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1 ASX RELEASE 15 May 2013 Resource Statements Update Talwood Coking Coal Project Walton PCI Coal Project HIGHLIGHTS: Talwood Coking Coal Project JORC Resource Statement Total JORC Coal Resource now totals 434.9Mt, up 76% from 246.5Mt Maiden Measured Resources defined of 77.9Mt Resource will produce a low ash coking coal and thermal coal by product Mining Lease application lodged Walton PCI Coal Project JORC Resource Statement Total JORC Coal Resource now totals 46.6Mt Total Rangal Coal Resources are 27.5Mt, up 18% from 23.3Mt 14.4Mt of Rangals defined as Measured Resources, up 98% from 7.3Mt Resource will produce a low volatile, high yielding PCI product Aquila Resources Limited (ASX:AQA the Company or Aquila ) is pleased to announce an update to the Resource Statements for the Talwood Coking Coal Project ( Talwood ) and the Walton PCI Coal Project ( Walton ) (both 100% Aquila owned). These statements are a result of recently completed exploration programmes on the respective projects. TALWOOD COKING COAL PROJECT Talwood is located in the Bowen Basin in Central Queensland, approximately 35km north of Moranbah (see Figure 1) and 130km south west of the coastal city of Mackay. The project is situated in EPC985, held by Aquila s wholly-owned subsidiary Talwood Coal Pty Ltd. A Mining Lease Application (MLa70471) covering the eastern 11 sub-block area has been lodged. The exploration tenement is ideally located relative to regional infrastructure with existing rail nearby. The tenement is adjacent to, immediately east of and down-dip from the BMA Goonyella Riverside and the Peabody North Goonyella mining operations. Figure 1. Location plan for Talwood showing boreholes Perth: Level 2 Aquila Centre, 1 Preston Street, Como WA 6152 Telephone (61) Facsimile (61) Brisbane: Level 18, 10 Eagle Street, Brisbane QLD 4000 Telephone (61) Facsimile (61) Johannesburg: Block C, Ground Floor, 28 Sloane Street, Bryanston 2191, Gauteng, South Africa (27) Facsimile (27)

2 Exploration History The area has been subject to three separate exploration programmes, which have culminated in this updated Resource Statement. The exploration programmes have identified resources in the Leichhardt and Vermont seams of the Rangal Coal Measures, and the Goonyella Upper and Goonyella Middle seams of the Moranbah Coal Measures. The exploration work focused on improving Resource definition for the Leichhardt Seam and to firm up the confidence levels of the Moranbah Coal Measures. The most recent exploration programme has brought greater confidence to the target mining domains as well as the coal quality of the various coals. In this programme of drilling, an additional 38 boreholes were drilled including the primary targets at the Leichhardt, Vermont, Goonyella Upper and Goonyella Middle seams. Five of the holes drilled used 4C coring techniques to target the Rangal Coal Measure seams. Three deep stratigraphic holes were drilled to improve the Resource coverage of the Moranbah Coal Measures. Resource Estimate This updated Resource Statement has been prepared under the requirements of both the JORC Code (2004) and the Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves (2003). See Appendix A for a summary overview of the JORC Table 1 estimation parameters. Within the project area, total Resources for the Leichhardt seam are 85.2Mt, up 42% from 60.1Mt. For the Vermont seam, the total Resources are 103.0Mt, which represents a small increase from 2010 estimates. However, Vermont Resources are now taken from a different mining section (only the Upper and Middle Vermont coal plies) and do not include the Yarrabee Tuff or the Lower Vermont plies. The deep Goonyella Upper has a maiden estimate of 105.0Mt and the deeper Goonyella Middle has a total resource of 141.6Mt, up 67% from 84.8Mt. Table 1. Talwood Coking Coal Project - JORC Resource Statement Category Leichhardt Vermont Goonyella Upper Goonyella Middle Total Measured 46.6Mt 31.3Mt Mt Indicated 31.8Mt 44.8Mt 12.5Mt 18.5Mt 107.6Mt Measured & Indicated 78.4Mt 76.1Mt 12.5Mt 18.5Mt 185.5Mt Inferred 6.8Mt 26.9Mt 92.5Mt 123.1Mt 249.3Mt Total 85.2Mt 103.0Mt 105.0Mt 141.6Mt 434.9Mt Measured Resources have now been defined at Talwood for the first time. Exploration has upgraded a significant proportion of Resources (46.6Mt) from the Leichhardt seam to a Measured status. The Vermont seam has also had a significant proportion (31.3Mt) upgraded to a Measured status. Total Resource tonnages have increased to 434.9Mt, up 76% from 246.5Mt. Drilling in the Rangal Coal Measures intersected the Leichhardt seam (maximum thickness of 3.75m) and the Vermont seam (maximum thickness of 2.53m). These seams will produce a low ash coking coal and thermal coal by product. Yields for the Leichhardt seam peak at 78% 9.9% Ash) and average 63.6% 10.9% Ash) for a combined coking and thermal product. Yields for the Vermont seam peak at 65% 10.4% Ash) and average 48.5% 11.9% Ash) for a combined coking and thermal product ex-bands. While the tenement has limited potential for open-cut Resources, the majority of Resources are best suited to a shallow box-cut development for underground mining operations. Modern longwall or board and pillar mining techniques are considered to be most advantageous to exploit this Resource. 2

