7 November 2013 ASX Limited Company Announcements Office SYDNEY NSW 2000

MAIDEN COAL RESOURCE AT GAYNDAH EPC2044 HIGHLIGHTS

A maiden Inferred Coal Resource estimation of approximately 79 million tonnes exceeding 6000 kcal/kg has been identified on EPC2044 at Gayndah.

RC Holes MD1 to MD30 and Diamond Drill holes DDH1 to DDH5 were completed on EPC2044 and form the basis of the estimation.

There were 29 chip samples and 52 core samples assayed for the resource with the following results:

GCV 6384 6100 6242 HGI 46 - 46

Drill hole geology was modeled using lithology colour codes in section

The interpreted coal seam outlines were digitised on screen in Surpac software and wire-frames generated for triangulations.

Volumes were interpolated using triangulations for each coal seam and reporting constrained by interpreted geological seam outlines with projections between holes or to a maximum of 1200m within geological boundaries.

This maiden resource is classified as an Inferred Coal Resource as

follows: CATEGORY Volume

(m3)

Tonnes (wet t)

Density Moisture (ar) %

GCV (adb) kcal/kg

Ash (adb) %

VM %

FC %

HGI

INFERRED 38,254,232 79,569,000 2.08 8.38 6242 42.39 14.27 39.10 46

Details of the resource estimation methods and parameters are shown in the attached Appendix - Summary Table of Resource Criteria.

Due to the high ash content in core, samples were sent for recovery tests to Recycoal Ltd in UK. Current results indicate that about 24% is recoverable and a standard coal product can be obtained by minimal upgrading processes.

Chip Core Total/Wtd Avg

samples 29 52 81

Density 2.04 2.11 2.08

TM 8.40% 8.37% 8.38%

IM 4.17% 3.91% 4.00%

Ash 20.80% 54.44% 42.39%

VM 20.20% 10.96% 14.27%

FC 54.93% 30.28% 39.10%

WAVENET INTERNATIONAL LIMITED ABN 50 087 139 428

Wavenet International is a new exploration company with a portfolio of coal tenements in Queensland as well as gold and polymetallic concessions in West Kalimantan, Indonesia. Update A maiden coal resource has been estimated from the drilling data at Gayndah on EPC2044. There are approximately 79 million tonnes of high ash, dry steam coal in an Inferred Coal Resource. This has been estimated using cross-sectional geology outlines and wire-frame volumes. It is based on 30 RC chip holes and 5 diamond drill holes for a total of 81 assays and density determinations. Initial investigations to upgrade the high ash material to a standard coal product were completed by Recycoal Ltd of UK. It is concluded that approximately 24% can be recovered using simple processes.

Registered Office: 45 Quarry Street FremantleWA 6160 Telephone: (08 9435 3800) Directors & Management Chairman Mick Stroud Directors Laurie Holyoak Gregg Freemantle Company Secretary Laurie Holyoak Geological Consultants Geologica Pty Ltd

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DETAILS The Inferred Coal Resource for EPC 2044 has been estimated with due process and adherence to standard resource estimation procedures by a “Competent Person” as detailed by the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). It was completed using RC chips and diamond drill core and interpreted from geological sections. The interpreted coal seam outlines were digitised on screen in Surpac software and wire-frames generated for triangulations. The volumes were interpolated within those wire-frame shapes strictly with reference to seam roof and floor locations. Assays for the diamond drill holes indicate that coal seams have mean GCV values in the range 6100 to 6384Kcal/kg with an average of 6242 Kcal/kg. The limited drill coverage means that the deposit has been placed in the Inferred Coal Resource category. The coal is classified as a high ash, dry sub-bituminous type. An explanation of the method and procedures used for resource estimation is found in the Summary Table of Resource Criteria in the appendix to this announcement.

