For personal use only - asx.com.au fileMineral Resources and Target Mineralisation The available K3 seam channel data was modelled using an ID 2 algorithm with Minemap software

Prospectus l blackgold international holdings limited 89

For resource estimations the mean dip of 13º was used for all seams and a specific gravity of 1.4t/m 3 was assumed (Fig 12). The assumed widths were as follows:v K1 = 0.80mv K2 = 0.50mv K3 = 0.40mv K4 = 0.30mv K5 = 0.25m

Figure 12: Heiwan Mine Coal Seam Outcrops.

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blackgold international holdings limited l Prospectus90

4.4.3 JORC Code Compliant Estimated Ore Reserves, Mineral Resources and Target MineralisationThe available K3 seam channel data was modelled using an ID 2 algorithm with Minemap software.

Proved Reserves have been defined as those within a maximum search radius of 100m. The volume from the Measured Resource estimate was then discounted by 15% to allow for mining and pillar losses and a further 128,308t was deducted for accounted production. No further dilution or mining losses were applied.

Probable Reserves have been defined as the Indicated resources within a 100 – 200m search radius around the Proved Reserves where the Indicated resource estimate was

Reserves 1,000t H20 % Ash % Vol % FC % SO2 % CV kcal/kg

Proved 509 0.7 31.0 6.9 61.4 0.4 5,100

Probable 404 0.7 31.3 6.9 61.0 0.9 5,100

Total 914 0.7 31.1 6.9 61.2 0.7 5,100

Table 28: Heiwan Mine K3 Seam Summary of JORC Compliant Reserve Estimates.

Resoures 1,000t H20 % Ash % Vol % FC % SO2 % CV kcal/kg

Measured 584 0.7 31.4 6.9 60.5 1.5 5,100

Inferred 417 0.7 32.0 6.9 60.2 1.7 5,100

Total 1,002 0.7 31.5 6.9 60.4 1.6 5,100

Table 29: Heiwan Mine K3 Seam Summary of JORC Compliant Resource Estimates.

discounted by 15% to allow for mining and pillar losses. No further dilution or mining losses were applied.

Inferred Resources were defined as the resources within a 200-500m search radius. Any remaining potential coal outside the 500m envelope within the Mining Permit and confined within the outcrop of the mapped coal seams was then classified as Target Mineralisation with its volume discounted to 80%.

Target Mineralisation was estimated for K1, K2, K4 and K5 seams.

The results of this estimation are presented in Tables 28 to 30 (Fig 13).

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Figure 13: Heiwan Mine K3 Seam Resources Location Map Showing Categories.

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Seam From Mt To Mt

K1 2.6 2.9

K2 1.6 1.8

K4 0.9 0.9

K5 0.7 0.8

Total 5.8 6.4

Table 30: Heiwan Mine Summary of Target Mineralisation Estimates.

The recent SGS assay data shows an average CV of 6,155 kcal/kg with 2.24% ar moisture, 24.8% ash, 0.87% total sulphur and 0.024% P2O5. Future production is anticipated to have similar quality. Current K3 seam Reserves are 0.9 million tonnes and Resources 1.0 million tonnes for a total of 1.9 million tonnes.

Target Mineralisation ranges between 5.8 – 6.4 million tonnes for seam K1, 2, 4 and 5 with the range for quality parameters anticipated to be from 5,300-6,100kcal/kg with 2.0 – 3.0% ar moisture, 22.0-28.0%ash, total sulphur from 0.3 – 3.0% and phosphorous from 0.005 – 0.010% P2O5.

The Target Mineralisation is conceptual in nature since there has been insufficient exploration to define a mineral resource

under JORC guidelines. It is uncertain whether further exploration will result in the determination of a mineral resource so this conceptual target may or may not be outlined with future work, either in whole or in part.

4.5 Reserves PotentialHeiwan Mine utilises standard production techniques with drifts developed off adit access and retreat mining with caving. Current approved production capacity was 40,000t per year with a planned 85% extraction of reserves.

Recorded coal production in 2009 from K3 coal seam was approximately 60,000t with a recovery rate of 86%. Reconciliation of production to 2008 indicates 70,000t was drawn from reserves with 10,000t lost as unaccounted or left in pillars.

Conversion of the remaining resources to reserves requires some drilling followed by underground development.

4.6 Proposed Exploration ProgramOnly the south eastern portion of the Mining Permit requires limited drilling to resolve coal seam potential with confidence.Underlying the Mining Permit at depth is Permian coal seam potential that requires exploration drilling to establish whether extraction via a vertical shaft system is feasible.

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The following budget is dependant only on minimum raising and is proposed with Year 2 expenditure dependent on continued positive results from the Year 1 program (Table 31).

ActivityYear 1 $000s

Year 2 $000s

Total $000s

Infill mapping 10 5 15

Drilling 75 165 240

Data review 3 2 5

Reporting 2 3 5

Administration 5 5 10

Contingency 10 15 25

Total 105 195 300

Table 31: Heiwan Mine Proposed Exploration Budget.

5.0 combinEd ProPoSEd work ProGram and budGEt

Additional mapping with drilling is proposed for both mines.

The following budget is dependant only on minimum raising and is proposed for both properties with Year 2 expenditure dependent on continued positive results from the Year 1 program (Table 32).

ProjectYear 1 $000s

Year 2 $000s

Total $000s

Caotang 260 440 700

Heiwan 105 195 300

Total 365 635 1000

Table 32: Exploration Budget for Two Year Plan.

6.0 concluSionSThe two mines have combined JORC compliant Reserves of 6.6 million tonnes and Resources of 10.9 million tonnes with an average CV of 4600kcal/kg with 0.7% ar moisture, 35.9% ash, and 0.7% total sulphur for both categories (Tables 33 and 34).

SeamReserves Category 1,000t H20 % Ash % Vol % FC % SO2 % CV kcal/kg

Ct K1 Proved 1,790 0.7 37.0 7.2 55.0 0.6 4499

Ct K2 Proved 180 0.7 35.2 7.0 57.1 0.8 4638

H K3 Proved 500 0.7 31.0 6.9 61.4 0.4 5067

Sub Total Proved 2,470 0.7 35.6 7.2 56.5 0.6 4625

Ct K1 Probable 2,780 0.7 37.0 7.2 55.1 0.6 4507

Ct K2 Probable 900 0.7 34.9 7.0 57.4 0.8 4656

H K3 Probable 400 0.7 31.3 6.9 61.0 0.9 5067

SubTotal Probable 4,080 0.7 36.0 7.1 56.2 0.7 4595

TOTAL P + P 6,550 0.7 35.8 7.1 56.3 0.6 4607

Table 33: Total Reserves for Caotang and Heiwan Mines.

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Total Target Mineralisation estimates are a range from 29.0 to 33.0 million tonnes with quality ranges from 5,500 to 6,500kcal/kg, 1.0 – 3.0% as received moisture, 22.0 – 31.0% ash, total sulphur from 0.3 – 3.0% and 0.005-0.015% P2O5. (Table 35).

The Target Mineralisation is conceptual in nature as there has been insufficient exploration to define a mineral resource under JORC guidelines and it is uncertain whether further exploration will result in the determination of a mineral resource. This conceptual target may or may not be outlined with future work, either in whole or in part.

SeamResourcesCategory 1,000t H20 % Ash % Vol % FC % SO2 % CV kcal/kg

H K3 Measured 580 0.7 31.4 6.9 60.5 1.5 5062

Ct K1 Inferred 6,560 0.7 37.0 7.2 55.0 0.6 4500

Ct K2 Inferred 3,380 0.7 34.9 7.0 57.4 0.8 4655

H K3 Inferred 410 0.7 32.0 6.9 60.2 1.7 5053

Total M + I 10,930 0.7 35.9 7.1 56.2 0.8 4598

Table 34: Total Resources for Caotang and Heiwan Mines.

Seam 1,000t H20 % Ash % Vol % FC % SO2 % CV kcal/kg

Ct K1 5,900-6500 2.0-3.0 26.0-31.0 7.80-9.50 60.0-65.0 2.20-2.50 5500-5800

Ct K2 12,300-13,700 1.0-2.50 22.0-26.0 8.0-10.0 63.0-69.0 1.0-2.20 5700-6300

Ct K3 5,400-6,000 1.0-3.0 22.0-31.0 7.0-10.0 60.0-69.0 1.0-2.50 5500-6300

H K1 2,620-2,901 2.0-3.0 22.0-28.0 6.0-8.0 62.0-72.0 0.30-3.0 5300-6100

H K2 1,640-1,820 2.0-3.0 22.0-28.0 6.0-8.0 62.0-72.0 0.30-3.0 5300-6100

H K4 850-940 2.0-3.0 22.0-28.0 6.0-8.0 62.0-72.0 0.30-3.0 5300-6100

H K5 710-760 2.0-3.0 22.0-28.0 6.0-8.0 62.0-72.0 0.30-3.0 5300-6100

Total 29,420-32,621 1.0-3.0 22.0-31.0 7.0-10.0 60.0-69.0 1.0-3.0 5500-6300

Table 35: Combined Target Mineralisation for Caotang and Heiwan Mines. *Ct=Caotang, **H=Heiwan

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Plans have already been implemented to expand production capacity. Remaining items for feasibility studies are coal washing facilities and overhead transportation from the elevated mine sites down to the main road level prior to trucking to port.

The current combined average profit margin is A$33.8 (RMB213) for the period from 1 November 2009 to 30 April 2010 with distinct indications of improvement that will come from the expansion efficiencies and possible increase in margins if washing plants are installed.

The mines and environs both have additional exploration merit since they are situated over ground that has not been subjected to systematic, modern exploration methodology.

During Year 1 desk top studies followed by targeted mapping and infill drilling will be used to identify additional potentially exploitable ground.

Drilling of selected areas will continue during Year 2.

Yours faithfully,

Allen J. Maynard

Competent Persons StatementThe information in this report which relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Brian Varndell, a Fellow of the Australasian Institute of Mining & Metallurgy ("AusIMM") and independent consultant to the Company. Mr Varndell is a consultant of Al Maynard & Associates Pty Ltd and has many years of experience in exploration and mining in a variety of mineral deposit styles. Mr Varndell 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 Varndell consents to inclusion in the report of the matters based on his information in the form and context in which it appears.

7.0 rEfErEncESAusIMM, (2004): "Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code), prepared by the Joint Ore Reserves Committee (JORC) of the AusIMM, the Australian Institute of Geoscientists (AIG) and the Minerals Council of Australia (MCA), effective December 2004.

AusIMM. (2005): "Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the VALMIN Code)" 2005 Edition.

Mean quality Parameters are presented in Table 36.

MineH2O %

arH2O %

ad

CV kcal/kg

ar

CV kcal/kg

adAsh %

adVol %

adFC %

adS % ad

P % ad

Caotang 2.3 1.0 5,648 5,835 27.2 8.8 63.0 2.1 0.060

Heiwan 2.4 1.1 5,977 6,155 24.8 7.0 67.1 0.9 0.024

Total 2.4 1.0 5,730 5,915 26.6 8.4 64.0 1.8 0.051

Table 36: Combined Resources Quality for Caotang and Heiwan Mines (SGS).

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AusIMM, (1998): "Valmin 94 – Mineral Valuation Methodologies". Conference Proceedings.

Bucci, Louis A., Paul F. Hodkiewicz, Phil Jankowski, Daniel Guibal, and Xinyu (Scott) Song., "JORC and the Chinese Resource Classification Scheme-an SRK view", July/August 2006

"Chinese Traditional Resource Estimation method", internal unpublished company report. May 2007.

Caotang Coal Mine Coal Resource Survey Report issued by the Chongqing 136th Geological Brigade on 8 October 2003.

CIM, (April 2001), "CIM Special Committee on Valuation of Mineral Properties (CIMVAL)" Discussion paper.

ClM, (2003): "Standards and Guidelines for Valuation of Mineral Properties. Final Version, February 2003". Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMV AL).

Heiwan Coal Mine Coal Resource Survey Report issued by Feng Jie County Guo Xing Land Resources Development Consultancy Services Co. Ltd. in December 2007.

Kilburn, LC, 1990: "Valuation of Mineral Properties which do not contain Exploitable Reserves" CIM Bulletin, August 1990.

Rudenno, (1998): "The Mining Valuation Handbook".

8.0 coal information and dEfinitionSTypes of coalCoal can be broadly classified into two types based on application:Thermal coal or steaming coal: principally used as a solid fuel to generate electricity and heat.

Metallurgical coal or coking coal: used to produce coke, which is used as a fuel and reducing agent in the smelting of iron ore to produce steel.

Coal also comes in four main types or ranks, the characteristics of which are predominantly affected by moisture, volatile content and carbon content:Anthracite: a hard black coal with a high carbon content (92 – 98%) and high energy density.

Bituminous coal: a soft black coal that can be used for thermal or metallurgical applications.

Sub-bituminous coal: a soft black coal with an energy density lower than that of bituminous coal and the most common type of coal used for electricity generation.

Lignite: a brown coal with a high moisture content and low energy density, used almost exclusively for electricity generation.

MoistureThe moisture content of coal varies by type of coal, the region where it is mined and the location of coal within a seam. The moisture content of coal is related to the energy content. In general, high moisture content decreases the energy content and increases the weight of the coal, thereby making it more expensive to transport. Moisture content in coal, as sold, can range from approximately 5 – 30% for bituminous and sub-bituminous coal to up to 45% for lignite.Total moisture is analysed by loss of mass between an untreated sample and the sample once heated and analysed. When analysing a coal sample, the analysis results need to account for moisture content. Results are typically reported as either:'as received' (ar) – as a percentage of the coal including the total moisture content; i.e. including both the surface and the air-dried moisture content of the coal;

'air dried basis' (adb – as a percentage of the air-dried coal; i.e. including the air-dried moisture but not the surface moisture;

'dry basis' (db or dry) – as a percentage of the coal after all moisture has been removed; and

'dry ash-free' (daf) – as a percentage of the volatile matter and fixed carbon components of the coal, with moisture and ash removed.

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Energy contentThe energy content of coal is typically measured as the heat released on complete combustion in air or oxygen, expressed as the amount of heat per unit weight. It is usually expressed in units of kilocalories per kilogram (kcal/kg). Energy content is affected by moisture content. Generally a higher energy content means a higher economic value, particularly for thermal coal.

Volatile matterVolatile matter in coal refers to the components of coal (excluding water) that are liberated at high temperatures in the absence of air. This is usually a mixture of short and long chain hydrocarbons, aromatic hydrocarbons and some sulphur. The volatile matter of coal is determined by heating the coal sample under controlled conditions.

Ash contentAsh is the inorganic residue remaining after the combustion of coal. It is an important characteristic of coal because electricity generators must handle and dispose of ash following combustion. Coal with a lower ash content is therefore considered to be of higher quality. Analysis is fairly straightforward, with the coal thoroughly burnt and the ash material expressed as a percentage of the original weight.

Fixed carbonThe fixed carbon content of coal is the carbon remaining after volatile materials are driven off. This differs from ultimate carbon content because some carbon is lost with the volatile materials as hydrocarbons. Fixed carbon is used as an estimate of the amount of coke that will be yielded from a sample of coal. Fixed carbon is determined by subtracting the moisture, ash and volatile matter content from the original mass of the coal sample.

Sulphur contentLow sulphur coal is generally characterised as coal with a sulphur content of 1% or less by weight. In many countries,

environmental controls restrict sulphur emissions by electricity generators. Low sulphur coal therefore offers environmental and economic advantages over high sulphur coal and reduces the need for flue gas desulphurisation. Coking coal requires a maximum sulphur content of 0.8%, because higher values affect steel quality.

Proximate analysisThis is the determination of moisture, ash, volatile matter and fixed carbon and is quoted along with the gross calorific value (ad), total sulphur and sometimes the phosphorous content. The other key parameters of crucible swelling index, ash softening temperature, ash fusion temperature and Hardgrove Grindability Index ("HGI") are often analysed and quoted with proximate analysis results.

Ultimate AnalysisThis entails determination on a daf basis of carbon, hydrogen, nitrogen, oxygen, carbonates, phosphorous and chlorine on a percentage basis.

Ash ConstituentsThis entails analysis on a percentage basis of SiO2, Al2O3, Fe2O3, TiO2, CaO, MgO, Na2O, K2O, P2O5, Mn3O4, SO3, and the SiO2: Al2O3 ratio.

Calorific

DensityIs determined on an ad basis.

Petrographic Parameters – Maceral AnalysisThis is a microscopic analysis to determine on a percentage basis the coal mineral components that are vitrinite, exinite, micrinite, semi-fusinite, fusinite, and mineral matter as well as quoting the reactives to inerts ratio.

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9.0 GloSSary of tEcHnical tErmS and abbrEviationS

Anticline Upward arching folds or rock strata (antonym = syncline).

Axial plane A plane that joins the hinge lines of successive beds in a fold.

Axis Hinge-line of a fold.

Basal A well sorted homogeneous conglomerate which forms the (conglomerate) bottom of the stratigraphic unit and rests on an erosional surface.

Bed Individual sedimentary layer.

Bedding A rock surface parallel to the surface of deposition.

Block Structural area of the continental landmass.

Channel Sample A sample of material taken continuously across a rock face.

Clastic A sedimentary rock composed of broken fragments of pre-existing rocks.

Conformable Beds deposited upon one another in uninterrupted sequence.

Conglomerate Sedimentary rock formed by the cementing together of rounded water-worn pebbles, distinct from breccia.

Cross bedding Sedimentary beds inclined with respect to the horizontal, formed by the migration of bed forms such as dunes and ripples.

Diamond drill Rotary drilling using diamond–impregnated bits, to produce a solid continuous core sample of the rock.

Dip The angle at which a rock layer, fault of any other planar structure is inclined from the horizontal.

Drag fold A minor fold formed in the vicinity of strike faulting due to the differentiated movement (dragging) of rocks either side of the fault.

Dyke A tabular intrusive body of igneous rock that cuts across bedding at a high angle.

Fault A fracture in rocks on which there has been movement on one of the sides relative to the other, parallel to the fracture.

Fault splay A series of minor faults at the extremities of a major fault. (splay zone)

Ferruginous Containing iron.

Fold A bend in the rock strata or planar structure.

Foliation The laminated structure resulting from the parallel arrangement of different minerals.

Footwall Rocks underlying mineralisation.

Geomorphology Study of the form and origin of natural land surfaces.

Geosyncline A large linear trough on the earth's surface in which sediments or volcanic rocks are deposited.

Geothermal Gradient

The rate of increase in temperature of the earth with depth.

Grass–roots The initial phase of examining an area for the occurrence of exploration mineralisation.

Hangingwall Rocks overlying mineralisation.

Hematite A common oxide of iron.

Inferred A resource inferred from geoscientific evidence, drill holes, Resource underground openings or other sampling procedures where lack of data is such that continuity cannot be predicted with confidence and where geoscientific data may not be known with a reasonable level of reliability.

Indicated A resource sampled by drill holes, underground openings, or other Resource sampling procedures at locations too widely spaced to ensure continuity and where geoscientific data are known with a reasonable level of reliability.

