EXPLORATION PERMIT (MINERALS) 7721

NAGOORIN OIL SHALE DEPOSIT

ANNUAL REPORT FOR THE PERIOD

22 MARCH 2014 – 21 MARCH 2015

Site Nagoorin EPM 7721 Date April 2015 Department Mine & Resource Development Author / Coordinator Graham Pope Distribution DNRM, Greenvale Mining N.L. , QER Pty Ltd TRIM location D15/00745 Revision 1.0

QER Pty Ltd

CONTENTS

SUMMARY ...... iv 1. INTRODUCTION ...... 1 2. TENURE ...... 1 Exploration Permit (Minerals) 7721 ...... 1 Mineral Development Licence 234 ...... 1 Environmental Authority ...... 3 Land Tenure History ...... 3 NATIVE TITLE CLAIMS ...... 3 Overlapping Authority to Prospect for Petroleum ...... 5 Overlapping Exploration Permit (Coal) ...... 5 3. GEOLOGY ...... 5 4. EXPLORATION FOR THE 12 MONTHS TO 21 MARCH 2015...... 7 Program for the 12 Months to 21 March 2015 ...... 7 Geological Interpretation ...... 7 Geological Data Evaluation ...... 10 2D SEISMIC INTERPRETATION ...... 10 Resource Review ...... 14 JORC 2012 RESOURCE ESTIMATE ...... 14 JORC 2012 GUIDELINE PARAMETERS ...... 15 SPE-PRMS PETROLEUM RESOURCE ESTIMATION ...... 16 Groundwater Monitoring Program ...... 17 6. ACTIVITY IN EPM 7721 22 march 2015 – 21 march 2016 ...... 19 7. REFERENCES & BIBLIOGRAPHY ...... 20

FIGURES: Figure 1: Tenement Locality Diagram ...... 2 Figure 2: Plan Showing Land Tenure Status ...... 4 Figure 3: Nagoorin Graben Composite Section...... 8 Figure 4: Nagoorin Oil Shale Deposit – sub-crop geology, drill holes and seismic line locations ...... 9 Figure 5: Seismic line 08-BRS-02 with interpretation...... 12 Figure 6: Seismic line 08-BRS-03 with interpretation ...... 13 Figure 6: Groundwater Level Monitoring Survey, drillhole locations...... 18

TABLES: Table 1: Tenure Details for EPM 7721 ...... 1 Table 2: Petroleum and Gas Wells within MDL 234 and EPM7721...... 5 Table 3: Nagoorin Resource Estimation JORC 2004 Summary ...... 14 Table 4: Nagoorin Resource Estimation JORC 2012 Summary ...... 15 Table 5: SPE-PRMS Petroleum Resource Estimate...... 16

APPENDICES:

1. Acknowledgement and Warranty

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PROJECT LOCATION

1:250,000 sheet: Monto SG 56-1 1:100,000 sheet: Calliope 9149

Locality feature names: 65km S of Gladstone Nagoorin, Boyne River, Boyne Valley

LOCAL GOVERNMENT

Gladstone Regional Council

KEYWORDS

Nagoorin Graben, Nagoorin beds, Tertiary, oil shale, ground water survey, resource estimate, seismic interpretation, stratigraphy

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SUMMARY

1. This statutory report to the Department of Mines and Energy is the annual activity report for Exploration Permit (Minerals) (EPM) 7721, the Nagoorin Oil Shale Deposit, , for the twelve-month period ending 21 March 2015. Holders of the EPM are Greenvale Mining NL, and Queensland Energy Resources Limited.

2. EPM 7721, granted in 1991, has most recently been renewed for a two-year term expiring on 21 March 2015. EPM 7721 provided the necessary underlying tenure to support the application dated 21st March 1996 for Mineral Development Licence 234 which was granted on 31 October 2012.

3. 2D seismic and CSG well data for the Nagoorin Graben has become available following the surrender of the Arrow Energy ATP 679. Preliminary interpretation of the data shows more detailed seismic reprocessing and reinterpretation together with CSG well interpretation is required within EPM 7721 for ongoing resource evaluation.

