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Godwin Robertson
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1 31 January 2014 Quarterly Report for the period ending 31 December 2013 Premier transaction completed with improved terms Due diligence drilling completed and exploration continues in 2014 Significant coking coal intersection in maiden deep drill hole Technical Report confirms high quality hard coking coal Completion of the Acquisition of Premier Coking Coal Limited During the period, Fitzroy Resources Limited ( Fitzroy or The Company ) completed the transaction to acquire 100% of Premier Coking Coal Limited ( Premier or PCC ) and its subsidiary, Premier Coking Coal LLC, a US based coal exploration and development company ( Premier Option ). The primary focus of Fitzroy s activities for 2014 and beyond will now be the development of the Emmaus and Blackstone properties (see location map - Figure 1) and to become a low capital cost, profitable producer of hard coking coal. Fitzroy will continue to assess further acquisitions in the vicinity of both properties. Completion of Due Diligence Drill Program The due diligence program related to the acquisition of Premier was completed during December. The program successfully confirmed the accuracy of the 50 historic drill holes that existed at Emmaus and Blackstone. A drill program will be prioritised at Blackstone in 2014 that aims to define a maiden resource. Defining a resource at Emmaus and Blackstone is an important first step toward the Company s strategy to become a coking coal producer during The proposed drilling locations are shown in Figure 2. The final hole of the due diligence drilling has successfully intercepted 3.8 feet (1.2 meters) of coal in the only hole planned to be drilled below the water table. The discovery of coal of mineable thickness at greater depth could have a significant impact on the long term future of the Emmaus project s future development. Coal Inventories are known to exist within the region in seams such as the Sewell, Beckley (War Creek), Firecreek and Pocahontas. To our knowledge, no previous deeper drilling has occurred at Emmaus. Drilling during 2014 will also test the extents and continuity of the deeper coal mineralisation in the Beckley while also testing for Fire Creek and Pocahontas seams. The proposed drilling locations are also shown in Figure 2. The results of the due diligence program and the historic drill holes were announced on 6 December Fitzroy Resources Limited Level 1, 35 Havelock Street PO Box 839 T E admin@fitzroyresources.com.au West Perth WA 6005 West Perth WA 6872 F W

2 FIGURE 1 - LOCATION MAPS OF EMMAUS AND BLACKSTONE PROPERTIES 2 P a g e

3 FIGURE 2 - EMMAUS DUE DILIGENCE PROGRAM AND PROPOSED 2014 DRILL HOLE LOCATIONS 3 P a g e

4 Independent Technical Report The Emmaus and Blackstone Technical Report 1 ( Technical Report ) was prepared by Cardno MM&A ( Cardno ) and commissioned to assist Fitzroy during its due diligence period. The full report is available on the homepage of the Fitzroy Resources website. The Technical Report considered four key seams at the Emmaus Property (Douglas, Gilbert, Lower War Eagle and the Beckley) and the same seams on the Blackstone Property except the Lower War Eagle, which is not included in the Blackstone option. Estimates of coal quality and based on historical exploration and mining data indicate the coal is a mid-volatile hard coking coal. The Technical Report was an assessment of the historic and recent drill hole results, a description of the features of the property and contained an initial Exploration Target of hard coking coal at both properties. It verified the likelihood of mid volatile, low sulphur hard coking properties of the coal and discusses the project s reasonable prospect for economic extraction both above and below drainage. Key findings included: Little to no evidence of faulting or folding The above water table, hillside target seams are generally contiguous Based on the available quality data the target seams are characterised as mid-volatile, low sulfur bituminous coking coal Can potentially be mined by underground and highwall/auger methods Cardno endorsed and supported the ongoing exploration program to potentially identify and quantify Coal Resources on the Emmaus Property, as well as the Blackstone exploration program. Provided positive results from the exploration, Cardno believes the identification of potential resources areas could provide a sufficient Coal Resource quantity to justify coal production on both the Emmaus and Blackstone Properties. Exploration Target As part of the Technical Report, Cardno identified an Exploration Target. The Exploration Target was broadly defined using the historic drilling data and the due diligence drilling conducted by Fitzroy. Cardno s experience and knowledge of the region was also an important consideration. The potential quantity and grade of the Exploration Target is conceptual in nature in that there has been insufficient exploration to estimate a Coal Resource and that it is uncertain if further exploration will result in the estimation of a Coal Resource. A full description of the basis for the estimate and proposed activities to test the validity of the Exploration Target are available in the Technical Report and the Fitzroy ASX release of 10 December An ASX release of the technical report and exploration target was announced on 10 December The full technical report is available on the homepage of the Fitzroy website 4 P a g e

