas was encountered. Approximately the first 10% of the proposed hole depth was cased with threaded steel casing and pressure cemented to establish a secure mounting point for the annular bag.

All drilling was to be ‘mud drilling’ using the hydrostatic head pressure of the water column as the primary control any coal seam gas.

Gas was encountered in several holes and the gas management plan was activated and the gas was controlled.

Drill Rig

When drilling several drill rig types are used, with most holes being completed by a multi-purpose UDR 1200 drill rig. This drill rig could drill both rotary and HQ core to target depths and was ideal for this type of program.

27

2014 Drilling Program Results

As the focus was on model and data management and reporting and planning, no drilling was conducted in 2014

Drill Hole Details & Locations

Not applicable. See above.

Table 4: Drill Collar Data

Hole Casing Total Meters Easting Northing RL Hole ID Type Depth Depth Cored (MGA 94) (MGA 94) (AHD)

* Final Survey Pending C= fully cored, R = chip holes, PC = partly cored.

28 Survey

As no drilling was conducted no survey was required, however when drilled, all drill holes are preliminary surveyed using a handheld GPS. Holes are then more accurately surveyed using a Qualified Surveyor who uses known survey markers as reference bases.

Wireline Logging

As no drilling was conducted, no wireline logging was necessary.

Coal Quality

Coal Quality analysis was completed on samples taken from previous drilling. Washability results are currently being determined and will be included in next year’s report.

Coal qualities sampled during previous programs reflect similar coal qualities found nearby at the Cameby Downs Deposit and other known Surat Basin resources.

No detailed float sink analysis was completed at the time of this report.

Drilling Production and Problems

As no drilling was conducted for 2013, this section is not applicable.

Geological Model & Resource

A preliminary geological model was established in 2010 by MetroCoal staff and was used as an initial base for GEOS Mining to establish theirs. With significant CSG exploration and production within the EPC, significant geological information was available from which to build the model.

In early years, GEOS Mining had estimated an Inferred Thermal Coal Underground Resource of 1,297 Mt within EPC compliant to the 2004 JORC Code.

29 Since that time, GeoConsult has modified and updated the resource model with greater accuracy and relevance, resulting in the 1,757 Mt Resource (Indicated and Inferred).

Details are reported in the Modelling Notes attached in Appendix 1.

Economic Potential of EPC 1165 Columboola

Longwall Mining

Potential for underground mining is considered highly contingent on mining economics. Scope exists for the potential to exploit medium to large underground resources of thermal coal for the export market.

The future Surat Basin Railway will also have an important effect on the region with access to the Gladstone Port providing a potentially economic means of exporting coal.

More recent developments with the increase in capacity of the Port of Brisbane will also have the potential to significantly affect the project and its path to export.

Open Cast Mining As previously reported, there will be open cast mining within the Cooperation area with the Cameby Downs Mine. Scope for open cast mining is limited to the eastern edge of the EPC and may see future development of a small open pit project at Goombi. This will however be highly dependent on the overlapping tenure and infrastructure from CSG proponents in the area.

30 9. EXPLORATION PROGRAM FOR YEAR 8

The JV proposes to continue with assessment of the form of tenure including type most suitable to progress e.g. Mineral Development Lease whilst maintaining Exploration Lease.

Resource model development is ongoing and will see further desktop studies on mine planning, logistics and washability.

A groundwater program will undoubtedly form part of future programs, amongst other environmental monitoring, for the purposes of completing an EIS. The timing of this is yet to be determined and may not be executed until such times as access can be assured in and around existing CSG infrastructure.

A closer spaced drilling program may not be necessary in order to satisfy the criteria for a MLA or MDL, as a concept study may proceed based on the Indicated Resource already established by the Columboola JV.