4. The annual review of parameters and assumptions underlying resource estimate for the oil shale resource discovered and delineated within the EPM and MDL was undertaken during the period. The figures for the estimate of the oil shale resources of the Nagoorin Deposit have been updated from those established in 2001 as a consequence of the evaluation of both seismic and CSG well information now publicly available. Based on grade cutoff limits of 50 litres per tonne at zero moisture (LT0M), and four-metre minimum thickness to a maximum depth of 502 metres below surface, the resource has been estimated as follows:

Resource Tonnes Grade Moisture Shale Oil Category (millions) LT0M Wt% Mbarrels in-situ Measured 815 91 28.8 332 Indicated 1,585 92 27.4 665 Inferred 3,019 95 24.5 1,355 Total 5,419 93 26.0 2,351

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1. INTRODUCTION

Exploration Permit Minerals (EPM) 7721 contains the Nagoorin Oil Shale Deposit. The deposit is located in the Boyne Valley, about 65 kilometres south of Gladstone (Figure 1). Investigations are conducted under a Joint Venture consisting of Greenvale Mining NL (GVL, 67%), and Queensland Energy Resources Limited (QER, 33%).

Investigations in the tenement area led to the discovery and definition of the Nagoorin oil shale deposit. Subsequently an application for Mineral Development Licence 234 (MDL 234) was lodged to cover this deposit in 1996 and granted in 2012. While assessment by the Department of the MDL application was in progress, the underlying EPM tenure was maintained to support the application.

This report is a summary of activities associated with the exploration and evaluation of the Nagoorin oil shale deposit, submitted as required under the terms of the EPM, in relation to the year ending 21 March 2015.

During the period, the annual report for the previous term of EPM 7721 was submitted to the Department (Pope, 2014).

2. TENURE

Exploration Permit (Minerals) 7721

EPM 7721 was granted on 22nd March 1991 over an area of 27 sub-blocks. The permit is a consolidation of former EPMs 4991 and 5889. The permit was renewed for three years commencing 22nd March 1993. The EPM was extended by subsequent renewals to 2015. The most recent application for renewal for 12 months (to 21 March 2017) was lodged on 22nd December 2014. As a consequence of grant of MDL 234, EPM 7721 was reduced to 14 sub-locks.

Details of the tenement are listed below.

Table 1: Tenure Details for EPM 7721 Exploration Permit (Minerals) 7721 Granted 22nd March 1991 Expiry 21st March 2015 Sub-blocks 14 Area 45.8 km2

Mineral Development Licence 234

An application for a Mineral Development Licence over the oil shale resource of the Nagoorin Oil Shale Deposit was lodged with the Department of Minerals and Energy on 21st March 1996. The application covers an area of 6,773 hectares. The outline of the area (MDL 234) relative to the EPM is shown in Figure 1.

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Figure 1: Tenement Locality Diagram

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The application was progressed during 2009 with the finalisation and signing of an Ancillary Agreement under Section 31 of the NTA and Section 31 Deed by the Port Curtis Coral Coast Claimant Group and the tenement holders. The Section 31 Deed documentation was completed by the State of Queensland in May 2010. Finalisation for the grant was completed in October 2010 with the issue and grant of MDL 234 on 24 October 2012 effective for 5 years from 1 November 2012.

Environmental Authority

Exploration of the Nagoorin tenement is undertaken under Environmental Authority number EPVX00206913 administered by the Environmental Protection Agency (EPA) under the Environmental Protection Act (1994). The EA allows exploration on the Nagoorin Project under the Code of Environmental Compliance for Exploration and Mineral Development Projects. The guidelines and triggers within the code are such that the current Nagoorin programs can continue without modification. Environmentally Sensitive Areas as defined in the EPM area are endangered regional ecosystem areas (“ERE”) mainly comprising the riparian vegetation associated with the Boyne River and its tributaries, and a small area of State Forest north of Nagoorin. The conditions of the EA allow for minor drilling programs and surface investigations with limited disturbance as well as access to ERE areas with appropriate planning and precautions.

Land Tenure History

Native title as currently understood has been extinguished over most of the land underlying the EPM; freehold and Lands Lease tenure (Figure 2). A small area of state forest in the northwestern part of the tenement and areas of reserves within the townships of Nagoorin and Ubobo may be subject to native title. Minor areas in this category also exist along waterways associated with the Boyne River and along some easements.

NATIVE TITLE CLAIMS

The EPM holders continue to monitor the status of Native Title Claims affecting the Nagoorin Project tenements and the surrounding areas. Searches at the National Native Title Tribunal (NNTT) have indicated that several claims have been lodged in the region. These include: a) Claim QC97/29 Bailai People - This claim was registered with the NNTT on 24th May 1999. The claim affected the State Forest area in the northwest corner of the EPM. b) Claim QC97/35 Gooreng Gooreng People – Whilst this claim failed the Registration Test on 15th September 1999, the status continues to be monitored. c) Claim QC99/19 Gooreng Gooreng #2 - This claim was registered on 12th July 1999. This claim affects the bed of the Boyne River. d) Claim QC99/20 Gurang (and descendants) Peoples - This claim, registered on 1st February 2000 after having previously failed the Registration Test on 13th September 1999, has blanket coverage of EPM 7721. e) The above claims were merged into one claim – The Port Curtis Coral Coast Claim QC01/29 in November 2001 which covers the whole tenement.

