HELIOS ENERGY LTD - Capital/Financing Update 2011

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NEW HORIZON MINERALS LTD (TO BE RENAMED NEW HORIZON COAL LTD) ACN 143 932 110

PROSPECTUS

For the offer of up to 75 million Shares at an issue price of $0.22 per Share together with one (1) Free Attaching Option for every one (1) Share issued, to raise up to $16.5 million (Offer). The Free Attaching Options are exercisable at $0.20 each on or before 31 December 2014 .

Joint lead managers:

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IMPORTANT INFORMATION

This Prospectus is a re-compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy ASX requirements for re-listing following a change to the nature and scale of the Company’s activities. The Offer is conditional on Shareholder approval being obtained at the Annual Shareholder Meeting.

This is an important document that should be read in its entirety.

If you do not understand it you should consult your professional advisers without delay. The Securities offered by this Prospectus should be considered highly speculative.

CHANGE IN NATURE AND SCALE OF ACTIVITIES AND RE-COMPLIANCE WITH THE ASX LISTING RULES

The Company has historically focused on gold and base metal exploration. As announced to the ASX on 26 September 2011, the Company entered into a conditional agreement (Share Sale Agreement) to acquire 100% of the issued share capital of Delta Coal Fund Pty Ltd (Delta Coal) (Acquisition or Transaction). Please refer to Section 10.1 for further details of the Share Sale Agreement.

The Acquisition will result in a significant change in the nature and scale of the Company’s activities which requires approval of its Shareholders under Chapter 11 of the ASX Listing Rules. The Company has convened an annual general meeting to be held on 9 November 2011 to seek Shareholder approval for, amongst other approvals, the Acquisition and the change in the nature and scale of the Company’s activities (Annual General Meeting).

The Offer under this Prospectus is conditional on receipt of the relevant Shareholder approvals at the Annual General Meeting.

ASX requires the Company to re-comply with Chapters 1 and 2 of the ASX Listing Rules. This Prospectus is issued to assist the Company to re-comply with these requirements.

The Company’s securities will remain suspended from trading on ASX and will not be reinstated until satisfaction of the conditions to the Offer and ASX approving the Company’s re-compliance with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules.

There is a risk that the Company may not be able to meet the requirements of ASX for requotation on the ASX. In the event the conditions to the Offer are not satisfied or the Company does not receive conditional approval for re-quotation on ASX then the Company will not proceed with the Offer and will repay all application monies received.

IMPORTANT NOTICE

This Prospectus is dated 3 November 2011 and was lodged with the ASIC on that date. The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which the Prospectus relates.

The expiry date of this Prospectus is at 5.00pm WST on that date which is 13 months after the date this Prospectus was lodged with the ASIC (Expiry Date). No securities may be issued on the basis of this Prospectus after the Expiry Date.

Application will be made to ASX within seven days after the date of this Prospectus for Official Quotation of the Shares the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Securities the subject of this Prospectus should be considered speculative.

RISK FACTORS

Potential investors should consider that an investment in the Company is highly speculative and should consult their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus. For further information in relation to the risk factors of the Company please refer to the summary in the Investment Overview Section and Section 9 of the Prospectus.

COMPETENT PERSON’S STATEMENT

The information in Section 4 of this Prospectus that relates to Exploration Targets and Exploration Results is based on information compiled by Mr James Kohler, who is a Registered Member of the Society of Mining, Metallurgy and Exploration and independent consultant to the Company. Mr Kohler is an Associate of Behre Dolbear & Company (USA), Inc and has over 35 years of exploration and mining experience in a wide variety of mineral deposit styles including coal. Mr Kohler has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Kohler consents to the inclusion in the Prospectus of this information in the form and context in which it appears.

DIAGRAMS

Diagrams in this Prospectus have been prepared by officers of the Company and are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of this Prospectus.

WEB SITE – ELECTRONIC PROSPECTUS

A copy of this Prospectus can be downloaded from the website of the Company at www.newhorizonminerals.com.au. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an application form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company.