5 When assessing the Exploration Target reasonable prospects of economic extraction were assessed by considering factors such as: Infrastructure; likely mining methodology; transportation and coal handling and; permitting The Exploration Target is shown in Table 1 and Table 2 Seam Mining Type Low High Average Emmaus Property Lower War Eagle Surface and Highwall Gilbert Underground 1,800 1,910 1,860 Douglas Underground 1,930 2,110 2,020 Beckley (War Creek) Underground 5,580 9,210 7,400 Total Emmaus Property 9,710 13,710 11,720 Blackstone Property Gilbert Surface and Highwall Gilbert Underground Douglas Underground 650 1, Beckley (War Creek) Underground Total Blackstone Property 1,630 2,470 2,060 Total By Seam Lower War Eagle Varies Gilbert Varies 2,780 3,340 3,070 Douglas Underground 2,580 3,150 2,870 Beckley (War Creek) Underground 5,580 9,210 7,400 Total By Seam 11,340 16,180 13,780 Total By Mining Type Surface and Highwall Varies 850 1,140 1,000 Underground Varies 10,490 15,040 12,780 Total By Mining Type 11,340 16,180 13,780 TABLE 1 - EXPLORATION TARGET ESTIMATE RANGE (X 1,000 IN-PLACE TONS) 5 P a g e

6 Proximate Analysis Wash Recovery Gilbert Seam - Processed Coal Proximate Analysis Ash (%) Sulfur (%) Btu/lb lb SO2 per MBtu Volatile Matter Free Swelling Index Max. Fluidity (DDPM) Average , ,821 Maximum , ,823 Minimum , ,487 # Samples Douglas (Red Ash) Seam - Processed Coal Proximate Analysis Average , ,910 Maximum , ,696 Minimum , ,693 # Samples TABLE 2 - SAMPLES OF HISTORIC DRILL PROGRAMS AT EMMAUS AND QUALITY RANGE OF EXPLORATION TARGET Rookwood During the September quarter, a geochemical sampling program at Rookwood was completed, following up on areas of heightened geophysical anomalism coupled with prospective geology. A further sampling program was completed during the December quarter. Results from the 100 samples taken were received during the quarter and have not highlighted any new areas of anomalism for immediate drilling however the multi-element geochemistry will be used to plan future exploration programs. Glentanna No work has been done at Glentanna during this reporting period. Corporate Improvement of Premier Transaction On 12 November 2013, Fitzroy announced to the market that it had considerably improved the terms of the transaction with the shareholders of Premier Coking Coal and the owners of the Emmaus and Blackstone leases which Premier holds and option over. The table below illustrates the differences in the terms. Previous terms Fitzroy receives: Emmaus Lease Share consideration: 55 million FRY ordinary shares 55 million FRY performance shares Cash consideration: US$1,600,000 New Terms Fitzroy receives: Emmaus Lease Blackstone Lease Deep Mine Permit Share consideration: 30 million FRY ordinary shares 20 million FRY performance shares Cash consideration: US$805,000 This was a significant outcome for Fitzroy. Not only were the terms and cash requirements to complete the deal substantially improved, but the current owners of the property leases, Emmaus Partners, have agreed to join the Fitzroy share register as a show of faith in the projects that we are acquiring. Emmaus Partners are individuals who have mined and done business within the West Virginian coal industry for a long time. Also included in the new terms was the Blackstone mineral lease. Blackstone is adjacent to Emmaus property and is permitted, giving Fitzroy immediate access to the Red 6 P a g e

