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QUARTERLY ACTIVITIES REPORT

For the period ending December 2012

HIGHLIGHTS

CORPORATE

Company-transforming bolt-on acquisition of the Orion Coal Project announced.

Orion Coal Project is adjacent to Moorlands Deposit creating 136Mt thermal coal project with significant exploration upside located 14km from Blair Athol Coal Mine.

Advanced discussions underway with Beijing Guoli for funding of acquisition and project development.

Cash on hand $10.40m.

PRIORITY PROJECTS

Moorlands Deposit

Moorlands exploration programme completed resulting in a 35% increase in JORC Resource to 53.4Mt.

Resource calculation underway for combined Moorlands resource including the contiguous Orion Coal Project, hosting significant open cut mining potential.

Cuesta’s flagship priority project is to fast-track Cuesta from explorer to developer. Scoping study planned for Q1 2013.

Eastern Galilee Project

Yellow Jacket exploration programme completed, maiden resource estimate scheduled for end of Q1 2013.

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1. QUARTERLY OVERVIEW

The quarter ending 31 December 2012 was a busy period of corporate and operational activity for Cuesta.

Cuesta acquired the Orion Coal Project for $18.2m, which will be integrated with Cuesta’s existing Moorlands Deposit to the immediate south, creating a “flagship project”. Together, they will be referred to as the Moorlands Deposit. The transaction detail is set out in Section 2.

The combined Moorlands resources total 136Mt with two open pit opportunities and a coal bearing strike length of approximately 20km offering further exploration upside potential through exploration activities. A revised resource estimate is currently in progress.

A key advantage of the Moorlands Deposit is that it is 14km from the existing infrastructure at the Blair Athol Mine.

A scoping study will commence in Q1 2013, with two resource definition drilling phases planned for 2013. Cuesta proposes to develop the Moorlands Deposit at a ROM production rate of 4Mtpa in a staged start-up to reduce development timetable and start-up capital expenditure, over a minimum 20 year mine life.

Exploration activities during the December quarter have focused on the 100% owned Moorlands Deposit (prior to the Orion Project acquisition) and the 100% owned Yellow Jacket Project. Encouraging intersections were encountered in both projects resulting in a resource upgrade including a maiden JORC Measured Coal Resource at Moorlands and a maiden JORC Inferred Resource is targeted at Yellow Jacket in the first quarter of 2013. Further drilling information is given in detail in section 3.

Cuesta continues to investigate infrastructure options principally for the Moorlands Deposit and is targeting formal agreements in 2013.

At the end of December 2012, Cuesta had cash and cash equivalents of $10.40m.

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Project Status

West Bowen

(Moorlands Deposit)

A total of 136.3Mt of Thermal Coal Resource (14.6Mt Measured, 38.9Mt Indicated and 82.8Mt Inferred Resource in accordance with JORC code (2004) guidelines). Combined resource estimate underway for consolidated Orion and Moorlands Projects Due Q1 2013. The combined areas to be known as the Moorlands Deposit. Mine scoping targeted for completion in Q1 2013.

East Wandoan

(Thorn Hill Deposit)

A total of 44.6Mt of Thermal Coal Resource (22.5Mt Inferred Resource and 22.1Mt Indicated Resource, in accordance with JORC code (2004) guidelines).

8.2: 1 stripping ratio open cut resource defined from near surface to a depth of 100m.

Further exploration planning underway to expand resource and to acquire further resources.

Eastern Galilee (Yellow Jacket Project)

Coal discovered further east of the known coal limits in 2011 scout drilling. In 2012 drilling coal has been intersected over ~ 15km2, at depths less than 130m from the surface, with two seams present across all the drilled area. Maiden Resource Estimate due Q1 2013.

West Emerald 50-200Mt Coking / PCI / Thermal Coal Exploration Target. Desktop study focusing on historic drilling data and geophysical analysis to prioritise target areas for drilling in 2013.

Other Projects Amberley Project

54.7Mt of Thermal Coal Inferred Resource, in accordance with the JORC code (2004) guidelines. Considering option to expand or divest. Montrose Project 0-70 Mt Exploration Target for Metallurgical Coal.

Desktop Studies continuing.