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Figure 2: Plan Showing Land Tenure Status

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Overlapping Authority to Prospect for Petroleum

Arrow Energy NL held Authority to Prospect 679 for hydrocarbons (targeting coal seam gas) in an area including the Nagoorin South and Nagoorin deposits. ATP 679 was relinquished by Arrow on 16 May 2014.

Subsequent to drilling wells Nagoorin-1, Boyne River-1 (TD 1060m, wireline logged to 552m) and Boyne River-2 (TD 780m), within the area of MDL 234, Arrow made application for Petroleum Licence (PL) 206 (which overlapped MDL 234). This application has also been relinquished.

Arrow completed 10 exploration (core) and stratigraphic (chip hole) wells with an aggregate for 7,325m to a maximum depth of 1,060m together with 42.52 km of 2D seismic in the Nagoorin Graben before relinquishment (Figure 4). Data from these programs has been obtained and information from nine wells and seismic which occur within both EPM 7721 and MDL 234 are being evaluated.

Table 2: Petroleum and Gas Wells within MDL 234 and EPM7721. Coy report Well ID Well Type Operator Well name Result TD (m) Rig release Latitude Longitude no. Dry + gas 1128 Petroleum ORE Nagoorin-1 330 17Jjan 1982 24° 23’ 41” 151° 20’ 19” 10283 show 58807 Petroleum ARM Boyne River-1 Gas 1060 29 Jan 2004 24° 23’ 39” 151° 20’ 16” 38468 Coal seam Gas - 59291 ARM Boyne River-2 779.5 23 Jun 2005 24° 23’ 37” 151° 20’ 30” 47710 gas 60 mcfd 60095 Appraisal AEL Boyne River-3 Unknown 598.98 12-Jan-07 24° 23’ 36” 151° 20’ 28” 64098 60197 Appraisal ARM Boyne River-4 Unknown 594.78 2-Mar-07 24° 23’ 36” 151° 20’ 27” 69836 62673 Exploration AEL Boyne River-5 Unknown 654 24-Jan-10 24° 21’ 57” 151° 19’ 26” 69046 62670 Exploration AEL Boyne River-6 Unknown 91 27-Nov-09 24° 26’ 14” 151° 21’ 04” 67120 62956 Exploration AEL Boyne River-6A Unknown 849.1 27-Nov-09 24° 26’ 14” 151° 21’ 04” 67120 62671 Exploration AEL Boyne River-7 Unknown 501.6 17-Mar-10 24° 17’ 39” 151° 17’ 34” - Coal Seam 64473 Exploration AEL Boyne River-8/8A 867 29-Aug-11 24° 22’ 44” 151° 20’ 06” - Gas Coal Seam 64471 Exploration AEL Boyne River-9/9A 749.7 16-Jul-11 24° 20’ 19” 151° 20’ 02” 69625 Gas Coal Seam 64472 Exploration AEL Boyne River-11 578.7 31-Jul-11 24° 21’ 10” 151° 18’ 43” Gas

Overlapping Exploration Permit (Coal)

Exploration Permit (Coal) 1038 of 136 subblocks was granted to Brothers Mining PL as of 13 September 2006, expiring 12 September 2015. This tenement partly overlaps EPM 7721 but excludes those areas of EPM 7721 which are included in MDL 234.

3. GEOLOGY

Early Cainozoic relaxation associated with the opening of the Tasman Sea is inferred to have caused the development of linear zones of weakness on the Australian mainland. Continuing subsidence in these zones resulted in the deposition of thick sequences of Tertiary sedimentary rocks, such as those preserved within the Nagoorin Graben. Similar

Nagoorin EPM7721 Annual Report 2015 5 QER Pty Ltd deposition occurred elsewhere in eastern Queensland – for example, lacustrine oil shale- bearing sequences are found in The Narrows Graben (containing the Rundle and Stuart Oil Shale Deposits) and at Lowmead east of Nagoorin.