INVESTMENT OVERVIEW ............................................................................................................. 5	INVESTMENT OVERVIEW ............................................................................................................. 5
1.	CORPORATE DIRECTORY ............................................................................................ 20
2.	CHAIRMAN’S LETTER ................................................................................................... 22
3.	DETAILS OF THE OFFER ................................................................................................ 23
4.	COMPANY AND PROJECT OVERVIEW ....................................................................... 27
5.	CORPORATE GOVERNANCE ...................................................................................... 30
6.	INDEPENDENT GEOLOGIST’S REPORT ......................................................................... 33
7.	INVESTIGATING ACCOUNTANT’S REPORT ................................................................. 34
8.	REPORT ON THE KINNEY PROJECT ............................................................................. 35
9.	RISK FACTORS ............................................................................................................ 36
10.	MATERIAL CONTRACTS .............................................................................................. 44
11.	ADDITIONAL INFORMATION ...................................................................................... 52
12.	DIRECTORS’ AND PROPOSED DIRECTORS’ AUTHORISATION ..................................... 59
13.	GLOSSARY .................................................................................................................. 60

INVESTMENT OVERVIEW

Important Notice

This Section is not intended to provide full information for investors intending to apply for Securities offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

The Offer

Summary of the Offer

By this Prospectus, the Company offers for subscription up to 75 million Shares at an issue price of $0.22 per Share together with one (1) Free Attaching Option for every one (1) Share issued to raise up to $16.5 million.

The Offer is open to all investors.

The minimum subscription pursuant to the Offer is $11 million.

Applicants should note that the Directors and Proposed Directors retain an overriding right to do any of the following at their discretion in relation to the Offer:

(a) accept the Application in full;
(b) accept the Application in respect of a lesser number of Securities than applied for; or
(c) decline the Application.

The Shares offered under this Prospectus will rank equally with the existing Shares on issue. Rights and liabilities attaching to the Shares and Free Attaching Options are summarised in the Section 11 of this Prospectus.

Business Model – Change of Direction

New Horizon Minerals Ltd (New Horizon or the Company) is an Australian public company listed on the official list of ASX (ASX code: NHO).

The stated objective of the Company when it was listed on ASX was to allocate part of its working capital budget to review, evaluate and acquire new projects. This change of focus is as a consequence of this review and decision to expand into the coal sector.

The Company has predominantly operated in the gold and base metal exploration industries in New South Wales. The Company currently has 20% interest in the Mount Drysdale Gold and Base Metal Project and the Hora Bore Base Metal Project from Drysdale Resources, with farmin rights to earn an 80% interest in the projects by expending $1 million over 3 years. The current Directors were each appointed on 4 June 2010.

On 26 September 2011, the Company announced to ASX that it had entered into the Share Sale Agreement to acquire Delta Coal from the shareholders of Delta Coal (Vendors).

Delta Coal has entered into an asset purchase agreement with Carbon Resources, LLC (Carbon Resources) (Asset Purchase Agreement) to acquire a 100% interest in:

(a) land from Carbon Resources known as the Kinney # 2 thermal coal project with mining permit number C0070047 (Permit), located in Utah in the United States of America (USA);
(b) the Carbon Resources Sublease (as described in the Report on the Kinney Project in Section 8);
(c) the Telonis Lease (as described in the Report on the Kinney Project in Section 8); and
(d) all of the Surface Fee Land (as described in the Report on the Kinney Project in Section 8),

(collectively, Kinney Project).

A summary of the Asset Purchase Agreement is contained in Section 10.2.

Pursuant to a deed of assignment and assumption between Delta Coal and Wasatch (Deed of Assignment), and in accordance with the terms of the Asset Purchase Agreement with the consent of Carbon Resources, Delta Coal will agree to assign its rights and obligations under the Asset Purchase Agreement to Wasatch. Wasatch is a 100% subsidiary of Delta Coal and therefore, following completion of the Acquisition, Wasatch will be a 100% subsidiary of the Company.

The issue of the Permit requires the lodgement of:

(a) a reclamation bond of at least $2,183,480 (or US$2,210,000 at a foreign exchange rate of A$/US$1.012) (Reclamation Bond). The amount of the Reclamation Bond is subject to change; and
(b) a plan for the future reclamation of the Permit site (Reclamation Plan),

(collectively, Grant Conditions) with the Department of Natural Resources, Division of Oil, Gas and Mining in Utah, USA (DOGM).

The Company is not the applicant for the Permit, Carbon Resources is the applicant. Pursuant to the Asset Purchase Agreement and the Deed of Assignment, Carbon Resources will deposit the Permit transfer documents with Wasatch at completion of the Asset Purchase Agreement, which is expected to be on or around 1 December 2011 (Closing). Carbon Resources will transfer the Permit to Wasatch once Wasatch satisfies the Grant Conditions and Carbon Resources obtains the Permit, which is expected to occur within one year of Closing.

