small scale mining, page-4

A couple of points for investors to note about ATQ's "small-scale mining" concept at Ngaka;

1. ATQ has a committment to provide 1,000 tonnes bulk samples to several cement factories in Tanzania in May 2010. Assuming the coal is suitable, the intention is to supply unwashed coal to the cement factories and other domestic customers. Unwashed coal can simply be dug up, loaded into a truck and delivered straight to the customer.

2. Once the bulk samples are produced, the intention is to continue mining from the bulk sample test pit using a "truck and shovel operation". This is relatively simple but certainly not "simplistic" method of small-scale mining and will allow ATQ to generate early cashflow without the need to spend a fortune on capex.

3. "Small-scale" is a relative term when compared to Australian coal mining operations. By Tanzanian standards, the "small-scale" coal mining operation planned to commence at Ngaka this year will be the largest coal mining operation in Tanzania's history.

4. Tancoal already has all the permissions and Govt. approvals necessary to commence small scale mining from the test pit at Ngaka, and the intention is to continue "test pit mining" and gradually increase production to at least 250,000tpa within the next 12 months.

5. Tanzania currently imports 250,000tpa of thermal coal from South Africa and Malawi. The first target will be to replace imported coal with coal mined at Ngaka, and in the process make Tanzania self-sufficient in thermal coal. Revenues produced by sale of coal to domestic customers will be used to expand production and develop plant and infrastructure to meet the projected requirements of the power station and export customers.

6. There is very strong demand for high quality thermal coal throughout southern Africa, as well as India and China. Where possible, the intention is to satisfy local and regional demand first.