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24 February 2010

Centralised Company Announcements Platform

Australian Securities Exchange

10th floor, 20 Bond Street

Sydney NSW 2000

EXCITING ACQUISITION OF OPERATING COAL MINING ASSETS

Bathurst Resources Limited (“Bathurst”) is pleased to announce it has signed an agreement to acquire BD Acquisition LLC which owns the Black Diamond Coal Mine and its exploration interests in the Appalachian Basin Coal Field in Kentucky, USA. This acquisition is a major accomplishment for Bathurst as it represents a first class operating coal operation, in a strategically strong geographic location with new and modern infrastructure. The operation boasts substantial resources/reserves and excellent exploration potential. The transaction was completed against the backdrop of the global financial crisis and represents exceptional value and a significant achievement for the Company. Key Points

• Acquisition of up to 100% of operating open pit and underground coal mines in Eastern Kentucky, USA.

• Over 100 million tons of recoverable coal reported in 2008, with substantial exploration potential

• Operations previously producing at 80,000 tons per month with published plans to increase to over 500,000 ton per month by 2010.

• Modern 900 tph coal processing plant and high-speed rail load-out commissioned in 2008.

• Operations kept in “care and maintenance” since July 2009. Bathurst would expect to resume within 3 months of acquisition.

• Opportunity to toll process and load third party coal on cost plus basis utilising excess capacity of coal processing plant.

• Production plans would restart mines utilising contractors, commencing with the open cut operations building production over the first 18 months to 200,000 tons per month.

Bathurst has undertaken detailed discussions with various coal parties on both sale of

coal product and on use of the spare capacity at the coal preparation facilities on a

cost-plus basis and has secured offers of more than US$60 per ton for 12500 BTU coal

and US$70 per ton for stoker coal

For and on behalf of Bathurst Resources Ltd

Hamish Bohannan Managing Director Bathurst Resources Ltd

For further information contact Hamish Bohannan David Griffiths

Bathurst Resources Ltd or Gryphon Management Australia 9322 2700 0419 912 496

ADDITIONAL INFORMATION Overview

Headquartered in Prestonsburg, Kentucky, Black Diamond

formed in 2003 as a vehicle to make coal industry investments.

Diamond acquired control of

reserves/resources in the CAPP region of eastern Kentucky, two rail loadout facilities,

an existing preparation plant and other coal assets from Floyd County Resources, Inc.

In February 2008, the various Black Diamond entities

protection in the United States Bankruptcy Court. Subsequently CIT Capital Bank,

New York, took control of the assets and placed them in

During the intervening period, Black Diamond had established 8 underg

open cut mines with one highwall miner with capacity to produce over 2.5 million tons

per annum and plans to increase this to over 5 million tons per annum through 19

mines by 2010. Additionally Black Diamond built in a new, modern 900 tph coa

preparation and rail load facility at Spurlock for approximately US$19 million and

upgraded the nearby Ivel Plant to 500 tph capacity. Overall, the company spent over

$25 million to increase the capacity of its acquired assets in order to process, blend

and distribute over 5.0 million tons of premium coal per year.

Coal Reserves

Black Diamond’s has 56,000

of recoverable coal as detailed in the table below. Bathurst plans to build production

over three years to 3 million tons per annum giving a mine life on existing resources

ADDITIONAL INFORMATION

Headquartered in Prestonsburg, Kentucky, Black Diamond Mining Company LLC

formed in 2003 as a vehicle to make coal industry investments.

Diamond acquired control of 56,000 acres of high-Btu, low



In February 2008, the various Black Diamond entities filed Chapter 11 bankruptcy


New York, took control of the assets and placed them in BD Acquisition LLC.

During the intervening period, Black Diamond had established 8 underg



mines by 2010. Additionally Black Diamond built in a new, modern 900 tph coa




and distribute over 5.0 million tons of premium coal per year.

,000 acres of coal reserves containing some 115 million tons


three years to 3 million tons per annum giving a mine life on existing resources

Mining Company LLC was

formed in 2003 as a vehicle to make coal industry investments. In May 2006, Black

Btu, low-sulfur coal



filed Chapter 11 bankruptcy


BD Acquisition LLC.