Pursuant to the Asset Purchase Agreement, in consideration for Wasatch’s acquisition of the Kinney Project, Wasatch must make the following payments to Carbon Resources:

Initial consideration at settlement of the Asset Purchase Agreement	US$7 million
First Deferred Consideration	US$3 million, which is payable on or before 1 June 2012 (First Deferred Consideration).
Second Deferred Consideration–non	US$15 million, which is payable upon

recourse the first to occur of: • completion of a Bankable Feasibility Study with New Horizon’s If the Bankable Feasibility Study is not Board making a Positive Decision to completed and the Positive Decision to Mine; or Mine is not made within 36 months of Closing of the Asset Purchase • 1 December 2014, Agreement, then the Kinney Project will (Second Deferred Consideration). be returned to Carbon Resources in accordance with the Asset Purchase Agreement and the Company will retain no interest in the Kinney Project.

Following settlement of the Acquisition, the Company will acquire a 100% interest in the Kinney Project in Utah. Accordingly, the Company intends to change the focus of its activities to include coal exploration and production.

The Company intends to fund the First and Second Deferred Consideration payments predominantly via future capital raisings in the equity markets, however debt financing may be considered if available on terms favourable to the Company.

Investors should note that there can be no assurance that such funding will be available on satisfactory terms or at all. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities.

If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be, which may adversely affect the Company. If the Offer is not fully subscribed, the Company may be required to seek further funding in order to meet the First Deferred Consideration payment. If funding is not available on satisfactory terms or at all, then the Company may be unable to pay the First Deferred Consideration, which would amount to a material breach under the terms of the Asset Purchase Agreement. If such a breach was not remedied, it would result in the the Kinney Project being returned to Carbon Resources and the Company will retain no interest in the Kinney Project.

If the Bankable Feasibility Study is not completed and the Positive Decision to Mine is not made within 36 months of Closing of the Asset Purchase Agreement, then the Kinney Project will be returned to Carbon Resources in accordance with the Asset Purchase Agreement and the Company will retain no interest in the Kinney Project.

The Company’s ability to generate revenue in the future will depend upon the success of the Company’s proposed exploration activities on the Kinney Project and the Company’s ability to successfully exploit any coal that may be discovered on the land which is the subject of the Project.

Subject to successful completion of the Offer, and following on completion of the Acquisition, Mike Placha and Carl Coward will be appointed as Directors of the Company. The Kinney Project will be managed by Mike Placha and Greg Hunt, who are USA based and have over 60 years of collective experience in the USA coal industry.

Full details in respect of the Company, its Board and its rights to the Project are set out in Section 4.

Indicative Timetable

Event	Date
Lodgement of Prospectus with the ASIC	3 November 2011
Offer Opening Date	3 November 2011
Closing Date for Offer	5:00pm WST on 14 November
	2011
Allotment of Securities under the Prospectus	21 November 2011
Settlement of Acquisition	1 December 2011
Anticipated date the suspension is lifted and the	1 December 2011
Company’s Securities re-commence trading on ASX
(subject to satisfaction of Chapters 1 and 2 of the
ASX Listing Rules).

Purpose of the Offer and Use of Proceeds

The purpose of the Offer is to:

(a) assist the Company to meet the requirements of ASX and re-comply with Chapters 1 and 2 of the ASX Listing Rules; and
(b) to raise up to $16.5 million pursuant to the Offer to:
(i) satisfy the condition precedent in the Share Sale Agreement that requires the Company to raise not less than $8,140,000. A summary of the Share Sale Agreement is contained in Section 10.1; and
(ii) provide additional funds for the acquisition of Delta Coal, general working capital and meet the expenses of the Offer.

On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

The table set out below describes the total funds that will be available to the Company at the close of the Offer.

	Minimum	Full
	Subscription	Subscription
	($11 million)	($16.5 million)
	($)	($)
Existing cash available for operations	2,100,000	2,100,000
Delta Coal Fund cash acquired	150,000	150,000
Total raised pursuant to the Offer	11,000,000	16,500,000
Total Funds Available	13,250,000	18,750,000

The Company intends to apply funds raised from the Offer as follows:

Item	Minimum	Full
	Subscription	Subscription
	($11 million)	($16.5
	($)	million)
		($)
Acquisition of Kinney Project1	6,916,000	9,880,000
Repayment of Delta Coal loan	835,000	835,000
JORC Resource report	90,000	90,000
Reclamation Bond2	2,183,000	2,183,000
Bankable Feasibility Study3	1,045,000	2,275,000
Expenses of the Offer4	1,070,000	1,400,000
Working Capital5	1,084,000	2,060,000
Total	13,223,000	18,723,000

