Riversdale Resources Target's Statement, 28 March 2019

Target's Statement

Riversdale Resources Limited ACN 152 669 291

This Target's Statement has been issued in response to the off-market takeover bid made by Hancock Corporation Pty Ltd 615 809 740, a wholly-owned subsidiary of Hancock Prospecting Pty Ltd ACN 008 676 417, for all of the ordinary shares in Riversdale Resources Limited.

The Independent Directors of Riversdale Resources Limited recommend that you

REJECT

the Offer of $2.20 per Riversdale Share, because it materially undervalues Riversdale and does not represent fair value for your Riversdale Shares.

This is an important document and requires your immediate attention. If you are in any doubt about how to deal with this document, you should consult your financial, legal or other professional adviser immediately.

If you have any questions or require assistance in relation to the Offer, please contact the shareholder information line on +61 2 8298 6106.

Financial adviser Legal adviser

IMPORTANT NOTICES

Nature of this document

This document is a Target's Statement issued by Riversdale Resources Limited ACN 152 669 291 (Riversdale) under Part 6.5 of the Corporations Act in response to the off-market takeover-bid made by Hancock Corporation Pty Limited (Hancock Corporation), a wholly-owned subsidiary of Hancock Prospecting Pty Limited (Hancock Prospecting) for all of the ordinary shares in Riversdale that it does not already hold, which was sent to Riversdale Shareholders on or about 13 March 2019.

You should read this Target's Statement in full and seek independent advice if you have any queries in respect of the Offer.

ASIC disclaimer

A copy of this Target's Statement was lodged with ASIC on 28 March 2019. Neither ASIC nor any of its respective officers, take any responsibility for the contents of this Target's Statement.

Defined terms

A number of defined terms are used in this Target's Statement. These terms are defined in section 9 of the Target's Statement. In addition, unless the contrary intention appears or the context requires otherwise, words and phrases used in this Target's Statement have the same meaning and interpretation as in the Corporations Act.

No account of personal circumstances

Nothing in this Target's Statement constitutes investment, legal, tax or other advice. This Target's Statement, including the Independent Expert's Report and Technical Expert's Report, does not take into account the individual investment objectives, financial or tax situation or particular needs of any Riversdale Shareholder, and should not be relied upon as the sole basis for any investment decision in relation to Riversdale Shares. You should seek independent legal, financial and taxation advice before making a decision as to whether or not to accept the Offer.

Disclaimer as to forward looking statements

Some of the statements appearing in this Target's Statement, including the Independent Expert's Report, may be in the nature of forward looking statements. The forward-looking statements in this Target's Statement are not based on historical facts, but rather reflect the current views of Riversdale held only as at the date of this Target's Statement (or the date the statement was actually made, as the case may be) concerning future results and events and generally may be identified by the use of forward-looking words such as "believe", "aim", "expect", "expected", "targeted", "anticipated", "intending", "foreseeing", "likely", "should", "planned", "may", "estimated", "potential" or other similar words and phrases. Similarly, statements that describe Riversdale's objectives, plans, goals or expectations may be forward-looking statements.

Any forward-looking statements included in this Target's Statement have been made on reasonable grounds. Although Riversdale believes that the views reflected in any forward-looking statements in this Target's Statement have been made on a reasonable basis, no assurance can be given that such views will prove to be correct.

As such forward-looking statements relate to future matters, they are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause Riversdale 's actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed, projected or implied by such forward-looking statements. Deviations as to future results, performance and achievements are both normal and to be expected. Riversdale Shareholders should review carefully all of the information, including the financial information, included in this Target's Statement. The forward-looking statements included in this Target's Statement are made only as at the date of this Target's Statement or the date the statement was actually made, as the case may be. Riversdale and its directors, officers and advisers give no representation, assurance or guarantee to Riversdale Shareholders or any other person that any forward-looking statements will actually occur or be achieved. Riversdale Shareholders are cautioned not to place undue reliance on forward- looking statements. Further, the past performance of Riversdale is not a guarantee of future performance.

Riversdale does not give any undertaking to update or revise forward-looking statements after the date of this Target's Statement to reflect any change in expectations in relation to those statements or any change in events, conditions or circumstances on which any such statement is based.

Disclaimer as to information

The information on Hancock Corporation contained in this Target's Statement has been prepared by Riversdale from publicly available information (including information contained in the Bidder's Statement). Information in this Target's Statement about Hancock Corporation has not been independently verified by Riversdale. Accordingly, Riversdale does not, subject to the Corporations Act, make any representation or warranty, express or implied, as to the accuracy or completeness of such information.

The Independent Expert's Report has been prepared by the Independent Expert for the purposes of this Target's Statement and the Independent Expert takes responsibility for that report.

The Technical Expert's Report has been prepared by the Technical Expert for the purposes of this Target's Statement and the Technical Expert takes responsibility for that report.

Risk factors

Riversdale Shareholders should note that there are a number of risk factors attached to their investment in Riversdale. Section 6 of this Target's Statement sets out further information on some of those risks.

Maps, diagrams and data in charts and tables

Any diagrams, charts, maps, graphs and tables appearing in this Target's Statement are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in diagrams, charts, maps, graphs and tables is based on information available at the date of this Target's Statement.

Rounding

A number of figures, amounts, percentages, prices, estimates, calculations of value and fractions in this Target' Statement are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Target's Statement.

Foreign jurisdiction

The release, publication or distribution of this Target's Statement in jurisdictions outside Australia may be restricted by law and any person who comes into possession of it should seek advice and observe any such restrictions. Accordingly, persons who come into possession of this Target's Statement should inform themselves of, and observe, those restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws or regulations.

This Target's Statement has been prepared in accordance with Australian law and the information contained in this Target's Statement may not be the same as that which would have been disclosed if this Target's Statement had been prepared in accordance with the laws and regulations outside Australia.

Internet

Riversdale maintains an internet site. The Riversdale internet site is www.rivresources.com. Information contained in, or otherwise accessible through, this internet site is not a part of this Target's Statement. All references in this Target's Statement to the Riversdale internet site are for your information only.

Privacy

Riversdale has collected your information from the register of Riversdale Shareholders for the purposes of providing you with this Target's Statement. The type of information Riversdale has collected about you includes your name, contact details and information on your shareholdings in Riversdale. Without this information, Riversdale would be hindered in its ability to issue this Target's Statement. The Corporations Act requires the names and addresses of Riversdale Shareholders to be held in a public register. Your information may be disclosed on a confidential basis to Riversdale and its related bodies corporate, and holders of Riversdale Shares and external service providers, and may be required to be disclosed to regulators, such as ASIC. If you would like details of information about you held by Riversdale, please contact us using the contact details shown below.

Shareholder information line

If you have any questions in relation to the Offer, please contact the Shareholder information line on +61 2 8298 6106. Further information relating to the Offer can be obtained from Riversdale's website at www.rivresources.com.

References to time

All references to time in this Target's Statement are to the time in Sydney, Australia, unless otherwise specified.

References to currency

All references to $, A$, dollars or cents in this Target's Statement are to Australian currency, C$ or CAD are Canadian currency and US$ or USD to American currency unless otherwise specified.

Board approval of this Target's Statement

This Target's Statement has been approved by the Board.

Date

This Target's Statement is dated 27 March 2019.

CHAIRMAN'S LETTER

Dear Riversdale Shareholder,

On 27 February 2019, Hancock Corporation Pty Ltd (Hancock Corporation), a wholly-owned subsidiary of Hancock Prospecting Pty Ltd, announced an unsolicited, conditional off-market takeover offer for Riversdale Resources Limited (Riversdale) (the Offer).

I wrote to Riversdale Shareholders on 21 March 2019, advising them that the Independent Directors1 recommend you take no action in respect to the Hancock Offer while we assessed its merits. This Targets Statement sets out Riversdale's formal response to the Offer. It contains a recommendation by all of the Directors, except for Mr Tadeusz Watroba, the Director appointed by Hancock Corporation.

Hancock Corporation Offer - $2.20 per Riversdale Share

In its Bidder's Statement, Hancock Corporation has said that, if its voting power in Riversdale exceeds 50%, calculated on a fully-diluted basis, prior to the end of the Offer Period, it will vary the Offer so that the Offer Price is increased to $2.50 per Riversdale Share (the Increased Offer Price).

Resource Capital Fund VI L.P. (RCF) and Regal Funds Management Pty Limited (Regal), two large Riversdale Shareholders, and the Independent Directors who in aggregate hold 49.7% of Riversdale have stated that they do not intend to accept the Offer.2

As a result of these statements, your Independent Directors believe it is highly unlikely the condition for the Increased Offer Price will be satisfied. You should consider the Offer as being $2.20 per Riversdale Share with little prospect that the Increased Offer Price will be available.

Your Independent Directors unanimously recommend that you REJECT the Offer

The Independent Directors unanimously recommend that you REJECT the Offer of $2.20 per Riversdale Share because it materially undervalues Riversdale and does not represent fair value for your Riversdale Shares.

Offer proceeds

Riversdale Shareholders who are not Canadian tax residents will not receive the Offer Price of $2.20 per Riversdale Share, but rather will receive $1.65 per Riversdale Share from Hancock Corporation with the balance remitted to the Canadian Revenue Agency. To the extent that the amount remitted to the Canadian Revenue Agency exceeds a Riversdale Shareholders actual Canadian tax liability, the Riverdale Shareholder will be entitled to seek a refund from the Canadian Revenue Agency. You should carefully read sections 7.5, 7.6 and 7.7 of this Target's Statement for further details.

Your Independent Directors' intentions

Your Independent Directors do not intend to accept the Offer of $2.20 per Riversdale Share, but reserve the right to do so in the limited circumstances noted in section 1.3 of the Target's Statement.

Independent Expert has concluded that the Offer is not fair and not reasonable

The Independent Directors' view about the Offer not representing fair value and materially undervaluing your Riversdale Shares is supported by the Independent Expert, Grant Thornton.

1 The Independent Directors are all of the Riversdale Directors excluding Mr Tadeusz Watroba, the Director appointed by Hancock who is also a director of Hancock Corporation and has declared a conflict in relation to the Company's response to the Offer.

2 The RCF and Regal statements of intent are subject to some qualifications and they are set out in full in Annexure C and Annexure D respectively. The Independent Directors intention with respect to the Riversdale Shares that they control is subject to the qualifications set out in section 1.3 of this Target's Statement.

The Independent Expert has assessed the fair market value of a Riversdale Share to be between $2.56 to $3.05 per Riversdale Share and has concluded that the Offer Price of $2.20 per Riversdale Share is NOT FAIR AND NOT REASONABLE to Riversdale Shareholders.

The Independent Expert has also considered the Increased Offer Price of $2.50 per Riversdale Share and has concluded that this is NOT FAIR BUT REASONABLE to Riversdale Shareholders. However, the Independent Expert has cautioned that Riversdale Shareholders should be aware that based on the statements of intent of RCF and Regal, which are enforceable under ASIC’s truth in takeover policy, the Increased Offer Price of $2.50 per Riversdale Share is unlikely to become payable and accordingly Riversdale Shareholders should assess the Offer having regard to the Offer Price of $2.20 per Riversdale Share.

A copy of the Independent Expert's Report is contained in Annexure B of this Target's Statement.

Other valuation matters

The Independent Expert's valuation of Riversdale is sensitive to assumptions made around the long-term coking coal price. The USD$135/tonne real long-term consensus price adopted by the Independent Expert in its valuation compares to a current spot price of USD$200/tonne. As noted in the Independent Expert's valuation, there is material valuation upside to the Independent Expert's value range of $2.56 to $3.05 per Riversdale Share if coking coal prices remain at their current level. Riversdale Shareholders should refer to the sensitivity analysis on page 7 of the Independent Expert's Report.

Riversdale's Grassy Mountain Project is a Tier 1 coking coal project which has strategic value in a sector where supply of quality and scale is scarce. A number of well-credentialed strategic parties are currently undertaking due diligence in respect of Riversdale. Your Independent Directors are encouraged by the level of interest shown, although it is too early to tell whether a superior offer or alternate transaction will result from this process.

Riversdale continues to make strong progress on meeting key milestones for the Grassy Mountain Project. As Riversdale achieves permitting and moves through the development phase to production, the project will progressively de-risk. Significant upside valuation potential exists for Riversdale Shareholders as the Grassy Mountain Project continues to de-risk.

Canadian withholding tax

Riversdale Shareholders who are tax residents of countries other than Canada will still be subject to Canadian federal income tax on any capital gain realised on the sale of their Riversdale Shares. The application of the Income Tax Act (Canada) will require Hancock to withhold and remit to the Canadian Revenue Agency 25% of the gross proceeds of sale of each such Riversdale Shareholders' Riversdale Shares.

Under section 116 of the Income Tax Act (Canada), Riversdale Shareholders who are not tax resident in Canada are required to apply for and obtain a clearance certificate from the Canadian Revenue Agency. If a Riversdale Shareholder is required to obtain a certificate, and fails to do so, it may be subject to penalties (up to a maximum of CAD$2,500). The Independent Directors have been advised that it usually takes a number of months to obtain a certificate which means it is not practicable for Riversdale Shareholders to obtain a certificate before the end of the Offer Period.

Riversdale Shareholders may also be subject to tax payable on any capital gains in their place of residence (if they are not tax resident in Canada), where they may also receive a foreign income tax offset for the Canadian tax paid. Section 7 of this Target's Statement contains a more detailed explanation of these matters which, Riversdale Shareholders are encouraged to carefully read.

Your decision should take account of your personal circumstances

You Independent Directors recognise that the Offer provides Riversdale Shareholders with a liquidity option which may not be available for some time in the foreseeable future. Your Independent Directors also recognise that there are risks and uncertainties in remaining as a

Riversdale Shareholder while the Grassy Mountain Project is taken to production. These risks and uncertainties are explained in Section 6 of this Target's Statement.

Accordingly, if you want to sell your Riversdale Shares in the foreseeable future or you do not want to take the risks and uncertainties involved in remaining as a Riversdale Shareholder while the Grassy Mountain Project continues to be developed to production, you may wish to accept the Offer even though the Independent Directors consider that it materially undervalues Riversdale and does not represent fair value for your Riversdale Shares and if you are not a resident of Canada for taxation purposes you are prepared to accept that Hancock Corporation will withhold 25% of the Offer Price for each of your Riversdale Shares to be remitted to the Canadian Revenue Agency.

In this regard, Grant Thornton states in its Independent Expert Report that the Increased Offer Price of $2.50 per Riversdale Share is reasonable having regard to the premium for control that the Increased Offer Price provides, the certainty of the cash consideration and because it provides liquidity for Riversdale Shareholders.

The detailed reasons of your Independent Directors for recommending that you REJECT the Offer are set out in section 1.2 of this Target's Statement.

Some important matters which we recommend that Riversdale Shareholders consider when determining whether or not to accept the Offer are set out in section 1.4 of this Target's Statement.

To reject the Offer, simply take no action in relation to the Bidder's Statement and acceptance form sent to you by Hancock.

What you need to do

I urge you to read this Target's Statement and the Independent Expert's Report in full and seek any independent financial, legal, taxation or other professional advice (including Canadian taxation advice) that you require before making a decision as to whether or not to accept the Offer.

You should consider whether your personal circumstances are such that you may want to accept the Offer as it provides a liquidity option and if necessary you should seek professional advice.

If you have any questions in relation to the Offer as a Riversdale Shareholder, please contact Riversdale's investor relations adviser, FTI Consulting, Philip Baker, +61 2 8298 6106.

Your Directors will continue to keep investors informed of material developments in relation to the Offer. Documents relating to the Offer and Riversdale can be found on the Riversdale website (http://www.rivresources.com).

Sincerely

Gary Lawler Chairman Riversdale Resources Limited

CONTENTS

CLAUSE PAGE

1. DIRECTORS' RECOMMENDATION ...... 8 2. FREQUENTLY ASKED QUESTIONS ...... 17 3. YOUR CHOICES AS A RIVERSDALE SHAREHOLDER ...... 21 4. IMPORTANT INFORMATION ABOUT THE OFFER ...... 24 5. INFORMATION RELATING TO RIVERSDALE ...... 31 6. RISK FACTORS ...... 38 7. TAX CONSIDERATIONS ...... 43 8. ADDITIONAL INFORMATION AND DIRECTORS' INTERESTS ...... 49 9. GLOSSARY AND INTERPRETATION ...... 55 10. AUTHORISATION ...... 59

ANNEXURE A THE OFFER CONDITION ANNEXURE B INDEPENDENT EXPERT'S REPORT ANNEXURE C RCF STATEMENT OF INTENT ANNEXURE D REGAL STATEMENT OF INTENT ANNEXURE E TAKEOVERS PANEL MEDIA RELEASE

1. DIRECTORS' RECOMMENDATION

1.1 Directors of Riversdale

The Riversdale Directors are:

 Gary Lawler (Chairman);

 Trudy Curran;

 Ronnie Beevor;

 James McClements;

 Tony Redman;

 Stephanie Sterling;

 Tadeusz Watroba; and

 Mark Wheatley.

Your "Independent Directors", being all Directors other than Mr Tad Watroba, make the recommendations in relation to the Offer.

Mr Tad Watroba does not make a recommendation in relation to the Offer. This is because he is also a director of Hancock Corporation and he has declared a conflict in relation to Riversdale's response to the Offer, including the Board's recommendation in relation to the Offer.

1.2 Independent Directors' Recommendation – REJECT THE OFFER

The Independent Directors unanimously recommend that you reject the Offer of $2.20 per Riversdale Share because it materially undervalues Riversdale and does not represent fair value for your Riversdale Shares.

TO REJECT THE HANCOCK CORPORATION OFFER SIMPLY DO NOTHING.

A summary of the reasons for the recommendation are as follows:

Reasons to REJECT THE OFFER The Independent Expert has valued your Riversdale Shares in the range of $2.56 and $3.05 a) per share and has concluded that the Offer Price of $2.20 per share is NOT FAIR AND NOT REASONABLE. You will not receive the Offer Price of $2.20 per Riversdale Share, but rather will receive b) $1.65 per Riversdale Share from Hancock Corporation with the balance remitted to the Canadian Revenue Agency The condition to trigger the Increased Offer Price of $2.50 per Riversdale Share is unlikely to be satisfied as Riversdale’s largest shareholder, and long-time funding c) supporter, RCF together with Regal and the Independent Directors, have also rejected the Offer.3 A consequence of accepting the Offer is that you will be deprived of the opportunity to d) consider any superior competing proposal that might be made.

3 RCF's statement of intent (and the qualifications to it) is set out in full in Annexure C and Regal's statement of intent (and the qualifications to it) is set out in Annexure D. The Independent Directors intention with respect to the Riversdale Shares that they control is subject to the qualifications set out in section 1.3 of this Target's Statement.

Riversdale's value is expected to be significantly higher if the long term coal price e) exceeds the long term real consensus price adopted by Grant Thornton (US$135/t) for the purposes of the Independent Expert's Report4 Riversdale's Grassy Mountain Project has strategic value in a sector where new supply of f) quality and scale is scarce Riversdale continues to make strong progress on key milestones for the Grassy g) Mountain Project Riversdale's value is expected to increase as further project milestones are h) achieved5 The premium of Hancock’s Offer to Hancock's previous subscription price of $1.75 per i) Riversdale Share, may not be an appropriate reference point because placements are usually undertaken at a discount to the underlying market value of a share

1.3 Directors' intentions

Independent Directors who have a relevant interest in 0.7% of Riversdale Shares in aggregate intend to REJECT the Offer.

Each Independent Director (except for Tony Redman) reserves the right to accept the Offer should: (a) Hancock Corporation's voting power in Riversdale exceed 50% on an undiluted basis; (b) the number of Riversdale Shareholders falls to 50 or fewer; or (c) Hancock Corporation increases its Offer Price to an amount higher than the Increased Offer Price of $2.50.

Tony Redman reserves the right to accept the Offer in his absolute discretion.

1.4 Reasons to reject the Offer

(a) The Independent Expert's Conclusion

The Independent Directors commissioned Grant Thornton Corporate Finance Pty Ltd (the Independent Expert) to prepare the Independent Expert's Report.

Grant Thornton in turn commissioned RPM Global to review and opine on the reasonableness of the technical assumptions adopted for the Grassy Mountain Project (Technical Expert's Report) and also engaged McElroy Bryan Geological Services to prepare a valuation of Riversdale's exploration and early-stage assets in accordance with the VALMIN Code (Exploration Asset Valuation). A copy of the Independent Expert's Report is set out in full in Annexure B of this Target's Statement. The Technical Expert's Report appears as Appendix I to that report and the Exploration Asset Valuation appears as Appendix J to that report.

In the Independent Expert's Report, Grant Thornton has concluded that:

(i) The Offer having regard to the Offer Price of $2.20 per Riversdale Share is NOT FAIR AND NOT REASONABLE to Riversdale Shareholders.

(ii) The Offer having regard to the Increased Offer Price of $2.50 per Riversdale Share is NOT FAIR BUT REASONABLE to Riversdale Shareholders. However, Grant Thornton, states that Riversdale Shareholders should be aware that based on the statements of intent of RCF and Regal, which are enforceable under ASIC’s truth in takeover policy, the Increased Offer Price is unlikely to become payable and accordingly Riversdale Shareholders should assess the Offer having regard to the $2.20 per share Offer Price.

4 See the sensitivity analysis on page 7 of the Independent Expert's report.

5 Note that this valuation upside is on a ‘all other variables remain the same’ basis, refer to section 6 for details of the risk that apply to Riversdale.

(iii) The value of your shares is assessed to be $2.56 to 3.05 per Riversdale share.

Figure 1: Independent Expert value range vs. the $2.20 Offer Price

Source: GTCF analysis

In the Technical Expert's Report, RPM Global concluded, amongst other things, that:

(i) there were no material flaws, errors or omissions on the technical aspects of the Grassy Mountain Project discovered during their review; and

(ii) the technical information and assumptions reviewed regarding the Grassy Mountain Project are considered reasonable.

In the Exploration Asset Valuation, McElroy Bryan valued Riversdale's exploration assets to be within the range of $3 million and $18 million, with a preferred valuation of $12 million.6

A copy of the Independent Expert's Report is set out in Annexure A and Riversdale Shareholders are encouraged to read the Independent Expert's Report it in full.

(b) You will not receive the Offer Price of $2.20 per Riversdale Share, but rather will receive $1.65 per Riversdale Share from Hancock Corporation with the balance remitted to the Canadian Revenue Agency

Riversdale Shareholders who are tax residents of countries other than Canada will still be subject to Canadian federal income tax on any capital gain realised on the sale of their Riversdale Shares. The application of the Income Tax Act (Canada) will requires Hancock to withhold and remit to the Canadian Revenue Agency up to 25% of the gross proceeds of sale of each such Riversdale Shareholders' Riversdale Shares.

6 Which per page 5 of the Independent Expert Report is equivalent to C$11.5 million for valuation purposes.

that it usually takes a number of months to obtain a certificate which means it is not practicable for Riversdale Shareholders to obtain a certificate before the end of the Offer Period.

Hancock has stated its intention to increase the Offer Price from $2.20 to $2.50 per Riversdale Shares if Hancock receives acceptances to take its voting power to more than 50% of Riversdale Shares, calculated on a fully-diluted basis.

Hancock has also stated that if RCF does not accept the Offer, then it will be challenging for Hancock to secure voting power of more than 50% of Riversdale Shares during the Offer Period.

RCF which holds 141,592,737 Riversdale Shares, representing 47.98% of all Riversdale Shares on issue, has stated that it does not propose to accept the Offer at Offer Price of $2.20 per Riversdale Share or the Increased Offer Price of $2.50 per Share. However, RCF reserves the right to (i) accept the Offer (at the Offer Price or the Increased Offer Price) should Hancock’s voting power exceed 50% on an undiluted basis or (ii) accept a revised offer from Hancock at an offer price above the Increased Offer Price.

Regal which holds 3,176,657 Riversdale Shares, representing 1.08% of all Riversdale Shares on issue, has stated that it does not intend to accept the Offer in the absence of a material change in circumstance.

The Independent Directors consider that, in light of these statements of intention from Riversdale Shareholders who hold in aggregate 49.1% of all Riversdale Shares on issue, it is very unlikely that the condition for the Increased Offer Price will be met. The Independent Expert, Grant Thornton, considers it a remote possibility.

As the statement of intent of RCF and Regal and the intentions of the Independent Directors are subject to qualifications, the Independent Directors will provide Riversdale Shareholders with an update if either RCF, Regal or any Independent Director, relying on a qualification, accepts the Offer or the condition for the Increased Offer Price of $2.50 per Riversdale Share is met.

(d) Consequences of Acceptance

Following the announcement of the Offer, Riversdale commenced a sale process to gauge the level of third party interest in the Grassy Mountain Project and to determine whether a superior offer may emerge for Riversdale.

The sales process is only in its early stages but, at present time, Riversdale has signed confidentiality agreements with a number of strategic coal companies who are in the process of undertaking due diligence. No assurance can be given as to whether any of these parties will make a superior offer for Riversdale or indeed whether any of the parties will be in a position to complete due diligence and respond before the Offer Period ends.

Regardless of the outcome of the Offer, should the company remain independent, the Board intends to continue to pursue various liquidity options for the benefit of

all Riversdale Shareholders. This includes continued engagement with the strategic coal companies who are in the process of undertaking due diligence until that process is complete, considering whether to publically list Riversdale Shares or creating some other liquidity event which all Riversdale Shareholders can participate in.

If you accept the Offer you will only be able to withdraw your acceptance in the limited circumstances (set out in section 4.11) and you will not be able to participate in a superior proposal from another party should one be made, about which no assurance can be given.

(e) Sensitivity to long-term coking coal price

The Riversdale valuation is sensitive to assumptions made around long-term coking coal price. Grant Thornton notes that the spot price for coking coal is currently ~US$200/tonne which is significantly higher than the US$135/tonne real long-term consensus price for coking coal which Grant Thornton adopted in its valuation of Riversdale.

If coking coal prices remain at the current level, there is material valuation upside to the Independent Expert's valuation range of $2.56 to $3.05 per Riversdale Share. The Independent Expert’s analysis shows that even if real long-term coal price is US$162/tonne, which is 19% below the current spot price of US$200/tonne, then Riversdale Shares would be valued within the range of $4.40 to $5.01. Further valuation sensitivities run by Grant Thornton are outlined on page 7 of the Independent Expert's Report.

Figure 2 below illustrates the sensitivities run by Grant Thornton around a real long-term consensus forecast HCC price of US$135/tonne. All sensitivities are set out on page 7 of the Independent Expert Report.

It shows that a +5% (~US$7/tonne) change in the coal price, which is in line with the historic 5 year average, implies a value range of be $3.11 to $3.64 per Riversdale Share under the Grant Thornton valuation.

Figure 2: Valuation sensitivity to coal price

Source: GTCF analysis. GTCF’s base valuation (on a control basis) is assessed to be $2.65 to $3.15 assuming permitting by the end of March 2020. GTCF’s final valuation is based on an average of four delayed development scenarios. The above chart shows the sensitivity in valuation from the base valuation case.

The Independent Expert has noted that:

(i) their base case assumption of real long-term consensus forecast HCC price of US$135/tonne is significantly lower than the average coking coal prices over the last five years (US$142/tonne) and ten years (US$162/tonne);

(ii) over the last ten years, the HCC price has traded at a level below the consensus real long-term HCC of US$135/t only for a period of circa 3 years; and

(iii) the Grassy Mountain Project has the optionality to vary production up and down to take advantage of fluctuations in the coal price.

Given volatility in commodity markets, assumptions regarding future coal prices are inherently subject to considerable uncertainty and each shareholder needs to form their own view.

(f) Grassy Mountain has strategic value in a sector where new supply of quality and scale is scarce

Riversdale's Grassy Mountain Project has strategic value in a sector where new supply of quality and scale is scarce. The key features of the Grassy Mountain Project are set out below.

Large high quality coking coal resource,  4.5Mtpa forecast production of a single HCC product, 23 year with substantial mine life with potential expansion reserves and mine  Significant exploration portfolio with potential to extend mine life life and expand production

 Strong projected margin curve position  Shallow, open cut, hard coking coal Tier one operating  Efficient infrastructure solutions in place, with confirmed capacity cost position for 4.5Mtpa on existing rail and port infrastructure  Grassy Mountain shares contiguous geological features with established regional mines along with access to existing operational infrastructure

Favourable  Long term operating sustainability assisted by local geology and jurisdiction with de- nearby coking coal risked development  The South West Alberta coal fields have an established history of production throughout the commodity price cycle

Low capital intensity  Minimal investment in rail and port required coking coal asset  Low product strip ratio

Portfolio of  Significant growth opportunities to expand reserves and exploration assets resources

(g) Riversdale continues to make strong progress on key milestones for the Grassy Mountain Project

Riversdale's recent progress on key milestones point to the ability to deliver further near term value for Riversdale Shareholders, including:

 Letters of support from Municipalities of Crowsnest Pass and Puncher Creek, as well as the Piikani First Nation and Stoney Progress with the Nakoda Nation permitting process  In July 2016 an Impact Benefit Agreement was signed with the and key stakeholder Piikani Nation and in February 2019, a second Impact Benefit support Agreement was signed with the Stoney Nakoda Nation regarding the Grassy Mountain Project  Subsequently, the Stoney Nakoda Nation, submitted a letter of no objection to the Provincial and Federal regulatory agencies

Progress on  In March 2019, a mandate was signed with seven banks to assist financing of Grassy in the structuring, arrangement and syndication of a US$375 Mountain Project million senior secured project loan facility to finance the construction of the Grassy Mountain Project

 In October 2018, additional geotechnical drilling and test pitting Operational completed developments  In the 2018 December Quarter, two non-binding Memorandums including drilling, of Understanding were signed with steelmakers in relation to 2 marketing and senior Mtpa of coal hires  Key roles in construction including Project Director, Maintenance Manager, Senior Mining Engineer and other, have been, or are close to being filled

(h) Riversdale's value is expected to increase as further project milestones are achieved

Riversdale's best estimate is that permitting for the Grassy Mountain Project will be received by the end of March 2020. Other milestones such as securing financing, successful construction and commencement of production are all factors that will de-risk the Grassy Mountain Project.

Grant Thornton has noted that:

“as the Grassy Mountain Project moves from a development project to a producing mine, most of the RRL’s reserves (which are currently undeveloped) will become “developed” which should trigger a significant market re-rating. As set out in section 5.3, the reserves and resources of producing mine trade at a large premium to the reserves and resources of undeveloped assets.”

Remaining as a Riversdale Shareholder will allow you to benefit from the significant valuation upside potential resulting from this de-risking process. Such increase in value assumes that all other variables remain the same.

(i) The premium of Hancock’s Offer may not be an appropriate reference point

Hancock has stated in its Bidder's Statement that its Offer provides a 29% premium relative to its prior average subscription price of $1.75 per Riversdale Share. This premium may not be informative of a control premium because:

(i) large equity placements, such as the Hancock Placement, are usually undertaken at a discount to the underlying market value of a share; and

(ii) Riversdale has made permitting and operational progress since the date of the Hancock Placement.

Further, the fact that there is no liquid market for Riversdale Shares means that it is very difficult to conduct meaningful premia analysis.

1.5 Consider your personal circumstances and other factors before making a decision about the Offer

The Independent Directors acknowledge that there are a number of factors and risks associated with taking Riversdale's Grassy Mountain Project to production (see section 6 of this Target's Statement). The Independent Directors acknowledge that there are risks associated with remaining to be a Riversdale Shareholder, including the lack of a liquid market to trade Riversdale Shares and the potential loss of the protections of Australian takeovers laws (see section 6.1(b) of this Target's Statement). These risks may lead you to consider accepting the Offer even though it undervalues your Riversdale Shares.

In the Independent Expert's Report, Grant Thornton has concluded that

 the $2.20 Offer Price is NOT FAIR AND NOT REASONABLE; and

 the $2.50 Increased Offer Price is NOT FAIR, BUT REASONABLE having regard to a number of advantages, disadvantages and other factors that are outlined in its report.

You should consider these matters carefully and decide whether your personal circumstances are such that you may want to accept the Offer, as it provides a liquidity event for you and it is uncertain if and when another liquidity event, that is available for all Riversdale Shareholders, will emerge.

(a) Grassy Mountain Project

Riversdale is in the pre-production stage for its flagship Grassy Mountain Project.

While the permitting process for this project is well advanced, the process in Alberta still has some time to run. There remains a joint panel hearing to be conducted and assuming a favourable outcome from that hearing, Ministerial approval needs to be obtained. Riversdale's best estimate of when these permits and approvals will be available is by the end of March 2020, as noted in section 5.3(b).

While Riversdale is confident that all permits required to develop the Grassy Mountain Project will be obtained, there is a risk that they will be delayed and possibly not obtained.

Once all permitting approvals have been obtained Riversdale needs to build the mine and bring the Grassy Mountain Project into production. This will require the expenditure in the order of CAD$631.6 million and will take approximately 23 months with an additional three months of commissioning from the time permitting and other approvals are granted as noted in section 5.3(c). Based on current assessment and assuming all permitting approvals are granted by the end of March 2020 Riversdale expects that the Grassy Mountain Project will be producing coal by June 2022.

Riversdale is in the process of organising the debt and equity funding which will be needed to develop the mine. Although Riversdale is confident that funding will be obtained on acceptable terms no assurance can be given that this will be the case. Further details concerning the proposed funding for the Grassy Mountain Project are set out in section 5.3(d).

(b) Liquidity

As Riversdale is an unlisted public company there is no available market on which Riversdale Shares can be traded by its shareholders in the same way as shareholders of listed companies are able to trade their shares.

The Offer has created a liquidity option at least for those shareholders who find the Hancock Group offer price of $2.20 per Riversdale Share attractive or who, after considering all the risks and other issues determine that, having regard to their personal circumstances, they want to accept the Offer, even though it is below fair value and not recommend by the Independent Directors and if you are not a resident of Canada for taxation purposes you are prepared to accept that Hancock Corporation will withhold 25% of the Offer Price for each of your Riversdale Shares to be remitted to the Canadian Revenue Agency.

In the absence of the Offer or the emergence of a better offer for Riversdale Shares there will be no ready market on which the Riversdale Shares can be traded. In the past Riversdale Shares have been sold off-market. It is possible that Riversdale Shares may be sold off-market in a private transaction between a Riversdale Shareholder and the buyer including during or after the Offer Period for prices that are at, above or below the Offer Price. The same Canadian withholding tax issue would need to be considered in relation to a sale in these circumstances (see sections 7.5, 7.6 and 7.7 of this Target's Statement for further details).

If you decided not to accept the Offer you may not be able to trade your Riversdale shares unless the Directors decide to publicly list Riversdale or some other liquidity event occurs that all Riversdale Shareholders can participate in or unless you are able to sell your Riversdale Shares to a buyer off-market and outside a process that is available for all Riversdale Shareholders to participate in.

Riversdale has 159 registered shareholders and, as a result, the acquisition of Riversdale Shares is regulated by Chapter 6 of the Corporations Act. If the number of Riversdale Shareholders who accept the Offer is such that Riversdale has 50 or fewer Shareholders at the end of the Offer Period then the acquisition of Riversdale Shares will no longer be subject to the protections afforded by takeover provisions in Chapter 6 of the Corporations Act. Under these circumstances, Riversdale Shareholders may not be afforded an equal opportunity to participate in the benefits of a change in control of Riversdale (see section 6.1(b) for further details concerning this risk).

(d) General Risks

If you decide not to accept the Offer and remain a Shareholder you may in the future realise a higher price for your Riversdale Shares. However, you should recognise the risks which are involved in continuing to hold Riversdale Shares while Riversdale moves from the pre-permitting to the development stage. These risks are set out in detail in section 6. You are encouraged to read them carefully. These risks could mean that you do not realise a value for your shares in the future which is in excess of the Offer price of $2.20 per Riversdale Share or indeed any value at all.

2. FREQUENTLY ASKED QUESTIONS

This section answers some commonly asked questions about the Offer. It is not intended to address all relevant issues for Riversdale Shareholders. This section should be read together with all other parts of this Target's Statement.

Question Answer

Why have I received this You have received this Target's Statement because you are document? a Riversdale Shareholder. This Target's Statement is Riversdale's formal response to the Bidder's Statement. It contains important information prepared by the Directors to help you determine whether or not to accept the Offer.

Who is making the Offer? Hancock Corporation, a wholly-owned subsidiary of Hancock Prospecting, is making the Offer. Information in relation to Hancock Corporation and Hancock Prospecting is set out in the Bidder's Statement.

What is the Bidder's The Bidder's Statement is the document prepared by Statement? Hancock Corporation which sets out the terms of the Offer, as required by the Corporations Act. Hancock Corporation lodged its Bidder's Statement with ASIC on 27 February 2019 and it was replaced by a replacement Bidder's Statement dated and lodged with ASIC on 11 March 2019. All Riversdale Shareholders should have recently received a copy of the Bidder's Statement in the post.

What is Hancock The Offer Price under the Offer is A$2.20 per Riversdale Corporation offering for my Share. Hancock Corporation has stated in its Bidder's Riversdale Shares? Statement that it intends to vary the Offer to increase the Offer Price to A$2.50 for each Riversdale Share (the Increased Offer Price) if Hancock Corporation's voting power in Riversdale exceeds 50% (on a fully diluted basis) prior to the end of the Offer Period. Riversdale Shareholders who are not Canadian tax residents will not receive the Offer Price of $2.20 per Riversdale Share, but rather will receive $1.65 per Riversdale Share from Hancock Corporation with the balance remitted to the Canadian Revenue Agency. To the extent that the amount remitted to the Canadian Revenue Agency exceeds a Riversdale Shareholders actual Canadian tax liability, the Riverdale Shareholder will be entitled to seek a refund from the Canadian Revenue Agency. Under section 116 of the Income Tax Act (Canada), Riversdale Shareholders who are not tax resident in Canada are required to apply for and obtain a clearance certificate from the Canadian Revenue Agency. If a Riversdale Shareholder is required to obtain a certificate, and fails to do so, it may be subject to penalties (up to a maximum CAD$2,500). The Independent Directors have been advised that it usually takes a number of months to obtain a certificate which means it is not practicable for Riversdale Shareholders to obtain a certificate before the

end of the Offer Period. You should carefully read sections 7.5, 7.6 and 7.7 of this Target's Statement.

Why do the Independent The Independent Directors consider the Increased Offer Directors consider the Price is highly unlikely to materialise as Riversdale has Increased Offer Price is received statements of intent from its largest shareholder highly unlikely to RCF, which has a relevant interest in 47.97% of Riversdale materialise? Shares and Regal, which has a relevant interest in 1.08% of Riversdale Shares indicating that they intend to reject the Offer for all of their Riversdale Shares on the terms outlined in sections 4.2 and 4.3 (respectively) of this Target's Statement. Hancock Corporation has also acknowledged in the Bidder's Statement that it will be challenging for Hancock Corporation to secure voting control of more than 50% of Riversdale Shares (on a fully diluted basis) during the Bid Period if RCF rejects the Offer.

What are the Independent The Independent Directors unanimously recommend that Directors of Riversdale you REJECT the Offer of $2.20 per Riversdale Share recommending? because it materially undervalues Riversdale and does not represent fair value for your Riversdale Shares. The reasons for the Independent Directors' recommendation are set out in section 1 of this Target's Statement

Further, Independent Directors having a relevant interest in 0.7% of Riversdale Shares have indicated that they intend to reject the Offer for any Riversdale Shares that they own or control.

What is the opinion of the The Independent Expert has assessed the fair market value Independent Expert? of a Riversdale Share to be between $2.56 to $3.05 per share and has concluded that the Offer Price of $2.20 per Riversdale Share is NOT FAIR AND NOT REASONABLE to Riversdale Shareholders. The Independent Expert has also considered the Increased Offer Price of $2.50 per Riversdale Share and has concluded that this is NOT FAIR BUT REASONABLE to Riversdale Shareholders. However, the Independent Expert has cautioned that Riversdale Shareholders should be aware that based on the statements of intent of RCF and Regal, which are enforceable under ASIC’s truth in takeover policy, the Increased Offer Price of $2.50 per Riversdale Share is unlikely to become payable and accordingly they should assess the Offer having regard to the Offer Price of $2.20 per Riversdale Share. A copy of the Independent Expert's Report is contained in Annexure B of this Target's Statement.

What choices do I have as a As a Riversdale Shareholder, you have the following Riversdale Shareholder? choices in respect of your Riversdale Shares:  reject the Offer by doing nothing;

 accept the Offer for some or all of your Riversdale Shares; or  sell your Riversdale Shares through a private transaction. There are several implications in relation to each of the above choices. A summary of these implications is set out in section 3 of this Target's Statement. You should seek legal, financial or taxation advice from your professional adviser regarding the action that you should take in relation to the Offer.

How do I reject the Offer? To reject the Offer, you should do nothing. You should take no action in relation to all correspondence from Hancock Corporation in relation to the Offer for your Riversdale Shares.

Are there any ramifications If you don't accept the Offer you will remain a Riversdale if I don't accept the Offer? Shareholder and will be exposed to the upside of exposure to Riversdale assets. You will also continue to be exposed to the risks that apply to Riversdale outlined in section 6 of this Target's Statement.

How do I accept the Offer? Instructions on how to accept the Offer are set out in section 6 of the Bidder's Statement.

When does the Offer close? The Offer is currently scheduled to close at 7:00pm on 14 April 2019, but Hancock Corporation can extend the Offer Period by up to 12 months. See section 4.9 of this Target's Statement for details of the circumstances in which the Offer Period can be extended.

Does Hancock Corporation Hancock Corporation had a relevant interest in 19.79% of currently have a Relevant Riversdale Shares as at the date of the Bidder's Statement. interest in Riversdale? As Riversdale is not a listed company, Hancock Corporation is not required to announce when there is a movement in at least 1% of its voting power in Riversdale. Hancock Corporation has however undertaken in the Bidder's Statement that it will give Riversdale a notice stating its voting power in Riversdale if, at any time during the Offer Period, Hancock Corporation's voting power in Riversdale rises from below a percentage in the following list to that percentage or higher:  25%;  35%;  45%:  every 1% between 45% and 51%;  75%; and  90%. Riversdale will make each voting power notice available to Riversdale Shareholders on the Riversdale website at www.rivresources.com on the date the notice is received by Riversdale.

If I accept the Offer, can I If you accept the Offer, you will only be able to withdraw withdraw my acceptance? your acceptance in limited circumstances where Hancock Corporation has not declared the Offer free from the Offer Condition and varies the Offer in a way that postpones the time when Hancock Corporation is required to satisfy its payment or other obligations by more than one month. This means that if you accept the Offer early, you will not be able to participate in any competing proposal, should one eventuate. At this stage it is too early to tell whether a competing proposal will eventuate. The Independent Directors will keep you informed of all material developments and will inform shareholders of the status of discussions with third parties by 5 April 2019 (one week before the Offer is due to close).

What are the tax A general outline of the tax implications for Australian implications of accepting resident Riversdale Shareholders that hold their Riversdale the Offer for Australian Shares on their capital account is set out in section 7 of resident Riversdale this Target's Statement. Shareholders? As the outline is general in nature, you should consult your taxation adviser for detailed taxation advice before making a decision as to whether or not to accept the Offer.

Is there a number that I If you have any further questions about the Offer, please can call if I have further contact the shareholder information line on +61 2 8298 queries in relation to the 6106. Offer?

3. YOUR CHOICES AS A RIVERSDALE SHAREHOLDER

As a Riversdale Shareholder, you have several choices available to you. The Directors encourage you to consider your personal risk profile, investment strategy, tax position and financial circumstances before making any decision in relation to your Riversdale Shares.

The reasons for the Independent Directors' recommendation are set out in section 1 of this Target's Statement.

The Independent Expert has assessed the fair market value of a Riversdale Share to be between $2.56 to $3.05 per share and has concluded that the Offer Price of $2.20 per Riversdale Share is NOT FAIR AND NOT REASONABLE to Riversdale Shareholders.

The Independent Expert has also considered the Increased Offer Price of $2.50 per Riversdale Share and has concluded that this is NOT FAIR BUT REASONABLE to Riversdale Shareholders. However, the Independent Expert has cautioned that Riversdale Shareholders should be aware that based on the statements of intent of RCF and Regal, which are enforceable under ASIC’s truth in takeover policy, the Increased Offer Price of $2.50 per Riversdale Share is unlikely to become payable and accordingly they should assess the Offer having regard to the Offer Price of $2.20 per Riversdale Share.

A copy of the Independent Expert's Report is contained in Annexure B of this Target's Statement.

3.1 Reject the Offer

If you do not wish to accept the Offer and want to retain your Riversdale Shares, you should simply do nothing.

If you choose to reject the Offer, do not take any action in relation to documents sent to you by Hancock Corporation.

If you reject the Offer by doing nothing, you will remain a Riversdale Shareholder.

You should be aware that there are risks associated with remaining a Riversdale Shareholder. Set out in section 0 is information relating to Riversdale and in section 6 are the risks which may affect the future operating and financial performance of Riversdale, the value of Riversdale Shares and your protections as a Riversdale Shareholder.

3.2 Accept the Offer

You may choose to accept the Offer. Details of how to accept the Offer are set out in section 6 of the Bidder's Statement.

Riversdale Shareholders who accept the Offer:

 will not receive the Offer Price unless and until the Offer Condition is satisfied or waived;

 who are not Canadian tax residents will not receive the Offer Price of $2.20 per Riversdale Share, but rather will receive $1.65 per Riversdale Share from Hancock Corporation with the balance remitted to the Canadian Revenue Agency. To the extent that the amount remitted to the Canadian Revenue Agency exceeds a Riversdale Shareholders actual Canadian tax liability, the Riverdale Shareholder

will be entitled to seek a refund from the Canadian Revenue Agency. You should carefully read sections 7.5, 7.6 and 7.7 of this Target's Statement;

 who are not Canadian tax residents, are required to apply for and obtain a clearance certificate from the Canadian Revenue Agency. If a Riversdale Shareholder is required to obtain a certificate, and fails to do so, it may be subject to penalties (up to a maximum of CAD$2,500). The Independent Directors have been advised that it usually takes a number of months to obtain a certificate which means it is not practicable for Riversdale Shareholders to obtain a certificate before the end of the Offer Period;

 will not be able to withdraw their acceptance and sell their Riversdale Shares, meaning that they would not be able to accept a higher price from any potential competing proposal if such a proposal eventuates, except in certain limited circumstances;

 will lose your exposure to the future growth potential of Riversdale and any proposal that the Riversdale Board may implement in the future to maximise the value of Riversdale Shares;

 you will not be able to accept the Offer or any other offer that may eventuate from a competing proposal if a competing proposal eventuates which is not assured; and

 may be liable to pay CGT (in both Australia and Canada) or income tax on the disposal of their Riversdale Shares which may have financial consequences for some Riversdale Shareholders (see section 7 of this Target's Statement for further details of the tax consequences of the Offer for Australian resident Riversdale Shareholders).

3.3 Sell your Riversdale Shares through a private transaction

You may be able to sell your Riversdale Shares to another person through a private transaction with a buyer. If you sell your Riversdale Shares, you:

 will lose your exposure to the future growth potential of Riversdale and any proposal that the Riversdale Board may implement in the future to maximise the value of Riversdale Shares;

 you will not be able to accept the Offer or any other offer that may eventuate from a competing proposal if a competing proposal eventuates which is not assured;

 if the Riversdale Shareholder who sells their Riversdale Shares off-market is not a Canadian tax resident the purchaser will be required to withhold and remit to the Canadian Revenue Agency up to 25% of the gross proceeds of sale (see sections 7.5, 7.6 and 7.7 of this Target's Statement for further details).

Riversdale Shareholders who wish to sell their Riversdale Shares should consider their individual tax implications of such sale and should seek advice.

3.4 Wait to see if competing proposal emerges

Riversdale are continuing to engage with strategic parties that have shown interest in Riversdale and the Grassy Mountain Project. A number of interested parties have signed confidentiality agreements and are undertaking due diligence on Riversdale and the Grassy Mountain Project.

The Independent Directors are encouraged by the amount of interest in Riversdale and continues its activities with the ultimate aim or procuring a higher offer for shareholders. At this stage it is too early to tell whether a higher offer or alternate transaction will eventuate.

The Independent Directors will keep you informed of all material developments and will inform shareholders of the status of discussions with third parties by 5 April 2019 (one week before the Offer is scheduled to close).

4. IMPORTANT INFORMATION ABOUT THE OFFER

4.1 Offer Price

The Offer Price being offered by Hancock Corporation is A$2.20 for each Riversdale Share you own. Hancock Corporation has stated in its Bidder's Statement that it will intends to vary the Offer to increase the Offer Price to the Increased Offer Price if Hancock Corporation's voting power in Riversdale exceeds 50% (on a fully diluted basis) prior to the end of the Offer Period. Riversdale Shareholders who are not Canadian tax residents will not receive the Offer Price of $2.20 per Riversdale Share, but rather will receive $1.65 per Riversdale Share from Hancock Corporation with the balance remitted to Canadian Revenue Agency. To the extent that the amount remitted to the Canadian Revenue Agency exceeds a Riversdale Shareholders actual Canadian tax liability, the Riverdale Shareholder will be entitled to seek a refund from the Canadian Revenue Agency. You should carefully read sections 7.5, 7.6 and 7.7 of this Target's Statement for further details.

Voting power for the purpose of the increase in Offer Price will be calculated on a fully- diluted basis. This means the voting power calculation assumes all Riversdale Options are exercised during the Bid Period and the corresponding Riversdale Shares issued. In order to acquire voting power that exceeds 50% (on a fully diluted basis), Hancock Corporation will need to acquire a relevant interest in an additional 90,420,591 Riversdale Shares.

Riversdale has received statements of intent from its largest shareholder RCF, which has a relevant interest in 47.97% of Riversdale Shares, and its shareholder Regal, which has a relevant interest in 1.08% of Riversdale Shares indicating that they intend to reject the Offer for all of their Riversdale Shares, on the terms outlined in sections 4.2 and 4.3 (respectively) of this Target's Statement.

Further, Independent Directors having a relevant interest in 0.7% of Riversdale Shares have indicated that they intend to reject the Offer for any Riversdale Shares that they own or control.

This means in aggregate persons representing 49.7% of Riversdale have indicated that they intend to reject the Offer. On this basis the Independent Directors believe it is highly unlikely that the Increased Offer Price, as set out in the Bidder's Statement, will materialise.

4.2 Intentions of RCF

RCF currently controls 47.97% of the Riversdale Shares on issue. RCF has given the following statement of intent to Riversdale:

"Resource Capital Fund VI L.P. (RCF VI) has reviewed the takeover offer from Hancock Corporation Pty Ltd (Hancock) made pursuant to its replacement bidder’s statement dated 11 March 2019 for all the shares in Riversdale Resources Limited (Riversdale) for A$2.20 per share (the Hancock Offer). We note Hancock has stated it will increase the offer price from A$2.20 per share to A$2.50 per share if Hancock receives acceptances under the Hancock Offer to take its voting power to more than 50% of Riversdale shares, calculated on a fully diluted basis (the Hancock Increased Offer).

RCF VI intends NOT to accept both the Hancock Offer and the Hancock Increased Offer.

However, RCF VI reserves the right to (i) accept the Hancock Offer or the Increased Hancock Offer should Hancock’s voting power exceed 50% on an undiluted basis; or (ii) accept a revised offer from Hancock at an offer price above the Hancock Increased Offer.

RCF VI currently holds 141,592,737 Riversdale shares, being 47.98% of the Riversdale shares currently on issue."

If RCF does not accept the Offer, as acknowledged by Hancock Corporation, then it will be challenging for Hancock Corporation to secure voting control of more than 50% of Riversdale Shares (on a fully diluted basis) during the Bid Period.

The full RCF statement of intent is included as Annexure C.

4.3 Intentions of Regal

Regal currently controls 1.08% of the Riversdale Shares on issue. RCF has given the following statement of intent to Riversdale:

"Regal Funds Management (Regal) has reviewed the takeover offer from Hancock Corporation Pty Ltd (Hancock) made pursuant to its replacement bidder’s statement dated 11 March 2019 for all the shares in Riversdale Resources Limited (Riversdale) for A$2.20 per share, which will be increased to A$2.50 per share if Hancock’s voting power exceeds 50% on a fully diluted basis (the Takeover Offer). Regal considers that the Takeover Offer vastly undervalues Riversdale. In the absence of a material change in circumstances, Regal does not intend to sell into the Takeover Offer.