During the intervening period, Black Diamond had established 8 underground and 3



mines by 2010. Additionally Black Diamond built in a new, modern 900 tph coal




containing some 115 million tons


three years to 3 million tons per annum giving a mine life on existing resources

of over thirty years. This reserve/resource figure represents only coal on permitted

areas leaving substantial exploration potential.

Mineral Resources and Ore Reserves are set out in the tables below. Note that Ore Reserve estimations are for areas that have a granted mining permit and include mining losses and therefore represent tonnages of coal that can be extracted and sold. Ore Reserves are not reported as a subset of Mineral Resources but as a separate tonnage.

The information in this announcement that relates to exploration results, mineral resources or ore reserves is based on information

compiled by Mr L A Gates who is a Chairman of Gates Consultants, an independent party, which is a Recognised Oversees

Professional Organisation accredited by the Australasian Institute of Mining and Metallurgy. Mr Gates 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 ‘Australasian Code for Reporting of Exploration Results, Mineral Resources

and Ore Reserves’. Mr Gates consents to the inclusion in the report of the matters based on his information in the form and context in

which it appears.

Furthermore, the information in this announcement has been compiled by Bathurst and is neither endorsed nor approved by CIT Capital

or its owners and no reliance on CIT or its other owners should be given when evaluating these disclosures.

The mineable reserves are contained in numerous coal seams including the Amburgy,

Broas, Elkhorn (1, 2, 3 & 3.5), Fireclay, Haddix, Peach Orchard, Whitesburg, and

Williamson seams. These seams contain highly volatile bituminous coals that range in

sulfur content from approximately 0.65% to 1.4% with thermal parameters ranging

TOTAL UNDERGROUND TOTAL SURFACE TOTAL

RESERVE (Tons) MEASURED/PROVEN MEASURED/PROVEN MEASURED/PROVEN

SPURLOCK 23,005,712 5,692,970 28,698,682

IVYTON 0 11,374,336 11,374,336

HIGHWAY 80 2,572,670 2,157,618 4,730,288

MUD CREEK 7,018,880 1,877,961 8,896,841

TOTAL 32,597,262 21,102,885 53,700,147


RESERVE (Tons) INDICATED/PROBABLE INDICATED/PROBABLE INDICATED/PROBABLE

SPURLOCK 21,583,673 5,783,955 27,367,628

IVYTON 0 13,314,951 13,314,951

HIGHWAY 80 9,195,891 5,030,736 14,226,627

MUD CREEK 4,209,683 2,264,845 6,474,528

TOTAL 34,989,247 26,394,487 61,383,734


RESERVE (Tons) RECOVERABLE RESERVES RECOVERABLE RESERVES RECOVERABLE RESERVES

SPURLOCK 44,589,385 11,476,925 56,066,310

IVYTON 0 24,689,287 24,689,287

HIGHWAY 80 11,768,561 7,188,354 18,956,915

MUD CREEK 11,228,563 4,142,806 15,371,369

TOTAL 67,586,509 47,497,372 115,083,881

BLACK DIAMOND MINING COMPANY, LLC

Gates Consultants Reserve Audit (August 2008)

TOTAL RESERVE BASE -- BLACK DIAMOND MINING COMPANY, LLC

from 12,000 to 13,500+ BTU. These coal qualities are in strong demand primarily

due to their exceptionally high thermal content but also because of environmental

restrictions imposed on both electric utility and industrial users of steam and stoker

coal, respectively. The Elkhorn seams are particularly suitable for the premium-

priced, stoker market and comprise over 50% of the company’s reserves.

Marketing and Coal Sales

Coal produced by the operations is well positioned to serve customers in numerous

key markets for CAPP coal. The Company’s market consists of power plants (steam

coal) and industrial customers (stoker coal) in South-eastern states such as Florida,

Georgia, North and South Carolina and Virginia, as well as a number of Midwestern

states including Kentucky, Michigan Ohio and Illinois.

Acquisition Value and Financing

Bathurst has signed an agreement to acquire the stock and assets of BD Acquisition

LLC, subject to final due diligence. The full terms of the Agreement are confidential,

however the final consideration is expected to be between US$40 and US$60million.

Bathurst has contracted Hyde Park Capital Group and Charlotte Capital Partners Inc to

raise the monies through mezzanine finance at a project level.

Full details will be released to shareholders once terms are finalised, and shareholder

and ASX approval of the acquisition will be sought and obtained prior to completion of

the transaction.

