SQUARE EASTERN PTY LTD

EXPLORATION PERMIT FOR COAL (EPC) 2055 MIMOSA

ANNUAL REPORT FOR THE PERIOD 12 JUNE 2015 – 11 JUNE 2016

TENEMENT HOLDER(S): Square Eastern Pty Ltd Mitsui Matsushima International Pty Limited

PREPARED BY: Peter Jorgensen & Andrea Pepper Square Eastern Pty Ltd 30/06/2016

SUBMITTED BY: Square Resource Holdings Pty Ltd 30/06/2016

EPC2055 Annual Report June 2016

CONTENTS

COPYRIGHT STATEMENT ...... 4 1.0 SUMMARY ...... 5 2.0 INTRODUCTION ...... 6 2.1 Tenure ...... 6 2.2 Location and Access ...... 8 2.3 Previous Exploration ...... 8 2.3.1 Geological Mapping ...... 8 2.3.2 Drilling – Stratigraphy and Palynology ...... 10 2.3.3 Drilling – Oil and Coal Seam Gas ...... 10 2.3.4 Drilling – Oil shale ...... 12 2.3.5 Seismic Investigations ...... 12 2.3.6 Water Bores ...... 12 3.0 REGIONAL GEOLOGY...... 14 3.1 Geological History ...... 14 3.2 Stratigraphy ...... 16 3.2.1 Rewan Formation ...... 17 3.2.2 Clematis Sandstone ...... 17 3.2.3 Moolayember Formation ...... 17 3.2.4 Precipice Sandstone ...... 18 3.2.5 Evergreen Formation ...... 18 3.2.6 Tertiary Basalt ...... 18 3.3 Structure ...... 19 3.3.1 Mimosa Syncline ...... 19 4.0 CURRENT WORK PROGRAMME ...... 20 4.1 Drilling and Completion Activities ...... 20 4.2 DEHP Compliance Audit ...... 20 4.3 Exploration Industry Expenditure Concession ...... 20 4.4 EPC Prospectivity Review and Partial Relinquishment ...... 21 5.0 WORK PROGRAMME COMPLIANCE STATEMENT ...... 23 6.0 RESULTS/CONCLUSIONS ...... 24 7.0 REFERENCES ...... 25

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APPENDICES Appendix 1 DEHP Compliance Audit Report

TABLES Table 1 EPC 2055 blocks and sub-blocks during the third year of tenure Table 2 Stratigraphy of the Mimosa Syncline Table 3 Modifications to the EPC 2055 Programme of Works

FIGURES Figure 1 Location of the ECJV's Mimosa Project Figure 2 EPC 2055 location and access Figure 3 Historical drillhole locations and seismic lines Figure 4 EPC 2055 water bores Figure 5 Location of the Mimosa Region in the Taroom Trough in Eastern Australia Figure 6 Location of EPC 2055 sub-blocks for partial relinquishment

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COPYRIGHT STATEMENT

ACKNOWLEDGEMENT AND WARRANTY 1. Subject to 2, the mining resource authority holder acknowledges that this report, including the material, information and data incorporated in it, has been made under the direction or control of the State of Queensland (the State) within the meaning of section 176 of the Copyright Act 1968 (Cwlth). 2. To the extent that copyright in any material included in this report is not owned by the State, the resource authority holder warrants that it has the full legal right and authority to grant, and does hereby grant, to the State, subject to any confidentiality obligation undertaken by the State, the right to do (including to authorise any other person to do) any act in the copyright, including to:  use;  reproduce;  publish; or  communicate in electronic form to the public, such material, including any data and information included in the material. 3. Without limiting the scope of 1 and 2 above, the resource authority holder warrants that all relevant authorisations and consents have been obtained for all acts referred to in 1 and 2 above, to ensure that the doing of any of the acts is not unauthorised within the meaning of section 29(6) of the Copyright Act 1968 (Cwlth).

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1.0 SUMMARY The Eastern Coal JV’s Mimosa Project provides access to an area of the southern Bowen Basin that remains relatively under-explored for coal resources. A review of the historical exploration results for this region has indicated that coal-bearing sequences are present here, and there are sufficient references to coal seam intersections in the literature to make it a suitable exploration target for opencut and/or underground mining options.