North-northwest trending Middle- and Late-Devonian to Carboniferous and Permian sediments, volcanics and low-grade metamorphics surround the site of the Graben. To the east, a north-trending belt of Permian granodiorite ( Granodiorite) intrudes the Palaeozoic sequence. Immediately west of the centre of the Graben, the Triassic Glassford Complex trends northeast, cutting across the trend of Palaeozoic sedimentary rock units. These intrusives range in composition from tonalite to adamellite and are intruded by aplite. Late stage pegmatite has developed in places.

During the Triassic, the Muncon Volcanics, comprising intermediate and basic lava, tuff, agglomerate, mudstone, silt and sand, were deposited over a wide area surrounding the future site of the Graben. Cretaceous felsic plugs (with associated volcanics) intrude the Glassford Complex.

The Nagoorin Graben, asymmetric in cross-section, is located at the intersection of three major structural features – the Boyne Valley Fault, the Yarrol Fault and the Borilla Shear Zone. The Graben, extending for 30km with a width up to 4.5km, corresponds closely to part of the present day Boyne Valley. Geophysical data suggests the bounding faults of the Graben are very steep to vertical.

Tertiary sediments were reported from the Nagoorin area in 1885 (Rands, 1885). Ball (1916) and Jensen (1918) described elements of the Tertiary sequence. In 1965, CRA Exploration Company Pty Ltd drilled two exploration holes into the Tertiary near Nagoorin. Oil shale beds were intersected in both holes and average oil yield from twenty-eight core samples was 56 L/t (Swarbrick, 1974). Geological mapping of the Monto 1:250,000 sheet area (Dear et al, 1971) led to the introduction of the name “Nagoorin beds” for the Tertiary sequence.

In the oil shale search by Greenvale-Esperance and SPP-CPM in the early 1980s, gravimetry, magnetometry and SIROTEM surveys were conducted in the Graben (Henstridge & Hutton, 1986). Two gravity minima (the northernmost later shown to correlate with the Nagoorin oil shale deposit) and three magnetic anomalies (probable intrusive bodies) were indicated. Based on an evaluation of gravity data, it was calculated that there are at least 1,300m of probable Tertiary age sediments within the Graben.

Core drilling of total length 10,567m in 53 holes (deepest 687m) was completed in the period 1980-1985 (Figure 4). The estimated minimum combined stratigraphic thickness of the Nagoorin beds as sampled in the drilling (pre-Tertiary basement not reached) amounts to 870m, including a consistent sequence containing kerogenous-carbonaceous sediments. Sandy edge faces are encountered in the western part of the Graben. Lithologies present in the Tertiary section in EPM 7721 are oil shale, carbonaceous oil shale, mudstone, siltstone, sandstone and conglomerate.

Basalts invaded the Phanerozoic rock sequence and Tertiary oil shale sequences during the Oligocene. Several possible vents and flows are recorded in the vicinity of the

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Nagoorin Graben. Quaternary (primarily Holocene) cover rocks comprising clay, sand, gravel and conglomerate are widespread. Distinct alluvial terraces flank the Boyne River.

A number of former mining fields exist in the vicinity of the Nagoorin Graben. Many Peaks (copper) is located immediately south of the Graben; Mt. Hector (copper - gold) is located 14 kilometres to the west and the Norton Goldfield five kilometres to the east. Many Peaks produced 8,512 tonnes of copper and 4,209 ozs of gold from 1910 to 1918 and it is believed that at the Norton Goldfield in excess of 20,000 ozs of gold was produced from 1878 to 1905. Production was recently revived in this Goldfield. In the vicinity of the Nagoorin Graben, there are numerous other small deposits of gold, lead, copper, antimony, tungsten and molybdenum, which have been exploited in the past.

4. EXPLORATION FOR THE 12 MONTHS TO 21 MARCH 2015.

Program for the 12 Months to 21 March 2015

In previous years, there is no prescribed program for EPM 7721 for the exploration period since the EPM existed primarily as pre-requisite tenure until MDL 234 was granted.

However, following grant of the MDL, the approved work program for exploration activities for the period includes geological data interpretation and evaluation and continuation of the groundwater monitoring program.

The resource estimate for the Nagoorin deposit was also reviewed during the year.

Geological Interpretation

The Nagoorin Beds have not been described formally and therefore there is no designated type section. A composite section (Figure 3) has been constructed from several of the drillholes in the Nagoorin and Nagoorin South Oil Shale Deposits. For Unit B the intersection in NDD014B at Nagoorin was used. Units C, D and E are represented by the section from NDD001 at Nagoorin. Unit F was derived from NSD016 and Unit G from NSD023; both Nagoorin South drillholes. The section of Unit H in NSD017 (Nagoorin South) selected was that used for detailed studies by Patterson and Lindner (1991). Unit J was derived from the section in NSD024 (also Nagoorin South). The sections selected for the units were chosen on the basis of a well-developed typical lithology and structural simplicity.