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2. ACQUISITION OF ORION COAL PROJECT

During the quarter Cuesta executed an agreement to acquire Hannigan & Associates Pty Ltd which is the holder of the Orion Coal Project (EPCs 775 and 776). The Orion Coal Project is located immediately north of the Moorlands Deposit in the West Bowen Basin (ASX Release, 12 December 2012).

The transaction is a Company-transforming acquisition which will fast-track Cuesta from explorer to developer and is due to be completed on or before 28 February 2013.

Details of the Acquisition

Hannigan & Associates is the holder of EPC 775 & EPC 776, collectively known as the Orion Coal Project which is located immediately north of the Moorlands Deposit (EPC 1738) and adjacent to the Cuesta’s Moorlands Deposit, part of its wider West Bowen Project (Figure 1). The Orion Coal Project currently has Indicated Coal Resources of 29Mt and Inferred Coal Resources of 54Mt with an additional exploration target of between 80Mt – 90Mt (refer to Table 1). The Orion Coal Project will be consolidated with Cuesta’s Moorlands Deposit creating two open pit opportunities with a coal bearing strike length of approximately 20km. Targeting a ROM production rate of 4Mtpa over a minimum of a 20yr mine life, it provides the Company with a significant development project 14km from the existing infrastructure at the Blair Athol Mine. Under the terms of the transaction, a $5 million deposit was paid in two tranches before 21 December 2012. The balance of $13.2 million is payable before 28 February 2013. Cuesta is in advanced and positive discussions with its cornerstone investor Beijing Guoli regarding funding support for the transaction. The Company also secured the option of issuing a $10 million vendor Convertible Note to fund part of the transaction should the balance of the funding not be secured on favorable terms for Cuesta’s shareholders prior to settlement date. The transaction is subject to FIRB approval and the Company is required to seek shareholder approval to issue $10m of Convertible Notes to the Vendor. The transaction is subject to a Break Fee of $500,000 if shareholder approval is not granted and the transaction does not complete. The EGM to approve the Convertible Note Agreement is scheduled to be held on the 21st of February 2013. The project has been identified as having potential to produce up to 4Mtpa of ROM coal, based on current JORC Resources with a staged start up to minimise initial CAPEX requirements. Open pit mining and low strip ratios in the Moorlands Deposit should result in lower start-up capital requirements. The Company will seek to identify synergies with existing mine operations in the area to deliver lower cost rail, port, power and water infrastructure solutions for the project. Cuesta aims to commence a scoping study in Q1 of 2013 and drilling in Q2 2013. Transaction Under the SSA Cuesta Coal will acquire 100% of Hannigan & Associates from two un-associated Vendors for a total cash consideration of $18.2m. The cash consideration is payable in three (3) installments as per the schedule below;

1) An initial deposit of $2m on the date of executing the SSA; 2) A second deposit of $3m on or before the 21st December 2012; and 3) $13.2m on or before the 28th February 2013.

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The Company has negotiated as part of the SSA that the 3rd installment may be settled by the payment of $3.2m in cash and the issue of $10m Vendor Convertible Notes to the Vendors. The broad terms of the Convertible Notes are as follows:

Term is 18mths Interest rate of 9% for 12mths and 10% for the remaining period, paid quarterly Notes may be converted by the vendor at a 10% discount to 10 day VWAP, 50% 30 days

prior to 27th November 2013 and 50% at the maturity date. Notes may be redeemed by Cuesta at any time by paying face value of the notes +

accrued interest (no penalty interest) The Notes are secured against the shares in Hannigan & Associates

Cuesta Coal is in advanced discussions with its major shareholder Beijing Guoli and associated entities related to funding of the Orion Coal Project acquisition. The Company is also assessing other funding options and will advise the market when appropriate. Combined Orion and Moorlands Project Description The Orion Coal Project and Moorlands Deposit lie in a basin that comprises an elongate, north south trending, fault bounded graben structure and is approximately 20km long and 3km wide. The structure is filled with up to 350m of coal bearing sediment units of the Birimgan Formation and Blair Athol Coal Measures. The Basin lies approximately 14km from Blair Athol and about 260km west of Mackay and the Port of Dalrymple Bay.