Figure 1 - Location of Resource Area in relation to EPC2044 permit area

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RC Holes MD1 to MD30 and Diamond Drill holes DDH1 to DDH5 were completed on EPC2044 and form the basis of the estimation. There were 29 chip samples and 52 core samples assayed for the resource as follows:

GCV 6384 6100 6242 HGI 46 - 46

Final volumes and tonnages using an as received (laboratory measured) coal seam density of 2.08 are tabulated below:

RESOURCE CATEGORY

Volume (m3) Tonnes

(wet t) Density Moisture

(ar) %

GCV (adb) kcal/kg

Ash (adb) %

VM %

FC %

HGI

INFERRED 38,254,232 79,569,000 2.08 8.38 6242 42.39 14.27 39.10 46

Figure 2 – Main wire-frame showing drill collar sites

Chip Core Total/Wtd

Avg

samples 29 52 81

Density 2.04 2.11 2.08

TM 8.40% 8.37% 8.38%

IM 4.17% 3.91% 4.00%

Ash 20.80% 54.44% 42.39%

VM 20.20% 10.96% 14.27%

FC 54.93% 30.28% 39.10%

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Overburden and Seam Thickness. There is less than 30 metres of overburden and the resource is expected to be accessible using open pit methods. See Figure 3 for thickness distribution of overburden and Figure 4 for Seam Thickness.

Overburden Thickness 10-14m=dark blue 14-18m=cyan 18-22m=green 22-26m=yellow 26-30m=red

Figure 3 – Plot of Overburden Thickness. Note that maximum thickness is 30m.

Seam Thckness 0-2m=dark blue 2-4m=cyan 4-6m=green 6-8m=yellow 8-10m=red

Figure 4 – Plot of Seam Thickness. Note that most of the tonnage is generated in the northern area.

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RECOVERY TESTS New technology was introduced by RecyCoal Ltd and tested on the EPC2044 deposit to investigate potential recoveries. Recycoal has expertise in:

a. The removal of coal from highly contaminated deposits comprising dirt and clay by constantly changing the natural medium density and is suited to recover coal from difficult materials, ie:

b. Heat affected coal – as is the case with the Gayndah coal beds c. Clay contaminated coal seams d. Top of seam and remnant floor seam interfaces

Core samples from this drill program were flown to United Kingdom for testing. Results to date indicate that the coal at Gayndah can be upgraded using similar technology to that of Recycoal, but that any resource would result in a reduction of tonnage available for generation of a saleable product. Further recovery tests would need to be completed on this material. Results of initial tests by RecyCoal are shown on the tables below:

HOLE SAMPLE DEPTH MOIST TOTAL FLOATS FLOATS

COMMENTS No No M %

FLOATS ASH VM

% % %

DDHIA 1 37.91-38.6 4.7 15.6 21.0 10.3 Mudstone & Fine Black

Material

2 38.6-39.13 5.6 17.0 18.5 9.6 Mudstone & Fine Black

Material

3 39.13-39.73 6.4 13.4 21.2 11.1 Mudstone & Fine Black

Material

Average 5.6 15.3 20.2 10.3

HOLE SAMPLE DEPTH MOIST TOTAL FLOATS FLOATS

COMMENTS No No M %

FLOATS ASH d/b VM d/b

% % %

DDHIB 1 19-20 Mudstone, Fines & Clay

2 20-21 16.6 3.9 23.2 28.6 Mudstone, Fines & Clay

3 21-22 Mudstone & Clay

4 22-23 6.0 36.9 20.4 33.5 Rock & Black Hard Material

5 23-24 6.3 37.4 18.4 35.5 Rock & Black Hard Material

6 24-25 Mudstone, Grey Fine Material

7 27-28 12.6 11.4 27.1 35.4 Mudstone Core & Clay

8 29-30 10.7 2.8 28.2 32.4 Mudstone Core & Clay

9 30-31 8.3 59.0 26.6 35.5 Black Hard Cores

10 31-31.5 Mudstone & Clay

Average 10.1 25.2 24.0 33.5

Samples knocked down by hand and floated, '-0.5mm floats undetermined due to pre-preparation, but negligible amounts of -0.5mm in floated samples. Samples not floated contain minimal amounts of fines, less than 1%.

The above results indicate that a commercially viable coal product could be obtained by washing and treatment processes, but that total recoveries would be in the order of 24% by weight. Declaration The information in this statement that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by independent consulting geologist Brian Davis who is a Member of The Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Mr Davis is employed by Geologica Pty Ltd and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which is undertaken to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Davis consents to the inclusion in the report of the matters based on the information made available to him, in the form and context in which it appears”.

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APPENDIX - SUMMARY TABLE OF RESOURCE CRITERIA

Criteria Explanation

Sampling techniques.