Intercept The length of rock or mineralisation traversed by a drillhole.

Ironstone A concretionary, often pebbly, weathering product composed mainly of iron oxides.

Isocline An anticline or syncline so closely folded that the two sides have the same dip.

JORC Joint Ore Reserves Committee- Australasian Code for Reporting of Identified Resources and Ore Reserves.

Jurassic A time period from approximately 212 to 142 million years ago.

Level In mining, a group of workings at approximately the same elevation.

Limestone A sedimentary rock composed mainly of calcium carbonate.

Measured A resource intersected by drill holes, underground openings or Resource other sampling procedures at locations which are spaced closely enough to confirm continuity and where geoscientific data are reliably known.

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Mineral Resource A tonnage or volume of rock or mineralisation of economic interest.

Mineralisation In economic geology, the introduction of valuable elements into a rock body.

Outcrop The surface expression of a rock layer (verb: to crop out).

Oxidation Near surface decomposition by exposure to the atmosphere and ground water.

Plunge Angle of the axis of folding with a horizontal plane. (of fold axis)

Proved Reserve An ore reserve stated in terms of mineable tonnes and grade in which the corresponding identified Mineral Resource has been defined in three directions by excavation or drilling (including minor extensions beyond actual openings and drill holes), and where the geological factors that limit the orebody are known with sufficient confidence that the Mineral Resource is categorised as Measured.

Quaternary A division of geological time ranging between 1.8 million years and the present.

Recent Geological age from about 20,000 years ago to present (synonym:Holocene).

Reconnaissance A general examination or survey of a region with reference to its main features, usually as a preliminary to a more detailed survey.

Resource In-situ mineral occurrence from which valuable or useful minerals may be recovered, but from which only a broad knowledge of the geological character of the deposit is based on relatively few samples or measurements.

Sandstone A cemented or otherwise compacted detrital sediment composed predominantly of quartz grains.

Sediment Rocks formed by the deposition of solids from water.Shale A laminated sediment in which the constituent particles are predominantly clay sized. (smaller than 0.0039mm in diameter)

Shear (zone) A zone in which shearing has occurred on a large scale so that the rock is crushed and brecciated.

Siltstone A very fine-grained clastic rock composed predominantly of silt sized particles.

Splay fault A secondary shear or fault divergent from the principal structure.

Strike The direction or bearing of the outcrop of an inclined bed or structure on a level surface.

Subcrop The surface expression of a mostly concealed rock layer.

Syncline A fold where the rock strata dip inwards towards the axis. (antonym: anticline)

Triassic A time period from approximately 248 to 212 million years.

Unconformable Descriptive of rocks on either side of an unconformity.

Unconformity Lack of parallelism between rock strata in sequential contact, caused by a time break in sedimentation.

Wacke A sandstone consisting of angular and unsorted mineral and rock fragments.

Weathering A process of change to rocks brought about by their exposure to oxygen and water.

ABBREVIATIONScm centimetreg gramha hectareHGI Hardgrove Grindability Indexkcal kilocalorie (=1000 calories = 4.184 kilojoules) kg kilogramkm kilometrekmc 2 square kilometreM millionm metrem 2 square metrem 3 cubic metremm millimetret tonnetpa tonnes per annumoz troy ounce, equivalent to 31.1035g.P2O5 Phosphorous pentoxide.

UNITS OF CONCENTRATIONppb parts per billionppm parts per million

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Financial information6F

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IntroductIon This Section summarises the relevant historical and proforma financial information (the "Financial Information") in relation to the Subsidiaries and GP Group – Heiwan Mine division. The Financial Information includes: v The historical statements of comprehensive income and statements of cashflow for the financial year ended 31 December 2008, the 10 months ended 31 October 2009 and the six months ended 30 April 2010; v the historical statement of financial position as at 31 December 2008, 31 October 2009 and 30 April 2010; and v the proforma statement of financial position as at 30 April 2010. Crowe Horwath audited the financial statements for the financial year ended 31 December 2008 and the financial period ended 31 October 2009, and reviewed the interim financial statements for the six-months financial period ended 30 April 2010. In relation to the financial statements for 31 December 2008 and 31 October 2009, a qualified audit opinion was issued to the following extent: BasisofQualifiedOpinion WewereengagedasauditorsfortheCombinedGroup afterthefinancialperiodended31October2009. Asaresult,wedidnotobservethecountingofthe physicalinventoriesasat31December2008and 31October2009.OwingtothenatureoftheCombined Group'srecords,wewereunabletosatisfyourselvesas totheinventoryquantitiesbyotherauditprocedures.

QualifiedOpinion Inouropinion,exceptfortheeffectsofsuchadjustments, ifany,asmighthavebeendeterminedtobenecessary hadwebeenabletosatisfyourselvesastothephysical inventoryquantities,thecombinedfinancialstatements havebeenproperlydrawnupinaccordancewith InternationalFinancialReportingStandardssoastogivea trueandfairviewofthefinancialpositionoftheCombined Groupasat31December2008and31October2009 andoftheirfinancialperformanceandcashflowsforthe RelevantFinancialPeriodsthenended. An unqualified review opinion was issued by Crowe Horwath on the financial statements for the six months ended 30 April 2010. The Financial Information has also been reviewed by WHK Horwath Perth Audit Partnership, whose Investigating Accountant's Report is set out in Section 7. Investors should note the scope and limitations of the Investigating Accountant's Report on the Financial Information. Also summarised in this Section are: v The bases of preparation and presentation of the Financial Information; and v Management discussion and analysis of the historical statements of comprehensive income. The Financial Information has been prepared by management and adopted by the Directors. The Directors are responsible for the inclusion of the Financial Information in this Prospectus.

6.0 financial information

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BasIs of preparatIon and presentatIon of the hIstorIcal fInancIal InformatIon

Combined Group The "Combined Group" in this Section refers to companies which were under the common control, either directly or indirectly, of Mr Yu Guo Peng and his associates, which comprises the following companies or entities: v For the financial year ended 31 December 2008 and the financial period ended 31 October 2009: • Chongqing Guoping Shang Mao Trading Co., Ltd; • Chongqing Guoping Industrial (Group) Co., Ltd – Heiwan Mine division; and • Chongqing Caotang Coal Resources Development Co., Ltd v For the period ended 30 April 2010: • Blackgold Holdings HongKong Limited; • Chongqing Heijin Industrial Co., Ltd; • Chongqing Guoping Shang Mao Trading Co., Ltd; • Chongqing Guoping Heiwan Resources Development Co., Ltd; • Chongqing Caotang Coal Resources Development Co., Ltd; and • Chongqing Guoping Industrial (Group) Co., Ltd – Heiwan Mine division. Basis of Presentation The manner of the presentation of the combined financial statements is to reflect the economic substance of the Combined Group, which were under common control throughout the financial year ended 31 December 2008, the financial periods ended 31 October 2009 and 30 April 2010 ("Relevant Financial Periods"), presented as a single economic enterprise.

The objective of the combined financial statements is to show what the historical information might have been had the Combined Group been in place since 1 January 2008. For the Relevant Financial Periods, these combined financial statements of the Combined Group are a combination or aggregation of the financial statements of the entities in the Combined Group. Basis of Preparation The historical Financial Information is prepared under the historical cost convention, and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with International Financial Reporting Standards ("IFRS"). In the preparation of the historical Financial Information, the Combined Group has adopted all of the IFRSs and Interpretations to IFRS ("IFRIC Interpretations") that are relevant to its operations and effective for the Relevant Financial Periods presented in the combined financial statements. The preparation and presentation of the historical financial information in accordance with IFRSs and IFRIC Interpretations does not materially differ from the recognition and measurement principles prescribed by the Australian Accounting Standards, Australian Accounting Interpretations or other authoritative pronouncements of the Australian Accounting Standards Board, except where otherwise disclosed.

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The following new and amended accounting standards and interpretations have mandatory application dates for future annual reporting periods commencing on or after the dates

The Directors anticipate that the adoption of the above IFRSs and Interpretations will not have a material financial impact on the financial results or financial position. It will only impact the content of disclosures presented in the financial statements.

The accounting policies of the Combined Group have been consistently applied throughout the Relevant Financial Periods. Significant accounting policies relevant to the Financial Information are set out in this Section. The Financial Information set out in this Prospectus is in an abbreviated form and does not contain all of the disclosures provided in an annual report.

detailed below. The Directors have decided against early adoption of these standards and interpretations for the Relevant Financial Periods:

summary of hIstorIcal statements of comprehensIve Income Set out in the table (1) below is a summary of the Combined Group's historical Statements of Comprehensive Income for the Relevant Financial Periods:

AASB's and Interpretations / IFRSs and IFRIC Interpretations Effective Date

AASB 3 / IFRS 3 (Revised) – Business Combinations 1 July 2009

AASB 9 / IFRS 9 – Financial Instruments 1 January 2013

AASB 124 / IFRS 24 – Related Party Disclosures 1 January 2011

Interpretation 17 / IFRIC 117 – Distribution of Non-cash Assets to Owners 1 July 2009

Interpretation 18 / IFRIC 118 – Transfer of Assets from Customers 1 July 2009

Interpretation 19 / IFRIC 119 – Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

Improvements to FRSs 2009 1 July 2009/ 1 January 2010

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Table 1

management dIscussIon and analysIs of hIstorIcal fInancIal InformatIon

Period ended 31 October 2009 compared to year ended 31 December 2008 Revenue increased substantially by RMB91,969,000 or 211% from 2008 to 2009. However, considering the financial period ended 31 October 2009 covers a period of 10 months, the increase is equivalent to an increase of 273% calculated on an annualised basis. This increase is contributed by two

factors. Firstly, production output at Caotang Mine increased substantially following completion of a technical upgrade in the end of 2008. Secondly, coal prices were generally higher in 2009 than in 2008. There was no material change in the nature or quantum of expenses during this period. Increases in expense items are the result of an increase in the level of business activity as is reflected in the increased revenue.

Reviewed Audited

6 months30.04.2010

10 months 31.10.2009

12 months31.12.2008

$'000 RMB'000 RMB'000 RMB'000

Revenue 24,668 152,864 135,463 43,494

Cost of Sales (14,527) (90,024) (78,281) (18,554)

Gross Profit 10,141 62,840 57,182 24,940

Other Income 45 280 10 37

10,186 63,120 57,192 24,977

Distribution and Marketing Expenses (294) (1,822) (2,897) (2,138)

Administrative and Other Expenses (822) (5,092) (4,898) (5,770)

Finance Costs (10) (64) (59) (1,136)

Profit Before Taxation 9,060 56,142 49,338 15,933

Income Tax (Expense) / Benefit (2,294) (14,215) (12,335) (7,638)

Profit After Tax 6,766 41,927 37,003 8,295

Other Comprehensive Income: - - - -

Total Comprehensive Income 6,766 41,927 37,003 8,295

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Table 2

(continueonpage94)

Period ended 30 April 2010 compared to period ended 31 October 2009 Physical production of the Combined Group remained constant. However, higher coal prices resulted in the Combined Group reporting an increase in revenue of RMB17,401,000, or an increase of 88% calculated on an annualised basis.

There was no material change in the nature or quantum of expenses during this period.

summary of hIstorIcal statements of cash flow Set out in the table (2) below is a summary of the Combined Group's historical Statements of Cash Flow for the Relevant Financial Periods:

Reviewed Audited

6 months30.04.2010

10 months 31.10.2009

12 months31.12.2008

$'000 RMB'000 RMB'000 RMB'000

Cash flows from operating activitiesProfit before taxation 9,060 56,142 49,338 15,933

Adjustments for:Allowance for doubtful debt - - 138 -

Amortisation of land use rights 4 22 37 44

Amortisation of mining rights 34 210 247 181

Depreciation of property, pant & equipment 128 796 728 427

Interest expense 12 64 59 1,136

Ancillary income set off against constructionwork-in-progress - - - 14,621

Operating profit before working capital changes 9,238 57,234 50,547 32,342

Decrease / (Increase) in inventories 130 788 (87) 459

Decrease / (Increase) in receivables (2,978) (18,875) 1,273 3,862

(Decrease) / Increase in payables 676 4,719 (4,972) (1,444)

Cash from operations 7,066 43,866 46,761 35,219

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Table 2 (continuefrompage93)

Reviewed Audited

6 months30.04.2010

10 months 31.10.2009

12 months31.12.2008

$'000 RMB'000 RMB'000 RMB'000

Interest paid (12) (64) (59) (1,136)

Income tax paid (2,407) (14,905) (11,939) (8,255)

Net cash from operating activities 4,647 28,897 34,763 25,828

Cash flows for investing activitiesIncrease in share capital 1 9 - -

Purchase of property, plant & equipment (2,671) (16,552) (2,614) (15,686)

Net cash for investing activities (2,670) (16,543) (2,614) (15,686)

Cash flows for financing activitiesRepayment of short-term borrowings - - - (3,700)

Repayment / Advances to a related party (1,450) (9,028) (21,042) (1,765)

Dividend paid - - (9,550) (4,530)

Net cash for financing activities (1,450) (9,028) (30,592) (9,995)

Effect of foreign exchange translation (8) 8 - -

Net increase in cash and cash equivalents 519 3,334 1,557 147

Cash and cash equivalents at beginning offinancial year / period 530 3,292 1,735 1,588

Cash and cash equivalents at end offinancial year / period 1,049 6,626 3,292 1,735

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Table 3

(continueonpage96)

summary of hIstorIcal statements of fInancIal posItIon Set out in the table (3) below is a summary of the Combined Group's historical Statements of Financial Position for the Relevant Financial Periods:

Reviewed Audited

30.04.2010 31.10.2009 31.12.2008

$'000 RMB'000 RMB'000 RMB'000

Assets

Non-currrent Assets

Property, plant & equipment 9,121 57,616 41,860 39,974

Land use rights 96 604 626 663

Mining rights 2,422 15,301 15,511 15,758

11,639 73,521 57,997 56,395

Current Assets

Inventories 178 1,126 1,914 1,827

Trade and Other Receivables 3,433 21,689 3,514 4,925

Cash and cash equivalents 1,049 6,626 3,292 1,735

4,660 29,441 8,720 8,487

Total Assets 16,299 102,962 66,717 64,882

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Reviewed Audited

30.04.2010 31.10.2009 31.12.2008

$'000 RMB'000 RMB'000 RMB'000

Equity and Liabilities

EquityIssued Capital 1 9 5,300 5,300

Retained Earnings 10,119 62,709 25,566 8,020

Merger Deficit Reserves (756) (4,511) - -

Other Reserves 1,216 8,626 8,618 7,421

Total Equity 10,580 66,833 39,484 20,741

Current Liabilities

Trade and Other Payables and Accruals 4,759 30,066 25,347 21,609

Amounts owing to Ultimate Holding Company 1 861 5,440 573 21,615

Current Tax Liabilities 99 623 1,313 917

Total Liabilities 5,719 36,129 27,233 44,141

Total Equity and Liabilities 16,299 102,962 66,717 64,882

1 Ultimate Holding Company refers to Lucky Magic Enterprises Limited.

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Table 4

(continueonpage98)

unaudIted proforma statement of fInancIal posItIon as at 30 aprIl 2010 The following unaudited proforma Statement of Financial Position has been prepared based on the Combined Group's historical reviewed financial statements for the 6 months ended 30 April 2010. The unaudited proforma Statement of Financial Position has been reviewed by WHK Horwath Perth

Audit Partnership and adjusted by the Company to reflect the impact of the Offer as if it had occurred as at 30 April 2010. The unaudited proforma Statement of Financial Position is provided for illustrative purposes only and is not represented as being indicative of the Company's view on the future financial position.

Proforma 30.04.2010

Historical Reviewed 30.04.2010

If the Maximum Amount is

raised

If the Minimum Amount is

raised

RMB'000 $'000 $'000 $'000

AssetsNon-Current AssetsProperty, plant & equipment 57,616 9,121 9,121 9,121

Land use rights 604 96 96 96

Mining rights 15,301 2,422 2,422 2,422

73,521 11,639 11,639 11,639

Current Assets

Inventories 1,126 178 178 178

Trade and Other Receivables 21,689 3,433 3,361 3,351

Cash and cash equivalents 6,626 1,049 50,629 41,581

29,441 4,660 54,168 45,110

Total Assets 102,962 16,299 65,807 56,749

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The bases and assumptions made by the Company in preparing the unaudited proforma Statement of Financial Position are as follows: v The issue of 187,500,000 New Shares at an issue price of $0.26 per New Share to raise $48,750,000 (if the Minimum Amount is raised) before expenses of the Offer,

and the issue of 225,000,000 New Shares at an issue price of $0.26 per New Share to raise $58,500,000 (if the Maximum Amount is raised) before expenses of the Offer. It should be noted that proceeds from the Sale Shares (as discussed elsewhere in this Prospectus) will be paid immediately and directly from the share application

Proforma 30.04.2010

Historical Reviewed 30.04.2010

If the Maximum Amount is

raised

If the Minimum Amount is

raised

RMB'000 $'000 $'000 $'000

Equity and Liabilities

EquityIssued Capital 9 1 69,261 60,126

Retained Earnings 62,709 10,119 9,552 9,512

Merger Deficit Reserves (4,511) (756) (28,255) (28,255)

Other Reserves 8,626 1,216 1,216 1,216

Total Equity 66,833 10,580 51,774 42,599

Current Liabilities

Trade and Other Payables and Accruals 30,066 4,759 4,759 4,759

Amounts owing to Vendor Shareholders 5,440 861 9,175 9,292

Current Tax Liabilities 623 99 99 99

Total Liabilities 36,129 5,719 14,033 14,150

Total Equity and Liabilities 102,962 16,299 65,807 56,749

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Proforma 30.04.2010

If the Maximum Amount is raised

If the Minimum Amount is raised

$'000 $'000

Reviewed balance as at 30 April 2010 1,049 1,049

Proceeds from issue and sale of Offer shares 58,500 48,750

Share of the expenses of the Offer not already paid (5,120) (4,418)

Part payment of deferred consideration for theacquisition of the Group Operating Companies (3,800) (3,800)

Proforma cash balance as at 30 April 2010 50,629 41,581

account to the Vendor Shareholders. Accordingly, these amounts have not been included as part of the unaudited proforma Statement of Financial Position. If the Minimum Amount is raised, the proceeds from the sale of Sale Shares would be $9,750,000 and if the Maximum Amount is raised, the proceeds from the sale of the Sale Shares would be $11,700,000; v All New Shares issued pursuant to this Prospectus will be issued as fully paid and will rank equally in all respects with the Shares already on issue; v The sum of $3,800,000 from proceeds of the Offer earmarked for part payment of deferred consideration for acquisition of Group Operating Companies is paid immediately on completion of the Offer; v Expenses of the Offer amounting to $5,312,000 (if Maximum Amount is raised) or $4,610,000

(if Minimum Amount is raised), if not already paid, is paid in full upon completion of the Offer; v The recognition of $28,255,000 as a merger deficit reserve in accordance with the accounting requirements under the "pooling of interests" approach; v A sum of $3,739,000 (if Maximum Amount is raised) or $3,127,000 (if Minimum Amount is raised) which qualifies under IFRS32 to be charged directly to share capital is charged to directly to share capital; reconcIlIatIon of adjustments to cash and cash equIvalents Set out in the table below is a statement showing the reconciliation of the reviewed cash and cash equivalent balance as at 30 April 2010 and the proforma cash and cash equivalent balance:

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summary of sIgnIfIcant accountIng polIcIes Significant accounting policies adopted by the Group in preparing the Financial Information are summarised below: (a) Critical Accounting Estimates and Judgements Estimates and judgements are currently evaluated by Directors and are based on historical experience and the best available current information. Estimates assume a reasonable expectation of future events and are based on information obtained both externally and internally: (i) Depreciation of Property, Plant and Equipment The cost of property, plant and equipment is depreciated on a straight-line basis over their economic useful lives estimated to be within 3-10 years, net of residual value. The carrying amounts of these assets of the Combined Group were approximately RMB39,974,000, RMB41,860,000 and RMB57,616,000 ($9,121,000) as at 31 December 2008, 31 October 2009 and 30 April 2010 respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation could be revised. (ii) Carrying Value of Non-Current Assets Non-current assets, including property, plant and equipment, land use rights and mining rights are carried at cost less accumulated depreciation/ amortisation. These carrying amounts are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use. In estimating the recoverable amounts of assets, various assumptions, including future cash flows to be associated with the non-

current assets and discount rates, are made. If future events do not correspond to such assumptions, the recoverable amounts will need to be revised, and this may have an impact on the Combined Group's results of operations or financial position. (iii) Net Realisable Value of Inventories Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitor actions in response to severe industry cycles. Management reassesses the estimations at the balance sheet date. (iv) Provision for Close-down, Restoration and Environmental Costs The provision for close-down, restoration and environmental costs is determined by management based on their past experience and best estimation of future expenditures, after taking into account existing relevant PRC regulations. However, in so far as the effect on the land and the environment from current mining activities becomes apparent in future years, the estimate of the associated costs may be subject to revision from time to time. (v) Reserve Estimates Reserves are estimates of the amount of product that can be economically and legally extracted from the Combined Group's properties. In order to calculate reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand and commodity prices.