7 Ash/Douglas seam at any time in the future after we have completed our technical, engineering and financial analysis. Director Appointment In October Russell Lynton-Brown was appointed as a Non-Executive Director of the company. Russell has a background in the Stockbroking and Corporate finance sector. He has extensive experience in the provision of advice to retail, institutional and corporate clients focusing on the natural resources sector. Cash Position and Capital Raise On 23 December 2013, Fitzroy announced a Rights issue and Placement to raise A$1.279 million. The placement is complete and rights issue closed with an acceptance level of 56.3% for a total of $579,155 received. Underwriters have indicated funds for the shortfall of $449,845 will be received during the week commencing 3 February Current cash reserves including the proceeds of the capital raising are expected to cover cash requirements for the remainder of the 2014 financial year. The cash position as at 31 December 2013 is $434,000. Benjamin Lane For further information contact: Mr Benjamin Lane Chief Executive Officer Mr Simon Robertson Company Secretary Competent Person Statement The information in this report that relates to Exploration Results and the Exploration Target is extracted from the reports entitled Due Diligence Completion & Significant Intercept Emmaus created on 6 December 2013 and Technical Report Completed for Emmaus and Blackstone created on 10 December 2013 and are available to view on. The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The company confirms that the form and context in which the Competent Person s findings are presented have not been materially modified from the original market announcement. Tenement Schedule Project Location Tenement Interest Rookwood Queensland EPM % Rookwood Queensland EPM % Rookwood Queensland EPM % Glentanna Queensland EPM % Coal Lease Location Land Owner Option to Lease Date Acquire Emmaus WV, USA Kim Peraldo Gilley, et al., Trustess 100% 24/7/2012 Emmaus WV, USA Harrold Investment, LP 100% 23/8/2012 Emmaus WV, USA Red Bird Pocahontas Land, LLC 100% 26/9/2012 Emmaus WV, USA C.O. Davis, Jr., et al., 100% 21/11/2012 Blackstone WV, USA Marco Land Company, Inc 100% 26/9/ P a g e

8 About Fitzroy Resources Capital Structure (31 December 2013) Share Code Shares on Issue Options Performance Shares on issue Directors and Management Tom Henderson, Chairman Will Dix, Director Ric Vittino, Director Russell Lynton-Brown, Director Benjamin Lane, Chief Executive Officer Simon Robertson, Company Secretary 73.5 Million 6 Million 20 Million Projects Emmaus: Hard Coking Coal Property West Virginia, USA 100km S of Charleston, WV Blackstone: Hard Coking Coal Property West Virginia, USA 100km S of Charleston, WV Rookwood: VHMS copper/gold prospect 70km NW of Rockhampton, Qld Glentanna: VHMS copper/gold prospect 140km SW of Brisbane, Qld Fitzroy Resources Ltd is an Australian based coal development company, with two hard coking coal projects in West Virginia, USA. Fitzroy s main focus is to explore the coal potential of the Emmaus and Blackstone projects for hard coking coal and to rapidly develop into a producer of hard coking coal to the US domestic and export markets. FIGURE 3 LOCATION OF EMMAUS AND BLACKSTONE Fitzroy also owns the Rookwood and Glentanna exploration tenements in Queensland, Australia. Rookwood contains potential for the discovery of substantial VHMS copper/gold deposits beyond the existing resource. 8 P a g e

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For personal use only Infrastructure and service rich jurisdiction Low start up capital FITZROY RESOURCES US based coking coal Exposure to steel industry and tightening coking coal supply Cost competitive environment driving