3 Figure 2. East West Cross-Section of Talwood Figure 3. Coal core from bore RH100C showing a section of the Leichhardt seam WALTON PCI COAL PROJECT Walton is located in the Bowen Basin in Central Queensland, approximately 175km West of Rockhampton (see Figure 4). The Project consists of EPC1013 and EPC2302, both held by Aquila s wholly-owned subsidiary Argos (Qld) Pty Ltd. The exploration tenement is ideally located relative to regional infrastructure, with the Capricorn Highway and Blackwater Rail System traversing the tenement. Exploration History The area has been subject to three separate exploration programmes, which have culminated in this updated Resource Statement. The latest programme undertaken in late 2012 involved drilling an additional 42 holes, 10 of which were cored holes. The project area at Walton has been interpreted as a normal succession of Rangal Coal Measures with underlying Burngrove Coal Measure stratigraphy. The strata dips steeply from sub-crop in the east towards the Yarrabee Fault in the west (see Figures 4 & 5). This fault forms a natural boundary to the open cut resources. The work programmes mainly targeted the area to the east of the Yarrabee fault. The effective coal sequence present has a strike length in excess of 5 kilometres and ranges in width up to approximately 1,000 metres. 3

4 Figure 4. Location plan for Walton showing boreholes A total of 91 holes have now been drilled at Walton. This increase in coverage has significantly improved the definition of the Resource area to the east of the regional Yarrabee Fault in which both the Rangal Coal Measures and coal seams from the Burngrove and Fair Hill formation sub-crop are located. Work has targeted the Rangal Coal Measures, where coal quality testing indicates that five of the six seams could be washed to produce a low volatile, high yielding PCI coal. Resource Estimate Updated Resource Statements have been prepared under the requirements of both the JORC Code (2004) and the Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves (2003). See Appendix A for a summary of the JORC Table 1 estimation parameters. Table 2. Walton PCI Coal Project - JORC Resource Statement Category Rangals Burngroves Total Measured 14.4Mt Mt Indicated 3.1Mt - 3.1Mt Measured & Indicated 17.5Mt Mt Inferred 10.0Mt 19.1Mt 29.1Mt Total 27.5Mt 19.1Mt 46.6Mt In the Rangal Coal Measures, a total of 14.4Mt have been defined as Measured and 3.1Mt defined as Indicated giving a combined total of 17.5Mt of Measured and Indicated Coal Resources. In addition, there are 10.0Mt of Inferred Coal Resources resulting in a total Rangals Resource of 27.5Mt. The Burngrove Coal Resources are all of a mineable thickness and depth for open-cut mining, and the exploration borehole spacing is generally the same as for the Rangal Coal Measures. Due to limited coal quality data, the Burngrove Coal Resource is classified as Inferred. All coal categories combine to give a total Resource of 46.6Mt. 4

5 Figure 5 shows a cross-section that highlights the frequency of the coal seams present in the tenement. At the top LHS are the Rangal Coal Measures including Cancer plies (pink), a comparatively short seam length due to it being intersected by the Yarrabee Fault. Immediately below it are the Aries (grey), Castor (orange), Pollux (yellow), Orion (dark green) and Pisces (light green), which are underlain by the Burngrove (blue through to pink) and then the Fair Hill seams (olive). Drilling in the Rangal Coal Measures intersected seam plies up to 3.7m in thickness. Laboratory results for six of the seven seams indicate a low volatile, high yielding PCI coal with average seam recovery of greater than 80% overall and an ash content of less than 10%. Figure 5. East West Cross-Section of Walton Tony Poli Executive Chairman For further information regarding this announcement, please contact Tony Poli. Telephone: (08) Facsimile: (08) address: mail@aquilaresources.com.au Visit us at: Competent Person Statement The information in this announcement that relates to the Talwood Coking Coal Project and Walton PCI Coal Project Resource Statements has been based on information compiled by Mr Rod Doyle, who is a full-time employee of Aquila Resources Limited. He is a qualified Geologist (BSc Geology UOW 1978 and MAppSc UNSW 1988) with some 34 years of experience in coal geology, mining and resource evaluation. He is a member of the Australasian Institute of Mining and Metallurgy and qualifies as a Competent Person under the JORC Code. Mr Doyle holds shares in Aquila Resources Limited. Mr Doyle consents to the inclusion in the announcement of the matters based on the information in the form and context in which it appears. 5