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Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or fields to be determined by analysing geological data such as drilling samples. This process may require complex and difficult geological judgements and calculations to interpret the data. Because the economic assumptions used to estimate reserves changes from period to period, and because additional geological data is generated during the course of operations, estimates of reserves may change from period to period. Changes in reported reserves may affect the Combined Group's financial results and financial position in a number of ways, including the following: v Asset carrying values may be affected due to changes in estimated future cash flows. v Depreciation, depletion and amortisation charged in the statement of comprehensive income may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change. v Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves affect expectations about the timing or cost of these activities. v The carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits. (b) Functional and Presentation Currency The individual financial statements of each entity in the Combined Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency. The combined financial statements are presented in RMB, which is the Combined Group's functional currency.

For the purposes of the Historical and Proforma financial information, the presentation currency used is Australian Dollars. The financial results and financial position of foreign entities whose functional currency is different to the presentation currency are translated as follows: v Assets and liabilities are translated at year end exchange rates prevailing at reporting date. At 30 April 2010, the exchange rate used was $1 = RMB 0.158; and v Income and expenses, and items appearing in the Historical Statement of Cash Flow are translated at the average exchange rate for the period. The average exchange rate used was $1 = RMB 0.1607. (c) Basis of Consolidation The combined financial statements comprise the financial statements of the Group Operating Companies or the Subsidiaries (as the case may be) for the Relevant Financial Periods. Consistent accounting policies are applied for like transactions and events in similar circumstances. All significant intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full. The Historical and Proforma Financial Information for the Relevant Periods have been prepared in accordance with the principles of the pooling of interests method. This method has been used on the basis that the business combination involving the entities comprising the Combined Group involves entities and businesses under common control. Consequently, the requirements of AASB 3 / IFRS 3 – Business Combinations, has not been applied.

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Under the pooling of interests method, the acquirer accounts for the combination as follows: v The assets and liabilities of the combining entities are recorded at their carrying amounts reported in the combined financial statements and not at fair value. v Intangible assets and contingent liabilities are only recognised to the extent that they were recognised by the acquiree in accordance with applicable IFRS. v No goodwill is recorded. The difference between the acquirer's cost of investment and the acquiree's equity is presented separately as a reserve. v Any expenses of the combination are written off immediately in the statement of comprehensive income. v Comparatives are presented as if the entities had always been combined since the date the entities had come under common control. The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Consolidation of the entities incorporated in the PRC is based on the entities' financial statements prepared in accordance with the IFRS, which may differ from those reflected in the PRC statutory financial statements of the entities. In accordance with the relevant laws and regulations, profit available for distribution by the PRC entities is based on the amounts stated in the PRC statutory financial statements. (d) Property, Plant and Equipment (i) Owned Assets Items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the location and condition for its intended use.

(ii) Depreciation Depreciation is provided on the straight-line basis so as to write off the cost of property, plant and equipment net of the estimated residual values over their estimated useful lives as follows:

Building and mining structures (including the main and auxiliary mine shafts and underground tunnels) are depreciated based on the units of production method utilising only recoverable coal reserves as the depletion base. Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date. (iii) Cost Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Combined Group and its cost can be measured reliably. The costs of the day-to-day servicing of the property, plant and equipment are recognised in the statement of comprehensive income when incurred.

Estimated Useful Lives

Estimated Residual Value

as a Percentage of Cost

Plant and Machinery 3-10 years 5%

Equipment 3-10 years 5%

Furniture and fittings 5 years 5%

Motor Vehicles 4 years 5%

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Fully depreciated assets are retained in the combined financial statements until they are no longer in use. The gain or loss on disposal or retirement of an item of property, plant and equipment recognised in the statement of comprehensive income is the difference between the net sale proceeds and the carrying amount of the relevant asset. (iv) Construction Work-In-Progress Mining structure under construction is recognised at cost and not depreciated. Upon completion of construction, the initial cost will be transferred to the cost of buildings or plant. Revenue generated from the production of saleable material directly attributable to bringing the asset to the condition necessary for it to be capable of operating in the manner intended by Management is deducted from capitalised construction work in progress. (e) Land Use Rights Land use rights are stated at cost less accumulated amortisation and impairment losses and are amortised based on the units of production method utilising only recoverable coal reserves as the depletion base. (f) Mining Rights Mining rights are stated at cost less accumulated amortisation and impairment losses and are amortised based on the units of production method utilising only recoverable coal reserves as the depletion base.

(g) Inventories Inventories are carried at the lower of cost and net realisable value. Cost is determined on the weighted average basis and comprises all cost of purchases, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale. When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised in the combined statements of comprehensive income in the period in which the reversal occurs. (h) Trade and Other Receivables Trade and other receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less any impairment losses. An allowance for impairment of receivables is established when there is objective evidence that the Combined Group will not be able to collect all amounts due according to the original terms of the receivables. (i) Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand, bank balances with financial institutions, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or amortisation, if no impairment loss had been recognised. (k) Issued Capital Issued capital is classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. Dividends on shares are recognised as liabilities when approved for appropriation. (l) Statutory Reserves In accordance with relevant PRC regulations, entities are required to transfer a portion of their net profit to the statutory reserve until the cumulative reserve reaches 50% of their registered capital. The transfer to this reserve must be made before the payment of dividends to shareholders.

(j) Impairment (i) Impairment of Financial Assets At each reporting date, an assessment is made as to whether there is objective evidence that a financial instrument has been impaired. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the statement of comprehensive income. (ii) Impairment of Non-Financial Assets The carrying amounts of the Combined Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets' recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units)

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The statutory reserve can only be used to set off against losses or to increase the capital of the entity. The entity may convert its statutory common reserve into share capital provided that the remaining balance of such reserve is not less than 25% of the registered capital of the entity. (m) Trade & Other Payables and Accruals Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received during the reporting period which remains unpaid. The balance is recognised as a current liability with the amount being paid within normal credit terms of 30 to 90 days. (n) Provisions Provisions are recognised when the Combined Group has a present obligation as a result of a past event where it is probable that it will result in an outflow of economic benefits that can be reasonably estimated. (o) Provisions for Closedown, Restoration and Environmental Costs Closedown and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. Closedown and restoration costs are provided in the accounting period when the obligation arising from the related disturbance occurs, whether this occurs during mine development or during the production phase, based on the net present value of estimated future costs. The cost is capitalised where it gives rise to future benefits, whether the rehabilitation activity is expected to occur over the life of the operation or at the time of close down. The capitalised cost is amortised over the life of the operation and the increase in the net present value of the provision is included in borrowing costs.

Where there is a change in the expected decommissioning and restoration costs, an adjustment is recorded against the carrying value of the provision and related assets, and the effect is then recognised in the combined statements of comprehensive income on a prospective basis over the remaining life of the operations. Provisions for close down and restoration costs do not include any additional obligations which are expected to arise from future disturbance. The cost estimates are reviewed and revised at each balance sheet date to reflect changes in conditions. (p) Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instruments or where appropriate, a shorter period. Income or expense is recognised on an effective interest basis for debt instruments. (q) Financial Instruments FinancialAssets Financial assets are recognised in the statement of financial position when, and only when, the Combined Group becomes a party to the contractual provisions of the financial instrument. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Combined Group commits to purchase the asset or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

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(r) Derecognition of Financial Assets and Liabilities (i) Financial Assets Financial assets are derecognised from the statements of financial position when the Combined Group has transferred substantially all risks and rewards of ownership. (ii) Financial Liabilities A financial liability is derecognised from the statements of financial position when the obligation under the liability is discharged, cancelled or expired. (s) Revenue Recognition Provided it is probable that the economic benefits will flow to the Combined Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in the statements of comprehensive income as follows: (i) Sale of Goods Revenue is recognised when goods are delivered to the customers' premises or collected by the customers at the Combined Group's premises which is taken to be the point in time when the customer has accepted the goods and the related risks and rewards of ownership. (ii) Interest Income Interest income is recognised on a time proportion basis using the effective interest method. (t) Employee Benefits The Combined Group participates in the national pension schemes as defined by the laws of the PRC in which it has operations. Contributions to national pension schemes are recognised as an expense in the period

(i) Classification The Combined Group classifies its investments in financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date, with the exception that the designation of financial assets at fair value through profit or loss is not revocable. As at the reporting date, the Combined Group did not have any financial assets in the category of financial assets at fair value through profit or loss, held-to-maturity investments and available- for-sale financial assets. (ii) Loans and Receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in combined statements of comprehensive income when the loans and receivables are derecognised or impaired, as well as through the amortisation process. FinancialLiabilities Financial liabilities within the scope of IAS 39 are classified as either financial liabilities measured at amortised cost such as interest-bearing liabilities and trade and other payables, or financial liabilities designated at fair value through profit or loss.

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in which the related service is performed. Companies incorporated in the PRC are required to provide certain staff pension benefits for their employees under existing PRC legislation. Pension contributions are provided at rates stipulated by the PRC legislation and are contributed to a pension fund managed by government agencies, which are responsible for paying pensions to the retired employees. These benefits are accounted for on an accrual basis and charged to the statements of comprehensive income when incurred. These national pension schemes are dealt with as payments to defined contribution plans where the Combined Group's obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. (u) Finance Costs Interest expense and similar charges are expensed to the statements of comprehensive income in the period in which they are incurred. The interest component of the interest-bearing liabilities is recognised in the statements of comprehensive income using the effective interest method. (v) Income Taxes (i) Current Tax Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in the statements of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous financial years.

(ii) Deferred Tax Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the combined financial statements. Deferred tax is, however, not recognised on temporary differences arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that sufficient future taxable profit will be available against which the temporary differences can be utilised. (iii) Value-added-tax ("VAT") The Combined Group's sale of goods in the PRC are subject to VAT at the applicable tax rate of 17% (31.12.2008 – 13%) for the PRC domestic sales. Input tax on purchases can be deducted from output VAT. (w) Comparative information The financial year end for the Combined Group was changed to 31 October each year with effect from the financial year commencing 1 January 2009. The first financial period following this change is for the 10 months financial period from 1 January 2009 to 31 October 2009. Subsequent financial years will commence 1 November in each calendar year and end 31 October the following calendar year.F

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Investigating accountant's report

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7.0 investigating accountant's report

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Solicitor's report on mining tenements

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8.0 solicitor's report on mining tenements

15 October 2010

To the Board of DirectorsBlackgold International Holdings LimitedPrincipal Office12th floor, No. 18 Mian Hua Street, Yu Zhong District, Chongqing City, People's Republic China, Postal Code 40011

Re: SOLICITOR'S RePORT ON TeNeMeNTS

Dear Board,We are qualified to practice law in the People's Republic of China ("PRC") (which, for the purposes of this report, excludes the Hong Kong and Macau Special Administrative Regions of the PRC and Taiwan). We have acted as PRC legal counsel to Blackgold International Holdings Limited ACN 145 095 478 ("Blackgold" or the "Company") in connection with the proposed offer of 225,000,000 fully paid ordinary shares ("Shares") at an application price of $0.26. per Share, comprising an offer of 187,500,000 new Shares by the Company to raise $48,750,000 and 37,500,000 Shares by Lucky Magic Enterprises Limited and Prima Network Financial Group Limited ("Vendor Shareholders"), with the right to accept over-applications of up to 45,000,000 Shares at an application price of $0.26 per Share, comprising the issue of up to 37,500,000 new Shares by the Company to raise up to an additional $9,750,000 and the sale of up to 7,500,000 Shares by the Vendor Shareholders (together, the "Offer").

This report (the "Report") is prepared for inclusion in the Prospectus for the Offer (the "Prospectus") and relates to the mining tenements in Chongqing, PRC (the "Tenements"), which the Company's subsidiaries, Chongqing Caotang Coal Mine Resources Development Co., Ltd ("Caotang Mining") and Chongqing Guoping Heiwan Resources Development Co., Ltd ("Heiwan Mining") (Caotang Mining and Heiwan

Mining together being the "Subsidiaries") hold or will acquire pursuant to binding legal agreements.

A schedule of the Tenements is set out in Section 3 of this Report.

In preparing this Report, we have examined originals or copies, certified or otherwise identified to our satisfaction, of all such documents, corporate records, certificates, governmental approvals, and other instruments as we have considered necessary or appropriate as a basis for this Report set forth herein.

For the purpose of providing this Report, we have assumed: (i) the genuineness of all signatures and the authenticity of all documents submitted to us as originals; (ii) the conformity to originals of all documents submitted to us as certified or reproduced copies; (iii) that all factual statements made in all documents are correct in all material respects; and (iv) that all parties to the documents have full power and authority to enter into, and have duly executed and delivered such documents. To our best knowledge after due inquiry, the Company has disclosed to us all material facts relevant to this Report. Where important facts were not independently established to us, we have relied upon certificates issued by Governmental Authorities and appropriate representatives of the Company and/or other relevant entities and/or upon representations, made in or pursuant to the documents.

1.0 PRC TeNeMeNTS

1.1 IntroductionThis Report relates to:v a brief summary of the laws applying to the Tenements in PRC; and v details of the Tenements.

This Report relates only to the primary laws and regulations in force in PRC at the date of this Report with respect tothe Tenements.

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2.0 ReLATeD PRC LAWS

China's coal industry is subject to extensive regulations by the PRC government. These regulations govern a wide range of areas, including, but not limited to, investments, exploration, production, mining rights, distribution, trading, transportation and exports relating to coal, and investments, generation, pricing, despatch and tariffs relating to power. In addition, coal operations are subject to fees and taxes, as well as safety and environmental protection laws and regulations. Set out below is a summary of the basic structure of the PRC legal system relating to the Tenements. For more detailed information on the PRC legal system please refer to Annexure A of the Prospectus.

2.1 The laws and regulations regarding mineral resources and coal resourcesThe Mineral Resources Law of the PRC (the "MRL") was promulgated on 19 March 1986 and amended on 29 August 1996. The purpose of the MRL is to regulate prospecting, reconnaissance, exploration and mining activities in relation to all types of mineral resources except water within the territory of PRC. In light of the specific conditions and actual needs of respective administrative areas, local regulations, such as the Chongqing Mineral Resources Regulations ("Chongqing MRR", referred to in 3.2(a)), may be formulated, provided that such regulations do not contradict the Constitution, the laws of PRC and any administrative regulations.

The Coal Law of the PRC ("Coal Law") became effective on 1 December 1996 and was amended on 27 August 2009. The purpose of the Coal Law is to regulate the production of coal, including, among others, exploration, the approval of new mines, the issuance of production permits, the implementation of safety standards, the trading of coal and the protection of mining areas from destructive exploitation, the protection of miners and administrative supervision.

The Measures for the Regulation of Coal Operations ("MRCO") were promulgated by the National Development and Reform

Commission (the "NDRC") on 27 December 2004. NDRC implemented the MRCO as a system to examine coal operation qualifications in respect of coal operations, including the wholesaling and retailing of raw coal and processed coal products, and the processing and distribution of coal for civilian use.

The Decision on the Institutional Reform of Investment System ("DIRIS") was promulgated by the PRC State Council on 16 July 2004. According to the DIRIS, applications for all coal mine development projects within PRC of State planning level are required to be submitted to the NDRC for approval, while others of general planning level are to be submitted to the competent investment department of local governments.

2.2 The laws and regulations regarding pricing of coalSince 2002, the prices for all types of coal other than thermal coal have been largely subject to market forces. However, according to the Price Law issued by National People's Congress (the "NPC") and effected on 1 May 1998, temporary guidelines can be issued by the NPC, from time to time, to limit price increases if the price of thermal coal increases significantly or is likely to increase significantly. No such temporary guidelines are in effect at the date of this Report.

2.3 The laws and regulations regarding safetyAccording to the Safety Production Law effected on 1 November 2002, the Mining Safety Law effected on 1 May 1993 and relevant regulations the following applies:v The State Administration of Work Safety (the "SAWS") and the State Administration of Coal Mine Safety (the "SACMS") under the supervision of the SAWS are the PRC government authorities exercising control over, and supervision of, the safety of coal production. v In order to proceed with the construction of a coal mine project, the project's safety designs and procedures must be examined and approved by the SACMS or its local offices. Upon the completion of a coal mine construction project and before the commencement of production,

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further inspection and approval by the SACMS or its local offices of the facilities and conditions is required. The SACMS also conducts regular safety inspections of coal producers. v In addition, mining companies are required to truthfully report to their supervising labor administrative authority within 24 hours of the occurrence of any safety accident that causes serious personal injuries or fatalities. v Each operating coal mine is required to apply for a coal production safety permit from the SACMS or its provincial bureau. A coal production safety permit is valid for an initial period of three years, after which it may be renewed.v Penalties for infringements: If a mining company fails to perform its duty of administering production safety according to the provisions of the present law, it shall be ordered to mend up within a prescribed time period. If a mining company fails to mend up within the prescribed time period, it shall be ordered to suspend construction or suspend production or business for rectifications, and may be fined. If serious consequences have resulted and a crime has been constituted, the offenders shall be subject to criminal liabilities according to the relevant provisions of the Criminal Law.

