Square Eastern Pty Ltd

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 2 EPC2055 Annual Report June 2016 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 3 EPC2055 Annual Report June 2016 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). 4 EPC2055 Annual Report June 2016 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. 5 EPC2055 Annual Report June 2016 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, 6 EPC2055 Annual Report June 2016 Figure 1: Location of the ECJV's Mimosa Project 7 EPC2055 Annual Report June 2016 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

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