6 APPENDIX A - Estimation Parameters SECTION 1. SAMPLING TEHCNIQUES AND DATA Sampling Techniques All coal seams are sub-surface with no observed outcrop. Core sampling for coal quality work took place using 4C (100mm) coring methods for Coal Measure seams. Although HQ (63mm) core was also used to a much lesser extent. Coal core samples were sent to the lab with chain of custody paperwork. Chip samples of cuttings are taken on a metre by metre basis and these were logged by the rig geologist and sampled. A suite of geophysical logs, including Density, Gamma, Calliper, Neutron and borehole deviation was typically run in all holes. All tools were calibrated on a regular and systematic basis. Further discussion of sampling and testing of coal is provided below. Drilling Techniques Blade bits and hammers are used to construct open holes (sections) and triple tube core barrels are used to recover coal core to established industry standards. Core diameters were either 4C (100mm) or HQ (63mm), as noted above. Drill Sample Recovery Standard industry techniques are used for sampling. In open holes, representative cuttings are sampled every metre and logged. All core is logged and photographed. Core was obtained by 4C (100mm) or HQ (63mm) diameter coring techniques, using triple tube operations, providing excellent recovery. Recovery standards are high and typically attain 100%. Re-drills are required if target coal seams fail to obtain 95% recovery rates. Typically all coal core is sent for laboratory testing. Logging All holes are geologically (lithologically and geotechnically) logged and English logs prepared for every hole. This is undertaken in a high level of detail. In conjunction, all holes are geophysically logged with a suite of tools being used (as described above). Geophysical logs are analysed extensively and used to confirm and correct geological logs. Validation of the geological logs against geophysics is undertaken to ensure accuracy. The geophysical suite of logs includes verticality logs - all holes are planned to be vertical. Normally re-drills are required if the hole is greater than 10% off verticality. However, at Walton strata dips can exceed 30 degrees and as a result some holes deviate by greater than 10%. This is deemed a function of the geology and not poor drilling. At Talwood the strata dips average 1 in 10 and the majority of holes do not deviate by greater than 10%. Core photography is undertaken on all core and chips. Chips are also sampled. Sub-sampling Techniques and Sample Preparation No splitting of core is undertaken in the field. Typically recovery from triple tube coring is well above 95%. All of this coal core (including roof and floor dilution samples - stone) is sampled and placed into labelled bags to ensure proper Chain of Custody. It is then transported to the laboratory for testing purposes. The laboratory continues with the Chain of Custody requirements. Sample preparation is undertaken according to Australian Standards. Core diameter provides adequate sample mass to undertake the variety of raw coal and washing together with composite testing required. Quality of Assay Data and Laboratory Tests Typically a pilot hole is drilled on site to confirm the seam details and then a core hole is proposed. The sample selection is determined inhouse at the Company and reviewed by external coal quality consultants. The latter also develop the procedures for testing the coal. Australian Standards are used for all laboratory testing. One single lab has been undertaking the analysis. They use systematic QA/QC procedures for all work and are NATA registered. This process is considered to be appropriate for coal and to achieve a high degree of accuracy and repeatability of testing. Results are reviewed both inhouse and externally to ensure the accuracy of the data. The laboratory has been inspected by the Company s personnel. Bulk density geophysical measurements are made with a Century Geophysical 9239 sonde, which comprises a focused dual detector arrangement with 15cm and 31cm spacings. Data is recorded in 1cm increments. The calliper and resistivity measurements are checked weekly with standard calibration assemblies. The density calibrations are performed routinely - either with blocks of known densities (nylon and aluminium) or against calibration holes. Verification of sampling and assaying Significant intersections are isolated events in coal exploration. Excessively thick coal seams are unusual and often considered to be caused by thrust faulted. No significant intersections were noted at Talwood or Walton. Twin