COMET RIDGE LIMITED — Capital/Financing Update 2004

May 2, 2004

3 May 2004

ASX ANNOUNCEMENT

COMET RIDGE INCREASES INTEREST IN WALLOON COAL MEASURES CSG PROJECT

The Board of Comet Ridge Limited (ASX code COI) announces that it has exercised the first of three options that allow it to increase its interest in two exploration permits covering the Walloon Coal Measures project in south eastern Queensland by committing to spend \$1 million (as contemplated in the prospectus).

Under an agreement with Arrow Energy NL (Operator), Comet Ridge has the right to increase its existing interests in ATP 683P and ATP 689P in three separate phases. The Company's existing, new and maximum interests that can be earned are shown in Table 1. Comet Ridge will earn an additional 6.67% (increasing from 30 to 36.67%) in the Dalby South Block of ATP 683P plus a further 10% in the Millmerran Block of ATP 683P and in all of ATP 689P (from 20 to 30% in both) under the first phase, it can earn up to 50% in each of the Blocks by exercising all three phases.

The Company has agreed that the \$1 million can be spent in the adjacent Dalby Block (Comet Ridge 20%) to accelerate the development of the Tipton West Pilot project.

The Tipton West Pilot has recently been commissioned. The intent of the initial phase of the pilot is to dewater the coals in order to reduce pressure and allow the gas adsorbed onto the coals to flow to surface. Due to the quality and gas content of the coals at Tipton West, gas flow was noted immediately. This gas flow has gradually increased over the last two weeks as the pumps continue to draw down the water level and the well pumps are now running on produced gas.

The Tipton West Pilot consists of four producing wells and seven monitoring wells. The monitoring wells are at distances of 1 to 7 km away from the pilot producing wells. Pressure responses will be observed in these wells to assess reservoir continuity.

Of the seven monitoring wells, four are completed and three are near completion. It is planned to have all wells completed and equipped with pressure gauges within the next two weeks.

All geological and production data is being forwarded to Netherland Sewell and Associates in the United States (independent consultant reserve engineers) to prepare for reserves certification by mid-year.

The intent and timing of the mid-year reserve certification is to support announced gas sales Memoranda of Understanding totalling 6.7 Petaioules/vr (2.7 PJ/yr to Ergon Energy Pty Ltd and 4PJ/yr to Wambo Power Ventures Pty Ltd) and to provide a sound foundation for other current and on-going gas sales negotiations.

Comet Ridge managing director Andy Lydyard said, "Our objective is the early commercialisation of our CSG projects. The Board's decision to increase our interest in the Walloon Coal Measures project and further develop Tipton West demonstrates our confidence in achieving this objective."

On behalf of Cornet Ridge Limited

Idyad

Andrew J. Lydyard Managing Director

For further information contact:

Andy Lydyard Managing Director Tel: (08) 9225 7108 Fx: (08) 9225 4448 Web: www.cometridge.com.au

Tony Dawe Ward Holt Corporate Communication Tel: (08) 9221 8722 Fx: (08) 9221 8733

Map showing Comet Ridge Limited's existing and new interests in Queensland permits ATP 683 and ATP 689P

Comet Ridge Limited's Existing & Potential Interests in the Walloon Coal Measures Project in south eastern Queensland

Permit/Block	Existing Interest	Interest Affers 1st Option	Interest After 2nd Option	Interest After 3rd Option
ATP 683P Dalby* Dalby South Millmerranl	20% 30% 20%	ΝA 36.67% 30%	NΑ 43.33% 40%	NA 50% 50%
ATP 689P	20%	30%	40%	50%
	Cost	\$1 million	\$1 millíon	\$1 million

* Comet Ridge acquired its 20% interest in the Dalby Block (includes Tipton West Pilot) under a separate agreement