2.4 The laws and regulations regarding taxationPursuant to the "Provisional Regulation of Resources Tax" and the "Rules Administering Levy of Mine Resource Compensation Fees", the coal industry has been levied resources taxes and resources compensation fees. The mine resource compensation fee is calculated according to the formula of "the income of mine for sale of coal product multiplied by the applicable mine resource compensation fee rate". Since 2004, the Ministry of Finance and the State Administration of Taxation have issued a series of notices on coal resources taxation adjustments. The coal resources tax rates of certain regions, such as Shanxi province, Qinghai province, Inner Mongolia autonomous region, Guizhou province, Fujian province, Shandong province, Yunnan province, Ningxia Hui autonomous region, Chongqing

municipality, Anhui province, Henan province, Tianjin municipality, Hunan province and Hubei province, have been increased. The current resources tax rate for the mining of coal in Chongqing is RMB 2.5 yuan per tonne of coal produced.

2.5 The laws and regulations regarding environmental protectionThe Environmental Protection Law of PRC (the "EPL") was adopted on 26 December 1989. The EPL requires all operations that produce pollutants or other hazards to take environmental protection measures, and to establish an environmental protection responsibility system.

The Water Pollution Prevention Law was promulgated on 11 May 1984 and revised on 15 May 1996 and 28 February 2008 respectively. Any enterprise or institution that discharges water pollutants is subject to a discharge fee in accordance with relevant regulations and an excess-pollutant discharge fee in case of discharges in excess of the prescribed level and must take corrective measures. Any entity that causes water pollution is obliged to ensure the elimination of the pollution and must provide compensation for direct losses suffered by entities or individuals.

The Atmospheric Pollution Prevention Law was promulgated on 5 September 1987 and revised on 29 April 2000 and became effective on 1 September 2000. The purpose of the Atmospheric Pollution Prevention Law is for the prevention and control of atmospheric pollution from, among other things, the burning of coal, motor-driven vehicles and vessels, exhaust gases and dust. A system of collecting fees has been implemented by the government for discharging pollutants on the basis of the categories and quantities of the atmospheric pollutants discharged. Any entity that has caused an atmospheric pollution hazard is obliged to eliminate the pollution and compensate relevant entities or individuals for their direct loss.

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Penalties for infringements: Any company which violates any of the aforesaid laws and regulations, thereby causing an environmental pollution accident, is obliged to eliminate it and make compensation to the entity or individual that suffered direct losses; and such entities shall be fined (such fine being dependent upon the relevant damage) by the competent department of environmental protection administration or any other department with power to conduct environmental supervision and management; in serious cases, the responsible persons shall be subject to administrative sanctions by the entity that employs them or by the competent department of the government. In the most serious cases, offenders shall be subject to criminal liabilities according to the relevant provisions of the Criminal Law.

Any company that has failed to eliminate or control pollution by the applicable deadline shall, as provided for by the State, pay a fee for excessive discharge; in addition, a fine may be imposed on it on the basis of the damage incurred, or the company may be ordered to suspend its operations or close down.

3. TeNeMeNTS

3.1 IntroductionMineral resources belong to the State. State ownership of mineral resources, either near the earth's surface or underground, shall not change with the alteration of ownership of, or the right to use, the land on which the mineral resources

are located. A person with a mining right shall have the right to apply for and be granted the right to use the land on which the mineral resources are located in accordance with applicable land use right laws.

A mining permit authorises the holder of the permit to mine within a designated mining area for a specified term. The holder shall pay resources taxes and resources compensation fees to the government as consideration for the right to mine. A permit holder may apply to the government to have the mining permit renewed 30 days before the expiry date of the mining permit.

A mining permit shall not be transferred unless the transfer is required because of the corporate activity of the permit holder including a merger, division, formation of an equity joint venture or contractual joint venture, sale of assets, or change of ownership of assets, subject in each case to obtaining any approval that is required under applicable laws.

If a person mines without a mining permit, they shall be ordered to stop mining and compensate for the losses caused; the mineral products and unlawful proceeds shall be confiscated; and the person may also be fined. If the person refuses to stop mining and thus causes damage to the mineral resources, the person who is directly responsible shall be investigated for criminal responsibility in accordance with the provisions of the Criminal Law.

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3.2 The mining rights owned by the Subsidiariesof the CompanyAs PRC enterprises, Caotang Mining and Heiwan Mining can engage in the mining and production of coal subject to

obtaining a Mining Permit, a Coal Production Permit and a Permit of Safe Production. Details of the permits held by, or proposed to be acquired by, Caotang Mining and Heiwan Mining are set out as below:

Licence/Permit No.

Registered Holder Content

Grant Date

ExpiryDate

AreaSize

AnnualProduction Capacity (tonnes) Note

Caotang MiningMining Permit/采矿许可证

No.C50000020090411 30019437

Chongqing Caotang Coal Mine Resources Development Co., Ltd.

Types of Mineral Resource: Coal; Underground mining

April 2, 2009

September 2, 2011

9.0995 square Kilometres

150,000 1 3.2 a)

Coal ProductionPermit/煤炭生产许可证

No.05002360477


Row: K1 2; Blasting Mining; Transportation: Train

June 29, 2007

December 31, 2015

N/A 60,000 1 3.2 a)

Permit of SafeProduction/安全生产许可证

(Yu) MK An XuZheng Zi (2009) No.901045


Coal Mining (Standard height of the main shaft +435 metres, Standard height of the air shaft + 150 metres)

June 3, 2009

June 2, 2012

N/A N/A 3.2 a)

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Heiwan Mining which has entered into agreements with Chongqing Guoping Industrial (Group) Co., Ltd to purchase

the mining rights, assets and business with regard to Heiwan Mining, including the Tenements set out below:

Licence/Permit No.

Registered Holder Content

Grant Date

ExpiryDate

AreaSize

AnnualProduction Capacity (tonnes) Note

Mining Permit/采矿许可证

No.C50000020090411 30019437

Chongqing Guoping Industrial (Group) Co., Ltd.

Types of Mineral Resource: Coal; Underground mining

March 8, 2007

January 8, 2011

3.2468 square Kilometres

60,0001 3.2 b)

Coal ProductionPermit/煤炭生产许可证

No.205002360401


Row: K3 2; Hand-Ho Mining; Transportation: Train

June 29, 2007

December 31, 2015

N/A 40,0001 3.2 b)

Permit of SafeProduction/安全生产许可证

(Yu) MK An XuZheng Zi (2008) No.801023


Coal Mining December 31, 2008

December 30, 2011

N/A 3.2 b)

(1) Notwithstanding the production capacity stated in a Mining Permit, the actual approved production capacity is determined by the capacity permitted under the corresponding Coal Production Permit.(2) In the event the Mining Permit holder wishes to extract coal from seams other than that stated in the Mining Permit, the permit holder must notify Chongging Administration of Land Resources and Housing to update and amend its Mining Permit, and accordingly to update the Coal Production Permit. In such an event, an additional Mining Permit or Coal Production Permit would not need to be applied for by the permit holder.

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Note 3.2 (a)In 2005, Caotang Mining started its technology transformation project to increase its production capacity from 60,000 to 210,000 tonnes (the "Project"). According to the Certification issued by Fengjie County Coal Industry Bureau on March 19, 2009, the Project was almost completed by the end of 2008, and was ready for inspection and approval in 2009.

At present, Caotang Mining currently holds the Coal Production Permit (No.205002360477) issued by Chongqing Economy Committee. The production capacity is 60,000 tonnes per year. The actual coal exploitation output of Caotang Mining for the Year 2007 was 232,000 tonnes, 215,500 tonnes for 2008, and 321,300 tonnes for the first ten months of 2009.

In the Statement on Coal Exploitation Output of Caotang Mining for the period from 2007 to October 2009 issued by Fengjie County Coal Industry Bureau on December 10, 2009, it is stated that the bureau "hereby confirms the actual coal exploitation output of such company for 2007, 2008 and January to October 2009." The mine has paid up the taxes and charges for its actual coal production for the year 2007, 2008 and the first ten months of 2009.

The MRL and the Chongqing MRR prohibit certain activities including mining without a mining permit, mining beyond the approved limits of the mining area and mining in a destructive way; and provide administrative penalties for such illegal mining activities. The MRL and the Chongqing MRR also prohibit "wasteful mining", but do not define what activities constitute wasteful mining. Consequently, it is unclear whether over production constitutes wasteful mining. Therefore, there is no clear administrative penalty to over production under current applicable PRC laws.

Based on the above, we are of the view that, although the actual coal exploitation yield of Caotang Mining from the Year 2007 to October 2009 exceeded the production capacity provided in the Coal Production Permit, the actual coal

exploitation yield for such period has been recognised by the relevant coal production administration authority. Caotang Mining has paid up all taxes and charges for such actual coal production. Accordingly, in our view, an administrative sanction or fine will not be imposed on Caotang Mining by the local mine administration bureau for its over production, unless the relevant legislation is amended or made clear to provide for such sanctions and fines, or the administration department clarifies or introduces penalty regulations imposing administrative sanctions or fines on over production.

The construction of the Project has been completed. Caotang Mining has now made an application to obtain the approval of the local mine administration bureau to increase the production capacity of Caotang Mining to 210,000 tonnes per year. By obtaining the aforesaid approval, the production capacity of Caotang Mining may increase to 210,000 tonnes per year. Caotang Mining may apply to have its Coal Production Permit renewed with a new production capacity of 210,000 tonnes per year.

In the event that Caotang Mining fails to obtain the aforesaid approval, it may only be able to continue to produce 60,000 tonnes per year but none of the permits will be revoked or cancelled by the regulatory authorities. Provided the Caotang Mining produces more than its approved production capacity in the future, it shall pay all related taxes or fines thereon and seek the relevant authority's recognition of the production in excess of its approved production. There is no certainty that such recognition can and will be obtained by Caotang Mining.

Note 3.2 (b)The mining permits for the Heiwan colliery are currently registered in the name of Chongqing Guoping Industrial (Group) Co., Ltd. (the "GP Group"). Heiwan Mining and GP Group have entered into a Mining Right Transfer Agreement and the Asset Transfer Agreement of Heiwan Colliery, under which Heiwan Mining has agreed to acquire the mining rights, assets and business with regard to the Heiwan mine from GP Group. Following the receipt of applicable government

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approvals on 10 August 2010, Heiwan Mining will apply for new licences regarding the mining and production in relation to the Heiwan colliery.

Application for Mining Permit On November 2, 2009, Fengjie County Leading Group of Integration of Small Collieries submitted the Request for Instructions on Changing the Name of Chongqing Guoping Industrial (Group) Co., Ltd. Heiwan Mining (Feng Mei Zheng He Ban [2009] No.5) to the Office of Chongqing Leading Group of Integration of Collieries and set forth the following opinions: "GP Group decides to change Heiwan Mining to a legal person enterprise entity with independent legal person status and controlled directly by GP Group"; and "After the examination, as such application complies with the provisions in the Notice on Further Acceleration of the Integration Work of Collieries of the Government of Chongqing (Yu Fu [2009] No.2), we approve to submit their application to your office for further approval".

On November 3, 2009, Fengjie County Administration of Land Resources and Housing issued the Survey Form of Changing the Mining Right with respect to the change of GP Group's mining right of Heiwan colliery and set forth the following opinions: (a) this colliery is an independently reserved colliery planned by the approvals (Yu Fu Fa [2008] No.128 and Yu Fu [2009] No.2); (b) the production capacity of such mine is 60,000 tonnes per year, and the valid term is until January 8, 2011; (c) in accordance with the Pre-approval Notice on the Name (Yu Ming Cheng Yu He Zhun Zhun Zi [2009] Feng Gong Shang No.260161 ), this enterprise changed the name of mining enterprise from "Chongqing Guoping Industrial (Group) Co., Ltd. Heiwan Mining” to “Chongqing Guoping Heiwan Resources Development Co., Ltd."; (d) there is no existing mining right or resources dispute related to the designated mining area of such colliery; (e) during its operation, this colliery was not violating the laws, regulations and disciplines and has duly paid various legal taxes and fees; and (f) after preliminary review, the documents submitted by such colliery being true, we suggest approving the change.

On August 10, 2010, Chongqing Administration of Land Resources and Housing issued the Approval of the Mining Right Transfer([2010] No. 4) and set forth the following opinions: (a) after examination, the application dossiers of the Mining Right Transfer from GP Group to Heiwan Mining comply with the criterions of the Administrative Rules Governing the Mining Right Transfer, now we approve to the aforesaid Mining Right transfer; (b) the applicant shall register the Mining Right Transfer according to the Administrative Rules Governing the Registration of Mining Resource Exploiture in 60 days from receiving the approval.

In accordance with the Mining Right Transfer Agreement entered into by and between Heiwan Mining and GP Group on April 6, 2010, GP Group transferred its mining right of Heiwan Colliery Branch of GP Group ("Former Heiwan") to Heiwan Mining for a consideration of RMB 4,783,903 yuan. Upon the approval from Chongqing Administration of Land Resources and Housing on August 10, 2010, the aforesaid agreement and mining right transfer comes into effect.

According to the Confirmation signed by Heiwan Mining and GP Group on July 22, 2010, the purchase price under the Asset Transfer Agreement of Heiwan Colliery, which was RMB 4,874,260.62 yuan, included the purchase price under the Mining Right Transfer Agreement. Therefore the total amount to be paid by Heiwan Mining under the Asset Transfer Agreement of Heiwan Colliery and Mining Right Transfer Agreement was RMB 4,874,260.62 yuan.

In accordance with the Asset Transfer Agreement of Heiwan Colliery entered into by and between Heiwan Mining and GP Group on July 14, 2010, Heiwan Mining purchased relevant assets which had been used by Former Heiwan for its coal mining production, at a purchase price of RMB 4,874,260.62 yuan. Upon the completion of both parties' signature, the aforesaid agreement comes into effect.

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The parties agreed to make the date after the day on which the receipt of all government approvals including the approval from Chongqing Administration of Land Resources and Housing or a mutual agreement date, as the expected delivery date (which as at the date of issuance of this Report cannot be determined). On the delivery date, the assets, the business and the employees of Former Heiwan related to its coal mining production business will be transferred to Heiwan Mining. Upon the completion of the aforesaid transfer on the delivery date, the aforesaid asset transfer comes into effect.

During the period from Oct 31st, 2009, the valuation date, to the expected delivery date, the gain or loss generated from the assets of Former Heiwan is enjoyed or born by Heiwan Mining.

Heiwan Mining and GP Group have entered into the Mining Right Transfer Agreement and the Asset Transfer Agreement of Heiwan Colliery. In our view, such Mining Right Transfer Agreement and Asset Transfer Agreement of Heiwan Colliery are legal. The Mining Right Transfer Agreement and mining right transfer come into effect upon the grant of the approval from Chongqing Administration of Land Resources and Housing. Heiwan Mining and GP Group shall register the Mining Right Transfer according to the Administrative Rules Governing the Registration of Mining Resource Exploiture in 60 days from receiving the aforesaid approval.

Further, the Asset Transfer Agreement comes into effect upon the completion of both parties' signature. Upon the receipt of all government approvals including the approval from Chongqing Administration of Land Resources and Housing on August 10, 2010, and the transfer of the assets being completed on the delivery date determined by the parties, Heiwan Mining will legally own all of the assets of the Heiwan colliery, including the mining permit.

Production at Heiwan MineAt present, GP Group currently holds the Coal Production Permit (No.205002360401) for the Heiwan mine issued by Chongqing Economy Committee. The production capacity is 40,000 tonnes per year. The actual coal exploitation output of Heiwan mine for the Year 2007 was 35,859 tonnes, 39,966 tonnes for 2008, and 59,819 tonnes for 2009. Accordingly, the actual coal exploitation yield of the Heiwan Mine in 2009 exceeded the annual production capacity provided in the Coal Production Permit.

By an Undertaking Letter issued by GP Group on July 13, 2010 to Heiwan Mining, GP Group agreed to be liable for all the administrative sanctions and all the losses Heiwan Mining may suffer because of any overproduction at Heiwan Mine by Former Heiwan before completions.

It is unclear whether over production constitutes wasteful mining which is prohibited by the MRL and Chongqing MRR. Therefore, there is no clear administrative sanction with respect to over production under current applicable PRC laws. Accordingly, in our view, an administrative sanction or fine will not be imposed on Heiwan Mining by the local mine administration bureau for the over production of Former Heiwan. Even if the relevant legislation is amended or made clear to provide for such sanctions and fines, or the administration department clarifies or introduces penalty regulations imposing administrative sanctions or fines on over production, GP Group will take responsible for all aforesaid administrative sanctions or fines pursuant to the Undertaking Letter.

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4. CONCLUSIONSubject to the comments, qualifications and assumptions set out in this Report, we are of the opinion that as at the date of this Report, there is nothing to indicate that the Tenements are not in good standing, subject to the pending mining permit transfer and the Heiwan colliery asset transfer transactions between Heiwan Mining and GP Group.

5. CONSeNTSThis Report is solely for the benefit of the Company and the directors of the Company in connection with the above-described transaction. It may not be furnished to or relied upon by anyone else or used for any other purpose without prior written consent.

Grandall Legal Group (Shanghai) consents to being named as the authors of this Report.

Grandall Legal Group (Shanghai) has given, and has not before the lodgement of this Prospectus, withdrawn its consent to the inclusion of this Report in the Prospectus.

Application for Coal Production Permit We are of the view that Heiwan Mining may apply for a Coal Production Permit in relation to Heiwan colliery with the relevant government authority in accordance with applicable PRC laws after Heiwan Mining has obtained a mining permit for the Heiwan colliery in accordance with applicable PRC laws.

If Heiwan Mining fails to obtain a Coal Production Permit, it will be prohibited from producing coal. If coal production takes place without a Coal Production Permit, a fine will be imposed, illegal proceeds confiscated, and an order to stop production may be made by a competent government department.

Application for Safe Production Permit by Heiwan MiningWe are of the view that Heiwan Mining may apply for a Safe Production Permit in relation to Heiwan colliery with relevant government authority in accordance with applicable PRC laws after Heiwan Mining has obtained a mining permit for the Heiwan colliery in accordance with applicable PRC laws.

If Heiwan Mining fails to obtain a Safe Production Permit, it will be prohibited from producing coal. If coal production takes place without a Safe Production Permit, it shall be ordered to terminate the illegal activities or to close down production; its illegal proceeds will be confiscated and a fine will be imposed. If serious consequences have happened as a result of the illegal activities and a crime has been constituted, the offender shall assume criminal liabilities according to the relevant provisions of the Criminal Law.

Yours faithfully,

Grandall Legal Group (Shanghai)

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Additional information9F

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9.0 additional information

RegISTRATION AND CORPORATe STRUCTUReThe Company was registered in Australia on 8 July 2010 as a public company limited by shares.

The liability of the members of the Company is limited.