holes are rare from the perspective of gaining coal quality data. However, pilot holes are used to determine the location and thickness of coal seams prior to coring. The pilot holes also assist with minimising coring distances. All holes are geophysically logged and verification of seam details is made through analysis of the geophysics. Assessments of coal intersections are undertaken by external contract geologists, Company supervising geologists, as well as by the Competent Person. Geophysics allows confirmation of the presence of coal seams. Core photography provides evidence of samples taken. Sample sheets are developed inhouse and reviewed externally with a final check by the laboratory, prior to testing. An external expert provides the specific testing programme to be undertaken for coal. All data is provided by the coal laboratory and reviewed by external consultants for their comments and reporting. No adjustments are made to any coal quality data. Data is used as presented from the laboratory. Coal quality data is stored in electronic format in XLS programmes. It is intended to transfer all coal quality data into GBIS, Aquila s new data base system. Location of Data Points All boreholes are set out using GPS technology and then formally surveyed by external professional contract surveyors. All tenements are present in Zone 55 of the GDA94 grid system in Queensland. The holes are located with a high degree of precision in three dimensions. Work is undertaken to Australian Standards. Data Spacing and Distribution Bores have been nominally spaced at 250m, 500m or 1,000m depending on target seams. Ongoing exploration will continue to see the spacing reduced and the confidence levels improved. In the area of prospective mining domains the overall bore spacing has been reduced to less than 500m apart. This provides a high degree of confidence in estimating Coal Resources. Sample compositing has not been applied. Orientation of Data in Relation to Geological Structure All holes are aimed to be vertical to minimise any bias in obtaining information. Verticality surveys are also undertaken. At Talwood the seams dips are less and the movement of the hole away from vertical is usually within normal requirements. Because of the steep dips of the strata at Walton, boreholes have veered away from their original vertical set up. The modelling of the deposit only uses holes with reliable verticality logs and all holes have been plotted as drilled to eliminate the potential for bias in seam thickness interpretation. Sample Security Core when removed from the borehole remains in the core splits and is identified and then photographed. The samples are then double bagged and labelled both internally and externally. A list of the samples and their details is created electronically and provides the basis of creating the request for analysis (RFA) of the coal laboratory. The samples are taken to a local courier who provides a receipt of the samples. The samples are dispatched to the coal laboratory for immediate processing. If there is any delay with testing the samples, they are stored in a refrigerated storage room. Audits or Reviews Data integrity of all data (geological, survey, geophysical and laboratory information) is reviewed before importing into the Company s data base system. The Company is in the process of converting to GBIS for storage of data base information. No specific audit of sampling techniques has been undertaken. Validation of log corrections were made by separate persons. An internal audit of the data base was undertaken before and following modelling plots were checked against real data to ensure that the data was accurate and accurately portrayed by the model. 6

7 SECTION 2. REPORTING OF EXPLORATION RESULTS Mineral Tenement and Land Tenure Status Talwood is an Exploration Permit for Coal - EPC985. It is held 100% by the Aquila Resources Limited Group through Talwood Coal Pty Ltd. A Mining Lease Application has also been applied for covering the eastern 11 sub-blocks - MLa There are no other agreements or material issues and no known impediments to the granting of the Mining Licence. The Walton Project Area is 30km east of Blackwater, Queensland. It consists of two Exploration Permits for Coal (EPC) tenements: Walton EPC1013, and Walton North EPC2302. These EPC s are held 100% by Aquila through its wholly-owned subsidiary Argos (Qld) Pty Ltd. A portion of EPC2302 is overlain by Taunton National Park. No resources have been quoted within 20m of the park boundary. Exploration done by other Parties At Talwood, Aquila has undertaken all exploration on the tenement since However, there has been earlier periods of work that have contributed to the understanding generated for this Resource Report and ASX release. Utah, the Geological Survey of Queensland and BHPB / BMA have all undertaken exploration in or near the tenement. Previous drilling by other companies identified the presence of coal at Walton and assisted in defining an Exploration Target. Aquila has undertaken exploration planning and activities to prove up the extent of the Resource. 