The Eastern Coal JV has sought to confirm this interpretation by compiling and evaluating all available technical data for the region, and has now commenced sub-surface exploration to gain further evidence. EPC 2055 was the fourth tenement within the Mimosa Project to be granted. This third annual statutory report for EPC 2055 provides a summary of the results obtained in the year ending 11 June 2016.

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2.0 INTRODUCTION The Eastern Coal JV’s Mimosa Project is an early stage, coal resource project comprising five contiguous exploration tenements at the southern end of the Bowen Basin in southern- Central Queensland (Figure 1). The Eastern Coal JV believes that the prospectivity of this area is significant, warranting further study and investigation.

The Mimosa Project consists of five granted Exploration Permits for Coal, of which EPC 2055 was the fourth to be granted. This is the third annual exploration report for EPC 2055, the tenement having been taken up in June 2013.

2.1 Tenure EPC 2055 was granted on the 12th June 2013 for a term of 5 years and originally consisted of 284 sub-blocks (as listed below in Table 1).

Table 1: EPC 2055 blocks and sub-blocks during the third year of tenure

1:1M Block Number of Sub- Identification Map Block ID Sub-Block ID Blocks CHARLEVILLE 353 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 425 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 426 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 497 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 498 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 569 AB E UVWXYZ 9 CHARLEVILLE 570 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 571 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 640 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 641 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 642 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 CHARLEVILLE 643 ABCDEFGHJKLMNOPQRSTUVWXYZ 25 Total Sub-Blocks 284

EPC 2055 was initially granted to Eastern Coal Pty Limited as the sole (100%) lease holder. To fund and manage the exploration of the EPC, Eastern Coal formed a Joint Venture, the Eastern Coal Joint Venture (ECJV), with Square Eastern Pty Ltd. In mid-2015 Eastern Coal Pty Ltd transferred a 20% share of the EPC to Square Eastern Pty Ltd. This transfer was officially registered by the DNRM on the 26th August 2015. Subsequently, Eastern Coal sold all of its interests in the project to Square Eastern and a new JV partner,

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Figure 1: Location of the ECJV's Mimosa Project

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Mitsui Matsushima International Pty Limited, in November 2015. This second transfer was officially registered by the DNRM on the 7th April 2016.

2.2 Location and Access EPC 2055 covers an area of 887km2 and is located in the Central Highlands region of southern-Central Queensland, some 125km southeast of Blackwater and 50km west of Moura (Figure 1).

The primary access route into EPC 2055 is via the all-weather Dawson Highway which crosses the entire Mimosa Project from east to west (Figure 2). A network of unsealed secondary roads and farm tracks branching off from the highway also criss-cross the area, giving good access to much of the EPC. The Moura Queensland Rail (QR) system is the closest rail load out, and lies approximately 50km to the east of EPC 2055.

Primary land use in the Mimosa Project area is cattle grazing, with some agriculture in the Dawson River Valley. Approximately 70% of EPC 2055 is zoned as Strategic Cropping Areas (Figure 2).

2.3 Previous Exploration While the Mimosa Project area has been the site of a significant number of previous geological investigations (Figure 3), only a limited amount of coal-related exploration has been conducted within the region to date. The following section is a brief summary of those historical reports that covered all, or significant portions, of the project area.

2.3.1 Geological Mapping The first geological investigations that referenced coal and coal-bearing strata in the Dawson River Valley were undertaken by Daintree (1872) and Dunstan (1901). Between 1902 and 1924 the Queensland Department of Mines and the Queensland Government Mining Journal Annual Reports often discussed interest in the mineral resources of the region. Reid (1939, 1944, 1945a, b, c) conducted drilling and reported on the complex structure of the coal in the region.

In 1961 the sheet area was covered by 1:85,000 scale air-photos, from these slotted templets at 1:93,000 were used to prepare the base map for the 1:250,000 map. The Baralaba area was mapped in 1963 by the combined Bureau of Mineral Resources and the Geological Survey of Queensland for the 1:250,000 sheet (Olgers et al., 1964).