The entities controlled by the Company are set out in Section 2 of this Prospectus.

The Company is controlled by Lucky Magic Enterprises Limited, a company controlled by Mr Yu Guo Peng. Please refer to Section 2 of this Prospectus.

RIghTS ATTAChINg TO ShAReSFull details of the rights attaching to Shares are:(a) set out in the Constitution a copy of which can be inspected, free of charge, at the Company's Registered Office during normal business hours; and

(b) in certain circumstances, regulated by the Corporations Act, the Listing Rules and the general law.

The following is a broad summary of the rights, privileges and restrictions attaching to all Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. All Shares issued pursuant to this Prospectus will from the time they are issued, rank pari passu with all the Company's existing Shares.

Voting RightsSubject to any rights or restrictions for the time being attached to any class or classes of shares (at present there is only one class of shares), at meetings of Shareholders of the Company:(a) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;

(b) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and

(c) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid shares, shall have such number of votes as bears the same proportion which the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited).

Meetings and NoticeEach shareholder is entitled to receive notice of and to attend general meetings of the Company and to receive all notices, accounts and other documents required to be sent to shareholders under the constitution of the Company, the Corporations Act or the Listing Rules.

Rights on Winding UpSubject to the rights of holders of shares (if any) with special rights in a winding up, on a winding up of the Company all assets that may be legally distributed among members will be distributed in proportion to the number of Shares held by them irrespective of the amount paid up or credited as paid up on the shares.

Transfer of SharesSubject to the Constitution, a shareholder may transfer shares by a market transfer in accordance with any computerised or electronic system established or recognised by the Listing Rules or the Corporations Act for the purpose of facilitating transfers of shares, or by an instrument in writing in any usual or common form or in any other form approved by the Directors or by ASX, or by an instrument which is sufficient under section 1071B of the Corporations Act, or in any other usual or common form.

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The Directors may decline to register a transfer of shares (other than a market transfer) where the Listing Rules or ASTC Settlement Rules require or permit the Company to do so, or the transfer is in breach of the Listing Rules or any escrow agreement in relation to restricted securities entered into by the Company under the Listing Rules.

Future Increases in CapitalWithout prejudice to any special rights conferred on the holder of any shares,the allotment and issue of any shares is under the control of the Directors. Subject to the Listing Rules, the Corporations Act and the Constitution, the Directors may allot and issue such number of shares or class or shares, and on such terms, as they see fit.

Variation of RightsUnder the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary the rights attaching to shares. Subject to the Corporations Act and the Listing Rules, if at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of the issue of the shares of that class), whether or not the Company is being wound up, may be varied with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

Dividend RightsThe Directors may declare that a dividend is to be paid to Shareholders entitled to the dividend. Dividends are payable out of profits. Dividends declared will (subject to any special rights or restrictions attaching to a class of shares created as to any arrangement as to dividend) be payable on shares in accordance with the Corporations Act.

Proportional Takeover BidsIf a proportional takeover bid is made in respect of shares included in a class of shares in the Company, the registration of a transfer giving effect to a contract resulting from the acceptance of an offer made under the proportional takeover bid is prohibited unless a resolution to approve the proportional takeover bid is passed in accordance with the Constitution. If a resolution to approve a proportional takeover bid is rejected, all offers under the proportional takeover bid which have been accepted must be rescinded by the bidder. This provision ceases to have effect on the third anniversary of the date of adoption or last renewal of the provision.

Alteration to the ConstitutionThe constitution can only be amended by a special resolution passed by at least three quarters of shareholders present and voting at the general meeting. At least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

Listing RulesIf the Company is admitted to the Official List of ASX, then despite anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision or not to contain a provision the Constitution is deemed to contain that provision or not to contain that provision (as the case may be). If a provision of the Constitution is or becomes inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.F

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PRC LAWS AND RegULATIONSThe Group Operating Companies are subject to the laws and regulations of the PRC. An overview of these laws and regulations is included in Annexure A.

SUMMARy Of MATeRIAL CONTRACTSA summary of material contracts entered into by the Company and its Subsidiaries is set out below:

Share Purchase Agreements(a) Acquisition Agreement in relation to Chongqing Guoping Shang Mao Trading Co., Ltd between Chongqing Heijin Industrial Co., Ltd and GP Group Chongqing Heijin Industrial Co., Ltd. and GP Group entered into an Equity Acquisition Agreement on 11 March, 2010, as supplemented by a Supplemental Agreement dated 15 July 2010 (together, the "Agreements"). Under the Agreements:

(i) GP Group transferred its 90% equity interest in Chongqing Guoping Shang Mao Trading Co., Ltd. to Chongqing Heijin Industrial Co., Ltd. in consideration for RMB8,559,800, of which RMB4,500,000 has been paid and RMB4,059,800 is payable on or before 31 December 2010; and

(ii) GP Group warranted that there is no encumbrance or lien on such equity interest, and there is also no dispute or litigation related to such equity interest.

The Agreements are governed by the laws of the PRC.

(b) Acquisition Agreement in relation to Chongqing Guoping Shang Mao Trading Co., Ltd between Chongqing Heijin Industrial Co., Ltd and Ms. Ou Xiaoping Chongqing Heijin Industrial Co., Ltd. and Ms. Ou Xiaoping, the wife of Mr Yu Guo Peng, entered into an Equity Acquisition Agreement in relation to Chongqing Guoping Shang Mao Trading Co., Ltd. on 11 March 2010, as supplemented by a Supplemental Agreement dated 15 July 2010 (together, the "Agreements"). Under the Agreements:

(i) Ms. Ou Xiaoping transferred her 10% equity interest in Chongqing Guoping Shang Mao Trading Co., Ltd. to Chongqing Heijin Industrial Co., Ltd. in consideration for RMB951,100, of which RMB500,000 has been paid and RMB451,100 is payable on or before 31 December 2010; and

(ii) Ms. Ou Xiaoping warranted that there is no encumbrance or lien on such equity interest, and there is also no dispute and litigation related to such equity interest.

The Agreements are governed by the laws of the PRC.

(c) Acquisition Agreement in relation to Chongqing Caotang Coal Mine Resources Development Co., Ltd. between Chongqing Guoping Shang Mao Trading Co., Ltd. and GP Group On 15 March 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and GP Group entered into an Equity Interest Acquisition Agreement under which:

(i) GP Group transferred its 73% equity interest in Chongqing Caotang Coal Mine Resources Development Co., Ltd. to Chongqing Guoping Shang Mao Trading Co., Ltd. in consideration for RMB219,000 which has been paid in full; and

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The Agreement is governed by the laws of the PRC.

(d) Acquisition Agreement in relation to Chongqing Caotang Coal Mine Resources Development Co., Ltd., between between Chongqing Guoping Shang Mao Trading Co., Ltd. and Mr. Xia Xiaogang On 15 March 15 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Mr. Xia Xiaogang entered into an Acquisition Agreement in relation to Chongqing Caotang Coal Mine Resources Development Co., Ltd., under which:

(i) Mr. Xia Xiaogang transferred his 27% equity interest in Chongqing Caotang Coal Mine Resources Development Co., Ltd. to Chongqing Guoping Shang Mao Trading Co., Ltd. in consideration for RMB 81,000 which has been paid in full; and

(ii) Mr. Xia Xiaogang warranted that there is no encumbrance or lien on such equity interest, and there is also no dispute or litigation related to such equity interest.


(e) Acquisition Agreement in relation to Chongqing Heiwan Resources Development Co., Ltd., between Chongqing Guoping Shang Mao Trading Co., Ltd. and GP Group On 14 March 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and GP Group entered into an Acquisition Agreement in relation to Chongqing Heiwan Resources Development Co., Ltd., under which:

(i) GP Group transferred its 100% equity interest in Heiwan Mining to Chongqing Guoping Shang Mao Trading Co., Ltd. in consideration for RMB500,000, which has been paid in full; and



(f) Acquisition Agreement in relation to Chongqing Heijin Industrial Co., Ltd, between Blackgold Holdings HongKong Limited and GP Group On 10 March 2010, Blackgold Holdings HongKong Limited and GP Group entered into an Acquisition Agreement under which:

(i) GP Group transferred its 75% equity interest in Chongqing Heijin Industrial Co., Ltd to Blackgold Holdings HongKong Limited in consideration for RMB 7,500,000, which has been paid in full; and



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(g) Share Purchase Agreement and related agreements in relation to Creative Black Gold Limited Under a share Purchase Agreement dated 29 July 2010 (but excuted in full on 23 August 2010) between the Company and Lucky Magic Enterprises Limited ("Share Purchase Agreement"), the Company acquired all of the issued share capital in Creative Black Gold Limited and its subsidiaries (being the Subsidiaries) in consideration for $27,499,999 comprising $13,000,000 in cash ("Cash Consideration") and $14,499,999 satisfied by the issue of 224,999,999 Shares ("Shares") at an issue price of $0.06444444 each.

By letter dated 23 August 2010, Lucky Magic Enterprises Limited instructed the Company to issue the Shares to Lucky Magic Enterprises Limited and its nominees, in full satisfaction of the Company's obligations to issue the Shares, as follows:

(i) 189,000,000 Shares to Lucky Magic Enterprises Limited;

(ii) 23,999,999 Shares to Prima Network Financial Group Limited;

(iii) 3,000,000 Shares to Link Success Asia Holdings Limited;

(iv) 4,500,000 Shares to East Asia Success Limited; and

(v) 4,500,000 to Blackgold International Holdings Limited (Cayman Islands).

By a document dated 13 September 2010 ("Supplemental Document"), the Company and Lucky Magic Enterprises Limited agreed that the Cash Consideration is payable in the following manner:

The Supplemental Document states that the Share Purchase Agreement is to be re-dated 23 August 2010, the date it was fully executed.

By Deed of Assignment and Release dated 21 September 2010, Chongqing Heijin Industrial Co., Ltd and the Group Operating Companies ("Assignor") agreed to assign all of their rights and interests in and under a debt of RMB18,955,000 owing by GP Group to the Assignor for amounts advanced by the Assignor to the GP Group between 1 November 2009 and 30 April 2010 ("Debt") to Lucky Magic Enterprises Limited with effect from the date of the deed, in consideration for the release of the Company's obligation to pay $3,000,000 of the Cash Consideration to Lucky Magic Enterprises Limited. The parties agreed this would give effect to the accounting set-off referred to in the Supplemental Document.

Amount How and When Payable

$3,000,000 To be settled by way of accounting set-off against a sum of RMB18,955,000 reflected as being due from GP Group in the proforma combined financial statement as at 30 April 2010.

$3,000,000 To be paid in cash from proceeds of the proposed Offer of new Shares by the Purchaser.

$7,000,000 To be paid on or before 31 October 2012.

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Under the Share Purchase Agreement, Lucky Magic Enterprises Limited provided a number of warranties and indemnities including in relation to: (a) title, power and authority; (b) records, assets, solvency and tax; (c) material contracts and insurance; and (d) mining permits, environmental issues, litigation and compliance with laws, employee issues and accuracy of information. The warranties are qualified by any disclosures made in the Share Purchase Agreement and in due diligence reports. Any liability of Lucky Magic Enterprises Limited for a breach of a warranty is limited to 100% of the purchase price.

The Share Purchase Agreement and the Deed of Assignment and Release are governed by the laws of Western Australia.

Heiwan Mine Acquisition Agreements(a) Mining Right Transfer Agreement On 6 April 6 2010, Chongqing Guoping Heiwan Resources Development Co., Ltd and GP Group entered into a Mining Right Transfer Agreement under which:

(i) GP Group agreed to transfer and its mining right in respect of Heiwan colliery to Chongqing Guoping Heiwan Resources Development Co., Ltd, subject to receipt of all government approvals, in consideration for RMB4,783,903; and

(ii) the aforesaid mining rights transfer will come into effect upon approval for the transfer of the mining rights being received from the Chongqing Municipal Land Resource and Housing Authority, which was received on 10 August 2010.

The agreement is governed by the laws of the PRC.

(b) Heiwan Colliery Asset Transfer Agreement On 14 July 2010, Chongqing Guoping Heiwan Resources Development Co., Ltd and GP Group entered into the Heiwan Colliery Asset Transfer Agreement, under which:

(i) Chongqing Guoping Heiwan Resources Development Co., Ltd agreed to purchase and GP Group agreed to sell the business of coal mining, production and trading of Heiwan Mine and all relevant assets used by Heiwan Colliery Branch of GP Group for its coal mining business at Heiwan Mine ("Vendor Assets and Business") for a consideration of RMB4,874,260.62 of which RMB4,400,000 has been paid and the balance is payable within 60 days after completion or such other date agreed by the parties;

(ii) Chongqing Guoping Heiwan Resources Development Co., Ltd may offer to employ all employees of GP Group – Heiwan Mine division;

(iii) Completion of the Heiwan Colliery Asset Transfer Agreement will be the day after the mining permit is transferred to Chongqing Guoping Heiwan Resources Development Co., Ltd pursuant to the Mining Right Transfer Agreement and has obtained all other such permits as may be required to carry on the business or such other date as may be agreed between the parties;

(iv) From 31 October 2009 to completion, Chongqing Guoping Heiwan Resources Development Co., Ltd is entitled to the net earnings from the operation of the Vendor Assets and Business (as determined by an auditor), and to bear all the operating costs and expenses arising from the operation of the Vendor Assets and Business;

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(v) The Vendor will be responsible and liable for all tax liabilities, claims and legal proceedings accruing before 31 October 2009, and the Purchaser will be responsible and liable for all tax liabilities, claims and legal proceedings accruing on or after 31 October 2009; and

(vi) Pending completion, the Vendor shall bear all risks in relation to the Vendor Assets.

The agreement is governed by the laws of the PRC.

(c) Heiwan Colliery Asset Transfer Price Confirmation On 22 July 2010, Chongqing Guoping Heiwan Resources Development Co., Ltd and GP Group signed the Heiwan Colliery Asset Transfer Price Confirmation under which the parties agree that the consideration for the sale and purchase of the Vendor Assets and Business payable under the Heiwan Colliery Transfer Agreement of RMB4,874,260.62 was inclusive of the consideration payable under the Mining Right Transfer Agreement in relation to the Heiwan Mine summarised above.

(d) Sub-lease Agreement of Heiwan Coal Mine Leased Land On 14 July 2010, Chongqing Guoping Heiwan Resources Development Co., Ltd and GP Group entered into the Sub-lease Agreement of Heiwan Coal Mine Leased Land, under which:

(i) GP Group agreed to sub-lease the land they lease from several natural lessors for use in the Heiwan Mine operations to Chongqing Guoping Heiwan Resources Development Co., Ltd;

(ii) Chongqing Guoping Heiwan Resources Development Co., Ltd will pay the rental fees to the natural lessors;

(iii) Chongqing Guoping Heiwan Resources Development Co., Ltd, may, after the expiry of the sub-lease, request GP Group to extend the leasing agreement

with the natural lessors, and in that situation, has the priority right to sub-lease the land from GP Group; and

(iv) GP Group agreed to indemnify Chongqing Guoping Heiwan Resources Development Co., Ltd for any loss suffered as a result of any flaw in the original lease agreement or a result of any breach of the original lease agreement by the natural lessors.

Coal Sales and Purchase Contracts(a) The Particular Contract of Changzhou Yangtze River Thermal Energy Co., Ltd with Changzhou Yangtze River Thermal Energy Co., Ltd On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Changzhou Yangtze River Thermal Energy Co., Ltd entered into the Particular Contract of Changzhou Yangtze River Thermal Energy Co., Ltd, under which it was agreed that Chongqing Guoping Shang Mao Trading Co., Ltd. would supply Changzhou Yangtze River Thermal Energy Co., Ltd with 80,000 tons of anthracite coal, priced at RMB13.60 per 100 calorie (including 17% VAT) subject to certain specifications being satisfied. The actual price is subject to sample check testing and acceptance between the two parties, and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are not satisfied. The contract is valid from 1 January 2010 to 31 December 2010.

(b) The Contract of Coal Purchase and Sale with Yichang Yihua Pacific Thermal Energy Co., Ltd On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Yichang Yihua Pacific Thermal Energy Co., Ltd entered into the Contract of Coal Purchase and Sale, under which Chongqing Guoping Shang Mao Trading Co., Ltd. would supply Yichang Yihua Pacific Thermal Energy Co., Ltd with 100,000 tons of bunker coal subject to a specification of 4,500 kcal. The unit price is in accordance with the order of each month. The actual price is subject to sample check testing

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and acceptance between the two parties and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are not satisfied. The contract is valid from 1 January 2010 to 31 December 2010.

(c) The Contract of Huaneng Nanjing Power Plant with Huaneng Power International Joint Stock Company Limited – Nanjing Power Plant On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Huaneng Power International Joint Stock Company Limited – Nanjing Power Plant entered into the Contract of Huaneng Nanjing Power Plant, under which Chongqing Guoping Shang Mao Trading Co., Ltd. agreed to supply Huaneng Power International Joint Stock Company Limited – Nanjing Power Plant with 120,000 tons of coal, priced at RMB612 per ton subject to certain specifications being satisfied. The actual price is subject to sample check testing and acceptance between the two parties and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are are exceeded or not satisfied. The contract is valid from 1 January 2010 to 31 December 2010.

(d) The Agreement of Coal Purchase and Sale with Shanying Paper Industry Joint Stock Company Limited On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Shanying Paper Industry Joint Stock Company Limited entered into the Agreement of Coal Purchase and Sale, under which Chongqing Guoping Shang Mao Trading Co., Ltd. agreed to supply Shanying Paper Industry Joint Stork Company Limited with 80,000 tons of coal, priced at RMB0.112 per kcal (including VAT) subject to certain specifications being satisfied. The actual price is subject to sample check testing and acceptance between the two parties and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are exceeded or not satisfied. Shanying Paper Industry Joint

Stock Company Limited is also charged for transportation at the rate of RMB50 per ton. The contract is valid from 1 January 2010 to 31 December 2010.

(e) The Agreement of Coal Purchase and Sale with Nanjing Huarun Thermoelectricity Co., Ltd On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Nanjing Huarun Thermoelectricity Co., Ltd entered into the Agreement of Coal Purchase and Sale, under which Chongqing Guoping Shang Mao Trading Co., Ltd. agreed to supply Nanjing Huarun Thermoelectricity Co., Ltd with 120,000 tons of coal for power generation, priced at RMB580 per ton (including VAT) subject to certain specifications being satisfied. The actual price is subject to sample check testing and acceptance between the two parties and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are exceeded or not satisfied. The contract is valid from 1 January 2010 to 31 December 2010.

(f) The Agreement of Coal Purchase and Sale with Chongqing Dinghao Trading Company Limited On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and Chongqing Dinghao Trading Company Limited entered into the Agreement of Coal Purchase and Sale, under which Chongqing Guoping Shang Mao Trading Co., Ltd. agreed to supply Chongqing Dinghao Trading Company Limited with 80,000 tons of bunker coal and subject to a specification of 4,500 kcal. The unit price is in accordance with the order of the current month. The actual price is subject to sample check testing and acceptance between the two parties and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are not satisfied. The contract is valid from 1 January 2010 to 31 December 2010.