12 old holes have contributed to the geological understanding. Geology Both areas are within the Bowen Basin. The regional geology of the areas is well known with several mines and projects in each area. Studies into local geology of the tenements have been undertaken. Coal seams that have been identified are part of the Rangal, Burngrove and Moranbah Coal Measures. At Walton a significant geological feature, the Yarrabee Fault has been identified in the tenement. Drill Hole Information At Talwood, 160 holes have been drilled on site (or nearby). However, only 111 were used in this modelling. Of the holes not used, there is a large duplication of pilot and cored holes. There are a total of 46 cored holes: 10 by other companies and the remaining 36 by Aquila. 91 holes are located across the two Walton tenements. Only 51 of these holes were used for modelling and for resource tonnes estimation. 40 holes were not used including: 15 duplicated core holes, 16 old holes without verticality logs (or adequate geophysics), 8 holes to the west of the coal Resource area and on the down thrown side of a significant throw fault, and 1 recent hole without verticality logs. Summary tables are presented in the internal Company Resource Report that presents; easting, northing, AHD, dip and azimuth of the hole, down hole depth, seam interception depths and hole length amongst other things. Data Aggregation Methods No weighting has been attributed to any results used in reporting these Resources. For the purposes of the Resource definition, an open-cut process has been considered for all Resource recovery at Walton. A minimum thickness cut-off of 0.20m has been used for all seams identified as Resources. In addition, the frequency of the presence of a seam taking into account depth and location was considered when establishing if the seam was a resource or not. For the Leichhardt seam, a seam thickness cut-off of 1.50m has been used as a minimum thickness for Resources. Because of the thick Yarrabee Tuff stone band in the Vermont seam, the Upper and Middle plies are considered as the potential mineable working section and a mining thickness cut-off of 1.50m has been used. A minimum of 1.50m thickness cut-off was used for both the Upper and Middle Goonyella seams. Relationship between Mineralisation Widths and Intercept Lengths All bores have commenced as being drilled vertically. However, there is a naturally tendency to deviate from the vertical. Because the strata dips at significant angles in this deposit at Walton there is a slight bias in down-hole thicknesses of seams. This bias is known as an apparent thickness and is always going to be slightly thicker than the true thickness. This bias has been eliminated by using geophysical logs (verticality logs) to establish the model. At Talwood this bias is significantly reduced due to the gentler seam dips. Diagrams Formal Company Resource Reports have been prepared, they contain diagrams covering all JORC listed requirements. Diagrams for the tenement include: location maps, plans showing all boreholes, resource areas, seam structure floor contours, individual seam thickness, overburden depth and where appropriate coal quality as well as cross sections. Balanced Reporting In the formal Resource Reports, all Coal Quality data is reported in both Raw, Washed and Composite data sets with the aim to give an overall view of the nature of coal present in the tenements. In this ASX release the information is summarised into product type. Other Substantive Exploration Data Gas data at both sites has been collected from various bores throughout the tenement at various depths and in various seams. It is reported in the internal Resource Report. Some groundwater has been encountered in boreholes. While this is not thought to hamper potential mining, further work on water needs to be undertaken. No data considered substantive has been deliberately omitted from this discussion. Further Work At Walton 2D seismic is planned to obtain data. Future exploration drilling is proposed to firm up further Resources, coal quality, better define structure and to give overall improved confidence levels. Reserve investigations are to be undertaken and studies associated with this need to be worked through at both Walton and Talwood. The studies associated with this work will assist in defining the on-going exploration work required. For example, lox line drilling and seismic coverage of mineable seams. SECTION 3. ESTIMATION AND REPORTING OF MINERAL RESOURCES Database Integrity Data recorded in the field is input into rugged field computers using standard