Regal currently holds 3,176,657 Riversdale shares, being 1.08% of the Riversdale shares currently on issue."

The full Regal statement of intent is included as Annexure D.

4.4 Takeovers Panel Proceedings

On 25 March 2019, Riversdale made an application to the Australian Takeovers Panel. In the application Riversdale submitted that, Hancock Corporation is required to withhold (and remit to the Canadian tax authority) up to 25% of the Offer Price for any Riversdale Shareholders who accept the Offer and are not resident in Canada for tax purposes. Riversdale submitted that this obligation is not disclosed in Hancock's replacement bidder's statement (noting that the Offer contains a term allowing Hancock Corporation to deduct amounts from the Offer Price and remit it to the Canadian tax authority). As a result, Riversdale submitted that:

 Riversdale Shareholders do not have enough time and enough information to enable them to assess the merits of the Offer and the acquisition of control of Riversdale will not take place in an efficient, competitive and informed market;

 Riversdale Directors are not in a position to consider all material matters for the purpose of preparing the Target's Statement and making their recommendation; and

 the Independent Expert does not have all material information to assess whether the bid is fair and reasonable.

Riversdale has sought orders from the Takeovers Panel including to cancel any acceptances to date, require Hancock Corporation to provide a supplementary bidder's statement addressing the Canadian withholding tax matter and to extend the Offer Period.

As at the date of this document, a sitting Takeovers Panel has not been appointed at this stage and no decision has been made whether to conduct proceedings. The Takeovers Panel makes no comment on the merits of the application.

A Media Release from the Takeovers Panel regarding the application made by Riversdale is contained in Annexure E.

4.5 Offer Period

The Offer is open for acceptance during the Offer Period which began on 13 March 2019 and ends at 7:00pm (Sydney time) on 14 April 2019, unless extended by Hancock Corporation or withdrawn.

The circumstances in which Hancock Corporation may extend or withdraw the Offer are set out in section 4.9 and section 4.10 respectively of this Target's Statement.

4.6 Offer Condition

The Offer is subject only to a "prescribed occurrences" condition, the terms of which are set out in Annexure A.

The Offer Condition will only not be satisfied in limited circumstances that are largely within Riversdale's control. Riversdale does not propose to take any action to cause the Offer Condition to be breached without the approval of Riversdale Shareholders.

4.7 Effect of non-satisfaction of the Offer Condition

If the Offer Condition is unsatisfied (or has been triggered) and has not been waived by Hancock Corporation by the date which is three Business Days at the end of the Offer Period, Hancock Corporation will have an option as to whether to proceed with the acquisition of Riversdale Shares under its Offer or allow its Offer to lapse. If the Offer lapses, all acceptances of the Offer will be void and of no effect.

4.8 Status of the Offer Condition

Section 13.13 of the Bidder's Statement states that Hancock Corporation will give a Notice of Status of Offer Condition to Riversdale on 6 April 2019. Hancock Corporation is required to set out in its Notice of Status of Offer Condition:

 whether the Offer is free of the Offer Condition; and

 Hancock Corporation's voting power in Riversdale at that time.

If the Offer Period is extended before the Notice of Status of Offer Condition is to be given, the date for giving the Notice of Status of Offer Condition will be taken to be postponed for the same period. In the event of such an extension, Hancock Corporation is required, as soon as practicable after the extension, to notify Riversdale of the new date for giving the Notice of Status of the Offer Condition.

As the Offer Condition is a "prescribed occurrences" condition, Hancock Corporation will have until three Business Days after the end of the Offer Period to waive the Offer Condition.

4.9 Extension of Offer Period

Hancock Corporation may extend the Offer Period at any time before giving the Notice of Status of Offer Condition while the Offer is subject to the Offer Condition. However, if the Offer is unconditional (that is, the Offer Condition is waived by Hancock Corporation), Hancock Corporation may extend the Offer Period at any time before the end of the Offer Period.

In addition, there will be an automatic extension of the Offer Period if, within the last seven days of the Offer Period:

 Hancock Corporation improves the Offer Price offered under the Offer; or

 Hancock Corporation's voting power in Riversdale increases to more than 50%.

If either of these two events occur, the Offer Period is automatically extended so that it ends 14 days after the relevant event occurs.

4.10 When you will receive the Offer Price

If you accept the Offer, you will not receive the Offer Price until after the Offer becomes unconditional.

If you validly accept the Offer:

(a) before the Offer is or becomes unconditional, Hancock Corporation will pay you for your Riversdale Shares within seven days from the date that the Offer Condition is satisfied (being the end of the Offer Period) or earlier if waived by Hancock Corporation; or

(b) after the Offer Condition is satisfied or waived, Hancock Corporation will pay you within seven days of the later of your acceptance of the Offer or the date when the Offer Condition is satisfied or waived.

See section 13.7 of the Bidder's Statement for further details on when you will be paid the Offer Price by Hancock Corporation.

4.11 Withdrawal of Offer

Hancock Corporation may not withdraw the Offer if you have already accepted it. Before you accept the Offer, Hancock Corporation may withdraw the Offer with the written consent of ASIC and subject to the conditions (if any) specified in such consent.

However, if the Offer Condition has not been satisfied or waived by Hancock Corporation by the date which is three Business Days after the end of the Offer Period, then all acceptances will be void and of no effect.

4.12 Effect of acceptance

The effect of acceptance of the Offer is set out in section 13.6 of the Bidder's Statement. You should read these provisions in full to understand the effect that acceptance will have on your ability to exercise the rights attaching to your Riversdale Shares and the representations and warranties which you will be giving Hancock Corporation by accepting the Offer.

In particular, accepting Hancock Corporation's Offer will prevent you from selling or otherwise dealing with your Riversdale Shares during the Offer Period (unless withdrawal rights come into effect in accordance with section 4.13 of this Target's Statement). Further, if the Offer is declared unconditional, Hancock Corporation will be able to exercise the rights attaching to your Riversdale Shares (for example, to exercise the voting rights attaching to such Riversdale Shares).

4.13 Withdrawal of your acceptance

If you accept the Offer, you will only be able to withdraw your acceptance in limited circumstances and you will not be able to participate in a competing proposal if such a proposal eventuates. You may only withdraw your acceptance of the Offer if the Offer remains subject to the Offer Condition at the time you accept the Offer and Hancock Corporation varies the Offer in a way that postpones the time when Hancock Corporation is required to satisfy its obligations (for example, its obligation to pay the Offer Price) by more than one month.

4.14 Disclosure of Hancock Corporation's voting power

In addition to Hancock Corporation's obligations to notify Riversdale and ASIC of increases in its voting power pursuant to section 654C of the Corporations Act, at Riversdale’s request, Hancock Corporation has provided the following undertaking (Undertaking).

Hancock Corporation will give Riversdale a notice stating its voting power in Riversdale (Voting Power Notice) if, at a particular time during the Bid Period, Hancock Corporation’s voting power in Riversdale rises from below a percentage in the following list to that percentage or higher:

 25%

 35%;

 45%;

 every 1% between 45% and 51%;

 75%; and

 90%.

Hancock Corporation will use reasonable endeavours to provide a Voting Power Notice to Riversdale by 9.30 am (Perth time) on the Business Day after the date the rise in voting power occurred, but in any event, will provide that notice within two Business Days after the rise in voting power occurred.

Riversdale will make each Voting Power Notice available to Riversdale Shareholders on the Riversdale website at www.rivresources.com on the date on which the Voting Power Notice is received by Riversdale.

In the event that a competing takeover offer for Riversdale Shares is publicly announced during the Bid Period and the bidder's statement for that takeover does not include an undertaking by the bidder on equivalent terms to the Undertaking, the Undertaking will lapse at 9:00am (Perth time) on the Business Day after Hancock Corporation gives notice of the termination of the Undertaking to Riversdale.

4.15 Effect of an improvement in the Offer Price

If Hancock Corporation improves the consideration offered under the Offer, all Riversdale Shareholders, whether or not they have accepted the Offer before that improvement in consideration, will be entitled to the benefit of that improved consideration immediately.

4.16 Compulsory acquisition

Hancock Corporation has stated in section 9.4 of the Bidder's Statement that if it becomes entitled to proceed to compulsory acquisition in accordance with the Corporations Act, it intends to compulsorily acquire any outstanding Riversdale Shares.

The two types of compulsory acquisition under Chapter 6A of the Corporations Act are discussed below.

(a) Follow on compulsory acquisition

Under Part 6A.1 of the Corporations Act, Hancock Corporation will be entitled to compulsorily acquire any outstanding Riversdale Shares for which it has not received acceptances on the same terms as the Offer if, during or at the end of, the Offer Period, Hancock Corporation (together with its associates) has relevant interests in at least 90% (by number) of the Riversdale Shares and has acquired at least 75% (by number) of the Riversdale Shares that Hancock Corporation offered to acquire under the Offer (whether the acquisitions happened under the Offer or otherwise).

(b) General compulsory acquisition

Under Part 6A.2 of the Corporations Act, Hancock Corporation will be entitled to compulsorily acquire any outstanding Riversdale Shares, if Hancock Corporation (either alone or with a related body corporate) holds full beneficial interests in at least 90% of Riversdale Shares (by number) (ie if Hancock Corporation becomes a "90% holder"). If this threshold is met, Hancock Corporation will have six months after Hancock Corporation becomes a 90% holder within which to give compulsory acquisition notices to Riversdale Shareholders which must be accompanied by an independent expert's report and an objection form.

4.17 Lapse of Offer

The Offer will lapse if the Offer Condition is not waived or satisfied by Hancock Corporation by the date which is three Business Days after the end of the Offer Period, in which case, all contracts resulting from acceptance of the Offer and all acceptances that have not yet resulted in binding contracts are void and have no effect. In that situation, you will not receive the Offer Price and be free to deal with your Riversdale Shares as you see fit.

4.18 Intentions of Founding Shareholders

Each of the Founding Shareholders has given the following statement of intent to Hancock Corporation:

“I confirm that I regard your proposed offer price (of $2.20) as fair. My present intention would be to accept an offer on those terms, subject to no superior proposal being made. However, I reserve the right to alter my position, in which case I will inform you as soon as practicable.”

The Founding Shareholders collectively hold (directly or indirectly) 48,750,068 Riversdale Shares, representing approximately 16.5% of the Riversdale Shares on issue.

Hancock Corporation has indicated in section 3.1 of the Bidder's Statement that it does not consider these statements of intent to be enforceable by Hancock Corporation under ASIC's 'truth in takeovers' policy or otherwise. This means that the Founding Shareholders are free to change their minds and not accept the Offer.

5. INFORMATION RELATING TO RIVERSDALE

Riversdale is an unlisted Australian public steelmaking coal development company focussed on projects with the potential to be developed into mines supplying steelmaking coal into the seaborne market. In particular, Riversdale is focussed on achieving permitting, construction and development within the next couple of years of the production of Tier 1 coking coal from the operations and holdings at the Crowsnest Pass Complex.

Riversdale was incorporated as an Australian proprietary company on 15 August 2011 and converted to an unlisted public company on 12 April 2012. Its head office is in Chatswood, New South Wales, Australia, and it has a Canadian office in Blairmore, Alberta, Canada.

5.1 Riversdale assets overview

Riversdale's main asset is its 100% interest in the Crowsnest Pass Complex located in Southwest Alberta, Canada. The Crowsnest Pass Complex area has a long history of coal mining and is located within 30km of a number of Teck Resources’ producing steelmaking coal mines in British Columbia. The Crowsnest Pass Complex contains:

(a) the flagship Grassy Mountain Project which has Coal Resource of 195 Mt of steelmaking coal with a 23 year mine life;

(b) the Bellevue, Grassy North and Grassy South extension opportunities;

(c) the Adanac and Lynx Creek exploration opportunities, of which certain parts are intended to be cancelled by the Government of Alberta for a Provincial park; and

(d) 7,100 acres of freehold land, part of which may be suitable for project related infrastructure.7

Riversdale's current focus for the Crowsnest Pass Complex is on advancing the process of obtaining permitting in respect of the Grassy Mountain Project that is required to develop the mine (see section 5.2 below). This will involve responding to questions and providing additional information to regulatory bodies prior to the project being the subject of a joint panel review heading (refer to section 5.3(b) of this Target's Statement for more information).

Riversdale is contemporaneously finalising design and construction contracts so that upon receipt of all necessary permits Riversdale can immediately commence construction.

5.2 Grassy Mountain Project

(a) General

The Grassy Mountain Project is owned by Benga, a wholly owned subsidiary of Riversdale. The Grassy Mountain Project is targeting first product coal on or around June 2022, building to peak production of 4.5 Mtpa by mid-2024. The 4.5 Mtpa coal production level is expected to be maintained through the majority of the 23 year mine life, albeit as per the proposed mine plan, in later years increasing strip ratios are expected to drive a slightly lower annual production rate.

The Grassy Mountain Project is expected to be a first quartile cost producer, with life of mine, free on board operating costs (excluding royalties) estimated to be CAD$88.9/t product. With this cost structure, Grassy Mountain is expected sit

7 This includes the approximately 1,400 hectares of crown leases that the Government of Alberta advised its intention to cancel in 23 January 2017 (see section 8.6 of this Target's Statement for further details).

within the first quartile of the export metallurgical coal margin curve. The Grassy Mountain Project is also expected to be among the lowest capital intensity hard coking coal projects constructed recently due to the fact that it is closely located to existing rail and port infrastructure with existing capacity.

Since acquiring the Grassy Mountain Project in 2013, Riversdale has undertaken numerous drilling campaigns and the extraction of bulk samples from the project area for the purposes of resource delineation and reserve definition, laboratory scale quality analysis, washability analysis and also preparation of samples for distribution to global steelmakers. In addition, Riversdale is finalising all required engineering studies in respect of mining, processing, water management, materials handling, ancillary facility design and rail loadout design to understand the economics of the project. Further, Riversdale has completed a thorough assessment of the proposed Grassy Mountain Project’s development impact on the immediate and surrounding environment and communities that were included in an Environmental Impact Assessment (EIA) which was required for permit applications.

(b) Resources and reserves

The Grassy Mountain Project coal resource is 195Mt, and consists of three seams to a maximum depth of 400 metres. The resource is classified as 85Mt measured and 110Mt indicated. 160Mt of the coal resource is less than 200 metres deep, with 15Mt below 300 metres and 20Mt between 200 metres and 300 metres.

A coal reserves report for the project resulted in proved and probable reserves totalling 154Mt and marketable proved and probable reserves of 88Mt.

Category Coal Resources Measured 85 Indicated 110 Inferred - Total 195

A coal reserves report for the project resulted in proved and probable reserves totalling 154Mt and marketable proved and probable reserves of 88Mt.

Category Coal Reserves (Mt) Marketable Coal Reserves (Mt) Proved 65 37 Probable 89 51 Total 154 88

5.3 Operational Update

(a) First Nations

Riversdale has been working closely with the First Nations (predominantly the Treaty 7 bands) undertaking regulated consultation work which includes amongst other things, cumulative effects assessments, traditional knowledge and traditional land use studies.

In July 2016, Riversdale signed an Impact Benefit Agreement with the Piikani Nation which is the closest band to the Grassy Mountain Project. In February 2019, Riversdale signed a second Impact Benefit Agreement with the Stoney

Nakoda Nation (which consists of three bands: Bearspaw, Chiniki and Wesley). Contemporaneous with this signing, the Stoney Nakoda Nation signed a letter of no objection in relation to the Grassy Mountain Project which was submitted to the provincial and Federal regulatory agencies.

In addition, Riversdale continues to engage with First Nations around opportunities for future partnerships during the construction, operation and reclamation stages of the Grassy Mountain Project pending its regulatory approval.

The risks associated with the community consultation process are set out in section 6.2.

(b) Permitting

In order to develop the Grassy Mountain Project, Riversdale requires permits and/or approvals under the Coal Conservation Act (Alberta); Environmental Protection and Enhancement Act (Alberta); the Water Act (Alberta) and the Public Lands Act (Alberta) through an integrated permit application process. The Alberta Energy Regulator and the Canadian Environmental Assessment Agency are currently jointly reviewing this EIA.

In the process of the EIA being reviewed and as a result of requests for additional information from various government agencies, Riversdale has submitted a total of 9 addendums to compliment the EIA. On 21 January 2019, the public comment period relating to the EIA (with a short extension for the Tsuut'ina submission into February) ended. A number of submissions were received, both in favour of, and raising concerns with, the Grassy Mountain Project. Riversdale has, with the assistance of its advisors on regulatory matters, responded to certain of the submissions received during the comment period.

The Joint Review Panel (JRP) was appointed in August 2018. The JRP is currently reviewing the sufficiency of the EIA to opine whether or not there is sufficient information in front of the JRP before scheduling a public hearing for the Grassy Mountain Project. On 22 March 2019, the JRP provided Riversdale a letter with additional requests regarding noise and air quality and stated that the JRP expected that all further requests to Riversdale would be made by 14 May 2019. Riversdale has considered the first request and expects to have those responses ready shortly and will diligently work towards answering any other requests once received. Riversdale is confident that a public hearing will be scheduled between June and December 2019 and will take approximately 10 days. After the public hearing is concluded, the following steps occur:

(i) the JRP will consider the information submitted and the outcomes of the public hearing and it will summarise its deliberations into a report which will determine whether the Project is in the public interest and set out its recommendations. The report will be issued within 90 days of the end of the hearing; and

(ii) the JRP report is submitted to the Federal Minister who may issue a Decision Statement permitting the Project to proceed. Issuance of the Decision Statement will likely occur approximately 3 months after the Minister receives the JRP Report.

This means that the required permits and approvals are expected between February 2020 and December 2020 with the end of March 2020 being Riversdale's best estimate at this time.

The risks associated with the permitting process are set out in section 6.2.

Following permitting, construction is expected to commence and last 23 months with an additional three months of commissioning.

The initial estimated capital cost of developing the Grassy Mountain Project to achieve first coal sales is CAD$631.6 million on an owner operator basis. The total capital cost estimate to bring the mine to nameplate production of 4.5Mtpa product by mid-2024 is approximately CAD$738 million. Riversdale continues to assess the financing options to fund the construction of the Grassy Mountain Project. 8

The risks associated with construction and development are set out in section 6.2.

(d) Financing

On 10 March 2019, Riversdale signed a mandate with seven banks to assist in the structuring, arrangement and syndication of a US$375 million senior secured project loan facility to finance the development of its Grassy Mountain Project.

Riversdale has been primarily focussed on project financing in recent times and now that the banks have been mandated, Riversdale's aim is to complete all due diligence, documentation and other items such that an approved facility can be in place prior to the completion of permitting and approvals.

Riversdale has also continued consideration and discussions around potential sources of equity funding to complement the project finance and complete the funding required for construction to commence. This includes amongst other things, discussions with end users who have expressed significant interest in a project level investment in addition to discussions with other groups interested in providing equity capital for project development at both a corporate or project level and equipment provider financing. All options are currently being assessed.

The risks associated with the financing process are set out in section 6.2.

(e) Infrastructure

In terms of infrastructure, port has been secured whilst the rail component is still pending but in advanced negotiations.

Riversdale has entered into an agreement with Westshore Coal Terminal in Vancouver which expires in 2030 and in terms of coal volumes, mirrors the expected ramp-up of the mining operations.

The national rail system is adjacent to the proposed train load out facility and has sufficient capacity for the planned mine production and provides access to the Westshore Coal Terminals, approximately 1,070 km away.

The risks associated with the infrastructure are set out in section 6.2.

(f) Off-take arrangements

Riversdale has continued its exploration program to collect and test samples for both short term mine planning purposes (washability, raw and product quality) and bulk washing for customer samples.

8 Riversdale will require funding (debt and equity) of CAD$850 million during the permitting and construction period which includes capital and operating costs, overheads, finance and transaction costs, interest payments until first sales and cost overrun facility.

It is anticipated that up to 8 – 10 steelmakers will take a test sample of the product, some for the second time after previous samples were provided in 2015. Recently, strong interest has been expressed by a number of steelmakers in testing the product.

(g) Management Update

Riversdale has entered into employment contracts with a number of key personnel whose expertise and experience in the mining industry is important to the continued development and operation of its mining interests. In February 2019, Mr Steve Mallyon stepped down from the role of Managing Director and Ms Trudy Curran was appointed as Interim Managing Director and CEO.

The Board has also engaged a leading, global executive search firm to identify a new Canadian based Managing Director, who has appropriate construction and development experience.

Mr Alisdair Gibbons has also been promoted from General Manager Grassy Mountain Project to the to the position of Executive Vice President, Riversdale Resources. Additionally, key roles in construction including Project Director, Maintenance Manager, Senior Mining Engineer and others have been or are close to being filled. The current team together with these successful candidates bring in excess of 150 years' experience in the coal mining industry.

5.4 Tax structure

In section 3.9 of the Bidder's Statement, Hancock Corporation states that for Australian taxation resident shareholders, the effective total Canadian and Australian taxation impost on Benga's source income could be up to 51.5% (for corporate taxpayers) or 63.3% (for individual taxpayers on the top marginal rate).

The implication of this section of the Bidder's Statement is that the holding structure of the Grassy Mountain Project is inefficient in some way. Riversdale considers that this tax outcome is nothing more than the ordinary tax result that applies to all Australian resident investors in relation to returns sourced from shares in foreign companies.

Further, the tax rates disclosed by Hancock Corporation appear to be based on an assumption that the operations of Riversdale would be exclusively funded from Australia by equity contributions. Lower effective tax rates would apply to the extent that debt funding is provided from Australia (or elsewhere). Accordingly, the disclosure in the Bidder's Statement assumes the worst case scenario in terms of the capital structure which will be in place when Riversdale is in production and able to pay dividends which is not expected before July 2022. Details of the anticipated timing for the Grassy Mountain Project to move to production are included in section 5.2(a) of this Target's Statement.

5.5 Historical Financial Information

Riversdale financial statements for the 6 months to 31 December 2018 and the 12 months to 30 June 2018 can be found on the Riversdale website at www.rivresources.com.

5.6 Board and Management

(a) Board

The Board comprises the following members as at the date of this Target's Statement:

Name Position

Gary Lawler Chairman

Trudy Curran Interim Managing Director and CEO

Ronnie Beevor Independent Non-Executive Director

James McClements Non-Executive Director appointed by RCF

Tony Redman Independent Non-Executive Director

Stephanie Sterling Independent Non-Executive Director

Tadeusz Watroba9 Non-Executive Director appointed by Hancock Corporation

Mark Wheatley Non-Executive Director appointed by RCF

A summary of the qualifications and experience of the Directors is available on the Company's website atwww.rivresources.com.

(b) Senior executive management team

Name Position

Trudy Curran Interim Managing Director and Chief Executive Officer

Anthony Martin Chief Financial Officer

Alisdair Gibbons Executive Vice President

Mike Youl Vice President Resource Development

5.7 Agreements with major Riversdale Shareholders

(a) RCF

Under the terms of a side deed between Riversdale and RCF dated 20 December 2016, RCF has the right to:

(i) appoint one director to the Board where it holds at least 15% of Riversdale Shares and two directors where it holds more than 20% of Riversdale Shares; and

9 Mr Garry Korte is Mr Tadeusz Watroba's alternate.

(ii) to consent to any issue of Riversdale Shares where it is not a pro rata rights issue and will result in RCF holding less than 30% of Riversdale Shares.

(b) Hancock

Under the terms of the subscription agreement between Riversdale, Hancock Corporation and Hancock Prospecting dated 28 August 2019, Hancock Corporation has the right to:

(i) appoint one director to the Board where it holds at least 15% of Riversdale Shares and two directors where it holds more than 30% of Riversdale Shares; and

(ii) participate in any future issues of securities to achieve or maintain a shareholding of 19.9% in Riversdale subject to certain exceptions (including the issue of securities under the ESOP or another management option plan or the issue of Riversdale Shares following the conversion of interests under such plan).

5.8 Effect of the offer on ESOP

Of the Riversdale Options:

(a) 861,665 are fully vested; and

(b) 1,633,335 have not fully vested.

Of the fully vested Riversdale Options:

(a) 85,000 have an exercise price of $1.10; and

(b) 776,665 have an exercise price of $1.20.

Of the unvested Riversdale Options:

(a) 466,667 have an exercise price of $1.20 and are exercisable between 16 May 2019 and 16 January 2022;

(b) 366,666 have an exercise price of $1.20 and are exercisable between 16 January 2020 and 16 January 2022;

(d) 166,667 have an exercise price of $1.20 and are exercisable on completion of the Grassy Mountain Project permitting process and expire on 3 July 2022;

(e) 166,666 have an exercise price of $1.20 and are exercisable on the earlier of first production of a commercial quality of coal at the Grassy Mountain Project or 5 years employment with Riversdale and expire on 3 July 2022; and

(f) 100,000 have an exercise price of $2.50 and vest upon the end of Ms Trudy Curran's employment.

Fully vested Riversdale Options may be exercised during the Offer Period and upon exercise, holders will be issued with the same number of Riversdale Shares. Any Riversdale Shares issued on exercise of Riversdale Options will be capable of participating in the Offer. Any Riversdale Options that are not vested are not capable of being exercised and will not participate in the Offer and will therefore remain on issue.

Where Hancock Corporation becomes entitled to and proceeds with compulsory acquisition under Part 6A.1 of the Corporations Act (see section 4.16(a) of this Target's Statement), Hancock Corporation will be required to make offers to purchase any outstanding Riversdale Options.

Where Hancock Corporation becomes entitled to and proceeds with compulsory acquisition under Part 6A.2 of the Corporations Act (see section 4.16(b) of this Target's Statement), Hancock Corporation will be entitled to acquire any outstanding Riversdale Options.

6. RISK FACTORS

6.1 Takeover and shareholding related risks

(a) Liquidity

As Riversdale is an unlisted public company there is no available market on which Riversdale Shares can be traded by Riversdale Shareholders in the same way as shareholders of listed companies are able to trade their shares.

The Offer has created a liquidity option for those shareholders who find the Offer Price attractive or who, having considering the risks of Riversdale Share ownership outlined in section 6 and other issues, determine that having regard to their personal circumstances, they want to accept the Offer, even though it is below fair value as assessed by the Independent Expert and not recommended by the Independent Directors.

In the absence of the Offer or an alternative proposal that provides liquidity for Riversdale Shares, there will be no liquid market on which the Riversdale Shares can be traded. In the past, Riversdale Shares have been sold off-market. It is possible that Riversdale Shares may be sold off-market in a private transaction between a Riversdale Shareholder and the buyer including during or after the Offer Period for prices that are at, above or below the Offer Price.

(b) Ramifications of 50 or fewer Riversdale Shareholders

Riversdale currently has 159 Shareholders. There is no certainty as to how the Riversdale share register will be comprised at the end of the Offer Period nor how many Shareholders Riversdale will have.

If the number of Riversdale Shareholders falls below 50, Riversdale will no longer be subject to the takeovers provisions in Chapter 6 of the Corporations Act. These provisions, amongst other things, regulate the acquisition of voting shares in companies. Including limiting a person from increasing its voting power from below the 20% takeovers threshold to above that level without doing so by one of the permitted exceptions. These exceptions include making a takeover offer, a scheme of arrangement, with shareholder approval and a list of others. Importantly, the principles underlying these provisions are that:

(i) the acquisition of control over the voting shares in an unlisted company with more than 50 members takes place in an efficient, competitive and informed market; and

(ii) the holders of shares, and the directors of the company:

(A) know the identity of any person who proposes to acquire a substantial interest in the company, body or scheme;

(B) have a reasonable time to consider the proposal; and

(iii) as far as practicable, the holders of the relevant class of voting shares all have a reasonable and equal opportunity to participate in any benefits accruing to the holders through any proposal under which a person would acquire a substantial interest in the company; and

(iv) an appropriate procedure is followed as a preliminary to compulsory acquisition for voting shares or interests of any kind of securities under Part 6A.1 of the Corporations Act.

This means that if Riversdale has fewer than 50 members shareholders and Chapter 6 ceases to apply, Hancock Corporation, RCF or any other persons would be free to acquire Riversdale Shares in excess of 20% of the Riversdale Shares without first making a takeover bid for all of the Riversdale Shares, obtaining the approval of the Riversdale Shareholders or implementing a scheme of arrangement.

If Hancock Corporation obtains voting power in more than 25% of Riversdale at the end of the Offer Period it will be able to block a "special resolution" of Riversdale Shareholders, for example a resolution:

 adopting or amending the Riversdale Constitution; or

 approving a scheme of arrangement.

(d) Hancock Corporation intentions

Details of Hancock Corporation's intentions when it obtains various levels of voting power at the end of the Offer Period are set out in section 9 of the Bidder's Statement.

6.2 Business risks

In considering this Target's Statement and the Offer, Riversdale Shareholders should be aware that Riversdale is currently in an advanced state of pre-production transitioning into product and remains subject to a number of risks which may affect its future operating and financial performance.

Some of the risks can be adequately mitigated by the use of safeguards and appropriate systems, but many are beyond the control of Riversdale and its Directors and cannot be mitigated.

Project risk - Riversdale's key focus is developing the Grassy Mountain Project. Following Grassy development, Riversdale will primarily derive its revenue from the sale of coal Mountain produced from the Grassy Mountain Project. Project The development of the Grassy Mountain Project will require a significant amount of work and funding once environmental permits and approvals have been granted. If Riversdale fails to develop the Grassy Mountain Project, future results are likely to be materially adversely affected. See section 5.2 for further detail on the status of the Grassy Mountain Project. Riversdale's future financial performance and prospects should also be considered in light of the risks, expenses and challenges generally associated with mining development projects. If any of these risks eventuate, it may not be able to develop the Grassy Mountain Project or develop it in a manner it

contemplates, or to generate revenues in the amounts and the periods it anticipates.

Permitting Before it can develop the Grassy Mountain Project, Riversdale must obtain an environmental permits and approvals from Alberta and Federal Canadian agencies.

Riversdale has submitted an EIA to the Alberta Energy Regulator and to the Canadian Environmental Assessment Agency for approval of its Grassy Mountain Project. See section 5.3(b) for further detail on the status of these applications.

If the government authorities reviewing the EIA and other applications identify environmental issues of which Riversdale is currently unaware, that may require additional, unforeseen work, which may cause delays, or require Riversdale to alter its plans in ways that affect the economics of the Grassy Mountain Project.

There can be no assurance that Alberta or Federal regulators, as the case may be, will grant the required environmental approvals or operating permits. If Riversdale is unable to secure the required approvals or permits, Riversdale will be unable to proceed to develop the Grassy Mountain Project, which will materially adversely impact Riversdale's financial position and prospects.

Financing The development and construction of the Grassy Mountain Project will require a significant amount of financing over the coming years. See section 5.3(d) for further detail on the status of financing.

There is however a risk that Riversdale may not be able to obtain sufficient funding from external sources as required on terms satisfactory to it, or at all, to finance the development and construction of the Grassy Mountain Project (or any other potential prospects).

There is also a risk that where Riversdale raises equity funds that you may be diluted (if such funds are raised other than pro-rata or you do not participate in a fundraising).

Development If Riversdale obtains the environmental permits and approvals to proceed with and developing the Grassy Mountain Project, the process of developing and infrastructure constructing the Grassy Mountain Project will be subject to certain risks. See section 5.3(e) for further detail on the status of the development of the Grassy Mountain Project.

There is a risk that the economic and technical estimates and assumptions on which the development decision is based will prove to be inaccurate, and unforeseen factors may result in outcomes that are materially less favourable than those estimated or assumed at the time.

The development process will also be subject to a number of uncertainties and risks that are inherent in developing a mining project (including, but not limited to, adverse weather such as heavy rainfall, heavy snowfall or extreme cold), any of which could cause development of the Grassy Mountain Project to be delayed, result in higher costs or even result in the project ceasing to be economic, which may materially adversely impact Riversdale's financial performance.

Environment, Riversdale’s ability to develop its projects will depend in part on its ability to Community maintain good relations with the First Nations and relevant local communities. and First Any failure to adequately manage community and social expectations with Nations respect to project design, compensation for land access, employment opportunities, impact on local businesses or other aspects of the Grassy

Mountain Project may lead to local dissatisfaction with the Grassy Mountain Project, which in turn may lead to disruptions in Riversdale's proposed operations.

Further, coal exploration and mine development in Alberta requires the proponent to consult with, and if necessary accommodate, certain First Nations peoples whose treaty rights may be impacted by the proposed activity.

Key Personnel The loss of key personnel and the failure to recruit sufficiently qualified staff could affect the matters outlined above in this risk section, that are required to be satisfactorily obtained, addressed or actioned before the Grassy Mountain Project is implemented.

Riversdale may not be able to locate or employ qualified executives on acceptable terms or at all. If Riversdale cannot attract, train and retain qualified managers, Riversdale may be unable to successfully manage its growth or otherwise compete effectively in the international coal industry.

Commodity If and when development of the Grassy Mountain Project is complete and the prices project is in production, Riversdale will derive its revenue from the sale of coal. The price which Riversdale will receive for its coal depends on numerous factors that are beyond Riversdale's control and are inherently unpredictable, including international supply and demand, the price and availability of alternative fuels, actions taken by governments, and global economic and political developments.

As a result, some or all of Riversdale’s underlying assumptions may materially change and actual coal prices and demand may differ materially to those expected by Riversdale. Adverse changes in market sentiment or conditions can and will impact Riversdale's ability to manage operating costs and have sales meet installed production capacity. These impacts could lead to a reduction in earnings and the carrying value of assets that are outside of Riversdale's control.

Foreign If and when development of the Grassy Mountain Project complete and the exchange project is in production, Riversdale will derive its revenue from the sale of coal which is priced in USD while a number of costs are priced in CAD.

Accordingly, fluctuations in the AUD relative to the USD and relative to CAD may materially affect the cash flow and earnings which Riversdale will realise form its operations in AUD terms.

Coal Resource The information provided in this Target's Statement in relation to the estimation Riversdale project is in the current estimate of coal reserves, capital and operating costs, as determined from geological data obtained from drill holes and other exploration techniques and feasibility studies conducted to date. Resource estimates are stated to the JORC Code and are expressions of judgement based on knowledge, experience and industry practice. These estimates were appropriate when made, but may change significantly when new information becomes available.

Coal quality The statements contained in this Target's Statement relating to the estimated quality of the coal available at the Grassy Mountain Project and the nature of the coal products that Riversdale will be able to produce are based on limited sampling, which although consistent with industry practice, may prove to be an unreliable guide to the overall quality of the coal, its amenability to processing and the characteristics (and therefore the value) of the products that result.

Exploration The exploration of mineral deposits involves significant risks which even a risk combination of careful evaluation, experience and knowledge is unlikely to completely eliminate.

Title risk Riversdale’s property rights in respect of the Crowsnest Pass Complex may be disputed resulting in disruption and/or impediment in the operation or development of the Grassy Mountain Project. Although title opinions were obtained in respect of the Crowsnest Pass Complex, such reviews and opinions do not guarantee or certify that an unforeseen defect in the chain of title.

Canadian courts have also recognised that certain First Nations peoples may have rights with respect to land used or occupied by their ancestors in the absence of treaties to address those rights. These First Nations rights may vary from limited rights of use for traditional purposes to rights of title and will depend upon, among other things, the nature and extent of prior First Nations use and occupation.

Health and A violation of health and safety laws could lead to a temporary shutdown of all safety or a portion of the drilling program, the mine or relevant facility, a loss of the regulations right to operate the relevant equipment or facility, the imposition of costly compliance procedures and fines, exposure to civil liability and serious reputational damage.

6.3 Not exhaustive

The above risk factors are not an exhaustive list of risks relevant to Riversdale, its performance and the value of Riversdale Shares. These risks (and others not specifically referred to above) may materially affect the financial performance of Riversdale and the value of Riversdale Shares. In particular, additional risks and uncertainties not currently known may also have an adverse effect on Riversdale's business and the value of Riversdale Shares.

7. TAX CONSIDERATIONS

The following is a general summary of the Australian income tax, goods and services tax (GST) and stamp duty consequences for Riversdale Shareholders of disposing of their Riversdale Shares under the Offer. In addition the following provides a general summary of the Canadian Federal income tax and withholding tax consequences for Riversdale Shareholders of disposing of their Riversdale Shares under the Offer.

This summary applies to Riversdale Shareholders who hold their Riversdale Shares on capital account and acquired their Shares for capital gains tax (CGT) purposes after 11:45am on 21 September 1999. It does not apply to banks, insurance companies or Shareholders who otherwise hold their Shares on revenue account or as trading stock, Shareholders who acquired their Shares under an employee share or option plan, Shareholders who are exempt from Australian tax or Shareholders whose Shares are subject to the "taxation of financial arrangements" rules in Division 230 of the Income Tax Assessment Act 1997.

Riversdale Shareholders who are tax residents of a country other than Australia (whether or not they are also residents or temporary residents of Australia for tax purposes) should take into account the tax consequences under the laws of their country of residence, as well as under Australian and Canadian law, of accepting the Offer.

The information in this summary is based upon Australian tax law and practice in effect at the date of this Target's Statement. It is not intended to be an authoritative or comprehensive analysis of the tax laws of Australia or Canada as they apply to a disposal of Riversdale Shares under the Offer. This summary does not consider any specific facts or circumstances that may apply to particular Riversdale Shareholders. It is therefore recommended that Riversdale Shareholders obtain independent tax advice based on their own circumstances prior to accepting the Offer.

7.1 General

The disposal of Riversdale Shares should have both Australian and Canadian income tax consequences for Riversdale Shareholders. In broad terms, the disposal will give rise to Canadian CGT and withholding tax liabilities for the Riversdale Shareholders and will also have consequences under Australia's CGT rules.

To the extent that Canadian tax is paid, a foreign tax credit (a "foreign income tax offset" or FITO) may be available to reduce the Australian tax that would otherwise also be payable on any capital gain realised from the disposal of the Shares. However, there are a number of restrictions on the amount of the FITO as well as Australian tax compliance requirements in relation to the claiming of the FITO.

The relevant Australian and Canadian rules are discussed separately below.

7.2 Australian income tax for Australian resident shareholders

(a) Shareholders who accept the Offer

The disposal of Riversdale Shares by a Shareholder under the Offer will constitute a CGT event. The date of the CGT event is when the contract to sell the Riversdale Shares is formed.

(b) Compulsory acquisition

A compulsory acquisition of the Riversdale Shares will also constitute a CGT event. In this case, the date of the CGT event is when the change of ownership of the Shares occurs.

Riversdale Shareholders may make a capital gain or a capital loss, depending upon whether the capital proceeds from the disposal of their Shares are more than the cost base of their Shares, or whether the capital proceeds are less than the reduced cost base of their Shares, respectively.

The cost base (or reduced cost base) will generally include the amount paid for the Riversdale Shares and certain non-deductible incidental costs of acquisition and disposal (e.g. fees for financial advice in relation to the Offer).

The capital proceeds will include the amount of the Offer consideration received by Riversdale Shareholders in respect of their Riversdale Shares.

Any capital gain or capital loss made by a Riversdale Shareholder will be aggregated with other capital gains and capital losses of the Riversdale Shareholder in the income year to determine whether the Riversdale Shareholder has a net capital gain or net capital loss. A net capital gain (if any) will be included in the Shareholder's assessable income and subject to income tax, although the CGT discount may be available to reduce the taxable gain for the Riversdale Shareholder, as described below. A net capital loss may not be deducted against assessable income, but may be carried forward to be offset against net capital gains made in later income years (in the case of companies, if certain loss utilisation tests are satisfied).

Riversdale Shareholders who have held their Riversdale Shares for at least 12 months prior to the CGT event should be entitled to discount the amount of the capital gain (after the application of capital losses) made on the disposal of the 1 Riversdale Shares by 50% in the case of individuals and trusts or by 33 /3% in the case of complying superannuation entities. Trustees should obtain specific advice regarding the tax consequences of making distributions attributable to discounted capital gains. The CGT discount is generally not available to companies.

7.3 Non-Australian resident Riversdale Shareholders

This section applies to Riversdale Shareholders who are not residents of Australia for tax purposes and do not hold their Riversdale Shares in carrying on a business through a permanent establishment in Australia.

A disposal of Riversdale Shares by these Riversdale Shareholders will generally only have CGT implications if the Riversdale Shares are "indirect Australian real property interests", which will be the case if:

(a) the Riversdale Shareholder together with its tax law associates held at least 10% of the issued shares in Riversdale at the time of disposal or for any continuous 12 month period within the preceding 24 months (the non-portfolio interest test); and

(b) more than 50% of the market value of Riversdale assets is attributable to direct or indirect interests in Australian real property or mining, quarrying or prospecting rights in Australia (the principal asset test).

While Riversdale does not expect that the Riversdale Shares will satisfy the principal asset test at the date of this Target's Statement, non-Australian resident Riversdale Shareholders should obtain their own professional advice in relation to applying these tests.

7.4 Australian CGT withholding for foreign residents

Under rules ("the foreign resident CGT withholding rules") introduced in 2016, a person that acquires certain CGT assets, including "indirect Australian real property interests" (which can include shares in companies that hold Australian real property), from a "relevant foreign resident" may be required to withhold tax from the purchase price it pays to the foreign resident seller.

These rules are designed to ensure that CGT payable by foreign residents on the sale of taxable Australian property is able to be collected by the Australian Taxation Office. The rate of withholding is generally 12.5%.

In broad terms, a "relevant foreign resident" is any entity that, at the time the transaction is entered into:

(a) is known or reasonably believed by the purchaser to be a foreign resident for Australian tax purposes; or

(b) is not reasonably believed by the purchaser to be an Australian resident for tax purposes and either has an address outside Australia or the purchaser is authorised to make payments to that person in relation to the transaction at a place outside Australia.

Under these rules, Hancock Corporation will be required to withhold 12.5% of the Offer consideration where it considers a Riversdale Shareholder to be a "relevant foreign resident" and the Riversdale Shares of the Riversdale Shareholder to be "indirect Australian real property interests". However, Hancock Corporation will not be required to withhold any amounts from the Offer consideration under these rules if the relevant Riversdale Shareholder gives Hancock Corporation one of the following declarations (unless Hancock Corporation knows the declaration to be false):

(a) a declaration that the Riversdale Shareholder is an Australian resident for tax purposes (residency declaration); or

(b) a declaration that the Riversdale Shares held by the Riversdale Shareholder are not "indirect Australian real property interests" (interests declaration).

Any Riversdale Shareholder who believes that they may be impacted by the foreign resident CGT withholding rules should obtain their own professional advice and consider contacting Hancock Corporation prior to accepting the Offer.

Any Riversdale Shareholder who receives their Offer consideration net of foreign resident CGT withholding may be entitled to a credit for the amount withheld. Any Riversdale Shareholder in this situation should obtain their own professional advice.

7.5 Canadian Income Tax for Riversdale Shareholders

This section applies to Riversdale Shareholders who are not residents of Canada for tax purposes and do not use or hold their Riversdale Shares in carrying on a business in Canada.

A disposal of Riversdale Shares by these Riversdale Shareholders will generally be subject to Canadian Federal income tax on any capital gain realized if the Riversdale Shares are "taxable Canadian property" (TCP) and the Riversdale Shareholder is not entitled to an exemption under any applicable income tax convention between Canada and the country in which the Riversdale Shareholder is resident. The income tax convention between Canada and Australia does not exempt capital gains from the disposition of TCP from Canadian income tax.

The Riversdale Shares will generally be TCP if at any time in the 60 month period prior to the disposition more than 50% of the fair market value of the Riverdale Shares was derived, directly or indirectly, from real property in Canada or Canadian resource property. Riverdale has concluded that the Riverdale Shares will be TCP at the time of the sale under this Offer.

One half of the amount of any capital gain on TCP is included in income subject to Canadian Federal income tax, including for non-residents of Canada. On the disposition of the Riversdale Shares, a Riverdale Shareholder who holds their Riversdale Shares on capital account will realize a capital gain on disposition for Canadian Federal income tax purposes that is equal to the excess of cash proceeds over the “adjusted cost base” of those shares (and reasonable costs of disposition).

The Canadian income tax paid by a Riversdale Shareholder on the gain from the disposition of its Riversdale Shares may be deductible, or creditable, against the shareholders income tax obligations in its resident jurisdiction. Riversdale Shareholders should consult with their own tax advisors with respect to the availability of any such deduction or credit.

7.6 Canadian Withholding Tax and Tax Filing Obligations

Since the Riversdale Shares will be TCP on the disposition of Riversdale Shares to Hancock, certain certification obligations will apply to a Riversdale Shareholder, and withholding tax obligations will apply to Hancock. These obligations are designed to ensure that Canadian Federal income tax payable by persons not resident in Canada on the sale of TCP is able to be collected by the Canadian Revenue Agency. The rate of withholding is 25% of the sale proceeds.

Unless a Riversdale Shareholder completes the Canadian tax certification application process with respect to the Riversdale Shares sold by it, and provides a certificate issued by the Canadian tax authorities, to Hancock Corporation prior to the closing of the sale of the Riversdale Shares under the Offer, Hancock Corporation will be required to withhold 25% of the sales proceeds and remit that amount to the Canadian tax authorities.

To address the timing problems with obtaining a certificate the Canadian Revenue Agency has developed a 'comfort letter' procedure which enables a purchaser to hold the funds in escrow whilst the certificate application is determined. The 'comfort letter' process is made applicable at the sole discretion of the purchaser. Even under the 'comfort letter' process, 25% of the relevant purchase price will be tied up for a period of time and unavailable to the vendor.

Canadian tax certification requirements are complex and time consuming. Any Riversdale Shareholder who believes that they may be impacted by these certification requirements should obtain their own professional advice as soon as possible and consider contacting Hancock Corporation about the applicable withholding procedures prior to accepting the Offer.

A Riversdale Shareholder may also be required to file a Canadian income tax return to report the sale of its Riversdale Shares, and may be entitled to a full or partial refund of any amount paid or remitted by the Hancock Corporation to the Canadian tax authorities

to the extent, if any, such remittance exceeds the shareholder’s actual Canadian tax liability for the sale of its Riversdale Shares. Riversdale Shareholders should consult with their own tax advisors with respect to their other Canadian income tax compliance obligations and procedures for obtaining any available refund in respect of amounts withheld and remitted by the Hancock Corporation to the Canadian Revenue Agency.

7.7 Foreign income tax offset for Canadian tax paid

Riversdale Shareholders who are Australian residents may be able to claim a FITO for some or all of the Canadian tax paid in relation to the disposal of their Shares to reduce the Australian tax payable in relation to that disposal.

There are limits on the amount of the FITO that may be claimed: in particular, taxpayers eligible for the CGT discount may not be able to claim a for the FITO on the discounted portion of the gain. In addition, depending on when the final Canadian tax liability is paid (that is, on an assessment), there may be a delay between the payment of Australian CGT on the gain from the disposal and time at which the FITO can be claimed.

More specifically, in order to be eligible for the FITO, the capital gain made on the disposal of the Shares must be included in the Shareholder's assessable income. For example, recent case law (currently under appeal) confirms that if a Riversdale Shareholder makes a capital gain from the disposal of the Shares and had an Australian capital loss that was used to reduce (or eliminate) the taxable capital gain from the disposal, no foreign income tax offset would be available for the Canadian tax paid to the extent the taxable capital gain was reduced by the capital loss (and no FITO would be available at all if the taxable capital gain was entirely eliminated).

Similarly, if the Riversdale Shareholder is eligible for the CGT discount on the disposal, no FITO would be available to the extent Canadian tax was paid on the discounted portion of the capital gain. It should also be noted that capital losses and the CGT discount can both apply to reduce the FITO where applicable.

For a Riversdale Shareholder seeking to claim a FITO of more than A$1,000 for an income year, the amount of the offset is limited to, in very broad terms, the Australian tax that would otherwise be payable on the amount of the taxable gain from the disposal which is included in the Riversdale Shareholder's Australian assessable income. Shareholders claiming a FITO of no more than A$1,000 for an income year do not need to calculate the amount of Australian tax that would otherwise be payable. Excess FITOs (that is, amounts in excess of the offset limit) cannot be carried forward by the Riversdale Shareholder for future use.

The FITO is only available for the Canadian tax once it is paid. As the Canadian withholding amount is not a final tax, the FITO may not be available until the shareholder files a Canadian tax return and the final Canadian tax liability for the disposal is calculated. If the final Canadian tax liability is not paid until an income year after the Shareholder has filed their Australian income tax return for the year in which the taxable gain from the shares is derived, the Riversdale Shareholder will need to amend their Australian tax return in order to claim the foreign income tax offset.

The amount of the Canadian tax paid must be converted to Australian dollars in order to calculate the amount of the FITO. Details of the applicable currency conversion rules may be found on the Australian Taxation Office website (www.ato.gov.au).

Finally, Riversdale Shareholders will need to obtain and retain evidence to show the amount of Canadian tax paid in order to substantiate their FITO claim.

7.8 GST

No liability to GST should arise for Riversdale Shareholders on a disposal of their Riversdale Shares to Hancock Corporation.

Riversdale Shareholders may incur GST on costs in respect of the disposal (e.g. fees for legal and financial advice). Riversdale Shareholders may not be entitled to input tax credits, or may only be entitled to reduced input tax credits, in relation to the GST amount incurred on these costs. Riversdale Shareholders in this situation should obtain their own professional advice.

7.9 Stamp duty

No liability to stamp duty should arise for Riversdale Shareholders in any State or Territory of Australia on a disposal of their Shares.

8. ADDITIONAL INFORMATION AND DIRECTORS' INTERESTS

8.1 Issued capital

As at the date of this Target's Statement, Riversdale's issued capital consisted of:

Security Quantity

Riversdale Shares 295,151,613

Riversdale Options 2,495,000

8.2 Substantial holders

As at the date of this Target's Statement, the substantial holders of Riversdale Shares are:

Holder Substantial holding

RCF 47.97%

Hancock Corporation 19.79%

Kingfisher Capital Pte Ltd 8.19%

Stanhope Investments Pty Limited (a 6.13% company controlled by Steve Mallyon)

Prospect AG Trading Pty Ltd (a company 5.86% controlled by Michael O'Keeffe)

8.3 Interests and dealings of Directors in Riversdale securities

As at the date immediately before the date of this Target's Statement, the Directors had the following relevant interest in Riversdale Shares and Riversdale Options:

Director Number of Riversdale Number of Riversdale Shares options

Gary Lawler 1,107,142 Nil

Ronald Beevor 607,142 Nil

James McClements Nil Nil

Tony Redman 300,000 Nil

Stephanie Sterling 7,142 Nil

Trudy Curran 7,142 100,000

Tadeusz Watroba Nil Nil

Mark Wheatley Nil Nil

Other than the issue of 100,000 Riversdale Options to Ms Trudy Curran under the terms of her employment agreement dated 14 February 2019 and acquisition of 7,142 Riversdale Shares by Stephanie Sterling as a component of her director's compensation, no Director has acquired or disposed of a relevant interest in any Riversdale securities in the 4 month period ending on the date immediately before the date of this Target's Statement. Hancock Corporation confirmed in section 12.11 of the Bidder's Statement that the issue of these Riversdale Options to Ms Curran during the Offer Period would not breach the Offer Condition.

8.4 Interests and dealings of Directors in Hancock Corporation securities or Hancock Prospecting Securities

Hancock Corporation is a wholly-owned subsidiary of Hancock Prospecting. Hancock Prospecting is a privately owned company whose ownership is shown in section 7.1(d) of the Bidder's Statement.

As at the date immediately before the date of this Target's Statement, no Director had a relevant interest in any Hancock Prospecting securities.

No Director has acquired or disposed of a relevant interest in any Hancock Prospecting securities in the 4 month period ending on the date immediately before the date of this Target's Statement.

8.5 Benefits and agreements

(a) Benefits to Directors

As a result of the Offer, no person has been or will be given any benefit (other than a benefit which can be given without member approval under the Corporations Act) in connection with the retirement of that person, or someone else, from the Board, managerial office or related body corporate of Riversdale.

Except as outlined below, no Director has agreed to receive, or is entitled to receive, any benefit from Hancock Corporation or Hancock Prospecting which is related to or conditional on the Offer, other than in their capacity as a holder of Riversdale securities.

A committee of Independent Directors was formed to consider the Offer consisting of Gary Lawler, Trudy Curran, Ronnie Beevor and Stephanie Sterling. The members of this committee (other than Trudy Curran) will receive a committee fee of $10,000 per month to compensate them for the additional work done on the committee.

(b) Agreements in connection with or conditional on the Offer

No agreement has been made between any Director and any other person in connection with, or conditional upon, the outcome of the Offer, other than in their capacity as a holder of Riversdale securities.

