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1 17 February MILLION TONNES MAIDEN JORC INFERRED COAL RESOURCE AT FERNDALE Resource underscores Coalworks confidence in Ferndale as a high quality, strategic project 443 Million tonnes Inferred JORC (2004) Resource identified within the Newcastle Coal Measures at depths amenable to open cut mining 300 Million tonnes Inferred JORC (2004) Resource identified within the Wittingham Coal Measures with Underground Mining potential. Based on completion and interpretation of 40 exploration drill holes during Stages 1-3 of drilling Announcement continues strong progress made by Coalworks in its strategy to build an independent Australian coal producer Coalworks Limited (ASX: CWK) today announced that its Inferred Resources (classified in accordance with the JORC Code) within the Ferndale Exploration Licence (EL7430) total 743 million tonnes of bituminous coal. The resources are based on the completion and geological interpretation of 40 exploration drill holes completed during the Stages 1, 2, and 3 of the current drilling program at Ferndale. The program which started in mid 2010 has concentrated on confirming continuity of seams both within the Shallow Newcastle Coal Measures and the deeper Upper and Middle Wittingham Measures. The Resources estimated by Ravensgate Minerals Industry Consultants, are classified in accordance with the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). Coalworks Chairman Wayne Mitchell said: This announcement is a significant milestone for both the Ferndale project and for Coalworks. We believe that the JORC endowment identified reaffirms the high quality, strategic nature of Ferndale, and justifies our confidence in the project, which is one of the core projects in Coalworks strategy to build a new independent Australian coal producer. The Stage 3 Drilling program is continuing with the aim of potentially upgrading Resources to Indicated and Measured Status. ACN Level 5, 44 Miller Street, North Sydney NSW 2060 AUSTRALIA Ph: Fax: info@coalworks.com.au

2 Tenement (Figures 1 and 3) The Ferndale deposit is contained within EL 7430, held by Loyal Coal Pty Ltd. Yarrawa Coal Pty Ltd, a 100% subsidiary of Coalworks Limited, owns 92.5% of Loyal Coal. EL 7430 was granted 18 December 2009 and expires 18 December Coal resources estimated and reported are wholly contained within EL Drillholes The resource estimate is based on results from 40 exploration drill holes (FD001-FD039 and FD042) drilled recently. Figure 2 shows the location of drill holes within EL7430 Of the 40 bore holes used to calculate the Maiden Inferred Resource, 37 were either partially or fully HQ Cored, with the seams sampled and submitted for coal quality analysis. Quality analysis results from 15 boreholes have been included in the Resource estimate. The remaining bore cores are awaiting completion of analysis. Drill hole spacing ranges from ~ 500m to ~2km. All drill holes completed to date have intersected coal. All of the completed drill holes were geophysically logged and corrected for depth. Coal core samples from Stage 1 drilling were submitted to Actest Laboratories in Newcastle for ply quality analysis. Subsequent coal core samples from Stages 2 and 3 drilling have been submitted to Bureau Veritas Laboratories in Newcastle for ply quality analysis. Quality data displayed in Table 2 and 3 is based on coal bore cores analysed for all seams. The current JORC Resource estimated is based on Coal Quality analysis completed on 15 completed boreholes to date. Stage 3 drilling is continuing with three drill rigs on site. Bore core samples are being continuously submitted for analysis upon completion of each hole, with currently a further 32 completed bore cores are awaiting analysis at Bureau Veritas in Newcastle. Raw Coal Analysis include was available from the following Boreholes: FD001 FD003 FD004 FD007 FD008 FD009 FD010 FD011 FD012 FD013 FD014 FD015 FD016/16R 1 FD017 FD038 2

3 1 Holes FD016 required abandoning and redrilling several metres from the original collar, hence the FD16R suffix. 2 Drill hole FD038 was abandoned at ~54m with sampling continuing in a re-drill several metres away at hole FD038R. The hole is labelled as FD038R on the Figure 2 Drill hole location plan. Figure 1 EL 7430 Tenement Location

4 Figure 2 Location of Coalworks boreholes within EL7430 (FD016 and FD038 were abandoned mid hole with drilling continuing several metres away on holes labelled FD016R and FD038R on the above plan)

