ann out now !!, page-27

From initial research report 1st Aug 2011 by BGF Equities research:

"Hypothetical Valuation
The drilling to date on the first of the Overhangay licences had coal intersections in three out of five
holes where thick intersections over significant distance provides encouraging but inconclusive data on
the possible existence of a very large resource.
On the first licence drilled, with two holes 280m apart showing hard coal intersections of >30m, and a
third hole 6,000m away showing 12m and 15m intersections, there is considerable scope for a large
resource. The Company has stressed that geological structure is poorly understood at this stage. The
size of the licences, the spacing of the drill holes and width of the intersections, enables some
reasoned speculation.
• For example, at a 30m continuous minimum thickness and an assumed an SG of 1.4, it could be
estimated that the initial Overhangay Prospect could yield 420,000 tonnes of hard coal per hectare.
An initial resource of 200 Mt could theoretically be achieved in an area of 476 hectares, well within
the limits of the licence.
• Similarly, at a minimum of 12m coal thickness, SG 1.4, for 168,000t per hectare, 1190 Ha would be
required for a similar resource.
• Using an apparent dip from the first two holes and an average hard coal thickness of 30m, a open
cut to a depth of 200m would require only 6.7 km of strike length for a 200 Mt resource.
• An inferred JORC Inferred Resource of 200 Mt could be valued at $0.75/t, giving a value of about
$0.23/share on the current capital structure, based on a semisoft/thermal coal mix. On the same
basis, larger resource tonnages will be a multiple of this.
While this is an hypothetical exercise, it illustrates the potentially large coal resources possible with
such wide seam thicknesses and shallow depths. The success of other Companies such as Aspire,
Hunnu and Xanadu in establishing large resources augers well for CEO in this exploration setting" p.2[of 9]