No Director has any interest in any contract entered into by Hancock Corporation or Hancock Prospecting.

8.6 Material litigation

Except as outlined below, to the best knowledge of the Directors and senior management of Riversdale, Riversdale is not involved in any litigation or dispute which is material in the context of Riversdale and its subsidiaries taken as a whole.

On 23 January 2017, the Government of Alberta advised of its intention to cancel approximately 1,400 hectares of the Adanac crown leases located within the proposed Castle Provincial Park which will affect both the Adanac and the Lynx Creek projects (but not the Grassy Mountain Project). On 2 February 2018, at the request of the Alberta Energy Regulator, Riversdale applied for compensation in the relation to the cancellation of the 1,400 hectares of crown lease. In accordance with the Mineral Rights Compensation Regulations, Riversdale can only claim for cost incurred rather than the market value of the exploration assets.

Excluding those leases that the Government of Alberta has advised that it intends to cancel, Riversdale's remaining Adanac and Lynx Creek leases would be located close to the proposed park boundary, which may limit their future development potential. Riversdale continues to assess the impact of the Castle Provincial Park on its freehold mineral titles within the park and the Crown and freehold mineral leases that border the park and is assessing all options, including potential legal action, to protect Riversdale’s interests.

8.7 Effect on Riversdale's licences, permits and material contracts

To the best knowledge of the Directors and senior management of Riversdale, none of the exploration permits or material contracts to which Riversdale is a party contain change of control provisions which may be triggered as a result of the Offer or acceptances of the Offer, and which may have a material adverse effect on Riversdale.

8.8 Officers' indemnity and insurance

To the extent permitted by law, Riversdale indemnifies every person who is or has been an officer of Riversdale against:

(a) any liability (other than legal costs) incurred by that person as an officer of Riversdale (including liabilities incurred by the officer as an officer of a subsidiary of Riversdale where Riversdale requested the officer to accept that appointment); and

(b) reasonable legal costs incurred in defending an action for liability or allegedly incurred by that person as an officer of Riversdale (including such legal costs incurred by the officer as an officer of a subsidiary of Riversdale where Riversdale requested the offer to accept that appointment).

8.9 Consents

Ashurst has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's legal adviser in the form and context in which it is named.

Macquarie Capital has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's investment banking adviser in the form and context in which it is named.

Grant Thornton has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's independent expert adviser in the form and context in which it is named.

RPM Global has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's technical expert adviser in the form and context in which it is named.

McElroy Bryan Geological Services has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's technical expert adviser in the form and context in which it is named.

FTI Consulting has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's communications adviser in the form and context in which it is named.

Osler, Hoskin & Harcourt LLP has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement as Riversdale's Canadian tax adviser in the form and context in which it is named.

RCF has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement in the form and context in which it is named.

Regal has given, and has not withdrawn before lodgement of this Target's Statement with ASIC, its written consent to be named in this Target's Statement in the form and context in which it is named.

Each person named in this section 8.9 as having given its consent to the inclusion of a statement or being named in this Target's Statement:

 does not make, or purport to make, any statement in this Target's Statement or any statement on which a statement in this Target's Statement is based other than those statements which have been included in this Target's Statement with the consent of that person; and

 to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Target's Statement, other than a reference to its name and any statements or report which have been included in this Target's Statement with the consent of that party.

ASIC has published various Class Orders that modify, or exempt parties from compliance with the operation of various provisions of Chapter 6 of the Corporations Act. Riversdale has relied on that ASIC Class Order relief.

As permitted by ASIC Class Order 13/521 this Target's Statement contains statements which are made, or based on statements made, in documents lodged with ASIC. Pursuant to this ASIC Class Order, the consent of persons to whom such statements are attributed is not required for the inclusion of these statements in this Target's Statement. Any Riversdale Shareholder who would like to receive a copy of any of those documents may obtain a copy free of charge during the Offer Period by contacting the shareholder information line on +61 2 8298 6106.

As permitted by ASIC Class Order 2016/72, this Target's Statement may include or be accompanied by certain statements:

 fairly representing a statement by an official person; or

 from a public official document or a published book, journal or comparable publication.

Pursuant to this ASIC Class Order, the consent of such persons to whom statements or documents are attributed is not required for the inclusion of those statements in this Target's Statement.

8.10 Disclosure

Riversdale Shareholders may obtain a copy of:

 Riversdale's half yearly report;

 Riversdale's annual report; and

 the Riversdale Constitution,

free of charge upon request by contacting the shareholder information line on +61 2 8298 6106. Riversdale's Constitution and this Target's Statement are also available on Riversdale's website at www.rivresources.com.

8.11 No other material information

This Target's Statement is required to include all the information that Riversdale Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer, but:

 only to the extent to which it is reasonable for Riversdale Shareholders and their professional advisers to expect to find this information in this Target's Statement; and

 only if the information to known to any Director.

The Directors are of the opinion that the information that Riversdale Shareholders and their professional advisers would reasonably require to make an informed assessment whether to accept the Offer is:

 the information contained in the Bidder's Statement (to the extent that the information is not inconsistent with or superseded by information in this Target's Statement);

 the information contained in the documents lodged by Riversdale with ASIC, before the date of this Target's Statement; and

 the information contained in this Target's Statement.

The Directors have assumed, for the purposes of preparing this Target's Statement, that the information in the Bidder's Statement is accurate (unless they have expressly indicated otherwise in this Target's Statement). However, the Directors do not take any responsibility for the contents of the Bidder's Statement and are not to be taken as endorsing, in any way, any or all of the statements contained in it.

In deciding what information should be included in this Target's Statement, the Directors have had regard to:

 the nature of the Riversdale Shares;

 the matters that Riversdale Shareholders may reasonably be expected to know;

 the fact that certain matters may reasonably be expected to be known to Riversdale Shareholders' professional advisers; and

 the time available to Riversdale to prepare this Target's Statement.

9. GLOSSARY AND INTERPRETATION

9.1 Definitions

ASIC means the Australian Securities and Investments Commission.

Benga means Benga Mining Limited, a wholly owned subsidiary of Riversdale.

Bid Period means the period commencing on the date that this Bidder's Statement is provided to Riversdale, and ending at the end of the Offer Period.

Bidder's Statement means the bidder's statement received by Riversdale from Hancock Corporation under Part 6.5 of the Corporations Act dated 27 February 2019 in relation to the Offer as updated by the replacement bidder's statement of from Hancock Corporation dated 11 March 2019 in relation to the Offer, and includes any Supplementary Bidder's Statement.

Board means the board of Directors of Riversdale.

Business Days means a day on which banks are open for general banking business in Perth and in Sydney (not being a Saturday, Sunday or public holiday in Western Australia or New South Wales).

CGT has the meaning set out in section 7 of this Target's Statement.

Competent Person has the meaning given in the JORC Code.

Control has the meaning given in section 50AA of the Corporations Act and controlled has the corresponding meaning.

Convertible Security means the Riversdale Options, as well as any other securities exercisable or convertible for Riversdale Shares, on issue at the Register Date.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of Riversdale.

ESOP means the Riversdale share option plan.

Feasibility Study means the assessment and evaluation of the Grassy Mountain Project completed by Riversdale in February 2017 to determine whether the mineral resources can be mined economically.

FITO has the meaning given in section 7.1 of this Target's Statement.

Founding Shareholders means, collectively, Mr Michael O'Keeffe (former Riversdale Chairman), Mr Steve Mallyon (Former Riversdale Managing Director) and Mr Anthony Martin (Riversdale Chief Financial Officer).

Funding Agreement means the agreement dated 26 February 2019 between Hancock Prospecting and Hancock Corporation setting out the terms on which Hancock Prospecting has agreed to advance funds to Hancock Corporation in order to:

(a) meet its obligations under the Offer to fund the Offer consideration to accepting Riversdale Shareholders (and any associated transaction costs); and

(b) pay any additional amounts required by Hancock Corporation to meet its payment obligations due to the Increased Offer Price.

GST has the meaning set out in section 7 of this Target's Statement.

Hancock Corporation means Hancock Corporation Pty Ltd 615 809 740.

Hancock Prospecting means Hancock Prospecting Pty Ltd ACN 615 809 740.

Hancock Prospecting Group means:

(d) each entity that is a subsidiary of Hancock Prospecting; and

(e) any entity that, directly or indirectly through one or more intermediaries, is Controlled by Hancock Prospecting from time to time.

Increased Offer Price has the meaning given in section 4.1 of this Target's Statement.

Independent Directors means each of the Directors except for Mr Tadeusz Watroba.

Independent Expert means Grant Thornton.

Independent Expert's Report means the report produced by the Independent Expert set out in Annexure B of this Target's Statement.

JORC Code means the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).

Kingfisher means Kingfisher Capital Pte Ltd.

Notice of Status of Offer Condition means Hancock Prospecting's notice disclosing the status of the Offer Condition which is required to be given by section 630(3) of the Corporations Act.

Offer means the offer by Hancock Prospecting for Riversdale Shares, which is contained in section 2 of the Bidder's Statement.

Offer Condition means the condition of the Offer, on the terms of Annexure A of the Bidder's Statement and Annexure B of this Target's Statement.

Offer Period means the period during which the Offer will remain open for acceptance in accordance with section 13.3 of the Bidder's Statement.

Offer Price means the consideration offered under the Offer, being A$2.20 per Riversdale Share as at the date of this Target's Statement, to be increased to $2.50 for each Riversdale Share as at the date of this Target's Statement if Hancock Corporation's voting power in Riversdale exceeds 50% (on a fully diluted basis) prior to the end of the Offer Period.

Project means the Grassy Mountain Project, further details of which are outlined in section 5.2.

RCF means Resource Capital Fund VI LP.

Regal means Regal Funds Management.

Register Date means the date set by Hancock Corporation under section 633(2) of the Corporations Act, being 7:00pm (Sydney time) on 1 March 2019.

relevant interest has the same meaning given to that term in section 608 of the Corporations Act.

Riversdale means Riversdale Resources Limited ACN 152 669 291

Riversdale Constitution means the constitution of Riversdale as amended from time to time.

Riversdale Group means:

(f) Riversdale;

(g) each entity that is a subsidiary of Riversdale; and

(h) any entity that, directly or indirectly through one or more intermediaries, is Controlled by, Riversdale from time to time,

and a reference to Riversdale Group Member is to any member of the Riversdale Group.

Riversdale Options means an option over Riversdale Shares.

Riversdale Share means a fully paid ordinary share in Riversdale.

Riversdale Shareholder means a holder of Riversdale Shares.

Security Interest has the meaning given in section 51A of the Corporations Act.

Supplementary Bidder's Statement means any supplementary bidder's statement received by Riversdale from Hancock Corporation in relation to the Offer in accordance with section 643 of the Corporations Act.

Target's Statement means this document (including any attachments), being the statement of Riversdale under Part 6.5 Division 3 of the Corporations Act.

TCP has the meaning given in section 7.5 of this Target's Statement.

Undertaking has the meaning given to that term in section 4.14 of this Target's Statement.

voting power has the meaning given to that term in section 610 of the Corporations Act.

Water Act means Water Act (Alberta).

9.2 Interpretation

In this Target's Statement, unless the context requires otherwise:

(a) headings are inserted for convenience and do not affect the interpretation of this Target's Statement;

(b) words and phrases in this Target's Statement have the same meaning given to them (if any) in the Corporations Act;

(d) a gender includes all genders;

(e) a reference to a person includes a corporation, partnership, joint venture, association, unincorporated body or other body corporate and vice versa;

(f) if a word is defined, another part of speech has a corresponding meaning;

(g) a reference to a section or annexure is a reference to a section or annexure of this Target's Statement;

(h) a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;

(i) unless expressly stated otherwise, a reference to time is a reference to Sydney Time; and

(j) unless expressly stated otherwise, a reference to dollars, $, A$ or AUD is a reference to the lawful currency of Australia.

10. AUTHORISATION

This Target's Statement is dated 27 March 2019 and has been approved by a resolution passed by the Directors of Riversdale at a Board meeting at which Mr Tadeusz Watroba did not attend.

Signed for and on behalf of Riversdale Resources Limited:

Gary Lawler Chairman

ANNEXURE A

THE OFFER CONDITION

The Offer Condition is as follows:

During the Bid Period none of the following happen:

(a) any Riversdale Group Member converts all or any of its shares into a larger or smaller number of shares;

(b) any Riversdale Group Member resolves to reduce its share capital in any way;

(i) enters into a buyback agreement;

(ii) resolves to approve the terms of a buyback agreement;

(d) any Riversdale Group Member issues shares (other than Riversdale Shares as a result of the conversion of Convertible Securities), or grants an option over its Shares, any right that is convertible into Riversdale Shares or agrees to make such an issue or grant such an option or right;

(e) any Riversdale Group Member issues, or agrees to issue, convertible notes;

(f) any Riversdale Group Member disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property;

(g) any Riversdale Group Member grants, or agrees to grant, a Security Interest in the whole or a substantial part, of its business or property;

(h) any Riversdale Group Member resolves that any of them be wound up;

(i) a liquidator or provisional liquidator is appointed to any Riversdale Group Member;

(j) a court makes an order for the winding up of any Riversdale Group Member;

(k) an administrator is appointed to any Riversdale Group Member;

(l) any Riversdale Group Member executes a deed of company arrangement;

(m) a receiver, or a receiver and manager is appointed in relation to the whole, or a substantial part, of the property of any Riversdale Group Member.

ANNEXURE B

INDEPENDENT EXPERT'S REPORT

Riversdale Resources Limited

Independent Expert’s Report and Financial Services Guide

26 March 2019

Grant Thornton Corporate Finance Pty Ltd ABN 59 003 265 987 The Independent Directors AFSL 247140

Riversdale Resources Limited Level 17, 383 Kent Street Sydney NSW 2000 Suite 2, Level 1 PO Locked Bag Q800 6 McIntosh Street QVB Post Office Sydney NSW 1230 Chatswood NSW 2067 T + 61 2 8297 2400 F + 61 2 9299 4445 E [email protected] W www.grantthornton.com.au 26 March 2019

Dear Independent Directors

Introduction

Riversdale Resources Limited (“RRL” or “the Company” or “Riversdale”) is an independent hard coking coal development and exploration company focussed on bringing into production the 100% owned Grassy Mountain Project which is part of the Crowsnet Pass Complex, located in Alberta, Canada. The Grassy Mountain Project contains 195 Mt of measured and indicated resources, 154 Mt of reserves and 88 Mt of marketable reserves1. RRL is a public unlisted company with 159 shareholders2.

On 27 February 2019, Hancock Corporation Pty Ltd, a wholly owned subsidiary of Hancock Prospecting Pty Ltd (“Hancock”), announced an all cash offer (“Offer” or “Hancock Offer”) to acquire all the issued shares of Riversdale in which Hancock does not already have a relevant interest at a price of A$2.20 per share (“Base Offer Price”). The Base Offer Price will increase to A$2.50 per share (“Increased Offer Price”) if Hancock’s shareholding in Riversdale exceeds 50% on a fully diluted basis3 before the Offer closes. We note that Resource Capital Fund VI LP (“RCF”) is the largest shareholder of RRL and it currently controls 47.98% of the issued capital. Hancock has indicated in the Bidder’s Statement that if RCF does not accept the Offer, then it will be challenging for Hancock to secure in excess of 50% of the issued capital of Riversdale and pay the Increased Offer Price.

The Offer is only conditional to “no prescribed occurrences” from the date of the Bidder’s Statement (27 February 2019). The Offer extends to RRL Shares issued during the offer period upon exercise of existing options4 (“RRL Options”).

Hancock has a relevant interest in 19.8% of the issued shares as at the date of the Bidder’s Statement. Riversdale’s founding shareholders: Mr Michael O’Keeffe, Mr Steve Mallyon and Mr Anthony Martin (“Founding Shareholders”) have each provided a statement of intent5 to accept the Base Offer Price of A$2.20 per share in respect of all the shares held by them, representing approximately 16.5% of the total Riversdale Shares on issue in the absence of a superior proposal. Each of the Founding Shareholders have reserved the right to alter their position at any time. We note that Hancock does not consider the statement of intents made by the Founding Shareholders in

1 Resources are inclusive of reserves. 2 Based on the share register as at 19 March 2019. 3 The voting power calculation assumes all convertible securities in RRL have been converted into ordinary shares prior to the calculation. 4 As at 19 March 2019, RRL has 295,151,613 RRL Shares and 2,601,667 RRL Options on issue. 5 Refer to Annexure B of the Bidder’s Statement for the full form.

the Bidder’s Statement to be enforceable by Hancock under the ASIC’s truth in takeover policy6.

On 21 March 2019, RRL communicated to the Shareholders that it had received the following statement of intents from RCF and Regal Funds Management (“Regal”):

 RCF’s statement of intent – RCF intends not to accept the Hancock Offer under both the Base Offer Price and the Increased Offer Price. However, RCF reserves the right to (i) accept the Increased Offer Price should Hancock’s voting power exceed 50% on an undiluted basis; or (ii) accept a revised offer from Hancock at an offer price above the Increased Offer Price. RCF currently holds 141,592,737 RRL Shares equivalent to 47.98% of the undiluted issued capital7 and 47.55% of the fully diluted issued capital8.

 Regal’s statement of intent – in the absence of a material change in circumstances, Regal does not intend to sell into the Offer. Regal currently holds 3,176,657 RRL Shares equivalent to 1.08% of the undiluted issued capital and 1.07% of the fully diluted issued capital.

We have been instructed that RCF and Regal’s statements of intent are enforceable under ASIC’s truth in takeover policy.

RCF and Regal collectively hold 49.06% of the undiluted issued capital and 48.62% of the fully diluted issued capital. Notwithstanding the statements of intents of RCF and Regal above, it is mathematically still possible for Hancock to receive acceptances in excess of 50% of the diluted issued capital so that the payment of the Increased Offer Price will be triggered, however we are of the opinion that this is a remote possibility.

The Independent Directors9 of RRL (“Independent Directors”) have unanimously recommended that RRL Shareholder reject the Offer of $2.20 per Riversdale Share. The Independent Directors do not intend to accept the Offer of $2.20 per Riversdale Share, but reserve the right to do so in the limited circumstances noted in section 1.3 of the Target's Statement.

Purpose of the report

Mr. Watroba is an executive director of Hancock and a Non-Executive Director of Riversdale. In accordance with the requirements of the Corporations Act, an independent expert’s report in relation to the Offer is required as Hancock and RRL have one common director.

When preparing the Independent Expert’s Report (“IER” or “Report”), Grant Thornton Corporate Finance has had regard to the Australian Securities and Investments Commission (“ASIC”) Regulatory Guide 111 Contents of expert reports (“RG 111”) and Regulatory Guide 112 Independence of experts (“RG 112”). The IER also includes other information and disclosures as required by ASIC.

For the purposes of this report, Grant Thornton Corporate Finance has engaged RPM Global (“RPM”) to review and opine on the reasonableness of the technical assumptions adopted for the Grassy Mountain Project. Grant Thornton Corporate Finance has also engaged McElroy Bryan

6 ASIC’s Regulatory Guide 25 address the issue of “truth in takeovers”. 7 295,151,613 RRL Shares 8 297,753,280 RRL Shares comprising 295,151,613 RRL Shares on issue plus 2,601,667 RRL Options. 9 The directors of RRL other than the director appointed by Hancock

Geological Services (“MBGS”) to prepare a valuation of RRL’s exploration and early-stage assets. RPM and MBGS reports and procedures were completed in accordance with the VALMIN Code and their reports are attached in Appendix I (“RPM Report”) and in Appendix J (“MBGS Report”).

Summary of opinion

We note that in our fairness assessment, we have formed separate opinions on the Base Offer Price and the Increased Offer Price.

Grant Thornton Corporate Finance has concluded that the Hancock Offer having regard to the Base Offer Price is NOT FAIR AND NOT REASONABLE to RRL Shareholders.

Grant Thornton Corporate Finance has concluded that the Hancock Offer having regard to the Increased Offer Price is NOT FAIR BUT REASOABLE to RRL Shareholders. However, RRL Shareholders should be aware that based on the statements of intent of RCF, which is enforceable under ASIC’s truth in takeover policy, the Increased Offer Price is unlikely to become payable and accordingly they should assess the Offer having regard to the Based Offer Price.

Fairness Assessment

Base Offer Price

Fairness assessment Section A$ per share Reference Low High Fair market value of Riversdale Share 5.2.7 2.56 3.05 Base Offer Price 1 2.20 2.20 Premium/(discount) (0.36) (0.85) Premium/(discount) (%) (14.1%) (27.8%) FAIRNESS ASSESSMENT NOT FAIR Source: GTCF analysis

The Base Offer Price is below of our assessed valuation range of an RRL Share on a 100% and fully diluted basis. Accordingly, we conclude that the Offer is NOT FAIR to RRL Shareholders.

Increased Offer Price

Fairness assessment Section A$ per share Reference Low High Fair market value of Riversdale Share 5.2.7 2.56 3.05 Increased Offer Price 1 2.50 2.50 Premium/(discount) (0.06) (0.55) Premium/(discount) (%) (2.4%) (18.0%) FAIRNESS ASSESSMENT NOT FAIR Source: GTCF analysis

The Increased Offer Price is below of our assessed valuation range of an RRL Share on a 100% and fully diluted basis. Accordingly, we conclude that the Offer is NOT FAIR to RRL Shareholders.

The assessed fair value for the Grassy Mountain Project is particularly sensitive to movements in the long term hard coking coal (”HCC”) price10 which has exhibited a significant degree of volatility historically. Grant Thornton Corporate Finance has adopted a long term real HCC price of US$135/t (from 2023) based on consensus forecasts and broker reports11. However, we note that the current HCC price is circa US$200/t. Depending upon the views taken by individual shareholders in relation to long term HCC price, it is possible that individual shareholders could reach a different conclusion on the appropriate range of values for the Grassy Mountain Project and on the fairness of the Offer. We have included a sensitivity analysis on the long term HCC prices in the section below.

Sum of Parts methodology

Grant Thornton Corporate Finance has selected the market value of net assets as the primary method to assess RRL’s equity value. The market value of net assets is based on the sum of the parts of RRL’s development and exploration assets, and other assets and liabilities as reported in the reviewed balance sheet as at 31 December 2018.

The Grassy Mountain Project is the flagship asset of RRL. The market value of the Grassy Mountain Project was assessed applying the DCF Method using cash flows projections on a real basis prepared by the Company and reviewed by RPM for the period from 1 February 201912 to 31 December 2044. We have set out below a summary of the key assumptions adopted:

 Economic assumptions:

o Coal price – long term (from 2023) real coal price between US$132.5 and US$137.5 with a mid-point of US$135/t based on consensus prices benchmark13.

o Exchange rates – 1 US$ for 1.30 C$ real long term exchange rate. We have then converted the C$ value per share having regard to the exchange rate of 1 C$ for 1.04 A$ exchange rate over the recent months.

o Discount rate – real post tax weighted average cost of capital of 10.7% (mid-point)14.

o Funding dilution factor – ASIC RG 111 specifies that funding requirements for a target should generally be taken into account when determining the fair value of target securities15. RRL requires funding of circa C$85016million to bring the Grassy Mountain Project into production. This amount is expected to be funded circa 60% with debt and 40% with equity. In our valuation assessment, we have assumed that existing shareholders will suffer a dilution between 10% and 15% of the value of RRL on a 100% basis to raise the required equity. The dilution factor is calculated as the difference between our valuation of RRL on pre-funding and control basis and the theoretical issue price of the future potential

10 The pricing benchmark adopted for the purpose of our valuation, which is outlined in section 5.2.1.6, is a mix of standard HCC and Low volatility premium HCC. In the remaining of this Report, we refer to HCC as is a mix of standard HCC and Low volatility premium HCC. 11 Consensus estimates are based on Energy & Metals Consensus Forecast as at January 2019 and brokers’ consensus estimates are based on KPMG consensus forecast report as at January 2019. Both Energy & Metals and KPMG have not consented to the use and/or reference to their names and reports. 12 We are using the cash balance as at 31 January 2019 for the purpose of our valuation assessment and accordingly, we have net present valued the cash flows to 1 February 2019. 13 Specification of HCC of similar quality to Grassy Mountain. 14 The assessed discount rate is between 10.2% and 11.2% real. Refer to Appendix F for details. 15 RG111 – refer to note to paragraph 15 16 Including construction capital expenditure of C$631.6 million plus cost overrun facility, interest payment, operating expenses and overheads during the construction period and finance costs.

equity raising assumed at circa A$2.00 per share17. We note that the assessed dilution discount is equivalent to an additional specific risk premium of circa 2% which would increase the mid-point of the nominal cost of equity from 15% to 17%.

 Operating assumptions:

o Permitting – The management of RRL (“Management” or “RRL Management”) has indicated that they are confident that the permitting will be obtained by the first quarter of 2020 (Management’s best estimate) and construction will commence immediately for a period of 23 months plus 3 months commissioning with first sales on 1 June 2022. However, given that this process is substantially outside the control of RRL, the fact that the Company has experienced delays in the past and considering that limited construction activity can be carried out during the bird nesting season between 15 April 2020 and 15 August 2020, in our assessment of the RRL fair market value, we have considered the value per share of RRL if permitting is delayed by 3 months, 6 months or 9 months. We note that our valuation assessment is based on the overarching assumption that the permitting will be obtained, so it is a question of when it is obtained rather than if it is obtained. This assumptions has been reviewed by RPM and considered reasonable. We also note that this is supported by the Hancock Offer which is clearly based on the presumption that permitting will be obtained in the near future.

o Production – The targeted production profile of the Grassy Mountain Project is approximately 4.5 Mt per annum of marketable coal which is expected to be maintained for 12 of the 23 years mine life. The total saleable coal production over the mine life is forecast to be approximately 93.0 Mt, with an estimated product coal strip ratio of 9.2. Average processing yield is 55.3% requiring an average 8.1 Mt of ROM coal per year.

o Capex – Capital expenditure for the construction of the mine and related infrastructure of circa C$631.6 million18.

o Exploration assets – They have been valued by MBCG at a value between A$3 million and A$18 million with a preferred value of A$12 million19 (equivalent to C$11.5 million).

We have set out below a summary of our valuation assessment based on the SOP and assuming permitting is obtained in March 2020 (Management’s best estimate) and construction commence right away as per Management’s view and the operation assumptions detailed above (“Management Case”).

17 This is at a premium of circa 15% to the highest price of A$1.75 per share at which RRL Shares were issued in the second half of 2018. We are of the opinion that it is reasonable to apply a premium to the issue price of A$1.75 per share given that the capital raising will be undertaken after the permitting has been granted and accordingly the dilution suffered by existing RRL Shareholders will reduce. 18 This is different from the amount which requires funding as the latter also includes interest payments on the debt, overheads, funding costs and transactions costs and cost overrun facility. 19 Independent Technical Report – Exploration Properties of Riversdale Resources by MBGS, 14 March 2019.

SOP Method - Valuation summary under Management Case (1) Section C$ '000 (except where stated otherwise) Reference Low High Grassy Mountain Project as per Management Case (1) 5.2.1 793,340 904,130 Exploration Assets 5.2.2 11,538 11,538 Total Enterprise Value of Riversdale (control basis) 804,879 915,668 Net cash as at 31 January 2019 (1) 5.2.4 87,766 87,766 Equity value of Riversdale pre-money (control basis) 892,644 1,003,434 Estimated dilution discount from future equity raising 5.2.7 15.0% 10.0% Equity value of Riversdale post-money (control basis) 758,748 903,090 Number of outstanding shares (3) ('000s) 3.5 297,647 297,647 Value per share (control basis) (C$ per Share) 2.55 3.03 Exchange Rate C$/A$ 5.2.1.6 1.04 1.04 Value per share (control basis) (A$ per Share) 2.65 3.16 Source: GTCF analysis Note (1): Under the Management Case, permitting is obtained in March 2020 (Management’s best estimate). Note (2): It includes C$89.8 million net cash as at 31 January 2019 plus C$3.0 million cash from the exercise of the RRL Options and minus C$5 million transaction cost; (2) It includes 295,151,613 Riversdale Shares and 2,495,000 Riversdale Options

We have set out below our overall value range assuming permitting is delayed by 3 months, 6 months or 9 months.

Valuation of Riversdale - Based on different permitting granting dates A$ per share Low High Mangement Case (permits obtained in March 2020) 2.65 3.16 Permits delayed by 3 months 2.59 3.08 Permits delayed by 6 months 2.53 3.01 Permits delayed by 9 months 2.48 2.94 Overall assessed valuation range (average) 2.56 3.05 Source GTCF analysis Note: The dilution percentage has been kept at the assessed level under the Management Case

We have assessed the fair market value of RRL between A$2.56 to A$3.05 per share on a control basis.

Sensitivity analysis on HCC price and exchange rate

The value of the Grassy Mountain Project is particularly sensitive to movements in the long term coal price and exchange rates. We have set out below a sensitivity analysis of how the value of the Grassy Mountain Project assessed under the Management Case (permitting obtained in March 2020 – Management’s best estimate) varies in conjunction with different coal prices and US$/C$ exchange rate. Refer to section 5.2.6 of this Report for more information.

(1) Valuation of RRL - Sensitivity analysis on the Management Case Fair value of RRL (A$ per share) % change on fair value of RRL Low High Low High (1) Management case - long term real HCC price US$/t 135 (mid-point) 2.65 3.16

Long term HCC price Decrease from the US$/t 135 (real, mid-point) 15% decrease (US$/t 115) 1.31 1.74 (50.4% ) (44.8% ) 12.5% decrease (US/t 118) 1.54 1.98 (42.0% ) (37.3% ) 10% decrease (US$/t 122) 1.76 2.21 (33.6% ) (29.8% ) 7.5% decrease (US$/t 125) 1.98 2.45 (25.2% ) (22.4% ) 5% decrease (US$/t 128) 2.21 2.69 (16.8% ) (14.9% ) 2.5% decrease (US$/t 132) 2.43 2.92 (8.4% ) (7.5% ) Increase from the US$/t 135 (real, mid-point) 2.5% increase (US$/t 138) 2.87 3.39 8.4% 7.5% c.5% increase (US$/t 142 - Average real price over last 5 years) 3.11 3.64 17.4% 15.4% 7.5% increase (US$/t 145) 3.32 3.86 25.1% 22.3% 10% increase (US$/t 149) 3.54 4.07 33.5% 29.1% 12.5% increase (US$/t 152) 3.76 4.31 41.9% 36.5% 15% increase (US$/t 155) 3.96 4.54 49.4% 44.0% c.20% increase (US$/t - 162 Average real price over last 10 years) 4.41 5.01 66.2% 58.8%

Long term exchange rate US$/C$ 5% decrease (US$/C$ 1.24) 2.20 2.66 (17.0% ) (15.6% ) 2.5% decrease (US/C$ 1.27) 2.43 2.91 (8.5% ) (7.8% ) 2% decrease (US$/C$ 1.28) 2.47 2.96 (6.8% ) (6.2% ) 1% decrease (US$/C$ 1.29) 2.56 3.06 (3.4% ) (3.1% ) 1% increase (US$/C$ 1.32) 2.74 3.25 3.4% 3.1% 2% increase (US$/C$ 1.33) 2.83 3.35 6.8% 6.2% 2.5% increase (US$/C$ 1.34) 2.88 3.40 8.5% 7.8% 5% increase (US$/C$ 1.37) 3.10 3.65 16.9% 15.6%

Discount rate 2% decrease 3.42 4.05 29.2% 28.3% 1% decrease 3.01 3.57 13.6% 13.2% 1% increase 2.34 2.79 (11.9% ) (11.6% ) 2% increase 2.06 2.47 (22.4% ) (21.8% ) Source: GTCF analysis Note: The dilution percentage has been kept at the assessed range under the Management Case Note (1): Under the Management Case, permitting is assumed to be obtained in March 2020 (Management’s best estimate).

Reasonableness Assessment

We have assessed the Base Offer Price as NOT REASONABLE and the Increase Offer Price as REASONABLE having regard to the following advantages, disadvantages and other factors in relation to the Hancock Offer.

Advantages

Premium for control

A premium for control is applicable when the acquisition of control of a company or business would give rise to benefits such as the ability to realise synergies, access cash flows, access tax benefits and control of the board of Directors of the company.

The Offer represents a premium as outlined below:

 Base Offer Price of A$2.20 per share – 26% to the highest price of A$1.75 per share at which RRL Shares were issued in the second half of 2018.

 Increased Offer Price of A$2.50 per share – 43% to the highest price of A$1.75 per share at which RRL Shares were issued in the second half of 2018.

The premium for control is unlikely to be available to RRL Shareholders in the absence of the Offer or an alternative transaction. RRL Shareholders should be aware that if the Offer lapses and RRL Shareholders seek to sell their shares in the secondary market, RRL Shares are likely to trade at a discount to the Base Offer Price at least in the short-term.

Whilst we have outlined above the premium for control based on the highest price paid by Hancock in 2018, we note the following:

 Based on discussions with the Management and a review of the information available, we understand that RRL did not run a full competitive global process to raise the required funds but it rather approached a number of high net worth investors, family offices and sophisticated investors who could provide conventional equity funding.

 Following the aborted IPO in the first half of 2018, RRL needed to expeditely raise the required funds to potentially repay the convertible notes issued in August 2013 totalling A$35 million and due to for repayment on 28 August 2018 (the convertible notes were eventually converted into equity on the maturity date).

 Large placements, such the Hancock’s 19.8% placement, are usually undertaken at discount to the underlying market value on a minority basis.

 Since the Hancock’s placement, RRL has advanced its operations and permitting process.

As a result of the above, it may be difficult to draw conclusive evidence of the effective premium for control embedded into the Offer.

Certainty of the cash consideration

Riversdale Shareholders have the opportunity to receive a certain cash amount at a premium to placement undertook by the Company in the second half of 2018. RRL Shareholders accepting the Offer will no longer be exposed to the ongoing risks associated with holding an investment in Riversdale. The underlying value of RRL is expected to change as Grassy Mountain Project moves through its development cycle. Whilst the range of values attributed to RRL in our fairness

assessment are considered reasonable at the date of this report, the fair value of the Company may increase significantly, or conversely decline materially in value, depending on when the permitting is obtained, including if any onerous conditions are attached to it, the terms of the fund raising for the construction capital expenditure, the execution of the mine and infrastructure construction, the quality of the coal extracted from the deposit and future HCC prices.

Accordingly, RRL Shareholders accepting the Takeover Offer will no longer be exposed to the ongoing risks or benefits associated with holding an investment in RRL.

Liquidity for minority shareholders

RRL is a public unlisted company and accordingly RRL Shares have limited liquidity if the Offer lapses and in the absence of an alternative transaction. The share register is dominated by RCF (47.98%), Hancock (19.8%), Kingfisher Capital PTE Ltd (7.64%) and the Founding Shareholders (collectively holding 16.5%). The balance of the issued capital on an undiluted basis (8.06%) is held by several small shareholders and most of them are considered retail/sophisticated investors20 (“Minority Shareholders”) rather than institutional ones. The ability of the Minority Shareholders to realise a price in line with the Base Offer Price in the short term and in the absence of the Offer is limited.

Whilst the Base Offer Price offers a liquidity opportunity for RRL Shareholders at a premium to the recent equity raising, we are of the opinion that the magnitude of the discount of the Base Offer Price compared with our assessed valuation range21 is too significant to encourage the Minority Shareholders to sell their shares in order to obtain liquidity for their investment. We also note that Minority Shareholders would have known at the time of their investments in RRL that it was an unlisted company with limited liquidity which accordingly may not necessarily be an issue from their risk’s profile perspective.

In addition, we are of the opinion that RRL Shareholders may still have the benefit of a liquidity opportunity in the short to medium term due to the following:

 RCF is a financial investor and accordingly it is likely to seek a liquidity event in the short/medium term. We note that Resource Capital Fund VI LP was established in 2013 and in the same year it bought its interest in RRL (initially via a convertible note facility), so a liquidity event in the short/medium term is not unreasonable to assume given an average holding period for financial investors like RFC is usually 3 to 5 years.

 RRL initiated an Initial Public Offering (“IPO”) process at the end of 2017 and a draft prospectus was prepared and marketed to global institutions in March and April 2018. However the IPO was abandoned shortly after as the pre-permitting status of the project and the time to cash flows were considered challenging by institutional investors. It is not unreasonable to assume that once the permitting is obtained and in conjunction with the potential capital raising required to fund the construction of the Grassy Mountain Project, there could be a liquidity opportunity for the RRL Shareholders.

20 Sophisticated investors are individual investors that have net assets or A$2.5 million or more and/or that have gross income of at least A$250,000 over the last two years. Retail investors are all the individual investors who are not sophisticated investors. 21 Discount between 14.1% and 27.8%

Notwithstanding the above, we note that RCF may structure the sale of its interest in the Company by placing its shares with a number of parties which will not require RRL to comply with Chapter 6 of the Corporations Act22 if none of the new investors will hold greater than 19.9% of the issued capital. Under these circumstances, Minority Shareholders may not have the opportunity to realise their shares at the same price and at the same time of RCF. However, we note that this transaction structure is unlikely to maximise the value of RCF’s investment in RRL (given that the new investors will not be prepared to pay a premium for the strategic value of the shareholding). Conversely, there are a number of like-minded financial investors on the share register of RRL and in our opinion, it will provide RCF and all the other shareholders with a superior outcome, if the sale of RCF’s interest is timed in conjunction with the other investors which could deliver control over the Grassy Mountain Project to interested parties.

No brokerage costs

RRL Shareholders will be able to realise their investment in RRL without incurring any brokerage.

Disadvantages

Fairness assessment

Both the Base Offer Price and the Increased Offer Price are considered by Grant Thornton Corporate Finance not fair.

However, those Riversdale Shareholders who are seeking a liquidity event in the short-term or do not want to take the risks and uncertainties involved in the development of the Grassy Mountain Project, may wish to accept the Offer even though Grant Thornton Corporate Finance considers that the Base Offer Price materially undervalues Riversdale and does not represent fair value for Riversdale Shares.

Shareholders will not be able to participate in the future upside of RRL

RRL Shareholders accepting the Hancock Offer will forgo the opportunity to participate in the future upside potential of the Company and any uplift in current market conditions. In particular, the Company will face a number of price catalysts events over the next 12 to 36 months which if executed with success should materially increase the fair market value of RRL, all other things remaining the same. In particular, we note the following:

 The current coking coal price is c.US$200/t which is significantly higher than the real long term consensus price adopted in our valuation assessment of US$135 real (mid-point)23. If the coal prices remains at the current level for longer than expected or there are other significant disruptions of the supply side, the value of RRL could increase materially based on favourable movements in coal prices. Grant Thornton has undertaken a sensitivity analysis in the fairness assessment section of the IER to highlight the impact on our valuation of RRL of different coal prices.

22 Chapter 6 of the Corporations Act regulates takeover and change of control (interest greater than 20%) in public companies with more than 50 members. 23 Given first sales is expected in June 2022, most of the revenue are calculated based on the long term consensus price (after 2023).

 As the Grassy Mountain Project moves from a development project to a producing mine, most of the RRL’s reserves (which are currently undeveloped) will become “developed” which should trigger a significant market re-rating. As set out in section 5.3, the reserves and resources of producing mine trade at a large premium to the reserves and resources of undeveloped assets.

 The Grassy Mountain Project is considered a top tier hard coking coal asset which has several uncommon attributes which makes the project particularly valuable as outlined below:

 It is a pure high quality hard coking coal project.

 It is considered a first quartile cost production24 project with significant gross margin generated at the current coal price and the ability to withstand material fluctuations in future prices.

 The Grassy Mountain Project is also expected to be among the lowest capital intensity hard coking coal projects constructed recently mainly due to the fact that it is closely located to existing rail and port infrastructure with existing capacity.

 Long life of mine project with significant growth opportunities to increase the amount of resources and reserves.

After the Grassy Mountain has been de-risked via the permitting process, it has the quality and the pedigree to be an attractive growth opportunity for the major global mining companies (including Hancock) and it may attract a resource multiple at a premium to the Offer.

As discussed in section 5.3, in March 2018, Rio Tinto agreed to sell its 80% stake in Queensland’s Kestrel unground coking coal mine for US$2.25 billion to a group including EMR Capital and Adaro Energy. In 2017, the Kestrel mine produced 5.1 Mt of saleable coal comprising 4.25 Mt of HCC and 0.84 Mt of thermal coal. At the end of 2017, Rio Tinto reported marketable reserves of 146 Mt and resources of 241 Mt. We note that the Kestrel mine is similar to the Grassy Mountain Project in terms of resources, HCC annual production/expected production, opex/t and long life of mine.

The sale process of the Kestrel mine was highly competitive with several parties involved and the transaction resulted in a marketable reserves multiple of US$19.3/t and in resources multiple of US$11.7/t. We note that the Offer implies a resource multiple between US$2.4/t (Base Offer Price) and US$2.7/t (Increased Offer Price) and a marketable reserves multiples between US$5.3/t (Base Offer Price) and US$6.0/t (Increased Offer Price)25.

Whilst the Kestrel mine is significantly more advanced than the Grassy Mountain Project, given it has been producing for several years, however in our opinion, the multiple differential indicates the following:

 The potential value of the coal optionality given that the Kestrel mine has been sold when the HCC price was at a level similar to the current price.

24 The first quartile is the median of the lower half of the data set. This means that about 25% of the numbers in the data set lie below the first quartile and about 75% lie above it. 25 The multiples implied in the Offer have been calculated based on an exchange rate of 1A$ for 0.71US$ and the number of shares on a fully diluted basis.

 The price that market participants are prepared to pay for high quality producing coking coal mines with low cost of production and long mine life.

No value for the coal price optionality embedded in the Offer

Coal is a cyclical commodity which has experienced significant volatility in the past. Market conditions in the coking coal market are currently favourable thanks to global supply shortfall (mainly due weather related disruption in Australia) and strong demand from China, India and other Asian countries expected to continue going forward. These market conditions have provided strong support for the coking coal price which as set out in the graph below is currently high.

Historical and forecast HCC price

275 250 225 200 175 150 125 US$/t (real) US$/t 100 75 50 25 0 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 CY24 CY25 CY26 CY27 CY28 Historical price (yearly average) Forecast (yearly) Forecast (long term) Average over the last 5 years - US$/t 142 Average over the last 10 years - US$/t 162

Source: KPMG quarterly summary report Dec-18/Jan-19, Energy & Metals Consensus Forecast Jan-19, GTCF analysis, other brokers

In addition and as result to the current level of coal prices, listed coal producers share prices are high relative to the historical averages as set out in the graph below.

Share price performance among coal producers

Peer index (A$) HCC contract price US$/t 180 350 160 300 140 250 120 100 200 80 150 60 100 40 20 50 0 0

Peer index1 HCC contract price 2 Source: S&P Capital IQ, GTCF Analysis Note: (1) The Peer Index is based on the weighted average market capitalisation of Stanmore Coal, Bathurst, Yancoal, Whitehaven Coal and New Hope; (2) Benchmark prices include yearly average contract price during 2018, and Q1 2019 consensus estimates.

In our opinion, the Offer does not reflect the option value embedded in the ability of RRL to increase/reduce production in conjunction with future coal prices. The DCF approach implicitly assumes that the output of the Grassy Mountain Project is fixed at the time of valuation. However, in

practical terms, Management has the ability to react to changes in the coal prices by changing the production rate (within system capacities) during strong prices and vice versa. Small increases in production are considered viable based on existing infrastructure capacity. This is particularly valuable for the Grassy Mountain Project considering the long life of mine.

Given that the Grassy Mountain Project is only expected to commence production in April 2022, our valuation assessment mainly relies on the long term real HCC price of US$135/t which is materially lower than the current coal price. However, what it has commonly occurred in the past is that brokers and investments’ analysts will update their assessment of the long term prices in conjunction with sustained period of strong HCC price.

We note the following in relation to the real long term consensus forecast HCC price of US$135/t:

 It is significantly lower than the average coking coal prices over the last five years (US$142/t) and ten years (US$162/t).

 Over the last ten years, the HCC price has traded at a level below the consensus real long term HCC of US$135/t only for a period of circa 3 years.

Other factors

Likelihood to receive a premium for control in the future

If the Offer becomes unconditional and the Founding Shareholders sell their shares into the Offer in accordance with their statement of intents26 and no other shareholders of RRL accept the Offer, Hancock will hold approximately 36.3% of the undiluted issued capital. If Hancock owns more than 30% of the issued capital, it will be able to appoint another director on the Board of RRL (total of two directors).

Under these circumstances, in our opinion, the exits options for the Non-Associated Shareholders27 may diminish. Hancock is a strategic investor and is focussed on developing the Grassy Mountain Project into a producing mine and it has in-depth expertise, resources and capital available to do it. The presence of Hancock as such a significant shareholder on the share register is likely to deter other market participants and interested parties in a takeover of the Company.

If Hancock holds more than 25% of the issued capital, it will be challenging for the Company to be able to pursue an IPO if Hancock is opposing it which accordingly will reduce the liquidity options for RRL and the Non-Associated Shareholders.

The Company will still be able to pursue a deal/joint venture at asset level, whose approval only requires a majority resolution of the Board of Directors, however it will not offer direct liquidity opportunities for the Non-Associated Shareholders. In addition, Hancock may take actions to frustrate/ostracise the process.

26 Each of the Founding Shareholders have reserved the right to alter their position at any time. We note that Hancock does not consider the statement of intents made by the Founding Shareholders in the Bidder’s Statement to be enforceable by Hancock under the ASIC’s truth in takeover policy. Refer to Annexure B of the Bidder’s Statement for the full form. 27 Defined as all the RRL Shareholders other than Hancock.

In our opinion, the above factors reduce the takeover contestability of RRL and the number of exits options which will be at detriment of the Non-Associated Shareholders.

Minority Shareholders should wait until towards the end of the Offer period before considering their position

In considering the Offer, Minority Shareholders should delay their acceptances as long as possible due to the following:

 Providing the maximum time for the Independent Directors and their financial adviser to source an alternative counter-proposal. We note that as set out in the RRL Shareholders’ communication released on 12 March 2019, a number of well-credentialised parties have expressed their interest in Riversdale and the Grassy Mountain Project. We note that if the Offer becomes unconditional, accepting RRL Shareholders will not be able to revoke28 their acceptance.

 To allow on-going consideration of the position of the other major shareholders (including the Founding Shareholders and Kingfisher).

Hancock provides greater options for future funding

If the Offer becomes unconditional and the Founding Shareholders sell their shares into the Offer in accordance with their statement of intents29 and no other shareholders of RRL accept the Offer, Hancock will hold approximately 36.3% of the undiluted issued capital.

Hancock is one of the largest mining companies in the world and as disclosed in the Bidder’s Statement, it has cash reserves of over A$3 billion. In order to undertake the construction of the Grassy Mountain Project, RRL will require funding (debt and equity) of circa C$850 million. If Hancock increases its stake from 19.8% to 36.3%, it may be prepared to play a more active role to assist RRL in raising the required funding either directly or indirectly which may assist the Non- Associated Shareholders to reduce the potential dilution from future equity raising.

Acquisition of more than 50.1% interest in RRL

Even if it is a remote possibility given the statements of intent of RCF and Regal, Hancock may still obtain more than 50% of RRL Shares on a fully diluted basis which will trigger the payment of the Increased Offer Price. Under these circumstances, RCF has stated that it may also reconsider its position in relation to its holding.

If this occurs, we are of the opinion that remaining RRL Shareholders should accept the Increased Offer Price given that Hancock will hold between circa 70%30 and less than 85%31 of the issued capital and those RRL Shareholders who do not intend to accept the Offer should careful consider the risks of remaining investors in a private company with limited/no liquidity options. In our opinion, under these circumstances, the fair market value of the remaining RRL Shares will be adversely

28 Excluding some limited cases as set out in section 13.6 of the Bidder’s Statement. 29 Each of the Founding Shareholders have reserved the right to alter their position at any time. We note that Hancock does not consider the statement of intents made by the Founding Shareholders in the Bidder’s Statement to be enforceable by Hancock under the ASIC’s truth in takeover policy. Refer to Annexure B of the Bidder’s Statement for the full form. 30 If only RCF accepts the Offer, Hancock will hold approximately 67.8% of the issued capital. 31 If RCF and the Founding Shareholders accept the Offer, Hancock will hold approximately 84.3% of the issued capital.

affected in a material way. We note that parcel shareholding in a private unlisted company with a large dominant strategic shareholder and no foreseeable liquidity opportunity may trade at a discount to the fair market value of up to 40%/50%32.

Tax implications

RRL Shareholders accepting the Hancock Offer may crystallise a capital gains tax expense. The taxation consequences for shareholders will vary according to their individual circumstances. In addition, we note the following disclosure sets out in the Target’s Statement:

 Depending on the holding structures that individual shareholders have in place (if any), they may be subject to an element of double taxation in Canada and their place of residence upon disposal of their RRL Shares.

 Riversdale Shareholders, who are not Canadian residents for tax purpose, will be subject to Canadian federal income tax on any capital gain realised on the sale of their Riversdale Shares. The application of the Canadian Income Tax Act requires Hancock to withhold and remit to the Canadian Federal Tax Authority up to 25% of the gross proceeds of the sale on behalf of Riversdale Shareholders who are not tax residents in Canada. These Riversdale Shareholders may also be subject to tax payable on any capital gains in their place of residence where they may also receive a foreign income tax offset for the Canadian tax paid. Refer to section 7 of the Target’s Statement for details. of (either under the Offer or on the secondary market or

RRL Shareholders should read the overview of tax implications of the Hancock Offer set out in the Bidder’s Statement and the Target’s Statement and also seek independent financial and tax advice on the implications of accepting the Hancock Offer.

Takeover protection for Minority Shareholders

Riversdale currently has 159 registered Shareholders and as long as RRL has more than 50 Shareholders the acquisition of Riversdale Shares is regulated by Chapter 6 of the Corporations Act. If the number of Riversdale Shareholders who accept the Offer is such that Riversdale has 50 or fewer Shareholders at the end of the Offer period then the acquisition of Riversdale Shares will no longer be subject to the protections afforded by takeover provisions in Chapter 6 of the Corporations Act. Under these circumstances, Riversdale Shareholders may not be afforded an equal opportunity to participate in the benefits of a change in control of Riversdale.

Directors’ recommendations and intentions

The Independent Directors have unanimously recommended that RRL Shareholder reject the Offer of $2.20 per Riversdale Share. The Independent Directors do not intend to accept the Offer of $2.20 per Riversdale Share, but reserve the right to do so in the limited circumstances noted in section 1.3 of the Target's Statement.

32 The lack of marketability is often the largest dollar discount factor in the valuation of a business, in particular if the subject of the valuation is a minority interest. Restricted stock and pre-IPO studies have shown discounts for lack of marketability in the range of 20% to 56%. Refer to Appendix G for details.

Reasonableness conclusion

Based on the qualitative factors identified above, it is our opinion that both the Base Offer Price is NOT REASONABLE and the Increase Offer Price is REASONABLE to RRL Shareholders.

Overall conclusion

After considering the abovementioned quantitative and qualitative factors, Grant Thornton Corporate Finance has concluded that the Hancock Offer is:

 NOT FAIR and NOT REASONABLE to RRL Shareholders in relation to the Base Offer Price in the absence of a superior alternative proposal emerging.

 NOT FAIR BUT REASONABLE to RRL Shareholders in relation to the Increased Offer Price in the absence of a superior alternative proposal emerging.

Other matters

Grant Thornton Corporate Finance has prepared a Financial Services Guide in accordance with the Corporations Act. The Financial Services Guide is set out in the following section.

The decision of whether or not to accept the Hancock Offer is a matter for each RRL Shareholder to decide based on their own views of value of RRL and expectations about: future market conditions; RRL’s performance; risk profile; and investment strategy. If RRL Shareholders are in doubt about the action they should take in relation to the Hancock Offer, they should seek their own professional advice.

Yours faithfully GRANT THORNTON CORPORATE FINANCE PTY LTD

ANDREA DE CIAN JANNAYA JAMES Director Director

26 March 2019

Financial Services Guide

1 Grant Thornton Corporate Finance Pty Ltd

Grant Thornton Corporate Finance carries on a business, and has a registered office, at Level 17, 383 Kent Street, Sydney NSW 2000. Grant Thornton Corporate Finance holds Australian Financial Services Licence No 247140 authorising it to provide financial product advice in relation to securities and superannuation funds to wholesale and retail clients.