5 Figure 3 EL7430 Ferndale Location Plan Geology Regional Geology EL 7430 is situated in the Upper Hunter region of the Permian-Triassic Sydney Basin. The Permian coal measures in the area are divided into three sequences: the Early-Mid Permian Greta Coal Measures, the Late Permian Wittingham Coal Measures, and the overlying Late Permian Newcastle Coal Measures, the latter two being of focus in EL The presence of the Greta Coal Measures in the tenement is unknown, but if present, it is considered to exist at depths excessive for mining. Local Geology The Triassic sediments in the tenement which overlie Permian coal bearing sediments generally form prominent escarpments and hilltops. Also present in the tenement are minor Quaternary alluvial sediments in some creeks which flow into the Goulburn River. Coal seams targeted are in the Newcastle Coal Measures (NCM) and upper and Middle

6 Wittingham Coal Measures (WCM) of the Singleton Supergroup. A general stratigraphic column is presented in Table 1. In the tenement, the seams of the NCM and WCM dip gently (around 1-3 ) to the general north-northwest, although dip direction varies throughout the majority of the tenement. In the tenement s north western portion, the dip direction is variable although it is generally to the north-northeast. Towards the tenement s north eastern portion, the strike swings around to produce north westerly dips. Minor faulting may also possibly be associated with this flexure. Igneous intrusions and heat affected strata occasionally exist in the WCM seams and to a lesser extent the NCM seams, and the interburden throughout the tenement. Newcastle Coal Measures (NCM) Intersected coal thicknesses for the NCM range from 0.07m in the Montrose 2 seam (FD001) to 2.64m in the Great Northern seam (FD014). The maximum depth to roof of Coal was a depth of 206.5m down hole for the Borehole Seam in bore hole FD014. Of the 15 Seams identified within the NCM (Table 1) containing up to 27 individual coal plys, only 8 seams and 13 individual plys have met resource assessment criteria and have been included in the Inferred Resource (Table 2). Wittingham Coal Measures (WCM) Coal Seams thickness intersected within the WCM ranged from 0.13m for the Redbank Creek 1 seam (FD006), to a maximum thickness of 8.82m in the Bayswater seam recorded in bore hole FD013.The Bayswater Seam is typically the thickest seam in the resource area. Geological interpretation has identified 15 seams within the WCM as displayed in Table 1, 8 of these seams have met resource assessment criteria and have been included in the Inferred Resource (Table 3). The depth to base of weathering intersected in boreholes ranges from ~10m to ~38m.

7 Figure 4 General East- West Cross-Section view of Ferndale Wittingham and Newcastle Resource Modelling Seams and selected sectional Drill-holes View (Azim=180, Dip-0 degrees). Coal Seams shown are JORC classified seams only - Newcastle Seams (Pink) and Wittingham Seams (Blue).Topography is green and Base of weathering orange. BLOCK MODEL CONSTRUCTION AND RESOURCE ESTIMATION Ravensgate has completed a Resource Model update in line with the JORC Code guidelines for the Ferndale Coal Project EL 7430 (Ferndale). The resource modelling has been carried out using industry best practice standards and are valid with respect to the JORC code (Dec 2004). It must be stated that the resource summaries shown here are to be classified as Inferred Resources only at this early stage of project development and will be subjected to some future up-dates as and when further data becomes available. Ravensgate primarily relied on the main logged stratigraphic logging codes and the available coal quality analyses to define the 3-D coal seam wire-frames which were used for block model coding and preliminary resource estimation. Block Modelling and Resource estimation was completed using Minesight software. Grade estimation was carried out using a standard averaging interpolation approach which is often used for resource block modelling when low volume variance affected variables are considered. Search ellipses used were orientated to reflect the orientation of the majority of coal seams. Each seam was coded with the coal quality and associated data on a seam by seam basis.

8 A pair of equivalent seam surfaces were developed by way of triangulation of roof and floor points in conjunction with an extruded boundary out to ~1500m from the nearest drill-hole logging interval. The deeper seams by default were generated on relatively fewer intervals on account of not all drill-holes intersected the deeper seams. The preliminary validated seam wire-frames were then clipped and contained within the current EL-7430 Lease Boundary. The seam surfaces were combined to produce 3-D seam solid wire-frames which were used to code the drill-hole Composite files and the Block Model file. Individual models were produced for the Newcastle and Wittingham Coal Measures. A standard block model was developed to help estimate the seam volumes and associated weight averaged coal quality for the Wittingham seams. For the Newcastle seams, the final clipped or rationalized seam wire-frames were directly interrogated to estimate total seam volumes. The surface topography for resource estimation was based on a Surface Digital Terrain Model. The Base of weathering was modelled as a separate surface from down hole lithological interpretation. Resources Models were clipped by Topography and surface weathering. Figure 5 General Oblique view of Ferndale Wittingham Resource Model Seams and Drilling View (Azim=150, Dip-25 degrees). Interpolation of Coal Quality Data Into Parts of Seams Is Shown Graphically As The Orange (1000m) and Purple (1500m) Areas.