Figure 1: Moorlands Deposit (EPC 1738) showing EPC 775 & EPC 776 (in red)

The Birimgan Formation and Blair Athol Coal Measures comprise mainly sandstone, mudstone and conglomerate, and contain up to 13 coal seams of export thermal coal quality which are

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designated as B1 – B13. Seams B11, B12 & B13 are the equivalents of the Monteagle, Kalbar 1 & Kalbar 2 seams which are better developed in the Moorlands Deposit. The southern section of the Orion Coal Project has not been fully explored but significant coal intersections have been encountered. Close-spaced drilling by Cuesta in the northern section of EPC 1738 gives confidence that exploration in this southern section of the Orion area may result in significant additional resources. Coal Resources and Exploration Targets for the Orion Coal Project were estimated in compliance with guidelines of the JORC Code 2004 by FG Robins of Fred Robins Geological Consulting in January 2012 and are summarised in Table 1. Coal Resources for the Moorlands Coal Deposit were estimated by Lyndon Pass of Encompass Mining in December 2012, and are also summarised in Table 1. Exploration Targets in the Satellite Target areas were estimated by Mr Brice Mutton, Technical Director of Cuesta Coal Limited. Table 1: West Bowen Global Coal Resources in accordance with JORC Guidelines

Deposit Coal Resources (Mt)

Exploration Target (Mt)

Measured Indicated Inferred Total Low High

Orion Coal Project 0 29.2 53.7 82.9 80 90

Moorlands Deposit 14.6 9.7 29.1 53.4 5 10

Satellite Target Areas

0 0 0 0 0 50

Total 14.6 38.9 82.8 136.3 85 150 The combination of the Orion Coal Project and Cuesta’s Moorlands Deposit will result in a combined JORC-compliant Resource of 136.3Mt as shown in Table 1. Table 2 below summarises average coal quality by seam for the Orion and Moorlands areas. Data for the Orion area have been summarised from individual borehole results which were reported by FG Robins in January 2012. Data for the Moorlands area have been summarised from recent coring carried out by the Company and compiled by Lyndon Pass of Encompass Mining.

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Table 2: Orion Coal Project and Moorlands Deposit – Average Raw Coal Quality by Seam

Seam Name

No. of Quality Holes

Moisture %

(ad)

Ash %

(ad)

Volatile Matter

% (ad)

Fixed Carbon

% (ad)

Specific Energy MJ/kg (ad)

Total Sulphur

% (ad)

Relative Density gm/cc (ad)

Orion Coal Project

B8 n/a 10.8 14.1 29.3 45.8 23.82 0.54 -

B9 n/a 11.7 11.3 31.8 45.2 24.76 0.80 -

Moorlands Deposit

B5 2 9.5 12.8 34.1 43.5 24.97 2.25 1.42

B7 4 9.6 22.2 27.1 41.1 21.28 0.52 1.51

B8 6 8.3 18.9 27.3 45.5 22.90 0.53 1.51

B9 5 8.5 16.3 31.1 44.1 23.41 0.70 1.47

ME 3 11.4 11.3 30.9 46.4 24.63 0.72 1.40

K2 7 8.2 14.1 34.3 43.5 25.29 1.13 1.48

Conceptual Mine Plan A mine plan study for the Orion Coal Project was completed by Hannigan & Associates in July 2012. The geological model was converted to Vulcan mining software format to produce a conceptual pit design and production schedule. The model indicated a 2.5Mtpa ROM output for a minimum of 15yrs with an average strip ratio of 7.1 BCM/ROM tonne of coal. Based on a preliminary assessment the Company has assumed that crushing, screening and washing similar to that previously carried out at Blair Athol would lower sulphur and increase energy content. Crushing and screening were assumed to produce the following fractions;

Coarse: plus 1.4mm, 75% of ROM Coarse fines: minus 1.4mm – 0.125mm, 20% of ROM Fines: minus 0.125mm

The coarse product would come from the wash plant with a 90% yield to produce a 6,200 Kcal/kg(AR) thermal product. The coarse fines would bypass the wash plant and be sold as a thermal coal with a heat value of 5,800 Kg/kcal (AR). Cuesta is in the process of commencing its own Conceptual Mine Study of both the Orion Coal and Moorlands Deposits in Q1 of 2013. Cuesta believes that the Moorlands deposit will add a further 1.5Mtpa ROM at an average strip ratio of between 4:1 to 6:1 enhancing the overall economics of the West Bowen Coal Project.