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TOTAL MOISTURE OIL RELATIVE Composite Section BULK DENSITY OIL YIELD LTOM % as Received DENSITY g/cc Nagoorin Graben 1.20 1.70 2.20 0 50 100 150 200 250 0 10 20 30 40 50 0.85 0.90 0.95 1.00 1.05

0 Quaternary W eathered Tertiary

100 Unit J

Unit H

200 Unit G

300 Subunit Fc

Subunit Fb 400

Subunit Fa

500

Unit E

600

Unit D 700

800 Subunit Cf

Subunit Ce

900 Subunit Cd

Subunit Cc

1000 Subunit Cb

Subunit Ca 1100

Unit B

1200

Undifferentiated Sandstone 1300

Interbedded mudstone, sandstone, conglomerate Oil shale, mudstone, sandstone

Interbedded mudstone, sandstone Oil shale Sandstone, conglomerate Carbonaceous Oil shale

Figure 3: Nagoorin Graben Composite Section.

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Figure 4: Nagoorin Oil Shale Deposit – sub-crop geology, drill holes and seismic line locations

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Geological Data Evaluation

2D SEISMIC INTERPRETATION

Arrow Energy acquired 42.48km of 2D seismic in the Nagoorin Graben. A single line along the length of the Graben (08-BRS-01, 21.24 line km) and two cross lines (08-BRS- 02, 7.48 line km and 08-BRS-03, 7.56 line km) cover the Nagoorin Oil Shale deposit (Figure 4). The western sections of 08-BRS-02 and 08-BRS-03 traverse the western margin of the basin within EPM 7721.

The tenement holders have completed preliminary evaluation of the 2D seismic sections. Seismic reflectors have been identified in conjunction with both CSG well data and oil shale drill holes that represent the main resource oil shale units within the Nagoorin Oil Shale deposit. These horizons can be traced to the west in seismic sections 08-BRS-02 and 08-BRS-03 to areas within the western portion of the Nagoorin Graben in EPM 7721 where there has been little drill investigation (Figure 4, Figure 5 and Figure 6).

Wireline and geological logging in Boyne River-11 (on line 08-BRS-02) has identified likely oil shale horizons but there is no core to confirm the likely tenor of any oil shale sequence encountered. All the CSG wells are within MDL 234. Wells Boyne River-5 and Boyne River-8A are the closest cored holes to EPM 7721 on seismic lines. These can be relogged to confirm the oil shale sequence correlation with seismic reflectors on line 08-BRS-01 and further correlated with cross-lines 08-BRS-02 and 08-BRS-03. Detailed interpretation can then be undertaken on the seismic line data to confirm the interpretation of likely oil shale sequences within EPM 7721.

Once potential oil sale horizons have been identified, confirmatory core hole drilling can take place to access the quality and quantity of oil shale within the interpreted horizons.

Qualitative seismic interpretation was undertaken on 08-BRS-02 and 08-BRS-03 to identify major structural features and correlate oil shale units where oil shale drill hole data was close to seismic lines. This enabled seismic interpretation in EPM7721 to the west of the defined resource within MDL234

The methodology used involved the following:

o Sonic logs from CSG well data confirm the low velocity of oil shale. A general velocity of 1900m/sec has been used to convert observed TWT to depth – ie 0.1sec =~100m. This should be confirmed with synthetic seismograms calculated for the complete Nagoorin sequence. o Seismic resolution is best between about 200m and 800m for graben sequence as a consequence of the acquisition parameters. Intrusive dolerite at a number of locations along all lines resulted in poor resolution where intrusives are common and also masks significant parts of the oil shale sequence below the sub-crop of intrusive bodies. o Interpretation completed by Arrow focussed on line 08-BRS-01, a long section, which defined “basement” and 5 horizons of interest (cycles) in the sequence above interpreted basement. At this point, relating these cycle horizons to any of