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(g) The Coal Purchase and Sale Agreement with China Guodian Jiujiang Power Plant On 1 January 2010, Chongqing Guoping Shang Mao Trading Co., Ltd. and China Guodian Jiujiang Power Plant entered into the Agreement of Coal Purchase and Sale, under which Chongqing Guoping Shang Mao Trading Co., Ltd. agreed to supply China Guodian Jiujiang Power Plant with 80,000 tons of coal for power generation, priced at RMB580 per ton (including VAT) subject to certain specifications being satisfied. The actual price is subject to sample check testing and acceptance between the two parties and variation in accordance with agreed parameters if the specifications in relation to quality and technical standard of the coal products supplied are exceeded or not satisfied. The contract is valid from 1 January 2010 to 31 December 2010.

Executive Employment Agreements(a) Employment of Yu Guo Peng as Group Chief Executive Officer Blackgold Holdings HongKong Limited has entered into an Employment Agreement dated 23 August 2010 with Mr Yu Guo Peng, under which Blackgold Holdings HongKong Limited appointed Mr Yu Guo Peng as Group Chief Executive Officer for an annual fee of $250,000. The agreement is for a period of 5 years commencing on 1 September 2010 but may be terminated before the end of the term:

(i) immediately by the Company or Mr Yu Guo Peng for cause; or

(ii) by either party giving the other party three months' notice.

INTeReSTS Of DIReCTORS Of The COMPANyExcept as disclosed in this Prospectus, no Director holds, or during the last two years has held, any interest in:(a) the formation or promotion of the Company;(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Offer; or(c) the Offer,

and no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to be paid to any Director to induce him to become or to qualify as a Director or otherwise for services rendered by him in connection with the formation or promotion of the Company or the Offer.

ShARehOLDINg QUALIfICATIONSThe Directors are not required to hold any Shares in the Company under the Constitution.

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DIReCTORS' hOLDINgSThe Directors' interests in Shares of the Company are as follow:

As at the date of this Prospectus

Following completion of the Offer

If the Maximum Amount is raised

If the Minimum Amount is raised

DirectlyHeld

Indirectly Held

DirectlyHeld

Indirectly Held

Chi Ho (James) Tong (1) 72,000,000 NIL 49,500,000 NIL 53,250,000

Yu Guo Peng (2) 567,000,000 NIL 544,500,000 NIL 548,250,000

Teck Sin (Steven) Chong NIL NIL NIL NIL NIL

Chong Hee (Frank) Peh NIL NIL NIL NIL NIL

Seng Kiong Yap NIL NIL NIL NIL NIL

(1) Shares held by Prima Network Financial Group Limited (2) Shares held by Lucky Magic Enterprises Limited

None of the Directors will apply for Shares under this Prospectus.

ReMUNeRATION Of DIReCTORSThe Constitution of the Company provides that the non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate maximum sum per annum from time to time determined by the Company in general meeting. The directors' fees payable in aggregate to non-executive Directors is currently approved at $250,000 per annum. Each of the non-executive Directors has assumed his position as a non-executive Director of the Company pursuant to a letter of appointment, and the Company will pay each non-excutive Director $50,000 per annum, plus superannuation, where applicable.

A Director may be paid fees or other amounts as the Directors determine where a Director performs extra duties or makes any special exertions on behalf of the Company. A Director may also be reimbursed for out of pocket expenses incurred as a result of their duties as a Director.

The Company's sole Executive Director, Yu Guo Peng, will receive a salary from Blackgold Holdings HongKong Limited, a wholly owned subsidiary of the Company as an employee on the terms set out in an employment contract. This employment contract is summarised earlier in this Section 9 of this Prospectus.

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OTheR DIReCTOR INTeReSTSLucky Magic Enterprises Limited, a company controlled by Mr Yu Guo Peng, will sell 18,750,000 Sale Shares under this Prospectus if the Minimum Amount is raised or 22,500,000 Sale Shares if the Maximum Amount is raised.

Prima Network Financial Group Limited, a company controlled by Mr Chi Ho (James) Tong, will sell 18,750,000 Sale Shares under this Prospectus if the Minimum Amount is raised or 22,500,000 Sale Shares if the Maximum Amount is raised.

The Company acquired Blackgold Holdings HongKong Limited (and its then parent Creative Blackgold Limited) on or about 27 August 2010 from Lucky Magic Enterprises Limited pursuant to a Share Purchase Agreement dated 23 August 2010 summarised in Section 9 of this Prospectus in consideration for $27,499,999 comprising $13,000,000 in cash and $14,499,999 satisfied by the issue of 224,999,999 Shares at an issue price of $0.06444444 each, of which 189,000,000 Shares were issued to Lucky Magic Enterprises Limited and 23,999,999 Shares to Prima Network Financial Group Limited. The remaining Shares were issued to the parties disclosed in the summary of the Share Purchase Agreement. On 10 September 2010, the Company altered its share capital by way of a 1 to 3 share split, pursuant to which the Shares of Lucky Magic Enterprises Limited were increased from 189,000,000 Shares to 567,000,000 Shares and the Shares of Prima Network Financial Group Limited were increased from 24,000,000 Shares (including 1 subscriber Share) to 72,000,000 Shares.

The cash consideration is payable by the Company to Lucky Magic Enterprises Limited in the manner set out in the summary of the Share Purchase Agreement and related agreements in relation to Creative Black Gold Limited and Blackgold Holdings HongKong Limited in this Section 9 of the Prospectus, of which $10,000,000 remains outstanding at the date of this Prospectus. The Company intends to pay $3,000,000 from the proceeds of the issue of New Shares

under the Offer and the balance of $7,000,000 from cash generated from operating activities.

The Group Operating Companies were acquired from GP Group, a company controlled by Mr and Mrs Yu Guo Peng. In addition, one of the Group Operating Companies, Chongqing Guoping Heiwan Resources Development Co., Limited entered into the Heiwan Mine Purchase Agreements to acquire the business and operating assets of the Heiwan Mine from GP Group. The Heiwan Mine Purchase Agreements and the agreements for the acquisition of the Group Operating Companies are summarised in Section 9 of this Prospectus.

The total consideration for the acquisition of the Group Operating Companies and the business and operating assets of the Heiwan Mine is RMB22,685,160, of which RMB4,985,160 remains outstanding at the date of this Prospectus. The Company intends to utilise $800,000 (approximately RMB4,500,000, the actual amount can only be determined based on the $:RMB foreign currency exchange rate applicable on the date remittance is made) from the proceeds of the issue of New Shares under the Offer to pay the GP Group and Ou Xiaoping (Mr Yu Guo Peng's spouse) and the balance from cash generated from operating activities.

On 1 January 2010, Chongqing Heijin Industrial Co., Limited entered into a Real Estate Lease Agreement with Chongqing Guoping Mingyang Logistics Company Limited, a company controlled by Mr Yu Guo Peng, under which Chongqing Heijin Industrial Co., Limited leased a 400 m2 office premise from Chongqing Guoping Mingyang Logistics Company Limited at a rental of RMB150,000 per year. This lease is for the period from 1 January 2010 to 31 December 2013.

Chongqing Guoping Shang Mao Trading Co., Ltd leased a 200sq metre commercial space for the period from 30 November 2009 to 19 November 2014 at lease rentals of RMB15,000 per year from Chongqing Guoping Mingyang Logistics Company Limited, a company controlled by Mr Yu Guo Peng.

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Number of Shares subject to escrow

Name of Controlling ShareholderIf Maximum Amount

is raisedIf Minimum Amount

is raised

Lucky Magic Enterprises Limited 544,500,000 548,250,000

Upon the listing of the Company on ASX, the Company proposes to entered into Deeds of Indemnity and Access with each Director and the Company Secretary under which the Company will to the extent permitted by the Corporations Act:

(i) indemnify the Director or Company Secretary as the case may be against certain liabilities incurred by him while acting as Director or Company Secretary of the Company;

(ii) insure the Director or the Company Secretary as the case may be against certain risks to which he is exposed to as a Director or Company Secretary of the Company; and

(iii) grant to the Director or Company Secretary a right of access to certain records of the Company for a period up to 7 years after he ceases to be a Director or Company Secretary.

The Company intends to effect and maintain directors' and officers' liability and company reimbursement insurance after Quotation.

eSCROW ARRANgeMeNTSLucky Magic Enterprises Limited, a company controlled by Mr Yu Guo Peng, will on or before Quotation voluntarily enter into a restriction agreement under which they are restricted from dealing in any Shares held by them for 24 months from the date of completion of the Offer, the number of Shares that will be subject to escrow arrangements are set out below.

During the escrow period, the holder (or controller) of the restricted Shares is not permitted to:v Dispose of, or agree or offer to dispose of, the restricted Shares or controlling interests;v Create, or agree to create, any security interest in the restricted Shares or controlling interests; orv Do, or omit to do, any act if the act or omission would have the effect of transferring effective ownership or control of the restricted Shares or controlling interests.

The Company may release the restricted Shares from the above restrictions if either:v A takeover bid is made to acquire all or some of the Shares and at least half of the Shareholders (other than the holders of the restricted Shares) have accepted the offers; orv A scheme of arrangement between the Company and the Shareholders becomes effective under the Corporations Act.F

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INTeReST Of NAMeD PeRSONSExcept as disclosed in this Prospectus, no promoter or other person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus, holds, or during the last two years has held, any interest in:(a) the formation or promotion of the Company; (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or(c) the Offer,

and no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to be paid to a promoter or any person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus for services rendered by that person in connection with the formation or promotion of the Company or the Offer.

Peregrine Corporate Limited will act as Lead Manager to the Offer. Under the mandate letter, Peregrine Corporate Limited will receive a fee of $30,000 and a capital raising fee of 6% of the amount raised under the Offer. Peregrine Corporate Limited will also be reimbursed its own out of pocket expenses incurred in relation to the Offer. Blakiston & Crabb has acted as Australian legal advisers in connection with the Offer. The Group will pay approximately $180,000 to Blakiston & Crabb for these services. Blakiston & Crabb have not provided other professional services to the Group during the last two years.

Grandall Legal Group (Shanghai) has acted as PRC legal advisers in connection with the Offer and has prepared the Solicitor's Report on Tenements included in Section 8 of this Prospectus and the PRC Legal and Regulatory Overview in Annexure A of this Prospectus. The Group will pay approximately $100,000 for these services. Grandall Legal

Group (Shanghai) has provided other professional services to the Group during the last two years for which the Company has paid fees of approximately $75,000.

TanLim Partnership has carried out due diligence investigations on Blackgold Holdings HongKong Limited for the purpose of the Offer. The Group will pay approximately $20,000 to TanLim Partnership for these services. TanLim Partnership has not provided other professional services to the Group during the last two years.

Al Maynard & Associates Pty Ltd has prepared the Independent Geologist's Report included in Section 5 of this Prospectus. In respect of this work, the Group will pay approximately $50,000.

WHK Horwath Perth Audit Partnership has prepared the Investigating Accountant's Report included in Section 7 of this Prospectus. In respect of this work, the Group will pay approximately $40,000. WHK Horwath Perth Audit Partnership will also be paid their usual commercial rates as auditor to the Company.

Biztrack Partnership Pte Ltd has acted as corporate adviser to the Company in relation to this Offer. In respect of this work, the Group will pay $120,000.

Crowe Horwath has provided accountancy and auditing services to the Subsidiaries. In respect of this work, the Group will pay approximately $235,000. Crowe Horwath will also be reimbursed its own out of pocket expenses incurred in the performance of these services. Crowe Horwath will continue as auditors of the Subsidiaries for which they will be paid their usual commercial rates.

The amounts disclosed above are, where applicable, exclusive of any amount of goods and services tax payable by the Company in respect of those amounts.

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CONSeNTSEach of the parties referred to in this Section:(a) does not make, or purport to make, any statement in this Prospectus or on which a statement made in the Prospectus is based other than as specified in this Section; and

(b) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section.

Al Maynard & Associates Pty Ltd has given its written consent to the inclusion in Section 5 of this Prospectus of its Independent Geologists' Report and to all statements referring to that report, or attributed to or derived from that report, in the form and context in which they appear and has not withdrawn such consent before lodgement of the Prospectus with ASIC.

Brian Varndell has given his written consent to the inclusion in this Prospectus of all statements made by him or attributed to or derived from those statements in the form and context in which they appear and has not withdrawn such consent before lodgement of the Prospectus with ASIC.

WHK Horwath Perth Audit Partnership has given its written consent to the inclusion in Section 7 of this Prospectus of its Investigating Accountant's Report and to all statements referring to that report, or attributed to or derived from that report, in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Grandall Legal Group (Shanghai) has given its written consent to the inclusion in Section 8 of this Prospectus of their Report on Tenements and in Annexure A of this Prospectus of the PRC Legal and Regulatory Overview, and to all statements referring to the report and overview as the case may be, or attributed to or derived from that report or overview, in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC

Crowe Horwath has audited the financial statements of the Group Operating Companies for the the financial year ended 31 December 2007, 31 December 2008 and for the financial period ended 31 October 2009 and has reviewed the financial statements of the Subsidiaries for the 6 months period ended 30 April 2010, and have prepared reports thereon which are not included in this Prospectus. Crowe Horwath has given its written consent to all statements referring to those reports, or attributed to or derived from that report, in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Each of the following has consented to being named in the Prospectus in the capacity as noted below and have not withdrawn such consent prior to the lodgement of this Prospectus with ASIC:

(i) Peregrine Corporate Limited as Lead Manager;

(ii) Biztrack Partnership Pte Ltd as Corporate Adviser to the Company and the Subsidiaries;

(iii) Al Maynard & Associates Pty Ltd as Independent Geologists;

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(iv) Crowe Horwath as auditors of the Subsidiaries;

(v) WHK Horwath Perth Audit Partnership as Investigating Accountant and as Auditor of the Company;

(vi) Grandall Legal Group (Shanghai) as PRC legal advisers to the Company and the Subsidiaries and as solicitors reporting on the Subsidiaries' tenements and the authors of the PRC Legal and Regulatory Overview in Annexure A of this Prospectus;

(vii) TanLim Partnership as the law firm which carried out due diligence investigations on Blackgold Holdings HongKong Limited;

(viii) Blakiston & Crabb as Australian legal advisers to the Company; and

(ix) Link Market Services Limited as the Company's share registry.

There are a number of persons referred to elsewhere in this Prospectus who are not experts and who have not made statements included in this Prospectus nor are there any statements made in this Prospectus on the basis of any statements made by those persons. These persons did not consent to being named in this Prospectus and did not authorise or cause the issue of this Prospectus.

exPeNSeS Of The OffeRThe following table sets out the estimated costs in connection with the Offer, including costs for the preparation and issue of this Prospectus (exclusive of GST):

Service / Expense Item

Estimate of Cost

If Maximum Amount

is raised ($)

If Minimum Amount

is raised ($)

Lead Manager 4,212,000 3,510,000

Corporate Adviser 120,000 120,000

Legal Advisers 300,000 300,000

Investigating Accounting 40,000 40,000

Independent Geologist 50,000 50,000

Audit and Accountancy 235,000 235,000

Marketing expenses 90,000 90,000

Travelling expenses 60,000 60,000

Printing and mail 20,000 20,000

ASIC and ASX fees 150,000 150,000

Miscellaneous expenses 35,000 35,000

Total 5,312,000 4,610,000For

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If the Minimum Amount is raised, the Company will pay $3,845,000 and the Vendor Shareholders will pay $765,000 of the expenses of the Offer. If the Maximum Amount is raised, the Company will pay $4,430,000 and the Vendor Shareholders will pay $882,000.

TAxATIONThe acquisition and disposal of Shares in the Company will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisors accept no liability or responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

LITIgATIONThe Company is not involved in any material litigation or arbitration proceedings, nor, so far as the Directors are aware, are any such proceedings pending or threatened against the Company.

PRIvACy DISCLOSUReThe Company collects information about each Applicant from an Application Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant's security holding in the Company.

By submitting an Application Form, each Applicant agrees that the Company may use the information in the Application Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the Share Registry, the Company's related bodies corporate, agents, contractors and third party service providers, including mailing houses, ASX, ASIC and other regulatory authorities.

If an Applicant becomes a security holder of the Company, the Corporations Act requires the Company to include information about the security holder (name, address and details of the securities held) in its public register. This information must remain in the register even if that person ceases to be a security holder of the Company. Information contained in the Company's registers is also used to facilitate distribution payments and corporate communications (including the Company's financial results, annual reports and other information that the Company may wish to communicate to its security holders) and compliance by the Company with legal and regulatory requirements.

If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application.

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AUThORISATIONEach Director and Vendor Shareholder states that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements made by the Directors and the Vendor Shareholders in this Prospectus are not misleading or deceptive and that in respect of any other statements made in this Prospectus by other persons, the Directors and the Vendor Shareholders have made reasonable enquiries and on that basis have reasonable grounds to believe that persons making the statement or statements were competent to make such statements, that those persons have given their consent to the statements being included in this Prospectus in the form and context in which they are included and have not withdrawn that consent before lodgement of this Prospectus with ASIC, or to each Director's and Vendor Shareholder's knowledge, before any acquisition of Shares pursuant to this Prospectus. This Prospectus is prepared on the basis that certain matters may reasonably be expected to be known to likely investors or their professional advisors.

Each of the Directors and the Vendor Shareholders has consented to the lodgement of this Prospectus in accordance with Section 720 of the Corporations Act 2001 and has not withdrawn that consent.

Dated: 15 October 2010

The Company:

Signed for and on behalf ofBlackgold International Holdings Limited

Chi Ho (James) Tong Yu Guo PengChairman Executive Director/ Chief Executive Officer

The Vendor Shareholders:

Signed for and on behalf of Signed for and on behalf ofLucky Magic Enterprises Limited Prima Network Financial Group Limited

Yu Guo Peng Chi Ho (James) TongSole Director Sole Director

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Definitions

Annexure A

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definitions

The following definitions apply throughout this document unless the context requires otherwise.

AEST Australian Eastern Standard Time.

Applicant A person who submits an Application.

Application A valid application to acquire Shares.

Application Form The application form attached to this Prospectus.

Application Monies Monies received by the Company from Applicants.

ASIC Australian Securities and Investments Commission.

ASTC ASX Settlement And Transfer Corporation Pty Limited ABN 49 008 504 532.

ASX ASX Limited ABN 98 008 624 691, and where the context permits the Australian Securities Exchange operated by ASX Limited.

Auditors Auditors of the Company being with Perth Audit Partnership.

Blackgold Holdings HongKong Limited

Blackgold Holdings HongKong Limited, a company incorporated in Hong Kong, company registration no. 1391675.

Board The board of Directors unless the context indicates otherwise.

Blackgold International Holdings Limited (Cayman Islands)

Blackgold International Holdings Limited, a company incorporated in the Cayman Islands, company registration no. 237985.

Business Day A day other than a Saturday or Sunday on which banks are open for business in Perth, Western Australia.