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3. PRIORITY PROJECTS EXPLORATION ACTIVITY REVIEW

3.1 West Bowen Project

Moorlands Deposit EPC 1738 (CQC: 100%) The West Bowen Coal Project stretches over an area of 1,000km2 and is located 25km West of Clermont, Queensland. It consist of EPC 1738 and 1891 and EPCA 2008, which sit in close proximity to the Rio Tinto Blair Athol Open Cut Coal Mine which has operated since 1984 and produced up to 12Mt of thermal coal per annum. Cuesta’s Measured, Indicated and Inferred Mineral Resource of 53.4Mt in accordance with the JORC code (2004) guidelines is located within EPC 1738, known as the Moorlands Deposit. This resource is contained within a discrete Permian sub‐basin situated approximately 14km northwest from the Blair Athol Mine. Cuesta is conducting detailed geological desktop assessments to identify additional coal bearing targets to the Moorlands Deposit, primarily in EPC 1891 with an aim to conduct scout drilling in 2013. Quarterly Activities During the quarter, drilling at the Moorlands Deposit was completed and announced on 22 November. Subsequently, the company announced a 35% resource upgrade to 53.4Mt, on previous resource of 39.5Mt on 10 December. Key highlights of the Moorlands drilling activities and results are as follows:

Resource increases to 53.4Mt at Moorlands Deposit (EPC 1738) – a 35% increase on previous resource of 39.5Mt

14.6Mt Measured and 9.7Mt Indicated JORC Resource in open cut target

4:1 to 6:1 strip ratio defined in open cut target

Raw Coal Analysis in line with expectations

Previously untested satellite gravity targets identified within close proximity to deposit.

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3.2 East Wandoan Project

Thorn Hill Deposit (CQC: 90%) The East Wandoan Project stretches over an area of 1089km2 and is situated approximately 15km east of the township of Wandoan, Queensland. It comprises EPCs 1955, 1987 and 2237, situated along the north-eastern fringe of the Surat Basin. Cuesta is exploring for shallow units of the lower Walloon Coal Measures, referred to as the Taroom Coal Measures. Quarterly Activities 2012 drilling occurred in the first half of the year. No further activities occurred at the Thorn Hill Deposit during the past quarter. The Company will continue to monitor infrastructure development in the Surat Basin and the impact it will have on the Thorn Hill Deposit future mine development, to determine the amount of funds to be invested in the project in the immediate future.

3.3 Eastern Galilee Project

The Eastern Galilee Project covers a total area of approximately 4,000km2 extending in a south-easterly direction from the township of Pentland, located midway between Charters Towers and Hughenden in Queensland. Cuesta holds five tenements in total consisting of EPC 1802 (“Yellow Jacket Project”), 1957 (90%) and EPCa’s 1983, 2688 and 2699. Two of the tenement applications (EPCAs 2079, 2080) are under a Farm-In and Joint Venture Agreement with QCI (Galilee) Pty Limited (QCI). Subject to successful granting of the tenements, QCI can earn 51% through expending $3 million on exploration. The target objective is to identify multiple deposits of open cut coal measures sized between 200 and 1,000Mt. The coal is expected to be of the Late Permian Betts Creek Beds Sequence; regionally this sequence contains net coal thickness greater than ten metres in substantial tonnages. In its drilling activities during 2011 and 2012, Cuesta has intersected coal over an extensive area on EPC 1802, which it has called the Yellow Jacket Project. During the quarter, a new target area Karura was defined in the company’s 90% owned EPC 1957.

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Figure 2: Cuesta’s Eastern Galilee Tenure including the Karura Target Area in EPC 1957 Yellow Jacket - EPC 1802 (CQC: 100%) Quarterly Activities The Yellow Jacket Project has been the main focus of exploration activities at the Eastern Galilee Project. Key highlights of the drilling activities are as follows:

23 PCD open holes, 5 partially cored holes totalling 4,229m completed

1 Fully cored hole completed to test for petrology, palynology and stratigraphic studies

All holes geophysically logged

Coal quality samples on way to laboratory for input into revised geological model

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Coal encountered 3km east of the main drilled area, providing scope for further drilling in

2013

New target area Karura defined in 90% owned EPC 1957

Karura has similar geological traits to Yellow Jacket and lies directly south of the Adani

