EMU NL — Interim / Quarterly Report 2014

Apr 28, 2014

EMU NL ABN 50 127 291 927

QUARTERLY REPORT FOR MARCH 2014

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HIGHLIGHTS

HIGHLIGHTS
TONNES PROCESSED MARCH QTR	279,503
DIAMONDS SOLD(CARATS)MARCHQTR	10,617
FUNDS RECEIVED FROM SALES MARCH QTR	R17.18 million US$1.57 million
AVERAGE PRICE PER CARAT MARCHQTR	R1,618 US$148
DIAMONDS SOLD APRIL 14 (CARATS)	4,831
FUNDS RECEIVED FROM APRIL 14 SALES	R3.27 million US$0.315

Figures are for 100% equity in Superkolong which is owned as to 50% by Emu.

SUPERKOLONG DIAMOND OPERATION (50% EMU)

Diamonds sold for the quarter totalled 10,617 carats. Sales totalled US$1.57 million. The average price per carat received was US$148.

Diamond production continued to be below budget due to continuing plant recovery issues caused by an inadequate supply of reasonable quality of process water. Normal plant operation was suspended on 18[th] February due to the water supply and employees were redeployed to maintenance duties. The plant was restarted on 5[th] March on a limited basis and full production resumed on 16[th] March. During this period routine maintenance and upgrades were completed to all sections of the plant.

From 16[th] March the plant has operated normally with daily throughputs trending upwards to stabilise over 5,000 tpd and recovered grades in line with expected tailings grades (5 to 7 cpht).

Most of the work to upgrade the water supply has been completed. The outstanding item is the pipeline from Homevale to the Maturation Ponds. The tender for this work has been awarded and the project will commence once the Municipality has approved the work.

As advised in the announcement on 7[th] March, due to the issues with the water supply and notwithstanding the return to normal production, the next vendor payment (R35 million) due on 1[st] July will have to be substantially funded by the shareholders of IT243 (Superkolong’s holding company).

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EMU NL ABN 50 127 291 927

QUARTERLY REPORT FOR MARCH 2014

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SALE OF SUPERKOLONG DIAMOND INTEREST

Based on a review of the Superkolong operation and discussions regarding ongoing working capital requirements for the operation, the Board of Emu has resolved to accept an offer from its 50% partner (El Nino), to acquire Emu’s interest in the project by the purchase of Emu’s shareholding in the holding company, IT243, and Emu’s loan account. The share (and claims) purchase agreement was signed by all parties today and the essential terms of the transaction are:

1. Total consideration is A$3 million to be paid in six instalments ( Instalments ) of A$500,000.

2. The Instalments will be partially secured by Euro 600,000 which will be held in escrow upon satisfaction of the conditions precedent pending full payment but reducing in line with the value of the Instalments outstanding.

3. All of El Nino’s obligations are guaranteed by its parent company, Batla Minerals (SA), listed on Euronext (Marche Libre) in France.

4. Upon signing the binding agreement, the first Instalment was placed in escrow pending satisfaction of the conditions precedent (see paragraph 9 below).

5. The first Instalment will be released upon satisfaction of the conditions precedent (see paragraph 9 below).

6. The second Instalment will be paid upon the sooner of 31 July 2014 or delivery of agreed water volumes.

7. The remaining Instalments shall then be paid quarterly.

8. Instalments outstanding shall attract interest calculated and compounded daily at the annual rate of 12%.

9. The transaction is subject to the following conditions precedent:

10. a) Emu shareholder approval (which will be sought forthwith);

11. b) approval of the Takeover Review Panel in South Africa (expected to be forthcoming); and

12. c) any other applicable regulatory approvals,

which conditions are to be satisfied by 10[th] June 2014 or such longer date as is needed to meet regulatory requirements.

1. Should El Nino not pay all the Instalments and interest, in addition to other rights that Emu may have (including to sue for the entire amounts outstanding), the shares and balance of Emu’s loan account shall revert to Emu for no consideration.

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EMU NL ABN 50 127 291 927

QUARTERLY REPORT FOR MARCH 2014

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A Notice of Meeting will be lodged with ASX today seeking approval for the transaction. The Notice of Meeting details the transaction, including the proposed timetable for the transaction, and the effect of the transaction on Emu.

The Directors and their associates will vote in favour of the transaction.