9 Coal Resources The Inferred Resource (calculated in accordance with the JORC Code) in EL7430 total 743 Million tonnes of bituminous coal. Inferred Resource containing 443 Million tonnes have been estimated within the Newcastle Coal Measures. The thin, multi seam coal measures are at depths amenable to Open Cut Coal mining within the majority of the tenement. Where areas of steep relief including areas of potential cultural or environmental heritage exist high wall auger mining may be a potential option. Coal Resources within the Shallow Newcastle Coal measures were estimated assuming a maximum 50% average raw ash, a minimum average seam thickness of 0.3m, a maximum seam depth of 250m, maximum included parting 0.2m, and a maximum insitu waste : insitu coal ratio of 15:1m 3 /t. Insitu waste volumes were estimated from the surface topography to the roof of Coal. Estimated insitu waste bcm to insitu coal ratios are displayed in Table 4. Indicative ratios to the Wave Hill 4 seam are ~9.2:1, whilst indicative ratios to the Borehole Seam are ~12.7:1 It is worth noting that 7 additional seams modelled within the Newcastle Coal Measures including 14 additional coal plys were not included within the Resource estimate due to an average raw ash >50%. As additional bore core analysis results are completed on outstanding bore cores, the average raw ash of some of these seams may fall below 50% Ash potentially adding additional tonnes to the current resource estimate. Seams included within the Newcastle Coal Measures Resource Estimate Include: Great Northern 1 (GN1)1 Fassifern (FAS) Upper Pilot 1 (UP1)1 Hartley Hill 1 (HTH 1)1 Hartley Hill 2 (HTH 2)1 Montrose 1 (MON1)1 Montrose 2 (MON2)1 Wave Hill 1 (WVH1)1 Wave Hill 2 (WVH2)1 Wave Hill 3 (WVH3)1 Wave Hill 4 (WVH4)1 Nobby (NOB) Borehole (BRH) 1 Suffix 1 4 indicates sub seam set of general stratigraphy identified in Table 1.

10 Inferred Resource of 300 Million tonnes have been estimated for the Wittingham Coal Measures. Resources were estimated using a minimum seam thickness of 1m, no depth restriction, an average interburden distance between seams of 20m, maximum raw ash of 45%, a maximum stone parting of 0.5m, and a minimum seam resource of 20Mt. Seam depths ranged from ~166m (WYB1) to 658m (BAY1). The Inferred Resource estimated within the Wittingham Coal Measures have future underground mining potential. Seams included within the Newcastle Coal Measures Resource Estimate Include: Wybrow 1 (WYB1) 1 Redbank Creek 1 and 2 (RBC1 and 2) 1 Whynot (WNT) 1 Blakefield 1 and 2 (BLK 1 and 2) 1 Bowfield (BOW) 1 Warkworth (WKW) 1 Broonie 2 (BRO2) 1 Bayswater 1 (Bay1) 1 1 Suffix 1 4 indicates sub seam set of general stratigraphy identified in Table 1. Figure 6 Ferndale Resource Modelling Wittinham Coal Seams and Drilling Plan View showing Coal Mineralization (East toward top of page)

11 Coal Quality From the raw coal ply analysis results to date from 15 drill holes, the Ferndale Resource is defined as a high ash, high volatile, low sulphur coal deposit as displayed in Tables 2 and 3. Due to the high ash nature of the deposit it is envisaged that coal washing will be required. Limited Coal washability simulation test work has been completed on bore cores to date, with results to be announced upon final completion including clean coal composite analysis. Average raw ply CSN properties have been produced from limited bore cores. Although the average raw ply CSN value per seam to date is lower than a general Semi Soft Coking specification (typically >3.5 CSN), variability from a limited data set is quite high. Due to the high raw ash values of the Wittingham Coal Measures, it is envisaged that coal washing will be required. The Wittingham Coal Measures in Table 3 display maximum individual raw ply CSN values within a potential Semi Soft Coking Coal Range. Upon completion of further bore core analysis, including further washability test work and clean coal composite analysis, some sections of the Wittingham Measures may have the potential to produce a washed SSCC product. The average raw sulphur per seam is considered low, suggesting that the Ferndale coal may have additional low sulphur blending potential.