Grant Thornton Corporate Finance has been engaged by RRL to provide general financial product advice in the form of an independent expert’s report in relation to the Hancock Offer. This report is included in RRL’s Target’s Statement.

2 Financial Services Guide

This Financial Services Guide (“FSG”) has been prepared in accordance with the Corporations Act, 2001 and provides important information to help retail clients make a decision as to their use of general financial product advice in a report, the services we offer, information about us, our dispute resolution process and how we are remunerated.

3 General financial product advice

In our report we provide general financial product advice. The advice in a report does not take into account your personal objectives, financial situation or needs.

Grant Thornton Corporate Finance does not accept instructions from retail clients. Grant Thornton Corporate Finance provides no financial services directly to retail clients and receives no remuneration from retail clients for financial services. Grant Thornton Corporate Finance does not provide any personal retail financial product advice directly to retail investors nor does it provide market-related advice directly to retail investors.

4 Remuneration

When providing the Report, Grant Thornton Corporate Finance’s client is the Company. Grant Thornton Corporate Finance receives its remuneration from the Company. In respect of the Report, Grant Thornton Corporate Finance will receive from RRL a fee of A$130,000 (plus GST) which is based on commercial rates, plus reimbursement of out-of-pocket expenses for the preparation of the report. Our directors and employees providing financial services receive an annual salary, a performance bonus or profit share depending on their level of seniority.

Except for the fees referred to above, no related body corporate of Grant Thornton Corporate Finance, or any of the directors or employees of Grant Thornton Corporate Finance or any of those related bodies or any associate receives any other remuneration or other benefit attributable to the preparation of and provision of this report.

5 Independence

Grant Thornton Corporate Finance is required to be independent of RRL in order to provide this report. The guidelines for independence in the preparation of independent expert’s reports are set out in RG 112 Independence of expert issued by ASIC. The following information in relation to the independence of Grant Thornton Corporate Finance is stated below.

“Grant Thornton Corporate Finance and its related entities do not have at the date of this report, and have not had within the previous two years, any shareholding in or other relationship with RRL (and associated entities) that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation the Hancock Offer.

Grant Thornton Corporate Finance has no involvement with, or interest in the outcome of the transaction, other than the preparation of this report.

Grant Thornton Corporate Finance will receive a fee based on commercial rates for the preparation of this report. This fee is not contingent on the outcome of the transaction. Grant Thornton Corporate Finance’s out of pocket expenses in relation to the preparation of the report will be reimbursed. Grant Thornton Corporate Finance will receive no other benefit for the preparation of this report.

Grant Thornton Corporate Finance considers itself to be independent in terms of RG 112 “Independence of expert” issued by the ASIC.”

6 Complaints process

Grant Thornton Corporate Finance has an internal complaint handling mechanism and is a member of the Financial Ombudsman Service (membership no. 11800). All complaints must be in writing and addressed to the Chief Executive Officer at Grant Thornton Corporate Finance. We will endeavour to resolve all complaints within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with, the complaint can be referred to the Financial Ombudsman Service who can be contacted at:

Financial Ombudsman Service Limited GPO Box 3 Melbourne, VIC 3001 Telephone: 1800 367 287

Grant Thornton Corporate Finance is only responsible for this report and FSG. Complaints or questions about the General Meeting should not be directed to Grant Thornton Corporate Finance. Grant Thornton Corporate Finance will not respond in any way that might involve any provision of financial product advice to any retail investor.

7 Compensation arrangements

Grant Thornton Corporate Finance has professional indemnity insurance cover under its professional indemnity insurance policy. This policy meets the compensation arrangement requirements of section 912B of the Corporations Act, 2001.

Contents

Page

1 Purpose and scope of the report 20 2 Industry overview 23 3 Profile of RRL 29 4 Valuation methodologies 37 5 Valuation assessment of RRL Shares 39 6 Sources of information, disclaimer and consents 58 Appendix A – Valuation methodologies 60 Appendix B – Comparable companies - Adjusted Resource Multiple 61 Appendix C – Comparable companies descriptions 64 Appendix D – Comparable transactions 65 Appendix E – Comparable transaction descriptions 67 Appendix F – Discount rate 69 Appendix G – Liquidity discount 76 Appendix H – Glossary 77 Appendix I – RPM Report 79 Appendix J – MBGS Report 80

1 Purpose and scope of the report

1.1 Purpose

Section 640 of the Corporations Act requires that a target’s statement made in response to a takeover offer for securities in an Australian publicly listed company or unlisted with more than 50 members must be accompanied by an independent expert’s report if:

 the bidder’s voting power in the target is 30% or more; and

 for a bidder who is, or includes, an individual – the bidder is a director of the target company; or

 for a bidder who is, or includes, a body corporate – a director of the bidder is a director of the target company.

The independent expert’s report must state whether, in the opinion of the independent expert, the takeover offer is fair and reasonable to the target company’s shareholders and provide the reasons for forming that opinion.

As at the date of our report, we note that RRL and Hancock have one common director and accordingly the IER is required in accordance with section 640 of the Corporations Act. In addition, the Independent Directors of RRL have requested Grant Thornton Corporate Finance to prepare this independent expert’s report to assist RRL Shareholders in assessing the merits of the Hancock Offer.

1.2 Basis of assessment

The Corporations Act does not define the meaning of “fair and reasonable”. In preparing this report, Grant Thornton Corporate Finance has had regard to Regulatory Guide 111 Content of expert reports (“RG 111”) which contains certain guidelines in respect of independent expert’s reports prepared for the purposes of the Corporations Act. RG 111 is framed largely in relation to reports prepared pursuant to section 640 of the Corporations Act and comments on the meaning of “fair and reasonable” are in the context of a takeover offer.

As the Hancock Offer is a takeover bid, RG 111 requires the following assessment:

 An offer is considered fair if the value of the offer price or consideration is equal to or greater than the value of the securities that are subject to the offer. The comparison should be made assuming 100% ownership of the target company and irrespective of whether the consideration offered is script or cash and without consideration of the percentage holding of the offeror or its associates in the target company.

 An offer is considered reasonable if it is fair. If the offer is not fair it may still be reasonable after considering other significant factors which justify the acceptance of the offer in the absence of a higher bid. ASIC has identified the following factors which an expert might consider when determining whether an offer is reasonable:

 The offeror’s pre-existing entitlement, if any, in the shares of the target company.

 Other significant shareholding blocks in the target company.

 The liquidity of the market in the target company’s securities.

 Taxation losses, cash flow or other benefits through achieving 100% ownership of the target company.

 Any special value of the target company to the offeror, such as particular technology or the potential to write off outstanding loans from the target company.

 The likely market price if the offer is unsuccessful.

 The value to an alternative offeror and likelihood of an alternative offer being made.

Grant Thornton Corporate Finance has determined whether the Hancock Offer is fair to the RRL Shareholders by comparing the fair market value range of RRL Shares on a 100% basis with the Base Offer Price and the Increased Offer Price.

In considering whether the Hancock Offer is reasonable to the RRL Shareholders, we have considered a number of factors, including:

 Whether the Hancock Offer is fair.

 The implications to RRL and RRL Shareholders if the Offer lapses.

 Other likely advantages and disadvantages associated with the Offer as required by RG111.

 Other costs and risks associated with the Offer that could potentially affect the RRL Shareholders.

1.3 Independence

Prior to accepting this engagement, Grant Thornton Corporate Finance (a 100% subsidiary of Grant Thornton Australia Limited) considered its independence with respect to the Hancock Offer with reference to RG 112 issued by ASIC.

Grant Thornton Corporate Finance has no involvement with, or interest in, the outcome of the approval of the Hancock Offer other than that of an independent expert. Grant Thornton Corporate Finance is entitled to receive a fee based on commercial rates and including reimbursement of out-of-pocket expenses for the preparation of this report.

Except for these fees, Grant Thornton Corporate Finance will not be entitled to any other pecuniary or other benefit, whether direct or indirect, in connection with the issuing of this report. The payment of this fee is in no way contingent upon the success or failure of the Hancock Offer.

In our opinion, Grant Thornton Corporate Finance is independent of RRL and its Directors and all other relevant parties of the Hancock Offer.

1.4 Consent and other matters

Our report is to be read in conjunction with the Target’s Statement dated on or around 26 March 2019 in which this Report appears, and is prepared for the exclusive purpose of assisting the RRL Shareholders in their consideration of the Hancock Offer. This report should not be used for any other purpose.

Grant Thornton Corporate Finance consents to the issue of this IER in its form and context and to it being provided to RRL shareholders in conjunction with the Target’s Statement.

This report constitutes general financial product advice only and in undertaking our assessment, we have considered the likely impact of the Hancock Offer to the RRL Shareholders as a whole. We have not considered the potential impact of the Hancock Offer on individual shareholders. Individual shareholders have different financial circumstances and it is neither practicable nor possible to consider the implications of the Hancock Offer on individual shareholders.

The decision of whether or not to accept the Hancock Offer is a matter for each RRL Shareholder based on their own views of the value of RRL and expectations about future market conditions, RRL’s performance, and their individual risk profile and investment strategy. If shareholders are in doubt about the action they should take in relation to the Hancock Offer, they should seek their own professional advice.

1.5 Compliance with APES 225 Valuation Services

This report has been prepared in accordance with the requirements of the professional standard APES 225 Valuation Services (“APES 225”) as issued by the Accounting Professional & Ethical Standards Board. In accordance with the requirements of APES 225, we advise that this assignment is a Valuation Engagement as defined by that standard as follows:

“An Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Member is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Member at that time.”

2 Industry overview

2.1 Introduction

The black coal industry is made up of a number of mine operators engaged in the extraction and production of the two main types of black coal: metallurgical (or coking) and thermal (or steam) coal. The key difference between metallurgical and thermal coal relates to key properties and different applications for each type of coal.

Thermal coal is primarily used to generate heat. Its main uses are for electricity generation in coal-fired power plants, and cement production.

Metallurgical coal is used mostly for the production of iron and steel. Coking coal is considered to be of a higher quality than thermal coal, having a higher carbon content and calorific value (i.e. energy content) and lower level of impurities such as sulphur, phosphorus and ash. Accordingly metallurgical coal prices trade at a significant premium to thermal coal prices, and are therefore more valuable.

Metallurgical coal is further categorised based on the carbon content into hard coking coal ("HCC") (highest carbon content), semi-hard coking coal (“SHCC”), semi-soft coking coal (“SSCC”) and pulverised coal injection ("PCI") (lower carbon content). Hard coking coal (“HCC”) can further be classified into premium and standard coking coal and into low volatile, medium volatile and high volatile products.

2.2 Canadian Coal Industry

Canadian metallurgical coal production is primarily based in the Western Rocky Mountains, between the provinces of British Columbia and Alberta, with thermal coal production primarily east of the Rocky Mountains in Alberta and Saskatchewan. Canada produces an almost equal amount of metallurgical and thermal coal, however almost all thermal coal is used domestically for electricity generation, while metallurgical coal is exported for steel production33.

The map below illustrates the Canadian metallurgical and thermal coal regions and deposits:

Canadian coal regions and deposits

Source: AEM Advisory Independent Coal Market Report December 2017

33 Coal Association of Canada production stats 2017.

Canadian metallurgical coal deposits have deep seams and faults and are located in the challenging terrain of the Rocky Mountains which can lead to higher mining costs. Due to the geological landscape, open-cut mining is the preferred method of mining coal. While costs can be greater due to mining landscape and transportation challenges, the typical cost of labour is lower in comparison to Australian metallurgical mines.

Canadian coal mining is regulated at a provincial and federal level, with federal regulation enforced under the Canadian Environmental Protection Act and the Fisheries Act. Environment and Climate Change Canada has taken on a review of The Fisheries Act. The review began in 2017, has held numerous public consultations and is still in the process of being brought forward into regulation with an expected date in 2019/202034.

2.3 Metallurgical coal

2.3.1 Demand

Coking coal is exported to steel producing countries due to its importance in the steel manufacturing process. Therefore trends in demand for pig iron35 and steel are the primary drivers of the global demand for metallurgical coal. The demand for steel and iron is positively correlated to the industrialisation rate of a country, and is typically higher in emerging and developing countries.

The majority of demand growth in the past decade has been the result of Chinese industrialisation. In 2016, China accounted for 60% of global HCC imports36 and in 2017, Chinese demand peaked37. Going forward, demand from China is expected to stabilise whereas demand from India is expected to ramp up, overtaking China as the world’s largest importer of coking coal in 2020.

India’s metallurgical coal imports surged in 2018, increasing by 19 percent for the year to September 201838, driven by the ongoing expansion of the domestic steel sector. Moreover, India has limited domestic reserves of metallurgical coal and will need to increase imports to support the growth of its domestic steel industry.

Japan's imports of metallurgical coal are forecast to grow modestly over the outlook period, supported by demand for steel for use in the domestic construction sector. Metallurgical coal imports from South Korea are forecast to remain mostly flat, due to weak domestic demand from its major steel-using sectors.

Demand from emerging markets is forecast to grow considerably, albeit from a low base. Many South-East Asian countries are building up their steel capacity to meet demand from the construction sector, driven by large infrastructure projects. In particular, Vietnam, Indonesia and Malaysia have added substantial blast- furnace steel capacity, which will support the demand for metallurgical coal.

34 Environment and Climate Change Canada, Forward Regulatory Plan 2017-2019. 35 Pig iron is an intermediate product of the iron industry. It is refined to produce steel, wrought iron and ingot iron. 36 Bounty IPO Prospectus. 37 Australian Government Resources and Energy Quarterly, December 2018. 38 Australian Government Resources and Energy Quarterly, December 2018.

Metallurgical coal imports by country

80 71 70 69 68 70 67 67 63 59 60 51 48 48 48 49 50 47 47

40 35 36 36 35 35 Mtpa

0 CY16 CY17 CY18 CY19F CY20F China Japan India South Korea

Source: Resources and Energy Quarterly December 2018

The primary export facilities for Canadian coal are on the Western Canadian coast along the Pacific Ocean. This inherently creates the primary markets of Canadian coal to be North Asia with two-thirds of exports going to Japan, Korea, China and Taiwan. As Indian steel producers increase demand, they view Canada as a primary coal source alternative to Australia for hard coking coals.

The graph below summarises the historical Canadian metallurgical coal exports by geography:

Canadian metallurgical coal exports by destination 2017

China, 15%

Rest of the world, 39% South Korea, 20%

Japan, 23% USA, 3%

Source: Natural resource of Canada website (2017)

2.3.2 Supply

World metallurgical coal supply is forecasted to increase going forward as strong 2018 prices have restarted idle mines and spurred development of new mines. In 2017 world exports totalled 311 Mt, with forecasts for 324 Mt, 334 Mt and 340 Mt exported in 2018, 2019 and 2020, respectively.

Historically Canada’s metallurgical coal exports peaked in 2013, with exports of 35Mt. Due to decreasing coal prices, a number of mining operations closed and exports declined between the periods of 2014 to 2016. With prices once again increasing in 2017, exports have returned to 29 Mt in 2017 and are 25

forecasted to increase by 4.8% in 2018, 1.7% in 2019 and 1.6% in 2020. Canada’s metallurgical coal exports continue to account for 9% of total world exports for the period of 2017 to forecast 2020, placing Canada as the fourth largest exporter of metallurgical coal by volume.

Canadian metallurgical coal exported

32.0 9.4% 31.5 9.4% 31.0 30.5 9.3% 30.0 9.3%

29.5 export 29.0 9.2%

Metallurgical(Mt/pa)coal 28.5 9.2%

28.0 Canada's%world metallurgicalof coal 27.5 9.1% CY17 CY18 CY19F CY20F Source: Resources and Energy Quarterly, December 2018.

Australia is expected to remain the largest exporter of metallurgical coal, accounting for a forecast 57% of total exports in 202039. However, this represents a decline from Australia’s share pre-Cyclone Debbie of 60% in 2016 with other countries such as Canada, Russia and Mozambique expected to increase their exports and importers seeking to diversify their supply sources.

The graph below illustrates the historical and forecast export from Canada and its main competitors:

Metallurgical coal exports by country

200 189 190 193 178 180 173

160

140

120

100 Mtpa 80 54 60 50 49 45 37 40 28 29 30 31 31 22 23 24 24 25 13 20 7 9 11 0 CY16 CY17 CY18 CY19F CY20F Australia United States Canada Russia Mozambique

Source: Resources and Energy Quarterly, December 2018.

39 Ibid.

2.3.3 Coal Prices

Metallurgical coal prices are driven by a number of technical coal specifications that impact the price of a particular coal product and result in a premium or discount applied to the benchmarked metallurgical coal price. The key technical specifications include CSR40, volatile matter, total moisture, total sulphur, ash and phosphorus. The classification of coal between premium and standard is driven by the quality of the following properties:

 CSR of over 65% for premium coking coal, while 55%-64% is accepted for standard coking coal.

 The lower the grade of volatile matter, the higher the quality of coal. Volatile matter represents organic compounds and mineral impurities that are released during the steel making process. Volatile matter of 21%-22% are typical of premium hard coking coal, while 25%-26% is typical of standard coking coal.

 The lower the level of moisture, the higher quality of coal. Moisture greater than 10% typically incurs a discount as it has lower energy content and is typically costlier to transport.

 The lower the sulphur content, the higher the quality of coal. Sulphur content of over 0.6% generally incurs a discount as it requires additional coke consumption and energy requirements.

 The lower the ash content, the higher the quality of coal. Lower ash content assists in the oxidisation process and ash in excess of 12% typically incurs a discount.

 The lower the phosphorus content, the higher the quality of coal. Levels of phosphorus above 0.05% can cause metal weakness in the steel making process.

Over the last year, metallurgical coal pricing has entered a new phase with key players such as major Japanese and South Korean steel mills and coking coal miners increasingly relying on spot price indexes. In the past, coking coal contract prices were settled on a quarterly basis and were usually set by Australia’s largest suppliers such as the BHP Billiton Mitsubishi Alliance (“BMA”). The move toward greater reliance on spot price indexes is expected to lessen the impact of market volatility and mirrors the move towards spot pricing in the iron ore sector at the beginning of the decade.

The average of the standard and premium HCC spot price (FOB Australia) was an estimated US$191 a tonne in 2018, 5 per cent higher the previous year.

The graph below shows historical and forecast metallurgical coal prices using an average of premium and standard coking coal (real).

40 Coke Strength After Reaction.

Historical and forecast HCC prices (real)

275

250

225

200

175

150

125 US$/t (real) US$/t 100

0 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23

Historical price (yearly average) Forecast (yearly) Source: KPMG quarterly summary report Dec-18/Jan-19, Energy & Metals Consensus Forecast Jan-19, GTCF analysis, other brokers

HCC prices have historically been highly sensitive to global economic growth.

The price of HCC was approximately US$160/t at the end of 2010, predominantly as a result of increasing demand from Asian countries. In early 2011, Australia experienced significant flooding, causing further supply constraints, pushing the price up to US$250/t. In 2012, the supply constraints eased, causing the price of HCC to significantly decrease during the year to US$186/t.

In 2013, the supply of HCC further increased by 10.8%41 pushing the spot price down by year-end. In 2014, China's imports rose by a further 21% as continued low seaborne prices encourage the consumption of imported coals over those produced domestically.

From 2014 to the first half of 2016, we note a steady decline in the price of HCC due to lower steel production in China and a downturn in China’s residential construction sector contributing to excess global metallurgical coal supply over demand. The downturn in China led to a low HCC average quarterly price of below US100/t between 2014 and first quarter of 2016.

Subsequently, in the last quarter of 2016 the HCC price experienced a significant increase (2016 HCC price average at US$143/t for the year). The escalation in price over the December 2016 quarter was driven by weather-related supply disruptions in China's main coal-producing region of Shanxi in July 2016, Chinese government policies restricting the number of production days per year at Chinese coal mines from 330 to 276, and increased activity in China's construction sector. HCC prices subsequently fell in the March 2017 quarter due to the Chinese government easing its working day restrictions on its coal mines, back to 330 days a year.

Moving forward, the coking coal price is forecast to decline to approximately US$178 a tonne in 2019 and circa US$154 a tonne in 202042 due to both supply growth and an expected softening of import demand from China, as steel production weakens and domestic production recovers.

41 Various Broker Reports. 42 Resources and Energy Quarterly December 2018.

3 Profile of RRL

3.1 Introduction

RRL is an independent hard coking coal development and exploration company focussed on bringing into production the 100% owned Grassy Mountain Project which is part of the Crowsnet Pass Complex, located in Alberta, Canada. Riversdale acquired the Crowsnest Pass Complex for US$49.5 million from Consol and Devon on 29 August 2013 via a wholly owned subsidiary, Benga Mining Limited (“Benga”).

The Crowsnest Pass Complex comprises the following assets:

 Riversdale’s flagship asset, the Grassy Mountain Project, which contains 195 Mt of measured and indicated resources, 154 Mt of reserves (included in the resources) and 88 Mt of marketable reserves. Subject to receiving all the necessary approvals, the Grassy Mountain Project is targeting first sales in June 2022 with a peak production of 4.5 Mtpa. Over the current anticipated mine life of 23 years, the Grassy Mountain Project is expected to produce 92.9 Mt of product coal representing an average yield of circa 55%.

 Explorations properties which represents potential extension opportunities for the life of mine of the Grassy Mountain Project (Grassy North, Grassy South, Bellevue).

 Other exploration assets such as Adanac and the Lynx Creek43.

 Significant freehold land, part of which may be suitable for project related infrastructure.

The map below visualises the location of the Crowsnest Pass Complex:

Crowsnest Pass Complex location

Source: AEM Advisory Independent Coal Market Report December 2017

43 As discussed in section 3.3, the Government of Alberta advised of its intention to cancel approximately 1,400 hectares of the Adanac crown leases located within the proposed Castle Provincial Park which will affect both the Adanac and the Lynx Creek projects.

The Grassy Mountain Project is located in Crowsnest Pass, southwest Alberta (7km north of Blairmore, Alberta and 150km south of Calgary, Alberta). It is 30km east of Teck Resources Ltd’s large Elk Valley coking coal operations. The project is considered to be in a well-developed mining jurisdiction.

3.2 Grassy Mountain Project

The Grassy Mountain Project’s mine plan includes an open-pit coking coal mine, coal handling and preparation plant (“CHPP”) with associated infrastructure, an overland conveyor system to connect to a rail load-out facility and a new spur rail line to connect to the national rail system which is only 6km away.

3.2.1 Reserves and resources

We have set out below a summary of the resources and reserves of the Grassy Mountain Project.

Grassy Mountain Project - Reserves and Resources Mt Coal Resources1

Measured 85 Indicated 110 Inferred - Total Resources 195 Coal Reserves Proved 65 Probable 89 Total Reserves 154 Source: RRL official website and RPM Report Note: (1) Resources are quoted inclusive of reserves; (2) We note that reserves and resources have been independently reviewed by RPM

The majority of the coal resources is shallow, less than 200 metres deep. Based on the current mine plan, the Grassy Mountain Project is expected to support a mine life of 23 years with peak production rate of circa 4.5 Mtpa. The project is expected to produce a single hard coking coal product over the life of the mine with an indicative product specifications as outlined below.

Coking Coal Specification CSR Volatile Matter Ash Sulfur Phosphorus Fluidity Grassy Mountain Project 65.0 23.5 9.0-9.5 9.5 0.04 150.0 Source: RRL Management

Based on an independent review of the coal quality commissioned by the Company, the Grassy Mountain project is expected to produce a mid-volatile hard coking coal similar to hard coking coals produced in Australia. The Grassy Mountain coal compares favourably to the benchmark specifications for hard coking coal in terms of higher strength, lower volatiles, lower sulphur and lower phosphorus. The coal produced from the Grassy Mountain Project is expected to attract a premium to the standard hard coking coal, but to be at a slight discount to the low-vol premium coking coal.

3.2.2 Optimised Feasibility Study

RRL completed the optimised feasibility study (“OFS”) for the Grassy Mountain Project in 2017. Set out below is a summary of the key results of the OFS:

 The OFS indicates that 93 Mt of marketable coal will be produced at an average product stripping ratio of 9.2 over the 23 year mine of life period. Average processing yield is 55.3%.

 Total project FOB operating costs, excluding royalties, is estimated to be C$88.9/t product. RPM has estimated a level of accuracy of +/- 15% which is considered appropriate by RPM. This cost structure is competitive and as a result the Grassy Mountain Project is expected to be classified as a first quartile44 cost producer.

 The capital costs to develop the mine and bring it to name-place capacity of 4.5 Mtpa are estimated at circa C$631.6 million45 to first sales production on an owner operator basis which is low compared with similar large scale coking coal projects and it is driven by established rail and port infrastructure with available capacity. The bulk of the capital expenditure is in relation to mining with C$141.4 million to first sales and C$233.0 million to full production, and to the CHPP with C$206.3 million to first sales. The majority of the mine and all of the materials handling, processing and rail loading infrastructure is expected to be located on land currently owned by Riversdale.

 The project entered the formal phase of permitting in October 2017 and it is now on a prescribed pathway toward approval of its Environmental Impact Assessment (“EIA”).

 The Company plans to undertake the mine reclamation as soon as possible once sufficient area is available and an annual cost is allowed during the 23 year mine life.

 Payback period from commencement of production is circa three years.

3.2.3 Permitting

RRL is in the process of obtaining the required mining lease and various permits to be able to commence construction of the Grassy Mountain Project. We have set out below a brief overview of the current regulatory requirements and where the Grassy Mountain is in that process.

 Coal exploration and mine development in Alberta is regulated by the Alberta Energy Regulator (“AER”) and the Federal Government. The AER is a special department established to regulate the oil and gas, energy and coal sectors in Alberta. In order to obtain the necessary permitting, RRL needs to engage with the local and federal authorities and mitigate any concerns in relation to environmental impact, ensuring that mining activities do not conflict with existing land use policies or management, obtain the necessary water licences and engage with the community and First Nation consultation.

 Development of coal mines also requires a federal environmental assessment to be carried out by the Canadian Environmental Assessment Agency. We note that the Federal Government works in conjunction with the AER to ensure alignment in the regulatory decision process, including establishing a joint review panel.

Riversdale submitted an integrated application comprising the Environmental Impact Assessment Report (“EIA”) and operating permits to both Alberta and Federal regulators in August 2016. After the provision of

44 The first quartile is the median of the lower half of the data set which means that 25% of the observations lie below the first quartile and 75% above it. 45 Funding of C$850 million assumed during the permitting and construction period which includes capital and operating costs, overheads, finance and transaction costs, interest payments until first sales and cost overrun facility.

supplementary information, on 31 October 2017, the EIA was deemed complete and capable of assessment.

A joint review panel (“JRP”) was appointed in August 2018. The joint panels are chosen by both the AER and the Federal Environment Minister. The JRP roles is to determine the sufficiency of the application, hold public hearings and conduct a technical analysis of the project based on the information submitted and to ultimately make a recommendation on whether the project/permit should be approved or not.

The JRP is currently reviewing the sufficiency of the EIA Report to opine whether or not there is sufficient information in front of the JRP before scheduling a public hearing for the project. The JRP has recently communicated to the Company that it will require all additional information by the 14th of May 2019. Accordingly, the Company is confident that a public hearing will be scheduled either way between June and December 2019.

Once the public hearing is scheduled, interested parties, who have the requisite standing, will have the opportunity to file evidence, including expert’s reports, with the JRP. The public hearing is expected to last for a period of 10 days. After the public hearing is concluded, the JRP will consider the information submitted and the outcomes of the public hearing and it will summarise its deliberation into a report which will outlines whether or not a permit has been granted. This process generally takes three months.

The JRP report is then submitted to the Federal Minister to determine if significant adverse effects from granting the permit are likely before the permit becomes effective.

Agreements with First Nations are negotiated throughout the JRP and public hearing process. Interim adequacy reports describing the agreed upon terms with First Nations are completed prior to the final public hearing. While it is not necessary to enter into agreements to receive Federal Minister Approval, it assists with demonstrating First Nation support and increases the likelihood of approval. RRL has already reached an agreement with four First Nation bands.

The Management’s best estimates is that the permit will be granted at the end of the first quarter of 2020 with construction commencing shortly after, however for the purpose of our valuation assessment we have sensitised this date assuming delays by three months, six months and nine months.

3.2.4 Infrastructure

As a greenfield project, the Grassy Mountain Project will require to build full on-site infrastructure which comprises electrical power systems, haul roads, conveyor systems, CHPP, a rail loading facility, water and waste water management systems and other ancillaries facilities. The proposed mine site is located 6 km north of the rail line.

The train load out facility will be connected to the adjacent Canadian Pacific main rail line via a spur line which is required to pass under the highway. The rail line provides access to the Westshore Coal Terminals, approximately 1,070 km away. Sufficient existing rail capacity currently exists for the planned mine production. As at the Valuation Date the Company is still negotiating the agreement with CP rail.

Riversdale has entered into an agreement with Westshore Coal Terminal in Vancouver which, in terms of coal volumes, mirrors the expected ramp-up of the mining operations. The agreement expires in 2030. Since RRL has entered in to the agreement they have paid annual reservation payments to ensure that Westshore retains their allocated shipping capacity.

3.3 Exploration properties

The Crowsnest Pass Complex also include exploration properties as outlined below:

 Grassy North, Grassy South and Bellevue – these are considered potential extension opportunities for the Grassy Mountain Project given their proximity the future Grassy Mountain Project infrastructure. These exploration properties do not report JORC resources but they do have exploration targets.

 Adanac and Lynx Creek – On 23 January 2017, the Government of Alberta advised of its intention to cancel approximately 1,400 hectares of the Adanac crown leases located within the proposed Castle Provincial Park which will affect both the Adanac and the Lynx Creek projects. On 2 February 2018, at the request of the AER, Riversdale applied for compensation in the relation to the cancellation of the 1,400 hectares of crown lease. In accordance with the Mineral Rights Compensation Regulations, RRL can only claim for cost incurred rather than the market value of the exploration assets.

 Lynx Creek – Given the close proximity to the Castle Provincial Park, the future development opportunities are limited.

3.4 Financial information

Company’s financial information is presented in US$ which is their reporting currency.

3.4.1 Financial performance

The table below illustrates the Company’s audited consolidated statements of comprehensive income for the last two financial years ended 30 June 2017, 30 June 2018 and 31 December 2018.

Statements of financial performance FY17 FY18 HY19 US$ '000 Audited Audited Reviewed Revenue 54 61 552 Administrative expenses (2,102) (3,218) (1,640) Other expenses (1,491) (7,460) (1,918) Mark to market gain on valuation of derivatives - - 5,460 Foreign exchange gain/ (losses) (755) 1,112 333 Finance costs (5,166) (5,321) (1,884) Net profit before tax (9,460) (14,826) 903 Tax expense - - - Net profit / (loss) after income tax (9,460) (14,826) 903 Other comprehensive income (655) (335) (6,599) Total comprehensive loss for the year (10,115) (15,161) (5,696) Sources: RRL annual and half year financial reports

In relation to the above, we note the following:

 Administration expenses mainly include the salary and wages of RRL personnel in Australia and Canada.

 The significant increase in the other expenses in FY18 was caused by the marked to market of the convertible notes derivative (“Convertible Notes”) which causes an increase of the liability as a result of the positive movements in the market value of the underlying share price of RRL.

 Other expenses also include one-off costs in relation to the aborted IPO of circa US$0.8 million.

 Finance costs represents the annual unwinding of the Convertible Notes until maturity using the amortised equity method based on the effective interest rate of 5.30%.

 Other comprehensive income is relates to the foreign currency translation differences between C$ and US$.

3.4.2 Financial position

The consolidated statement of financial position of RRL as at 30 June 2017, 30 June 2018 and 31 December 2018 is summarised in the table below.

Statements of financial position FY17 FY18 HY19 US $'000 Audited Audited Reviewed Assets Cash and cash equivalents 5,969 3,777 68,890 Other receivables 227 110 593 Total current assets 6,196 3,887 69,483 Property, plant and equipment 189 262 493 Land 6,829 7,235 7,607 Exploration and evaluation expenditure 68,894 78,483 82,565 Total non-current assets 75,912 85,980 90,665 Total assets 82,108 89,867 160,148 Liabilities Trade and other payables 1,452 1,648 1,561 Provisions 283 323 345 Convertible notes liability - 55,101 - Total current liabilities 1,735 57,072 1,906 Convertible notes liability 36,763 - - Total non-current liabilities 36,763 - - Total liabilities 38,498 57,072 1,906 Net assets 43,610 32,795 158,242 Sources: RRL annual and half year financial reports

We note the following in relation to RRL’s financial position:

 The cash and cash equivalents increased significantly after the 30 June 2018 reporting date as a result of the placement of circa A$99.3 million worth of RRL Shares with Hancock between 29 August 2018 and 21 September 2018 and the exercise of certain RRL Options. As at 31 January 2019, the cash and cash equivalents of RRL was C$89.9 million (US$ 68.9 million).

 Land value represents the cost of the freehold which is expected to be used for the Grassy Mountain infrastructure.

 Exploration and evaluation expenditures increased by circa US$10 million as a result of advancements on engineering and development of the Grassy Mountain Project.

 Convertible Notes liability of US$55.1 million refers to the following:

- First Convertible Notes totalling A$56 million issued in August 2013 to RCF (A$49 million) and Macquarie Bank Limited (A$7 million) which was primarily used to purchase the Crowsnest Pass Complex. It did bear an interest rate of 7% per annum. It comprises of two tranches: Tranche 1 for A$20.5 million converted into ordinary shares at a price A$0.70 per share in September 2013; Tranche 2 for A$35.5 million converted at A$0.75 per share on 28 August 2018.

- Second Convertible Notes totalling U$30 million46 with a maturity date of 31 January 2019 and bearing an interest rate of 4% per annum which can be drawn down in a number of tranches. It converted into equity on 28 August 2018 at a price of A$1.75 per share.

On 28 August 2018, all the Convertibles Notes were converted into RRL Shares.

3.5 Share capital structure

As at the date of this report, RRL had the following securities on issue:

 295,151,613 RRL Shares.

 2,495,000 with an exercise price varying between A$1.10 and A$2.5.

3.5.1 Recent shares issuance

Between August and September 2018, the Company issued the following shares to Hancock:

 39,388,160 RRL Shares at an issue price of A$1.75 per share to raise circa A$68.9 million.

 17,203,343 RRL Shares at an issue price of A$1.60 per share to raise circa A$27.5 million.

 1,829,213 RRL Shares at an issue price of A$1.60 per share to raise circa A$2.8 million.

The Company also issued 68,856,406 RRL Shares to RCF (62,113,026) and MBL (6,743,380) upon conversion of the Convertible Notes and 7,321,429 RRL Shares upon exercise of a component of RRL Options.

3.5.2 Top shareholders

We have set out below the top 10 shareholders of RRL as at 19 March 2019:

46 US$4 million remained undrawn as at 30 June 2018.

Top 10 shareholders of ordinary shares as at 19 March 2019 Rank Name No. of shares Interest (% ) 1 RCF 141,592,737 47.97% 2 Hancock Corporation 58,420,716 19.79% 3 Kingfisher Capital PTE Limited 24,177,999 8.19% 4 Steve Mallyon (via Stanhope Investments Pty Ltd) 19,201,225 6.51% 5 Michael O'Keeffe (via Prospect AG Trading Pty Ltd 17,281,225 5.86% 6 Anthony Martin 12,263,561 4.16% 7 Merrill Lynch (Australia) Nominees Pty Limited 3,176,657 1.08% 8 Barkly Resources Pty Limited 1,400,000 0.47% 9 Munz Custodians Pty Limited 1,000,000 0.34% 10 Mr Philip Munz 1,000,000 0.34% Top 10 shareholders 279,514,120 94.7% Remaining shareholders 15,637,493 5.3% Source: RRL Management

4 Valuation methodologies

4.1 Introduction

As discussed in Section 2, our fairness assessment involves comparing the Base Offer Price and the Increased Offer Price to the fair market value of RRL Shares on a control and fully diluted basis.

Grant Thornton Corporate Finance has assessed the value of RRL using the concept of fair market value. Fair market value is commonly defined as:

“the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm’s length.”

Fair market value excludes any special value. Special value is the value that may accrue to a particular purchaser. In a competitive bidding situation, potential purchasers may be prepared to pay part, or all, of the special value that they expect to realise from the acquisition to the seller.

4.2 Valuation methodologies

RG 111 outlines the appropriate methodologies that a valuer should generally consider when valuing assets or securities for the purposes of, amongst other things, share buy-backs, selective capital reductions, schemes of arrangement, takeovers and prospectuses. These include:

 Discounted cash flow and the estimated realisable value of any surplus assets (“DCF Method”).

 Application of earnings multiples to the estimated future maintainable earnings or cash flows of the entity, added to the estimated realisable value of any surplus assets (“FME Method”).

 Amount available for distribution to security holders on an orderly realisation of assets (“NAV Method”).

 Quoted price for listed securities, when there is a liquid and active market (“Quoted Security Price Method”).

 Any recent genuine offers received by the target for any business units or assets as a basis for valuation of those business units or assets.

Further details on these methodologies are set out in Appendix A to this report. Each of these methodologies is appropriate in certain circumstances.

RG111 does not prescribe any above methodologies as the method(s) that an expert should use in preparing their report. The decision as to which methodology to use lies with the expert based on the expert’s skill and judgement and after considering the unique circumstances of the entity or asset being valued. In general, an expert would have regard to valuation theory, the accepted and most common market practice in valuing the entity or asset in question and the availability of relevant information.

4.3 Selected valuation methods

In our assessment of the fair market value of RRL, Grant Thornton Corporate Finance has relied on a number of valuation methodologies as outlined below.

4.3.1 Sum of Parts approach (“SOP”)

The Grassy Mountain Project is the flagship asset of RRL. The market value of the Grassy Mountain Project was assessed by applying the DCF Method. We believe this methodology to be appropriate due to the following:

 The Grassy Mountain Project is an advanced development project with well-defined Reserves and Resources.

 Management of RRL has prepared cash flow forecasts based on the current level of reserves and resources.

 RRL is at an advance stage of obtaining the required permits to commence construction.

 RRL has received indicative terms sheets from debt finance providers.

 Infrastructure (port) has been secured whilst the rail component is still pending but in advanced negotiations.

 The DCF Method is the most appropriate approach to reflect the significant level of capital and time required for the development of mineral assets.

 The DCF Method is the most appropriate approach in valuing assets with a finite life such as mining assets. This reflects the fact that the reserves deplete over time, and the significant level of capital and time required for the development of mining assets.

4.3.2 Cross check valuation methodologies

We have cross-checked our valuation assessment having regard to the Reserve and resource multiples implied in our SOP valuation which we have compared with the reserve and resource multiples of listed peers and comparable transactions.

4.3.3 Independent technical specialist

For the purposes of this report, Grant Thornton Corporate Finance has engaged RPM to review and opine on the reasonableness of the technical assumptions included in Grassy Mountain Project projections and MBGS to prepare a valuation of the exploration assets of RRL.

RPM and MBGS’ reviews were completed in accordance with the VALMIN Code and they are attached in Appendix I and J. 38

5 Valuation assessment of RRL Shares

5.1 Valuation summary under the Management Case

As discussed in Section 4.3, we have assessed the fair market value of RRL Shares on a control basis using the SOP approach which is summarised in the table below under the Management Case (permitting obtained in March 2020 – Management’s best estimate).

SOP Method - Valuation summary Section C$ '000 (except where stated otherwise) Reference Low High Grassy Mountain Project (Management Case) 5.2.1 793,340 904,130 Exploration Assets 5.2.2 11,538 11,538 Total Enterprise Value of Riversdale (control basis) 804,879 915,668 Add: Net cash as at 31 January 20191 5.2.4 84,770 84,770

Add: cash from exercise of the RRL options 5.2.5 2,996 2,996 Equity value of Riversdale pre-money (control basis) 892,644 1,003,434 Estimated dilution discount from future equity raising 5.2.7 15.0% 10.0% Equity value of Riversdale post-money (control basis) 758,748 903,090 Number of outstanding shares2 ('000s) 3.5 297,647 297,647 Value per share (control basis) (C$ per Share) 2.55 3.03 Exchange Rate C$/A$ 5.2.1.6 1.04 1.04 Value per share (control basis) (A$ per Share) 2.65 3.16 Source: GTCF, S&P Global, RPM, RRL Management Note: (1) It includes C$5 million of transaction costs (2) It includes 295,151,613 Riversdale Shares and 2,495,000 Riversdale Options

As outlined in the table above, we have assessed the fair market value of RRL47 on a control and 100% basis between A$2.65 and A$3.16 per share under the Management Case (permitting obtained in March 2020 – Management’s best estimate). This does not represent our value range of RRL for the purpose of the fairness assessment which is outlined in section 5.2.7.

5.2 SOP Method

For the purpose of our valuation assessment of RRL utilising the SOP approach, RRL has prepared a financial model (“Financial Model”) for the Grassy Mountain Project which we have used as a base for our valuation assessment.

Grant Thornton Corporate Finance has engaged RPM to review and express an opinion on the technical assumptions included in the Financial Model in relation to, amongst other things, reserves and resources, production profiles, operating costs and capital expenditures.

Based on RPM’s review and suggested changes to the Financial Model, Grant Thornton Corporate Finance has assessed the net present value of the Grassy Mountain Project using real, ungeared, post-tax cash flows, having regard to Grant Thornton Corporate Finance’s assessment of the coking coal prices, exchange rates, inflation and discount rate. We note that the Financial Model has been prepared in C$.

Whilst Grant Thornton Corporate Finance believes that the assumptions underlying the Financial Model are reasonable and appropriate to be adopted for the purpose of our valuation, in accordance with the

47 Under the Management Case

requirements of RG111, we have not disclosed them in our Report. In addition, the projections contain commercially sensitive information and they do not meet the requirements for presentation of prospective financial information as set out in ASIC RG170.

In accordance with the requirement of RG 111, we have undertaken a critical analysis of the Financial Model before relying on it for the purpose of our valuation assessment. Specifically, we have performed the following tasks:

 Conducted high level checks, including limited procedures in relation to the mathematical accuracy of the Financial Model.

 Engaged RPM to perform a broad review, critical analysis and benchmarking of the key assumptions.

 Held discussions and interviews with RRL Management and Company’s financial adviser in relation to the Financial Model.

The assumptions adopted by Grant Thornton Corporate Finance do not represent projections by Grant Thornton Corporate Finance but are intended to reflect the assumptions that could reasonably be adopted by industry participants in their pricing of similar businesses. We note that the assumptions are inherently subject to considerable uncertainty and there is significant scope for differences of opinion. It should be noted that the value of RRL could vary materially based on changes to certain key assumptions, in particular coal price, exchange rates and discount rates. Accordingly, we have conducted further sensitivity analysis to highlight the impact on the value of RRL Shares caused by movements to certain key assumptions. As a result, the outcomes of the SOP approach should be considered with caution by RRL Shareholders.

5.2.1 Grassy Mountain Project

5.2.1.1 Introduction

In assessing the market value of the Grassy Mountain Project, Grant Thornton Corporate Finance has adopted the DCF Method, using cash projections prepared by the Company and reviewed by RPM for the period from 1 January 2019 to 31 December 2044. RPM has reviewed the Financial Model and confirm the assumptions appear reasonable. Refer to the RPM Report in Appendix I for further details.

The key assumptions underpinning the forecast cash flows relating to the Grassy Mountain Project are set out below.

Supplementary and operation assumptions summary

Life of mine (LOM) 23 years Mine type Open-cut Coal type 100% hard coking coal (HCC) Average saleable production per year 4.5 Mt LOM strip ratio 5.1 LOM product strip ratio 9.2 Average cash cost per tonne (excluding royalties) (C$) 88.9 Development capital cost (C$ million) 631.6 Total raw coal produced over LOM (Mt) 168.0

Total saleable coal produced over LOM (Mt) 93.0 Source: Grassy Mountain Model

5.2.1.2 Permitting process

Based on discussions with RRL Management and RRL’s legal adviser, we understand that the permitting for the Grassy Mountain Project is currently undergoing a review by the JRP for the sufficiency of the EIA report.

As discussed in section 3.2.3 The Company expects the permit to be granted at the end of the first quarter of 2020 (Management’s best estimate) with construction commencing shortly after. Due to the uncertainty of timing of obtaining the required permitting as outlined above, the delay incurred by the Company in the past and the fact that RRL is only allowed to undertake limited activities between 15 April and 15 August of each year due to the bird nesting season, in our valuation assessment we have considered potential delays of the permitting by three months, six months and nine months.

We note that our valuation assessment is based on the overarching assumption that the permitting will be obtained, hence it is a question of when it is obtained rather than if it is obtained. This assumption has been reviewed by RPM and considered reasonable. Additionally, we also note that this is supported by the Hancock Offer which is clearly based on the presumption that permitting will be obtained in the near future.

5.2.1.3 Production profile

The projected production profile for the Grassy Mountain Project over the life of mine is presented in the following graph.

Grassy Mountain Project – Production profile

9,000

8,000

7,000

6,000

5,000

4,000

3,000 Saleable/ ROM (Mtpa) 2,000

1,000

0 CY22 CY24 CY26 CY28 CY30 CY32 CY34 CY36 CY38 CY40 CY42 CY44

Saleable HCC ROM Production Source: Grassy Mountain Model

We note the following in relation to the above graph:

 The Grassy Mountain pit has a length of approximately 6km which has been divided into 9 sub-pits which have been prioritised in order to maximise cash-flows at the beginning of the project (sub-pits with lower strip ratios are mined first). The operations will commence in the sub-pit adjacent to the CHPP and they will proceed north.

 The targeted production profile of the Grassy Mountain Project is approximately 4.5 Mt per annum marketable coal which is expected to be maintained for most of the mine life. In the outer years, the annual production is reduced due to higher strip ratios. The annual production volumes are consistent with the rail and port volume allocation provided by Canadian Pacific (“CP”).

 The total saleable coal production over the mine life is forecast to be approximately 93.0 Mt, with an estimated average ROM strip ratio of 5:1 and total ROM coal of 168 Mt which provides plant yield of 55.3%.

5.2.1.4 Operating costs

Operating costs include costs associated with mining, processing, royalty payments and overhead costs. The following graph summarises the forecast operating expenses over the projected mine life.

Grassy Mountain Project – Forecast operating expenses

440 439 448 434 431 120 422 427 450 404 392 403 403 386 381 388 381 369 400 100 345 312 320 350 297 80 266 300

250 60 200 150

Cost/tonne(C$/t) 40 150

100 Totalcost C$ pamillion 20 16 50

0 0 CY22 CY24 CY26 CY28 CY30 CY32 CY34 CY36 CY38 CY40 CY42 CY44 Rail transport & port charge Mining costs CHPP cost Infrastructure costs Water Management Costs Rail Siding Costs General & Admin Costs Opex during construction Total cost pa Source: Grassy Mountain Model

We note the following in relation to the operating costs:

 The operating costs estimate includes all activities relating to the extraction of coal from the Grassy Mountain Project, including overheads, royalties and taxes. Cost estimates have been built up from first principle estimates.

 The life of mine project operating costs, excluding royalties are estimated to be C$88.9/t product with the two most significant costs being the mining costs at C$22.2/t ROM and rail and transport costs at C$37.0/t product.

 RPM considers that the operating cost estimates have been diligently prepared and that estimates are likely to be accurate within ±15%. We note that the Company is currently in the phase of firming-up the cost estimates with an updated engagement with suppliers, however this information is not available as at the date of this Report.

 In relation to rail cost, we note that the CP rail line will provide necessary rail capacity on the rail network to deliver the product to the Westshore Terminal. It is noted that CP have not expressed any concern regarding their collective ability to ship roughly 4.5 Mtpa of the Grassy Mountain Project production.

 The coal export port facility of Westshore Terminal is located in Delta, BC, just south of Vancouver. Westshore is currently undergoing capital works which will increase its coal shipping capacity. Riversdale entered into a reservation fee that guarantees 4.5 Mtpa of throughput with potential to start shipping from mid-2022.

 Royalties are calculated as a percentage of revenue and they are payable at 1% of netback revenue (port revenue less rail, loading, marketing and testing costs). When the initial capital expenditure and a 10% theoretical return have been recovered, a second tier royalty of 13% of net revenue is payable. The increase in the royalty drives up the cost after the first period of production.

 Income tax - Income tax has been calculated by applying the Canadian statutory company tax rate of 27% to the notional taxable income. We have also assumed that the existing gross tax losses balance plus the losses to be incurred during the construction period will be utilised to offset future taxable income. We also note that provincial election has been called in Alberta for 16th of April 2019. We note that the current opposition leader has announced that if elected, his government would reduce the province’s corporate income tax from 12% to 8%. We have undertaken a sensitivity analysis in section 5.2.6 in relation to this issue.

 Carbon Tax – the province of Alberta has a carbon dioxide emissions tax that is applied to diesel, gasoline, natural gas and propane fuel consumption. The current 2019 rate for diesel fuel is 8.03 Canadian cents/L. RRL expects to pay carbon tax of C$1,029 million for heavy trucks and C$63 million for CHPP diesel fuel over the LOM.

 Working capital – During production, the business assumes average receipts from debtors in 5 days, and payables to creditors in 30 days.

 Remediation liability – Mine closure costs totalling C$130.8 million throughout the life of mine are included in the Financial Model. While the remediation costs are incurred throughout the entire project, C$69.9 million (included in the C$130.8 million) are incurred after the cessation of mining operations.

5.2.1.5 Capital expenditure

The forecast capital expenditure for the construction of the mine and related infrastructure (C$631.6 million48) over the projected mine life is summarised below:

Grassy Mountain Project – Forecast capital expenditure

450 120

400 100 350

300 80

250 60 200

150 40

100 Depreciation(C$ millions) Capitalexpenditure (C$ millions) 20 50

0 - CY20 CY22 CY24 CY26 CY28 CY30 CY32 CY34 CY36 CY38 CY40 CY42 CY44

Development capex Deferred and operating capex Depreciation

Source: Grassy Mountain Model

48 This is different from the amount to be funded which includes operating costs, interest and finance costs and cost overrun facility until first sales.

We note the following in relation to the forecast capital expenditure:

 Construction is expected to commence on or around March 2020 (Management’s best estimate) and last 23 months with an additional three months of commissioning and first sales in June 2022. Considering the uncertainty pertaining to the permitting process and potential extended construction period, we have run alterative scenarios that delay the permitting process for three, six and nine months.

 The initial capital cost estimates for the construction of the mine and related infrastructure amounts to approximately C$631.6 million (excluding interest payments and financing fees, operating costs and overheads and cost overrun facility until first sales), spread over three years from CY20 to CY23.

 The estimated capital expenditure is based on numerous sources, including first principles estimates, feasibility study-level engineering design, contractor estimates and supplier quotations.

 RPM considers the capital cost estimate (including contingencies) is detailed and accurate within ±15%.

5.2.1.6 Economic assumptions

Coal prices

For the purpose of forming a view on the appropriate coal prices to use for the valuation, Grant Thornton Corporate Finance has had regard to the historical spot prices, forecast prices prepared by various brokers and consensus estimates.

Given the volatility in commodity markets, the current levels of commodity prices relative to historical long run prices, and the widely varying views of industry analysts, assumptions regarding future coal prices are inherently subject to considerable uncertainty. It should be noted that the value of the mineral assets could vary materially based on changes in commodity price expectations.

The assumptions in relation to the coal prices adopted by Grant Thornton Corporate Finance do not represent forecasts by Grant Thornton Corporate Finance but are intended to reflect the assumptions that could reasonably be adopted by industry participants in their pricing of resources assets and companies.

The sources for the coal prices are denominated in US dollars and are on a nominal basis and real basis (i.e. inclusive of inflation expectations). We have re-expressed the nominal US dollar denominated commodity prices into real Canadian dollar denominated terms having regards to the exchange rate assumptions discussed below and the future inflation discussed below.

In our assessment of the coal prices, we have considered the following:

 Forecasts released by Consensus Economics Inc, “Energy & Metals Forecasts’ dated February 2019.

 Consensus forecasts released by Capital IQ.

 Various brokers’ reports.

 Movement in spot and forward prices.

Based on the analysis and discussion above, the following table summarises the real US-dollar denominated prices for the average HCC prices adopted in our valuation assessment.