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Figure 2: EPC 2055 location and access

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2.3.2 Drilling – Stratigraphy and Palynology  1963 – A regional programme of stratigraphic borehole drilling by the Bureau of Mineral Resources. Included Baralaba 19 just to the south of Mimosa Project EPC 2051. Results reported in BMR report 1963/153 and BMR Record 1964/26.  1963-64 – Queensland Department of Mines completed shallow drilling with a Proline Auger in the Surat and Bowen Basins. 39 very shallow holes were completed in the Mimosa area, with a total of 491m (1612 feet) drilled in outcrop sections. Samples were collected for palynological and lithological studies for formation correlation of Lower Mesozoic and Permian strata. The programme was halted as the drill rig could not penetrate sandstones.  1965-1966 – Queensland Department of Mines conducted stratigraphic drilling in the Bowen and Surat Basins to obtain palynological samples and to complete a lithological study of the formations. 12 fully cored holes were completed to a total of 1645m (5400 feet) and 9 holes were wireline logged. Boreholes DRD 7, 8, 9 and 10 were drilled within or in close proximity to the Mimosa Project.  1981 – Geological Survey of Queensland, Coal Section conducted stratigraphic drilling in the Kiddell Plains area. 3 core holes were completed for a total of 231m. All 3 holes are located in the southeastern portion of the Mimosa Project.  1981 – Geological Survey of Queensland (J.W. Beeston) conducted a coal rank study on samples taken from a number of regional stratigraphic boreholes (GSQ) and petroleum company wells in the Moolayember Formation. Boreholes DRD 7 and 9 were amongst those analysed.

2.3.3 Drilling – Oil and Coal Seam Gas In the period from 1994 to 2003 a number of petroleum and coal seam gas exploration wells were drilled within the general Mimosa Project area, however they are either too shallow or not in the targeted Moolayember Formation.  1994 - 2000 – Tri-Star Petroleum Company completed three wells (Dawson 1 in 1994, Dawson 2 and 3 in 2000) just to the west of the Mimosa EPCs.  2002 – Oil Company of Australia completed one well (Friendly Hill 1).  2003 – Tipperary Oil & Gas (Australia) Pty Ltd completed two holes called Mount Aldis 1 and Mount Aldis 2.

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Figure 3: Historical drill hole locations and seismic lines

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2.3.4 Drilling – Oil shale  1981-1982 – BP Australia Limited carried out field mapping and shallow drilling for oilshale resources within the Tertiary-aged Woorabinda Basin, part of which overlaps the northern portion of the Mimosa Project. No oilshales were intersected, but some information on the Moolayember Formation was derived.

2.3.5 Seismic Investigations Four separate seismic surveys have been conducted within the bounds of the Mimosa Project area. All were carried out by petroleum companies in the period 1981 to 1990:-  Friendly Hill – Offshore Oil NL, 1981; dynamite survey; 317km on 15 individual lines.  Reedy Creek – Tenneco Oil and Minerals, 1982; dynamite survey; 21km from 2 separate lines in the southwest corner of EPC 2051.  Conomara – Offshore Oil NL, 1984; vibrator survey; approximately 240km over 12 separate lines in the north of EPC 2053.  Dawson – AGL Petroleum, 1990; vibroseis survey; 157km on 3 lines.

A fifth seismic survey was completed more recently for CSG exploration purposes by QGC Pty Ltd during September 2013:-  Bute – QGC Pty Ltd, 2013; vibroseis survey; 408km on 12 individual lines.

2.3.6 Water Bores Drilling records for a large number of registered water bores across the Mimosa area are maintained in a database by the Queensland Department of Environment and Resource Management. Some 73 water bores are listed within the original EPC 2055 lease boundaries. The records were reviewed and a total of 9 bores (Figure 4) were found to have intersected coal-bearing sequences during drilling.

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Figure 4: EPC 2055 water bores

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3.0 REGIONAL GEOLOGY The Mimosa Project area is located at the southern end of the Bowen Basin and covers the outcrop zone of the lower-middle Triassic Moolayember Formation in the core of the asymmetric, south-plunging Mimosa Syncline.

