8. Independent Geological Expert Report For personal use only Independent Geological Expert Report 123 Report Independent Geological Expert’s Report U&D Mining Industry (Australia) Pty Ltd and Company U&D Coal Limited Site Various Date December 2013 Doc No UDM1707-01 For personal use only 124 Independent Geological Expert Report U&D Mining Industry (Australia) Pty Ltd and U&D Coal Limited Independent Geological Expert’s Report Important Notice U&D Mining Industry (Australia) Pty Ltd and U&D Coal Limited (“the Client”) This document has been produced by or on behalf of Palaris Australia Pty Ltd (“Palaris”) solely for use by the Client for inclusion in the Replacement Prospectus dated on or around 5th December 2013 (“the Purpose”) in the form and context in which it appears in this report. Use of this document is otherwise subject to the provisions of Palaris’ Terms and Conditions of Service. Palaris owns copyright in this document. 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Regulatory and policy changes Dec13 | UDM1707-01 | Page 2 of 43 Independent Geological Expert Report 125 U&D Mining Industry (Australia) Pty Ltd and U&D Coal Limited Independent Geological Expert’s Report Contents 1 U&D Mining Projects ............................................................................................................................... 4 2 Orion Downs – Meteor Downs South and Inderi ..................................................................................... 7 3 Broughton .............................................................................................................................................. 12 4 Rockwood .............................................................................................................................................. 16 5 Stockyard Creek .................................................................................................................................... 21 6 Nebo ...................................................................................................................................................... 24 7 Talwood and Sullivan Creek .................................................................................................................. 27 8 Springton ............................................................................................................................................... 30 9 Essex ..................................................................................................................................................... 32 10 Expedition Peak ..................................................................................................................................... 34 11 Pretoria Hill JV ....................................................................................................................................... 36 12 Other U & D Mining Tenure ................................................................................................................... 38 13 References ............................................................................................................................................ 43 For personal use only Dec13 | UDM1707-01 | Page 3 of 43 126 Independent Geological Expert Report U&D Mining Industry (Australia) Pty Ltd and U&D Coal Limited Independent Geological Expert’s Report 1 U&D Projects (i) Introduction Palaris Australia Pty Ltd (Palaris) was commissioned by U&D Mining Industry (Australia) Pty Ltd and U&D Coal Limited (U&D) to undertake a review of U&D’s coal tenements and complete an Independent Geological Expert’s Report for inclusion in the Replacement Prospectus for U&D’s initial public offering (IPO). U&D acquired Australian junior coal explorer Endocoal Limited (Endocoal) in April, 2013. Endocoal had an extensive tenure base in the Bowen Basin, Queensland and had successfully identified coal resources at Meteor Downs South and Inderi (Orion Downs), and Rockwood. Additionally, Endocoal had applied for a mining lease application (MLA) over the proposed Meteor Downs South open cut. U&D acquired the Broughton project (EPC818) in 2012 and combines this asset into U&D’s extensive portfolio. Broughton has an existing resource which was identified in 2005 and further studies are currently underway, with U&D aiming for the transition from explorer to producer. Palaris has undertaken a review of U&D’s exploration assets (EPCs) in the Bowen and Basin and provide a summary of the location, geological setting and stratigraphy, coal quality, historical and recent exploration, resource base and exploration potential. The location of U&D’s Bowen Basin assets is shown in Figure 1.1. Recent exploration permit – coal (EPC) applications located in the Galilee Basin are also included in this report. (ii) Geological Setting The Bowen Basin is part of a connected group of Permian coal basins in Eastern Australia that includes the Sydney and Gunnedah Basins (Mallett et al, 1995). Coal rank in the basin is largely related to relative position to a Triassic thrust front and Early Cretaceous intrusions. These conditions resulted in relatively shallow and undisturbed coal seams developed over large areas of the central and north-western parts of the basin. These coal seams are medium to high volatile bituminous with coking characteristics. On the eastern edge of the basin, coal rank varies from low volatile bituminous to anthracite with complex structure. Towards the south-western limits of the Bowen Basin, coal rank decreases and coking properties show a general deterioration. (iii) Stratigraphy Coal-bearing sequences occur in numerous stratigraphic levels throughout the Bowen Basin; however, those that have economic significance are classified as four distinct groups, referred to as Group I to IV. These are described by Mutton in Queensland Coals (2003) and a simplified stratigraphic table is presented in Table 1.1 below. Group I coal measures are the oldest coal-bearing sequence and are largely confined to the Denison Trough in the south west of the Bowen Basin. This group is represented by the Reid Dome Beds (RDB), deposited in extensional basins during the Early Permian. Group I coal seams have variable thicknesses and while targeted at Minerva on the Springsure Anticline, generally occur at significant depths. Group II coal measures consist of several unconnected Permian sub-basins;