31 October 2012 Company Announcements Office - ASX Limited RE: QUARTERLY ACTIVITIES REPORT FOR ADAVALE RESOURCES LIMITED (ASX: ADD) (ARL) FOR THE PERIOD TO 30 SEPTEMBER 2012 PROJECTS – INDONESIA Indonesian Project Areas Sangatta Kutai Timr Kutai Kartanegara KALIMANTAN SUMATRA PADANG Kota Baru Tapan For personal use only Banjar Tanah Bumbu Figure 1: Indonesia - Active Project Areas 1 Quarter Ended 30 September 2012 SUMATRA PERKASA PRIMA ABADI (PPA) (Wholly owned subsidiary of ARL) TAPAN PROJECT (100% PPA) PADANG JAMBI Perkasa Prima Abadi PAINAN N TAPAN Figure 2: Current Project Locations - Sumatra PPA holds an IUP production permit on 198Ha and an IUP exploration permit on 2054Ha. Approval has been granted to upgrade the IUP exploration to IUP production subject to an AMDAL (environmental) report. This approval provides a substantial increase in area and the potential to increase the size of the existing resource. The company has been actively engaged in sourcing potential mining companies, joint venture partners and or buyers with a view to move the project into production. Currently, negotiations continue with an established mining company that has shown strong interest in the project. At the same time the company has maintained strong relationships with the local government For personal use only authorities and village communities. Adavale is acting on the good relationship’s it has established with the local government bodies and is reviewing other projects located between Tapan and Painan that present an opportunity to secure a foothold in this West Sumatra coal belt. 2 Quarter Ended 30 September 2012 KALIMANTAN ADAVALE HARNER RESOURCES (AHR) (60% ARL) BML MB Kutai Kartanegara DCP Banjar BPR Figure 3: Current Project locations- Kalimantan For personal use only Given the outlook for coal prices for 2013-2015, the company has narrowed the focus on projects under review to more stringent criteria. A minimum GCV of 5800 is paramount along with additional quality coal specifications and sound logistics. Investigation and evaluation of projects in East and South Kalimantan continues. Projects identified during the quarter and under review are listed below. 3 Quarter Ended 30 September 2012 EAST KALIMANTAN KUTAI KARTENAGARA REGION Bukit Menjangan Lestari [BML] The project consists of an IUP exploration permit of 2,657Ha and an IUP production permit of 2,293Ha. Mining has taken place previously. The coal bearing formation is Pulau-Balang which hosts good quality thermal coal. Normal GCV 5800 to 6500 kcal/kg. The project lies in a prolific mining area west of Samarinda. Infrastructure and logistics are good. Distance from mine to jetty is 14 k’s and Jetty to mother vessel is 40 hrs. AHR has signed a Non-Disclosure Agreement and submitted a Letter of Intent to the current owners. Legal and technical due diligence continues. Subject to completion of due diligence and reaching satisfactory terms, the company intends to enter into a formal agreement to acquire the project. SOUTH KALIMANTAN BANJAR REGION The company is looking at a group of three projects in the Banjar Region of South Kalimantan. See figure 4 and table A. During the quarter, field surveys were carried out on each of the projects. AHR became interested in the group as information provided by the vendors supported minimum criteria and mining had previously taken place within the IUP production areas or on concessions For personal use only immediately adjacent. Initial reconnaissance and regional geology maps show the coal bearing formation within the group is Tanjung which hosts good quality thermal coal. Normal GCV 6100 – 6800 kcal/kg. The project group offers an opportunity for a low cost operation centred on re-opening existing pits and using the operations as a base to expand within the area. Legal and technical due diligence continues. 