Backarc basin deformation occurring during the Early Permian in eastern Australia resulted in graben formation from crustal extension. These grabens later became the focus for regional crustal sag through thermal subsidence during the onset of formation of the Bowen Basin. During the late Permian a transition to a foreland basin system occurred when a magmatic arc formed along the eastern margin of the basin, causing an increase in sediment accumulation across a wide area, notably in the Taroom Trough region. Compression in the early Triassic and overthrusting from the east resulted in the formation of three distinctive major structural regions in the Taroom Trough from north to south; the Nebo Synclinorium, the Dawson Fold Zone, and the Mimosa Syncline. The Taroom Trough is bound by the Comet Ridge to the west, the Auburn Arch and the Burunga- Leichhardt Fault to the east (Figure 5). The Mimosa Syncline contains the Moolayember Formation, the youngest preserved Triassic unit within the Bowen Basin. (Mallett et al., 1995; Totterdell et al., 1995; Fielding et al., 1995; Korsch & Totterdell, 1995). The base of the Moolayember Formation is marked by the well exposed Clematis Group (Fielding et al., 1995), and the upper surface is unconformably overlain by basal Surat Basin (Jurassic) sequences to the south.

3.1 Geological History The depositional environment of the Mimosa Syncline, as summarised from Totterdell et al. (1992) and Fielding et al. (2000), is discussed below and includes the development of the sediments in the Syncline and the formation of the Moolayember Formation:- 1. The Rewan Formation (Early Triassic) was deposited during the initial stage of development of the Mimosa Syncline when a downwarp occurred in the southeastern section of the Bowen Basin. Basal sediments derived from dominantly volcanic sources reflect the initial high energy fluviatile environment. Red-beds deposited higher in the sequence mark an environmental change with source material from an arid landscape in a low-energy fluviatile (oxidising) environment. Grey sandstone and shale in the upper part of the formation appear to have been deposited in reducing conditions in a low-energy fluviatile lacustrine environment.

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MIMOSA PROJECT AREA

Figure 5: Location of the Mimosa Project in the Taroom Trough of Eastern Australia (from Korsch et al., 1997).

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2. The Clematis Sandstone (Mid Triassic) accumulated during a time during of slow subsidence. Angular grains and cross-bedding indicate rapid sediment transport. The locus of maximum subsidence in the basin shifted westward increasing the thickness of the sandstone from 140m in the east to 240m near the middle of the basin. 3. The Mimosa Syncline began to subside more rapidly during the deposition of the Moolayember Formation (Late Triassic). In the east, volcanic conglomerate and sandstone near the bottom of the formation are evidence of a high energy fluviatile environment. In the middle of the basin the sediments are finer, indicating low energy deposition. Higher in the formation, well-sorted sandstone, shale rich in plant fragments and coal indicate low-energy fluviatile to lacustrine or estuarine environments. 4. After the Moolayember Formation subsidence ceased, a period of uplifting and erosion occurred, marking the end of the Bowen Basin as a depositional basin. 5. The first unit of the Surat Basin, the Precipice Sandstone (Early Jurassic), was laid down as a thick blanket on the weathered surface of the Moolayember and older formations. Its source material was similar to the earlier Clematis Sandstone, and the environment of deposition was high-energy decreasing to low-energy.

3.2 Stratigraphy The coal-bearing formation of interest in the Mimosa Project area is the Moolayember Formation, however its under- and overlying formations are also discussed below as they influenced the coal seam development and preservation within the Mimosa Syncline (Table 2).

Table 2: Stratigraphy of the Mimosa Syncline (modified from Gray, 1968)

Formation Member TERTIARY Basalt Evergreen Formation Boxvale Sandstone Member JURASSIC Westgrove Ironstone Member Precipice Sandstone Moolayember Formation TRIASSIC Clematis Sandstone

Rewan Formation

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3.2.1 Rewan Formation The Rewan Formation is approximately 3650 metres thick (Olgers et al., 1964) in the southeastern section of the Bowen Basin, and consists of interbedded chocolate brown mudstones and siltstones, green lithic sandstone and minor quartzose sandstones, with a basal conglomerate (67-82 metres thickness) (Gray, 1972). The western sediments contain a red-bed sequence, this colour change indicates a change in depositional enviroment from oxidising to reducing conditions (Gray, 1968).

