strategic investment 2012, page-9

NEW AGE EXPLORATION ( NAE ) AN EXCITING EMERGING COAL COMPANY

New Age Exploration’s transformation into a coal exploration and development company began in May this year when a partnership was formed with Aurora Energy to pursue thermal and coking coal development projects in Colombia. Aurora has been active in Colombia for 25 years and is a major supplier of equipment and consulting services to the coal mining sector. With its extensive network of contacts, Aurora is ideally placed to assist New Age Exploration in identifying a strong pipeline of projects which will enable the company to grow substantially over coming years. Under the terms of the agreement NAE will own 90% and Aurora 10% of projects which are vended into the Colombian joint venture company, Newco.

The management team at NAE are developing a good track record of success having delivered on everything they have promised shareholders to date. The Managing Director is a former senior executive from BHP so securing a person of his callibre is a real positive for a company the size of New Age.

Projects Acquired to Date
So far the partnership has resulted in the identification of six projects for NAE, three thermal and three coking coal. Further acquisitions in the near term are highly likely.

Subachoque Coking Coal Concessions: The Facts
• To date three acquisitions have been made within the
Subachoque Syncline (887T, FL2-151 and JBI-11091).

• Three concessions acquired with a conceptual target of
30-58MT of hard coking coal.

• Initial JORC resource from 887T concession of 3.6mt of
medium volatile hard coking coal.

• Production scheduled to commence in Q1, 2013.

• Current mine operation life due to permitting constraints
is October 2014.

• Annual production rate of 400Ktpa of saleable coking coal.

• I have calculated a DCF valuation (based on the
parameters released in today's announcement (plus some of
my own assumptions) for Stage 1 and 2 in the range of
$0.24 to $0.56 per share based on 400Ktpa production of
saleable coal and a coking coal price in the range of
$200 - $250 per tonne (887T to October 2014, then
production from adjoining concession FL2-151). This
does not include any value from the potential to expand
production further.

• Wash plant to be centrally located to other concessions
to extend overall project life.

• Stages 2 (Q1, 2014) has the potential to add multiples of
value to the current share price because it is not
restricted by permitting constraints.

• Stage 2 drilling scheduled to commence in Q1, 2012.


Cesar Basin Thermal Coal Concessions: The Facts
• Three concessions acquired with a total size 6,685h
(GJP-151, GIK-103 and GHN-121).

• Conceptual exploration target of 250-1,000 million tonnes
of export quality thermal coal.

• Target sequence typically has a thickness of up to 35m
with multiple coal seams ranging from 2–6m thick.

• Initial due diligence has confirmed that both concessions
have the potential to host the target sequence at depths
accessible by conventional underground mining methods.

• Cesar project has a rail line running through it which
could provide access to existing port facilities.

• Trucking provides another short term viable solution if
rail capacity is fully utilised. There is an extensive
network of highways which could provide access to ports.

• Fenco plans to expand the railway capacity to 100Mt from
2015 (current capacity 50Mtpa).

• An independent expert recently valued Glencore’s Cesar
Basin operations at US$4.9 Billion. The operation has
thermal coal reserves of 209Mt and current production of
5.2Mtpa expanding to 14.0Mtpa.

• Japanese company Itochu paid US$1.5b for a 20% stake in
Drummond’s coal operations in Columbia. The largest
operation included in the transaction, which produces
27Mtpa, adjoins two of NAE’s concessions which total
4,141 hectares where an exploration target of 200-800Mt
of underground thermal coal has been defined.

The milestones delivered by the company to date give me confidence that the management team at NAE will continue to deliver. Provided they do, 2012 should be an exciting year for shareholders.