BATHURST RESOURCES OVERVIEW

Introduction

Bathurst Resources Limited is an Australian listed company focused on growing and becoming a

mid-sized coal producer. Bathurst has been producing coal in Eastern Kentucky since September

2008 when it acquired C&R Holding. Bathurst has been r

recent months and has now signed an agreement to acquire the Black Diamond coal assets in

Eastern Kentucky, USA. This acquisition is to be funded through mezzanine finance at a project

level facilitated by Hyde Park C

to follow this with a listing in North America at an appropriate time.

The C&R assets acquired by Bathurst included four properties of which one, at that time, was

operational. Bathurst had plans of steadily ramping production at the mines to over one million

tons per annum whilst actively pursuing other acquisition opportunities. The timing of the

acquisition however was not ideal with the market collapsing in the following months.

rapidly changed its operating plan and production was cut back to about 30,000 tonnes per month

to conserve resources. The Company did continue its acquisition trail, both acquiring leases to

add to the C&R leases, and also evaluating other mini

available in the deteriorating US coal environment.

The C&R assets did not include and coal preparation or load out facilities and as a result the coal

was sold raw into the Ohio River market. This together with the sm

the limited reserves were perceived as a limitation to the growth potential of the Company.

When a dispute arose with the original vendors of C&R, the assets were disposed of, November

2009, allowing the Company to focus on

been actively pursuing investment opportunities in Kentucky and West Virginia in the USA as well

a Greenfield metallurgical project in New Zealand.

Bathurst was recently successful in bidding for th

Kentucky and has now signed an agreement to acquire these properties and related assets from

BD Acquisition LLC who hold the assets following their resumption by the primary creditor, CIT

Capital, when the company fe

market crashed.

Black Diamond Mining Company LLC, Prestonsburg, Kentucky

Overview

Headquartered in Prestonsburg, Kentucky, Black Diamond was formed in 2003. Black Diamond

struck financial difficulties in late 2008 and control was taken by the bank, CIT Capital, which has

subsequently formed the company BD Acquisitions to hold the asset

RESOURCES OVERVIEW


sized coal producer. Bathurst has been producing coal in Eastern Kentucky since September

2008 when it acquired C&R Holding. Bathurst has been reviewing a number of opportunities in



Hyde Park Capital Group and Charlotte Capital Partners, Inc.

to follow this with a listing in North America at an appropriate time.


st had plans of steadily ramping production at the mines to over one million


acquisition however was not ideal with the market collapsing in the following months.



add to the C&R leases, and also evaluating other mining opportunities that were becoming

available in the deteriorating US coal environment.


was sold raw into the Ohio River market. This together with the small scale of the operations and



2009, allowing the Company to focus on acquiring better opportunities. The Company has since


a Greenfield metallurgical project in New Zealand.

Bathurst was recently successful in bidding for the Black Diamond assets in Floyd County,



Capital, when the company fell into financial difficulties towards the end of 2008 as the US coal

Black Diamond Mining Company LLC, Prestonsburg, Kentucky



subsequently formed the company BD Acquisitions to hold the assets for sale.


sized coal producer. Bathurst has been producing coal in Eastern Kentucky since September

eviewing a number of opportunities in



apital Group and Charlotte Capital Partners, Inc. It is our intention


st had plans of steadily ramping production at the mines to over one million


acquisition however was not ideal with the market collapsing in the following months. Bathurst



ng opportunities that were becoming


all scale of the operations and



acquiring better opportunities. The Company has since


e Black Diamond assets in Floyd County,



ll into financial difficulties towards the end of 2008 as the US coal



s for sale.

In May 2006, Black Diamond acquired control of the high-Btu, low-sulfur coal reserves/resources

in the Central Appalachian (“CAPP”) region of eastern Kentucky, two rail loadout facilities, an

existing preparation plant and other coal assets from Floyd County Resources, Inc.

Independent consulting groups have subsequently reviewed these reported reserves/resources.

Gates Consultants estimated a total of 115,084,000 measured and indicated recoverable tons

under lease as at August 12, 2008, adding that additional exploration in the Mud Creek and

Spurlock areas would likely result in additional proven reserves within the existing Black

Diamond Mining Company, LLC leasehold.