Carmichael Project rail corridor

Yellow Jacket exploration target of 200 – 1,000Mt

Maiden resource estimate for Yellow Jacket (EPC 1802) targeted for March 2013

Since the commencement of drilling, on 27th August 2012, Cuesta has drilled a total of 23 open PCD holes and 5 partially cored holes totaling 4,229m for the 2012 drilling campaign, with all holes geophysically logged. All of the drill holes intersected coal in the target area (See figure 3 and Table 3). The partially cored holes (Figure 3) encountered coal seams as expected, with a physical appearance of the coal similar to that of the lower seams in the Betts Creek Beds Coal Measures, this will be verified in coal analysis. Cuesta is pleased to report it drilled one fully cored hole to allow testing for a positive identification of the age of the Yellow Jacket coal occurrence, allowing correlation with the traditional Galilee Basin. Testing will include petrology, palynology and stratigraphic studies. As previously announced, step out scout drilling of 3km was completed to the east of the most eastern drill traverse. Drilling was aiming to identify if the coal measures continue to occur, and encouragingly, drilling encountered the same coal seams. This provides significant exploration upside potential to the Yellow Jacket Prospect. The target area has been bought inside of the most easterly drill hole prior to additional drilling being completed in 2013. Table 3: Yellow Jacket 2012 Drilling Summary

SiteID TD(m) Easting Northing RL(m) Type Drilled Year

HP10 183 426015 7607495 330 Chip 2012 HP11 180 425885 7606212 336 Chip 2012 HP13 234 425817 7605482 338 Chip 2012 HP14 156 425532 7603167 320 Chip 2012 HP15 156 427004 7605493 353 Chip 2012 HP16 156 425415 7601966 315 Chip 2012 HP17 138 425266 7600504 313 Chip 2012 HP18 144 425166 7599455 316 Chip 2012 HP19 150 427002 7607007 346 Chip 2012 HP20 156 426943 7603219 330 Chip 2012 HP21 144 426995 7602004 332 Chip 2012 HP22 156 426982 7600505 328 Chip 2012 HP23 156 427008 7599506 322 Chip 2012 HP24 151 424504 7607001 329 Chip 2012 HP25 156 427003 7604500 349 Chip 2012 HP26 144 424519 7604004 322 Chip 2012 HP27 174 424503 7600496 308 Chip 2012 HP28 118 426858 7597259 318 Chip 2012 HP29 150 428491 7599521 306 Chip 2012 HP30 150 429915 7599503 293 Chip 2012 HP31c 170.9 425361 7601375 314 Fully Cored 2012 HP32c 132 427008 7599509 322 4C core 2012 HP33c 120 425529 7603165 320 4C core 2012 HP35 145 428277 7594996 300 Chip 2012 HP36 116 429016 7593693 298 Chip 2012 HP37c 156 424508 7606993 329 4C core 2012 HP38c 101.5 426850 7597258 318 HQ Core 2012

HP39c 132.6 426990 7605490 353 HQ Core 2012

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Upcoming Work Following Cuesta’s completion of drilling at its Yellow Jacket Prospect, coal samples from the partially cored holes are being transported to the laboratory for analysis and input into the geological model for a maiden resource calculation. A geological model of the drill data will be completed over the coming months with a target completion date of March 2013. Karura Target Area (EPC 1957) In conjunction with the exploration activities in Yellow Jacket, a detailed desktop review of Cuesta’s 90% owned EPC 1957 has confirmed a target area of up to 50km2 is present immediately south of the Adani Carmichael Project rail corridor. Historical regional seismic lines have been investigated and they indicate syncline structures present in both Yellow Jacket and Karura that have the potential to preserve the Permian coal measures of the Betts Creek Beds east of the known sub crop. This has been proven in Yellow Jacket through the drilling activities in 2011 and 2012. The syncline structure in Yellow Jacket match the gravity survey conducted earlier this year. There are very similar geological properties in the Karura Target area as there is in the Yellow Jacket Project, which warrant further exploration to verify the presence of coal.

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Figure 3: Drill hole locations on the Yellow Jacket Project, Eastern Galilee Basin

3.4 Amberley Project

Amberley Deposit (CQC: 100%) EPC 2127 comprises 12 sub-blocks within the mining district of South Brisbane, and is located 5km south of Amberley RAAF Base near Ipswich, Queensland. The project is located approximately 8km south east of the Jeebropilly coal mine and 5km from the soon to be re-commissioned Ebenezer Mine.

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Quarterly Activities 2012 drilling occurred during Q3. No further activities occurred at the Amberley Deposit during the past quarter. Key Highlights of the deposit are as follows:

54.7Mt JORC Inferred Coal Resource Resources defined to a depth of 150m.