3.2.2 Clematis Sandstone Consisting mainly of medium to coarse, pebbly, sub-labile quartzose sandstone, and minor interbedded light grey siltstone and shale, the Clematis Sandstone can be very clayey in parts. Its thickness varies from 60 metres on the western flank of Reids Dome, to over 300 metres on the western flank of the Mimosa Syncline. It has a conformable contact with the overlying Moolayember Formation (Gray, 1972).

3.2.3 Moolayember Formation On the western limb of the Mimosa Syncline the Moolayember Formation consists of sandstone with minor shale, and laminated shale, siltstone and very fine sandstone units. The sandstone is green-grey, fine to medium grained, well sorted and feldspathic lithic quartzose in composition. Abundant carbonaceous and micaceous laminations occur in the sandstone. The shale is dark grey to black, micaceous, carbonaceous, generally laminated with grey siltstone and very fine green-grey feldspathic-lithic-quartzose sandstone (Gray, 1968; 1972).

In the eastern limb of the Mimosa Syncline the Moolayember Formation is more quartzose than the characteristic sandstone elsewhere. Consisting of mainly light grey to green-grey, fine to course, moderately sorted, lithic feldspathic quartzose sandstone with a white clay cement, it also has some volcanic conglomerate at the base of the unit. Here the thickness of the Moolayember ranges from 305 metres in the west to 1670 metres in the centre of the syncline (Burke & Vind, 1963; Marathon Petroleum, 1963; Gray, 1968).

Towards the centre of the syncline and lower in the Moolayember sequence a higher proportion of finer sediments were deposited, indicating a reduction in the energy of the fluvial environment compared to the fringes. Higher in the formation, low-energy lacusterine or esturine environments were active as indicated by the presence of well sorted sandstones, and shales with plant fragments and coal.

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The upper contact of the Moolayember Formation with the Precipice Sandstone is unconformable (Gray, 1968). A significant Tertiary basalt cover extends over the upper sequences of the Moolayember Formation towards the centre of the Mimosa Syncline.

3.2.4 Precipice Sandstone The lower Precipice Sandstone changes in the east from interbedded sandstone, siltstone and shale, to mostly sandstone. The sandstones in the middle of the Precipice Sandstone are pale grey to white, medium to granular, and poorly sorted. They are quartzose, porous, with minor black lithics and feldspar, and a white, argillaceous cement. Some shales are also present and are black, carbonaceous, sandy, and occur in laminae and wavy contorted beds, indicative of a disturbed depositional environment (Gray, 1968). The upper Precipice (60-90 metres thickness) consists of sandstone interbedded with laminae of shale and siltstone. The sandstones are fine to medium grained, well sorted, and feldspathic lithic quartzose in composition. Some very carbonaceous micaceous partings are also present (Gray, 1972).

The unit’s upper boundary with the Evergreen Formation is transitional (Gray, 1968).

3.2.5 Evergreen Formation The Evergreen Formation is some 120 to 200 metres thick and consists of interbedded labile and sub-labile sandstone, siltstone, mudstone, shale and minor coal (Gray 1972).

In the east the Boxvale Sandstone Member (30-45 metres thickness) is a lensing, well sorted, fine to medium quartzose sandstone, with minor micaceous siltstone and mudstone. It is present from north of Tambo to the middle of the Mimosa Syncline where it wedges out (Gray 1972).

The Westgrove Ironstone Member (6-9 metres thickness) is a pelletal or chamositic rock with interbedded ironstone, sandstone, siltstone and mudstone. It is a persistent marker and can be traced from southern Springsure to the western flank of the Mimosa Syncline (Gray 1972). A similar marker bed occurs at approximately the same stratigraphic level in the upper Evergreen on the eastern flank of the Mimosa Syncline (12-20 metres thickness). It can be traced from east of Taroom to east of Chinchilla. It is generally more oolitic and sandier than the Westgrove Member proper (Gray 1972).