The reserves are largely located in the Elkhorn Group but also in the Fireclay, Peach Orchard,

Broas, Ambury, Haddix, Whitesburg and Williamson coal seams which have a history of yielding

high quality compliance steam and stoker coal. The Elkhorn seams are particularly suitable for

producing stoker coal, which trades at a premium to steam (or utility grade) coal because of the

stringent quality required for the stoker market. These reserves comprise one of the largest

integrated blocks of low-sulfur, high-Btu coal reserves in the CAPP region.

Black Diamond produced a broad range of high quality steam and stoker coal to utility and

industrial customers. The company distributed its coal through a variety of easily accessible

transportation options including rail (primarily through CSX), truck and barge at the Big Sandy

River terminal.

Ramp-Up & Expansion

By the end of 2008, some 19 mines were to be in operation with a target of reaching peak

production in 2010, at a rate of over 6.0 million tons per year. This would have seen the

company operating 23 mines (five surface, 18 underground), two state-of-the-art processing

plants and two high-speed rail loadout facilities. The company spent $25 million to increase the

capacity of its acquired assets in order to process, blend and distribute over 5.0 million tons of

premium coal per year.

Bathurst believes that these targets are realistic and attainable as the market recovers. Bathurst

plans to keep modest production levels for next twelve to eighteen months focusing on the

production of premium stoker coal and the toll treatment of thirds party coal.

Black Diamond has also constructed a 900 tph coal processing plant located at Spurlock Creek in

Floyd County, (the “Spurlock Plant”). The Spurlock Plant, with a construction cost of

approximately $19.0 million, is a state-of-the-art facility and commenced operations in July

2007. Black Diamond also constructed an additional high-speed, rail loadout capable of loading

a unit train in under four hours adjacent to the Spurlock Plant site (the “Spurlock Loadout”).

Bathurst has reviewed the condition of the facilities with engineering consultants and whilst it

has identified several areas that should be addressed whilst the plant is not operating, before

restarting the plant, these are not major and should be achieved in a matter of weeks.

Bathurst has however recognised that operational savings can be achieved by installing refuse

(or “tailings”) conveyor and pumping facilities as the material is currently trucked to the existing

refuse facility (“tailings dam”). Bathurst has also recognised that the quantity of stoker coal

produced can be increased with additional screen capacity. Both these have been budgeted for

the first year of production.

Black Diamond also completed refurbishment of a 500 tph processing plant in Ivel, Kentucky

(the “Ivel Plant”). The Ivel Plant has an adjacent high-speed, rail loadout facility (the “Ivel

Loadout”) with access to the CSX rail line. Black Diamond was contracted with Sedgman, LLC

(“Sedgman”) to operate the Ivel Plant, which was completed and operational in December 2006.

Bathurst is currently negotiating a similar arrangement on the Ivel plant, which whilst not critical

at the current time is seen as a strategically important in a recovered market.

Current operations included two surface mine and eight underground mines, with an additional

five mines (one surface, four underground) under development. All the mines were shut down

in an orderly manner in anticipation of resumption of operations.

Bathurst intends to recommence operations from the open cuts only in the short term, bringing

the underground mines into production as and when the market recovers. Considerable

interest has already been received from third parties to utilise the spare capacity at the coal

preparation facilities to treat their coal on a cost plus basis. This combination would allow the

operations to be in positive cashflow almost immediately.

Coal Reserves

The project has over 56,000 acres of coal reserves which lie primarily in Floyd County, Kentucky

with additional reserves/resources located in the eastern corner of Magoffin County, centrally

located in the eastern Kentucky CAPP coalfields. Coal quality in this region is exceptional and

averages over 12,500+ BTU/lb, 1% (or less) sulfur content, with relatively modest ash

percentages.

Specifically, the mineable seams contain highly volatile bituminous coals that range in sulfur

content from approximately 0.65% to 1.4% with BTU parameters ranging from 12,000 to

13,500+. These coal qualities are in strong demand primarily due to their high thermal content

but also because of environmental restrictions imposed on both electric utility and industrial

users of steam and stoker coal, respectively.

The mineable reserves are contained in numerous coal seams including the Amburgy, Broas,

Elkhorn (1, 2, 3 & 3.5), Fireclay, Haddix, Peach Orchard, Whitesburg, and Williamson seams. The

Elkhorn seams are particularly suitable for the premium-priced, stoker market and comprise

over 50% of the reserves.