4. OTHER PROJECTS ACTIVITY REVIEW

Initial desktop reviews were commenced on the other projects within the Cuesta Coal Portfolio of tenements and this will be an ongoing activity for the company over the coming 6 to 12 months.

The key focus will be at Montrose and Bauple as both of those projects have metallurgical coal potential.

5. JOINT VENTURES

The Joint Venture with QCI (Galilee) Pty Limited is pending the granting of two tenements EPCA 2079 and 2080. Cuesta anticipates granting of one of the tenements in Q1 2013.

6. TENEMENT GRANTING

The following tenement was granted during the quarter.

EPC 2181 as part of the Bauple Project.

No new applications for tenure were submitted.

7. INFRASTRUCTURE

As stated previously, Cuesta has engaged Balance Resources Pty Ltd to investigate potential infrastructure options, including port, rail, power and water, for its key projects. A full report has been generated outlining options and strategy. As part of this strategy Cuesta has:

i. Submitted an EOI for 1.2Mtpa allocation at the Port of Brisbane for its Amberley Project

ii. Aims to enter into an exclusive arrangement to negotiate secondary market port and rail allocation for its Moorlands deposit.

8. HEALTH & SAFETY

Cuesta is pleased to report that it continues to maintain its strong commitment to health and safety.

A training matrix has been established and staff members are attending a variety of training courses and will be an ongoing requirement.

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9. CORPORATE

9.1 Financial

During the quarter, Cuesta received a BAS refund of $189k and paid $547k in administrative expenses. Cuesta made payments of $2.286m for exploration activities which comprised the successful completion of concurrent exploration programs at Moorlands in the Bowen Basin and at Yellow Jacket in the Galilee Basin.

At the end of the December 2012 quarter Cuesta had cash and cash equivalents of $10.40m.

9.2 Vendor Payments

On 12 December 2012, Cuesta announced the Company-transforming acquisition of the Orion Coal Project. Cuesta made two payments under the terms of the Share Sale Agreement (SSA) during the quarter as follows;

1. The initial deposit of $2m was paid at the time of executing the SSA; and

2. The second deposit of $3m was paid prior to 21 December 2012.

The $5m deposit is currently being held on trust until that date of settlement, 28 February 2013. Interest accrued on the deposit up until the settlement date will be payable to Cuesta upon successful completion of the acquisition.

Transaction costs of $315k relating to the acquisition were paid during the quarter.

The amount of $2,221,622 (GST exclusive) and $87,500 (GST exclusive) is payable upon the granting of tenements to ACN Mining and Mining One Investments Pty Ltd.

The $87,500 (GST exclusive) payment will be paid to Mining One Investments Pty Limited this coming quarter and this will complete that transaction.

10. CONTACTS

For further information, please contact:

Mr Matthew Crawford Managing Director 02 9284 5900

Mr Keith McKnight Operations Director 02 9284 5900

Cuesta Coal Limited ACN: 153 351 994 Tel: 02 9284 5900 Fax: 02 9284 5999 Email: info@cuestacoal.com.au Web: www.cuestacoal.com.au Street address: Level 15, 31 Market Street Sydney NSW 2000 Postal address: PO Box Q716, Queen Victoria Building NSW 1230

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11. COMPETENT PERSONS STATEMENT

Information concerning Coal Resources and Exploration Results for the Orion Coal Project is based on a report by F.G.Robins of Fred Robins Geological Consulting which is dated 31 January 2012. He agrees to the inclusion in the current document of this information in the form and context in which it appears.

Fred Robins is paid by Hannigan and Associates Pty Ltd. for geological consultancy concerning the Orion Coal Project, but he has no other interest in the Orion project.

Fred Robins has been a Member of the Australasian Institute of Mining and Metallurgy continuously since 1973, and for the majority of this time has worked on the geology, exploration and resources of coal deposits. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’, published by the Joint Ore Reserves Committee (JORC).

A report entitled ‘Moorlands Project (EPC 1738) – Resource Estimate dated December 2012’, ‘East Wandoan Project JORC Resources dated June 2012’ and ‘Amberley Project (EPC 2127) – Resource Estimate’ dated 4th September 2012’, have been complied by Lyndon Pass of Encompass Mining, and it reflects his current view of the Moorlands, East Wandoan and Amberley coal deposit resources. In the future, as additional information may become available, this view could be subject to modification. The full reports contain detailed information regarding the Moorlands, East Wandoan and Amberley deposit.

