Projects - Maryborough

LOCATION: EPC923 and EPC1082. Near Hervey Bay, Queensland
OWNERSHIP : 100% NEC
PROJECT PHASE: MINE FEASIBILITY
PRODUCT: Hard Coking Coal

ESTIMATED RESOURCES : ~200 Mt
Indicated Resource : 9.8 Mt
Inferred Resource : 73.5 Mt
Exploration Target : 105-137 Mt

MARKETABLE RESERVES : 5.9Mt
Probable Reserve : 5.9Mt

Following a short exploration program partly funded by the Japanese Government organisation NEDO, Northern Energy confirmed the presence of coal with good coking properties within the Cretaceous Burrum Coal Measures on the western limb of the Burrum syncline north of Maryborough within EPC923. This area had previously been the subject of small scale mining for many years.

A review of the drilling results, historical information from previous mining activity in the area and the potential availability of port infrastructure was undertaken in relation to the Maryborough project. In July 2009 the Company announced an initial 5Mt inferred resource and this was followed over the next twelve months by a series of upgrades and improvements as more information was made available from drilling and analysis.

Subsequently, Northern Energy announced the quantification of an additional 50-70Mt Exploration Target for the Maryborough Hard Coking Coal Project as a result of geological modelling of historical drilling information obtained earlier in the year. The Company announced in early 2010 an upgrade of this target area to an Inferred Resource of 57.4Mt, with a further additional 25 - 35Mt added to the Exploration Target category at depths between 100 and 150 metres.

Subsequent to this, the company announced a further upgrade of the resources to include 9.8Mt of Indicated Resource and 73Mt of Inferred Resource in April 2010.

In July 2010 the company achieved a significant milestone in the development of the Colton mine in the Maryborough Project with the announcement of a Probable Reserve of 5.9Mt.

This marketable reserve, supported by a substantial inferred resource, is sufficient to underpin development of the proposed open cut Colton Mine to produce 500,000 tonnes a year of premium quality, hard coking coal with an initial mine life of at least 10 years. A Mining Lease application has been submitted for the Colton Mine Area, supported by a supporting Environmental Management Plan which will take into account the potential for a longer project life following the upgrading of the resource.

With rail capacity available to transport product coal to port at Gladstone, Northern Energy is seeking to develop and bring the Colton Mine into production during the 2010-11 financial year, subject to completion of the relevant approval processes.

A tender process initiated to introduce a joint venture party to the mine and exploration project was truncated by the Global Financial Crisis. The increased confidence in the project resulting from the geological modelling and coal quality assessment to date has resulted in the Directors considering alternative funding models to the JV partner route.