4 Quarter Ended 30 September 2012 Taboneo Anchorage Figure 4: Banjar Concessions Locations Name Location Coal Size Logistics Data Makmur Banjar Region – F. Tanjung IUP Production Existing haul rd 40k’s to Previously mined . Bersama South Kalimantn GCV 6100-6800 192 Ha Jetty , established Jetty Outcrops . Drill [MB] with loading facilities, 14 hole data hrs barging Dayakarsa Banjar Region – F. Tanjung IUP Exploration Existing haul rd 55k’s to Previous mining Cakrawala South Kalimantn GCV 6100-6800 673 Ha Jetty , 14 hrs barging adjacent. Drill hole Persada IUP Production data [DCP] 196 Ha For personal use only Banjar Persada Banjar Region – F. Tanjung IUP Exploration Existing haul rd 60k’s to Currently mining Resources South Kalimantn GCV 6100-6800 706 Ha Jetty , 14 hrs barging adjacent [BPR] IUP Production 199 Ha Table A. Banjar Concessions Details 5 Quarter Ended 30 September 2012 AUSTRALIA LAKE SURPRISE - SOUTH AUSTRALIA (100% ARL) Adavale’s sedimentary uranium project at Lake Surprise in South Australia comprises EL 4949 and EL 4950 over an area of 1,836km2. Two prospect areas – Clayton Basin and Mumpie - have been the focus of exploration to date. The original 5 year exploration licences have been renewed. It is the company’s opinion that the area holds significant potential and only a very small percentage of that potential has been explored to date. During the quarter the company commenced the search for a Joint Venture partner to continue exploring the project. John Risinger Managing Director (08) 9467 2049 Competent Person Statement: The information in this report that relates to Exploration Results, Mineral Resources or Ore Resources is based on information compiled by Eka Antasari Nugraho, who is a Member or Fellow of The Australasian Institute of Mining and Metallurgy. Eka Antasari Nugraha is a full time employee of Adavale Harner Resources. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of The “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Eka Antasari Nugraha consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. For personal use only 6 Quarter Ended 30 September 2012 Rule 5.3 Appendix 5B Mining exploration entity quarterly report Name of entity Adavale Resources Limited ABN Quarter ended (“current quarter”) 96 008 719 015 30 Sept 2012 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities $A’000 (3 months) $A’000 1.1 Receipts from product sales and related debtors - - 1.2 Payments for (a) exploration and evaluation (21) (21) (b) development - - (c) production - - (d) administration (230) (230) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature received - - 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (compulsory acquisition of shares) - - (251) (251) Net Operating Cash Flows Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects - - (b)equity investments - - (c) other fixed assets - - 1.9 Proceeds from sale of: (a)prospects - - (b)equity investments - - (c)other fixed assets - - 1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - For personal use only 1.12 Other (provide details if material) - - Net investing cash flows - - 1.13 Total operating and investing cash flows (carried (251) (251) forward) 7 Quarter Ended 30 September 2012 1.13 Total operating and investing cash flows (brought (251) (251) forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (cost of raising funds and sale unmarketable - - parcel of shares) Net financing cash flows - - Net increase (decrease) in cash held (251) (251) 1.20 Cash at beginning of quarter/year to date 590 590 1.21 Exchange rate adjustments to item 1.20 - - 1.22 Cash at end of quarter 339 339 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 137 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions For personal use only 8 Quarter Ended 30 September 2012 . Payments totaling $28,905 were made directly to Mr J Risinger and to Larca Pty Ltd, an associated entity of Mr Risinger. The disbursements were in relation to travel costs and director fees. Payments totaling $36,000 were paid to Entertainment Marketing Enterprise Pty Ltd, an associated entity of Mr P Suriano. The disbursements were in relation to director fees and consulting fees in relation to the development of Adavale Indonesian project. Payments totaling $36,915 were made to Arthur Phillip Pty Ltd, an associated entity of Mr R Poole. The disbursements were in relation to ASX reporting requirements, reimbursement of travel costs and company secretarial services. Payments totalling $6,000 were made to Mr R Poole, for director fees owing. Payments totaling $2,000 were made to Mr M Stevenson in relation to director fees owing. Payments totaling $27,102 were made to Steinepreis Paganin, an associated entity of Mr R Steinepreis. The disbursements were in relation to director fees and legal services. Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows N/A 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest N/A Financing facilities available Add notes as necessary for an understanding of the position.