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the oil shale unit boundaries defined in the oil shale stratigraphy requires additional geological re-logging of the CSG well cores. Arrow did not present interpretation for the cross-sections. o Qualitative interpretation was undertaken for seismic and correlation with oil shale units. The following were identified based on oil shale drill hole data and able to be interpreted on parts of the seismic sections: . Basement – identified at the northern and southern end of line 08- BRS-01 and in parts of 08-BRS-02. . UnitCc – carbonaceous oil shale (channel coal). Highest yielding oil shale section at Nagoorin. . Unit E – basal sequence – marked lower amplitude section above higher velocity Unit D section. o The interpreted seismic sections indicate significant zones of faulted sequence in both previously known fault locations and other areas where faulting had not been found or interpreted from drilling. This is particularly apparent in the seismic line intersection NDD011 and NDD012 on line 08-BRS-02 in particular (Figure 5). A more detailed, quantitative interpretation of the current line data would be allow more confidence in grade and thickness continuity in areas of less disturbance. The western ends of lines 08-BRS-02 and 08-BRS-03 indicate possible oil shale horizons west of the current resource envelope and in EPM 7721 that may present viable exploration targets. Further work is required with the seismic data be reprocessed and interpreted to highlight the oil shale prospective zones in the sequence.

There are a number of CSG wells that have cored significant intervals of units that contribute to the oil shale resource (in MDL 234). It is probably too late to analyse these cores (drilled between 2004 and 2011) as the core will have degraded due to aging since drilling. However, re-logging with emphasis on the sequence as an oil shale log will add more value to the information and provide support to continuity interpretations for the deposit. In addition the sonic logs can be used to construct synthetic seismograms to aid the interpretation of the reprocessed seismic data. Further work is required with the core from wells Boyne River-2C,-5,-8, and -9A to be re-logged to identify and coded to the Nagoorin deposit oil shale units.

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Figure 5: Seismic line 08-BRS-02 with interpretation.

For seismic section locations see Figure 3.

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Figure 6: Seismic line 08-BRS-03 with interpretation For seismic section locations see Figure 3.

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Resource Review

A major reassessment of the resource for the Nagoorin Deposit was undertaken in 2001, and a revised estimate was established. Previous annual reviews have not seen any change to the estimate.

In 2014 a significant Nagoorin Resource review was required due to:

 The most recent Nagoorin Resource estimate is based on drilling and regional geophysical work carried out between 1979 and 1985. Whilst the estimate has been regularly reviewed, up to now there has been no new significant geological or geophysical information available on the Nagoorin Graben since the documentation of the resource estimate report in September 2008 (QER, 2008).  The Nagoorin tenement was overlapped by a petroleum tenement (ATP679) held by Arrow Energy Pty Ltd (Arrow). Arrow undertook a significant amount of exploration in the area between January 2004 and July 2011. The data has now become publically available through open file and should be assessed in relation to stratigraphic and structural interpretation work completed for the oil shale investigations. The Arrow work in the Nagoorin Graben included: o Drilling 10 CSG exploration holes both core and open holes for 7,325m to a maximum depth of 1,060m (Boyne River-1). o Four 2D seismic land lines total 42.48km completed in 2008.

JORC 2012 RESOURCE ESTIMATE

The resource estimate under the now superseded JORC 2004 guidelines from the September 2008 report is listed in Table 3. The resource is wholly within MDL 234 although the host oil shale sequence extends westward into EPM 7721. The inclusion of the adjustments required as a consequence of review of the CSG well and seismic data are provided the updated summary in Table 4.

Table 3: Nagoorin Resource Estimation JORC 2004 Summary Total Resource, 50 LT0M, 4 metre thickness cutoff, maximum 502 metres depth. Resource Category Tonnes Grade Moisture Shale Oil (millions) LT0M Wt% Mbarrels in-situ Measured 942 92 28.5 391 Indicated 1,739 90 26.8 719 Inferred 2,972 95 24.6 1,335 Total 5,652 93 26.0 2,445 Date of estimate – September 2008. LT0M – litres per tonne at zero percent moisture.

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Table 4: Nagoorin Resource Estimation JORC 2012 Summary Total Resource, 50 LT0M, 4 metre thickness cutoff, maximum 502 metres depth. Resource Category Tonnes Grade Moisture Shale Oil (millions) LT0M Wt% Mbarrels in-situ Measured 815 91 28.8 332 Indicated 1,585 92 27.4 665 Inferred 3,019 95 24.5 1,355 Total 5,419 93 26.0 2,351 Date of estimate – March 2014. LT0M – litres per tonne at zero percent moisture.

The changes in the resource estimate whilst locally significant are not considered to be material to the global estimate for the Nagoorin Oil Shale deposit and within the confidence error for the estimation methodology.