3.2.6 Tertiary Basalt Basalt flows in the Tertiary overlie the stratigraphy in the centre of the Mimosa Syncline. Drilling show this to consist of varying numbers of individual flows with a combined

18 EPC2055 Annual Report June 2016 thickness of up to 74 metres thick. In places, intrusions, presumed to be associated with the basalt, cut across the sedimentary sequences.

3.3 Structure 3.3.1 Mimosa Syncline The Mimosa Syncline is a structural feature that postdates deposition in the Bowen Basin and was caused by deformation in the Late Triassic. Cessation, or dramatic slowing, of sedimentation and/or a phase of erosion in the Taroom Trough over a 40 m.y. period formed the major unconformity between the Bowen Basin sediments and the overlying Surat Basin sediments. Jurassic-aged Surat Basin sediments such as the Precipice Sandstone and the Evergreen Formation unconformably, but symmetrically, overly the Mimosa Syncline (and the uppermost unit of the Bowen Basin, the Moolayember Formation) (Totterdell et al., 1992).

The geometry of the Taroom Trough and, by extension, the nature of the Mimosa Syncline, is that of an asymmetric north-northwest trending synform that dips to the south. The formation of the syncline is directly attributed to westward advancing thrust sheets along the eastern margin of the Taroom Trough from the Gogango Overfold Zone and the Burunga-Leichhardt/Moonie-Goondiwindi Fault systems. This created uplift and steeper dips on the eastern limb of the syncline, up to 30˚ in the uppermost sediments, and ended the deposition of the Moolayember Formation in the Late Triassic. Deeper sediments in the syncline tend to have a shallower, less pronounced dip angle. The western limb of the structure has dips of less than 15˚ and is likely relatively unchanged from tectonic events in the region, with sediments lapping onto the Comet Ridge in the west.

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4.0 CURRENT WORK PROGRAMME In Year 3 of tenure for EPC 2055, the ECJV carried out management and statutory tasks to maintain the EPC in good standing, and conducted data reviews to establish new drilling targets and to assess the relinquishment strategy for the tenement. These activities are summarised below.

4.1 Drilling and Completion Activities Regular contact with the Department of Transport and Main Roads was continued during the first half of the tenure year in order to arrange the final formal signoffs (Landholder Release Statements) for the drill site completed within EPC 2055 during the 2013 exploration programme. In addition, the statutory supervision of the EPC by a SSE had to be maintained throughout the tenure year due to its status as an active exploration site.

4.2 DEHP Compliance Audit On the 2nd June 2015 the ECJV was contacted by Environmental officers from DEHP Rockhampton to arrange an environmental compliance inspection of the rehabilitated borehole sites on EPC 2055. This was to be a standard inspection to review any current or recent past exploration activities, check rehabilitation, and evaluate compliance with the relevant Environmental Authority.

Two DEHP officers and the ECJV’s Exploration Manager visited 1 borehole site within EPC 2055 on the 15th July. While onsite the DEHP indicated that the ECJV had complied with its Environmental Authority conditions, and no issues were raised.

The ECJV received a “Post Inspection Letter of Compliance” from the DEHP on the 12th August officially closing out the site inspections completed on 15-16 July. The DEHP acknowledged that the ECJV had operated within its prescribed Environmental Authority conditions, and that it had demonstrated proactive environmental management when conducting activities on the tenement. No further action was required. A copy of this letter is appended herein as Appendix 1.

4.3 Exploration Industry Expenditure Concession On 17 March 2016 the Queensland Government announced a concession package to assist resource explorers meet statutory expenditure commitments for eligible EPC tenures. The Exploration Industry Expenditure Concession (EIEC) allows for up to 50% variation to the conditioned expenditure required for exploration permits for coal with

20 EPC2055 Annual Report June 2016 conditioned milestones ending in years 2016 and 2017. EPC 2055 had a 3 year tenure milestone falling due in 2016 and hence was eligible for this scheme.