HCC Forecast prices US$/t real CY19 CY20 CY21 CY22 CY23 Long term Consensus HCC coal price forecast1

Average 181.7 161.3 154.9 150.9 149.7 135.0 Median 180.0 157.5 155.0 152.9 145.0 135.6 GT long term price range assumption2

Low price 132.5

High price 137.5 Sources: KPMG quarterly summary report Dec-18/Jan-19, Energy & Metals Consensus Forecast Jan-19, GTCF analysis, other brokers Notes: (1) Where brokers have expressed coal price forecast in nominal terms, we have converted into real terms using an inflation assumption of 2.5% per annum; (2) The GT long term price range is computed by adding and subtracting US$2.5 from the brokers’ average forecast

Set out in the following graph, we have plotted our adopted real coal price range against the historical coal price (real) for the last 15 years.

Historical and forecast HCC coal price

275

250

225

200

175

150

125 GT selected lon term price range US$/t (real) US$/t US$132.5 - US$137.5 100

0 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY23 CY24 CY25 CY26 CY27 CY28 Historical price (yearly average) Forecast (yearly) Forecast (long term) Source: KPMG quarterly summary report Dec-18/Jan-19, Energy & Metals Consensus Forecast Jan-19, GTCF analysis, other brokers

Exchange Rates

The following table summarises our assessment of the forecast real exchange rates adopted in our valuation assessment to convert the US$ coal prices into C$:

US$/C$ exchange rate forecast (nominal) Broker Report date 01-Jun-19 01-Sep-19 01-Dec-19 01-Mar-20 01-Jun-20 01-Sep-20 01-Dec-20 Long term (real) Broker 1 01-Mar-19 1.27 1.27 1.28 1.3 1.31 Na Na Na Broker 2 01-Feb-19 1.34 1.33 1.33 1.34 1.33 1.31 1.3 Na Broker 3 01-Feb-19 1.31 1.27 1.27 1.25 1.24 1.23 1.22 Na Broker 4 01-Jan-19 1.34 1.33 1.32 1.31 1.3 Na Na Na Broker 5 01-Feb-19 1.31 1.32 1.34 1.34 1.35 1.36 1.36 Na Average 1.31 1.30 1.31 1.31 1.31 1.30 1.29 Na 1 GT US$/C$ long term assumption 1.30 Source: Publicly available information released from financial institutions Note: (1) We have applied the Purchase Price Parity approach to account for the respective inflation rates of Canada and USA in order to derive the real exchange rate.

In our assessment of the exchange rate, we have considered various broker reports, consensus estimates provided by Capital IQ and movement in spot and forward exchange rates.

The graph below illustrates the historical and forecast US$ to C$ exchange rate.

Historical and forecast US$/C$ exchange rate

1.5

1.4

1.3

1.2 US$/C$

1.1

0.9 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

Historical US$/CA$ Brokers' forecast average GT adopted exchange rate US$/C$ 1.30 Source: Capital IQ and GTCF analysis

As discussed in section 5.1, the Grassy Mountain Model has been prepared in C$. We have assessed the C$/A$ exchange rate and applied the selected rate to our C$ equity value as at the Valuation Date. In our assessment we have analysed one month, six month and one year C$/A$ exchange averages and have selected a C$/A$ exchange rate of 1.04.

Historical exchange rate C$/A$

1.15

1.10

1.05 C$/A$ 1.00

0.95

0.90 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Source: S&P Global

Inflation

For the purpose of our valuation assessment, we have adopted a US inflation rate of 2.2% per annum. The cash flows used in our valuation assessment are in real terms.

Discount rate

The cash flow assumptions associated with the Grassy Mountain Project have been prepared on a real, ungeared and post-tax basis. Accordingly, Grant Thornton Corporate Finance has applied a real, post-tax Weighted Average Cost of Capital (“WACC”) of 10.7%49. Refer to Appendix F for further details.

The selected discount rate reflects the fact that the Grassy Mountain Project is a greenfield development, with permitting still pending and technical and execution risks.

5.2.2 Exploration properties

MBGS has separately assessed the fair market value of RRL’s explorations assets based on the comparable transaction methodology. The exploration target of Adanac and Lynx Creek has been updated to reflect the significant reduction of the land available for exploration as a result of the Castle Provincial Park.

MBGS has valued the exploration assets between A$3.2 million and A$24.0 million with a preferred value of A$12.0 million which result in C$11.5 million at the selected exchange rate of C$/A$ 1.04.Refer to Appendix K for details.

5.2.3 Corporate costs

The net present value of the future corporate costs is included in the Financial Model. These costs are mainly associated with its offices in Australia and Canada and administration costs incurred by RRL to run its operations.

49 Our assessed discount rate range is between 10.2% and 11.2%.

5.2.4 Net debt

Based on the reviewed balance sheet as at 31 January 2019, RRL has a net cash position of US$68.8 (C$89.7 million) plus C$3.0 million cash from the exercise of the RRL Options and minus C$5 million transaction cost.

5.2.5 Options

As discussed in Section 3.5, RRL has 2,495,000 RRL Options on issue. We have valued RRL on a fully diluted basis assuming that the RRL Options are exercised before the Offer.

5.2.6 Sensitivity analysis

It should be noted that the enterprise value of RRL could vary materially based on changes in certain key assumptions in particular in relation to: coal prices and exchange rates; and operating and capital costs. Accordingly, we have conducted certain sensitivity analysis below to highlight the impact on the value of RRL based on the DCF Method caused by movements in these key assumptions.

Grassy Mountain Project Fair vaue of Grassy Mountain % change on fair value of Project Grassy Mountain Project

C$'000 Low High Low High Management Case (Permits obtained on March 2020) 793,340 904,130

Discount rate 2% decrease 1,053,586 1,188,340 32.8% 31.4% 1% decrease 914,661 1,036,637 15.3% 14.7% 1% increase 687,023 787,982 (13.4% ) (12.8% ) 2% increase 593,543 685,831 (25.2% ) (24.1% )

Hard coking coal price 5% decrease 643,667 754,551 (18.9% ) (16.5% ) 2.5% decrease 718,520 829,341 (9.4% ) (8.3% ) 2.5% increase 868,108 871,840 9.4% (3.6% ) 5% increase 942,916 942,443 18.9% 4.2%

Capex 15% decrease 853,714 964,422 7.6% 6.7% 10% decrease 833,589 944,330 5.1% 4.4% 5% decrease 813,464 924,250 2.5% 2.2% 5% increase 773,189 884,001 (2.5% ) (2.2% ) 10% increase 753,042 863,874 (5.1% ) (4.5% ) 15% increase 732,891 843,727 (7.6% ) (6.7% )

Opex 15% decrease 1,015,116 1,125,820 28.0% 24.5% 10% decrease 941,264 1,051,924 18.6% 16.3% 5% decrease 867,282 978,066 9.3% 8.2% 5% increase 719,346 830,168 (9.3% ) (8.2% ) 10% increase 645,309 756,199 (18.7% ) (16.4% ) 15% increase 571,233 682,192 (28.0% ) (24.5% )

Tax rate 4% decrease 849,579 966,367 7.1% 6.9% 2% decrease 821,459 935,248 3.5% 3.4% Source: GTCF analysis We note that the sensitivity on the tax rate has been undertaken to reflect some potential reduction in the tax rate earmarked in Canada but which are yet to be discussed and regulated by Parliament as well as potential reduction or elimination of carbon tax through a future change in government.

These sensitivities do not represent a range of potential equity values per RRL Share, rather they intend to show to the RRL Shareholders the sensitivity of our valuation assessment to changes in certain variables.

5.2.7 Equity value of RRL

Based on the analysis above, we have set out below our valuation assessment of RRL:

Equity value - Management Case (1) Section C$ '000 (except where stated otherwise) Reference Low High Grassy Mountain Project (Mangement Case) (1) 5.2.1 793,340 904,130 Exploration Assets 5.2.2 11,538 11,538 Total Enterprise Value of Riversdale (control basis) 804,879 915,668 Add: Net cash as at 31 January 2019 (2) 5.2.4 84,770 84,770

Add: cash from exercise of the RRL options 5.2.5 2,996 2,996 Equity value of Riversdale pre-money (control basis) 892,644 1,003,434

Source: GTCF analysis Note: (1) Permitting obtained in March 2020 (Management’s best estimate) Note: (2) It includes C$5 million of transaction costs

Our valuation assessment of RRL outlined above is on an unfunded basis. RRL is required to raise funds of approximately C$850 million or US$650 million50 in order to develop the Grassy Mountain Project and generate the free cash flows included in our valuation assessment in a timely manner.

RG 111 specifies that funding requirements for a target that is not in financial distress (e.g. capital that is required to develop a project) should generally be taken into account when determining the fair value of the target securities. Such funding requirements will generally be relevant to determining the value of the target securities assuming knowledgeable and willing, but not anxious, parties. RG111 indicates that the expert may need to expressly determine to take funding requirements into account when using DCF methodology.

In considering the funding requirements of the Company and the potential impact on the assessed equity value, we have considered that in the second half of 2018, the Company approached a number of project finance providers to fund a component of the construction capital expenditure. Further, on 10 March 2019, RRL signed a mandate with seven banks to assist in the structuring, arrangement and syndication of a US$375 million senior secured loan facility.

Based on the feedback received from the banks, we have outlined below some of the key commercial terms of the expected project finance facility:

 Amount – US$375 million project finance facility plus US$25 fixed asset facility. Based on discussions with the financiers, circa 60% of the overall capital expenditure is expected to be funded with debt. Based on the low cost operations of the Grassy Mountain Project and the current consensus coal price, we are of the opinion that the assumptions above in relation to the proportion of the capital expenditure to be funded with debt is reasonable and sustainable.

 Tenure – between 7 and 8 years.

 Interest rate – margin over the LIBOR.

50 Based on a long term exchange rate of C$1.30 for 1 US$.

The balance of the capital expenditure of C$325 million or US$250 million will be required to be funded by equity. RRL has a number of options as outlined below:

1. A rights issue with existing shareholders and/or a placement with strategic/financial investors or a combination of them.

2. An investment at project level. It is quite common for steel makers in Asia to provide the required capital to develop the project in conjunction with offtake/marketing agreements.

3. A combination of the above together potentially with mezzanine funding to reduce the potential dilution for existing shareholders.

Whilst it is not feasible to predict at this point in time the funding strategy that RRL will adopt for the equity component, it is not unreasonable to assume that any investment at holding company or project level will occur at a discount to our valuation assessment of RRL on a 100% basis.

In order to incorporate the theoretical dilution compared with our valuation assessment of RRL that existing shareholders may suffer from raising the required equity, we have assumed that RRL will raise circa C$325 million or US$250 million via a placement at a price of circa A$2.00 per share.

In order to assess the theoretical issue price, we have considered that the capital raising will only occur after RRL has secured the required permitting and approvals and it is ready to commence construction. Accordingly, the operations of RRL will be de-risked hence, the issue price should be at a premium compared with the highest price of A$1.75 per share paid by Hancock in the second half of 2018.

By applying the assumptions outlined above to the future raising, it does result in a dilution discount between 10% and 15% for the existing RRL Shareholders which is also equivalent to apply a specific risk premium of 2% in our assessment of the discount rate.

We have set out in the table below our valuation assessment incorporating the dilution discount.

Equity value - Management Case (1) Section C$ '000 (except where stated otherwise) Reference Low High Equity value of Riversdale pre-money (control basis) 5.2.7 892,644 1,003,434 Estimated dilution discount from future equity raising 5.2.7 15.0% 10.0% Equity value of Riversdale post-money (control basis) 758,748 903,090 Number of outstanding shares (2) ('000s) 3.5 297,647 297,647 Value per share (control basis) (C$ per Share) 2.55 3.03 Exchange Rate C$/A$ 5.1.2.6 1.04 1.04 Value per share (control basis) (A$ per Share) 2.65 3.16 Source: GTCF analysis Note: (1) Permitting obtained in March 2020 (Management’s best estimate) Note (2) It includes 295,151,613 Riversdale Shares and 2,495,000 Riversdale Options

As discussed before, the Grassy Mountain Project is in the process of obtaining the required permits to commence construction. Management has assumed that permits will be granted in the first quarter of 2020 (Management’s best estimate) with construction commencing immediately after.

Given that this process is substantially outside the control and RRL, the fact that the Company has experienced delays in the past and considering that limited construction activity can be carried out during 52

the bird nesting season between 15 April 2020 and 15 August 2020, in our assessment of the valuation range, we have also taken into account the value per share of RRL if permitting is delayed by three months, six months or nine months. We have set out our calculations in the table below.

Valuation of Riversdale - Based on different permitting granting dates A$ per share Low High Mangement Case (permits obtained in March 2020) 2.65 3.16 Permits delayed by 3 months 2.59 3.08 Permits delayed by 6 months 2.53 3.01 Permits delayed by 9 months 2.48 2.94 Overall assessed valuation range (average) 2.56 3.05 Source: GTCF analysis Note: The dilution percentage has been kept at the assessed level under the Management Case

As set out in the table above, we have assessed the fair market value per share of RRL on a control and 100% basis between A$2.56 and A$3.05.

5.3 Valuation cross check – Resource multiples

We have considered the reasonableness of our RRL valuation with reference to the SOP having regard to the M&I Resource Multiple (“Resource Multiple” or “Resources”) observed for listed comparable companies and comparable transactions.

We have set out in the table below the Resource Multiples implied in our DCF valuation:

Implied Resources and Reserve Multiple Section C$ million (except where stated otherwise) Reference Low High Enterprise value - Grassy Mountain Project after dilution discount 1 659 804 Exchange Rate C$/A$ 5.2.1.6 1.04 1.04 Enterprise value - Grassy Mountain Project (A$ million after dilution discount) 686 836 Measured and indicated resources (Mt) 3.2.1 195 195 Measured and indicated resources multiple (A$/Mt) 3.5x 4.3x Sources: RRL Management, GTCF analysis Note 1: Assessed by deducting the C$ value of the dilution discount from the net present value of the Grassy Mountain Project.

Resource Multiples can vary significantly between peers and comparable transactions due to varying stages of development, size of the deposit, economic viability of extraction, easy access to infrastructure, capital/ operating costs and geotechnical factors of the deposit. We have examined these factors in our assessment of the comparable companies and transactions to the extent available.

We have considered a range of comparable companies and transactions focussing on assets at various stages of development i.e. Exploration stage, Development stage and Production stage. However, we note that there is a paucity of listed companies focussing on premium HCC projects in development and construction phase in regions like Australia or North America, which are among the largest hard coking coal producing regions in the world. Accordingly, the listed comparable companies and comparable transactions offer more directional evidence to test the reasonableness of the Resource Multiple implied in the DCF assessment rather than empirical evidence of the Resource Multiple applicable to the Grassy Mountain Project.

5.3.1 Resource Multiples of listed peers and comparable transactions

When considering the Enterprise Value (“EV”) to Resource Multiples for the listed comparable companies, we note that they are calculated based on the market price for minority or portfolio share holdings whereas the comparable transactions often reflect a control value. We have also calculated the net resources of each company reflecting their ownership interest in the projects.

Because of the diverse assets base, locations, status of advancement of the projects of the listed peers and comparable transactions, we have adopted the following principles in the calculation of the Resource Multiple:

 We have relied on the Measured and Indicated resource base for most entities. However, some development- and production-stage assets in our peer group have a mine life of greater than 25 years. For these assets, we have only adopted the resources expected to be exploited over 25 years of production period (i.e. Adjusted Resources Multiple), as in our opinion a pool of potential purchasers will attribute limited/no value to the cash flows beyond 25 years of production as the net present value impact is negligible.

 We have not included in our assessment of the resource base of the peers group the resources of early stage exploration assets, since these have a longer time to production and typically provide lesser information/ certainty about production volumes and mine life. Some of these assets are also in stranded location (i.e. Surat Basin) with no infrastructure around them and accordingly, we have assumed that their resource base is not particularly valuable. We have however considered in our assessment prospective project in the development phase51.

Our assessment of comparable companies’ Adjusted Resource Multiples is set out below:

Listed comparable companies – Adjusted Resource Multiples (1)

Development and exploration companies Production companies 7.0x

6.0x 5.54x 4.92x 5.0x Riversdale Resources multiple range 3.5x - 4.3x 4.22x 4.0x

3.37x A$/t 3.0x 2.21x 2.50x 2.0x

1.0x 0.62x 0.11x 0.24x 0.29x 0.0x Australian Allegiance Aspire Mining Jameson Coronado Stanmore Whitehaven Yancoal New Hope Bathurst Pacific Coal Coal Limited Limited Resources Global Coal Limited Coal Limited Australia Corporation resources Limited Resources Limited limited % Metallurgical coal¹ % Thermal coal

Sources: S&P Global and GTCF analysis Note (1) We note that our calculation of the Adjusted Resource is for our valuation purposes only and does not attempt to reflect or estimate a reported coal equivalency under JORC Code 2012.

In addition to the above, we have also assessed the Adjusted Resource Multiples of the comparable transactions, which are set out below:

51 For this purpose, we consider an asset to be at development-stage if a feasibility study exists/ is currently well advanced, the asset has JORC- defined resources/ reserves, high-level details of expected production, and the time to production is between 0-5 years.

Comparable transactions – Adjusted Resource Multiples (1)

Development and exploration companies Production companies 22.0x 195 20.0x 18.0x 190 16.0x 185 14.0x 12.0x 180 10.0x 8.0x 175

EV/Adjusted resources 6.0x Riversdale Resources Assessed multiple range 3.5x - 4.3x HCC HCC Benchmarkprice(US$) 4.0x 170 2.0x 0.0x 165 Crown Mountain Tenas Isaac Downs Winchester South Eagle Downs Hail Creek and HVO and MTW Kestrel mine Valeria Jun-18 Nov-18 Jun-18 Mar-18 May-18 Mar-18 Jan-17 Mar-18 % Metallurgical coal % Thermal coal HCC Benchmark prices Sources: S&P Global and GTCF analysis Refer to Appendix D for details of the comparable transactions. (A) Metallurgical coal comprises HCC, SHCC, SSCC and PCI coal. (B) Where available we have based the split on resources, otherwise we have relied on the latest break up of production. Note (1) We note that our calculation of the Adjusted Resource is for our valuation purposes only and does not attempt to reflect or estimate a reported coal equivalency under JORC Code 2012.

We have included in the graphs above some development/exploration companies which are comparable in terms of the location of the project and type of coal, however we have not relied on them for the purpose of our analysis as the attributes of their projects make them not particularly comparable to the Grassy Mountain Project.

Despite being a development-stage asset, the Resource Multiples on a control basis implied in our DCF valuation of Riversdale are in line with the Resource Multiples of the listed peers (minority basis). We do not consider this to be unreasonable given the following:

 Most production companies in our group of listed peers produce mainly thermal coal. Thermal coal differs in quality and usage from metallurgical coals, and is also priced at a substantial discount to the hard coking coal contract price while having a similar cash cost of production. In addition, the Grassy Mountain Project is expected to be in the lowest cost quartile cost producers enhancing the premium to the listed peers focussed on thermal coal.

 Our implied Resource Multiple is at a premium to Stanmore Coal Limited’s multiple which is a dominant metallurgical coal producer. We do not believe this to be unreasonable due to the following:

- Stanmore currently produces SSCC and thermal coal (80/20 split in H1FY19) and it is only expected to commence production of SHCC in 2 - 3 years from the Isaac Downs Project. SSCC and SHCC are both priced at a discount to hard coking coal price. Conversely, Riversdale is expected to produce premium hard coking coal in 2 – 3 years, priced close to the benchmark.

- Stanmore is in the ramp-up phase of its operations and its all-in cash cost is significantly higher than RRL (A$119/t including royalty).

- Circa 40% of the M&I Resources of the Isaac Plain Complex are in relation to Isaac Downs and Isaac South which are development projects in a similar phase of development of the Grassy Mountain but of inferior quality in relation to the type of coal and quality of coal. On the flip side, they are brownfield developments rather than greenfield like the Grassy Mountain.

 Our implied Resource Multiple is at a premium to Coronado’s multiple which is a dominant metallurgical coal producer. We do not believe this to be unreasonable due to the following:

- The Curragh mine currently supplies 2.5-3.5 Mtpa of thermal coal to Stanwell at a loss, and is contracted to do so up to FY27. Post FY27, 2 Mtpa will be supplied for 10 years at a discount to the prevailing thermal coal price. In our view, these legacy contracts reduce the attractiveness of the company’s earnings profile.

- The company also has another development lease, MDL162 however it is early stage development and additional capital cost of circa A$160 million is required to be spent in order to advance the project. Coronado is currently investigating the optimal product mix.

- Premium hard coking coal exported from Curragh mine in Australia fetches discounts to the benchmark ranging from 6-16%, while other Australian and US assets held by Coronado also face a range of discounts to the respective benchmarks for each type of coal produced.

- A significant proportion of the company’s product mix comprises of coal other than hard coking coal.

In relation to the comparable transactions in the development and exploration categories, we note the following:

 Isaac Downs – Stanmore acquired it from Peabody in September 2018 for A$30 million which implies a resource multiple of A$1.4/t however shortly after that, in December 2018, an independent expert report commissioned by the company valued the Isaac Downs project at circa A$180 million which implies a resource multiple of A$8.5/t. In addition, Isaac Downs has a short life operations compared with the Grassy Mountain Project and it is expected to produce an inferior SHCC product.

 Eagle Downs Project – the project experienced significant challenges since Baosteel/Aurizon bought it from Aquila Resources in 2014 due to the significant capital expenditure required for the underground mining operations with a large component of the resources at a depth greater than 700 metres. After the acquisition by South32 of a 50% interest plus operator rights for circa US$133 million, South32 has commenced a final feasibility study to seek to optimise the mine’s design and development (the project was put in care and maintenance in 2015). Given the uncertainty in relation to the viability of the project, we do not consider it as particularly comparable to the Grassy Mountain Project.

 Tenas and Crown Mountain – they are early stage assets held by Allegiance and Jameson Resources and accordingly not considered particularly comparable, expect for the location and potentially type of coal.

 Winchester South – this is a large greenfield development for hard coking coal however the project is significantly earlier stage than the Grassy Mountain Project. Whitehaven is current undertaking approval and studying process.

In relation to the comparable transactions in the production categories, we note that our valuation assessment is at a small discount to the HVO and MTW transaction which represents the acquisition of the former Coal and Allied assets of Rio Tinto by Yancoal. These assets mainly produce thermal coal. Similarly to our discussion on the listed peers, we do not believe it to be unreasonable for a pure HCC

development company like RRL with the quality attributes of the Grassy Mountain Project to trade on or around the trading prices of producers of lower quality coal.

The acquisition of Hail Creek and Valeria represented a sale of predominantly thermal coal resources, and was undertaken at 1.8x the Measured and Indicated Resources. Hail Creek produced about two-thirds hard coking coal and one-third thermal coal (total JORC resources 601Mt) whilst Valeria was a thermal coal deposit in the exploration stage with total JORC resources of 762Mt.

The Kestrel Mine transaction occurred at a particularly high Resource Multiple and it was the outcome of a highly competitive process. The attributes of the Kestrel Mine are fairly similar to the expected ones of the Grassy Mountain Project once into production. In particular, we note that the Kestrel Mine has a long life, it produced in 2017 4.25 Mt of hard coking coal and it has marketable reserves of 146 Mt and resources of 241 Mt. In addition, it produces a high quality metallurgical coal with relatively low production costs. In our opinion, the Resource Multiple paid for this transaction outlines the market appetite for low cost, large scale high quality coking coal assets and the option value embedded in the coal prices as discussed in the executive summary.

5.3.2 Conclusion on implied Resource Multiples

As discussed above, the listed comparable companies and comparable transactions offer more directional evidence to test the reasonableness of the Resource Multiple implied in the DCF assessment rather than empirical evidence of the Resource Multiple applicable to the Grassy Mountain Project.

We consider the Resource Multiple implied in the DCF value for the Grassy Mountain Project is not unreasonable considering the following:

 Several coal production companies in our group of listed peers produce mainly thermal coal. We do not believe it is unreasonable for a pure HCC development company to trade substantially in line with lower quality coal producers.

 We have included in our analysis some development/exploration companies which are comparable in terms of the location of the project and type of coal, however we have not relied on them for the purpose of our analysis as their attributes make them not particularly comparable to the Grassy Mountain Project.

 The Resource Multiples implied in our valuation assessment is at a significant discount to the Resource Multiple for the Kestrel Mine transaction. The Grassy Mountain Project once it is developed into a producing assets, it is expected to have similar attributes to the Kestrel Mine.

6 Sources of information, disclaimer and consents

6.1 Sources of information

In preparing this report Grant Thornton Corporate Finance has used various sources of information, including:

 Draft Target’s Statement.

 Annual and Semi-annual reports/ consolidated accounts of RRL for FY14 to FY18.

 Management Projections.

 RRL Limited Monthly asset reports

 GSA summary

 Press releases and announcements by RRL on the ASX.

 S&P Global.

 IBISWorld.

 Various industry and broker reports.

 Other publicly available information.

In preparing this report, Grant Thornton Corporate Finance has also held discussions with, and obtained information from, Management of RRL and its advisers.

6.2 Limitations and reliance on information

This report and opinion is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

Grant Thornton Corporate Finance has prepared this report on the basis of financial and other information provided by the Company, and publicly available information. Grant Thornton Corporate Finance has considered and relied upon this information. Grant Thornton Corporate Finance has no reason to believe that any information supplied was false or that any material information has been withheld. Grant Thornton Corporate Finance has evaluated the information provided by the Company through inquiry, analysis and review, and nothing has come to our attention to indicate the information provided was materially misstated or would not afford reasonable grounds upon which to base our report. Nothing in this report should be taken to imply that Grant Thornton Corporate Finance has audited any information supplied to us, or has in any way carried out an audit on the books of accounts or other records of the Company.

This report has been prepared to assist the Directors of RRL in advising the RRL Shareholders in relation to the Hancock Offer. This report should not be used for any other purpose. In particular, it is not intended that this report should be used for any purpose other than as an expression of Grant Thornton Corporate Finance’s opinion as to whether the Hancock Offer is fair and reasonable to the RRL Shareholders.

RRL has indemnified Grant Thornton Corporate Finance, its affiliated companies and their respective officers and employees, who may be involved in or in any way associated with the performance of services contemplated by our engagement letter, against any and all losses, claims, damages and liabilities arising out of or related to the performance of those services whether by reason of their negligence or otherwise, excepting gross negligence and wilful misconduct, and which arise from reliance on information provided 58

by the Company, which the Company knew or should have known to be false and/or reliance on information, which was material information the Company had in its possession and which the Company knew or should have known to be material and which did not provide to Grant Thornton Corporate Finance. The Company will reimburse any indemnified party for all expenses (including without limitation, legal expenses) on a full indemnity basis as they are incurred

6.3 Consents

Grant Thornton Corporate Finance consents to the issuing of this report in the form and context in which it is included in the Scheme Booklet to be sent to the RRL Shareholders. Neither the whole nor part of this report nor any reference thereto may be included in or with or attached to any other document, resolution, letter or statement without the prior written consent of Grant Thornton Corporate Finance as to the form and content in which it appears.

Appendix A – Valuation methodologies

Capitalisation of future maintainable earnings

The capitalisation of future maintainable earnings multiplied by appropriate earnings multiple is a suitable valuation method for businesses that are expected to trade profitably into the foreseeable future. Maintainable earnings are the assessed sustainable profits that can be derived by a company’s business and excludes any abnormal or “one off” profits or losses.

This approach involves a review of the multiples at which shares in listed companies in the same industry sector trade on the share market. These multiples give an indication of the price payable by portfolio investors for the acquisition of a parcel shareholding in the company.

Discounted future cash flows

An analysis of the net present value of forecast cash flows or DCF is a valuation technique based on the premise that the value of the business is the present value of its future cash flows. This technique is particularly suited to a business with a finite life. In applying this method, the expected level of future cash flows are discounted by an appropriate discount rate based on the weighted average cost of capital. The cost of equity capital, being a component of the WACC, is estimated using the Capital Asset Pricing Model.

Predicting future cash flows is a complex exercise requiring assumptions as to the future direction of the company, growth rates, operating and capital expenditure and numerous other factors. An application of this method generally requires cash flow forecasts for a minimum of five years.

Orderly realisation of assets

The amount that would be distributed to shareholders on an orderly realisation of assets is based on the assumption that a company is liquidated with the funds realised from the sale of its assets, after payment of all liabilities, including realisation costs and taxation charges that arise, being distributed to shareholders.

Market value of quoted securities

Market value is the price per issued share as quoted on the ASX or other recognised securities exchange. The share market price would, prima facie, constitute the market value of the shares of a publicly traded company, although such market price usually reflects the price paid for a minority holding or small parcel of shares, and does not reflect the market value offering control to the acquirer.

Comparable market transactions

The comparable transactions method is the value of similar assets established through comparative transactions to which is added the realisable value of surplus assets. The comparable transactions method uses similar or comparative transactions to establish a value for the current transaction.

Comparable transactions methodology involves applying multiples extracted from the market transaction price of similar assets to the equivalent assets and earnings of the company. The risk attached to this valuation methodology is that in many cases, the relevant transactions contain features that are unique to that transaction and it is often difficult to establish sufficient detail of all the material factors that contributed to the transaction price.

Appendix B – Comparable companies - Adjusted Resource Multiple

Trading resources multiples of listed companies¹ Attributable tonnage³ EV Multiples⁵ Enterprise v alue Location of Time to M+I R AR⁴ M+I R AR⁴ Company A$ million flagship asset Stage Ty pe of Coal² Production (Mt) (Mt) (Mt) (Mt) (Mt) (Mt) Tier 1 - Development and pre-development companies Allegiance Coal Limited 24.3 BC, Canada PFS M ~2 99.68 50.32 99.68 0.24x 0.48x 0.24x Aspire Mining Limited 78.9 Mongolia DFS H ~3 273.19 255.00 273.19 0.29x 0.31x 0.29x Australian Pacific Coal 79.6 NSW, Australia PFS T ~1 719.00 235.00 719.00 0.11x 0.34x 0.11x Jameson Resources Limited 38.7 BC, Canada PFS H/PCI ~3 62.02 46.20 62.02 0.62x 0.84x 0.62x Average 0.32x 0.49x 0.32x Median 0.27x 0.41x 0.27x Tier 2 - Production companies Bathurst resources limited 210.9 New Zealand Producing H/M na 86.82 32.59 38.07 2.43x 6.47x 5.54x New Hope Corporation Limited 2,980.0 QLD, Australia Producing T na 1,600.30 629.10 605.40 1.86x 4.74x 4.92x Stanmore Coal Limited 300.1 QLD, Australia Producing T/M na 519.62 52.30 120.10 0.58x 5.74x 2.50x Whitehav en Coal Limited 4,748.5 NSW, Australia Producing T/M/PCI na 2,750.30 790.30 1,408.25 1.73x 6.01x 3.37x Yancoal Australia 8,321.9 NSW, Australia Producing T/M/PCI na 3,186.14 1,033.00 1,972.70 2.61x 8.06x 4.22x Coronado Global Resources 2,744.1 QLD, Australia Producing M/T na 2,314.00 1,084.00 1,242.00 1.19x 2.53x 2.21x Average 1.73x 5.59x 3.79x Median 1.79x 5.87x 3.80x Source: S&P Global, GTCF analysis Notes: (1) Share price as at 12 March 2019; (2) PCI (P), hard coking coal (H), thermal coal (T) and other metallurgical coals (M); (3) Measured and indicated resources (M+I), total reserves (R) and total measurable reserves (MR); (4) Assessed Production Resources (ARP) represents life of mine production and is calculated as a product of ROM (mtpa), Mine Life (years) and the respective ownership percentage.

When considering the Enterprise Value (“EV”) to Adjusted Resource Multiples, we note the following with regard to the Resources (M&I) number used in our evaluation:

 Allegiance Coal Limited: We have only considered the Resources of the Tenas project (99.68 Mt) considering it is the company’s most advanced project, with feasibility studies completed.

 Aspire Mining Limited: We have considered the Resources of all current projects including the Nuurstei and Ovoot project, with a total resource base of 273.1 Mt.

 Australian Pacific Coal: We have considered the Resources of the Dartbrook asset as it is the company’s most progressed asset with Resources estimates. We have taken into account the total M&I Resources of 719 Mt attributable to Australian Pacific Coal’s 50% stake.

 Jameson Resources Limited: We have considered the Resources of the Crown Mountain Project as it is the company’s most progressed asset with Resources estimates. We have taken into account the total M&I Resources of 62.02 Mt attributable to Jameson Resources Limited 83% stake.

 Bathurst Resources Limited: We have considered the total Resources (21.82 Mt) of all currently operating projects including Stockton, Rotowaro, Maramarua, Takitimu and Canterbury attributable52 to Bathurst Resources. Of the exploration and development stage assets we have only considered the Buller Project, that the company may possibly develop in the short to medium term. For the Buller Project, we have relied on the company’s and analysts’ guidance and assumed a 25 year life with 650 ktpa RoM, totalling to LoM production of 16 Mt.

 New Hope Corporation: We have only considered the Resources of producing assets including the New Acland and Bengalla project53 with total Resources of 605.4 Mt.

 Stanmore Coal Limited: We have only considered the Resources of the Isaac Plains Complex (120.1 Mt) as the assets is the company’s most progressed asset with some of its mine producing or under development. We have not considered other assets including the Range, Clifford and assets in the Bowen basin as they either have infrastructure issues or the company has not announced any development plans for those particular assets, and some of the assets are still in the exploration stage with a significant amount of Resources sitting in the inferred category.

 Whitehaven Coal Limited: We have considered Resources of both producing and underdevelopment assets. Under production assets we have considered Maules Creek, Narrabri, Tarrawonga, Rocglen and Werris Creek and taken a total Resource base of 1,014.50 Mt attributable54 to Whitehaven Coal Limited. In development assets we have considered the Vickery and Winchester projects, assuming 25 year mine life for both projects and 4.5 mtpa RoM for the Vickery project and 11.25 mtpa RoM for the Winchester project respectively based on the company’s guidance.

 Yancoal Australia: We have considered all the attributable55 Resources (1,515.20 Mt) of the assets with a mine life less than 25 years including Mount Thorley Warkworth, Moolarben and Middlemount. For assets with a mine life greater than 25 years we have assumed a 25 year mine life and calculated

52 Bathurst Resources Limited owns a 65% stake in Stockton, Rotowaro and Maramarua. They own 100% of Takitimu and Canterbury. 53 New Hope Corporation own 40% of Bengalla. 54 Whitehaven Coal Limited own 75% of Maules Creek and 70% of Narrabri. All other assets are on a 100% basis. 55 Yancoal Australia owns 83% of Mount Thorley Warkworth, 85% of Moolarben and 50% of Middlemount.

the LoM production using their respective annual RoM guidance and ownership percentage56. These assets includes the Hunter Valley Operations, Stratford Duralie and Yarrabee assuming annual RoM of 20 mtpa, 4.6 mtpa and 3.5 mtpa respectively.

 Coronado Global Resources: We have considered all of the Resources of the Curragh asset (786 Mt) including both the Resources from the SRA with Stanwell (c.318 Mt) and the Resources from the recently acquired MDL 162 tenement (c.238). We have also considered all of the Resources of the Buchanan project of 251 Mt. However, due to the long life of the Logan (34 years) and Greenbrier (57 years), we have assumed a 25 year life and used the LoM production instead of total Resources. We have relied on company’s guidance and adopted a RoM of 7 mtpa for Logan and 1.2 mtpa for Greenbrier respectively.

56 Yancoal Australia owns 51% of the Hunter Valley Operations, and 100% of both Stratford Duralie and Yarrabee projects.

Appendix C – Comparable companies descriptions

Company Description Allegiance Coal Allegiance Coal Limited engages in the acquisition, exploration, and development of metallurgical coal tenements. Its principal project is the Limited Telkwa metallurgical coal project located in the north west of British Columbia, Canada. The company was incorporated in 2011 and is based in Sydney, Australia.

Aspire Mining Limited, a metallurgical coal and infrastructure company, explores for and develops mineral properties in Mongolia. The company primarily holds 100% interest in the Ovoot coking coal project located in Northern Mongolia. It also holds 90% interest in the Aspire Mining Nuurstei coking coal project, as well as builds and operates rail from the town of Erdenet to the Ovoot Coking Coal Railway in northern Limited Mongolia. Aspire Mining Limited is based in Perth, Australia.

Australian Pacific Coal Limited acquires and develops thermal and metallurgical coal prospects in Australia. The company's Queensland Australian Pacific portfolio consists of 11 coal tenements comprising 7 owned exploration permits; 1 mineral development license; and 3 joint venture Coal exploration permits. Australian Pacific Coal Limited is based in Brisbane, Australia.

Jameson Resources Limited explores for and develops coal projects in Western Canada. The company explores for coking and thermal Jameson coal. Its flagship project is the 90% interest in the Crown Mountain project with six granted coal licenses covering an area of 3,562 hectares Resources located in the Elk Valley coal field in south eastern British Columbia. The company was founded in 2007 and is headquartered in West Limited Perth, Australia.

Bathurst Resources Limited, together with its subsidiaries, engages in the exploration, development, and production of coal in New Zealand. The company holds interests in the Canterbury Coal mine located in the west of Christchurch; Stockton mine located in the north of Westport; and Takitimu mine located in the Northwest of Invercargill. It also owns Maramarua and Rotowaro mines in the Waikato Bathurst region; and the Cascade and Escarpment mines near Westport. In addition, the company exports coal. It primarily serves steel resources limited manufacturers. The company was formerly known as Bathurst Resources (New Zealand) Limited and changed its name to Bathurst Resources Limited in December 2013. Bathurst Resources Limited was incorporated in 2013 and is based in Wellington, New Zealand.

New Hope Corporation Limited explores, develops, produces, and processes coal, and oil and gas properties. It operates through three segments: Coal Mining in Queensland, Coal mining in New South Wales, and Oil and Gas. The company has interests in two open cut coal mines in South East Queensland that produce thermal coal, including the New Acland project, which is located in north-west of Oakey, Queensland; and the Jeebropilly coal mine located in the West Moreton region near Ipswich. It also holds interests in oil projects and New Hope exploration permits based in the Eromanga Basin of south west Queensland; and two onshore exploration permits in the Otway Basin of Corporation south western Victoria. In addition, the company is involved in the marketing and logistics activities; and port operation and agriculture Limited activities. It serves in Japan, Taiwan, China, Chile, Korea, Indonesia, Vietnam, India, Australia, and internationally. The company was founded in 1952 and is based in Brookwater, Australia. New Hope Corporation Limited is a subsidiary of Washington H. Soul Pattinson and Company Limited.

Stanmore Coal Limited explores, produces, and sells metallurgical and thermal coal in Australia. It holds interest in the Isaac Plains, Isaac Stanmore Coal Downs, Belview, The Range, Lilyvale, Mackenzie, Tennyson, and Clifford projects in the Bowen and Surat basins of Queensland. The Limited company also exports its products. Stanmore Coal Limited was founded in 2009 and is headquartered in Brisbane, Australia.

Whitehaven Coal Limited develops and operates coal mines in New South Wales. The company operates through two segments, Open Cut Operations and Underground Operations. It operates six mines in North West New South Wales; five open cut mines at Maules Creek, Tarrawonga, Rocglen, Werris Creek, and Sunnyside; and one underground mine at Narrabri. The company offers thermal coal and Whitehaven Coal metallurgical coal used in the production of steel. As of August 9, 2018, it had 985 million tons of recoverable coal reserves and 885 million Limited tons of marketable coal reserves. The company sells its coal primarily in Japan, Taiwan, Korea, India, China, Malaysia, Indonesia, Vietnam, the Philippines, Chile, Australia, and internationally. Whitehaven Coal Limited was founded in 1999 and is headquartered in Sydney, Australia.

Yancoal Australia Ltd Engages in the exploration, development, production, and marketing of metallurgical and thermal coal in Japan, Singapore, China, South Korea, Taiwan, Thailand, Australia, and internationally. It owns 81% interests in the Moolarben coal mine located in the Western Coalfields of New South Wales; 100% interests in the Stratford Duralie mines located within the New South Wales Gloucester Basin; 100% interests in the Yarrabee mine located to the northeast of Blackwater in Central Queensland’s Bowen Basin; 50% Yancoal Australia interests in the Middlemount mine located to the north-east of Emerald in Queensland's Bowen Basin; and 80% interests in the Mount Thorley mine and 84.5% interests in the Warkworth mine in the Hunter Valley region of New South Wales. It also manages five other projects in New South Wales, Queensland, and Western Australia. The company was founded in 2004 and is based in Sydney, Australia. Yancoal Australia Ltd is a subsidiary of Yanzhou Coal Mining Company Limited.

Coronado Global Resources Inc., together with its subsidiaries, produces, markets, and exports metallurgical coal. The company operates through four segments: Curragh, Buchanan, Logan, and Greenbrier. It owns a portfolio of operating mines and development projects, Coronado Global including the Curragh mine complex located in the Bowen Basin of Queensland, Australia; and the Buchanan, Logan, and Greenbrier mine Resources complexes located in the Central Appalachian region in Virginia and West Virginia, the United States. The company provides its products in the United States, India, Japan, Korea, Europe, Australia, Taiwan, China, and Brazil. Coronado Global Resources Inc. was founded in 2011 and is headquartered in Brisbane, Australia. Source: S&P Global

Appendix D – Comparable transactions M + I Total Assessed HCC benchmark Comparable transaction assessment Implied EV Time to Implied EV multiples Resources Reserves production price Date Target Location Bidder Stake (% ) (A$m) Coal type production (yrs) Mt Mt Mt1 M + I Resources Total Reserves Assessed production (US$)2 Tier 1: Exploration Jun-18 Crown Mountain BC, Canada Bathurst Resources Limited 8% 51.19 HCC, PCI 2.5 74.9 55.8 74.9 0.68x 0.92x 0.68x 191.5 Jun-18 Isaac Downs QLD, Australia Stanmore Coal Limited 100% 30.00 SHCC, PCI 3.0 22.3 n/a 22.3 1.35x n/a 1.35x 191.5 Average 1.01x 0.92x 1.01x Median 1.01x 0.92x 1.01x

Tier 2: Development Nov-18 Tenas BC, Canada Allegiance Coal Limited 20% 35.02 SSCC 3.0 36.5 29.1 36.5 0.96x 1.20x 0.96x 191.5 May-18 Eagle Downs QLD, Australia South32 Limited 50% 353.91 HCC 3.0 889.0 n/a 134.7 0.40x n/a 2.63x 191.5 Mar-18 Winchester South QLD, Australia Whitehaven Coal Limited 75% 324.30 HCC, SHCC, SSCC, TC 6.0 224.0 n/a 224.0 1.45x n/a 1.45x 191.5 Average 0.94x 1.20x 1.68x Median 0.96x 1.20x 1.45x

Tier 3: Production Mar-18 Kestrel mine QLD, Australia PT Adaro Energy Tbk; EMR Capital 80% 3,648.66 HCC, TC - 140.0 181.0 175.0 26.06x 20.16x 20.85x 191.5 Mar-18 Hail Creek and Valeria Australia Glencore plc 100% 2,211.02 HCC, TC - 1,251.0 216.0 1,251.0 1.77x 10.24x 1.77x 191.5 Jan-17 HVO and MTW NSW, Australia Yancoal Australia Ltd 82% and 71.2% 3,548.65 HCC - 1,632.0 1,198.0 975.0 3.28x 4.56x 5.76x 170.2 Average 10.37x 11.65x 9.46x Median 3.28x 10.24x 5.76x

Low (overall) 0.01x 0.40x 0.28x Average (overall) 2.55x 5.83x 3.27x Median (overall) 0.82x 4.05x 1.40x High (overall) 26.06x 20.16x 20.85x Source: S&P Global, Publicly available information and GTCF calculations Note: (1) For targets having a mine life of greater than 25 years, we have considered the expected ROM production over 25 years. Accordingly, the M + I resources exceeding the 25-year ROM production have not been considered; (2) Average HCC contract price for calendar year US$191.5/ t, as per Energy & Metals Consensus Forecasts report January 2019.

For most comparable transactions in the table above, our assessed Resource Multiple considers the total Measured and Indicated resources of the asset, and we have applied adjustments to the following assets:

 Eagle Downs: The Eagle Downs mine, upon achieving production, is expected to produce ROM coal of c.259Mt over a mine life of 47-48 years57. We have assessed the Resource Multiple assuming that c.135Mt58 of resources are exploited.

 Kestrel: The Kestrel mine was sold by Rio Tinto in 2018 after a competitive sale process. The asset is one of the largest producers of hard coking coal and thermal coal, with c.15 - 20% of thermal coal produced over the last 3 years. The geotechnical features of the mine are largely better than the Grassy Mountain project, with FOB cost of US$74.3/ t and a mine life of 35 years. For assessing the Resource Multiple, we have considered ROM production of 7-8Mtpa over 25 years.

 HVO and MTW: These represent the former Coal & Allied assets sold to Yancoal in 2017. An independent expert and technical expert appointed at the time of the acquisition valued the mine under various production cases, with the base case involving a mine life of 40 years for HVO and 29 years for MTW, with expected ROM production of 21.2Mtpa and 17.8Mtpa respectively. For assessing the Resource Multiple, we have considered ROM production over 25 years.

57 Based on the independent expert report prepared at the time of the acquisition of Eagle Downs in 2014. 58 259Mt proportionately adjusted for mine life of 25 years

Appendix E – Comparable transaction descriptions

Target Company description Altitude Resources Inc., a junior coal exploration company, engages in the exploration and development of coking coal Palisades coal property properties in northwest Alberta, Canada. It holds interest in the Palisades coal project that consists of six contiguous leases covering an area of 4,600 hectares located in the northwest of Hinton. The company is based in Calgary, Canada. Jameson Resources Limited explores for and develops coal projects in Western Canada. The company explores for coking and thermal coal. Its flagship project is the 90% interest in the Crown Mountain project with six granted coal licenses Crown Mountain covering an area of 3,562 hectares located in the Elk Valley coal field in south eastern British Columbia. The company was founded in 2007 and is headquartered in West Perth, Australia. As of July 31, 2018, Wotonga South Coking Coal Deposit was acquired by Stanmore Coal Limited. Wotonga South Coking Isaac Downs Coal Deposit comprises coal mines. The asset is located in Australia. As of March 28, 2018, Elan Coal Ltd operates as subsidiary of Atrum Coal Limited. Elan Coal Ltd explores and produces Elan Coal Ltd coking coal in Canada. The company offers large hard coking coal and metallurgical coal. Elan Coal Ltd was founded in 2012 and is based in Calgary, Canada. Forbes & Manhattan Inc., Investment Arm acquired Ram River and Scurry Ram coal properties from CONSOL Energy Inc. (NYSE:CNX) for approximately $110 million on December 21, 2012. On closing, cash payment of $55 million was made, out of which $52.5 million was payable to CONSOL Energy. Under the terms of the asset purchase agreement, Forbes & Manhattan shall make additional payments to CONSOL Energy of $25.5 million on or before June 21, 2013 and $24.5 Ram River Coal Corp. million on or before June 21, 2014. CONSOL Energy has retained the right to receive up to $20 million of the second or third cash payments in common shares of Ram River Coal. In a related transaction, Riversdale Resources agreed to acquire interest in other coal assets in Alberta from CONSOL Energy for $24 million. The purchase price is subject to certain conditions. Ram River Coal Corp. was created by Forbes & Manhattan to purchase the coal assets. Capital Investment Partners Pty Limited acted as financial advisor for Forbes & Manhattan Inc. South Australian Coal Ltd. engages in coal and mineral exploration in South Australia. The company owns and operates bituminous coal resource, Lake Phillipson deposit. South Australian Coal Ltd. was formerly known as South Australian Coal South Australian Coal Ltd. Corp. Pty. Ltd. The company was incorporated in 1971 and is based in Fullarton, Australia. As of July 28, 2010, South Australian Coal Ltd. operates as a subsidiary of White Energy Mining Pty Limited. Allegiance Coal Limited engages in the acquisition, exploration, and development of metallurgical coal tenements. Its Tenas principal project is the Telkwa metallurgical coal project located in the north west of British Columbia, Canada. The company was incorporated in 2011 and is based in Sydney, Australia. South32 Limited (ASX:S32) signed a conditional agreement to acquire 50% stake in Eagle Down Metallurgical Coal Project from Aquila Resources Pty Ltd for approximately $130 million on May 29, 2018. The consideration comprises an upfront payment of approximately $106 million upon completion of the acquisition (excluding transaction costs) and a deferred payment of $27 million due three years after completion. A coal price linked production royalty will also be payable and is capped at $80 million. The other 50% interest in the project will continue to be held by Aquila Resources Pty Ltd. South32 Eagle Downs (2018) will assume operatorship of Eagle Down. The acquisition will be funded from the cash reserves of South32. The agreement is conditional on the completion of China BaoWu Steel Group, ultimate parent of Aquila, acquisition of the 50% interest in Eagle Downs that it does not currently own, which is subject to a separate conditions and approvals process. Completion is expected in first half of financial year 2019. Jay Leary, Kate Cahill, Chelsea Herman, Mitchell Tatam and Dean Blumberg of Herbert Smith Freehills acted as legal advisors to South32 Limited. King & Wood Mallesons, Australia Branch acted as legal advisors to Baosteel Resources Australia Pty Ltd., parent of Aquila Resources Pty Ltd. Winchester South coking Winchester South coking coal project comprises coal mining project and is located in Australia. coal project Aquila Resources Pty Ltd explores for, evaluates, and develops coal, iron ore, and manganese resources in Australia. It primarily owns 50% interests in the West Pilbara iron ore project covering an area of 8000 square kilometers located to the Washpool south of Pannawonica in the Pilbara region of Western Australia; and Eagle Downs hard coking coal project located to the south east of Moranbah in Queensland’s Bowen basin region. The company was incorporated in 2000 and is headquartered in Perth, Australia. Aquila Resources Pty Ltd is a subsidiary of Baosteel Resources Australia Pty Limited. Aquila Resources Pty Ltd explores for, evaluates, and develops coal, iron ore, and manganese resources in Australia. It primarily owns 50% interests in the West Pilbara iron ore project covering an area of 8000 square kilometers located to the Eagle Downs (2014) south of Pannawonica in the Pilbara region of Western Australia; and Eagle Downs hard coking coal project located to the south east of Moranbah in Queensland’s Bowen basin region. The company was incorporated in 2000 and is headquartered in Perth, Australia. Aquila Resources Pty Ltd is a subsidiary of Baosteel Resources Australia Pty Limited. Carabella Resources Pty. Ltd., together with its subsidiaries, is engaged in the development and exploration of coal in Australia. The company holds interests in a portfolio of coal exploration tenements covering a total exploration area of approximately 4,200 square kilometers in the coal basins of Queensland. It primarily focuses on the development of Bluff and Grosvenor West Grosvenor West hard coking coal project in the Northern Bowen Basin; and the Bluff PCI project near Blackwater. Carabella Resources Pty. Ltd. was formerly known as Carabella Resources Limited. The company incorporated in 2010 and is based in Brisbane, Australia. As of February 5, 2014, Carabella Resources Pty. Ltd. operates as a subsidiary of Wealth Mining Pty Ltd. Talisman Energy Inc., As of March 8, 2012, Sukunka Hard Coking Coal Deposit of Talisman Energy Inc. was acquired by Xstrata Coal Pty Sukunka Hard Coking Coal Limited. Talisman Energy Inc., Sukunka Hard Coking Coal Deposit comprises coal resource of 236 million tons and is Deposit located in British Columbia, Canada. Shoal Creek Metallurgical As of December 3, 2018, Shoal Creek Metallurgical Coal Mine of Drummond Company, Inc. was acquired by Peabody Coal Mine of Drummond Southeast Mining, LLC. Shoal Creek Metallurgical Coal Mine of Drummond Company, Inc. comprises a low-sulfur Company, Inc. metallurgical coal mine. The asset is located in the United States. As of August 1, 2018, 82% stake in Hail Creek Joint Venture and 71.2% stake in Valeria Coal Development Project was 82% stake in Hail Creek acquired by Glencore Plc. 82% stake in Hail Creek Joint Venture and 71.2% stake in Valeria Coal Development Project Joint Venture and 71.2% represents the combined operations of Hail Creek Joint Venture and Valeria Coal Development Project and in their sale to stake in Valeria Coal Glencore Plc. Hail Creek Joint Venture produces coal from coking coal deposits. Valeria Coal Development Project Development Project comprises coal mining and exploration properties. Hail Creek Joint Venture is based in Australia. The asset is located in

Target Company description Australia. As of December 8, 2017, Cook Resources Mining Pty. Limited, Cook Colliery was acquired by Bounty Mining Limited. Cook Resources Mining Pty. Limited, Cook Colliery comprises coal mining lease, rail loop, washplant, and coal marketing agreement. The asset is located in Australia. Cook Colliery/ Blackwater Blackwater Coal Pty Ltd. and Caledon Coal Pty Limited represents the combined operations of Blackwater Coal Pty Ltd. and Caledron and Caledon Coal Pty Limited in their sale to Bounty Mining Limited. Blackwater Coal Pty Ltd. and Caledon Coal Pty Limited engages in the mining and export of thermal and coking coal. Blackwater Coal Pty Ltd. and Caledon Coal Pty Limited are based in Australia. Coal & Allied Industries Limited engages in mining, preparing, and marketing coal products in Australia. The company holds interests in the Mount Pleasant, Lower Hunter Lands, Bengalla, and Carrington West Wing projects located in Mount Thorley Warkworth, Hunter Valley, and Bengalla areas in the Hunter Valley region of New South Wales. Its products Coal & Allied Industries include thermal coal, semi-soft coking coal, and pulverized injection coal. The company operates in Australia, Asia, and Ltd. Europe. Coal & Allied Industries Limited was incorporated in 1960 and is based in Brisbane, Australia. Coal & Allied Industries Limited operates as a former subsidiary of Rio Tinto Limited. As of September 1, 2017, Coal & Allied Industries Ltd. operates as a subsidiary of Yancoal Australia Ltd. Peace River Coal Inc. develops and operates coal mines. The company was formerly known as Peace River Coal Limited Peace River Coal Inc. Partnership and changed its name to Peace River Coal Inc. in 2011. The company was founded in 2006 and is based in Vancouver, Canada. Peace River Coal Inc. operates as a subsidiary of Anglo American plc. Source: S&P Global

Appendix F – Discount rate

Introduction

The cash flow assumptions associated with RRL have been prepared on a real, ungeared and post-tax basis. Accordingly, we have assessed a range of real post-tax discount rates for the purpose of calculating the net present values of RRL.