JORC 2012 GUIDELINE PARAMETERS

A 50 litres per tonne at zero percent moisture (LT0M) cut-off value had been used as a standard point in previous estimation of resources at Nagoorin and is continued in this review. A minimum thickness of four metres at 50LT0M had also been adopted as a standard for resource estimations. The resource estimates were made for the resource within: 1. The existing constraints of the current data available inclusive of all oil shale satisfying cut-off parameters, and

2. A depth limit of 502 metres below current ground level; this level may be considered as a technical maximum mining limit for this style of oil shale deposit in this part of the Nagoorin Graben however environmental and statutory constraints will affect the ultimate pit depth.

The resource categories are based on the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC, 2012). The categories of resource classification as they apply to the polygon block for each Unit at the Nagoorin Deposit are defined as follows: Measured Resources: The oil shale units can be confidently correlated and the grade of shale oil can be estimated with a high degree of confidence, that is, the tonnage and grade are reasonably defined. The spacing of reliable observation points is such that no significant deviation from the estimated tonnage and grade is expected between these observation points. Where a polygon is completely surrounded by polygons, each with a drillhole contributing resource data at its centroid, the resource within that polygon is considered as measured provided the drillhole spacing and structural data provides sufficient confidence that no significant deviation from the estimated grade and tonnage is expected. This spacing is approximately 1 kilometre for the Nagoorin resource areas. Indicated Resources: The oil shale units can be confidently correlated by their theoretical grade of shale oil and tonnage can be confidently estimated at the point of observation. Spacing of reliable observation points is such that grade and tonnage variation is less reliable

Nagoorin EPM7721 Annual Report 2015 15 QER Pty Ltd than that of the measured resource but greater than that of an inferred resource. Where a polygon is completely surrounded by polygons, each with a drillhole contributing resource data at its centroid, the resource within that polygon is considered as indicated provided the drillhole spacing and structural data provides sufficient confidence that no significant deviation from the estimated grade and tonnage is expected. This spacing is generally greater than one kilometre but less than three kilometres for the Nagoorin resource area. Inferred Resources: Generally those resources near the ill-defined subcrop or structural complex zones of the resource units are classed as inferred. The geology of the deposit is defined sufficiently for correlation and generally the areas require only additional data on structure and oil yield to upgrade the resource category. Projection of drill-derived information to the subcrop or faults, whose nature and location is not well characterised, is unreliable. Estimated resource within polygons with any edge bounded by a subcrop or fault boundary is classed as inferred. No Categorisation: Those areas where drill information has confirmed the presence of oil shale units with yield above cut-off grade but structural complexity, doubtful unit identification, intrusive related effects and distal location from areas of confidence do not support classification have no assigned categorisation and are not include in the resource estimate.

SPE-PRMS PETROLEUM RESOURCE ESTIMATION

An annual review of resource estimates is required under Australian Stock Exchange listing rules. In addition, the listing rules changed from 1 December 2013. Under ASX listing rules and guidance notes which came into effect on 1 December 2013, oil shale is specifically defined as an unconventional petroleum resource and under ASX Listing Rule 5.25.2 petroleum resources must be classified in accordance with SPE-PRMS and reported in the most specific resource class in which Petroleum Resources can be classified under the SPE- PRMS.

The Petroleum Resource estimation is based on the discovered Petroleum Initially in Place (PIIP). The PIIP is estimated using the JORC 2012 guidelines. The methodology used is a deterministic method and where the JORC levels of categorisation (Measured, Indicate and Inferred) quantify the range of uncertainty or confidence levels for the deposit. The PRMS also requires a factor for recovery to be included in the estimate. A recovery factor of 0.95 has been used in this estimate based on published recovery data from a number of conventional retort technologies operating and under development. The total estimate is apportioned to the tenement holders according to their beneficial interests in the Nagoorin deposit in Table 5.

Table 5: SPE-PRMS Petroleum Resource Estimate. Beneficial Total Resources (Mbarrels) 1C 2C 3C Interest Greenvale 67% 211 634 1497 QER 33% 104 312 737 TOTAL 100% 315 946 2234

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Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development. At Nagoorin, resource development is considered unclarified or not viable based on the current immature state of knowledge of commercial recovery due to one or more of the following contingencies.

 Development requires the application and grant of a mining lease and environmental approvals from the based on a commercial mine and processing proposal; i.e. legal, environmental, social and governmental factors for development have not been either established or approved.  A commercial mine and processing development has not at this time been assessed against any current and forecast economic conditions to support commercial viability.  Commercial recovery is dependent on the suitability of Nagoorin oil shale to be processed in current retorting technology or technology under development.

