COAL RESERVE ESTIMATE Mt 5.5 Mt

5.5 Metallurgical Factors

The coal is sold unwashed so no metallurgical factors have been applied.

5.6 Cost and Revenue Factors

Bayan provided a “data sheet” of unit costs relevant to GBP Block 1. MMC checked these for reasonableness and also used an in-house NPV based economic model to show that the project and reserves are “economic”. These unit rates were then used to calculate the cost to deliver coal to a ship fob vessel. This allowed a break even strip ratio to be calculated and was also used to calibrate the optimiser software. The following points summarise the assumed cost and revenue factors used for the estimate: ‰ all costs are in US dollars. ‰ a benchmark coal price of US65 per tonne for coal of a 6300 kcalkg gar moisture was used for the estimates. An additional 10 per tonne increment was added as a “semi soft” premium due to the high quality of this coal relative to other coals. A sulphur penalty of US0.10 per 0.1 over 1 was applied. ‰ Royalties of 13.5 of revenue less marketing, barging and shipping costs have been allowed. ‰ A fuel price of 68 cents per litre was used for mining costs. ‰ A coal haulage cost of 12 cents per tonne kilometre. ‰ Allowances were made for crushing, stockpiling, barge loading and ship loading which totalled approximately 9 per tonne. ‰ Administration and marketing costs were 1.50 per tonne. ‰ Coal mining was a variable rate depending on depth. ‰ Waste mining was variable depending on depth and distance of haul.

5.7 Marketing and Product Specifications

A detailed market study had not been done. The current demand for high energy thermal and semi-soft coking coal is high and MMC see no problems in selling this coal.

5.8 Other Relevant Factors

There are a number of planning issues which may impact on the stated mining reserves. These include: ‰ contract mining rates ‰ future exploration drilling and updates to the geological model, and ‰ ongoing mine planning including different mining equipment and more detailed planning of the start up period and the box cut design. All of these issues impact on the pit shells and mining quantities. Consequently, when the next JORC statement is prepared it is likely to have a different pit shells and quantities.

5.9 Classification

At this stage a detailed Life of Mine plan has not been completed and the majority of reported Coal Resources are of Indicated category. Hence, all of the Coal Reserves are classified as “Probable”. A-26