The discount rate was determined using the WACC formula. The WACC represents the average of the rates of return required by providers of debt and equity capital to compensate for the time value of money and the perceived risk or uncertainty of the cash flows, weighted in proportion to the market value of the debt and equity capital provided. However, we note that the selection of an appropriate discount rate is ultimately a matter of professional judgment.

Under a classical tax system, the nominal WACC is calculated as follows: D E WACC  R d  1 t R e  D  E D  E

Where:

 Re = the required rate of return on equity capital;

 E = the market value of equity capital;

 D = the market value of debt capital;

 Rd = the required rate of return on debt capital; and

 t = the statutory corporate tax rate.

WACC Inputs

In our assessment of the required rate of return on equity capital, we have observed the global financial markets and adopted the US market as a proxy due to the following:

 Internationally coal is priced and traded in US$, directly impacting the revenue, profitability and operations of RRL.

 The presentation currency of the Company is in US$.

Required rate of return on equity capital

We have used the Capital Asset Pricing Model (“CAPM”), which is commonly used by practitioners, to calculate the required return on equity capital.

The CAPM assumes that an investor holds a large portfolio comprising of risk-free and risky investments. The total risk of an investment comprises of systematic and unsystematic risk. Systematic risk is the variability in an investment’s expected return that relates to general movements in capital markets (such as the share market) while unsystematic risk is the variability that relates to matters that are unsystematic to the investment being valued.

The CAPM assumes that unsystematic risk can be avoided by holding investments as part of a large and well-diversified portfolio and that the investor will only require a rate of return sufficient to compensate for the additional, non-diversifiable systematic risk that the investment brings to the portfolio. Diversification cannot eliminate the systematic risk due to economy-wide factors that are assumed to affect all securities 69

in a similar fashion. Accordingly, whilst investors can eliminate unsystematic risk by diversifying their portfolio, they will seek to be compensated for the non-diversifiable systematic risk by way of a risk premium on the expected return. The extent of this compensation depends on the extent to which the company’s returns are correlated with the market as a whole. The greater the systematic risk faced by investors, the larger the required return on capital will be demanded by investors.

The systematic risk is measured by the investment’s beta. The beta is a measure of the co-variance of the expected returns of the investment with the expected returns on a hypothetical portfolio comprising all investments in the market - it is a measure of the investment’s relative risk.

A risk-free investment has a beta of zero and the market portfolio has a beta of one. The greater the systematic risk of an investment the higher the beta of the investment.

The CAPM assumes that the return required by an investor in respect of an investment will be a combination of the risk-free rate of return and a premium for systematic risk, which is measured by multiplying the beta of the investment by the return earned on the market portfolio in excess of the risk-free rate.

Under the CAPM, the required nominal rate of return on equity (Re) is estimated as follows:

Re  Rf  e Rm  Rf 

Where:

 Rf = risk free rate

 βe = expected equity beta of the investment

 (Rm – Rf) = market risk premium

Risk free rate

In the absence of an official risk free rate, the yield on government bonds (in an appropriate jurisdiction) is commonly used as a proxy. We have observed the yield on the 10-year United Stated Treasury Bond and Canadian Treasury Bond over several interval periods The graph below show the yield trend of the US Treasury bond and the Canadian Treasury Bond of the last 20 years.

10-year United States and Canadian Treasury Bonds yield

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Dec-02 Dec-06 Dec-11 Dec-15 Dec-00 Dec-01 Dec-03 Dec-04 Dec-05 Dec-07 Dec-08 Dec-09 Dec-10 Dec-12 Dec-13 Dec-14 Dec-16 Dec-17 Dec-18 United States Treasury Constant Maturity - 10 Year GT adopted RfR Canadian 10 year Govenrment debt Source: S&P Global and GTCF calculations

Based on the above, we have selected a RFR of 3% which is based on the long term risk free rate and it is not inconsistent with the real RFR plus the long term inflation adopted for the purpose of the DCF assessment.

Market risk premium

The market risk premium represents the additional return an investor expects to receive to compensate for additional risk associated with investing in equities as opposed to assets on which a risk free rate of return is earned. However, given the inherent high volatility of realised rates of return, especially for equities, the market risk premium can only be meaningfully estimated over long periods of time. In this regard, Grant Thornton studies of the historical risk premium over periods of 20 to 80 years suggest the premium is between 4.5% and 6.0% for the US.

For the purpose of the WACC assessment, Grant Thornton Corporate Finance has adopted a market risk premium of 6.0%.

Beta

The beta measures the expected relative risk of the equity in a company. The choice of the beta requires judgement and necessarily involves subjective assessment as it is subject to measurement issues and a high degree of variation.

An equity beta includes the effect of gearing on equity returns and reflects the riskiness of returns to equity holders. However, an asset beta excludes the impact of gearing and reflects the riskiness of returns on the asset, rather than returns to equity holders. Asset betas can be compared across asset classes independent of the impact of the financial structure adopted by the owners of the business.

Equity betas are typically calculated from historical data. These are then used as a proxy for the future which assumes that the relative risk of the past will continue into the future. Therefore, there is no right equity beta and it is important not to simply apply historical equity betas when calculating the cost of equity.

For the purpose of this report, we have had regard to the observed betas (equity betas) of comparable companies in the mining industry as outlined below.

Beta analysis Market Cap Equity Gearing Ungeared Regeared Company name Country (A$m) beta R-squared Ratio Beta Beta Tier 1 - Developement and pre-development companies Jameson Resources Limited Australia 45 1.08 0.02 (17.4%) 1.23 1.34 Allegiance Coal Limited Australia 29 1.56 0.03 11.8% 1.44 1.57 Average - Tier 1 1.32 0.02 (2.8%) 1.34 1.46 Median - Tier 1 1.32 0.02 (2.8%) 1.34 1.46 Tier 2 - Production companies Bathurst Resources Limited New Zealand 190 0.63 0.01 (2.2%) 0.64 0.69 Stanmore Coal Limited Australia 241 1.90 0.06 (43.4%) 2.72 2.97 Whitehaven Coal Limited Australia 4,911 1.76 0.12 66.7% 1.20 1.30 Yancoal Australia Ltd Australia 4,357 NM 0.00 NM NM NM New Hope Corporation Limited Australia 3,333 1.25 0.19 (34.3%) 1.65 1.80 Average - Tier 2 1.38 0.08 (3.3%) 1.55 1.69 Median - Tier 2 1.51 0.06 (18.2%) 1.42 1.55 Tier 1 and Tier 2 Low 0.63 0.00 (43.4%) 0.64 0.69 Average 1.36 0.06 (3.1%) 1.48 1.61 Median 1.41 0.03 (9.8%) 1.34 1.46 High 1.90 0.19 66.7% 2.72 2.97 Source: S&P Global and GT calculations Note 1: Equity betas are calculated using data provided by S&P Global. The betas are based on a five-year period with monthly observations and have been degeared based on the average gearing ratio over five years. Note 2: NM – Not Meaningful, R squared below 0.05.

We have divided the betas into two tiers of companies, development and pre-development and production companies to obtain the most comparable beta to RRL possible.

It should be noted that the above betas are drawn from the actual and observed historical relationship between risk and returns. From these actual results, the expected relationship is estimated generally on the basis of extrapolating past results. Despite the arbitrary nature of the calculations it is important to assess their commercial reasonableness. That is, to assess how closely the observed relationship is likely to deviate from the expected relationship.

Consequently, while measured equity betas of the listed comparable companies provide useful benchmarks, the selection of an unsystematic equity beta requires a level of judgement.

The asset betas of the selected companies are calculated by adjusting the equity betas for the effect of gearing to obtain an estimate of the business risk of the comparable companies, a process commonly referred as de-gearing. We have then recalculated the equity beta based on an assumed ‘optimal’ capital structure deemed appropriate for the business (re-gearing). This is a subjective exercise, which carries a significant possibility of estimation error.

We used the following formula to undertake the de-gearing and regearing exercise:

 D     1   1  t  e a  E 

Where:

 βe = Equity beta

 βa = Asset beta

 t = corporate tax rate

The betas are de-geared using the median gearing level over the period in which the betas were observed and then re-geared based on a gearing ratio of 10% debt to 90% equity (see the Capital Structure Section below for further discussions).

We note that the median and average 5-year betas for the comparable companies is 1.46 and 1.61 respectively. While we note that while these companies have differences to RRL, we believe that the beta for these companies provides a reasonable measure of the industry beta.

Based on the above, for the purposes of our valuation, we have selected a beta range of between 1.40 and 1.60 to calculate the required rate of return on equity capital.

Specific risk premium

The specific risk premium represents the additional return an investor expects to receive to compensate for specific risks not reflected in the beta of the observed comparable companies.

In the computation of the cost of equity for RRL we have applied a specific risk premium of 3% which reflects the greenfield development status of the project.

Cost of debt

For the purpose of estimating the cost of debt applicable to RRL, Grant Thornton Corporate Finance has considered the following:

 The margin in corporate bond yields over the US and Australian Government bond yields.

 The weighted average interest rate on credit outstanding for large businesses over the last one to five years as published by the Reserve Bank of Australia.

 The indicative terms of the project finance facility.

 Expectations of the yield curve.

Based on the above, Grant Thornton Corporate Finance has adopted a cost of debt of 7% (pre-tax).

We have adopted an effective tax rate over the life of the model of circa 20% which takes into account the tax losses of the Company.

Capital structure

Grant Thornton Corporate Finance has considered the gearing ratio which a hypothetical purchaser of the business would adopt in order to generate a balanced return given the inherent risks associated with debt financing. Factors which a hypothetical purchaser may consider include the shareholders’ return after interest payments, and the business’ ability to raise external debt.

The appropriate level of gearing that is utilised in determining the WACC for a particular company should be the “target” gearing ratio, rather than the actual level of gearing, which may fluctuate over the life of a company. The target or optimal gearing level can therefore be derived based on the trade-off theory which stipulates that the target level of gearing for a project is one at which the present value of the tax benefits from the deductibility of interest are offset by present value of costs of financial distress. In practice, the target level of gearing is evaluated based on the quality and variability of cash flows. These are determined by an assessment of:

 the quality and life cycle of a company;

 the quality and variability of earnings and cash flows;

 working capital;

 level of capital expenditure; and

 the risk profile of the assets.

In determining the appropriate capital structure, we have mainly relied on RRL’s net debt level during the construction period and over the life of the project.

For the purpose of the valuation, Grant Thornton Corporate Finance has adopted a debt-to-enterprise ratio of 20% debt and 80% equity. Discount rate summary

Nominal WACC

The nominal discount rate for RRL, determined using the WACC formula, is set out below.

WACC Calculation Low High

Cost of equity Risk-free rate 3.0% 3.0% Beta 1.40 1.60 Market risk premium 6.0% 6.0% Specific risk premium 3.0% 3.0% Cost of equity 14.4% 15.6%

Cost of debt Cost of debt (pre-tax) 7.0% 7.0% Tax 20.0% 20.0% Cost of debt (post-tax) 5.6% 5.6%

Capital structure Proportion of debt 20% 20% Proportion of equity 80% 80% WACC (post-tax) 12.6% 13.6% Source: S&P Global and GTCF calculations

Real WACC

The forecast cash flows of RRL have been prepared on real terms. We have determined the WACC on real terms by ‘deflating’ the nominal WACC determined above by the US long term blended inflation rate of 2.2% utilising the Fisher equation, as follows:

(1+r ) = (1+r ) / (1+i) real nominal

Where:  rreal = real WACC  i = long term forecast rate of inflation  rnominal = nominal WACC

The real discount rate adopted for RRL is summarised below:

WACC Calculation in real terms Low High WACC (post-tax) (nominal) 12.6% 13.6% USA long term inflation 2.2% 2.2% WACC (post-tax) (real) 10.2% 11.2% GT selected WACC (post-tax) (real) 10.7% Source: Capital IQ and GTCF Calculations Note (1): GT selected WACC based on the average of the High and Low range

Appendix G – Liquidity discount

Restricted stock and pre-IPO studies have shown discounts for lack of marketability in the range of 20% to 56% as set out below:

Discount for lack of marketability

Study Source Years Discount

Restricted stock studies Alex W How ard Valuation issues in estate planning - study 2003 21%-25% Asw ath Damodaran Illiquidity in the market 2003-2005 25%-35% Michael A Paschall Banister Financial Inc - New sletter 2004 26%-36% Russel T Glazer The CPA Journal 2000-2005 30%-35% Phil Williams & John Linder FFECT Winter Journal 1997-2002 25%-40%

Pre-IPO studies Shannon Pratt Pratt 2000-2003 37.5%-56.4% Michael Paschall Banister Financial Inc - New sletter 1980-2006 46% Russell Glazer The CPA Journal 2000-2005 45% Phil Williams & John Linder FFECT Winter Journal 1997-2002 35%

The size of the marketability discount depends from the following factor:

i. The prospect for liquidity within a known timeframe. The shorter is the expected holding period for an investment and more certain is the potential prospective transaction or initial public offering, the lower is the discount.

ii. The dividend policy of the Company. A company will usually attract a lower marketability discount if it has a sustainable and consistent dividend policy as the shareholders receive their returns along the way as opposed to at the end when they dispose of their investment. iii. The pool of potential buyers. The greater is the pool of potential buyers the lower is the level of marketability discount. iv. The level of risk in the industry and in the Company. Typically higher level of risks is usually associated with higher level of marketability discount. The underlying principle is that the potential adverse impact of risk factors is enhanced by the inability to dispose of the investments in a liquid market.

Appendix H – Glossary

A$ Australian Dollar AER Alberta Energy Regulator APES Accounting Professional and Ethical Standards APES 225 APES professional standard “Valuation Services” APES110 Code of ethics for Professional Accounting ASIC Australian Securities Investment Commission ASX Australian Stock Exchange Base Offer Price Offer of A$2.20 per RRL Share Benga Benga Mining Limited BMA BHP Billiton Mitsubishi Alliance C$ Canadian Dollar CAPM Capital Asset Pricing Model CHPP Coal handling preparation plan Convertible Notes Convertible notes of RRL Corporations Act Corporations Act 2001 CP Canadian Pacific DCF Method Discounted Cash Flow EIA Environmental Impact Assessment EV Enterprise Value Financial Model RRL financial model prepared for the individual producing and advanced-development assets FME Method Valuation method: application of earnings multiples to the estimated future maintainable earnings or cash flows of the entity, added to the estimated realisable value of any surplus assets FSG Financial Services Guide Funding Shareholders Mr Michael O’Keeffe, Mr Steve Mallyon and Mr Anthony Martin FYXX Financial year ended 30 June 20XX GTCF, Grant Thornton, or Grant Thornton Corporate Finance Pty Ltd Grant Thornton Corporate Finance Hancock Hancock Prospecting Pty Ltd Hancock Offer or Offer All cash offer to acquire all the outstanding shares of RRL in which Hancock does not already have a relevant interest. The Offer is made of a Base Offer Price of A$2.20 which will increased to the Increased Offer Price of A$2.50 per share if Hancock's shareholding in Riversdale exceeds 50% on a fully diluted basis before the Offer closes HCC Hard Coking Coal IER or Report Independent Expert’s Report IGP Iona Gas Plant Increased Offer Price The Base Offer Price increased to A$2.50 if Hancock's shareholding in Riversdale exceeds 50% on a fully diluted basis before the Offer closes Independent Directors The Independent directors of RRL other than the director appointed by Hancock IPO Initial Public Offering JRP Joint review panel

LNG Liquefied Natural Gas MBGS McElroy Bryan Geological Services MBGS Report Report prepared by MBGS in relation to the valuation of RRL's exploration and early stages assets Management Case Valuation assessment of RRL assuming the permitting would be obtained in March 2020 based on Management’s best estimate and construction commence right away as per Management Mineral Resources Mineral Resources Limited Minority Shareholders Together sophisticated and retail investors of RRL. Retail investor are all the individual investors who are not sophisticated investors. Sophisticated investors are individual investors that have net assets or A$2.5 million or more and/or that have gross income of at least A$250,000 over the last two years. NAV Method Amount available for distribution to security holders on an orderly realisation of assets OFS Optimised feasibility study PCI pulverised coal injection Quoted Price Security Valuation method: quoted price for listed securities, when there is a liquid and active Method market RCF Resource Capital Fund VI LP Resource Multiple or M&I Resource Multiple Resources RG111 ASIC Regulatory Guide 111 “Contents of expert reports” RG112 ASIC Regulatory Guide 112 “Independence of Experts” RPM RPM Advisory Pty Ltd RPM RPM Global RPM Report Report prepared by RPM related to the review and opine on the reasonableness of the technical assumptions adopted for the Grassy Mountain Project RRL Management or The Management of RRL Management RRL Options As at the date of this Report, RRL has 2,655,000 options on issue. RRL or the Company or RRL Limited Riversdale RRL Share 1 outstanding ordinary share in RRL RRL Shareholders An individual/ entity beneficially holding RRL Share(s) SHCC Semi-hard coking coal SOP Sum of the part valuation approach SSCC semi-soft coking coal The Directors The Directors of RRL US$ United States Dollar VWAP Volume Weighted Average Price WACC Weighted Average Cost of Capital

Appendix I – RPM Report

Job Number: ADV-SY-04238

26th March 2019

Mr Andrea De Cain Director Grant Thornton Corporate Finance Pty Ltd Level 17 383 Kent Street Sydney NSW 2000

Dear Andrea,

RE: HIGH LEVEL INDEPENDENT TECHNICAL REVIEW OF THE GRASSY MOUNTAIN PROJECT

This report has been prepared by RPM Advisory Services Pty Ltd (“RPM”). The purpose of the report is to provide an Independent Technical Report (“Technical Report”) and opinion as to the accuracy and reasonableness of the information supporting the Grassy Mountain Coal Project (the “Project”). The focus of the review is on the technical aspects of the Project including geology, JORC Resources and Reserves Statements, the proposed mine plan, production rates, infrastructure, environment and capital and operating cost estimates.

This Technical Report specifically excludes all aspects of legal issues, land titles and agreements, excepting such aspects as may directly influence technical, operational or cost issues. RPM has not undertaken an evaluation of marketing or coal pricing forecasts. This Technical Report does not consider financial or commercial matters, including without limitation loan funding aspects, cash flows, profit and loss, balance sheet, non-cash items, commodity prices, exchange rates, economic viability or the valuation of the Project. RPM reserves the right to change its view of any of the conclusions set out in this Technical Report should any of the fundamental information provided to RPM materially change.

RPM has conducted its review and prepared this Report in recognition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code, 2012 Edition, prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (“JORC”), and the Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets, the VALMIN Code 2015 edition. Also, this Report was prepared in accordance with the relevant requirements of the listing rules of the ASX (including ASX LR 5.8.1 and ASX LR 5.9.1) and Regulatory Guides 111 and 112 of the Australian Securities and Investments Commission (“ASIC”) in relation to the preparation of independent expert reports.

For this Technical Report the following terms are defined:

. Project – The Grassy Mountain Coal Project; including coal tenements, coal resources, leases, licenses, consents, land and all plans relating to development of the Project. . Mine Plan – A Project plan prepared by Riversdale covering the operations period of 2022 to 2044; including mining, coal handling, coal processing, coal transport, and all associated infrastructure and ancillaries required for the Project. The development years 2020 to 2022 are also included, so that the Mine Plan is a 25 year development and operations plan, with 23 years of mining. . Hard Coking Coal (HCC) – A low ash (9.0% – 9.5%) product coal with coking properties, which RPM understands from Riversdale can be marketed as a hard coking coal (HCC). This Technical Report considers the Relevant Assets of Grassy Mountain located approximately 7 km north of the town of Blairmore in the Crowsnest Pass region of south west Alberta, Canada. Grassy Mountain is located in the eastern foothills of the Rocky Mountains in an area where there has historically been coal mining and in coal measures that are generally considered to contain medium volatile bituminous coal

(based on ASTM D388), with a typical maximum vitrinite reflectance of 1.15. The Grassy Mountain Resource can produce a HCC product.

The proposed Project mining operations are planned as an open cut mine operated as an owner operator. The Project will utilise diesel-powered hydraulic excavators in backhoe configuration loading rear-dump haul trucks to remove overburden, parting, and interburden waste rock and to mine and haul coal. Coal will be mined and hauled from the seams within the mining pit to a Run of Mine (ROM) stockpile and ROM dump area.

The primary excavator fleet consists of two classes of backhoe configured hydraulic excavators: a 550 tonne (29-cubic metre [cu.m] bucket capacity) and a 400 tonne (22-cu.m bucket capacity). Each class excavator would load 220-tonne end-dump trucks in waste removal operations, while coal would be loaded primarily by the 218 tonne wheel loader into 220-tonne end-dump trucks fitted with coal bodies.

Over the 23-year mine life, a total of 168 Mt of ROM coal is produced at an average ROM stripping ratio of 5.1 bank cubic metres of waste rock per one tonne of ROM coal (bcm/t ROM). All the ROM coal is routed through the Coal Processing Plant (CPP), yielding 93 Mt of product coal, which represents an average yield of 55%. The average effective product stripping ratio is therefore 9.2 bcm per product tonne.

RPM concludes from this review that:

. No material flaws, errors or omissions on the technical aspects of the Project were discovered during the review; . The technical information reviewed is considered reasonable and has been prepared by professionals using appropriate software and industry standards; . The assumptions used in estimating coal and waste production volumes, mining losses and dilutions, process yields, and capital costs and operating costs are considered appropriate and reasonable; . Riversdale has developed a Mine Plan which appears technically sound and is considered to be based on reasonable technical assumptions; . The basic geological data underpinning the Mine Plan is considered satisfactory and reflects detailed work completed particularly in the period since 2013 when Riversdale acquired the project. There is confidence that there are sufficient coal tonnes in the ground to support a 4.5 Mtpa product HCC mine for a 23 year mine life; . The Grassy Mountain Coal Resources and Reserves Statements are in accordance with JORC Code reporting guidelines; . Reported JORC Coal Resources total 195 Mt made up of 85 Mt Measured and 110 Mt Indicated; . Reported JORC Open Cut Coal Reserves are 154 Mt made up of 65 Mt Proved and 89 Mt Probable; . Reported JORC Open Cut Marketable Reserves are 88 Mt made up of 37 Mt Proved and 51 Mt Probable. It should be noted that Riversdale’s Mine Plan allows for coal washing with resulting washing losses, so Marketable Reserves are less than the JORC Open Cut Coal Reserves; . The Mine Plan using open cut, truck and hydraulic excavator equipment, commencing in 2022 and extending to 2044, recovering 168 Mt of ROM coal, can be supported by mine design quantities that are mostly JORC Reserves; . RPM believes that the open cut method of mining as contemplated by the Mine Plan is appropriate for this Project; . RPM considers that the assumptions and methodology used in estimating Free On Board (FOB) operating costs are appropriate and reasonable, covering the spectrum of mining, processing, coal transport, and site administration associated in getting the coal to the point of sale; . Total Project FOB operating costs (excluding royalty) in the Mine Plan, averaging approximately CA$88.9/t product coal, have been reviewed and are considered reasonable and should be taken as +/-15% accurate, which is considered appropriate for the current stage of Project development. Mine site costs comprise 58% of the total FOB cost and off site costs represent 42% of the total FOB cost;

This report has been prepared for Grant Thornton Corporate Finance Pty Ltd and must be read in its entirety and is subject to all assumptions, limitations and disclaimers contained in the body of the report. ©RPMGlobal Holdings Limited 2018

. The initial capital cost estimate required to achieve first coal sales is CA$ 631.6M. The total capital cost estimate to bring the mine to nameplate production of 4.5Mtpa product by June 2024 is CA$738.3M. The capital intensity of the Project at a nominal 8.3 Mtpa ROM, is CA$89M per 1 Mtpa ROM of installed capacity. This level of capital intensity reflects the current construction costs in a competitive market for bringing a new greenfield coal Project into construction in western Canada. RPM believes the initial capital cost estimate for the Project in its current status and location is reasonable and also believes the Project could be delivered for this estimate; . The Alberta Energy Regulator (AER) finalised its completeness check of the Integrated Application (IA) with the supporting Environmental Impact Assessment (EIA) and issued its public Notice of Application (NOA) on 31st October 2017. Riversdale is of the opinion that a final government decision statement can be issued by the end of the first quarter (end of March) 2020; . The Project Implementation Plan schedule over a 23 month period covering 1 April 2020 to 1 March 2022 followed by a 3 month commissioning period appears reasonable and achievable. RPM notes that the commencement of the development phase coincides with the 5 month window associated with the bird nesting window from 15th April until 15th of August and construction activities in this period will need to be well managed to ensure that the overall duration of construction and development of 23 months is able to be achieved; . The ramp up from first coal from 1 April 2022 (with first sales in June 2022) to full coal production by the middle of 2024, or a 24 month ramp up, is considered technically reasonable; The following opportunities have been identified in this Report:

. There are known coal occurrences adjacent to the Project that with further exploration and assessment could result in coal Resources and Reserves being identified leading to potential Project life expansion of more than the currently proposed 24 years; . Much of the land required for the Project as defined in the Mine Plan has already been acquired by Riversdale (50%) with the balance of a status that should allow for ready acquisition when Project approval has been granted; . Environmental investigations to date have highlighted no significant technical issues. The following key risks have been identified in this Report:

. Timely Project approval will be necessary for the Project implementation to proceed through 2020 – 2022. Delays in approval being granted will lead to delays in Project implementation and ultimately first coal production. . As mining progresses through the deposit in accordance with the mining sequence adopted in the Mine Plan, there is a risk coal quality may vary from that modelled. RPM believes it will be necessary to complete further sampling and testing work ahead of mining, to continually demonstrate the carbonisation properties of the seams and seam blends to be mined and to confirm the product yield that is to be expected from these same seams as they are mined and processed. . The importance of protecting surface water resources in the mine area is important to Project success. As a result, the Project has developed a selenium management strategy that has been built into the Mine Plan. The risk of this passive plan not achieving required outcomes may require the construction of a water treatment plant. This mitigation contingency has been formulated, however it is not expected to be detrimental to Project outcomes. The information in the attached Technical Report that relates to the Technical Assessment of Mineral Assets reflects information compiled and conclusions derived by Gregory Eisenmenger, B.E. (Civil Hons) University of Queensland, MAusIMM, who is a Member of the Australasian Institute of Mining and Metallurgy, a Recognised Professional Organisation included in a list promulgated from time to time, and is a permanent employee of RPM. He has 40 years of international coal mining industry experience, with a strong technical and general management background.

Gregory Eisenmenger has sufficient experience relevant to the Technical Assessment of the Mineral Assets under consideration and to the activity which he is undertaking to qualify as a Practitioner as defined in the 2015 edition of the ‘Australasian Code for the Public Reporting of Technical Assessments and Valuations

of Mineral Assets’. Gregory Eisenmenger consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this Report that relates to Exploration Results, Coal Resources and Coal Reserves of the Company has been reviewed by Gregory Eisenmenger, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a permanent employee of RPM. Gregory Eisenmenger has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity, which they are undertaking to qualify as a Competent Person as defined in the JORC Code, 2012 Edition. Gregory Eisenmenger consents to the inclusion in this Report of the matters based on the information in the form and context in which they appear.

Yours Sincerely,

Gregory Eisenmenger Executive Consultant RPM Advisory Services Pty Ltd

Grassy Mountain Technical Report

Grant Thornton Corporate Finance Pty Ltd

Job Number: ADV-SY-04238 Date: 26 March 2019

DOCUMENT CONTROL SHEET

Client

Grant Thornton Corporate Finance Pty Ltd

Report Name Date

Grassy Mountain Technical Report 26 March 2019

Job No. Revision No.

ADV-SY-04238 04

File Name:

Grant Thornton _Grassy Mountain_TR_RPM_Final.docx

Authorisations

Name Position Signature Date

Prepared By: Greg Eisenmenger Executive Consultant 26/03/2019

General Manager - Coal Reviewed By Dave McMillan 26/03/2019 Advisory

General Manager – Coal Approved By Dave McMillan 26/03/2019 Advisory

Distribution

No. Of No. Of Hard Organisation Recipient Electronic Comment Copies Copies

Grant Thornton Andrea De Cian 1

IMPORTANT INFORMATION ABOUT THIS DOCUMENT

Our Client This report has been produced by or on behalf of RPM Advisory Services Pty Ltd (“RPM”) solely for Grant Thornton Corporate Finance Pty Ltd (the “Client”). 1. Client Use The Client’s use and disclosure of this report is subject to the terms and conditions under which RPM prepared the report. 2. Notice to Third Parties RPM prepared this report for the Client only. If you are not the Client: . RPM has prepared this report having regard to the particular needs and interests of the Client, and in accordance with the Client’s instructions. It did not draft this report having regard to any other person’s particular needs or interests. Your needs and interests may be distinctly different to the Client’s needs and interests, and the report may not be sufficient, fit or appropriate for your purposes. . RPM does not make and expressly disclaims from making any representation or warranty to you – express or implied – regarding this report or the conclusions or opinions set out in this report (including without limitation any representation or warranty regarding the standard of care used in preparing this report, or that any forward-looking statements, forecasts, opinions or projections contained in the report will be achieved, will prove to be correct or are based on reasonable assumptions). . RPM expressly disclaims any liability to you and any duty of care to you. . RPM does not authorise you to rely on this report. If you choose to use or rely on all or part of this report, then any loss or damage you may suffer in so doing is at your sole and exclusive risk. 3. Inputs, subsequent changes and no duty to update RPM has created this report using data and information provided by or on behalf of the Client [and Client’s agents and contractors]. Unless specifically stated otherwise, RPM has not independently verified that data and information. RPM accepts no liability for the accuracy or completeness of that data and information, even if that data and information has been incorporated into or relied upon in creating this report (or parts of it). The conclusions and opinions contained in this report apply as at the date of the report. Events (including changes to any of the data and information that RPM used in preparing the report) may have occurred since that date which may impact on those conclusions and opinions and make them unreliable. RPM is under no duty to update the report upon the occurrence of any such event, though it reserves the right to do so. 4. Mining Unknown Factors The ability of any person to achieve forward-looking production and economic targets is dependent on numerous factors that are beyond RPM’s control and that RPM cannot anticipate. These factors include, but are not limited to, site-specific mining and geological conditions, management and personnel capabilities, availability of funding to properly operate and capitalise the operation, variations in cost elements and market conditions, developing and operating the mine in an efficient manner, unforeseen changes in legislation and new industry developments. Any of these factors may substantially alter the performance of any mining operation.

TABLE OF CONTENTS

1. INTRODUCTION ...... 1 1.1 Purpose of Report ...... 1 1.2 Scope of Work ...... 1 1.3 Capability and Independence ...... 2 1.4 Limitations and Exclusions ...... 2 1.5 Materiality ...... 2 1.6 Indemnity and Sign Off ...... 3 1.7 Site Inspection ...... 3 1.8 Inherent Mining Risks ...... 3

2. OVERVIEW ...... 4 2.1 Location and Background ...... 4 2.2 Project History ...... 4 2.3 Resources & Reserves ...... 4 2.4 Geology ...... 7 2.5 Coal Quality & Processing ...... 7 2.6 Mining ...... 8 2.7 Site Infrastructure ...... 8 2.8 Coal Transport ...... 8 2.9 Environment & Permitting ...... 9

3. RESOURCES & RESERVES ...... 10 3.1 Coal Resources ...... 10 3.2 Coal Reserves ...... 10

4. GEOLOGY...... 11 4.1 Regional Geology ...... 11 4.2 Exploration ...... 11 4.3 Site Geology ...... 13 4.4 Raw Coal Quality ...... 13 4.5 Geological Model ...... 17 4.6 JORC Coal Resources ...... 18

5. COAL QUALITY & PROCESSING ...... 20 5.1 Coal Quality ...... 20 5.2 Product Specifications ...... 20 5.3 Coal Processing ...... 21 5.4 Quality Variability ...... 25

6. MINING ...... 26 6.1 Feasibility Study (FS) 2017 ...... 26 6.2 Mining Method & Equipment Selection ...... 27 6.3 Equipment Utilisation and Productivity ...... 30 6.4 Mining Schedule ...... 31

7. SITE INFRASTRUCTURE ...... 32 7.1 Overview ...... 32

7.2 Permanent Infrastructure & Facilities ...... 32 7.3 Train Load-Out Infrastructure ...... 32

8. COAL TRANSPORT ...... 34 8.1 Rail Infrastructure ...... 34 8.2 Port Infrastructure ...... 34

9. PERMITTING AND ENVIRONMENTAL & SOCIAL/COMMUNITY IMPACT RISKS ...... 35 9.1 Environmental Setting ...... 35 9.2 Tenements ...... 35 9.3 Environmental Management Plan ...... 36 9.4 Permits and Authorisations ...... 36 9.5 Important Project Risk Components ...... 40

10. MINE PLAN COST ESTIMATES ...... 44 10.1 Capital Costs ...... 44 10.2 Operating Costs ...... 46

List of Tables

Table 3-1 Summary of Coal Resources (Mt) (May 2016) ...... 10 Table 3-2 Summary of Coal Reserves (Mt) (May 2016) ...... 10 Table 4-1 Summary of Exploration Activities ...... 13 Table 4-2 Sample and Average Quality Data on a Seam Ply Basis ...... 16 Table 4-3 Summary of Average Clean Coal Properties ...... 16 Table 4-4 2016 Coal Resources Estimate for Grassy Mountain (May 2016) ...... 19 Table 5-1 Indicative Product Specification ...... 21 Table 6-1 Equipment Time Use and productivity ...... 30 Table 9-1 Active Crown Mineral Agreements within the Mine Permit Boundary ...... 35 Table 9-2 Environmental Permits/Approvals Required ...... 37 Table 9-3 Regulatory Submissions for Grassy Mountain ...... 39 Table 10-1 Initial Capital Cost Estimate by WBS ...... 44 Table 10-2 Breakdown of Mining Capital by Category ...... 45 Table 10-3 LOM FOB Operating Costs ...... 47 Table 10-4 Annual Mining Operating Costs ...... 48

List of Figures

Figure 2-1 Location Plan ...... 5 Figure 2-2 Site Plan ...... 6 Figure 4-1 Stratigraphy ...... 12 Figure 4-2 General Geology Cross Sections A,B,C ...... 14 Figure 4-3 General Geology Cross Sections D,E,F ...... 15 Figure 5-1 Metallurgical Flow Sheet ...... 23 Figure 6-1 Ultimate Pit Limits ...... 28 Figure 6-2 Pit Phases ...... 29

1. INTRODUCTION

1.1 Purpose of Report This Report has been prepared by RPM Advisory Services Pty Ltd (RPM), at the request of Grant Thornton Corporate Finance Pty Ltd (“Grant Thornton”) to prepare an Independent Technical Report (“Technical Report”) of the relevant geological, mining and infrastructure assets of Riversdale Resources Limited (“Riversdale”) Grassy Mountain Coal Project (Grassy Mountain or the Project) in Alberta, Canada.

The purpose of the report is to provide an independent technical opinion as to the accuracy and reasonableness of the information supporting the Project that will appear in an Independent Experts Report (“IER’) in relation to the takeover offer by Hancock Corporation Pty Ltd (“Hancock” or “the Buyer”), a wholly owned subsidiary of Hancock Prospecting Pty Ltd for all the issued shares of Riversdale (“the Proposed Transaction”) in which Hancock does not have a relevant interest. The focus of the review is on the technical aspects of the Project including geology, JORC Resources and Reserves Statements, the proposed mine plan, production rates, Project infrastructure, environment and capital and operating cost estimates. The scope did not cover investigation or comment on coal prices, legal issues and approvals. Also, this report specifically does not include a valuation of the Project for Grant Thornton and is not a Valuation Report as defined by the VALMIN Code.

RPM has conducted its review and has compiled this Technical Assessment Report (Report) in recognition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code, 2012 Edition, published by the Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia”), and the Australasian Code for the Public Reporting of Technical Assessments and Valuations of Mineral Assets, the VALMIN Code 2015 edition.

This Report was prepared in accordance with the relevant requirements of the listing rules of the ASX (including ASX LR 5.8.1 and ASX LR 5.9.1) and Regulatory Guides 111 and 112 of the Australian Securities and Investments Commission (ASIC) in relation to the preparation of independent expert reports.

This Report must be read in its entirety and must be read in light of:

. Its reliance upon information provided to RPM by Riversdale and others; . The methodology and limitations and assumptions referred to throughout the report; . The limited scope of the report; . Other relevant issues not within the scope of the report. This report considers the assets (Relevant Assets) associated with the Project. The dates used throughout this Report are contingent on Project approval being granted by the end of the first quarter (March) 2020.

1.2 Scope of Work The Technical Report required RPM to review the technical project assumptions underlying the future cash flows of the development asset including:

. Resources and Reserves estimation; . Production volumes; . Operating expenses; . Capital costs; and . Environmental and infrastructure considerations. RPM advised Grant Thornton on the reasonableness of these assumptions for valuation purposes and prepared various sensitivity/scenario cases.

This report has been prepared for Grant Thornton Corporate Finance Pty Ltd and must be read in its entirety and subject to the third party disclaimer clauses contained in the body of the report© RPM Advisory Services Pty Ltd 2019

The Technical Report that s to be included in the IER will be prepared in accordance with the ‘Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets’ (“VALMIN Code 2015”) and Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC CODE 2012”).

1.3 Capability and Independence This Technical Report was prepared on behalf of RPM by the signatory to this report.

RPM provides advisory services to the mining and finance sectors. Within its core expertise it provides independent technical reviews, resource evaluation, mining engineering and mine valuation services to the resources and financial services industries.

RPM and the Competent Person have independently assessed the Project by reviewing pertinent data, including Resources, Reserves, and the life of mine plans relating to productivity, production, operating costs and capital expenditures. All opinions, findings and conclusions expressed in this Report are those of RPM, and the Competent Person.

Drafts of this Technical Report were provided to Grant Thornton, but only for the purpose of confirming the accuracy of factual material and the reasonableness of assumptions relied upon in this Technical Report.

RPM has been paid, and has agreed to be paid, professional fees for the preparation of this Technical Report. The remuneration for this Technical Report is not dependent upon the findings of this Technical Report. Neither RPM nor the Competent Person have any economic or beneficial interest (present or contingent), in the Project, in securities of the companies associated with the Project or Grant Thornton.

1.4 Limitations and Exclusions The contents of this Technical Report have been created using data and information provided by or on behalf of Riversdale in the form of an electronic dataroom. In RPM’s opinion, the information provided was reasonable and nothing discovered during the review suggested that there was any material error or misrepresentation in respect of that information. Information generated by third parties, consultants or contractors to Riversdale has not been independently validated by RPM through the generation of new work or new data.

RPM accepts no liability for the accuracy or completeness of data and information provided to it by, or obtained by it from, Riversdale or any third parties, even if that data and information has been incorporated into or relied upon in creating this report. The report has been produced by RPM using information that has been provided to RPM as at the date stated on the cover page. RPM is under no obligation to update the information contained in the report at any time after the date shown on the cover page, though RPM reserves the right to change its view of any of the conclusions set out in this Technical Report should any of the fundamental information provided to RPM materially change.

This review specifically excludes all aspects of legal issues, commercial and financing matters, land titles and agreements, except such aspects as may directly influence technical, operational or cost issues and where applicable to the JORC Code guidelines.

Notwithstanding the above, in RPM’s opinion, the data and information provided by or on behalf of the Client was reasonable and sufficient for the purposes of the JORC Code 2012 and VALMIN Code 2015 Edition nothing discovered during the preparation of this Report suggests that there was any significant error or misrepresentation of such data or information.

1.5 Materiality RPM has adopted the Australian Accounting Standards Board AASB 1031 which proposes that the materiality of information or data can be assessed in terms of the extent to which its omission or inclusion could lead to changes in total value:

. Equal to or less than five percent – immaterial.

. Between five and ten percent – discretionary. . Equal to or greater than ten percent – material. These guidelines were used only generally, as this Technical Report does not include a valuation of Grassy Mountain or Riversdale and therefore has not determined the materiality of items by valuation calculations.

1.6 Indemnity and Sign Off RPM has obtained from Riversdale an indemnity pursuant to which Riversdale has agreed to indemnify and compensate RPM for any liability:-

. Resulting from RPM’s reliance on information provided by or on behalf of Riversdale that is materially inaccurate or incomplete; and . Relating to any extension of workload through queries, questions or public hearings arising from any Public Report.

1.7 Site Inspection A ground level site visit was not made as part of this review by Mr Eisenmenger. Mr Eisenmenger has inspected the Grassy Mountain site previously in October 2018 on other Riversdale business and is familiar with the site. For the purposes of this Technical Report Mr Eisenmenger believes there has not been any material change to the site and the Project since his last visit in October 2018 and the results of that visit will suffice for the purposes of this Technical Report.

1.8 Inherent Mining Risks Coal mining is carried out in an environment where not all events are predictable.

Whilst an effective management team can identify the known risks and take measures to manage and mitigate those risks, there is still the possibility for unexpected and unpredictable events to occur. It is not possible therefore to totally remove all risks or state with certainty that an event that may have a material impact on the operation of a coal mine, will not occur.

It is therefore not possible to state with certainty, forward looking production and economic targets, as they are dependent on numerous factors that are beyond the control of RPM and cannot be fully anticipated by RPM. These factors include but are not limited to, site specific mining and geological conditions, the capabilities of management and employees, availability of funding to properly operate and capitalise the operation, variations in cost elements and market conditions, developing and operating the mine in an efficient manner. Unforeseen changes in legislation and new industry developments could also substantially alter the performance of any mining operation.

2. OVERVIEW

2.1 Location and Background Grassy Mountain is located approximately 7 km north of the town of Blairmore in the Crowsnest Pass region of south west Alberta, Canada. It is about 150 km south of Calgary and 20 km east of the provincial border with British Columbia. Alberta Highway 3 and a main line of the Canadian Pacific railway (CPR) traverse the municipality of Crowsnest Pass and provide excellent access to the project area. Refer to Figure 2-1 and Figure 2-2.

The proposed Grassy Mountain Project permit boundary in which all project-related activities will occur consists of approximately 6,121 hectares of privately held and Crown land. Since acquiring the Project, Riversdale has conducted a pre-feasibility study in 2014, feasibility study in 2015 and feasibility study update and optimisation in 2016/2017. The feasibility and optimisation studies also includes the development of the Environmental Impact Assessment (EIA) which has formed the basis of the Provincial and Federal Regulatory Application for approval of the Project.

The Project will operate in an environment where seasonal variations in temperature can be significant. The coldest month is December and the warmest month is July. Average monthly temperatures during these months are -6.4 °C and 15.4 °C, respectively. Snow can cover the ground from late September to the end of May at higher elevations. Warm to hot temperatures can extend from June through late September.

Annual precipitation is variable and between 1994 and 2013, was 361 mm, with rainfall contributing nearly three quarters of this (~270 mm) and snowfall one quarter (~90 mm). Spring and summer experience the greatest amount of rainfall.

2.2 Project History The Project is located in an area that is known for its extensive mining history dating back to the early 1900’s. The mining of the large quantities of coal in the area was predominately by underground mining methods. Many mines were operated in the region and significant coal tonnages were produced. The first mine in the area opened in 1909, but mining experienced fluctuating coal prices, strikes, and underground accidents. The underground mines in this part of Alberta were all closed in the early 1960s as the challenges of mining in an area with complex geology and significant faulting was not ideal for bord and pillar underground mining operations. As well coal prices were very low and the railway had fully switched to diesel powered locomotives.

The properties were acquired by Scurry Rainbow Oil in 1966. Comprehensive exploration and evaluation programs were conducted by Scurry Rainbow Oil from 1970 to 1972. Consolidation Coal Company, which later became Consol Energy Inc. (Consol), acquired a 50% interest in the property through a joint-venture agreement with Scurry Rainbow Oil in 1973.

Scurry Rainbow was acquired by Home Oil in 1993 and Home Oil was acquired by Anderson Exploration in 1995. Devon acquired Anderson Exploration and the original Scurry Rainbow coal holdings in 2001. Riversdale acquired Grassy Mountain from Devon Canada Corporation (Devon) and Consol of Canada (50/50 Joint Venture) in 2013.

The only relevant previous studies prior to the commencement of the feasibility and optimisation studies by Riversdale, is the “Technical Report, Grassy Mountain Property, Alberta, Canada,” dated April 5, 2013, by Norwest Corporation. The report for Riversdale was based on the work commissioned by Consol and Devon in relation to the sale of their joint-venture coal holdings in the area. This report was prepared not only to comply with the requirements of NI 43-101, but also to be compliant with the requirements of JORC.

2.3 Resources & Reserves JORC Resources have been reported as 195 Mt coal; being 85 Mt Measured and 110 Mt Indicated.

JORC Reserves have been reported as 154 Mt ROM coal; being 65 Mt Proved and 89 Mt Probable. Coal Reserves are included in Coal Resources; not additional to Coal Resources.

TES OF AME Dawson STA Victoria Island

UNITED Cambridge Bay YUKON TERRITORY

Echo Bay Whitehorse

NORTHWEST TERRITORIES Watson Lake NUNAVUT

Yellowknife

Kangiqcliniq P Fort Nelson (Rankin Inlet)

A Fort Smith

C Prince Rupert

I F BRITISH COLUMBIA I CANADA H udso n C Prince George Churchill Bay ALBERTA

C PROJECT LOCATION

E Edmonton SASKATCHEWAN A Flin Flon MANITOBA N Vancouver

Calgary Victoria Saskatoon

Lethbridge Regina ONTARIO

Winnipeg

UNI TED STATES O F A M ERI C A Thunder Bay

LEGEND CLIENT PROJECT

NAME National Boundary N Railway GRASSY MOUNTAIN TECHNICAL REPORT State Boundary River Road Port DRAWING PROJECT GENERAL LOCATION PLAN 0 500 1000 km FIGURE No. PROJECT No. Date DO NOT SCALE THIS DRAWING - USE FIGURED DIMENSIONS ONLY. VERIFY ALL DIMENSIONS ON SITE 2.1 ADV-SY-04238 March 2019 Source: GrassyMountainCoalProject_S07_MINING_UPDATE Final_Page 5 CLIENT PROJECT

NAME GRASSY MOUNTAIN TECHNICAL REPORT

DRAWING MINE LAYOUT

FIGURE No. PROJECT No. Date 2.2 ADV-SY-04238 March 2019

In addition, 88 Mt of Marketable Reserves are reported; 37 Mt Proved and 51 Mt Probable. Marketable Reserves are included in Coal Reserves; not additional to Coal Reserves. No Inferred Coal Resources have been reported by the Resources Competent Person, although there is coal outcropping and sub-cropping to both the north and the south of the Project area, providing some upside to the Project.

2.4 Geology Grassy Mountain is located in the eastern foothills of the Rocky Mountains. The coal bearing sediments occur within the Mist Mountain Formation of the Late Jurassic to Early Cretaceous age Kootenay Group which was strongly deformed.

Grassy Mountain is a structurally complex deposit with a broad anticlinal structure transected by up to 14 north-trending thrust faults with vertical displacement ranging from 5 m to 200 m and dipping between 50 degrees and 80 degrees towards the west.

Coal seams of economic interest are within the Mist Mountain Formation. Three coal seams of the Mist Mountain Formation, Seam No. 1, Seam No. 2, and Seam No. 4, crop out in three sub-parallel zones at Grassy Mountain, each zone separated by a major thrust fault. The three coal seams are reasonably continuous within the fault bounded structural blocks across the deposit, although with varying thickness and distribution of coal plies within the seams.

Seam No.1 comprises three main plies (from roof to floor: 1C, 1B, 1A) with a typical cumulative thickness of approximately 5 m and 26% raw ash.

Seam No. 2 is divided into an upper ply (2B) and a lower ply (2A) of approximately equal thickness. Seam No.2 generally varies in thickness from 5 m to 15 m with a typical true thickness of 8 m. Raw ash is typically around 20% and is generally consistent across the deposit.

Seam No. 4 is comprised of three main plies, the upper (4C), middle (4B) and lower (4A). The upper and lower plies range in thickness from 3 m to 5 m and the middle ply has a typical thickness of 1 m in most of the deposit. Raw ash varies 10% to 48 %, and is typically 25%.

2.5 Coal Quality & Processing The Grassy Mountain coal is bituminous possessing a volatile content and maceral content consistent with being able to produce a high grade coking coal product.

Run-of-Mine (ROM) coal will require processing in a modern state of the art coal processing plant (CPP), comprising dense medium cyclones (DMC), reflux classifiers, froth flotation processing circuits and mechanical dewatering systems to produce clean coal ranging from 9% to 10% ash (adb) with a 10% total moisture as sampled. The clean coal properties of the three seams are variable but are all amenable to blend construction, which would maximise hard coking coal yield from the deposit.

Despite the large variation of seam content percentage and the resultant range in quality, all blends that were tested had a coke strength after reaction (CSR) of between 62 and 70, and the coke reactivity index (CRI) was less than 30% in all cases. All blends of Grassy Mountain coal resulted in a hard coking coal (HCC) product.

Grassy Mountain coal is similar to other Cretaceous western Canadian coals and produced a better quality coke than may have been expected after assessing its relatively poor performance in Dilation (swell), Plastometer test (fluidity test) and petrographic analysis (vitrinite content and rank). The good coking performance attributed to the Grassy Mountain coal results from its semi-fusinite being fusible (also known as “reactive” in the coal matrix), contributing to the vitrinite’s binder phase of the coke process, whilst the non-reactive inertinite is fine textured and evenly distributed and contributing to the filler phase thereby imparting satisfactory stability and strength to the coke.

The Grassy Mountain coal has typical quality when compared to seaborne traded HCCs in the CSR range 59 to 68. Compared to these reference coals, Grassy Mountain’s quality is “industry standard” with a slightly

better ash chemistry, and with marginally lower vitrinite and caking performance. The Project’s coal does have comparatively good phosphorus and excellent predicted slag viscosity due to its high MgO content.

2.6 Mining Mining operations are planned as an open cut mine operated as an owner operator. The Project will utilise diesel-powered hydraulic excavators in backhoe configuration loading rear-dump haul trucks to remove overburden, parting, and interburden waste rock and to mine and haul coal. Coal will be mined and hauled from the seams within each pit area to a ROM stockpile and ROM dump area.

A pre-production and ramp-up schedule was developed over the first 3 years of the mine schedule, with the mine reaching full production of some 4.5Mt product by mid 2024. Actual ROM tonnage mined will vary due to fluctuations in yield within the actual scheduled blocks in a given period. Waste and coal removal is planned to commence in Q1 2022 with initial coal production being used for stockpile base and inventory build-up, prior to first sales from 1 June 2022 late in Q2 2022.