Nature and quality of sampling (eg. cut channels, random chips etc.) Open Hole RC Rock Chip and HQ Diamond Core Measures taken to ensure sample representivity.

Representative samples were taken by logging carefully the diamond core lithologies, suiting sample lengths to the lithology boundaries, recording sample widths and weights and assaying whole core within each coal seam interval and using the same recording, dispatch and assay techniques for all samples.

Drilling techniques. Drill type Schramm RC rig, Mayhew 1000 Multi-Purpose Drill rig

Drilling details (eg. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type

Open hole RC chips for exploration of seam areas Full coring with HQ core as well as “Touch –Coring “ technique where drilling is by open hole chips then when roof rocks of coal seam sequence are found the rig switches to full coring Whether core is oriented and if so, by what method, etc.). All holes were drilled vertically and not oriented.

Drill sample recovery.

Whether core and chip sample recoveries have been properly recorded and results assessed. All rock intervals were logged down hole by a geologist and recorded on lithology logs from chips or core. Coring intervals had recovery logged and measured in relation to drill depths and recorded as a percentage on a sample log sheet.

Measures taken to maximise sample recovery and ensure representative nature of the samples. All core intervals were laid out in trays, measured and compared to drill depths. If any holes had significant core loss of coal seam intervals the hole was re-drilled nearby Whether a relationship exists between sample recovery and grade and whether sample bias

may have occurred due to preferential loss/gain of fine/coarse material. Sample recovery did not adversely affect coal quality and generally sample recoveries exceeded 90% except where excess water was encountered in holes. There were no indications from coal assays that samples with lower weights (either slightly lower recovery or smaller intervals) were any different in the resulting assays when comparing the same coal seam.

Logging. Whether core and chip samples have been logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

Geological logging of coal seams and coal measure stratigraphy was detailed and correlated well between holes and areas of the deposit. The detailed logs were sufficient to ascertain the lithotypes, coal seam variations and boundaries as well as changes in the coal character such as bright vitrain layers or higher detrital content, shale-rich bands etc

Whether logging is qualitative or quantitative in nature. Core (or costean, channel etc.) photography.

Core logging was qualitative as well as quantitative in nature. Detailed graphical logs and text descriptions were kept. The lithology log was transferred to the geophysical log as a graphic column. Each log has down-hole metres recorded for geological boundaries and the nature of the lithology units described in detail for colour, texture, grain size, constituent minerals, oxidation state and structural fabric such as bedding, lamination, fractures, massive , layered etc

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Criteria Explanation

Sub-sampling techniques and sample preparation.

If core, whether cut or sawn and whether quarter, half or all core taken. Full core intervals of coal seams (uncut) were assayed where they were of economic thickness (generally + 1.0m). Roof and Floor samples of the rocks either side of the major coal seams were taken to obtain representative major element analyses and to measure bulk density.

If non-core, whether riffled, tube sampled, rotary split etc. and whether sampled wet or dry. The non-core samples were collected in bulk and obtained per 1m interval in an as received (wet or dry) condition. For all sample types, the nature, quality and appropriateness of the sample preparation

technique. Chip samples of coal seams were collected in large plastic bags before sending to the laboratory. Whole core from the core tray in lengths not greater than 1.5m was wrapped in plastic to preserve the as received moisture content and volume. Quality control procedures adopted for all sub-sampling stages to maximise representivity of

samples. Coal seam samples were taken strictly by lithological boundaries, including a minimum down hole width of 0.10m for coal seam roof and floor samples to evaluate the geochemistry of non-coal contact material.

Measures taken to ensure that the sampling is representative of the in situ material collected. Within coal seams a minimum whole core sample weights of 0.5kg were submitted to the laboratory. The complete coal seams were sub-sampled representing a maximum down hole thickness of 1.75m for each sample and a minimum of 0.10m

Whether sample sizes are appropriate to the grainsize of the material being sampled. Most of the samples comprised coal, carbonaceous mudstone or roof and floor siltstones or sandstones and assay techniques used were more than adequate to determine results from a minimum of 0.5kg weight. Since there were no conglomerates or very coarse-grained rocks there was no sampling bias induced by grain size or affected by different sampling techniques.

Quality of assay data and laboratory tests.