software. This software is designed to ensure data accuracy before being placed into the Company s database. Data correction and validation checks are undertaken both internally and by external consultants before the data is used for modelling purposes. Site Visits The Competent Person is also the Exploration Manager, as well as the Site Senior Executive and over several years, many site visits have been made. These visits include observing drilling programmes and negotiations with landowners. Geological Interpretation Geological interpretation of stratigraphy and seam continuity is at a stage where confidence is high. An improved interpretation of the overall strata in the area is present now compared to previous resource reports. Numerous coal seams intersected and the bore holes present suggest that confidence in the overall stratigraphy has improved with closer spaced holes. However, geological structures need further investigation and at this time have a low confidence level. Data used was borehole logging (English lithological logs), geophysical logs, sampling, coal quality laboratory testing and assessments. At Talwood, geological interpretation of seam continuity is at a very high level of confidence for the Rangal Coal Measure seams and at a lower level of confidence for the Moranbah Coal Measures. The nature of geological structures is at a lower level of confidence, however will improve with future planned work. Dimensions Talwood The Leichhardt seam Resources work has defined 2 main mining domains across the entire tenement covering an area of approximately 26.7km 2. With a thickness range from 1.50m (minimum cut-off) to 3.75m. Depth of the seam ranges from 29m to 371m. For the Vermont seam, some 29.8km 2 of Resource has been defined with a thickness range from 1.50m (minimum cut-off) to 2.53m. Depth ranges from 59m to about 400m. For the Upper Goonyella seam, approximately 27.5km 2 has been defined with 8 borehole intersections across the tenement mostly at 1-2km spacings. Seam thickness ranges from 1.50m (minimum cut-off) to 5.14m. With depth ranges from 530m to 800m. 7

8 For the Middle Goonyella seam, approximately 24.8km 2 has been defined within 7 borehole intersections across the tenement mostly at 1-2km spacings. Seam thickness ranges from 1.50m (minimum cut-off) to 5.26m. Depth ranges from 588m to 800m. Walton The two tenements comprise 8 sub blocks and almost form a cubic shape (with one sub-block missing). EPC1013 has 6 sub-blocks and EPC2302 has 2 sub-blocks. The area of the sub-blocks is about 25km 2, while the area of coal resources is about 7.5km 2. The strike length of the resource area is about 5km in length and up to 2km in width. The Resource Statement has identified Coal Resources from both the Rangal and Burngrove Coal Measures. Some 15 coal seams have been identified, all of which have been modelled. Coal seams generally range in thickness from 0.20m to in excess of 3.7m. With depths of seam picks ranging from 25m to approximately 310m. Estimation and Modelling Techniques Modelling has been undertaken using Gemcom s Minex software by people trained in its use. Extrapolation of data does not extend past confidence levels described in the Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves as referred to in the JORC Code. Data of coal seams is interpolated between existing points of data and the rest of the stratigraphic model. Neither deposit has been mined and as a result cannot have production checks to compare against borehole data. Mining studies for the site have not at this stage progressed to review deleterious elements and their possible impact on the environment. Regarding geological interpretation - no significant faulting (other than the Yarrabee Fault) has been modelled, although all tenements are considered to have other faulting. Future seismic surveys will be planned to provide better information on throw of faults and their orientation. Every grid produced was reviewed against the original data and found to honour the original data. It is expected that both coking and thermal products will be produced from Talwood. No other by-products have been considered at this stage. At Walton it is expected that all coal will be initially mined via open-cut techniques. PCI products will be produced. However, a primary coking coal and secondary thermal product could also be produced. Mining studies have been preliminary at this stage and have not included soil studies or potential impacts of acid leaching etc. These investigations will be undertaken when further studies are progressed. Both longwall and board and pillar reviews have been undertaken for mining potential at Talwood. At this stage the only assumptions regarding selective mining aspects has been seam thickness cut-offs (as described above). Validation of data was undertaken manually following plots of the modelling