Lyndon Pass is a Member of the Australasian Institute of Mining & Metallurgy (AusIMM). Lyndon Pass consents to the inclusion in the current document of the matters concerning Coal Resources at Moorlands, East Wandoan and Amberley based on his information in the form and context in which they appear. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ published by the Joint Ore Reserves Committee (JORC).

Sections of information contained in this report that relate to all Exploration Results were compiled or supervised by Blair Richardson, who is a Member of the Australasian Institute of Mining and Metallurgy and is General Manager of Exploration for Cuesta Coal Limited. Mr Richardson has sufficient experience which is relevant to the style of mineral deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Richardson consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Sections of information contained in this report that relate to Exploration Results and Targets were compiled or supervised by Brice Mutton, who is a Fellow of the Australasian Institute of Mining and Metallurgy and is Technical Director of Cuesta Coal Limited. Mr Mutton has sufficient experience which is relevant to the style of mineral deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Mutton consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

All statements contained in the announcement as to exploration targets are conceptual in nature. There has been insufficient exploration undertaken to date to define a coal resource and identification of a resource will be totally dependent on the outcome of further exploration. Any statement as to exploration targets has been made consistent with the requirements of the ‘Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves’ published by the Joint Ore Reserves Committee (JORC).

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12. ABOUT CUESTA COAL LIMITED (ASX CODE: CQC)

Cuesta Coal Limited (“Cuesta”) listed on the Australian Stock Exchange on 4th May 2012 raising $20 million to fund an aggressive 2 year exploration, mine scoping and feasibility study program on four key projects areas in the Queensland Coal Basins. Cuesta has assembled a diverse portfolio of thermal and coking coal exploration prospects within the Bowen, Surat and Galilee basins, the company’s core projects are well situated geographically with over 11,000km2 of exploration ground in total. Cuesta’s balanced portfolio consists of a pipeline of projects ranging from advanced exploration requiring resource definition drilling, to conceptual lateral opportunities requiring scout drilling. The projects are located in close proximity to current and future planned infrastructure.

Appendix 5B Mining exploration entity quarterly report 

 

 

 

+ See chapter 19 for defined terms.  17/12/2010 Appendix 5B  Page 1  

Rule 5.3 

Appendix 5B  

Mining exploration entity quarterly report Introduced 01/07/96  Origin Appendix 8  Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10  

 Name of entity 

Cuesta Coal Limited 

 ABN    Quarter ended (“current quarter”) 

36 153 351 994    December 2012 

 

Consolidated statement of cash flows  Cash flows related to operating activities  

Current quarter $A’000 

Year to date (6 months)  $A’000 

1.1  Receipts from product sales and related debtors  

   

1.2  Payments for  (a)  exploration & evaluation   (b)  development   (c)  production   (d)  administration 

(2,286) ‐ ‐ 

(547) 

(3,657) ‐ ‐ 

(1,083) 1.3  Dividends received  ‐  ‐ 1.4  Interest and other items of a similar nature 

received 207  457 

1.5  Interest and other costs of finance paid  ‐  ‐ 1.6  Income taxes paid  ‐  ‐ 1.7  GST Refund 

R & D Tax Refund 189 ‐ 

658 205 

   Net Operating Cash Flows 

(2,437)  (3,420) 

   Cash flows related to investing activities 

   

1.8  Payment for purchases of: (a)  prospects   (b)  equity investments   (c)  other fixed assets 

(5,325) ‐ 

(108) 

(5,325) ‐ 

(112) 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  ‐  ‐ 1.12  Other (provide details if material)  ‐  ‐ 

   Net investing cash flows 

(5,433)  (5,437) 

1.13  Total operating and investing cash flows (carried forward) 

(7,870)  (8,857) 

Appendix 5B Mining exploration entity quarterly report  

 

 

+ See chapter 19 for defined terms.  Appendix 5B  Page 2  17/12/2010 

 1.13  Total operating and investing cash flows 

(brought  forward) (7,870)  (8,857) 

   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 (provide details if material)  ‐  ‐ 

 Net financing cash flows 

‐  ‐ 

   Net increase (decrease) in cash held  

 (7,870) 

 (8,857) 

1.20  Cash at beginning of quarter/year to date  18,266  19,253 1.21  Exchange rate adjustments to item 1.20  ‐  ‐ 

1.22  Cash at end of quarter 10,396  10,396 

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 

 256 

 1.24 

 Aggregate amount of loans to the parties included in item 1.10 

‐ 

 1.25 

 Explanation necessary for an understanding of the transactions 

Payment  of  Directors’  Fees,  Executive  Directors  salaries  and  consultancy  fees payable to Directors’ related entities. 