12 Table 1 Generalised stratigraphic column showing seam codes based on drilling results.

13 Seam Inferred 2 Resources (MT) Average Thickness (m) Depth (m) to Coal (min) Depth (m) to coal (max) Relative Density (RD) Inherent Moisture Ash Volatile Matter (% adb) Fixed Carbon Total Sulphur Calorific Value (Mj/Kg, adb) Calorific Value (Kcal/Kg, adb) CSN 3 CSN 1 (min) GTN FAS UPL HTH HTH MON MON WVH WVH WVH WVH NOB BRH Total 443 Table 2 Resource Summary Newcastle Coal Measures including Raw Coal results 1 Minimum & maximum ply CSN value from Raw ply data 2 Insitu tonnes estimated on modelled seam RD. 3 CSN values estimated by weighted average CSN 1 (max) ACN Level 5, 44 Miller Street, North Sydney NSW 2060 AUSTRALIA Ph: Fax: info@coalworks.com.au

14 Seam Inferred 3 Resources (MT) Average Thickness (m) Depth (m) to Coal (min) Depth (m) to coal (max) Relative Density (RD) Inherent Moisture Ash Volatile Matter (% adb) Fixed Carbon Total Sulphur Calorific Value (Mj/Kg, adb) Calorific Value (Kcal/Kg, adb) CSN 1 CSN 2 (min) WYB RBC1 and WNT BLK1 and BOW WKW BRO BAY Total CSN values estimated on length weighted average ply data, not geo-statistically modelled 2 Minimum & maximum ply CSN value from Raw ply data 3 Insitu tonnes estimated on modelled seam RD. Table 3 Resource Summary Wittingham Coal Measures including Raw Coal results CSN 2 (max)

15 Seam cumulative Waste (M bcm) Cumulative Insitu Coal (Mt) Insitu Coal(t):bcm Waste WVH BRH Table 4 Estimated Insitu waste bcm to insitu coal ratios Cautionary Note: This release may contain forward-looking statements that are based upon management s expectations and beliefs in regards to future events.. These statements are subjected to risk and uncertainties that might be out of control of Coalworks Limited and may cause actual results to differ from the release. Coalworks Limited takes no responsibility to make changes to these statements to reflect change of events or circumstances after the release. In certain circumstances management has relied upon data provided by third parties. Coalworks, its officers and its subsidiaries take no responsibility for any inaccuracies flowing from information provided by third parties. The following statements apply in respect of the information in this report that relates to Exploration Results and Mineral Resources: The information is based on, and accurately reflects information compiled by Mr Stephen Hyland, who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Hyland is a geologist employed as Principal Consultant by Ravensgate, mineral industry consultants. He has the relevant experience in relation to the coal deposits being reported on to qualify as a Competent Person as defined in the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Identified Mineral Resources and Ore Reserves. Mr Hyland has consented in writing to the inclusion in this report of the matters based on the information in the form and context in which it appears. For further information, please contact: Nathan Bartrop Company Secretary Tel: Fax: info@coalworks.com.au For media inquiries, please contact: Dudley White / Garry Nickson MAGNUS Investor Relations + Corporate Communication Tel: dwhite@magnus.net.au / gnickson@magnus.net.au Coalworks has a portfolio of projects in Australia including: 1. Vickery South, Gunnedah Basin (exploration target coking/thermal coal) # JORC Resources Increase by 15% to 58.5 Mt - see ASX Announcement # ITOCHU to proceed with BFS for Vickery South - see ASX Announcement # ITOCHU signs Farm In Agreement in $11m deal - see ASX announcement # Preliminary Feasibility Study positive with semi soft coking coal forming 83% of product - see ASX announcement Ferndale Coal Project # Coalworks includes its 92.5% owned subsidiary Loyal Coal Pty Ltd # JORC Inferred Resource 743 Mt. # Coalworks alone commissioned Ravensgate to produce the Ravensgate JORC resource. Consent has not been sought nor has Boardwalk Resources Ltd or the Ferndale Joint Venture authorised the Ravensgate JORC resource referred to herein. 3. Oaklands Coal Project (JORC measured, indicated and inferred 822Mt thermal coal) #see ASX announcement ; #Strategic Alliance with Synthesis Energy Systems Inc to develop Oaklands coal-to-petrol plant announced see ASX announcement ACN Level 5, 44 Miller Street, North Sydney NSW 2060 AUSTRALIA Ph: Fax: info@coalworks.com.au