An application for an expenditure concession for EPC 2055 was submitted to the DNRM on 29 March 2016. The application was for a 50% reduction in overall expenditure for years 1 to 3 (inclusive). A work programme variation was also submitted to match the revised expenditure. The DNRM confirmed receipt of the submissions on 29 March.

These applications were successful and were approved by the DNRM on 27 April 2016.

4.4 EPC Prospectivity Review and Partial Relinquishment In accordance with the terms and conditions of the EPC 2055 grant document, the original area of the EPC was required to be reduced to a maximum of 170 sub-blocks prior to the commencement of the fourth year of tenure (12th June 2016). A review of the prospectivity of the EPC was able to identify a total of 114 sub-blocks suitable for relinquishment at this time (Figure 7). An application to carry out this partial relinquishment was submitted and approval was granted for the requested modification by the Queensland DNRM on the 11th May 2016.

An application to complete a partial surrender of the environmental authority held for EPC 2055 was simultaneously submitted to the Queensland Department of Environment and Heritage Protection (DEHP) for the corresponding area. The DEHP received the application on the 17th May 2016 and approval was granted for the requested modification on the 19th May 2016.

The sub-blocks are located within the southwestern and eastern portions of the EPC where recent drilling by the ECJV has shown that if any coal-bearing sequences are present, they are so limited in their extent or at such depths below ground surface to be uneconomic for opencut and/or underground mining using currently available technologies.

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Figure 6 Location of EPC2055 sub blocks for partial relinquishment.

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5.0 WORK PROGRAMME COMPLIANCE STATEMENT The tenure period 12th June 2015 to 11th June 2016 represents Year 3 of the first conditioned period for EPC 2055. In line with the variation to the original expenditure commitment for years 1 to 3 (inclusive) approved by the DNRM on 27 April 2016, the overall work programme for years 1 to 3 was also modified to match the revised expenditure as per Table 3.

Table 3: Modifications to the EPC 2055 Programme of Works

Original Programme Revised Programme (12 June 2013) (27 April 2016) Year 1  Data review / interpretation  Desktop Studies (technical review  Target selection of historical data)  Desktop Studies (target selection)  Drilling (rotary air blast) Year 2  Drilling  Site Technical (consultant studies)  Coal quality testing  Site Technical (internal staff studies)  Site Logistics (access / drill site preparation)  Desktop Studies (seismic data reprocessing) Year 3  Follow-up drilling  Site Technical (internal staff  Drilling partially cored holes studies)  Coal quality testing  Site Logistics (access / drill site preparation)

The ECJV have fully complied with the (revised) Programme of Works for EPC 2055 during the first conditioned period for the tenement.

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6.0 RESULTS/CONCLUSIONS During the tenure period of 12th June 2015 to 11th June 2016, the ECJV carried out a series of management and data assessment/interpretation tasks for EPC 2055. Of most significance were the successful environmental compliance audit conducted by the DEHP, an approved 50% decrease in the required minimal exploration expenditure for Years 1-3 of tenure, and a re-appraisal of the prospectivity of the project area to allow the relinquishment of 114 sub-blocks from the EPC.

Over the 3 years of the first conditioned period for the tenement the ECJV have fully complied with the work programme and relinquishment conditions of the EPC.

The ECJV’s exploration of EPC 2055 is ongoing and more work is planned for the tenement over the next tenure year. If stakeholder negotiations are successful, the required Year 4 programme of Infill drilling will be undertaken to determine the extent of other reported coal intersections within the EPC.

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7.0 REFERENCES

Beeston, J.W., 1981. Coal Rank Variation in the Bowen Basin, Queensland Department of Mines. GSQ Record 1981/48.

Burke, R.R., & Vind, E.W., 1963, Bauhinia Downs – Mimosa Reflection Seismograph Survey. Marathon Petroleum Australia Ltd and Continental Oil Company of Australia Ltd, Report 1215

Daintree, R., 1872. Notes on the geology of the Colony of Queensland, Quart. J. geol. Soc. Lond., 28, 271-317.