31 10. REFERENCES

1. EXON, N F ,1976 “Geology of the Surat Basin in Queensland” BMR Bull 166, 1976 2. JONES G.D., & PATRICK R.B.,1981 “ Stratigraphy and Exploration Geology of the North- eastern Surat Basin “ Journal of the Coal Geology Group of the Geological Society of Australia – Surat Moreton Basin Symposium Vol 1 part 4. 3. LEBLANG,G.M., RAYMENT, P.A., and SMYTH, M. 1981 “The Austinvale Coal Deposit – A Palaeoenvironmental Analysis” Coal Geology Vol 1 Part 4. MATHESON,S.G. (1991). “Geology and Coal Resources of the Moreton Basin, Queensland,” 5. SCOTT,S., ANDERSON,B., CROSDALE,P., DINGWALL,J., and LEBLANG,G. ( 2007) “Coal Petrology and Coal Seam Gas Contents of the Walloon Subgroup – Surat Basin, Queensland, Australia.” International Journal of Coal Geology Vol 70 6. Price Waterhouse Coopers “Linc Energy Limited, Underground Coal Gasification, ‘Industry Review and an Assessment of the Potential of UCG and UCG Value added Products.” May 2008, http://www.lincenergy.com.au/pdf/ucgreport-01.pdf 7. Australian Coal Gasification; http://www.australiancoal.com.au/cleantech.htm#gasification 8. Carbon Energy Pty Ltd : http://www.carbonenergy.com.au/home.php 9. Linc Energy Ltd; http://www.lincenergy.com.au/ucg.php 10. Cougar Energy Ltd; http://www.cougarenergy.com.au/index.html 11. Ergo Exergy Technologies, Inc; http://www.ergoexergy.com/ 12. UCG Partnership, UK ; http://www.ucgp.com/ 13. World Coal Institute: http://www.worldcoal.org/pages/content/index.asp?PageID=425 14. Syngas Refiner, USA: http://www.syngasrefiner.com/index.asp 15. The Coal Authority, UK; http://www.coal.gov.uk/resources/cleanercoaltechnologies/ucgintro.cfm 16. The Lawrence Livermore National Laboratory, USA; 17. UCG Engineering Ltd, UK http://www.coal-ucg.com/index.html 18. 6 Monthly Progress Report for Period Ending 23rd January, 1981 Authority to Prospect 312C Barakula/Kentucky, Shell, QDEX CR 8695 19. CSIRO: http://www.csiro.au/ 20. Milmerran Power Station: http://www.intergen.com/global/millmerran.php 21. Commodore Coal Mine: http://www.roche.com.au/Default.aspx?aCateId=965 22. Kogan Creek Power Station: http://www.csenergy.com.au/power_stations/ps_kogancreek.aspx 23. Kogan Creek Mine: http://www.golding.com.au/projects/civil_construction.php#Kogan_Power_Station 24. Syntech Resources (Australian Mining Holdings: http://mining.com.au/index.php?en_company 25. Golder Associates' Linc Energy’s Chinchilla Pilot Burn Environmental Report,” December 2005 26. Zerogen: http://www.zerogen.com.au/technologies/capture 27. BCG Energy Ltd; British Coal Gasification http://www.britishcoalgasification.co.uk/ 28. Friedmann, J 2007, “Fire in the Hole’ Science & Technology Review; https://www.llnl.gov/str/April07/Friedmann.html 29. QLD Government Mining Journal, Jan 15, 1923, QME Record 1971/17, BRN 58423. 30. Walker, L 1999, Underground Coal Gasification – A Clean Technology Ready for Development; http://www.australiancoal.csiro.au/pdfs/walker.pdf 31. Sasol; http://www.sasol.com 32. http://en.wikipedia.org/wiki/Fischer_Tropsch 33. Incitec Pivot Ltd: http://www.incitecpivot.com.au 34. Origin Energy Ltd: http://www.originenergy.com.au 35. QLD Mineral Resources Act 1989 http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/M/MineralReA89.pdf 36. QLD Petroleum & Gas (Production & Safety) Act 2004 http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/M/MineralReA89.pdf 37. Peabody: http://www.peabodyenergy.com.au/qld/wilkie-creek.html 38. Utilisation of Queensland’s Low and High Volatile Coals in Power Generation. By Dr Chris Spero Manager Engineering Technology – CS Energy, Brisbane 39. Qld Govt Publication “Utilisation of Walloon Coals for Power Generation”. Compiled by Ray Smith DNRM) 40. Coal Industry Review 2002-2003, 52nd Edition - Bureau of Mining and Petroleum Queensland 41. International Energy Agency: http://www.worldenergyoutlook.org/ 42. Register of Australian Mining 2004/05 43. QTHERM http://www.nrw.qld.gov.au/mines/coal/pdf/walloon_coal_6.pdf 44. Leblang 2007 Internal Correspondence.