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

Assay laboratory procedures are standard for coal proximate analyses using as received (AR) compared with Air Dried Basis (ADB). The laboratory, ALS is well regarded and all procedures are to European ISO 9000 – 9003 and American ASTM standards. Coal seam intervals were assayed for Total Moisture (TM), Inherent Moisture (IM), Ash Content (AC), Volatile Matter (VM), Fixed Carbon (FC), Total Sulphur (TS), Gross Calorific Value (GCV), Relative Density (RD) and Hardgrove Grindability Index (HGI) Nature of quality control procedures adopted (eg. standards, blanks, duplicates, external

laboratory checks) and whether acceptable levels of accuracy (ie. lack of bias) and precision have been established.

Duplicate samples were completed routinely at the laboratory, approximately one for each group of 20 samples. Blank sample checks were assayed after each batch as well as calibrations against manufacturer’s tolerance specifications for individual equipment and instruments. ASTM standard samples were also used for calibration and testing accuracy levels of tube furnaces, AES and ICP-OES analysers etc

Verification of sampling and assaying.

The verification of significant intersections by either independent or alternative company personnel.

Samples and results forming intersections of coal seams were checked by the Senior Geologist at site and the Geology Manager in Perth. The use of twinned holes.

Some holes were re-drilled through the coal seams and at one site MD5 (chip hole) was redrilled 7m away as a core hole (DDH2) with similar results. Another site diamond drill hole DDH1 was paired with diamond hole test bore DDH4 sited within 2m.

Location of data points.

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Drill hole collars were surveyed initially with a GPS unit where co-ordinate precision was expected to be within 2 metres and elevation precision within 10 metres. Follow-up measurements of collars were completed after drilling using standard geodetic instrumentation for total station survey and related back to a local base station tied in to government survey points. The precision of this technique is +/- 0.1 metres. This was completed by a contract surveyor Bruce Seresier of Burnett Mapping, Mundubbera Quality and adequacy of topographic control. Topographic control was generated from a regional government town boundary survey by cartographic and geodetic projection and rectified to the government survey control points. The raw data was used from data points to form the basis of a wire-framed topographic surface for the resource area. The topographic control is considered more than adequate for resource drill hole location plots.

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Criteria Explanation

Data spacing and distribution.

Data spacing for reporting of Exploration Results. The drill hole spacing at EPC 2044 is considered appropriate for Coal Resource definition, being well within the spacing distances between holes expected and commonly used for coal deposits. Whether the data spacing and distribution is sufficient to establish the degree of geological and

grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

The drill hole spacing of 400m by 400m or larger at Gayndah is only suitable for Indicated and Inferred Coal Resources as defined by the USGS guidelines on coal resource definition which quote: Measured as Drill Hole point to 400m distance Indicated from Measured boundary at 400m to 1200m distance Inferred from Indicated boundary at 1200m to 4800m distance. Due to the cross-sectional wire-framing technique used for interpretation of the multiple seams, the USGS standard circular technique was not used. It was felt that there was insufficient knowledge of the geological setting in the area to rely on purely mathematical techniques. Therefore a technique based upon geological modelling from cross sections was applied. Because of this technique and the variability of drill spacing it was decided to retain the whole resource in the Inferred category. Whether sample compositing has been applied. Some of the larger coal intercepts of similar material were assayed using a composite created in the laboratory of up to 4 samples separately submitted and logged. The majority of coal assays however were not composite samples.

Orientation of data in relation to geological structure.

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

Due to the shallow to horizontal dip of the coal measure stratigraphy at Gayndah the sampling orientation related down-hole within the vertical holes was considered more than adequate. The spacing of the holes also made it easy to discern possible seam elevation and dip angle changes and thereby locate possible disruptive fault structures.

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

Not Applicable

Audits or reviews. The results of any audits or reviews of sampling techniques and data. Sampling techniques and data were reviewed weekly and each time a lithology log and hole was finished to ensure that every sample going to the laboratory was correctly measured, identified and recorded. This was audited and signed off by the Project Manager before each batch of samples was dispatched to laboratory.