to ensure that the original data has been honoured. Moisture Considerable work has been undertaken on moisture levels from all core with Free Moisture, Residual Moisture, Total Moisture, Moisture Holding Capacity and Inherent Moisture all being measured. This level of detail has provided high confidence to determine In-Situ Moisture values. These values were in turn used to calculate In-Situ Relative Densities for tonnage calculations (as per the Preston Sanders equation). The Relative Density used for tonnage calculation was calculated and varies for each bore and each seam. Cut-off Parameters Talwood A minimum seam thickness cut off for both the Leichhardt and Vermont seams is 1.50m. Yields provide both Coking Coal and thermal products. Both these seams have Resource that extends to its boundaries. A minimum 1.50m thickness cut-off has also been applied to the Upper or Middle Goonyella seam with a maximum 800m depth cut-off. For all structural cut-offs, a 2km radius distance cut-off has been applied from existing Points of Observation for Inferred Resources, with a 500m radius distance for Indicated Resources and a 250m radius distance for Measured. For coal quality cut-offs, double the above distances have been used. Walton A minimum seam thickness cut off for all seams has been 0.20m. A strip ratio of 17.5 to 1 has been used to define the Rangal Coal Measure coals. In addition, any seam identified had to be present for a significant proportion of the area quoted in keeping with the Australian Guidelines. The likely product for these coals is PCI / thermal. Quality parameters are provided in detail in the internal Company Resource Report. Mining Factors or Assumptions Talwood All target seams are considered suitable for high productivity longwall operations or board and pillar operations. Walton All seams are considered suitable for open-cut operations. However, both high-wall and underground mining operations may also be considered as more information comes to hand for the deeper seams. Adjacent mining tenements have also identified open-cut Resources. To date, the focus has been on Open-Cut Resources. In some cases, some seams are more economic than others. However, some less economic seams may need to be mined to access the more attractive mining targets. Metallurgical Factors or Assumptions At Talwood, all seams will have yields that will provide metallurgical coking coal. Washing of all seams will be required. At Walton, work has determined that several target seams will produce targets suitable for PCI. This is the only comment made on metallurgical factors. Environmental Factors or Assumptions At Talwood, it is likely that mine access would be via a box cut or small open-cut operation, which would then access the underground resources of the Leichhardt seam. Production could be from either longwall or board and pillar operations depending on economics. No environmental studies have been undertaken at this stage of exploration activities. Mining studies will follow upon the granting of a Mining Lease Application. At Walton, potential mining would utilise a small wash plant and codisposal methodologies with handling waste in pit. No environmental studies have been undertaken at this stage of exploration activities. Mining studies will follow upon the granting of a Mining Lease Application. Bulk Density In estimating the Coal Resources, no assumptions have been made regarding bulk density. From laboratory measurements for relative densities (air dried) together with in situ moisture levels in-situ densities were calculated for all seams in all holes and were used to estimate in-situ resources. Classification As well as the JORC Code, the Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves has been adhered to in defining Resource categories. The Competent Person has taken into account all relevant factors in undertaking this estimation. Audits or Reviews An internal Company review of the Resource and this Resource Report has been undertaken prior to public release of this information. Discussion of Relative Accuracy/Confidence Based on the data available, the degree of accuracy of this statement is considered to be moderate to high for the Rangal Coal Measures at both sites. While the confidence is considered low for both the Burngrove and Moranbah Coal Measures. The process for calculation has used: Standards, Guidelines and the JORC Code along with best practice where available to define the Resource estimates provided. However, no geostatistical studies on data have been undertaken at this time. SECTION 4. ESTIMATION AND REPORTING OF ORE RESERVES This section is not addressed as no Coal Reserves have been determined at this stage of investigations. SECTION 5. ESTIMATION AND REPORTING OF DIAMONDS AND GEMS This section is not addressed as no diamonds or other gemstones are reported for this EPC. 8