The mine will be sequenced to extract lower ratio, lower cost coal during the initial years by concentrating mining operations within the phases located in the southern half of the ultimate pit. Mining progression is also designed to accelerate the mining of all benches within Phase 01 and Phase 02 in an effort to establish in-pit rock disposal areas as early as possible. Establishment of in-pit rock disposal zones within these initial phases provides a potential for the development of saturated fill zones, which are an integral part of the selenium management strategy for the mine.

Over the 23-year mine life, a total of 168 Mt of ROM coal is produced at an average stripping ratio of 5.1 bank cubic metres of waste rock per one tonne of ROM coal (bcm/t ROM). All the ROM coal is routed through the CPP, yielding 93 Mt of product coal, which represents an average yield of 55%. The average effective stripping ratio is therefore 9.2 bcm per product tonne.

2.7 Site Infrastructure Grassy Mountain is effectively a greenfields site with no existing Project infrastructure. Key infrastructure requirements include:

. Mine access; . Rail loop; . On site bulk earthworks and site access roads; . Mine infrastructure and service facilities; and . Power supply and distribution.

2.8 Coal Transport The proposed approach for the export of Grassy Mountain coal will be via rail to Westshore Terminals (Westshore) at Roberts Bank, just south of Vancouver. Ridley Terminals in Prince Rupert, British Columbia (BC), can serve as an alternate port if required. The total length of the route is approximately 1,070 km based on using the primary route (Crowsnest Pass – Golden – Kamloops – Vancouver) to reach the coast.

Approximately +95% of Canada’s coal exports are shipped through the BC coastline mainly because the vast majority of Canada’s coal deposits (approximately 90%) are located in the western provinces.

Westshore is Canada’s number one export coal facility with the largest throughput. Upgrades that have been recently completed have taken Westshore capacity to approximately 35 - 36 Mt per annum.

Riversdale entered into a Shipping Agreement with Westshore in August 2015. The current agreement covers commitments both in the Grassy Mountain pre-production phase and also for the first 10 years after the commencement of production.

2.9 Environment & Permitting The Project has entered into both the provincial and federal government regulatory process. In Alberta, the provincial and federal environmental processes are coordinated under a harmonisation agreement between these two levels of government (Integrated Application – IA).

The IA with the supporting Environmental Impact Assessment (EIA) was submitted in August 2016. A supporting Wildlife & Aquatic Resources Addendum was submitted in January 2017. The federal government Canadian Environmental Assessment Agency (CEAA) conducted its conformity check and issued conformity Supplementary Information Requests (SIRs), to which Riversdale prepared responses.

The Alberta Energy Regulator (AER) finalised its completeness check of the IA and issued its public Notice of Application (NOA) on 31st October 2017. The public comment period associated with the AER’s NOA, closed in December 2017. During that time, Riversdale provided an update to the Project’s Water Act (WA) application (Addendum 2), the Projects Public Lands Act (PLA) application (Addendum 3), and responses to CEAA conformity SIRs (Addendum 4). As part of the AER’s NOA process, at the end of December 2017, the AER issued the public stakeholder statements of concern (SOC), along with technical SIRs. Riversdale responded to each individual public stakeholder in February 2018 and submitted responses to the AER SIRs (Addendum 5) on February 28, 2018.

Also, on February 28, 2018, CEAA issued its second round of SIRs, to which Riversdale provided responses by April 30, 2018 (Addendum 6). In May 2018, at the request of the AER, Riversdale provided some additional information pertaining to the PLA and WA applications (Addendum 7).

During the period of SIRs, the AER agreed to enter into the joint review panel (JRP) process with CEAA. The draft terms of reference for the JRP were issued for public comment in February 2018 and the establishment of a JRP was announced in August 2018. A final round of SIRs from both the AER and CEAA were issued in August 2018; however, at the request of the JRP, Riversdale provided one response package directly to the JRP on October 17, 2018 (Addendum 8).

On completion of multiple rounds of SIRs, the JRP conducted a review of the submitted material and on November 5, 2018 deemed the information sufficient to proceed with notification to the public for its comments on sufficiency. The public comment period ended on January 21, 2019, with an extension to February 15, 2019 at the request of a specific Treaty 7 First Nation group.

The JRP is currently reviewing the sufficiency of the EIA to opine whether or not there is sufficient information in front of the JRP before scheduling a public hearing for the Grassy Mountain Project. On March 22, 2019, the JRP provided Riversdale a letter with additional requests for noise and air quality and stated that the JRP expected that all further requests to Riversdale would be made by May 14, 2019.

The next steps are the JRP will schedule a public hearing. After the public hearing is concluded, the following steps occur:

. The JRP will consider the information submitted and the outcomes of the public hearing and it will summarise its deliberations into a report which will determine whether the Project is in the public interest and set out its recommendations. The report will be issued within 90 days of the end of the hearing; and . The JRP report is submitted to the Federal Minister who may issue a Decision Statement permitting the Project to proceed. Issuance of the Decision Statement will likely occur approximately 3 months after the Minister receives the JRP Report. . Riversdale has stated they expect the required permits and approvals to be received between February 2020 and December 2020 with end of March 2020 being Riversdale's best estimate at this time.

3. RESOURCES & RESERVES

3.1 Coal Resources Coal Resources have been estimated by McElroy Bryan Geological Services Pty Ltd (MBGS) and are reported in their Statement titled “Competent Person Report Coal Resources, Grassy Mountain Alberta, Canada”, prepared for Riversdale Resources, dated May 2016. The Resources are given in the categories of Measured, Indicated and Inferred. Reported JORC Resources are given in Table 3-1.

The Technical Review has reviewed the JORC Resources Statement and considers that the estimate of Resources for the Project appears to reflect the geological understanding of the Project and no material issues with the Resources estimate have been identified. A more detailed description of Resources is given in Section 4 of this Report.

Table 3-1 Summary of Coal Resources (Mt) (May 2016)

Coal Resources

Measured Indicated Inferred TOTAL Coal Resources 85 110 0 195

Resources rounded to appropriate levels of accuracy in accordance with the 2012 JORC Code

3.2 Coal Reserves The Coal Reserves for Grassy Mountain have been estimated by Deswik Mining Consultants (Australia) Pty Ltd as of 31 May 2016 and are derived from the ‘2016_03 Geological Resource Model’ provided by MBGS. The Coal Reserves have been estimated using Deswik Suite software, applied to the provided Resource Polygons, data shell grid, fault block surfaces, coal structure and quality grids from MBGS using Minex software.

Marketable Reserves were estimated using regression formulae provided by Sedgman from ROM Ash. Reported JORC Reserves are shown in Table 3-2.

Table 3-2 Summary of Coal Reserves (Mt) (May 2016)

Coal Reserves

Proved Probable TOTAL Coal Reserves 65 89 154

Marketable Reserves 37 51 88

Moisture is at 5% as received (“ar”) for Coal Reserves and 10% (ar) for Marketable Reserves Reserves rounded by RPM for this Report

RPM has reviewed the JORC Reserves and confirmed that they have been reported in accordance with the guidelines of the JORC Code (2012). More detailed description of Reserves is given in Section 6 of this Report.

4. GEOLOGY

4.1 Regional Geology The Grassy Mountain coal deposit is located in the eastern foothills of the Rocky Mountains. The local stratigraphy comprises late Jurassic to early Cretaceous Fernie Formation, Kootenay Group and Blairmore Group. The Kootenay Group is the main coal-bearing formation and comprises of the Morrisey, Mist Mountain and Elk Formations.

Coal seams of economic interest are within the Mist Mountain Formation, which is locally subdivided into three members, Adanac, Hillcrest and Mutz members. The basal Adanac Member comprises siltstone, claystone and coal horizons identified collectively as Seam No. 4. The Hillcrest Member is predominantly sandstone with interbedded siltstone and claystone and in other localities has a coal seam (Seam No. 3) at the base of the sequence which is not present at Grassy Mountain. Seam No. 2 is at the base of the Mutz Member which also comprises siltstone interbedded with minor claystone and coaly bands. Seam No. 1 is at the top of the Mutz Member.

The Mist Mountain Formation is overlain by the distinctive massive conglomerate of the Cadomin Formation, the lowermost unit of the Blairmore Group. A regional unconformity occurs at Grassy Mountain below the Cadomin Formation which has eroded the Elk Formation and part of the upper section of the Mist Mountain Formation, including in some areas Seam No. 1. The Cadomin formation, which is a conglomerate, is an important geological marker band and has the potential to be used in the production of road base material for the Project.

The general stratigraphy of the Project is shown in Figure 4-1.

. Western Domain (west of D1 fault) comprises the western flank of the anticline structure with strata dipping relatively gently towards the wests and transected by at least eight thrust faults; and . Eastern domain (east of D1 fault) is the down thrust block of D1 fault, limited to the east by the steeply dipping (up to 90 degrees) eastern limb of the anticline. This domain is structurally more complex than the western domain.

4.2 Exploration The Crowsnest Pass area has a long history of underground mining and, to a lesser degree, surface mining since the early 1900’s. Coal mining commenced at Grassy Mountain in 1909; however, exploration results from that period are not available.

There are a total of 510 drill holes available, collected from five exploration campaigns conducted from 1971 to 2018 by Scurry Rainbow Oil Limited (Scurry Rainbow), Consolidation Coal Company, and Riversdale. A summary of the exploration programs is provided in Table 4-1.

Exploration drilling has typically included geophysical logging of holes and sampling and coal quality testing on cored drill holes.

Exploration conducted by Riversdale during 2013, 2014, 2015, 2016 and 2018 confirmed the geological structural interpretation and deposit geometry, helped refine fault definitions and increased the confidence in the geological models.

20 13 12 1C2 30 11 1C1 10 Gladstone Formation 40 9 8 Seam 7 No. 1 50 6 Blairmore Group 5 4 1B2 Cadomin

Formation 60 3 1B1 Elk 2 Formation 1 1B0 70 Seam No. 1

Cretaceous (m) 80

1A2 90 1A1

Mutz 100 Member 8 110 7 2B 6 Seam 5 Seam ?* 120 No. 2 4 2A No. 2 3 2 130 1 Mist Mountain Formation Mist Mountain

(m) 2A0 Kootenay Group Kootenay 140 Member Hillcrest 13 150 12 4D Seam 11 4C2 No. 4 10 160 Adanac 4C1 Member 9 8 Seam 170 7 No. 4 6 4B Moose

Member 5 Morrissey Mountain Formation 180 4 3 4A2 2 190 1 4A1 Jurassic

200

210

Passage Beds 220 Fernie Group 230

NOTE(S) CLIENT LITHOLOGY 1. ALL DEPTH, ELEVATION AND THICKNESS VALUES IN METERS BENGA MINING LIMITED 3. SEAMS ARE FAIRLY VARIABLE AND DO NOT ALWAYS RIVERSDALE RESOURCES LIMITED COAL CONGLOMERATE REPLICATE THE ABOVE EXAMPLE PROJECT GRASSY MOUNTAIN COAL PROJECT CONTACT IS UNKNOWN FEASIBILITY STUDY COAL STONY LIMESTONE REFERENCE(S) GIBSON, 1983 ALBERTA, CANADA TITLE CARBONACEOUS CLAYSTONE SANDSTONE FIGURE 3.6 TYPICAL STRATIGRAPHIC SECTION CLAYSTONE SILTSTONE Prepared by McElroy Bryan Geological Services PROJECT: 332/02 DRAWN BY: M.A

C:\Users\marcos\Desktop\Grassy Mountain\Maps\Logos_mbgs.jpg CHECKED BY: K.W DATE: MAY 13, 2015

Source: GrassyMountainCoalProject_1406422_S03_GEOLOGY Final_Page 14 CLIENT PROJECT

NAME GRASSY MOUNTAIN TECHNICAL REPORT

DRAWING STRATIGRAPHIC COLUMN

FIGURE No. PROJECT No. Date 4.1 ADV-SY-04238 March 2019

Table 4-1 Summary of Exploration Activities Drill Holes Year Company Number of Metres Additional Exploration Drill Hole Series Drill Holes Drilled · 37 Trenches 1971 Scurry-Rainbow 35 6,065 71DH01 – 71DH35 · 9 Adits · 11 Sidewall Holes 1973 Consol - Scurry 135 12,050 73CS001 – 73CS133 · Field mapping · Field mapping 1974 Consol 204 21,795 74GM001 – 74GM196 · 54 Tonne bulk sample · 34 Channel Samples 75GM01 – 75GM28 1975 Consol 34 4,270 · Field mapping 75GMT01 – 75GMT06 RGSC0001 – RGSC0013 · Field mapping Riversdale RGLD1001 – RGLD1021 · Trench Sample 2013-2018 102 18,376 Resources RGRF1501 - RGRF1503 · 15 Tonne Bulk Sample RGOH3001 –RGOH3063 Total 510 62,556

4.3 Site Geology The three coal seams (Seam No.1, 2, and 4) of economic significance at Grassy Mountain are reasonably continuous within the fault bounded structural blocks across the deposit, although with varying thickness and distribution of coal plies within the seams. The general geology of the Project can be seen in the cross sections from the geological model shown in Figure 4-2 and Figure 4-3.

Seam No.1 Is the uppermost coal interval and is present across most of the deposit except in localised areas towards the north, where a regional unconformity has eroded some or all the plies within the seam. Seam No.1 comprises three main plies (from roof to floor: 1C, 1B, 1A) with a typical cumulative thickness of approximately 5 m and 26% raw ash. The interburden between Seam No.1 and No.2 is a siltstone generally between 20m and 30m thick with interbedded sandstone and carbonaceous claystone interbeds.

Seam No.2 Is the thickest and most consistent seam at Grassy Mountain and can be recognised and correlated throughout the deposit. Seam No.2 has a typical coal thickness of 10 m but structurally thickened in some areas. Seam No.2 is divided into an upper ply (2B) and a lower ply (2A). Seam No.2 in total generally varies in thickness from 5 m to 15 m with a typical true thickness of 8 m. A stony coal band (2A0) sometimes occurs at the base of the seam. Seam No.2 contains very few stone bands. Raw ash is typically around 20% and is generally consistent across the deposit.

Interburden thickness between Seams No.2 and No.4 is between 5 m and 40 m and comprises of siltstone, claystone, and sandstone interbeds of the Hillcrest Member.

Seam No.4 Is the basal seam at Grassy Mountain and generally occurs between 5 m to 40 m below the floor of Seam No.2. The seam is comprised of three main plies; the upper (4C), middle (4B) and lower (4A). The upper and lower plies range in thickness from 3 m to 5 m and the middle ply has a typical thickness of 1 m in most of the deposit. Raw ash varies 10% to 48%, and is typically 25%.

4.4 Raw Coal Quality Coal at Grassy Mountain is generally considered to be a medium volatile bituminous coal (based on ASTM D388), with a typical Maximum vitrinite reflectance of 1.15. Raw Ash is considered moderate, being generally between 20% to 30% on an air dried basis.

E 1800RL E' D 1700RL ANTICLINE Topographyeathering AIN D' Map Area 1600RL Base of W

TURTLE MOUNT C 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 Meters B C' 2000RL B' B B' 1900RL A A' 1800RL

1700RL

Topographyeathering 1600RL Base of W

ANTICLINE 1500RL AIN

1400RL

TURTLE MOUNT

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0 1 2 1700RL A A' kilometers

1600RL Blairmore 3

NOTE(S) 1500RL Topography 1. ALL DEPTH, ELEVATION AND THICKNESS VALUES IN METERS REFERENCE(S) eathering · MINING LEASE BOUNDARIES PROVIDED BY MILLENNIUM EMS SOLUTIONS (MEMS) Base of W · WATERCOURSE MAP PROVIDED BY MILLENNIUM EMS SOLUTIONS (MEMS) · GEOLOGY BY CONSOL (EXPLORATION SUMMARY MAP; 1988) AND RIVERSDALE RESOURCES 2013 & 2014

1400RL CLIENT BENGA MINING LIMITED

ANTICLINE RIVERSDALE RESOURCES LIMITED

AIN PROJECT GRASSY MOUNTAIN COAL PROJECT 1300RL FEASIBILITY STUDY ALBERTA, CANADA TITLE TURTLE MOUNT FIGURE 3.7 1200RL GEOLOGICAL CROSS SECTION6S D, E & F Prepared by McElroy Bryan Geological Services 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 Meters PROJECT: 332/02 DRAWN BY: M.A C:\Users\marcos\Desktop\Grassy Mountain\Maps\Logos_mbgs.jpg CHECKED BY: K.W DATE: MAY 13, 2015

Source: GrassyMountainCoalProject_1406422_S03_GEOLOGY Final_Page 21 CROSS SECTION CLIENT PROJECT BLAIRMORE GROUP CADOMIN FORMATION NAME KOOTENANY GROUP SEAM NO.1 GRASSY MOUNTAIN TECHNICAL REPORT FERNIE GROUP SEAM NO.2 SEAM NO.4 REVERSE FAULT DRAWING FOLD - ANTICLINE GEOLOGICAL SECTIONS A,B,C LOCATION PLAN WATERCOURSE MINE PERMIT BOUNDARY FIGURE No. PROJECT No. Date ACCESS ROAD RAILROAD 4.2 ADV-SY-04238 March 2019 2000RL

F Topography F' N 1900RL Base of W eathering

1800RL F F'

1700RL E E' ANTICLINE 1600RL AIN D D' 1500RL TURTLE MOUNT 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 Meters Map Area

2100RL C E E' B C' 2000RL B'

Topography 1900RL A Base of Weathering A' 1800RL

1700RL

ANTICLINE

AIN 1600RL

TURTLE MOUNT 1500RL

0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 Meters

2100RL D D' 2000RL 0 1 2 1900RL kilometers

Topography 1800RL Base of W Blairmore 3 eathering NOTE(S) 1 . ALL DEPTH, ELEVATION AND THICKNESS VALUES IN METERS 1700RL ANTICLINE REFERENCE(S)

AIN · MINING LEASE BOUNDARIES PROVIDED BY MILLENNIUM EMS SOLUTIONS (MEMS) · WATERCOURSE MAP PROVIDED BY MILLENNIUM EMS SOLUTIONS (MEMS) · GEOLOGY BY CONSOL (EXPLORATION SUMMARY MAP; 1988) AND RIVERSDALE RESOURCES 2013 & 2014 CLIEN T 1600RL BENGA MINING LIMITED RIVERSDALE RESOURCES LIMITED TURTLE MOUNT PROJECT GRASSY MOUNTAIN COAL PROJECT 1500RL FEASIBILITY STUDY ALBERTA, CANADA TITLE FIGURE 3.7 1400RL GEOLOGICAL CROSS SECTION6S D, E & F 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 Meters Prepared by McElroy Bryan Geological Services PROJECT: 332/02 DRAWN BY: M.A C:\Users\marcos\Desktop\Grassy Mountain\Maps\Logos_mbgs.jpg CHECKED BY: K.W DATE: MAY 13, 2015

Source: GrassyMountainCoalProject_1406422_S03_GEOLOGY Final_Page 23 CROSS SECTION CLIENT PROJECT BLAIRMORE GROUP CADOMIN FORMATION NAME KOOTENANY GROUP SEAM NO.1 FERNIE GROUP SEAM NO.2 GRASSY MOUNTAIN TECHNICAL REPORT SEAM NO.4 REVERSE FAULT FOLD - ANTICLINE DRAWING LOCATION PLAN GEOLOGICAL SECTIONS D,E,F WATERCOURSE MINE PERMIT BOUNDARY FIGURE No. PROJECT No. Date ACCESS ROAD RAILROAD 4.3 ADV-SY-04238 March 2019

There are a total of 550 coal seam/ply samples available for the Project. A summary of the average raw coal quality values by seam ply and based on sample data, is provided in Table 4-2.

Table 4-2 Sample and Average Quality Data on a Seam Ply Basis

Number of Seam Seam Ply Density Ash VM TS FSI Samples

Seam No. 1 1C2 29 1.50 26.5 21.1 0.56 2.7 Seam No. 1 1C1 30 1.47 24.8 21.0 0.52 3.2 Seam No. 1 1B2 44 1.46 23.2 21.3 0.55 4.0 Seam No. 1 1B1 48 1.45 22.5 21.5 0.59 4.1 Seam No. 1 1B0 15 1.46 23.6 21.1 0.57 4.9 Seam No. 1 1A2 14 1.54 31.3 19.3 0.56 4.0 Seam No. 1 1A1 13 1.55 32.6 19.3 0.59 3.8 Seam No. 2 2B 73 1.44 21.2 20.2 0.35 2.7 Seam No. 2 2A 88 1.44 21.5 20.2 0.37 2.5 Seam No. 2 2A0 12 1.47 24.3 19.6 0.36 2.8 Seam No. 4 4D 17 1.45 22.4 20.6 0.41 3.6 Seam No. 4 4C2 45 1.45 22.8 20.5 0.34 2.6 Seam No. 4 4C1 42 1.46 23.8 20.2 0.35 2.6 Seam No. 4 4B 21 1.48 25.0 20.0 0.5 3.8 Seam No. 4 4A2 27 1.50 27.3 19.6 0.45 2.3 Seam No. 4 4A1 32 1.50 27.1 19.7 0.44 2.4 Total /Mean 550 1.45 22.6 20.3 0.4 2.8

The main product is expected to be a hard coking coal produced from a blend of the three seams.

A Summary of Average Clean Coal Properties is presented in Table 4-3 below.

Table 4-3 Summary of Average Clean Coal Properties Volatile Sulphur % FSI Reactive Reflectance Fluidity Seam Content % HGI P% (ad) (ad) (CSN) Content% RoMax ddpm (ad) No. 1 25.4 7 70 1.1 300-1300 No. 2 22.1 0.4-0.7 73-78 5 0.04 60 1.2 10-200 No. 4 23.8 5 65 1.18 10-400 Note: Reproduced from Coal Quality Review Report Completed by Bob Leach Sept 2015

Approximately 75% of the raw coal quality data is from exploration completed during 1971 and 1975. There were multiple sample preparation, laboratories and analytical procedures used to determine coal quality values during this period. Recent coal quality data was obtained from 26 drill holes including 10 HQ3 and PQ drill holes, 21 large diameter (13 x 150 mm and 8 x 230mm ) and 3 drill holes using reverse circulation flood methods (430 mm diameter). The understanding of raw coal quality is heavily based on historical sample results. The historical quality data has been reviewed prior to incorporation into the geological model. RPM considers that there is the potential for inconsistencies between the historical data and more recent data due to changes in sampling and testing methods used during the respective exploration and testing periods, as has been experienced with coal projects similar to Grassy Mountain that have had an extended exploration and development period stretching over several decades. For example earlier work carried out by previous owners underestimated vitrinite content and the low Phosphorus content in ash. More complete testing and bulk washing has demonstrated higher quality coal than the earlier work.

The more recent product yield estimates are based on float sink data from the large diameter core program exploration program completed in September 2013. The large diameter core program provides up to 6 samples for each seam ply to determine yield. The float sink data was used to determine a relationship between raw ash and product yield for each seam which was used in the mine planning process to predict product yields in the production schedule. RPM has not reviewed the basis of the equations used to estimate product yields for each Seam. RPM accepts the industry use of the derivation of raw ash yield regression curves to reflect the general washability characteristics of each seam is standard practice and hence the prediction of yield. However, the limited number of recent samples that have been able to be used in the generation of these regression curves may not fully reflect any spatial variation or changes in the washability characteristics of each ply across the deposit. The older float sink results are, however, relatively consistent with the predicted hard coking coal yield of the more recent work, albeit the HCC quality is better in the more recent work.

Seam and seam blend product qualities are based on the large diameter core exploration program and 2 bulk sample programs. Two separate trials extracting bulk samples of at least 15 tonnes were washed in 2014 and 2015 and for the first time included fine coal recovery from a floatation circuit. This resulted in pilot scale carbonisation testing on a range of blended Grassy Mountain products. The inclusion of the fine vitrinite rich coal recovered in floatation increased the coking performance over the earlier test work. The 7 carbonisation testing runs of multiple blends of the 3 coal seams demonstrated the ability to produce a Hard Coking Coal product in all instances. The carbonisation tests showed that the blend quality was stable across the seam blends in spite of the changing seam ratios. This indicates the mine quality can be expected to be stable over the life of the mine.

As mining progresses through the deposit in accordance with the mining sequence adopted in the mine plan, RPM believes it will be necessary to complete further in fill sampling and testing work ahead of mining to continually demonstrate the carbonisation properties of the seams and seam blends to be mined and to confirm the product yield that is to be expected from these same seams as they are mined and processed. This is normal short term planning practice in a well managed mine.

These near term results obtained during the course of mining operations will enable reconciliation with the geological and mining models to be undertaken and forecast production schedule outcomes to be updated. Where discrepancies between the models and predictions are indicated, the models can be updated with this scientific evidence, as is normally done, to provide a better basis for predicting medium to longer term outcomes associated with updates to the mine plan and production schedule.

4.5 Geological Model The Grassy Mountain geological model was built in GEOVIA Minex software (Version 6.4.2). The geological model used to estimate Resources and complete mine planning is identified as ‘GM_0316’. The geological model was built from 384 historical drill holes (from 1971 to 1975), and 83 drill holes completed by Riversdale (between 2013 and 2015), as well as 71 points from mapping data.

The geological model contains structure and quality grids.

The structural model includes roof and floor grids for the 16 modelled seam plies as well as the overlying Cadomin Formation and the underlying Moose Mountain Formation. The structural model incorporates 14 reverse faults into the structural grids.

The quality model includes quality grids for RD, Ash, VM, TS and FSI for each of the 16 modelled coal plies. The coal quality model used the analysis available in the drill holes database with the exception of holes with excessive core loss (>20%):

. There are localised areas within the deposit where the geology is structurally disturbed and the complexity of this smaller scale geology is not reflected in the geological model. This is likely to only have localised impacts on mine planning and is not considered to be material to the quantities and qualities associated with these areas in the mine plan; . With further exploration and/or mining, more faults could be expected to be defined, however they are most likely to be similar to the type of faulting already identified but of a lesser magnitude. This is likely

to have only localised impacted and is not considered to the material to the quantities and qualities associated with these areas in the mine plan; and . There is uncertainty in the surveyed collar position of historical drill holes. The easting and northing positions have been accepted and the drill hole collar elevations have been edited to match the acquired Lidar survey of topography. Due to the steep nature of both the coal seams and topography, any errors in the drill hole collar coordinates may have an effect on the depth of the seam intersection within the drill hole.

4.6 JORC Coal Resources Coal Resources for the Grassy Mountain Project have been estimated by McElroy Bryan Geological Services Pty Ltd (MBGS) and are reported in their Statement titled “Competent Person Report Coal Resources, Grassy Mountain Alberta, Canada”, prepared for Riversdale Resources, and dated May 2016.

The coal Resource report for Grassy Mountain has been prepared in accordance with the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition” (The JORC Code). The Resources are estimated as of 31st May 2016.

A total of 195 Mt of coal has been estimated for the Project including 85 Mt categorised as Measured and 110 Mt categorised as Indicated.

Coal Resources at Grassy Mountain were estimated by MBGS using GEOVIA Minex Software (Versions 6.3.1) within a “data shell” that is constrained by the depth and areal extent of drill holes for most of the area with the exception of the western boundary where Resources are limited by the extent of the planned pit shell. Resources were estimated both inside and outside of the planned pit shell to a maximum depth of 400 m below surface:

As per the JORC Code (2012), Resources by definition must have ‘reasonable prospects for eventual economic extraction’, the basis of which ‘must be explicitly disclosed and discussed by the Competent Person’. Of the total Resource of 195Mt, 39.2Mt exist outside of the defined Pit Shell and the basis for ‘reasonable prospects of eventual economic extraction’ have not been stated. RPM considers it likely that reasonable prospects for the 39.2Mt of Resources could be justified.

Measured Resources are generally supported by drill holes up to approximately 200 m apart, located on areas where coal seams are at less than 200 m deep. Indicated Resources are generally supported by drill holes approximately 500 m apart in the western domain and around 300 m apart in the down thrust block of the eastern domain.

Resources are reported by Seam, Resource Category, Depth (in 100 m increments) and by whether they occur within or outside of the pit shell. The estimate of Resources for the Project is presented in Table 4-4.

Table 4-4 2016 Coal Resources Estimate for Grassy Mountain (May 2016)

Although not classified as a Resource at this stage, there are in the order of 1 to 3 million tonnes of coal remaining in historical underground mines. Further investigation may allow this coal to be included into the Resource Estimate.

RPM considers that the estimate of Resources for the Project appears to reflect the geological understanding of the Project and no material issues with the Resource estimate have been identified.

5. COAL QUALITY & PROCESSING

5.1 Coal Quality Coal at Grassy Mountain is generally considered to be a medium volatile bituminous coal (based on ASTM D388), with a typical maximum vitrinite reflectance of 1.15. Raw Ash is considered moderate being generally between 20% and 30% on an air dried basis.

Two bulk sampling programs have been undertaken to assess product quality and blending options; one at Hazen in August 2014 and further work with ALS in November 2014. As a result of the bulk sampling process sufficient material was available for carbonisation tests on a total of 7 blends, 2 from Hazen bulk sampling work and five from the ALS work. A further 2 check samples were subjected to carbonisation testing at ALS. The results show despite the variation in quality between the three seams particularly with regards to volatile content, ash, sulphur, phosphorus, fluidity and dilatation all 7 blends and the 2 checks produced a coking coal product that can be characterised as a Hard Coking Coal. The quality results of all blends exceeded a CSR of 60 (range 62 to 68) and CRI values in low to mid 20s, demonstrating that a hard coking coal similar to other Canadian hard coking coal products can be produced from a variety of blends from all three seam groups within the Grassy Mountain mining area.

The carbonisation data demonstrates that despite Seam No.2 having low fluidity and minimal dilatation, blends containing up to 50% of Seam No.2 still maintained good carbonisation properties. This reflects a similar proportion to the Seam No.2 presence in the overall Resource.

In general, the coal products blend from the seams demonstrate the following properties:

. Low to moderate phosphorus; . Ash ranged from 8.4% to 9.7% ad; . Volatile content 22.9% to 23.9%, . Total sulphur 0.51% to 0.61%; . Uniform FSI (7 to 7.5); . Maximum fluidity varies from a low of 8 ddpm to a maximum of 145 ddpm; . Maximum dilatation varies from -16% to +20%; . Vitrinite content varied from 41% to 50%. The results demonstrate the Grassy Mountain coal to be medium volatile hard coking coal Resource with moderate in-seam ash. The carbonisation testing in particular, has demonstrated it will be possible to realise a hard coking product from Grassy Mountain with a widely variable blend consist of the three seams, thus simplifying the mine planning process.

Processing yield will vary on a bench by bench basis from 40% to 70% and product ash content will vary from 9.5% to 9.8% (air-dried basis) depending on the seam being processed. The three seam average yield is approximately 55%. The product coal, when blended properly from all three seam groups, will satisfy hard coking coal quality requirements.

Likely practical yield from the Resource has been obtained from plant simulations assuming a dense medium / reflux classifier / column flotation cell configuration. The estimated average yield from the program was 58.6% with a product ash of 9.7% (air dried basis), coarse coal cut point density 1.45, indicating the potential for future plant/yield optimisation around the current strategy of producing a single product.

5.2 Product Specifications Riversdale proposes in its mine plan to generate a single hard coking coal product. Indicative product specifications are presented in Table 5-1.

Table 5-1 Indicative Product Specification

Product Ash % Volatile RoMax Total Phosphorous CSR Matter % Sulphur % % HCC 9.0 – 9.5 23.5 1.18-1.20 0.5 0.04 65

5.3 Coal Processing 5.3.1 Plant Design

The Grassy Mountain coal processing plant (CPP) has been designed by Sedgman based on the metallurgical data available to achieve the following objectives:

. To receive, process, and handle an ultimate 8.4 Mtpa of ROM Coal (product nominally 4.5Mtpa); . To produce saleable coal with the following target specifications:

o Coking Coal: 9% to 10% ash (air dried), 10.0% nominal total moisture (ar); . To reclaim and train load 16,416 t (152 cars x 108 t) of coking coal product over an 8 hour period (as specified by CPR); . To combine coarse rejects and dewatered tailings and convey to a loading/storage bin for trucking to the nominated emplacement areas within the mine; . To minimise coal fines, loadout generated noise and dust; . To optimise operator manning levels; and . All plant to have a nominal design life in line with the Project duration, and be fit for purpose to operate in a harsh mining environment. As a result of the 2014 bulk sampling program, 30 working sections were suitable for plant design and Limn simulation. The Limn modelling was used to determine the optimum plant configuration, sizing splits between circuits, and processing options. As it is anticipated that to produce a hard coking coal, Grassy Mountain coal will need to be washed at low density cut-points in the range of 1.40 to 1.45, this was taken into consideration in the design.

Additional studies and test work was carried out to aid the design of the following aspects of the CPP operation:

. Plant construction - stick build vs modular plant; . Raw vs product blending; . Tailings disposal options; . Product dewatering options; . Reject dewatering options; . Raw vs product blending; . Product reclaim options; and . Tailings disposal options. A particularly significant area of study was the investigation of product drying options in an effort to avoid the costly and higher risk thermal drying option, whilst still ensuring the surface moisture of the product coal will be low enough to minimise handling issues created by the freezing of the product. While thermal drying is considered standard practice in Canadian coal plants, the test work indicates that the hyperbaric disc filters (HDF) selected for this operation can be expected to achieve the required level of product moisture and operate with better safety given recent issues with gas fired drying facilities at some plants in British Columbia. Also the HDF can be retrofitted with a steam hood to further reduce product moisture should this be required.

As a result of the sampling program, test work and optimisation work, the process was developed as a traditional coarse/fines/ultrafines processing plant with a single large diameter DMC selected for the coarse fraction, Reflux Classifiers (RC’s) for the fine fraction, and two-stage flotation selected for the ultrafine.

The intention is to campaign individual feed sources and direct feed as much as possible, therefore plant design takes into account the variations in size distribution and yield across the various seams and working sections. Yield predictions were calculated using Limn® computer-based modelling simulations to give an indicative yield window for design.

RPM has reviewed the main features of the coal process plant and considers it to be a robust approach to generating good quality marketable coals. Both the coarse and the fines processes proposed are proven industry technologies that are of minimal risk to the Project.

It is noted that during the studies and test work, consideration was given to the geographical layout of the site and the climatic conditions in addition to the coal properties.

5.3.2 Process Overview The CPP will be of stick build steel design and construction and will be a fully enclosed and clad. The CPP building will house all processing equipment with an annex to house the tailings belt press filters. As the Project involves a relatively quick ramp up in production, the CPP will be constructed in a single phase as a single, integrated plant with 1,120 tph (ar) ROM capacity. This configuration will provide for 8.4 Mtpa of ROM capacity assuming 7,500 operating hours per year.

The ROM bin will receive ROM coal direct from rear dump mine trucks or from large front-end loaders reclaiming ROM coal from stockpiles adjacent to the bin. The operation has limited raw coal stockpiling space, particularly in the early years, and the intention will be to campaign feed the plant directly from the pit with in-pit stockpiles providing the majority of the ROM storage. While this will reduce associated rehandling costs and size degradation of the coal prior to processing, it will require careful mine planning to ensure sufficient quantities of appropriate material are available for efficient processing.

From the ROM bin, the coal is screened and oversize material is reduced in size via a double roll sizer to produce a -50 mm material to be fed into the plant surge bin. Refer to Figure 5-1 for an illustration of the flow sheet.

Figure 5-1 Metallurgical Flow Sheet

The CPP will be fed from a 500 tonne surge bin containing sized raw coal (- 50 mm + 0 mm). This surge bin capacity will be used to smooth minor disruptions in the raw coal sizing system so it will not disrupt plant feed. The plant feed conveyor will transfer coal from the surge bin at a nominal feed rate of 1120 tph to the plant.

Raw coal fed from the plant feed conveyor will be directed into a plant feed hopper, which will feed raw coal directly onto two desliming screen vibrating feeders. The deslime screen oversize coal fraction from each deslime screen will be processed through a dedicated dense medium circuit.

The coarse coal fraction received from the desliming screen will be processed through ceramic lined 1,150- mm diameter DMC.

Reject and product material collected from the cyclone will be directed to separate drain and rinse screens to remove excess moisture and recover magnetite. The drained reject material will then be fed to the rejects conveyor.

Coarse product coal will discharge from the end of each product drain and rinse screen and will report to centrifuges for product dewatering. The centrifuges will be a horizontal basket type and will discharge product directly onto the product conveyor.

Mixed fine/ultrafine particles from each desliming screen underflow will be pumped into the desliming cyclones. Fine coal will report to the cyclone underflow and on to the reflux classifiers and ultrafine material will report to the two stage flotation circuit. The flotation circuit is designed to maximise recovery and will have a cleaner-scavenger setup, with the primary flotation cell rejects being re-processed in the secondary flotation cell.

Fines product will be thickened in centrifuges then dewatered in four fine coal (scrolling) centrifuges prior to discharge onto the product belt. Flotation product will be fed to a coal thickener and will be thickened to

approximately 30% to 35% solids. The underflow coal slurry from the coal thickener will be dewatered in HDF units to produce a filter cake at approximately 18% surface moisture. The cake will then discharge via a screw feeder onto the product conveyor.

The product coal transfer conveyor runs through the enclosed and heated CPP. After it leaves the CPP building it will be contained within fully enclosed, insulated, and heated galleries in order to keep the moist product coal from freezing prior to the stockpile. For coal quality management, a two-stage sample system will be installed on the product coal transfer conveyor downstream of the CPP to take samples of washed product coal.

The washed product coal will be directed to a series of conveyors and stackers that will allow washed product coal to be directed to one of two stackers for separate stockpiling. Both product stackers have luffing and slewing capability and nominal capacity of 800 tph. The stockpile capacity of each radial stacker will be either a single stockpile of approximately 60,000 tonnes or two separate stockpiles of approximately 20,000 tonnes each. Dozer push-out will allow additional storage beyond that of the stacker’s placement capacity. No heating will be installed from the product stockpile through to the TLO. The design allows for a future (optional) product stockpile expansion.

Product coal will be reclaimed from the product stockpiles by four dozer fed in-pile reclaim feeders. Each stacker stockpile arrangement will have two adjacent reclaim feeders each with a nominal capacity of 2000 tph. Each reclaim feeder will be equipped with a light duty breaker head which will break down any conglomerated lumps of frozen coal that may develop.

The configuration of two stackers feeding four product stockpiles gives flexibility in washing strategy to allow for various quality ROM material to be batched washed to optimise yield and/or coking properties and stockpiled separately according to various coking and ash qualities. The initial pad will be built to allow expansion up to six product stockpiles with the addition of a third stacker and associated reclaim equipment to further increase the washing and blending flexibility. This strategy is designed to minimise initial capital investment whilst still giving a degree of flexibility to the washing strategy during the early phase of the operation.

The blending of washed product coal is designed to be achieved by reclaiming of different washed product coals from separate stockpiles onto the single reclaim transfer conveyor from where a rotating chute will deliver the coal in a circular pattern inside the bin mixing the reclaimed product coals together. It will be drawn down in a mass flow pattern through the bottom cone of the bin.

In order to ensure the product shipments meet the necessary specification, coal will need to be blended as it is reclaimed from the product stockpiles. As the reclaim system operates at a nominal 2,000 tph and the loading of a 16,400 t capacity train is planned to take 8 hours, the required blending of coal off the stockpiles should be achievable but will need to be proactively managed.

The product reclaim transfer conveyor will deliver washed product coal into a loading bin onto the OLC and onto the TLO system. These conveyors will be open conveyors with hoods installed over the top of the belt to help protect the coal from the prevailing conditions. Due to the limited storage capacity at the trail load- out location, the overland conveyor will need to be available for utilisation at least 16 hours per day to avoid delays in train loading. As a result maintenance of this critical piece of infrastructure will be scheduled for the remaining 8 hour window.

Fine and ultrafine rejects will be dewatered by belt press filters before discharging onto the reject transfer conveyor and disposed of in-pit with the coarse reject.

The CPP flowsheet and plant selection used in this facility is based on design arrangements and technology which have been proven in many applications and are considered appropriate for this application.

The equipment capacity and layout appear adequate to meet the required operational throughput targets.

5.4 Quality Variability A risk with respect to coal quality for all coal projects is both structural and quality variability across a resource and the need to ensure the mine plan and coal processing and handling infrastructure caters for this.

For Grassy Mountain, RPM considers the likely deposit variability can be dealt with by proactive additional predictive exploration in advance of mining, reconciliation of actual outcomes with the model and regular updates of the models to provide better predictability of the mine plan and production schedule. The key to successful management is having a well developed geological model so that variability is well understood.

Based on a review of coal quality characteristics of the different seams at the Grassy Mountain Project, it was determined that coal blending will be required to produce the optimal export coking product coal specification. Coal can be blended on the raw side of the plant or on the product side. If blending strictly for product coal quality, this is most cost effectively achieved on the product side since a lesser tonnage of coal has to be managed to achieve the same degree of blending from different sources, according to the yield. However, if the raw coal requires blending to ensure that the plant feed properties lie within the plant design window, this will need to be managed on ROM or raw coal stockpiles.

Wherever possible, raw coal would be campaign mined from a single source and directly fed to the CPP to minimise double handling and to help control tracking of the original source of each batch of coal. Only those sources of ROM coal that lay outside the plant design window will be stockpiled either at the ROM or at temporary stockpiles near the mining faces given the limited ROM stockpile space and then blended with compatible feed types prior to processing.

As each batch of coal is campaign mined and processed, it will be directed to one of four product stockpile zones according to its source and expected properties. The product will be sampled and analysed for basic product quality parameters during each shift or part of shift if feed sources are changed during the course of a shift. Future expansion to six product stockpile zones has been incorporated in the design footprint.

6. Mining

6.1 Feasibility Study (FS) 2017

6.1.1 FS Objectives The key objectives of the mine plan developed for the FS included the following:

. Utilisation of the 2015 MBGS geological model to define working sections within the in situ coal seams; . Utilise working sections to estimate mineable coal tonnages on a ROM and product basis for use in mine design and production scheduling; . Provide for CPP annual throughput capacity up to 8.4 Mtpa ROM delivering a nominal 4.5 Mtpa of a single hard coking coal product; . Select mining equipment that is commonly utilised in the industry and is of a size and quantity that meets geological conditions and production requirements; . Development of manageable coal inventory levels within active pit areas and in product stockpiles to enable campaign processing and clean coal blending as necessary to meet product-quality constraints; . Develop plans that will ensure compliance with environmental regulations; . Establish in-pit waste dumps as quickly as practicable for the provision of saturated backfill zones for selenium mitigation and to minimise waste haulage requirements; and . Develop an efficient operation that considers mine safety and minimises mine operating and capital costs.

6.1.2 Economic Pit limits The determination of the economic pit limits using pit optimisation resulted in a series of nested pits all containing increasing coal and waste tonnages with increased coal price. Revenue values ranging from US$90/t to US$170/t were used for the determination of the nested pits. These revenue factors produced pits containing approximately 51 Mt to 125 Mt of product coal for the US$90/t and US$170/t pits, respectively, clearly identifying an opportunity for further reserve delineation in the future taking into account long term coking coal price movements.

The US$100/t pit extent was used as the basis to formulate the pit limits. Issues taken into account were:

. The exclusion of high stripping ratio areas in the north and the reductions of impacts on the GCT104 tributary of the Gold Creek; . Limited areas for out-of-pit dumping as watershed boundaries were used to set the limits for these dumps; and . Other environmental constraints limited the pit extents and the out-of-pit dumps within the Gold Creek and Blairmore Creek watersheds. Ultimately the available capacities of the out-of-pit dumps became a major driver, along with the delineation of sufficient product coal to provide for a minimum 20 year mine life, for the determination of the final pit limits.

Detailed design of the US$100/t pit provided sufficient product coal and an acceptable strip ratio throughout the mine life.

6.1.3 Ultimate Pit Design The US$100/t pit limit was modified to incorporate detailed geotechnical design criteria, pit access roads, and eliminate high strip ratio zones, where possible. Overall pit depth varies from 50 m in the south to nearly 300 m to the north within the western pit zone. The pit optimisation targeted the lowermost ply of Seam No. 4, the 4A1 ply. The 4A1 floor served as the pit floor wherever the seam dip was less than 35°. Refer to Figure 6-1.

Haulage ramps and working areas were incorporated into the ultimate pit design. Ramp widths of 33 m were chosen to safely accommodate two-way truck traffic. Ramps were designed into the pit walls and floor, as needed, to access the deepest levels of the pit. A nominal 60 m wide working area was built into the pit bottom to allow for efficient operation of mining equipment.

To reduce out-of-pit dumping and disturbance, in-pit backfill was prioritised early in the mine life. The in-pit backfill served a primary role in the overall pit access plan. Pit access for the ultimate pit was approached in consideration of the phase and dump plans. Mine phasing extents were chosen to allow lower stripping ratio portions of the pit to be extracted earlier in the mine life. With phase wall designs in place, pit access was designed to serve the smaller phased pits. Phased mining also allowed in-pit backfill to follow closer behind the mining advance, which provided additional options for the access plan.

Application of the detailed mine design parameters resulted in a pit containing 167.9 Mt of ROM coal, 92.9 Mt of product and 833 Mbcm of prime waste (including overburden, interburden, partings, and coal loss less out of seam dilution) equating to 854 Mbcm total after provision of 2.5% waste rehandle of prime. This delivers a total product stripping ratio of 9.2 bcm/t.

The ultimate pit was then broken into smaller sub-pits or phases. Refer to Figure 6-2. The pit phases generally progress from lower to higher stripping ratio, south to north within the ultimate pit.

6.2 Mining Method & Equipment Selection The key components of the mining operation and the methodology and equipment selected to carry out the tasks involved are described below.

Clearing and grubbing of standing timber and vegetation will be carried out by a contractor, generally completed in 5 year blocks ahead of mining to minimise contractor mobilisation and demobilisation costs. Topsoil and/or organic subsoil up to 2 m thick will be removed on all areas with slopes of less than 27°.

Drilling and blasting of overburden is required and will be conducted on dayshift with a planned powder factor of 0.65 kg/bcm based on a review of blasting experience in the respective geological formations and review of the rock strength data. Diesel powered drills that can drill up to 270 mm diameter holes for 15 m high benches are planned. Through-seam coal blasting is planned and this will need to be managed to offset the negative impacts on the coal seams that can be encountered. A third party service provider is planned for all the blasting needs of the site.

Based on this OS analysis, waste removal and haulage will involve a primary excavator fleet consisting of two classes of backhoe configuration hydraulic excavators: a 550 tonne (29-cubic metre [cu.m] bucket capacity) and a 400 tonne (22-cu.m bucket capacity). Each class excavator would load 220-tonne end- dump trucks in waste removal operations. The designed working height of the waste benches is 15 m, removed in 3 x 5 m lifts. Special operating procedures will be put in place when working in the vicinity of the old underground working to ensure safe operating procedures.

CPP

MIA

RAW WATER DAM

PRODUCT STOCKPILES

ACCESS ROAD CONVEYOR

MINE

Source: GrassyMountainCoalProject_S07_MINING_UPDATE Final_Page 18 CLIENT PROJECT

NAME GRASSY MOUNTAIN TECHNICAL REPORT

DRAWING ULTIMATE PIT DESIGN

FIGURE No. PROJECT No. Date 6.1 ADV-SY-04238 March 2019 ROM

CPP

MIA

RAW WATER DAM

PRODUCT STOCKPILES

ACCESS ROAD CONVEYOR

MINE

Source: GrassyMountainCoalProject_S07_MINING_UPDATE Final_Page 19 CLIENT PROJECT

NAME GRASSY MOUNTAIN TECHNICAL REPORT

DRAWING MINING PHASES

FIGURE No. PROJECT No. Date 6.2 ADV-SY-04238 March 2019

Coal will be mined and loaded out primarily by a 218 t Wheel Loader (FEL) with 35 cu.m bucket into 220- tonne end-dump trucks fitted with coal bodies. Small backhoe excavators will assist in the winning of thin steeply dipping coal coals that the FEL will then load-out.

Coarse and fine reject will be backhauled, from a reject bin located adjacent to CPP, to the waste dumping areas where it will be co-disposed with the waste in the dumping areas.

Environmental drainage is a key site water management issue. The collection of surface runoff water and the management of pit water are required for the removal of total suspended solids (TSS). Management and mitigation of the selenium content of water percolating through the excavated rock placed in the ex-pit rock disposal areas is also of primary concern. The main objective is to control selenium and TSS levels to meet wastewater guidelines and objectives. A series of collection ditches, sumps, pumps, and settling ponds will be established to manage all surface water on the mine site. These water management structures have been designed to a level of adequacy commensurate with an FS and costed in accordance with this level of design in estimating Project capital requirements. As noted in the FS there is some uncertainty with geotechnical aspects of design that will need to be rectified before final design for construction. Also a contingency plan involving the use of a water treatment plant has been formulated, should it be needed, to ensure compliance with environmental drainage. This is described further in section 9.5.1.

Operations support will be provided by equipment such as graders and water trucks for waste and coal haul road maintenance, utility backhoes and dump trucks, pit pumps, pumpers’ trucks, supply trucks, diesel generating sets, and other miscellaneous support equipment.

A mine reclamation management strategy that includes ongoing mine reclamation to be accomplished as soon as possible once sufficient area is available is planned for the Project. All final reclamation work remaining at the end of mining is planned to be accomplished within a 3-year period of the cessation of mining.

6.3 Equipment Utilisation and Productivity The mine equipment is scheduled to operate, 7 days per week, 2 shifts per day, 12 hrs per shift for 360 scheduled days per year. Based on this roster and the allocation of time to maintenance delays, idle time and operating delays annual working hours (digging or production time) of the major mining equipment is expected to be in the range of 4,900 hrs to 6,000 hrs as shown in Table 6-1.

Table 6-1 Equipment Time Use and productivity Parameter HE Waste 550t HE Waste 400t HE Coal 400t FEL Coal Haul Truck Drill Dozer Wheel Dozer Scheduled hrs 8,640 8,640 8,640 8,640 8,640 8,640 8,640 8,640 Mechanical Availability (MA) % 86% 86% 86% 78% 85% 75% 77% 77% Operational usage (OU) % 80% 80% 80% 72% 80% 77% 79% 79% Working hrs 5,944 5,944 5,944 4,852 5,875 4,990 5,256 5,256 Effective Pit Utilisation (EPU) % 69% 69% 69% 56% 68% 58% 61% 61% Productivity (bcm/ per Working hr) 1,819 1,380 570 Productivity (t ROM per Working hr) 2,110 2,268 430 Annual Production (Mbcm/Mt) 10.8 8.2 12.5 11.0 3.3/2.5

Based on its experience and knowledge of similar coal mining environments in Canada, RPM believes the expected utilisation of the main mining equipment is reasonable and achievable.

The working hour productivity and annual production expectations of the major mining equipment are also shown in Table 6-1. RPM also believes these are a reasonable and achievable expectation of the major pieces of mining equipment.

RPM has estimated the haul truck productivity on waste removal to average 570 bcm / working hr for an average cycle time of 23 minutes over the LOM as estimated by Deswik in its waste haulage productivity estimates.

For truck productivity on coal haulage RPM has estimated the truck productivity to be about 430 t / working hr for an average cycle time of 29.1 minutes over the life of mine as estimated by Deswik.

Both the waste haulage and coal haulage truck productivities envisaged for the Project are viewed as reasonable and efficient by RPM for the haulage tasks planned.

6.4 Mining Schedule

6.4.1 Production Ramp Up The production ramp up to full production is planned over 3 years commencing in Q2 2022 with the mine reaching nameplate production in mid 2024, based on receiving permits for construction to commence by the end of Q1 (March) 2020.

6.4.2 Production Schedule Derivation To facilitate scheduling, the ultimate pit shell was separated into 9 mining phases. Multiple scheduling options were evaluated by Deswick before arriving at the preferred mining sequence for the formulation of the final detailed production schedule. All schedules focused on developing a logical mining sequence in which multiple benches were actively mined within multiple phases of the pit in any given production period. The driver of the production schedules was the production of 4.5 Mtpa of consistent HCC specification product coal from the blending of the 3 coal seams.

The final mining sequence adopted for the production schedule used a low-to-high cost progression to achieve this goal, with operations commencing adjacent to the ROM coal dump hopper within the Phase 01 pit and generally proceeding to the north.