Dunstan, B., 1901. The Geology of the Dawson and MacKenzie Rivers with special reference to the occurrence of anthracitic coal. Geol. Surv. Qld. Publ. 155, 1-28.

Fielding, C.R., Stephens, C.J., Kassan, J., & Holcombe, R.J., 1995. Revised palaeogeographic maps for the Bowen Basin, Central. In: Follington, I.W., Beeston, J.W. & Hamilton, L.H., (editors), Bowen Basin Symposium 1995 …150 years on… Proceedings. Geological Society of Australia, Coal Geology Group, Brisbane, 27-35.

Fielding, C.R., Sliwa, R., Holcombe, R.J. & Kassan, J., 2000. A new Palaeogeographic Synthesis of the Bowen Basin of Central Queensland. In: Beeston, J.W. (editor), Bowen Basin Symposium 2000, The New Millennium – Geology Proceedings, Organised by The Bowen Basin Geologists Group and The Geological Society of Australia Incorporated Coal Geology Group, Rockhampton, 287-302.

Gray, A.R.G, 1968. Proline Drilling in the Surat and Bowen Basins, 1963-1964, Report No. 21, Geological Survey of Queensland, Queensland Department of Mines.

Gray, A.R.G, 1972. Stratigraphic Drilling in the Surat and Bowen Basins, 1967-1970, Report No. 71, Geological Survey of Queensland, Queensland Department of Mines.

Korsch, R. J., Johnstone, D. W., and Wake-Dyster, K. D., 1997, Crustal architecture of the New England Orogen based on deep seismic reflection profiling, in Tectonics and Metallogenesis of the New England Orogen, Geological Society of Australia Special Publication 19, p. 29-51.

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Korsch, R.J., & Totterdell, J.M., 1995. Basin phases and sequence stratigraphy of the Bowen Basin. In: Follington, I.W., Beeston, J.W. & Hamilton, L.H., (editors), Bowen Basin Symposium 1995 …150 years on… Proceedings. Geological Society of Australia, Coal Geology Group, Brisbane, 27-35.

Mallett, CW., Pattison, C., McLeannan, T., Balfe, P., & Sillivan, D., 1995. Bowen Basin, Geology of Australian Coan Basins, Special Publication No.1, Geological Socity of Australia.

Marathon Petroleum, 1963. Completion report, Bauhinia Downs – Mimosa seismic survey, Marathon Petroleum Australia Limited. Unpub. Rep., Geol Surv. Qld Library

Olgers, F., Webb, A.W., Smit, J.A.J., & Coxhead, B.A., 1964. The Geology of the Baralaba 1:250,000 sheet area, Queensland. Bur. Min. Resour. Aust. Rec. 1964/26.

Reid, J.H., 1939. Dawson Valley Colliery, Baralaba, Mt Morgan Ltd, Qld Govt Min. J., 40, 257

Reid, J.H., 1944. Dawson Coalfield, Baralaba, Ibid., 45, 204-205

Reid, J.H., 1945a. Dawson Coalfield, Ibid., 46, 21.8-109

Reid, J.H., 1945b. Dawson River Area. Baralaba, Ibid., 46, 296-299

Reid, J.H., 1945c. Baralaba Coalfield, Ibid., 46, 354-363

Totterdell, J.M., Brakel, A.T., Wells, A.T. & Hoffmann, K.L., 1995. Basin phases and sequence stratigraphy of the Bowen Basin. In: Follington, I.W., Beeston, J.W. & Hamilton, L.H., (editors), Bowen Basin Symposium 1995 …150 years on… Proceedings. Geological Society of Australia, Coal Geology Group, Brisbane, 27-35.

Totterdell, J.M., Wells, A.T., Brakel, A.T., Korsch, R.J. & Nicoll, M.G., 1992. Sequence Stratigraphic Interpretation of Seismic Data in the Taroom Region, Bowen and Surat Basins, Queensland. Bureau of Mineral Resources, Australia, Record 1991/102, 66pp.

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26 EPC2055 Annual Report June 2016

APPENDIX 1

DEHP COMPLIANCE AUDIT RESULTS

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