Coalworks has completed a 5 hole drilling program which tested the potential to the south of the northern area for significant underground coal resources at depths of over 150m.

The first 2 holes drilled in the mid eastern portion of the EPC failed to intersect coal although the third hole did intersect two 0.5m thick bands of coal from 124m. Further drilling has resulted in two final holes intersecting approximately 6 to 8 metres of cumulative coal closer to the northern area but deeper suggesting that further drilling is required to understand seam geometry.

Key hurdles for development will be resource establishment, coal processing tests to produce a marketable product, addressing the proximity to local dwellings and securing access to port loading capacity.

Coal analysis performed by previous tenement holders predicted that the coal is a hard, black coal having an in situ ash content of 40%+ (inherent moisture up to 15%). Sulphur is typically 0.5% to 0.7%. Washing will possibly reduce ash and sulphur to improve the product. The calorific values of the coal range from 22 - 24 MJ/Kg which indicates potential for sale as a medium grade steaming coal should an economic resource be found.

Key points include:

• Nearest railway is 6km
• Nearest Major Road is 1 km
• Nearest town/city is Toowoomba 10Km
• Nearest power line is 4km
• Nearest coal loader is 150 km (Brisbane Coal Terminal)
• Nearby rail link to Gladstone planned is 400km