Ann: Response to ASX Price Query, page-7

I agree that some of the washed coal will be premium HCC, with low ash, very high fluidity and very low phos.

However the unwashed ROM coal is nowhere near premium HCC and they initially won't have a wash plant.  I know they will have a basic separation plant which will improve the ROM coal, but to what extent I don't know.

Also, even some of the washed product coal is unlikely premium HCC.

See page 33 for the coal specs for the current reserves - http://www.asx.com.au/asxpdf/20140909/pdf/42s39c9d836pql.pdf

See page 7 to see the spec for premium HCC - http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/metcoalmethod.pdf

I think this shows quite clearly that the BRL unwashed coal is way too high in ash and the swells (CSN) are too low (CSN should be 8-9 for premium HCC).

Also, of the washed product coal, it would appear Escarpment and Whareatea West are the closest to premium HCC but the volatiles are way too high for Escarpment.  Deep Creek does not even appear to have a swell and the sulphur is quite high. While coalbrookdale has very high volatiles and the CSN is too low.

Plus, look at the sulphur for the coal at North Buller.  It is exceptionally high (almost unsalable) ie there will be a big discount because of this.

Don't get me wrong, I do think generally the washed coal is quite good, but it is certainly not all premium HCC, while the unwashed coal is not premium HCC and they initially won't have a wash plant.

As mentioned, I think the BRL project is a very good project, however I think existing management are very low quality in terms of corporate governance, capital allocation and operationally.  Someone will make a lot of money from this project, but it needs to get recapitalised and new management brought in.