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. 

 

Appendix 5B Mining exploration entity quarterly report 

 

 

 

+ See chapter 19 for defined terms.  17/12/2010 Appendix 5B  Page 3  

    Amount available $A’000  

Amount used $A’000 

3.1  Loan facilities  

‐  ‐ 

3.2  Credit standby arrangements  

‐  ‐ 

 Estimated cash outflows for next quarter 

    $A’000 

4.1  Exploration and evaluation  

1,460 

4.2  Development  

‐ 

4.3  Production  

‐ 

4.4  Administration  

603  

   Total 

2,063  

  

Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. 

Current quarter  $A’000 

Previous quarter $A’000 

5.1  Cash on hand and at bank  1,203  2,215 

5.2  Deposits at call 9,193  16,051 

5.3  Bank overdraft ‐  ‐ 

5.4  Other (provide details) ‐  ‐ 

 Total: cash at end of quarter (item 1.22) 

10,396  18,266 

 

Changes in interests in mining tenements      Tenement reference  Nature of 

interest (note (2)) 

Interest at beginning of quarter 

Interest at end of quarter 

6.1  Interests in mining tenements relinquished, reduced or lapsed   

  Exploration Permit for Coal 

(“EPC”) 

   

6.2  Interests in mining tenements acquired or increased   

EPC 2181  Exploration Permit for Coal 

(“EPC”) 

0%  100% 

Appendix 5B Mining exploration entity quarterly report  

 

 

+ See chapter 19 for defined terms.  Appendix 5B  Page 4  17/12/2010 

Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.  

  Total number   Number quoted  Issue price per security (see note 3) (cents) 

Amount paid up per security (see note 3) (cents) 

7.1  Preference +securities  (description)  

Nil  Nil     

7.2  Changes during quarter (a)  Increases through issues (b)  Decreases through returns of capital, buy‐backs, redemptions 

       

7.3  +Ordinary securities  

191,622,713  150,891,074     

7.4  Changes during quarter (a)  Increases through issues (b)  Decreases through returns of capital, buy‐backs 

‐  ‐     

7.5  +Convertible debt securities (description)  

Nil  Nil     

7.6  Changes during quarter (a)  Increases through issues (b)  Decreases through securities matured, converted 

       

7.7  Options  (description and conversion factor) 

  

8,035,718  

50,429,904 600,000 

  Exercise price  

$0.20 per Option 

$0.25 per Option $0.25 per Option 

Expiry date  

31 December 2015  

31 December 2015 29 October 2015 

7.8  Issued during quarter 

       

7.9  Exercised during quarter 

‐  ‐     

7.10  Expired during quarter 

‐  ‐     

Appendix 5B Mining exploration entity quarterly report 

 

 

 

+ See chapter 19 for defined terms.  17/12/2010 Appendix 5B  Page 5  

7.11  Debentures (totals only) 

‐  ‐     

7.12  Unsecured notes (totals only)  

‐       

 

Compliance statement  1  This statement has been prepared under accounting policies which comply with 

accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5). 

 2  This statement does give a true and fair view of the matters disclosed.   

Sign here:                                                                             Date: 31 January 2013 

(Company Secretary/ CFO)   Print name:   Megan McPherson  

Notes  1  The quarterly report provides a basis for informing the market how the entity’s 

activities have been financed for the past quarter and the effect on its cash position.  An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 

 2  The “Nature of interest” (items 6.1 and 6.2) includes options in respect of 

interests in mining tenements acquired, exercised or lapsed during the reporting period.  If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. 

 3  Issued and quoted securities The issue price and amount paid up is not 

required in items 7.1 and 7.3 for fully paid securities.  4  The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of 

Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.  5  Accounting Standards ASX will accept, for example, the use of International 

Financial Reporting Standards for foreign entities.  If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.