The mining schedule was established to fully mine the two southern-most phases, Phase 01 (2023) and Phase 02 (2026), and begin in-pit backfill as early as Year 4 of commercial production. This plan formed the basis of the mining sequence and resulted in early mining of relatively low stripping ratio coal, followed by expansion to a higher ratio coal in later years.

6.4.3 Detailed Production Schedule Over the 23-year mine life, a total of 168 Mt of ROM coal is produced at an average ROM stripping ratio of 5.1 bcm/t ROM. Annual ROM coal mined is from each of the main seams 1, 2 and 3. All the ROM coal is routed through the CPP, yielding 93 Mt of product coal which is a blend from the 3 seams. The product coal represents an average yield of 55% of the ROM coal.

Annual waste removal from the beginning of the mine life scales up to approximately 35 Mbcm in 2025. In 2029 the annual waste removal increases to approximately 45 Mbcm to account for the higher stripping ratio in the later portions of the mine life. Waste removal continues at around this level until 2041, after which it rapidly declines as the mine approaches its final pit limits. The average effective total product stripping ratio is therefore 9.2 bcm/t product.

7. SITE INFRASTRUCTURE

7.1 Overview Grassy Mountain will require the full suite of infrastructure and facilities associated with a greenfield development. The onsite infrastructure covers both permanent and temporary facilities for the Project.

7.2 Permanent Infrastructure & Facilities The permanent onsite infrastructure and facilities that are required includes the following:

. Bulk earthworks; − Platforms for CPP; − Platform for Mine Infrastructure Area (MIA); − Roadways (external to the mining area) including site access, intersections, culverts, and the train load-out (TLO) area access bridge. . Bridges; − Bridge crossing into the TLO area. . Water management system; − Raw water pumping system to CHPP and MIA area; − Potable water;  MIA and CPP area potable water treatment plant and reticulation (located on the Coal Processing Plant [CPP] platform); − Waste water;  MIA waste water treatment plant including sewage and effluent reticulation (to service the MIA and CPP office areas). . Propane heating, ventilation, and air conditioning (HVAC) systems; − MIA; − CPP (refer to Section 8: Coal Handling & Processing); . Site access security; . All mine infrastructure including a mine truck shop, storage warehouse, tyre repair, mine offices, mine dry facilities, vehicle washdown bays, an emergency response vehicle shed, and light vehicle/heavy vehicle fuel dispensers. . Waste management; − Solid waste; − Oils and hazardous waste. . IT/communications; − External interconnection; − Internal reticulation and facilities. . Power; − MIA power reticulation; − CHPP power reticulation (refer to Section 8: Coal Handling & Processing).

7.3 Train Load-Out Infrastructure A significant infrastructure requirement is the construction of a train load-out facility that requires a connection to the Canadian Pacific Railway, a length of loading track loop, and associated rail, highway, and drainage features. The load-out is sized to accommodate a unit train of 152 cars allowing the mine’s coal product to be transported to west coast ports.

The topography and other surface constraints within which the rail line connection has been made has resulted in the consideration of a number of options and scenarios to arrive at the most capital cost effective solution. Mine access to the new load-out facility includes the construction of a new access road between the Highway 3 intersection and the CHPP, a bridge across the main rail cut to provide continuous access to the east side of the rail loop, and a spur road running to all locations requiring vehicular access within the rail loop.

7.3.1 Power Reticulation Site power will be provided through extension and upgrade of the current Fortis Alberta local area megavolt (MV) distribution system. The 25 kilovolt (kV) supply from Coleman will be reticulated onto the site for interconnection at the TLO and CHPP areas.

7.3.2 Water Management Infrastructure Water management infrastructure is critical to the success of the Project implementation and operation over its 25 year life (that is the 2 year construction period and the 23 year mine life). Operational water management is focused on the management of groundwater inflows and surface water runoff into the open pits and toe seepage from ex-pit waste dumps.

The water management infrastructure will provide a reliable supply of water to meet Project water demands, will ensure an acceptable quality for all Project water discharges to avoid adverse impacts to Blairmore Creek and Gold Creek, and will maintain flows in the main stems of Blairmore Creek and Gold Creek to the extent practicable.

Based on the initial results of leaching tests, it is anticipated that water percolating through and emerging from the ex-pit waste dumps will require management to reduce selenium levels, and cannot be directly released to the environment. Groundwater inflows to and stormwater runoff from exposed open cut areas are expected to be of acceptable chemical quality, but will require suspended solids to be settled out in sediment ponds prior to release to the environment.

A site-wide water balance was developed in support of the operational water management to simulate flows over the 25 years of mine operation. The water balance was developed around the water management ponds and saturated backfill zones within the open cut to track inflows to, outflows from, and water accumulating in these facilities on a monthly basis under average hydrologic conditions.

There will be progressive closure of water management infrastructure during the operating life of the mine. Some structures will be covered over as mining advances and the ex-pit waste dumps are developed. Others will be actively decommissioned and the sites reclaimed when operation of these structures is no longer required. Infrastructure remaining at the end of the mine life will be actively decommissioned and the sites reclaimed, unless it is required for water management during the closure period or in subsequent years. Toe seepage with elevated selenium levels is expected to emerge from the dumps for several years. This water will need to be collected and pumped back to the saturated backfill zones in the open cut for treatment prior to discharge to the environment. Post-closure water management will be required until testing indicates that water quality has improved to a level acceptable for direct discharge to the environment without treatment.

These water management structures that are required over the life of the Project have been designed to a level of adequacy commensurate with an FS and costed in accordance with this level of design in estimating Project capital requirements. As noted in the FS there is some uncertainty with geotechnical aspects of design that will need to be rectified before final design for construction.

8. COAL TRANSPORT

8.1 Rail Infrastructure The primary rail route for Grassy Mountain production to Westshore terminal traverses Canadian Pacific (CP) and Canadian National (CN) rail lines between Crowsnest Pass, Alberta (AB) and Roberts Bank, British Columbia (BC). Alternative routings to either Roberts Bank and/or the Ridley Island Terminal in Prince Rupert, BC are also available. The Grassy Mountain spur track will connect to the CP at Blairmore, AB. CP carries the coal northwest to Kamloops, BC, preferably via Golden BC, although a longer alternative routing through Calgary is available if necessary. Beginning in Kamloops, the CP and CN jointly operate trackage into the greater Vancouver area, including the Westshore terminal. Loaded trains running westbound utilise CN network track, while returning empties utilise CP track.

The targeted rail network has been heavily used by coal shippers for decades. Although neither releases capacity data due to confidentiality concerns, CP and CN have not expressed any concerns regarding their collective ability to ship the roughly 4.5 Mtpa of Grassy Mountain production.

Grassy Mountain will load 152 car unit trains typical for western Canadian coal shipments. Average volume per wagon is 108 tonnes, resulting in train volume of about 16,400 tonnes per train. With this average volume, about 274 train loads per year (one shipment every one or two days) are necessary to move 4.5 Mtpa. RPM did not observe any unusual conditions for the overall rail plan.

Riversdale engaged Hatch Corporation (Hatch) to design the rail infrastructure on the mine site. RPM’s review of the FS study indicates that Hatch undertook a comprehensive review of rail alignment, grades, crossings, structures, geotechnical issues, and other considerations, with appropriate community input. The ultimate plans were supported by the Crowsnest Municipal Council on July 21, 2015, allowing Riversdale and Hatch to continue with the feasibility design of the loop track.

8.2 Port Infrastructure Riversdale plans to ship the Grassy Mountain production through the Westshore Terminal located in Delta, BC, approximately 33 km (via highway) south of Vancouver, BC. Westshore has long been the primary outlet for British Columbian and Albertan coal exports. In addition, U.S. producers also use this facility for thermal coal exports to Asian markets.

Upgrades that have been recently completed have taken Westshore capacity to approximately 35 - 36 Mt per annum. Due to downturns in international thermal and metallurgical coal markets that have only recently reversed, Westshore handled less than its capacity over the last three years. According to its 2016 Annual Report, 2016 throughput was 25.841 Mt. 2017 volume has been reported as 29.034 Mt and in the 11 months to November 2018 was 28.0 Mt with a final result for 2018 expected to be between 30.0 and 30.5Mt.

These volumes alone would suggest that Westshore has sufficient capacity to accommodate the approximately 4.5 Mtpa of Grassy Mountain production. More importantly however, Riversdale has since 2014 paid Westshore reservation fees to guarantee 4.5 Mtpa of throughput with potential to ship from late 2020, if required. As a result, RPM believes that Riversdale should encounter few issues with regard to sufficient terminal capacity at its preferred coal terminal.

9. PERMITTING AND ENVIRONMENTAL & SOCIAL/COMMUNITY IMPACT RISKS

9.1 Environmental Setting The topography of the Grassy Mountain Project consists of rounded hills at lower elevations with moderate to steep slopes at higher elevations. Ridges and corresponding valleys are oriented in the north to south direction with water flowing west to Blairmore Creek and east to Gold Creek. Blairmore Creek flows along the western margin of the proposed mine permit boundary while Gold Creek is located adjacent to the eastern proposed mine boundary. A portion of the headwaters of both watersheds is located in the proposed mine permit area. The variations in topography result in variable physiographic conditions supporting variable vegetation distributions.

9.2 Tenements Mineral/Coal leases for the Grassy Mountain Project are shown in Table 9-1. Benga Mining Ltd. (100% owned Riversdale subsidiary) holds the coal leases for the mine permit area while the petroleum and natural gas leases are held by several oil and gas companies as noted in the table.

Table 9-1 Active Crown Mineral Agreements within the Mine Permit Boundary

Agreement Number Agreement Type Expiry Date Agreement Holder(s)/Percentage

Petroleum and Natural Gas Direct Energy Marketing Ltd./ 10.25% (AB)001 127718 Dec 31, 9999 Lease Devon Canada Corp./ 89.75%

Petroleum and Natural Gas Direct Energy Marketing Ltd./ 10.25% (AB)001 127718A Dec 31, 9999 Lease Devon Canada Corp./ 89.75%

Direct Energy Marketing Ltd./ 10.25% (AB)002 1417 Natural Gas Lease Dec 31, 9999 Devon Canada Corp./ 89.75%

(AB)1316120176 Coal Lease Dec 20, 2031 Benga Mining Ltd./100%

(AB)1317040274 Coal Lease Apr 10, 2032 Benga Mining Ltd./100%

(AB)0131304020413 Coal Lease 20 Feb 2034 Benga Mining Ltd./100%

(AB)0131306120436 Coal Lease Dec 6, 2021 Benga Mining Ltd./100%

(AB)0131306120437 Coal Lease Dec 9, 2021 Benga Mining Ltd./100%

(AB)0131307030946 Coal Lease Mar 8, 2022 Benga Mining Ltd./100%

(AB)0131307030965 Coal Lease Mar 22, 2022 Benga Mining Ltd./100%

(AB)0131307080678 Coal Lease Aug 31, 2022 Benga Mining Ltd./100%

(AB)0131308050906 Coal Lease May 10, 2023 Benga Mining Ltd./100%

(AB)0131308050907 Coal Lease May 10, 2023 Benga Mining Ltd./100%

(AB)0131308050908 Coal Lease May 10, 2023 Benga Mining Ltd./100%

(AB)0131308050909 Coal Lease May 10, 2023 Benga Mining Ltd./100%

(AB)0131308070802 Coal Lease Jul 2, 2023 Benga Mining Ltd./100%

(AB)0131309090457 Coal Lease Sep 16, 2024 Benga Mining Ltd./100%

(AB)0131309110258 Coal Lease Nov 1, 2024 Benga Mining Ltd./100%

(AB)0131312060346 Coal Lease Jun 11, 2027 Benga Mining Ltd./100%

Agreement Number Agreement Type Expiry Date Agreement Holder(s)/Percentage

(AB)0131314010343 Coal Lease Jan 20, 2029 Benga Mining Ltd./100%

(AB)0131314010344 Coal Lease Jan 20, 2029 Benga Mining Ltd./100%

(AB)0131314010355 Coal Lease Jan 31, 2029 Benga Mining Ltd./100% 5 Year Foothills Petroleum (AB)0555505060975 Jun 30, 2015 Devon NEC Corp./ 100% and Natural Gas Licence 5 Year Foothills Petroleum Devon NEC Corp./ 50% (AB)0555505060976 Jun 30, 2015 and Natural Gas Licence Legacy Oil + Gas Inc./ 50%

The Project is located on lands owned by the following: (1) Provincial Crown Land; (2) Benga Mining Limited (Riversdale); (3) the Crowsnest Pass Golf & Country Club; and (4) three parcels of private ownership. Riversdale has agreements with the Crowsnest Pass Golf & Country Club to use lands required for Project development. The Riversdale owned land covers more than 50% of the proposed Project footprint following a land acquisition program over the last 4 years. In addition, Riversdale has an agreement to purchase one of the three private properties and is working to find an acceptable solution to the other two.

The existence of Provincial Crown Land in the projected mine permit area requires an application in accordance with the Public Lands Act for Mineral Surface Lease. Approval of this application will follow approval of the overall Project decision expected by the end of Q1 (March) 2020.

The mine is scheduled to begin development activities immediately following approval of the EIS and various permits and authorisations being granted.

9.3 Environmental Management Plan An Environmental Management Plan (EMP) for construction and operations must be developed based upon the conceptual EMP to be provided within the ESIA. The EMP’s should include the four general elements of a management plan: (1) Planning: a statement of principles, definitions of responsibilities for the performance of plans and planning of activities; (2) Execution: a number of guidelines/mitigation measures for the protection of the various environmental components and/or management of environmental risks; (3) Verification: a process for the control of activities by means of monitoring and inspections; and (4) Mitigation: corrective action in different areas under the environmental guidelines and implementation of remediation measures for the environment.

9.4 Permits and Authorisations The Project is regulated by the AER under the EPEA and Coal Conservation Act (CCA) in Alberta that requires submission of an EIA. The Project is also regulated by the Federal Government of Canada through the CEAA under the Canadian Environmental Assessment Act, which also will require an EA.

While the Alberta EAA prohibits issuance of provincial permits before an EA Certificate is issued, the Concurrent Approval Regulation allows for parallel review of related provincial permit applications. This regulation applies to Provincial and Canadian permits, authorisations, and approvals necessary to undertake works within the scope of the assessment. It should be noted that statutory permit approval processes are normally more specific than those required for the EA level of review and usually require detailed and possibly final engineering design information for certain permits such as the road and bridge designs. As a result, it is conceivable that additional information from the Proponent may be required to support acquisition of permits.

Other provincial/federal permits/authorisations needed comprise those associated with a number of legislative requirements/Acts including the Coal Conversion Act, Environmental Assessment Act, Alberta Environmental Protection and Enhancement Act, Public Lands Act, the Navigable Waters Act, the Fisheries Act (includes effluent limits and the MMER Fish Habitat Compensation Plan), the Water Act, the Species at Risk Act, Migratory Birds Conservation Act, and Explosives Act. If appropriate permit applications are submitted at the time of the formal submission of the EIS, Federal authorisations should be issued within

90 calendar days following EA approval. A list of permits/authorisations required to operate the Grassy Mountain Project are listed in Table 9-2. The projected approval dates are estimated based on projected date of the final project decision. Once the Project is in the Regulatory Panel Review, the timeline will be determined by specified time requirements.

Table 9-2 Environmental Permits/Approvals Required

Permit/Authorisation Approval Description Authority Status Date Comment EIA/EIS Completion Provincial and Federal CEAA Projected Updated EIS and Approval Reviewing end of 1st submitted to the updated EIS. Quarter reviewing panel on AER will begin 2020 August 15, 2016. review of EIA EIA/EIS is a once it issues supporting the public Notice document to of Application project early Oct 2017 application(s). Addendum to the EIA Provincial and Federal CEAA Projected Submitted on Reviewing end of 1st January 31, addendum Quarter 2017. Includes AER will begin 2020 Aquatic Ecology review of EIA Assessment; once it issues updated Section the public Notice E.6; and Updated of Application Wildlife early Oct 2017 Assessment including Little Brown Myotis (bat). Mine Permit Provincial AER will begin Projected Part of integrated review of end of 1st application to AER. application once Quarter Part of overall it issues the 2020 project decision public Notice of Application early Oct 2017 Coal Processing Plant Provincial AER will begin Projected Part of integrated Approval (Provincial) review of end of 1st application to AER. application once Quarter Part of overall it issues the 2020 project decision public Notice of Application early Oct 2017 Mine License Provincial AER will begin Projected Part of integrated (Provincial) review of end of 1st application to AER. application once Quarter Part of overall it issues the 2020 project decision public Notice of Application early Oct 2017 Waste Rock Disposal Provincial AER will begin Projected Part of integrated License (Provincial) review of end of 1st application to AER. application once Quarter Part of overall it issues the 2020 project decision

Permit/Authorisation Approval Description Authority Status Date Comment public Notice of Application early Oct 2017 Coal Conservation provincial AER will begin Projected Part of integrated Act review of end of 1st application to AER. application once Quarter Part of overall it issues the 2020 project decision public Notice of Application early Oct 2017 Canada Federal/Provincial CEAA Projected Part of integrated Environmental Reviewing end of 1st application to AER. Assessment Act AER will begin Quarter Part of overall (federal)/Alberta review of EIA 2020 project decision Environmental once it issues Protection and the public Notice Enhancement Act of Application (provincial) early Oct 2017 Water Act Approvals provincial AER will begin Projected Part of integrated review of end of 1st application to AER. applications Quarter Part of overall once it issues 2020 project decision the public Notice of Application early Oct 2017 Public Lands Act provincial AER will begin Projected Part of integrated review of end of 1st application to AER. application once Quarter Part of overall it issues the 2020 project decision public Notice of Application early Oct 2017 Fisheries Act Federal/Canada CEAA Projected Part of overall Requirements Reviewing end of 1st project decision (Federal/Canada) Quarter 2020 Species at Risk Act Federal/Provincial CEAA Projected Part of integrated (Federal) / Wildlife Act Reviewing end of 1st application to AER. (provincial) AER will begin Quarter Part of overall review of EIA 2020 project decision. once it issues the public Notice of Application early Oct 2017 Migration Birds Federal/Canada CEAA Projected Part of overall Conservation Ac t Reviewing end of 1st project decision Quarter 2020 Navigable Waters Act Federal/Canada Complete N/A Have a letter of no concern

Permit/Authorisation Approval Description Authority Status Date Comment Explosives Act Federal/Canada Submit Projected Approvals operating permit end of 1st concurrent with application just Quarter Project decision prior to Final 2020 Project Decision Historical Resources Provincial HRIA submitted Projected AB Culture and Act and Regulations to AB Culture end of 1st Tourism will issue and Tourism for Quarter report to Panel to review 2020 consider in overall project decision Once recommended mitigation is complete will issue clearance letter Electrical Utilities Act Provincial Submit Projected Approval and Regulations operational end of 1st concurrent with permit Quarter Project decision applications just 2020 prior to Final Project Decision - Approval Municipal Local Authorities Submit prior to Projected Municipal Government Act and construction end of 1st approvals must be Regulations actions Quarter issued once a 2020 Project decision is made under EPEA

A list of applications and addendums that have provided as part of the regulatory submissions for Grassy Mountain are provided in Table 9-3

Table 9-3 Regulatory Submissions for Grassy Mountain REGULATORY SUBMISSIONS FOR GRASSY MOUNTAIN COAL

Document Date Contents CEAA submitted doc #

Integrated Application 1-Aug-16 Environmental Impact Assessment 42

Addendum 1 31-Jan-17 CR6: Aquatic Resources Addendum 44 CR9: Wildlife Addendum Addendum 2 16-Oct-17 Errata Section C.5.1 and C.5.2 53 Appendix 1C CCA Addendum Appendix 1D Water Act Fence-line appl. Appendix 1E Water Act Licencing appl. Addendum 3 9-Nov-17 Updated PLA Application 54

Addendum 4 27-Nov-17 Updated Concordance Tables 55 Response to CEAA conformity IRs

Addendum 5 28-Feb-18 Response to AER IRs related to EIA, CCA, PLA, WA, 69 EPEA applications. Addendum 6 30-Apr-18 Response to CEAA Round 1 Technical IRs 70

Addendum 7 28-May-18 Response to AER PLA and WA IRs 72

Addendum 8 17-Oct-18 Response to CEAA conformity IRs, 89 Response to CEAA Round 2 technical IRs, Response to AER Round 2 technical IRs, Updated Concordance Tables

9.5 Important Project Risk Components The Grassy Mountain Project appears to be well-planned with the intent of returning the affected area to predevelopment conditions consistent with the land use objectives. Riversdale intends to accomplish this objective while preventing substantial impact to the environment and social components of the Project during the operations and post-closure phases. However, several risk components exist that jeopardise project success. Areas of potential risk are described in this section.

9.5.1 Water Resources Management

Surface Water Management A primary concern associated with project impact is the effects of mining on the flow regimes in the Blairmore Creek and Gold Creek drainages. Reduced flows could significantly impact aquatic habitats in both stream environments while flow increases could change channel morphology impacting the aquatic system. The Aquatic Effect Assessment Addendum recently completed discusses flow changes expected due to the mining project. Flows in Blairmore Creek are expected to increase compared to baseline conditions due to changes in surface morphology resulting in contributions of flow from Gold Creek sub- catchments. The addendum indicated that flow changes for Blairmore Creek include peak increases of 37% in January, 34% in February, and 26% in March. Flows dropped to 7% in the summer months and ramping up to 26% in December. It is important to note that the predicted flow increases are expected to occur during historical low flow periods. As a result, the changes resulting from mining should not impact the stream channel morphology of Blairmore Creek during the post-closure phase of the Project and beyond.

The Gold Creek watershed will be impacted as the mine pit will intercept water from some of the upper reaches of the watershed. In addition, some of the water collected in the mine pits would be used for project needs and some may be treated and discharged in the Blairmore Creek drainage. A net loss of flow is anticipated in the lower reaches of Gold Creek during the operations phase of the Project. Flow changes of about 10% are estimated to occur along the reaches of the creek most impacted by operations. However, most flow changes are expected to be less than 5%. The long-term increase in flow in the upper reaches of the Gold Creek watershed will be caused by overflow from the pit lake expected to occur during the post- closure phase of the Project.

The impact of mining on the flow regime of Blairmore Creek and Gold Creek is deemed not significant based on flow changes, which appear to be within the range of variability expected to occur between the dry and wet seasons.

Water Quality Management Water management is critically important to the success of the Grassy Mountain Project. The primary concern is protection of the surface water resources in the project area including Blairmore Creek and Gold Creek and their tributaries. Portions of these creeks are considered critical habitat supporting the threatened Westslope Cutthroat Trout.

Water resulting from surface runoff and mine pit dewatering will be captured on the mine site prior to discharge. Four sedimentation ponds will be constructed to collect water for sediment removal prior to release into Blairmore and Gold Creeks or used for project activities. Elevated levels of selenium and sulfate are major concerns for the protection of aquatic life. Four surge ponds will be used to collect water containing elevated selenium concentrations prior to treatment. As noted previously, elevated sulfate levels are a major concern. Geochemical simulations show sulfate levels will likely exceed guidelines in most of Blairmore Creek during operations, closure and post-closure. Nitrate levels may also become problematic in surface water and will likely require treatment. Some water will likely contain other elements that will not meet discharge standards. As a result, a treatment plant will be constructed if element/metal removal is required to meet discharge standards.

Experience with selenium concentrations resulting from coal mining in Elk Valley has elevated concern for selenium issues potentially caused by the Grassy Mountain Project. Rock testing has shown selenium levels of waste rock to be about half the concentrations found in Elk Valley. However, the importance of protecting surface water resources in the mine area is important to Project success. As a result, the Project has developed a selenium management strategy that has been built into the mine plan. The strategy includes the following:

. Capture seepage from the rock storage areas, which is expected likely enriched with selenium; . Untreated seepage will be used in the coal wash plant and other Project uses; . Development of passive treatment systems creating by establishing backfill pits that are injected with carbon sources (e.g. ethanol, molasses and potentially coal rejects) and saturated with water to generate anoxic conditions favourable for precipitation and sorption of selenium. The low solubility of selenium in solution under these reduced conditions is expected to be maintained during the post- closure phase of the Project and beyond. This type of treatment system has been successful in the past. Three saturated treatment zones will be created in the pit area during the life of the Project; and . A water quality treatment plant will be instructed as backup, if required. The treatment plant could be constructed but is not planned at this time. As noted, nitrate concentrations of seepage water may become high requiring removal. A similar treatment system to that used to remove selenium will be applied. The conversion of nitrate to gaseous nitrogen components through denitrification using an anoxic environment is a very effective treatment.

RPM understands that Riversdale has made a commitment as part of its operational water quality monitoring program to continuously monitor sulfate levels in Blairmore and Gold Creek. Potential issues associated with high sulfate levels in water discharged from the Project must be evaluated. Once the potential issue is defined, an appropriate management plan must be developed to demonstrate mitigation can be achieved.

Hydrogeology A good understanding of the hydrogeology of the project area is important to support development of mine costs associated with pit dewatering. Hydrogeology is also important for the environmental and social considerations of the project-related impacts to stream and spring flow and to water supply for local stakeholders.

The groundwater in the project area consists of a shallow and a deep aquifer apparently with limited connection. The near surface groundwater provides recharge to the surface water system while the lower groundwater system is maintained via surface recharge.

Pumping of groundwater required to dewater the mine area will cause water levels to decrease in the vicinity of the pit. A numerical groundwater model predicted drawdowns are highest in the vicinity of the mine pit and range between 30 m and 430 m. Measureable drawdowns (greater than 5 m) are mostly located within

400 m of the pit boundary and are found within the Mine Permit Boundary. Drawdown diminishes quickly with distance from the mine pit. The measurable drawdown does not extend to Gold Creek and Blairmore Creek but does extend under some of the headwater tributaries. Changes in topography associated with Grassy Mountain mining will change the groundwater regime in the immediate area of the mine, but changes beyond the mine pit boundary are not expected.

Dewatering of the mine pit area is expected to reduce baseline groundwater discharge to local streams. The reduction is largely due to groundwater being pumped to sedimentation ponds and therefore, cannot contribute to base flow. However, the surface water management plan includes discharge of water from the ponds into the streams to mitigate base flow reduction. This said, the physical removal of a large portion of Grassy Mountain will alter the groundwater flow regime in the area, which will affect its contribution to baseline flow conditions. This impact is not expected to cause significant impact to water flow conditions in surface water bodies during operations and post-closure phases of the Project. Much of the impact is offset by changes in surface water contributions to stream flow conditions as noted previously in this section.

9.5.2 Mine Waste Management Mine waste will consist of waste rock/overburden and coal cleaning/coal tailings material generated during coal processing. The potential impact of these materials on surface and groundwater quality is directly related to their content of sulfide, sulfur, selenium and to lesser degree cadmium. Selenium will be treated in the anoxic treatment systems established in the mine backfill while potentially acid forming materials will be neutralised by carbonate minerals and by blinding with non-acid forming materials.

Waste rock and coal tailings will be stored together in facilities that will not be lined but will be equipped with a seepage collection system. The seepage along with runoff will be captured and diverted to surge ponds for temporary storage. Some of this water will be recycled for use in processing while much of it will be disposed of in the passive treatment systems established to treat mine effluent for selenium and nitrate. Non-collected seepage from the mine waste storage areas has the potential of impacting groundwater. Riversdale has recognised this potential issue and have proposed mitigation to control environmental impact, which consists of installation of a pump and treat system.

9.5.3 Biodiversity Biodiversity evaluations of the proposed project area identified several biota considered as Species at Risk. A Fish and Aquatic Resources Baseline and Effects Assessment was initiated with baseline characterisation of the mine area during an initial campaign conducted during 2014 and 2015 with continued work during 2016. The information collected during the initial campaign indicated the presence of the Westslope Cutthroat Trout (Oncorphynchus clarkia lewisi), which is a threatened species as designated by the Provincial and Federal Governments and a terrestrial vegetation species Whitebark Pine (Pinus albicaulis) considered an endangered species was found within the Project area. The Little Brown Myotis (bat) considered by Environment and Climate Change Canada (ECCC) as a species of concern is also receiving attention.

Zones of critical habitat for the Westslope Cutthroat Trout exist along portions of Blairmore and Gold Creek and their tributaries. Data collected during the 2016 sampling campaign provided additional information to support completion of the Aquatic Ecology Effects Assessment submitted to the Provincial and Canadian governments on January 31, 2017.

The protection of critical habitat associated with Species at Risk is a primary consideration in the development of the Project. Potential impacts to fish habitat include direct removal of portions of the headwaters to Blairmore and Gold Creeks, alteration of stream flow and effluent discharge/seepage from the Project. The level of impact is discussed in the Aquatic Ecology Effects Assessment. Impacts to the critical habitat are expected. Mitigation actions will likely require a habitat offset, which will include a plan describing potential offset locations and detailed management actions required to assure future protection of the Westslope Cutthroat Trout.

Riversdale has been in continuous communication with the Department of Fisheries and Oceans Canada (DFO) in regard to an appropriate Fisheries Offsetting Plan to mitigate/offset potential impacts to the fish and aquatic resources associated with the project location. The plan was submitted to the JFP and DFO as part of Addendum 8. Questions associated with other SARA listed species, such as Whitebark Pine and Little Brown Myotis were also addressed and provided as part of Addendum 8.

9.5.4 Closure Plans/Costs Closure of the Grassy Mountain Project appears to be well planned and Riversdale has committed to meet financial security assurances based on the Mine Security Financial Program, the Mine Financial Security Program, and the Guide to the Mine Financial Security Program. The primary reclamation goal of the Project is to return the lands to a capability equivalent to predevelopment conditions consistent with the land use objectives developed during engagement with the various stakeholders.

The closure plan describes the many components required to successfully achieve equivalent land capability following mine closure. Several components addressed will likely pose risk to the overall success. The primary concern is to assure surface and groundwater meets acceptable water quality standards in the post-closure phase of the Project. It will also be important that flow regimes in Blairmore Creek and Gold Creek remain similar to pre-mining conditions and do not impact critical habitat associated with the Westslope Cutthroat Trout.

Efforts to achieve water quality standards include the conversion of sedimentation ponds into treed wetlands to provide the benefit of water treatment, water flow attenuation and habitat. In addition, the surge ponds will remain active to support the selenium management program until water quality is suitable for discharge. Mineral wetlands have been strategically planned at major water collection points to provide water treatment. Also, re-constructed watercourses will be developed as riparian areas by maintaining undisturbed areas and redeveloping on reclaimed areas. Erosion and sedimentation control systems will be installed during reclamation including the development of dips and swales topography to reduce steepness and slope length. In addition, drainage courses will be designed with the use of armouring with boulders and the establishment of vegetation to prevent erosion and scouring. The reclaimed landscape will be monitored and maintained to correct areas susceptible to excessive erosion.

Management of the final pit impoundment is not expected to cause major issues. However, potential issues with selenium should be considered during early stages of the Project to allow implementation of appropriate mitigation actions that will prevent issues during the post-closure phase of the Project.

An area of concern is the seepage from waste rock storage areas into the underlying groundwater. Selenium and other constituents likely present in the seepage could impact groundwater quality for an extended period of time. The pump and treat mitigation action as proposed by Riversdale is adequate with provision of the necessary manpower and equipment resourcing.

9.5.5 First Nations and Community Issues Collaboration is a key part of the consultation process. It is very important for proponents to involve both government, First Nations Groups and potentially impacted communities in the discussions at the outset of the Project and to work together to determine information to be collected to support decision making on the Project and how Riversdale initiated engagement activities with First Nations Groups and potentially impacted communities early in the project development process. Riversdale has interacted with all Treaty 7 First Nations Groups prior to Project acquisition. Riversdale has signed Impact Benefits Agreements (IBA’s) with the Piikani Nation and the Stoney Nakoda, which comprises three (3) of the First Nations Groups, bringing to four (4) the number of IBA’s currently signed off. Riversdale is in agreement discussions with the remaining three (3) First Nations Groups.

Key issues noted by the First Nations groups are training, employment, education and commercial opportunities. Other issues voiced by First Nations groups include: project closure, monitoring program participation, access to traditional use areas, emergency preparedness, and community investment.

It appears that engagement activities with First Nations Groups and communities are moving the Grassy Mountain Project toward acquisition of a “Social License” to operate. However, environmental issues associated with Project development have the potential of causing stakeholder concerns. NGO distress associated with potential environmental impacts of selenium effluents to critical habitat related to the Westslope Cutthroat Trout (threatened species) have been voiced in recent news articles. Riversdale will need to provide a positive mitigation approach to prevent development of such potential issue as the Project moves forward.

10. MINE PLAN COST ESTIMATES

10.1 Capital Costs

10.1.1 Overview Grassy Mountain capital costs have been estimated from the FS as an owner operated open cut mine that will deliver a life of mine product coal production target of 4.5 Mtpa. The capital cost estimate has had sufficient design, engineering, scheduling, plant and equipment costing undertaken to have an accuracy of +/- 15%. The total estimated cost of bringing the Project to first sales is CA$631.6m and to get to nameplate coal production by June 2024 is CA$738.3. The estimate is in real, Q1 2019 Canadian dollars.

10.1.2 Basis of Estimate The estimate takes account of all the direct and indirect costs from detailed design to commissioning for all areas of the site based on a Work Breakdown Structure (WBS).

There is no escalation in the capital cost estimate as prices are set in Q1 2019, Canadian dollars. In Alberta only the Canadian Federal 5% Goods and Services Tax (GST) is applied to purchases; there is no Provincial sales tax.

The Project is expected to procure items for construction and plant from a number of foreign sources such as the United States (US), European Union (EU) and China (CN) as well as from Canada.

10.1.3 Capital Cost Estimate The initial capital cost estimate required to achieve first coal sales is CA$ 631.6m. The total capital cost estimate to bring the mine to nameplate production of 4.5Mtpa product by the middle 2024 (24 months after the commencement of coal production) is CA$738.3M as shown by WBS in Table 10-1.

Table 10-1 Initial Capital Cost Estimate by WBS

Total to First Coal Total to Nameplate Area Produced (CA$M) Production (CA$M)

Mining 141.4 233.0

Infrastructure 10.3 12.4 CHPP 206.3 206.8 MIA 95.2 95.2 Rail Siding 39.6 39.6 Water 44.6 57.1

Owners & Insurance Costs 62.2 59.0

Construction Camp 32.0 35.2

Total 631.6 738.3

The capital intensity of the Project at a nominal 8.3 Mtpa ROM, is CA$89M per 1 Mtpa ROM of installed capacity. This level of capital intensity reflects the current construction costs in a competitive market for bringing a new greenfield coal Project into construction in western Canada. It is much lower than capital cost intensities that were experienced at the height of the last mining boom which were up to CA$150M per 1 Mtpa of installed ROM capacity.

RPM believes the initial capital cost estimate for the Project in its current status and location is reasonable and also believes the Project could be delivered for this estimate.

CHPP The CHPP capital cost estimate is for the engineering, procurement, and construction delivery (EPC- delivered) of the facility, fully designed, procured, fabricated, delivered to site, constructed, and commissioned. The delivery of the CHPP is anticipated to run over 3 years with the capital incurred from 2022 to 2024.

The battery limits are from the ROM bin to the train load-out for product coal.

Based on a risk and opportunity analysis conducted by Sedgman the capital cost level has been set at the P50 to P80 level (50% to 80% chance that the Project will be completed on/under budget) and the contingency for the CHPP of CA$12.4M has been provided.

Mine Capital Costs Mine capital costs relates the various forms of mining equipment necessary to maintain the production schedules for the mining operation in each year of the plan. Capital costs of the equipment were based on vendor quotations supplied to Riversdale as well as file data from past work. Where necessary, historical capital estimates were escalated based on the period of original derivation.

Initial capital is assumed to include the new capital outlays required to get the mine to full production by the end of 2024. Table 10-2 outlines the breakdown of initial capital by category and shows that 58% is associated with the 220-tonne haul truck fleet and 20% with the hydraulic excavators and FEL’s used for waste and coal mining. As the mining equipment costs are generally based on written OEM quotations, no contingency has been provided. RPM believes this is reasonable particular in the current market environment, as when the time arrives for procurement to be executed with the OEM, the quotation price is often higher than the deal price.

Table 10-2 Breakdown of Mining Capital by Category Category Cost CA$M % of Total Stripping & Loading Machines 46.0 20% Drilling & Blasting Equipment 5.0 2% Haul trucks 134.9 58% Mobile Equipment 32.8 14% Service & Support Equipment 14.3 6% Total 233.0 100%

Water Management Capital costs associated with water management were generated on an annual basis and covered the following categories:

. In-pit water management features; . Ex-pit water management features; and . Closure of water management features. The majority of the initial capital until 2024 of CA$57.1M is associated with the ex-pit water management features of drains dams etc. and constitutes 58% of the total estimate of CA$98M. The accuracy of the water management capital estimate is lower than the other WBS elements because of uncertainty associated with geotechnical aspects of dam design and a contingency in the period up to 2024 of 19% has been allowed. RPM believes this is reasonable and prudent.

Mine Access and Rail The mine access and rail capital cost estimate is CA$37.7 comprising CA$4.5M for the road access and CA$33.2M for the rail. A further contingency provision of CA$1.9M or 5% of the total has been allowed. This aspect of the Project is quite complex and the cost estimate reflects the effort and diligence that will need to be committed to deliver this aspect of the Project on budget.

MIA & Infrastructure The capital cost estimate of CA$95.2M covers the provisions of the following:

. Bulk earthworks (including ROM pad); . Access roads (mine and general access); . Haul road (Rejects area and MIA to ROM Pad); . Mine infrastructure including a mine truck shop, storage warehouse, tyre repair shop, mine offices, mine dry facilities, vehicle wash down bays, an emergency response vehicle shed, light/heavy vehicle fuel dispensers, and power and water reticulation; and . MIA site services (power, water, heating, ventilation, air conditioning [HVAC], and waste)

Construction Camp A provision of CA$32.0M has been made for a construction camp to accommodate the construction workforce during the 23 month construction period. The camp will need to be in place prior to the commencement of the construction period beginning in April 2020

Owner’s Costs & Insurance Costs Owner’s costs are all of the costs required to complete the Project construction that are outside of direct and indirect EPCM costs. Owner’s costs of CA$62.2M have been allowed.

10.2 Operating Costs

10.2.1 Overview The operating costs for the Project have been built up from first principles being operated as an owner operator mine site. The LOM Project operating costs (excluding royalties), FOB, are estimated to be CA$88.9/t product and the detail is outlined in Table 10-3.

Mine site costs are estimated to be CA$51.9/t product or 58% of the total FOB costs and off site costs are estimated to be CA$37.0/t product or 42% of the total FOB cost.

The FOB cost breakdown represents the imposition of significant logistics cost on coal projects in Canada that are more than 1,000 km from the coast and deep water port facilities that can service the seaborne coal trade markets.

10.2.2 Basis of Estimate The key assumptions associated with the FOB mine site operating costs estimate are:

. The physicals from the LOM production schedule; . Key consumable costs like diesel, electricity and explosives; Owner operator equipment cost database covering the following key elements associated with deriving hourly equipment operating costs; − Fuel burn rates; − Oils, grease and lubricants usage; − Ground Engaging Tools (GET); − Tyre costs and usage;

− Repair and maintenance parts costs for both preventive and corrective maintenance. . Production and maintenance labour annual salaries and on costs; and . Salaried employees annual salaries and on costs.

Table 10-3 LOM FOB Operating Costs LOM LOM CA$/t LOM Cost % of CA$M product CA$/unit Unit Total Mining 3735 40.2 22.2 tROM 45% Water Management 23 0.3 0.1 t ROM 0% Rail Siding 12 0.1 0.1 t product 0% G&A 150 1.6 1.6 t product 2% CHPP 558 6.0 3.3 t Feed 7% Infrastructure 293 3.2 3.2 t product 4% Construction Opex 50 0.5 0.5 t product 1% Sub Total Minesite 4821 51.9 51.9 t Product 58% Rail & Transport 3440 37.0 37.0 t Product 42% FOB (excluding royalties) 8261 88.9 88.9 t Product 100%

10.2.3 FOB Mine Site Operating Costs

Mining Costs The mine operating costs are shown in Table 10-4. They range from a high of CA$55.2/t product when the mine is operating at a prime to product strip ratio of just over 12:1, to CA$23.3/t product at the end of the LOM when the product strip ratio has reduced to about 4:1. The average mine operating costs over the LOM is CA$40.2/t product or CA$22.2/t ROM coal mined.

The main components of the mine operating costs are the waste mining costs and the drilling and blasting cost which together comprise about 74% of the total mining costs.

The unit mining cost over the life of mine expressed per equivalent bank cubic meter (bcme) of material moved comprising waste plus ROM coal converted to bank cubic meters is CA$3.9/bcme. This is a mining operating unit cost that would be expected from a well-managed, efficient, modern mine using the latest mining technology that is delivering best practice performance from its fleet of drills, blasting techniques, hydraulic excavators and trucks.

CHPP Costs

The operating cost estimate for the CPP has been generated on the premise that the facility will be owner operated. A full lifecycle of operating costs for the plant and equipment has been factored into the estimate on the basis of providing a functional and efficient asset for the projected life of the mine.

Over the LOM the CPP operating cost is estimated to be CA$3.3/t feed or CA$6.0/t product. RPM believes this is a fair and reasonable estimate of the operating costs that could be expected from a CPP configured as described for coking coal production.

Infrastructure

Infrastructure costs over the LOM are estimated to be CA$3.2/t product.

Table 10-4 Annual Mining Operating Costs

Mining Operating Cost Breakdown 250

200

150

100 Operating Costs ($M) 50

0 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 Year

Drilling & Blasting Waste Mining Coal Mining Mine Support Maintenance Mine Supervision & Admin

G & A G&A costs over the LOM are estimated to be CA$1.6/t product.

10.2.4 FOB Offsite Operating Costs The offsite operating costs comprise, rail freight charges and port costs.

Riversdale has advised a combined rail and port charge of $37.0/t product with the Westshore port costs being CA$13.0/t in real terms.

The rail portion of the CA$37.0/t combined cost is therefore CA$24.0/t product. This charge does not seem unreasonable.

Applied to the 1,070 km preferred route from Grassy Mountain to Westshore, this charge converts to CA$0.0224/t km. This rate is comparable with the rate that other western Canadian producers are paying for the rail transport of coal over the mountainous terrain of the Rocky Mountains to the west coast coal exporting ports.

Appendix J – MBGS Report

McElroy Bryan Geological Services Pty Ltd Consulting Geologists ABN 52 053 807 926

26 March 2019

Mr Andrea De Cian Director Grant Thornton Corporate Finance Level 17, 383 Kent Street Sydney, NSW 2000 AUSTRALIA

RE: UPDATE INDEPENDENT TECHNICAL REPORT - EXPLORATION PROPERTIES OF RIVERSDALE RESOURCES, ALBERTA, CANADA

Dear Andrea,

In November 2016, McElroy Bryan Geological Services Pty Ltd (MBGS) prepared an Independent Technical Report at the request of Riversdale Resources for inclusion in the Independent Expert’s Report in considering a financing proposal from Resource Capital Funds. This document is a summary update of the MBGS’ 2016 report prepared at the request of Grant Thornton Corporate Finance for inclusion in the Independent Expert’s Report being prepared by Grant Thornton for the board of Riversdale to assist in the consideration of a “takeover offer” from Hancock Corporation Pty Ltd.

MBGS staff involved in the preparation of both the initial report and this summary update are completely independent and have no conflict of interest with Riversdale. This summary provides an update of the exploration target tonnages and associated valuations of Riversdale’s exploration properties in Crowsnest Pass, Alberta, Canada as a result of the recent gazetting of Castle Park which impacts on two (Lynx Creek and Adanac) of the four exploration leases. This assessment and valuation does not include Riversdale’s well advanced coking coal development at Grassy Mountain. MBGS prepared the technical review in accordance with the requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2012 Edition) and referred to the Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets (The VALMIN Code, 2015 Edition) for guidance in relation to project valuation. MBGS has reviewed existing geological and other technical information obtained from sources believed to be reliable but cannot attest to its accuracy or completeness. This report provides a technical appraisal of the geological aspects and an estimate of the coal tonnage that may be present and then derives an indicative value of the remaining exploration projects involved:

• Adanac – reduced considerably by the footprint of Castle Park • Bellevue and Grassy South

MBGS’ previous technical assessment in 2016 included the property of Lynx Creek but this area is now completely covered by the footprint of Castle Park, so it is no longer included in this assessment.

Suite 201 ● Level 2 ● 15 Help Street ● CHATSWOOD ● NSW ● 2067 ● (+61 2) 8440 7800 PO Box 34 ● WILLOUGHBY ● NSW ● 2068 ● e:[email protected] ● www.mbgs.com.au

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The coal tonnage has reduced due to the impact of Castle Park, and apart from that, the development status of Riversdale’s exploration projects in Crowsnest Pass remains largely unchanged since 2016. The Adanac, Bellevue and Grassy South projects are:

• in the early stages of exploration and are supported by limited data. Exploration target tonnages were estimated for the projects, as the geological data available was considered insufficient to support a coal resource estimate. • likely to have similar coal quality characteristics to the Grassy Mountain project, which has passed the Feasibility stage and is currently waiting for permitting - with approximately 200 Mt of Measured and Indicated Resources of hard coking coal. • well located to add value to the Grassy Mountain Project.

Valuations of mineral assets are influenced by a range of uncertain factors and will depend largely on individual judgement. As a result, the valuations presented in this report are expressed as a range in 2019 Australian dollars (A$) with a preferred value between the maximum and minimum values.

This update reviewed the exploration targets of Riversdale after removing the areas of Lynx Creek and parts of Adanac where Castle Park is now located (Figure 1), as a result the median Exploration Target (ET) tonnage has reduced from 140 Mt to 80 Mt. The resource multiple values were also reviewed using current market capitalisation. With the current state of the coal industry and market conditions in general, a valuation based on market capitalisation was considered to be the most appropriate for the projects under consideration. This method resulted in an estimated value between A$3 M and A$18 M for the three projects, with a preferred value of approximately A$12 M as summarised in the following table.

Valuation Summary – Market Capitalisation

Resource Resource Resource Riversdale Exploration Target Value Value Value Ownership (Mt) Project Low High Preferred

% Range Median A$M A$M A$M Adanac 100 10 – 30 20 0.6 4.4 3

Bellevue, 100 30 - 90 60 1.8 13.2 9 Grassy South

Total 40 - 120 80 2.4 17.6 12

Previous valuation report included two valuation methods to derive a potential market value of the projects; comparable transactions and multiples of exploration expenditure. As this valuation is only an update on the previous report only market capitalisation was used.

• The Adanac project footprint area reduced significantly with the national park from 48 km2 to 17 km2 consequently the estimated value decreased from a preferred value of A$12 M to A$3 M.

• Bellevue and Grassy South projects have a combined value that ranges from A$2 M to A$13 M, with a preferred value of A$9 M. The potential quantity and grade of the exploration targets is conceptual in nature as there has been insufficient exploration to estimate a Coal Resource. It is uncertain if further exploration will enable a Coal Resource to be reported.

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The value in this report is the Market Value which is the estimated amount for which the coal assets should be exchanged between a willing buyer and willing seller in an arm’s length transaction where the parties have acted knowledgeably, prudently and without compulsion. Figure 2 shows comparable ASX listed companies with market capitalisation per tonne of resources for companies with similar projects. Using comparable ASX listed companies, the range for companies with coking coal projects in Canada is between A$0.03/t and A$0.43/t with a median of A$0.15/t. The most representative company is Atrum due to the close geographical location of Atrum’s Elan South deposit to the north of Riversdale’s Grassy Mountain and Bellevue areas (refer Figure 1). The early stage of the Riversdale projects is highly subjective and sensitive to exploration outcomes and economic factors including coal price and likely mining costs. Individual investors may place a strategic value on these assets. Likewise, the comparable ASX listed companies contain coal resources rather than exploration target tonnage estimates and the valuation for the Riversdale projects should reflect the relative uncertainty of the coal tonnage status. Accordingly, the value per tonne used in this valuation has been reduced substantially. MBGS has assessed that 50% of value per tonne for market capitalisation represents the most current indicator for the Riversdale projects given the status of those projects – a range between A$0.03/t and A$0.22/t with a median of A$0.15/t – this compares slightly lower than Atrum’s current market capitalisation of A$0.20/t due to the report of coal resources by Atrum.

MBGS is entitled to receive a fee for the preparation of this report based on time spent at our normal hourly rates for this type of work.

Yours sincerely,

Kerry Whitby Managing Director McElroy Bryan Geological Services Pty Ltd Phone: +61 2 8440 7800 Email: [email protected]

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Figure 1 . Exploration Target Areas

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Figure 2. Comparable ASX Listed Companies

Allegiance Coal 0.10

Atrum 0.20

Jameson 0.43

Pacific American 0.03

- 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45

Enterprise Value/resources (A$/t)

Page 5 of 5

ANNEXURE C

RCF STATEMENT OF INTENT

ANNEXURE D

REGAL STATEMENT OF INTENT

The Directors Riversdale Resources Limited PO Box 278 NSW 2067 Australia

19 March 2019

Dear Sir / Madam

Regal Funds Management (Regal) has reviewed the takeover offer from Hancock Corporation Pty Ltd (Hancock) made pursuant to its replacement bidder’s statement dated 11 March 2019 for all the shares in Riversdale Resources Limited (Riversdale) for A$2.20 per share, which will be increased to A$2.50 per share if Hancock’s voting power exceeds 50% on a fully diluted basis (the Takeover Offer).

Regal considers that the Takeover Offer vastly undervalues Riversdale. In the absence of a material change in circumstances, Regal does not intend to sell into the Takeover Offer.

Regal currently holds 3,176,657 Riversdale shares, being 1.08% of the Riversdale shares currently on issue.

Yours Sincerely

Philip King

Regal Funds Management Pty Limited T + 61 2 8197 4333 Level 47, Gateway, 1 Macquarie Place www.regalfm.com [email protected] Sydney NSW 2000 Australia AFSL 277737

ANNEXURE E

TAKEOVERS PANEL MEDIA RELEASE

MEDIA RELEASE

No: TP19/20 Tuesday, 26 March 2019 Riversdale Resources Limited – Panel Receives Application

The Panel has received an application from Riversdale Resources Limited in relation to its affairs. Riversdale is an unlisted public company. The application concerns a cash off-market takeover bid by Hancock Corporation Pty Ltd (a wholly-owned subsidiary of Hancock Prospecting Pty Ltd) for all the shares in Riversdale in which it does not have a relevant interest.

Details of the application, as submitted by the applicant, are below.

A sitting Panel has not been appointed at this stage and no decision has been made whether to conduct proceedings. The Panel makes no comment on the merits of the application.

Details

On 27 February 2019, Hancock lodged its bidder’s statement with ASIC which it sent to Riversdale shareholders (after lodging a replacement bidder’s statement) on 13 March 2019. The offer price is $2.20 per Riversdale share increasing to $2.50 per Riversdale share if Hancock’s voting power exceeds 50% on a fully diluted basis. The bid is conditional only on prescribed occurrences.

Riversdale is required to lodge its target’s statement and independent expert’s report with ASIC by 28 March 2019. To date, Riversdale’s directors have recommended that shareholders take no action.

Riversdale submits that, under Canadian law, Hancock is required to withhold (and remit to the Canadian tax authority) up to 25% of the offer price for any Riversdale shareholders who accept the offer and are not resident in Canada for tax purposes. Riversdale submits that this obligation is not disclosed in Hancock’s replacement bidder’s statement.1

As a result, Riversdale submits that:

1 Noting that the takeover offer contains a term allowing Hancock to deduct amounts from the offer price and remit it to the Canadian tax authority

1/2 • its shareholders do not have enough time and enough information to enable them to assess the merits of the bid and the acquisition of control of Riversdale will not take place in an efficient, competitive and informed market

• its directors are not in a position to consider all material matters for the purpose of preparing the target's statement and making their recommendation and

• the independent expert does not have all material information to assess whether the bid is fair and reasonable.

Riversdale seeks interim orders including to restrain the processing of any acceptances under the bid and to delay the lodgement of the target’s statement.2

Riversdale seeks final orders including to cancel any acceptances to date, require Hancock to provide a supplementary bidder’s statement addressing the Canadian withholding tax matter and to extend the offer period.

Allan Bulman Director, Takeovers Panel Level 10, 63 Exhibition Street Melbourne VIC 3000 Ph: +61 3 9655 3500 [email protected]

2 Riversdale has also sought a declaration or modification from ASIC to extend the time under section 633 of the Corporations Act to lodge its target’s statement

2/2