stage one construction update

WICET STAGE ONE CONSTRUCTION UPDATE

As announced on 1 October 2010, Cockatoo Coal Limited ('the Company') has been selected as a 3.0 million tonne per annum ('MTPA') Stage 1 user of the Wiggins Island Coal Export Terminal ('WICET') at Gladstone, Queensland.
Further, on 4 October 2011, the Company advised that financing and tenure arrangements had been successfully completed by WICET and construction of Stage 1 of WICET was to commence with a commissioning date scheduled for October 2014.
This export capacity, together with the Company's existing allocation to export coal through the RG Tanna terminal, located adjacent to WICET, will be satisfied from production from the Baralaba Expansion project.
The Company is not required to make any further capital contributions to the Stage 1 WICET construction costs.
On 27 September 2012, the Company reported the completion of its bankable feasibility study for the Baralaba Expansion project, confirming the attractive economics of its simple open-cut brownfield development. The study confirmed that the project will increase production from 750,000 tonnes per annum to 3.5 million tonnes per annum of saleable ULV PCI coal with a project life of in excess of 20 years. The comprehensive coal quality drilling and testing program, combined with independent testing and verification, confirmed that the project will have an attractive product yield of 85% and an improved product mix producing 100% high value ULV PCI coal.
The Company has been advised that as a result of WICET project being impacted by conditions in the construction market, timing of various approvals and some project-related matters, WICET has revised its forecast schedule for Stage 1 with the result that completion of the new terminal is now expected in March 2015.
The project is now approximately one third complete and forecast construction costs remain within WICET’s financing envelope for which WICET has secured all funding.

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Whilst the Company is disappointed in this indicated delay in the commissioning of WICET Stage 1, the following comments are made:
1. The Baralaba Expansion project remains on schedule for delivery of expanded coal production in October 2014. 2. Adjusting the Company's timetable for the Baralaba Expansion project to March 2015 provides the Company with greater flexibility in regards to its financing options. 3. Infrastructure capacities, particularly port capacity, remain a significant impediment to new coal mining expansion. The Company is well placed to have secured port and rail capacities to enable delivery of the increased coal production from the Baralaba Expansion project. 4. The Company's feasibility study factored in potential delays in the WICET Stage 1 timeline and this indicated delay will not have a material effect on the value of the Baralaba Expansion project.
For further information, contact Andrew Lawson, Mark Lochtenberg or Peter Nightingale on (61-2) 9300 3333.