Groundwater Monitoring Program

Some standing water level measurements in exploration bores have been recorded periodically since the early 1980s following the completion of the initial exploration and resource delineation drilling programs at Nagoorin. These data are included in the groundwater level dataset for historical purposes. Groundwater monitoring in sixteen exploration holes are open to sufficient depth to allow measurement. Standing water levels have been recorded generally every few months since mid-1995, apart from a two-year gap from September 2003 to September 2005. The location of the monitoring bores is shown in Figure 7.

With the grant of MDL 234, all of the monitoring points fall within the MDL area. Data for this program are reported under the MDL 234 annual reports.

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Figure 7: Groundwater Level Monitoring Survey, drillhole locations.

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6. ACTIVITY IN EPM 7721 22 MARCH 2015 – 21 MARCH 2016

The EPM will remain on care and maintenance activities.

As a consequence of the grant of MDL 234 from 1 November 2012, 15 subblocks wholly within the MDL have nominally been relinquished by grant of MDL 234. Of the remaining 12 subblocks, 11 are partially covered by the MDL and one is wholly outside the MDL. These 12 subblocks will be evaluated for retention in respect of any potential Nagoorin Development options for the future.

The proposed program as submitted for the first year in the renewal application consists of the following for the next activity period:  Geological and geophysical review – geological logging  Seismic interpretation  Resource review.

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7. REFERENCES & BIBLIOGRAPHY

ARROW ENERGY N.L., 2004: 5 May 2004 – Arrow Announces Successful Flow Tests of Boyne River-1 Well. http://www.arrowenergy.com.au.

ARROW ENERGY N.L., 2006: http://www.arrowenergy.com.au/boyneRiver.asp.

ARROW ENERGY N.L., 2011: Boyne River 2D Seismic Survey Report, Nagoorin Basin, Boyne River ATP679. GSQ CR68272

BALL, L.C., 1916: Qld Govt Min J 17, 213.

DEAR, J.F., MCKELLAR, R.G., AND TUCKER, R.M, 1971: Geol. Surv. Qld, Report 46.

DIXON, D.A., & POPE, G. J., 2006: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2005 – 21 March 2006. QERL Report R3151.

ENVIRONMENTAL PROTECTION AGENCY, DEPARTMENT OF MINES AND ENERGY, QUEENSLAND. 2001: Code of Environmental Compliance for Exploration Permits and Mineral Development Licence Projects, January.2001.

HENSTRIDGE, D.A., & HUTTON, A.C., 1986: The geology and organic petrography of the Nagoorin oil shale deposit. Proceedings of the third Australian workshop on oil shale, Lucas Heights, 15-16 May 1986.

JENSEN, H.I., 1918: Qld Govt Min J 19, 10.

O'SULLIVAN, K.J., 1999: Nagoorin North Oil Shale Deposit. Report on resource drillhole database compilation November 1999. Report No. 2374

PATTERSON, J.H. & LINDNER, A.W., 1991: Stratigraphy & Mineralogy of Unit H, Nagoorin South Oil Shale Deposit. Proceeding 6th Australian Workshop on Oil Shale, University of Queensland, p. 151.

POPE, G. J., 2001: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual report for the period 22 March 2001 – 21 March 2002. QERL Report R2744.

POPE, G. J., 2005: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2004 – 21 March 2005. QERL Report R3126.

POPE, G. J., 2007: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2006 – 21 March 2007. QERL Report R3173.

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POPE, G. J., 2014: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2013 – 21 March 2014. QER Report D14/03103. GSQ CR83464.

QER PTY LTD, 2008: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2007 – 21 March 2008. QER Report R3234. QER PTY LTD, 2009: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2008 – 21 March 2009. QER Report D09/05542

QER PTY LTD, 2010: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2009 – 21 March 2010. QER Report D10/07379

QER PTY LTD, 2011: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2010 – 21 March 2011. QER Report D11/06764

QER PTY LTD, 2012: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2011 – 21 March 2012. QER Report D12/05170

QER PTY LTD, 2013: Exploration Permit (Minerals) 7721 Nagoorin Oil Shale Deposit Annual Report for the Period 22 March 2012 – 21 March 2013. QER Report D13/03632

RANDS, W.H., 1885: The Goldfields of Raglan, Calliope, Milton(Norton) and Cania, in the Port Curtis District. Rep. Geol. Surv. Qld. 21, 6.

SWARBRICK, C.F.J., 1974: Oil shale resources of Queensland. Geol. Surv. Qld, 83, 45.

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APPENDIX 1

ACKNOWLEDGEMENT AND WARRANTY

1. Subject to 2, the tenure 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 (Cwth). 2. To the extent that copyright in any material included in this Report is not owned by the State, the tenure 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; and  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 tenure 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 (Cwth).

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