Caotang Mine The coal mine located in Fengjie County, Chongqing City in the PRC operated by Chongqing Caotang Coal Mine Resources Development Co., Ltd more fully particularised in Section 2 of this Prospectus.

CHESS ASX Clearing House Electronic Subregistry System.

Chongqing Caotang Coal Mine Resources Development Co., Ltd

Chongqing Caotang Coal Mine Resources Development Co., Ltd, a company domiciled in the PRC and registered in Fengjie County, Chongqing City, PRC.

Chongqing Guoping Heiwan Resources Development Co., Ltd

Chongqing Guoping Heiwan Resources Development Co., Ltd, a company domiciled in PRC, and registered in Fengjie County, Chongqing City, PRC.

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Chongqing Guoping Shang Mao Trading Co., Ltd

Chongqing Guoping Shang Mao Trading Co., Ltd, a company domiciled in PRC, and registered in Fengjie County, Chongqing City, PRC.

Chongqing Heijin Industrial Co., Ltd

Chongqing Heijin Industrial Co., Ltd, a company domiciled in PRC, and registered in Fengjie County, Chongqing City, PRC.

Closing Date 11 November 2010.

Company or Blackgold Blackgold International Holdings Limited ACN 145 095 478.

Constitution The Company's constitution.

Corporations Act Corporations Act 2001 (Cth).

Creative Black Gold Limited Creative Black Gold Limited, a company incorporated in the British Virgin Islands, company registration no. 1554980.

Crowe Horwath Crowe Horwath Kuala Lumpur Office [AF1018].

Directors The directors of the Company as at the date of this Prospectus.

Dollars or $ Australian dollars unless otherwise stated.

East Asia Success Limited East Asia Success Limited, a company incorporated in the British Virgin Islands, company registration no. 1595812, and is a company controlled by persons related to Mr Yu Guo Peng.

Exposure Period The period of seven (7) days after the date of lodgement of the Original Prospectus, which period may be extended by the ASIC by not more than seven (7) days pursuant to Section 727(3) of the Corporations Act 2001.

GP Group Chongqing Guoping Industrial (Group) Co., Ltd.

Group Company and its Subsidiaries.

Group Expansion Plan Has the meaning given to that term in Section 2 of this Prospectus.

Group Operating Companies Chongqing Guoping Shang Mao Trading Co., Ltd, Chongqing Caotang Coal Mine Resources Development Co., Ltd and Chongqing Guoping Heiwan Resources Development Co., Ltd.

Heiwan Mine The coal mine located in Fengjie County, Chongqing City in the PRC operated by GP Group for the benefit and account of Chongqing Guoping Heiwan Resources Development Co., Ltd under the Heiwan Mine Acquisition Agreements, more fully particularised in Section 2 of this Prospectus.

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Heiwan Mine Acquisitions Agreements

Mining Right Transfer Agreement dated 6 April 2010 between GP Group and Chongqing Guoping Heiwan Resources Development Co., Ltd and the Heiwan Colliery Asset Transfer Agreementdated 14 July 2010 between GP Group and Chongqing Guoping Heiwan Resources Development Co., Ltd, as varied by a confirmation in writing dated 22 July 2010.

Independent Geologist Al Maynard & Associates Pty Ltd ABN 75 120 492 435.

Independent Geologist's Report

The report of the Independent Geologist contained in Section 5 of this Prospectus.

Investigating Accountant WHK Horwath Perth Audit Partnership ABN 96 844 819 235.

Investigating Accountant's Report

The report of the Investigating Accountant contained in 7.

Lead Manager Peregrine Corporate Limited ABN 40 062 478 997 Australian Financial Services Licence No 237858.

Link Success Asia Holdings Limited

Link Success Asia Holdings Limited, a company incorporated in the British Virgin Islands, company registration no. 1595785, and is a company controlled by persons related to Mr Yu Guo Peng.

Lucky Magic Enterprises Limites

Lucky Magic Enterprises Limited, a company incorporated in the British Virgin Islands, company registration no. 1536838, and controlled by Mr Yu Guo Peng.

JORC Code Has the same meaning as in Appendix 5A of the Listing Rules.

Listing Rules Listing Rules of ASX.

Maximum Amount The maximum cash proceeds under the Offer if over-applications are received and accepted in full (before expenses of the Offer) of $70,200,000, comprising $58,500,000 to be raised by the Company by the issue of 225,000,000 New Shares and $11,700,000 payable to the Vendor Shareholders pursuant to the transfer of 45,000,000 Sale Shares.

Minimum Amount The minimum cash proceeds under the Offer (before expenses of the Offer) of $58,500,000, comprising $48,750,000 to be raised by the Company by the issue of 187,500,000 New Shares and $9,750,000 payable to the Vendor Shareholders pursuant to the transfer of 37,750,000 Sale Shares.

New Shares Up to 225,000,000 Shares offered for subscriptions under the Offer.

Offer The invitation by the Company and the Vendor Shareholders to apply for the Offer Shares under this Prospectus.

Offer Closing Date 5.00 pm AEST on Closing Date.

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Offer Period The period commencing on the Opening Date and ending on the Closing Date.

Official List The Official List of ASX.

Opening Date The date on which the Offer opens, being 18 October 2010.

Original Prospectus The prospectus dated 30 September 2010, which was lodged with ASIC on that date and which is replaced by this Prospectus.

PRC or China The People's Republic of China.

Prima Network Financial Group Limited

Prima Network Financial Group Limited, a company incorporated in the British Virgin Islands, company registration no. 1378801, and controlled by Mr Chi Ho (James) Tong.

Prospectus This Prospectus dated 15 October 2010.

Quotation Quotation of the Shares on ASX.

Registered Office 311-313 Hay Street Subiaco WA 6008

RMB Renminbi, the official currency of the PRC.

Sale Share Up to 45,000,000 Shares offered for sale by the Vendor Shareholder under the Offer.

Share A fully paid ordinary share in the share capital of the Company.

Share Registry Link Market Services LimitedGround Floor, 178 St Georges TerracePerth WA 6000

Shareholder A holder of Shares.

Solicitors' Report on Mining Tenements

The report of Grandall Legal Group (Shanghai) contained in section 8 of this Prospectus.

State The People's Government of the People's Republic of China.

Subsidiaries Collectively Blackgold Holdings HongKong Limited, Chongqing Heijin Industrial Co., Ltd. and the Group Operating Companies.

Vendor Shareholder Lucky Magic Enterprises Limited and Prima Network Financial Group Limited.

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SUMMARy Of ReLevANT LAWS AND RegULATIONS Of The PeOPLe'S RePUBLIC Of ChINAThe Company sets out below a summary of relevant PRC laws and regulations which affects the operations of the PRC Operating Companies in China.

1. PRC Legal SystemThe PRC legal system is based on the PRC Constitution and is made up of written laws, regulations and directives. Decided court cases do not constitute binding precedents in China.

The National People's Congress of China ("NPC") and the Standing Committee of the NPC ("Standing Committee") are empowered by the PRC Constitution to exercise the legislative powers of the State including the power to amend the PRC Constitution and to enact and amend primary laws.

The State Council of China ("State Council") is the highest organ of state administration and has the power to enact administrative rules and regulations. Ministries and commissions under the State Council of China are also vested with the power to issue orders, directives and regulations.

The power to interpret laws is vested by the PRC Constitution in the Standing Committee of the NPC. In cases where the limits of articles of laws need to be further defined or additional stipulations need to be made, the Standing Committee of the NPC shall provide interpretations or make stipulations by means of decrees.

At the regional level, the People's Congresses of Provinces and Municipalities and their standing committees may enact local rules and regulations and the local People's Government may promulgate administrative rules and directives applicable to their own administrative area. However, these local laws and regulations may not be in conflict with the PRC Constitution, any national laws or any administrative rules and regulations promulgated by the State Council of China.

annexure a

2. Judicial SystemThe People's Courts are the judicial organs of the PRC. The People's Courts comprise the Supreme People's Court, the local level of the People's Courts, military courts and other special People's Courts. The local People's Courts are divided into three levels, namely, the basic People's Courts, intermediate People's Courts and higher People's Courts. The basic People's Courts are divided into civil, criminal and administrative divisions. The intermediate People's Courts have divisions similar to those of the basic People's Courts and, where the circumstances so warrant, may have other special divisions (such as intellectual property divisions). The higher People's Court deal with significant impact cases, in civil, criminal and administrative divisions. The judicial functions of People's Courts at lower levels are subject to supervision of People's Courts at higher levels. The Supreme People's Court is the highest judicial organ of the PRC. It supervises the administration of justice by the People's Courts of all levels.

The People's Courts adopt a two-tier final appeal system. A party may before the taking effect of a judgement or order appeal against the judgement or order of the first instance of a local People's Court to the People's Court at the next higher level. Judgements or orders of the second instance of the same level and at the next higher level are final and binding.

A foreign individual or foreign enterprise is accorded the same litigation rights and obligations as a citizen or legal person of the PRC. But if the courts of a foreign country impose restrictions on the civil litigation rights of the citizens, legal persons and other organisations of the PRC, the People's Courts of the PRC shall follow the principle of reciprocity regarding the civil litigation rights of the citizens, enterprises and organisations of that foreign country. If any party to a civil action refuses to comply with a judgement or order made by a People's Court or an award made by an arbitration body in the PRC, the aggrieved party may apply to the People's Court to enforce the judgement, order or award.

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A party seeking to enforce a judgement or order of a People's Court against a party who or whose property is not within the PRC may apply to a foreign court with jurisdiction over the case for recognition and enforcement of such judgement or order. A foreign judgement or ruling may also be recognised and enforced according to PRC enforcement procedures by the People's Courts in accordance with the principle of reciprocity or if there exists an international or bilateral treaty with or acceded to by the foreign country that provides for such recognition and enforcement, unless the People's Court considers that the recognition or enforcement of the judgement or ruling will violate fundamental legal principles of the PRC or its sovereignty, security or social or public interest.

3. Arbitration and Enforcement of Arbitral Awards Under the Arbitration Law of the PRC, an arbitral award is final and binding on the parties. If a party fails to comply with an award, the other party to the award may apply to the People's Court for enforcement. A People's Court may refuse to enforce an arbitral award made by an arbitration committee if there were mistakes, an absence of material evidence or irregularities over the arbitration proceedings, or the jurisdiction or constitution of the arbitration committee.

The PRC has acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (the "New York Convention") adopted on 10 June 1958 pursuant to a resolution of the Standing Committee of the NPC passed on 2 December 1986. The New York Convention provides that all arbitral awards made by a state which is a party to the New York Convention shall be recognised and enforced by other parties to the New York Convention subject to their right to refuse enforcement under certain specific circumstances. Under the terms of the PRC's accession to the New York Convention, the PRC would only recognise and enforce foreign arbitral awards if the foreign arbitral award is made (1) by an arbitration committee from a state which recognises arbitral awards from the PRC; and (2) in relation to disputes considered under PRC laws to be arising from contractual and non-contractual mercantile legal relations.

4. Foreign Exchange ControlThe Regulations on Administration of Foreign Exchange of the PRC of January 1996 and the subsequent amendments in 1997 and in 2008 by the State Council of China set out the regulatory framework on foreign exchange of the PRC ("Foreign Exchange Regulations"). In accordance with the Foreign Exchange Regulations, Renminbi shall be freely exchanged for settling current accounts transactions, including trading and service related foreign exchange transactions and dividends distributions. However, foreign exchange involving direct investments, loans or securities investments outside the territory is restricted and requires the prior approval of the State Administration of Foreign Exchange. According to the Foreign Exchange Regulations, approvals from the State Administration of Foreign Exchange are exempted should the foreign owned enterprise trade the foreign currency with documentation that could prove such transaction, foreign exchange can be remitted (subject to the ceiling imposed by the State Administration of Foreign Exchange) for dividends distributions.

However, in view of the immense discretionary executive power of the central government, it is possible that there future restrictions may be imposed or current rights of foreign owned enterprises to purchase foreign exchange may be abolished.

5. TaxationThe applicable income tax laws, regulations, notices and decisions related to foreign invested enterprises ("FIE") and their investors within China (collectively the "Applicable Foreign Enterprises Tax Law") include the following:

Income tax on FIEs and domestically invested enterprises ("DIEs")The PRC enterprise income tax is calculated based on the taxable income determined under the PRC accounting standards and regulations.

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Prior to January 1, 2008, FIEs were generally subject to a state income tax at the rate of 30% of their taxable income and a local income tax at the rate of 3% of their taxable income. The then applicable income tax law and its implementation rules provided certain preferential tax treatments to manufacturing FIEs with operating terms of more than ten years, such as exemption from state income tax for their first two years of profitable operation and a 50% reduction in state income tax for the subsequent three years.

In March 2007, the National People's Congress enacted a new Enterprise Income Tax Law ("EIT Law"), which became effective on January 1, 2008. The new tax law imposes a unified income tax rate of 25% on all DIEs and FIEs unless they qualify under certain limited exceptions. The new tax law permits companies to continue to enjoy their preferential tax treatment under the prior tax regime until such treatment expires in accordance with its terms, on the condition that such preferential tax treatment is available under the "grandfather clause" of the new tax law.

Tax rate on dividend income distributed to a Hong Kong shareholder of a FIEUnder the FIE Law, enterprises established under the laws of non-PRC jurisdictions but whose de facto management body is located in China are considered "resident enterprises" for PRC tax purposes. Under the implementation regulations issued by the State Council of China relating to the EIT Law, de facto management body is defined as a body that has material and overall management control over the business, personnel, accounts and properties of an enterprise. In April 2009, the PRC State Administration of Taxation promulgated a circular to clarify the definition of de facto management body for enterprises incorporated overseas with controlling shareholders being PRC enterprises. However, it remains unclear how the tax authorities will treat an overseas enterprise invested or controlled by another overseas enterprise and ultimately controlled by PRC individual residents.

If a Hong Kong shareholder of a FIE or the FIE is treated as a "resident enterprise" for PRC tax purposes:(i) the Hong Kong shareholder will be subject to PRC income tax on its worldwide income at a uniform tax rate of 25%;(ii) dividends received by the Hong Kong shareholder from the FIE in PRC may be excluded from its taxable income as the EIT Law provides that dividend income between qualified "resident enterprises" be exempt from income tax; and(iii) gains from the disposition of ordinary shares in the FIE by the Hong Kong shareholder may not qualify for the 10% income tax normally applicable for for investors that are "non-resident enterprises" 1.

The EIT Law provides that a withholding tax of 10% is normally applicable to dividends payable to a "non-resident enterprise" to the extent such dividends are derived from sources within China, or a lower tax rate on the condition that China has a tax treaty with the judicial district which the "non-resident enterprise" is subject to. Because Hong Kong has tax treaty with China, dividends paid to Hong Kong shareholders of a FIE is subject to a 5% withholding tax, if the Hong Kong shareholder is considered as a "non-resident enterprise" under the EIT Law.

Value Added TaxThe current Provisional Regulations of the People's Republic of China Concerning Value Added Tax, promulgated on 13 December 1993 and amended on 5 November 2008, provide that value added tax is imposed on goods sold in or imported into China and on processing, repair and replacement services provided within China.

Value added tax payable in China is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided but excluding,

1 This 10% rate is available to such a "non-resident enterprise" as long as that "non-resident enterprise" does not have an establishment or place of business in the PRC or, despite the existence of such establishment or place of business in the PRC, the relevant income is not effectively connected with such establishment or place of business in the PRC. Investors who are "non-resident individuals" are subject to a tax rate of 20% on such capital gains.

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in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial year.

Business TaxThe current Provisional Regulations of the People's Republic of China on Business Tax, promulgated on 13 December 1993 and amended on 5 November 2008, provide that any business that provides services, or assigns intangible assets or sells immovable property is liable to pay a business tax at a rate ranging from 3% to 5% of the charges of the services provided, intangible assets assigned or immovable property sold, as the case may be.

6. Wholly Foreign-Owned EnterprisesA wholly foreign-owned enterprise ("WFOE") is one type of FIE. The establishment of a WFOE has to be approved by the Ministry of Commerce (or its delegated local counterparts). A WFOE may be established as a limited liability company which can independently assume civil obligations and enjoy civil rights (including being able to sue and be sued in its own name) and has the right to own, use and dispose of property. It is required to have a registered capital contributed by a foreign investor(s). The liability of a foreign investor(s) is limited to the amount of registered capital contributed. A WFOE must also obtain a business licence from the State Administration of Industry and Commerce (or its delegated authorities) before it can commence business.

A WFOE in the PRC can only distribute dividends (if any) from the after-tax profits in compliance with the Chinese Accounting Standards and Rules and Regulations. A WFOE is required to preserve a minimum 10% of its after-tax profit as a reserve fund, until the cumulative reserve fund amounts to 50% of the registered capital of the WFOE. This reserve cannot be distributed as cash dividends, but may be used for re-investment in the WFOE.

The board of director of a WFOE may determine a percentage of after-tax profits be preserved for an employee's bonus and welfare fund. The reserve cannot be distributed as cash dividends and can only be used to pay employee bonuses and/or for payment expenses for employee welfare.

7. Overseas Investments and Listings The State Administration of Foreign Exchange ("SAFE") issued a public notice in October 2005 to require all PRC residents, including both legal persons and natural persons, to register with their relevant local SAFE branch before establishing or gaining control over any company outside China, referred to in such SAFE notice as an "offshore special purpose company," for the purpose of acquiring any assets of or equity interest in PRC companies and raising funds from overseas.

In addition, any PRC resident that is already a shareholder of an offshore special purpose company is required to amend its SAFE registration with the local SAFE branch with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity or debt investment or creation of any security interest. If any PRC shareholder of any offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with such SAFE registration and amendment requirements could result in liabilities under PRC laws for evasion of applicable foreign exchange restrictions.

In August 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, China Securities Regulatory Commission ("CSRC") and SAFE, jointly adopted the Regulation on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors ("M&A rule").

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The M&A rule includes provisions that require a special purpose company that is formed for the purpose of the listing of equity interests in PRC companies on an overseas securities exchange and which is controlled directly or indirectly by PRC companies or individuals to obtain the approval from CSRC prior to the listing and trading of their securities on any overseas stock exchange. In September 2006, CSRC published on its official website procedures regarding its approval of overseas listings by special purpose companies. The CSRC approval procedures require the filing of a number of documents with CSRC and it can take several months to complete the approval process. The application of the M&A rule with respect to overseas listings of special purpose companies remains unclear with no consensus currently among leading PRC law firms regarding the scope of the applicability of the CSRC approval requirements.

8. LabourThe Employment Contract Law of PRC, effective as of 1 January 2008, provides that an employer shall sign the employment contract with any employee upon, or, in no event beyond one month from the commencement of service by the employee for such employer. There are three types: (i) an employment contract with fixed term, under which employment terminates on the fixed date agreed; (ii) an employment contract with indefinite term, under which the date of termination of employment is not explicitly provided and thus remains indefinite; and (iii) an employment contract termination subject to consummation of certain work, under which employment terminated upon consummation of certain work. An employment contract with indefinite term shall be duly established, where: (i) an employer has signed the employment contract with fixed term for consecutive two times; or (ii) an employer fails to sign any written employment contract with any employee after one year from commencement of service by such employee for such employer.