32 45. Swarbrick, C.F.J., Grey, A.R.G., Exon, N.F. 1973 Injune Creek Group - amendments and an addition to stratigraphic nomenclature in the Surat Basin. Queensland Government Mining Journal LXXIV(856) p57-62 46. Queensland Coals 14th Edition, 2003, QLD DNRM 47. Queensland QME QDEX Exploration Reports https://qeri.dme.qld.gov.au/qeri/controller/Home

33

11. APPENDICES AND ENCLOSURES

Appendix 1

Geological Model

34

Appendix 2

Environmental Permit

35

Enclosure 1

EPC 1165 Columboola DH Plan

36 Enclosure 2

Syntech Pty Ltd Cooperation Area

7,020,000mN 7,040,000mN 7,060,000mN EPC1165

200,000mE 7,045,000mN 7,046,000mN 7,047,000mN 7,048,000mN  TD93.83 R046 INDEXTO COOPERATION AREA within EPC1165 (Sub Blocks a,b,c,d of Block 2309, Brisbane) 2309, Block of a,b,c,d Blocks (Sub EPC1165 within

220,000mE Syntech Resources P L Exploration Cooperation Area Cooperation PL Exploration Resources Syntech (SubBlocks a,b,c,d Block 2309, ExplorationCooperation Area a TDNA R047 TDNA R2415,R047  EPC1165 Syntech ResourcesL N  Columboola

Brisbane) 235,000mE

240,000mE

260,000mE

236,000mE  TDNA R2349 b 

TD84 R4524 Warrego Highway Warrego   CD550 

TD120 CD551 TD92 R021 TD114  237,000mE  TDNA R042  TDNA R2350 

CD773 

TD106 CD577  TD90  CD514 CD774C  TD114 TD121 CD575 TD108

238,000mE  CD578 TD102   CD772C  TD97.73 CD576 CD739C TD108  c TD99.33 CD742C TD100.25   

CD785C 

TD102 CD573  TD90 R2416  TD96 CD740 CD747C     TD108 TD94.15 CD574R CD746C CD743 R2416 TD96  TDNA R2361  Syntech Resources P L drill hole (cored hole) hole Resources Syntech drill P L hole) (open hole Resources Syntech drill P L hole) (open hole drill Previousexploration  LEGEND CD748C TD94.91 CD570 TD78  CD743 TD108  CD566 TD96  CD572 TD84   CD746C TDNA R2393 239,000mE TD81.74 CD567 TD72 

CD741CR TD96 

CD779C 

TD79.23 CD569   TD72.17  CD782  CD744C CD565 TD101 TD84 TD78 TDNA R2344  CD571 TD108 

CD745C  CD558C  TD78 CD568 CD781C   TD74.05 TD72 TD90

CD558  TD72 CD775C 

TD78.34 CD562   d TD78 CD519  CD559C TD84 TD80.11 CD557 TD78

240,000mE  CD564   TD90 CD776C 

TDNA R2343 CD560R

TD81  TD90  CD556C  TD72 CD668C

 TD68

TDNA R101 CD556  TD72 CD563  TD102 CD561C  TD62 CD555 TD108  CD669 TD84  EPC1165 EISED REVI BY DRAFTED BY PILED COM CD814C  TD71.07 CD794  EXPLORATION COOPERATION AREA COOPERATION EXPLORATION TD66

CD796C  0 TD51 CD795 TD72  SYNTECH RESOURCES P L P RESOURCES SYNTECH TDNA R2342  .J OR E CORRI J. K. FORBES N. DRILL HOLE LOCATIONS HOLE DRILL

200 CD793 TD66   CD813C  CD811C 241,000mE TD59.74 CD809 TD43.24 

METROCOAL METROCOAL LIMITED TD66 CD810C TD47 400 1:20,000  within the within

CD812C  E 09 FEB 09 FEB TD56 CD807

 TD65 600 Proj.: MGA94 (zone56) MGA94 Proj.: WGN : No G DW

SCALE EPC1165  TD84 R2408 : 0 000 20, 1:  800 TDNA R2341 COLUMBOOLA 1,000 m 1,000 FIGURE

242,000mE

37