EMU NL — Capital/Financing Update 2013

Feb 19, 2013

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ACQUISITION OF DIAMOND OPERATION: SOUTH AFRICA

Emu Nickel NL ABN 50 127 291 927

ACQUISITION OF DIAMOND OPERATION, KIMBERLEY SOUTH AFRICA

ASX Code: EMU

10 Walker Ave West Perth, WA 6005

T +61 417 981 814 E info@emunickel.com.au

PO Box 1112 West Perth, WA 6872

Issued Capital : Shares - Quoted:

34,642,856 fully paid shares 19,894,892 contributing shares

Options – Unquoted:

Highlights

• Acquisition of an existing diamond operation producing up to 15,000 carats/month

• Minimum 5 year term

• Cash flow positive

• Average tender price of ~US$100/carat received for the product during 2012

• Attractive vendor terms

4,596,435 exercisable at $1.0878 by 27.2.2013

841,148 exercisable at $0.5874 by 22.12.2014 82,736 exercisable at $0.4266 by 21.12.2015

Cash: $3.4 million

Directors:

Peter Thomas Chairman

Greg Steemson Managing Director

George Sakalidis & Gavin Rutherford Non-Executive Directors

Emu Nickel NL ( Company ) and El Nino Mining Proprietary Limited ( El Nino ) (a South African registered company and subsidiary of Batla Minerals SA, an entity listed on the NYSE Euronext (Marche Libre) in Paris) have jointly offered, via a special purpose limited liability company ( SPV registered in South Africa, to purchase, amongst other things, all of the issued capital in and claims on loan account against Superkolong Proprietary Limited ( SK ).

SK is a 30.4% shareholder in the South African company Kimberley Miners Forum Proprietary Limited ( KMF ). KMF has purchased various coarse, diamondiferous, kimberlite tailings dumps (Tailings Mineral Resources – TMR s) situated around the town of Kimberley in South Africa from De Beers Consolidated Mines Limited ( DBCM ). SK operates a diamond tailings processing and recovery plant on land leased by SK from DBCM adjacent to the largest TMR resource purchased by KMF known as Chrono 1.

The terms of the acquisition by SPV are, amongst other things: -

1. Purchase Price payable by SPV to the SK Vendors is in the amount of ZAR135M (50% by Emu and 50% by El Nino) payable in four payments due as to R40M on 1 March 2013, R25M on 1 September 2013, R35M on 1 March 2014 and R35M on 1 September 2014.

2. The effective recourse of the SK Vendors to recover and the Security for the Purchase Price is limited to the shares held by SPV in SK and a portion of the cash flows of SK which are to be held in escrow.

Based on current operational parameters, funding for the payments due on 1 September 2013, 1 March 2014 and 1 September 2014 to the SK Vendors will be met from the SK cash flow.

SK and the other two shareholders of KMF have been operating plants to process the TMRs via KMF since 2007, initially under a service contract with DBCM and from 2008 in their own right (via arrangements with KMF) when KMF purchased the TMRs from DBCM. The KMF agreement with DBCM allows KMF’s shareholders (including in particular SK) access to the TMRs until April 2018. Discussions are currently underway between KMF and DBCM to extend the duration of this access period.

Under the arrangements with KMF, TMR material is delivered to each shareholder of KMF in their respective KMF equity proportions and treated by each KMF shareholder in their own plants. The SK plant currently processes SK’s attributable portion of the TMRs comprising of up to 150,000 tpm of TMR tailings and recovers up to 15,000 carats of diamonds per month.

The KMF feedstock is comprised of two resource sources. The main TMR resource currently being processed is being sourced from a series of smaller dumps scattered around Kimberley. The recovered grade from these smaller dumps varies between 7 and 9cpht. It is estimated by the Company that there is in excess of 6Mt of diamondiferous material left in these smaller dumps.

The largest remaining resource that was purchased by KMF is the TMR known as Chrono 1 which is estimated (by DBCM) to contain approximately 43Mt of diamondiferous tailings. This large dump was created by DBCM between the years 1959 and 1970 after which period improving technology (introduction of DMS plants amongst other things) reduced the grade of diamonds being deposited by DBCM in the TMRs. During March to December 2012 SK processed 206,000t from Chrono 1.

The average price per carat received by SK via tender during 2012 for diamonds recovered was ~US$100/ct.

During the period August 2003 to August 2005 DBCM completed a large diameter drilling ( LDA ) program consisting of 154 holes to estimate the grade of the Chrono 1, 2, 3 and 4 dumps (which are more or less contiguous). Holes were usually 50 to 60m long (being the height of the dumps) and samples were usually composited into 5m intervals. 760 bulk samples (25,079t) were processed through the Kimberley Mines Sampling Plant of DBCM between March 2004 and October 2006. The average recovered grade of diamonds for Chronos 1, 2, 3 and 4 was estimated by DBCM at 5.11cpht.

The LDA results show that the grade of Chrono 1 slowly decreased over time as technology then used was improved. The weighted average recovered grade of diamonds of this bulk sampling program for Chrono 1 was estimated by Emu/El Nino at 6.15cpht with the grades from the early years of the dump being > 7cpht.