An employer, who fails to sign any written employment contract with any employee beyond one month after commencement of service by such employee and remains so until expiration of one year, shall pay double salary to such employee.

Under an employment contract, no breach of contract damages may be deemed liable to any employee unless such employee: (i) who has taken qualified training at such employer's expense subject to a fixed term of service but fails to comply with such fixed-term employment contract; or (ii) who, under the employment contract, is obliged to keep confidential such employer's trade secrets, intellectual property and other confidential information, or is liable to the non-competition obligation, but fails to comply with the said confidentiality or non-competition.

9. The PRC Coal Industry

The coal industryChina's coal industry is subject to extensive regulations by the PRC government. These regulations govern a wide range of areas, including, but not limited to, investments, exploration, production, mining rights, distribution, trading, transportation and exports related to coal, and investments, generation, pricing, despatch and tariffs related to power. In addition, coal operations are subject to fees and taxes, as well as safety and environmental protection laws and regulations.

The Coal Law, the Mineral Resources Law and related laws and regulationsIn August 1996, the Standing Committee of the NPC promulgated the Coal Law of the PRC ("Coal Law"), which became effective on 1 December 1996 and amended on 27 August 2009. The Coal Law sets forth requirements in many areas of coal production, including, among others, exploration, the approval of new mines, the issuance of production permits, the implementation of safety standards, the trading of coal and the protection of mining areas from destructive exploitation, the protection of miners and administrative supervision.

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All mineral resources in China are owned by the State under the current Mineral Resources Law of the PRC ("Mineral Resources Law"), which was promulgated on 19 March 1986 and amended on 29 August 1996. The geology and mineral resources department of the State Council of China, (the state GMRD), is responsible for the supervision and administration of the mining and exploration of mineral resources nationwide. The geology and mineral resources department of each province, autonomous region and municipal government, (the local GMRD), is responsible for the supervision and administration of the exploration, development and exploitation of mineral resources within their own jurisdiction.

Enterprises engaged in the exploration and exploitation of mineral resources must obtain an exploration permit from the government. Upon approval, an exploration license for each proposed mine or a mining right permit for each mine will be granted by the state GMRD or the relevant local GMRD responsible for supervising and inspecting exploration and exploitation of mineral resources in the jurisdiction. Annual reports are required to be filed by the holders of mining right permits with the relevant administrative authorities that issue the permits. The tenure of mining right permits differs according to scale of production:, for large scale the maximum tenure is 30 years, for medium scale the maximum tenure is 20 years, and for small scale the maximum tenure is 10 years. Further, a licence holder may apply for renewal of a mining right permit 30 days before the expiry date of the licence.

Pursuant to the Decision on the Institutional Reform of Investment System promulgated by the State Council of China dated 16 July 2004, applications for all coal mine development projects within the State plan mining areas are required to be submitted to the National Development and Reform Commission, ("NDRC"), for approval, while other general coal mining development projects are to be submitted to the competent investment department of local governments. A coal producer must also obtain a coal production permit for each of its mines in order to begin producing and selling coal in China. In addition, the production capacity of each coal mine

should be approved by the NDRC or its provincial counterpart and is subject to annual reviews of the competent approving authority. Each coal production permit has a different tenure which is approved by competent investment department of local governments. A licence holder may apply for renewal of a coal production permit 90 days before the expiry date of the licence.

According to the Measures of Coal Operation Supervision, if a coal producer intends to engage in a business involving coal products which is not "self-produced" or "self-processed", such as coal trading, it must obtain an operational license from the department of coal operation to conduct such business. The tenure of a coal trading licence is 3 years. A licence holder may apply for renewal of an operation licence 30 days before the expiry date of the licence.

It is unlawful for an entity or individual to conduct mining operations in any area which has already been authorised for exploitation to other mining operators. An entity whose mining operations cause harm to others in terms of production or living standards is liable to compensate the affected parties and to take necessary remedial measures.

Under the Mineral Resources Law, a mine operator must follow certain procedures in closing a mine, including, among other things, submitting a mine closure geology report to the regulatory authority that originally approved the opening of the mine.

Mining rights are transferable subject to the approvals of relevant geological and mineral resources and land bureaus of the PRC and upon satisfaction of other conditions as stipulated under PRC law and regulations. A holder of a mining right permit has the right to and is also obligated to conduct mining activities in the area and within the time period designated in the mining right permit.

A holder of a mining right permit has certain additional rights including, among others, rights to (i) set up necessary production and living facilities within the designated area; and (ii) acquire the land use rights necessary for the production.

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A holder of a mining right permit has certain additional obligations including, among others, obligations to (i) conduct reasonable exploitation, and protect and fully utilise mineral resources; (ii) pay resources tax and resources compensation levy; (iii) comply with the laws and regulations relating to occupational safety, soil and water conservation, reclamation and environmental protection; and (iv) submit mineral resource reserve and utilization reports to relevant government authorities as required.

Domestic trading of coalPursuant to the Measures for the Regulation of Coal Operations promulgated by the NDRC on 27 December 2004, the State implemented a system to examine coal operation qualifications in respect of coal operations, including the wholesaling and retailing of raw coal and processed coal products, and the processing and distribution of coal for civilian use. Before an enterprise can engage in coal operations, it must obtain a coal operation qualification certificate. A coal production enterprise that deals in coal products which it did not itself produce and process is required to obtain coal operation qualifications. Such an enterprise is prohibited from dealing in coal products produced and/or processed by a coal mine enterprise that does not have a coal production permit or in coal products of a coal operation enterprise that does not have coal operation qualifications, and is also prohibited from selling coal products to a coal operation enterprise that does not have coal operation qualifications.

PricingSince 2002, the prices for all types of coal other than thermal coal have been largely subject to market forces. According to the Notice Regarding the Coordination of Production, Transportation of and Demand for Coal in 2006 issued by the NDRC on 27 December 2005, the measures as to the temporary intervention for pricing of thermal coal issued by the NDRC at the end of 2004 have been eliminated, and pricing is now determined primarily by supply and demand.

However, according to the Price Law issued by NPC and effected on 1 May 1998, temporary guidelines can be issued to limit price increases if the price of thermal coal increases significantly or is likely to increase significantly according to the Price Law of the PRC.

SafetyThe State Administration of Work Safety ("SAWS") and the State Administration of Coal Mine Safety ("SACMS") under the supervision of the SAWS are the PRC government authorities exercising control over and supervision of the safety of coal production. In order to proceed with the construction of a coal mine project, the project's safety designs and procedures must be examined and approved by the SACMS or its local offices. Upon the completion of a coal mine construction project and before the commencement of production, further inspection and approval by the SACMS or its local offices of the facilities and conditions is required. The SACMS also conducts regular safety inspections of coal producers pursuant to the Safety Production Law, the Mining Safety Law of the PRC and applicable safety regulations. Producers who fail to comply with safety regulations will be subject to penalties, including fines and suspension of the safety operation license. In addition, mining companies are required to truthfully report to their supervising labour administrative authority within 24 hours of the occurrence of any safety accident that causes serious personal injuries or fatalities. Under the Implementation Measures for Coal Production Safety Permits, effective from 17 May 2004, each operating coal mine is required to apply for a coal production safety permit from the SACMS or its provincial bureau. The coal production safety permits will be valid for an initial period of three years, after which they may be renewed upon the application of the permit holder. To further strengthen the safety regulation of coal mines, the SAWS and the SACMS issued the Amended Coal Mine Safety Procedures effective from 1 January 2005. The Amended Coal Mine Safety Procedures set forth higher production safety requirements and stricter safety standards for coal producers in China.

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TaxationPursuant to the "Provisional Regulation of Resources Tax" and the "Rules Administering Levy of Mine Resource Compensation Fees", the coal industry has been levied resources taxes and resources compensation fees. Since 2004, the Ministry of Finance and the State Administration of Taxation have issued a series of notices on coal resources taxation adjustments. The coal resources tax rates of certain regions, such as Shanxi province, Qinghai province, Inner Mongolia autonomous region, Guizhou province, Fujian province, Shandong province, Yunnan province, Ningxia Hui autonomous region, Chongqing municipality, Anhui province, Henan province, Tianjin municipality, Hunan province and Hubei province, have been increased. The current resources tax rate for mines in Chongqing is RMB 2.5 yuan per tonne.

The Environmental ProtectionThe Ministry of the Environmental Protection of the People's Republic of China is responsible for overall supervision and control of environmental protection in China. It formulates national standards for discharging waste materials and environmental protection and monitors the PRC environmental protection system. Environmental protection bureaus at the county level and above are responsible for environmental protection within their respective areas of jurisdiction.

The PRC Environmental Protection Law ("Environmental Protection Law") requires all operations that produce pollutants or other hazards to take environmental protection measures, and to establish an environmental protection responsibility system. Such system includes the adoption of effective measures to control and properly dispose of waste gases, waste water, waste residue, dust or other waste materials. Any entity that discharges waste material must report to and register with the relevant environmental protection authority. If an enterprise fails to report or register the environmental pollution caused by it, it will receive a warning or be penalized.

Enterprises which have polluted and endangered the environment must bear the responsibility for remedying the danger and effects of the pollution, as well as compensate any losses or damages suffered as a result of such environmental pollution. Enterprises which fail to restore the environment or remedy the effects of the pollution within the prescribed time period will be penalized or have their business licenses terminated. A material violation of the Environmental Protection Law that causes a material loss of public and private belongings or personal injuries or death may result in criminal liability.

The Water Pollution Prevention Law was promulgated on 11 May 1984 and revised on 15 May 1996 and 28 February 2008 respectively. It is the legal framework for the prevention and control of water pollution in respect of terrestrial and underground water from rivers, lakes, canals, channels and reservoirs. Environmental protection divisions under the local governments are vested with the functions to supervise and administer the prevention and control of water pollution, while the PRC State Environmental Protection Administration is in charge of the formulation of State water quality standards and State pollutant discharge standards. The provincial governments can supplement non-formulated items by setting local standards and filing reports to the State Environmental Protection Administration. Any enterprise or institution that discharges water pollutants is subject to a discharge fee in accordance with relevant regulations and an excess-pollutant discharge fee in case of discharges in excess of the prescribed level and has to take corrective measures. The urban centralized water pollutant disposal institutions provide services and charge water pollutant disposal fees to secure the normal operation of sewage centred processing facilities. Any enterprise or institution which has paid a sewage treatment fee is not subject to the pollutant discharge fees. Entities that fail to comply with the Water Pollution Prevention Law will be subject to a warning notice, a penalty payment, suspension of operations and closure of business as

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determined by the relevant environmental authority-in-charge. Any entity that causes water pollution is obliged to ensure the elimination of the pollution and compensate direct losses suffered by entities or individuals. The PRC Operating Companies do not discharge water pollutants in their business operations.

The Atmospheric Pollution Prevention Law was promulgated on 5 September 1987 and revised on 29 April 2000 and became effective on 1 September 2000, and is used for the prevention and control of atmospheric pollution from, among other things, the burning of coal, motor-driven vehicles and vessels, exhaust gases and dust. Administrative departments of environmental protection under the government at or above the county level shall be responsible for conducting unified supervision and management of the prevention and control of atmospheric pollution. Where atmospheric pollutants are discharged, the concentration of the said pollutants should not exceed the standards prescribed by State and local authorities. In addition, a system of collecting fees has been implemented by the government for discharging pollutants on the basis of the categories and quantities of the atmospheric pollutants discharged.

Entities that fail to comply with the Atmospheric Pollution Prevention Law will be subject to a warning notice, a fine, confiscation of illegal earnings, a suspension of operations, and the shut-down of their operations as determined by the competent environmental authority-in-charge, and to potential criminal liability. Any entity that has caused an atmospheric pollution hazard shall have the responsibility to eliminate the pollution and compensate relevant entities or individuals for the loss.

10. Real Property

Ownership of Land and Land Use RightsGenerally in China the State owns all land other than rural lands which may be owned by collectives of farmers. Land ownership is established under the PRC Constitution. The local government may either "grant" or "lease" to industrial land users land use rights ("LURs") to land planned for industrial purposes for a fixed period, through signing land grant contracts or land leases and issuing State-Owned Land Use Certificates. The industrial land users must pay land grant fees for the granted LURs or rent for the leased LURs. Land collectively-owned by local villages or land not planned for industrial use may not be granted or leased to industrial land users, but may be converted into State-owned industrial land by the State through an often time-consuming process which requires approvals of the State Council or the relevant provincial level People's Governments and then be granted or leased to industrial land users.

Construction and ownership of BuildingA permit for the Planning of Construction and a permit for the Commencement of Construction must be obtained from the local construction bureau for land users to commence the construction. Upon completion of construction, an Inspection and Acceptance Approval for the building must be obtained from the local authorities including those in charge of construction quality, fire safety and workplace health and safety.

The relevant government authority of the PRC grants a Certificate of Building Ownership to certify ownership of any relevant building, and the owners of the buildings should correspond with the owners of the land use right.

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Application Form

Broker Code

BGG IPO001

Adviser Code

G ( )Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

+FCHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)

X

E

C

+

D

A(minimum 9,000, thereafter in multiples of 9,000)

Cheques or bank drafts should be made payable to “Blackgold International Holdings Limited – Share Application Account” in Australian currency and crossed “Not Negotiable”.

HCheque or Bank Draft Number BSB Account Number

-

Shares applied for Price per Share Application Monies

at B A$0.26, , A$ , , .

This is an Application Form for Shares in Blackgold International Holdings Limited under the Offer on the terms set out in the Prospectus dated 15 October 2010. You may apply for a minimum of 9,000 Shares and multiples of 9,000 thereafter. This Application Form and your cheque or bank draft must be received by 5:00pm (AEST) on 11 November 2010.

If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

Title First Name Middle Name

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)Applicant #1Surname/Company Name

Designated account e.g. <Super Fund> (or Joint Applicant #3)

Title First Name Middle Name

Joint Applicant #2Surname

PLEASE COMPLETE ADDRESS DETAILSPO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Suburb/City or Town State Postcode

Unit Number/Level Street Number Street Name

Email address (only for purpose of electronic communication of shareholder information)

TFN/ABN type – if NOT an individual, please mark the appropriate box Company Partnership Trust Super Fund

TFN/ABN/Exemption Code First Applicant Joint Applicant #2 Joint Applicant #3

BLACKGOLD INTERNATIONAL HOLDINGS LIMITEDACN 145 095 478

LODGEMENT INSTRUCTIONS You must return your Application by hand or mail so it is received before 5:00pm (AEST) on 11 November 2010 by Link Market Services Limited at one of the addresses detailed on the reverse of this Application Form.

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares allotted as a result of the Offer will be held on the issuer sponsored sub-register.

Total Amount

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Your Guide to the Application Form

CORRECT FORMS OF REGISTRABLE NAMESNote that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.The shares to which this Application Form relates are Blackgold International Holdings Limited Shares. Further details about the Shares are contained in the Prospectus dated 15 October 2010 issued by Blackgold International Holdings Limited, Lucky Magic Enterprises Limited and Prima Network Financial Group Limited. The Prospectus will expire on 30 October 2011. While the Prospectus is current, Blackgold International Holdings Limited will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.The Prospectus contains important information about investing in the Shares. You should read the Prospectus before applying for Shares.

A Insert the number of Shares you wish to apply for. The Application must be for a minimum of 9,000 Shares and thereafter in multiples of 9,000. You may be allotted all of the Shares applied for or a lesser number.

B Insert the relevant amount of Application Monies. To calculate your Application Monies, multiply the number of Shares applied for by the issue price. Amounts should be in Australian dollars. Please make sure the amount of your cheque or bank draft equals this amount.

C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

D Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your Application. However, if these are not provided, Blackgold International Holdings Limited will be required to deduct tax at the highest marginal rate of tax (including the Medicare Levy) from any payments that may be made by Blackgold International Holdings Limited.

E Please enter your postal address for all correspondence. All communications to you from Blackgold International Holdings Limited and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

F If you are already a CHESS participant or sponsored by a CHESS participant, write your Holder Identification Number (HIN) here. If the name or address recorded on CHESS for this HIN is different to the details given on this form, your Shares will be issued to Blackgold International Holdings Limited’s issuer sponsored subregister.

G Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

H Please complete the details of your cheque or bank draft in this section. The total amount of your cheque or bank draft should agree with the amount shown in section B.

Make your cheque or bank draft payable to “Blackgold International Holdings Limited – Share Application Account” in Australian currency and cross it “Not Negotiable”. Your cheque or bank draft must be drawn on an Australian bank. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

If you receive a firm allocation of Shares from your Broker make your cheque payable to your Broker in accordance with their instructions.

LODGEMENT INSTRUCTIONSThis Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5:00pm (AEST) on 11 November 2010 at: Mailing Address: Hand Delivery Addresses: Blackgold International Holdings Limited Blackgold International Holdings Limited or Blackgold International Holdings LimitedC/- Link Market Services Limited C/- Link Market Services Limited C/- Link Market Services LimitedLocked Bag A14 Level 12, 680 George Street Ground Floor, 178 St Georges TerraceSydney South NSW 1235 Sydney New South Wales Perth WA 6000

(do not use these addresses for mailing purposes)

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

Type of Investor Correct Form of Registration Incorrect Form of Registration

IndividualUse given names in full, not initials Mrs Katherine Clare Edwards K C Edwards

CompanyUse Company’s full title, not abbreviations Liz Biz Pty Ltd Liz Biz P/L or Liz Biz Co.

Joint HoldingsUse full and complete names

Mr Peter Paul Tranche &Ms Mary Orlando Tranche

Peter Paul & Mary Tranche

TrustsUse the trustee(s) personal name(s)

Mrs Alessandra Herbert Smith<Alessandra Smith A/C>

Alessandra SmithFamily Trust

Deceased EstatesUse the executor(s) personal name(s)

Ms Sophia Garnet Post &Mr Alexander Traverse Post<Est Harold Post A/C>

Estate of late Harold PostorHarold Post Deceased

Minor (a person under the age of 18 years)Use the name of a responsible adult with an appropriate designation

Mrs Sally Hamilton<Henry Hamilton>

Master Henry Hamilton

PartnershipsUse the partners’ personal names

Mr Frederick Samuel Smith &Mr Samuel Lawrence Smith<Fred Smith & Son A/C>

Fred Smith & Son

Long Names Mr Hugh Adrian John Smith-Jones Mr Hugh A J Smith Jones

Clubs/Unincorporated Bodies/Business NamesUse office bearer(s) personal name(s)

Mr Alistair Edward Lilley<Vintage Wine Club A/C>

Vintage Wine Club

Superannuation FundsUse the name of the trustee of the fund

XYZ Pty Ltd<Super Fund A/C>

XYZ Pty LtdSuperannuation Fund

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Design and Production byOmartis

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Documents

For personal use only - asx.com.au fileMineral Resources and Target Mineralisation The available K3 seam channel data was modelled using an ID 2 algorithm with Minemap software