Estimation and reporting of Mineral Resources

Database integrity. Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

Data transfer from log and assay sheets was by hand and entered in a master database file in Microsoft Excel format. This was checked row by row and column by column against original sheets by 3 parties, the Site Geologist, the Resource Geologist and the Surpac operator. An additional check against daily reports and drilling progress sheets was completed so that any errors could be quickly identified and followed up. Data validation procedures used. In Surpac software the imported csv database was validated using the automatic validation procedures in the database import and validation functions. These procedures identify errors such as alpha codes entered instead of numeric, duplicate sample and ID numbers, incorrect codes, negative integers, blanks instead of numbers, the use of commas instead of decimal points etc. There were also manual checks of drill hole lithology codes and assays against summary logs and graphical logs before the acid test of plotting drill hole sections to locate missing data, incorrect co-ordinates, elevations or depths or erroneous lithology codes and assays. F

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Criteria Explanation

Geological interpretation.

Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.

The geological interpretation of the Gayndah coal deposit has been modelled from detailed drill hole logging as well as from regional and local GSQ maps. The area generally demonstrates good stratigraphic continuity of coal measure sequences but there is sufficient variability in thicknesses and location of rhyolite flows and uncertainty with some correlations to warrant maintaining the Inferred Resource category. Therefore the confidence in the geology interpretation is high in some areas and not in others. Nature of the data used and of any assumptions made. The data used is based on detailed logs from diamond drilling and chip hole sampling. Assumptions made relate to correlation of similar rock types and coal seams within the sequence and that there are no changes in lithology laterally (down dip or along strike). The data supports the view that the sequence is constant but that erosion surfaces and variation in stratigraphic location of intruded rhyolites make correlation from hole to hole and from hole to surface more difficult.. The effect, if any, of alternative interpretations on Mineral Resource estimation. It is difficult to interpret such shallow-dipping stratigraphy in different ways and the only differences would be in linking up the minor coal seams and where thicker seams split between holes. Any changes would have little or no impact on final resource volumes. The use of geology in guiding and controlling Mineral Resource estimation. A geological model was constructed in Surpac software from the drill hole logs and this was used as a basis for guiding the interpreted locations and linking of coal seams.

The factors affecting continuity both of grade and geology. Factors affecting continuity of grade and geology relate to faults, changes in GCV, weathering profile and survey elevations of the drill holes. All these have been investigated thoroughly and although there are effects seen in relation to faults and seam elevations, it is considered that these are minor for the whole resource. Changes in oxidation are also of a minor nature and there seem to be no differences between assays for oxidised outcrop samples compared with assays for the seam within drill holes. Plots of Seam overburden and thickness contours indicate that there is some variation along strike which could be explained by minor faults and changes in coal seam dips between them.

The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

The drilled coal resource extends 8 kilometres along strike (N-S) and a minimum of 3 kilometres width in the horizontal plane. It generally has dips of less than 10 degrees and has been intersected to 40m below surface. The main seam has an average of 2.17m down-hole thickness and a gross calorific value of 6242 kcal/kg (adb).

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Criteria Explanation

Estimation and modelling techniques.

The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters, maximum distance of extrapolation from data points.

The estimation technique was the use of cross-sectional outlines and geological interpretation and wire-framing of seams to derive volumes. No domains were used, nor were any areas partitioned into domains. The influence of oxidation on the coal was examined by comparing oxidised samples with drilled intercepts and there was no significant difference in proximate analyses. Only wire-frames for the Inferred Resource category were generated. Extension of resource continuity between drill holes was generally good. Maximum distance of extrapolation away from data source was 1200 metres. Statistics show that there is high ash content, low moisture content and a mean GCV range of 6100 kcal/kg to 6300 kcal/kg across the coal seams. An average of 6242 kcal/kg was used for the resource estimation. Individual Gross Calorific Value measurements ranged from 6046 to 6722 kcal/kg. There is minor variation in seam character with depth or in lateral continuity.

The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

There is no production data from Gayndah.

The assumptions made regarding recovery of by-products. There are no planned by-products

Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).

Samples were routinely tested for sulphur in the proximate analyses. Ash analysis and aluminium content (clay material) within and adjacent to coal seams was also tested. There was no indication that the material was too acidic or alkaline or would affect mine drainage water.

In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

Not applicable – no block model used

Any assumptions behind modelling of selective mining units. Not Applicable -No selective units have been used

Any assumptions about correlation between variables. GCV and moisture variability is low as are all of the quality attributes except for ash content. Seam thickness variability is easily modelled and only occurs over a large distance.