The diamonds recovered from the TMRs range from industrial type diamonds through to gem quality diamonds. In general, the value per diamond type of (i.e. carats recovered x price) is reasonably consistent.

Based on the current SK plant throughput, the SK operation would need up to 8 years to complete the processing of their share of the TMRs. Emu (in conjunction with El Nino) via the SPV plan to upgrade the SK processing plant and operation capacity to around 230,000tpm

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which would, on the basis that the requisite approvals were obtained, ensure the SK entitlement (under its arrangements with KMF) was processed during the current access term (notwithstanding it might be extended), enable SPV to pay out the Vendors earlier and deliver an enhanced financial outcome for the ultimate SK shareholders.

The transaction between SPV and the SK Vendors is subject to a number of conditions precedent including:

• Approval of the transaction by the Board of Directors and shareholders of the SK Vendors and the SPV;

• Approval of the transaction by the South African Take Over Regulation Panel;

• The SPV receiving a South African Revenue Services tax clearance certificate in respect of SK;

• Approval from the Financial Surveillance Department of the South African Reserve Bank permitting the SPV to receive loan funding from the Company.

The transaction between Emu and El Nino under which Emu is committed to fund the first tranche of the purchase price for SK is subject to the conditions precedent that any regulatory and ASX approvals and other requirements are obtained and met.

The Effective Date for the transaction is 1 March 2013.

RIGHTS ISSUE

The rights issue of contributing shares recently undertaken by the Company closed on 8 February 2013. The issue raised $596,846.85; 19,894,892 contributing shares will be issued.

SALE OF SMALL PARCELS

The sale by the Company of small share parcels (2,092,166 shares) was completed at a price of $0.068. A total of approximately $131,714 has been returned to 1,258 shareholders to date.

Dated 20 February 2013

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Checklist of Assessment and Reporting Criteria

Checklist of Assessment and	Reporting Criteria
Source of Diamonds	Various kimberlite mining operations around Kimberley. The grade of the Outside Dumps is known from plant recoveries. This is currently between 7 and 9cpht. The Chrono TMRs came from various sources including Bultfontein, Wesselton, Du Toitspan, Kimberley.
Sample collection	DBCM drilled 154 Large Diameter (1m) Auger holes through the Chrono dumps, collected 997 bulk samples (nominally 30t each), processed 760 bulk samples (25,079 tons) and recovered 1,273.13 carats. A Bauer BG36C rig was used for the work. The LDA were drilled on a nominal 60m grid. Holes were drilled to the base of the dump, between 50 and 60m. Sample interval was nominally 5m.
Sample treatment	The samples from the Chrono dumps were screened and concentrated at the Kimberley Mines Sampling Plant which emulated DBCM full scale plants. Oversize was screened at 25mm. The bottom size was 1mm. The diamonds were recovered using a DMS followed by grease tables and flow sort machines. The oversize consists of primary kimberlite and was crushed before processing.
Carats recovered	Grades recovered per bulk sample ranged from nil to 47.2 carats. Eighteen thousand eight hundred and twenty eight (18,828) stones were recovered amounting to 1,273.13 carats.
Sample grade	The grade of the Outside Dumps is averaging between 7 and 9cpht based on actual plant recoveries. The average grade (estimated by DBCM) of the 760 samples processed by DBCM was 5.11cpht for the whole Chrono Dump. The weighted average grade (estimated by Emu/El Nino) of Chrono 1 samples was 6.15cpht with the grade slowly decreasing towards Chrono 2. The dry density was estimated (by DBCM) at 1,61t/m3 and wet density at 1,79t/m3.
QA/QC	No quantitative information is available.

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For more information on the company visit www.emunickel.com.au Please direct enquiries to:

Greg Steemson George Sakalidis Managing Director Non-executive Director Phone: (08) 9226 4266 Mobile: 0417 981 814 Mobile 0411 640 337 Email: gsteemson@bigpond.com Email george@emunickel.com.au

COMPETENT PERSON’S STATEMENT

The details contained in this report that pertain to exploration results, mineral resources and mineral reserves are based upon information compiled by Mr Greg Steemson, Managing Director of Emu Nickel NL. Mr Steemson is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Steemson consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears.

FORWARD LOOKING STATEMENT

This report contains forward looking statements concerning the projects owned by Emu Nickel NL. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management’s beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments

Superkolong plant

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----- Start of picture text -----

BATLA$ KIMBERLEY)DUMP) EMU$NICKEL$NL$
MINERALS$(France)$ PROJECT) 100%$
El$Nino$Mining$ Emu$Blue$Pty$
Pty$Ltd$ Ltd$
(South$Africa)$ (Australia)$
50%$ 50%$$$
IT243$Pty$Ltd$
(South$Africa)$
100%$
Samber$Trading$Pty$Ltd$$ Superkolong$Pty$Ltd Superstone$Pty$Ltd$
9%$ 30.4%$ 60.6%$
Kimberley$Miners$Forum$
100%$
Kimberley$Dump$Project$
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Superkolong November tender goods

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