MT MARMION E30/462

As announced on 28[th] March, the Company has applied for an exploration tenement north of Southern Cross, WA. The tenement covers part of an Archaean greenstone belt considered prospective for base metal mineralisation. Previous exploration located three airborne electromagnetic conductors which remain untested.

29[th] April 2014

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EMU NL ABN 50 127 291 927

QUARTERLY REPORT FOR MARCH 2014

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Background to Superkolong’s tailings retreatment operation

Kimberley Miners Forum (Pty) Ltd ( KMF ) has rights to treat certain tailings ( KMF Tailings ) purchased from De Beers Consolidated Mines (Pty) Ltd ( De Beers ).

Superkolong (Pty) Ltd has a 30.4% shareholding in KMF and, in turn, each of Emu and El Nino Mining (Pty) Ltd (a wholly owned subsidiary of Batla Minerals (SA)) ( El Nino ) has an indirect 50% interest in Itakane Trading 243 (Pty) Ltd ( IT 243) which is the holding company of Superkolong.

Each KMF shareholder is entitled to retreat KMF Tailings in proportion to its shareholding.

Superkolong’s tailings retreatment operation is situated on land belonging to or controlled by third parties including De Beers and aspects of that operation must conform to certain De Beers’ policies with water and electricity being supplied and controlled by De Beers.

For more information on the company visit www.emunl.com.au

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EMU NL ABN 50 127 291 927

QUARTERLY REPORT FOR MARCH 2014

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Emu NL ABN 50 127 291 927 ASX Code: EMU 10 Walker Ave West Perth, WA 6005 T +61 8 9226 4266 E info@emunl.com.au PO Box 1112 West Perth, WA 6872 Issued Capital : Shares - Quoted: 39,693,856 fully paid shares 35,652,856 contributing shares Options – Unquoted: ~~841,148 exercisable at $0.5874~~ by 22.12.2014 82,736 exercisable at $0.4266 by 21.12.2015

Directors: Peter Thomas Chairman Greg Steemson Managing Director Gavin Rutherford NonExecutive Director

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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 NL. Mr. Steemson is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and has sufficient experience in the activity which he is undertaking to qualify as a Competent Person as defined in the 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 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.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/2013

Name of entity

	Name of entity
	Emu NL
	ABN 50 127 291 927 Consolidated statement of cash flows
			31 March 2014
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) NetOperating Cash Flows		Current quarter $A’000		Year to date (9 months) $A’000
		- (44) - - (92) - 5 - - -		- (149) - - (297) - 16 - - -
		(131)		(430)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		- - - - 10 - (208) - -		- - - - 11 15 (808) - -
		(198)		(782)
		(329)		(1,212)

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(329)	(1,212)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows	- - - - - (1)	505 - - - - (6)
	(1)	499
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(330) 759 -	(713) 1,142 -
	429	429

Payments to directors of the entity, associates of the directors, related entities of the entity and associates of the related entities

1.23 1.24	1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
			130
			208
1.25 Explanation necessaryfor an understandingof the transactions Item 1.23 includes aggregate amounts paid to directors including salary, directors’ fees, consulting fees, superannuation and geological consulting services. Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest		Explanation necessaryfor an understandingof the transactions
		Item 1.23 includes aggregate amounts paid to directors including salary, directors’ fees, consulting fees, superannuation and geological consulting services.
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest

• See chapter 19 for defined terms.

Appendix 5B Page 2

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	Nil	Nil
	Nil	Nil

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	50
	-
	-
	150
Total	200

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	429	759
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	429	759

Changes in interests in mining tenements and petroleum tenements

6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased	Tenement reference and location	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference+securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs,redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	39,693,856 35,652,856	39,693,856 -	Fully paid 6 cents	Fully paid 3 cents
7.5 +Convertible debt securities(description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	841,148 82,736	- -	Exercise price $0.5874 $0.4266	Expiry date 22 December 2014 21 December 2015
7.11 Debentures(totals only)
7.12 Unsecured notes (totals only)

• See chapter 19 for defined terms.

Appendix 5B Page 4

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

• 2 This statement does / ~~does not*~~ (delete one) give a true and fair view of the matters disclosed.

Sign here: Date: 29 April 2014

(Company secretary)

Print name: Dennis Wilkins

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements and petroleum tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

01/05/2013 Appendix 5B Page 5