The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

Validation of the database was completed against original lithology logs, survey records and assay files by three independent checks and at every database update (3 during the course of the resource estimation). Wireframes were checked against interpreted cross-section outlines on every section as well as long sections. Internal validation procedures were also completed on Surpac software to ensure that each triangulation was snapped to the correct point and volumes were closed.

Moisture. Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

Tonnages are determined from wire-framed in situ volumes and Relative Density as received i.e. wet density as found in the ground.

Cut-off parameters. The basis of the adopted cut-off grade(s) or quality parameters applied. Quality parameters relate to minimum coal seam mining width of 0.5m, maximum contained waste thickness of 1m and average GCV (adb) of mineable coal seam to exceed 6000 kcal/kg.

Mining factors or assumptions.

Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It may not always be possible to make assumptions regarding mining methods and parameters when estimating Mineral Resources. Where no assumptions have been made, this should be reported.

After resource estimation and analysis of coal and waste material assumptions made about mining methods were: 1 Shallow dip allows for open cut mining methods using standard excavator and truck operation 2 Visual grade control for interburden and overburden can be used 3 Assumed maximum dilution of 1m internal waste and 0.15m external waste, although good mining practises would avoid generating this waste. 4 Assumed mining unit is 2m by 4m to suit a small excavator 5 Assumed coal density of 2.08 based on Relative Density measurements at the laboratory

Metallurgical factors or assumptions.

The basis for assumptions or predictions regarding metallurgical amenability. It may not always be possible to make assumptions regarding metallurgical treatment processes and parameters when reporting Mineral Resources. Where no assumptions have been made, this should be reported.

This resource estimation has no assumption about processing parameters of the coal.

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Criteria Explanation

Bulk density. Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

Relative densities were reported from the laboratory for coal seams. The coal material was estimated for relative density on as received samples. These measurements are in situ density, not bulk density. Estimations of volume swell factors and tests on coal from trial mining will allow a more detailed calculation of bulk density for mining tonnages and volumes.

Classification. The basis for the classification of the Mineral Resources into varying confidence categories. The drill hole spacing at Gayndah is only suitable for Inferred Coal Resource category due to the available access locations on farming properties. It was felt that there was insufficient knowledge of the geological setting in the area (due to the hole locations) to rely on purely mathematical techniques. Therefore a technique based upon geological modelling from cross sections was applied. Thus all the coal at Gayndah has been classified as Inferred Coal Resource.

Whether appropriate account has been taken of all relevant factors. i.e. relative confidence in tonnage/grade computations, confidence in continuity of geology and metal values, quality, quantity and distribution of the data.

Confidence in tonnage and volumes is good due to collection of density data for coal seams and known geological continuity of coal seams from drilling.

Whether the result appropriately reflects the Competent Person(s)’ view of the deposit. The Competent Person continually reviewed the resource drilling program and supervised the collection of data as well as completed the resource estimation

Audits or reviews. The results of any audits or reviews of Mineral Resource estimates. Volume calculations, wireframe locations/orientations as well as validity and applicability of the estimation parameters was checked by an independent geologist and found to be of sound principles and conforming to industry standards. Plots of coal seam thickness and overburden were completed to validate the volumes and seam continuities.

Discussion of relative accuracy/

confidence.

Where appropriate a statement of the relative accuracy and/or confidence in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.

The relative accuracy of volume estimation from wire-frames was checked by mathematical software methods, but this does not account for the reliability of the basic data that is being wire-framed. Factors that could affect the relative accuracy of the resource are as follows:

Variability in coal density for tonnage estimation, however this is known to be very low.

Variability in drill collar surveys due to the surface terrain. However the drill collar surveys have been checked and reconciled against the regional topography surface and the Government survey stations around Gayndah and are considered sufficiently accurate for Inferred Coal Resources.

Reliability of coal seam down-hole thicknesses due to core loss or poor logging practices. Lithology logs were checked and reconciled for down-hole depths of coal seam intervals and geological units were plotted and checked on sections. However some drill holes suffered loss of chips or core due to groundwater inflow.

Interpretation of coal seam continuities on sections. Coal seam dips were validated by consistent interpretation of seams in a minimum of two holes per section and also by comparison with sections ahead and behind to understand relative (minor) changes in dip.

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages or volumes, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

The EPC 2044 coal tonnages and volumes quoted in this resource estimation fall under the Inferred Coal Resources category. The methods used are fully explained in this document.

These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

Not available at Gayndah.

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