The Bathurst proposal is based on the more recent and conservative Gates Report (2008) which

delineates over 100 million tons of recoverable coal, excluding that coal which is not currently

permitted. Bathurst believes that this figure can be increased substantially with a program of

exploration drilling and permit application.

Bathurst believes that the approximately 100 million tons of reserves are adequate to meet its

30-year production projections with substantial exploration potential available for future

development.

BD Acquisition holds mineral rights under long-term lease from various land holding companies

including Elk Horn. The following map details the company’s reserves and resources in the CAPP

region of eastern Kentucky:

Mining Operations

Mining operations historically consisted of surface, highwall and deep (underground) mining.

Fundamental to the acquisition is an operating strategy focused on providing value through

superior coal products, service and distribution while outsourcing operational functions where it

has limited or no competitive advantage. The Company’s operating strategy calls a key core of

staff and operators for the processing and load-out facilities but for contractors for open cut and

underground mining.

The operations provide considerable flexibility for meeting production targets with the large

number of production sources and the capacity and flexibility of the modern state-of-art

processing plant.

Ivyton N

Ivyton

RisnerOrchard Branch

Prater Creek

DanaMartin Plant

Spurlock SurfaceSpurlock W Fireclay

Spurlock W

Spurlock ESpurlock Prep Plant

Stonecoal

Turkey Creek 2

Lee AlleyMitac 2

Mitac 1

Andy Fork

King HamiltonMargaret Fork

Black Diamond

ResourcesHeadquarters

Ivel Prep Plant

Spurlock E Surface

Ivyton N

Ivyton

RisnerOrchard Branch

Prater Creek

DanaMartin Plant

Spurlock SurfaceSpurlock W Fireclay

Spurlock W

Spurlock ESpurlock Prep Plant

Stonecoal

Turkey Creek 2

Lee AlleyMitac 2

Mitac 1

Andy Fork

King HamiltonMargaret Fork

Black Diamond

ResourcesHeadquarters

Ivel Prep Plant

Spurlock E Surface

The capacity of the preparation facilities offers opportunity to treat third party coal on a cost

plus basis. Bathurst plans to do this for the first twelve to eighteen months of operation, both

preserving reserves and covering admin and overhead costs.

In addition, the US government is offering considerable incentive for mining companies to treat

historic mine wast stockpiles (“Gob”). Bathurst has identified over 10 million tons of such

material that could readily be treated through the Spurlock or Ivel plants. This material must be

blended with raw coal production but due to the high capacity available at the plants would not

constrain production. These Gob piles contain typically 35-45% recoverable coal.

Mine Production

The reserves contain multiple mine blocks that were until recently in production, idle mine

blocks that will be brought into production and mine blocks where production could be phased

as demand increases. The typical development time from obtaining final permits to start-up for

surface and underground mines is three to four months. Bathurst has however assumed that

real recovery will not start for at least 24 months.

The coal is processed and sold to meet primarily two applications: stoker coal, a clean burning

coal ideal for industrial applications requiring high heating temperatures, and high quality steam

coal used primarily for energy generation by utilities.

The residual coal from the cleansing process that produces stoker also creates a finer sized coal

possessing the same properties that, while too fine to qualify as saleable stoker coal, can be

blended with other coals to raise the combined quality and thermal characteristics. The quality

of Black Diamond’s minable reserves coupled with wash plant and high-speed rail loadout

capabilities allows the Company to blend coal types in order to match coal reserves and

production to the market demand conditions.

Vertically Integrated Operations

Coal produced from these operations is well positioned to serve customers in numerous key

markets for CAPP coal. The market consists of power plants (steam coal) and industrial

customers (stoker coal) in South-eastern states such as Florida, Georgia, North and South

Carolina and Virginia, as well as a number of Midwestern states including Kentucky, Michigan

Ohio and Illinois.

The operations have a competitive regional advantage relative other producers because its

preparation plants and high speed rail loadout facilities will allow the Company to process the high

quality raw coal into stoker coal and distribute it to customers at a competitive cost and at

specified coal quality. The Company will have 40 to 50% of the regional capacity (defined in a 25-

50 mile radius) of wash plants and high-speed load outs. The Company’s competitively priced

stoker product is expected to displace sales from higher cost producers. Fines from the stoker

process also contain higher BTU to blend with cheaper coal to sell at a more attractive price.

Documents

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