Notes:

1 Initial consideration payable on settlement is $6,916,000 (or US$7,000,000 at a foreign exchange rate of A$/US$1.012). A further $2,964,000 (or US$3,000,000 at a foreign exchange rate of A$/US$1.012) is payable on or before 1 June 2012.
2 The lodgement of the Reclamation Bond with DOGM is a condition of the Permit being granted to Wasatch. The Reclamation Bond in United States currency is US$2,210,000 (at a foreign exchange rate of A$/US$1.012). The other conditions for the grant of the Permit are described in the Report on the Kinney Project in Section 8.
3 The proposed Bankable Feasibility Study in respect of the Kinney Project is dependent upon, firstly, the successful completion of the Asset Purchase Agreement, and secondly, the Company meeting the pre-conditions to the grant of the Permit set by DOGM, such as paying the Reclamation Bond and lodging the Reclamation Plan, before the Permit will be granted. The Asset Purchase Agreement is summarised in Section 10.2.
4 A more detailed breakdown of the expenses of the Offer is set out below in this Investment Overview Section.
5 Administration and working capital will include the costs of leasing office space, sundry costs such as audit, share registry, ASX fees, executive and non-executive fees and the costs of any additional staff or consultants that may be retained by the Company in the future to investigate new projects and/or possible acquisitions.

In the event that more than $11 million but less than $16.5 million is raised, the Company intends to allocate the funds as follows (and in order of priority):

(a) to increased Offer expenses;
(b) to continue with work under the Bankable Feasibility Study to facilitate early completion; and
(c) to satisfy (in part) future deferred consideration payable for the Kinney Project Acquisition.

The above table is a statement of current intentions as of the date of lodgement of this Prospectus with the ASIC. As with any budget, intervening events (including exploration success or failure) and new circumstances have the potential to affect the ultimate way funds will be applied. The Board reserves the right to alter the way funds are applied on this basis.

Capital Structure

The capital structure of the Company following completion of the Offer is summarised below[2] :

	Minimum	Full
	Subscription	Subscription
Shares	($11 million)	($16.5 million)
	($)	($)
Shares on issue at date of Prospectus3	20.5 million	20.5 million
Shares issued to Vendors1	10 million	10 million
Shares now offered	50 million	75 million
Total Shares on issue at completion of the Offer and	80.5 million	105.5 million
Acquisition
	Minimum	Full
	Subscription	Subscription
Options	($11 million)	($16.5 million)
	($)	($)
Options on issue at date of Prospectus	20.5 million	20.5 million
Unlisted Incentive Options to be issued to executives of	10 million	10 million
the Company
Free Attaching Options now offered	50 million	75 million
Total Options on issue at completion of the Offer and the	80.5 million	105.5 million
Acquisition
	Minimum	Full
	Subscription	Subscription
Performance Shares	($11 million)	($16.5 million)
	($)	($)

Class A performance shares to be issued to Vendors	10 million	10 million
upon satisfaction of Milestone A1, 4
Class B performance shares to be issued to Vendors upon	10 million	10 million
satisfaction of Milestone B1, 4
Class C performance shares to be issued to Vendors	10 million	10 million
upon satisfaction of Milestone C1, 4
Total Performance Shares on issue at completion of the	30 million	30 million
Offer and the Acquisition

Notes:

1 These Shares and Performance Shares are to be:
a. issued to the Vendors in consideration for the acquisition of Delta Coal; and
b. escrowed until that date which is 12 months from the date of their issue. If a Performance Milestone is met then the Shares issued will be escrowed from the original escrow date of the Performance Shares being issued, or such time as determined by the ASX. Refer to Section 10.1 for further details of the Share Sale Agreement.
2 Assumes no further securities are issued prior to settlement of the Transaction.

3 6,050,000 Shares are currently restricted securities to 17 October 2012. 4 Refer to Sections 10.1(b) and 10.1(c) for further information in relation to the Class A, B and C Performance Shares.

Restricted securities

Subject to the Company being re-admitted to the Official List, certain of the Securities on issue prior to the Offer and certain of the Shares issued on the exercise of the Options on issue prior to the Offer, are likely to be classified by ASX as restricted securities and will be required to be held in escrow.

Change in Nature and Scale of Activities

As outlined in more detail in Section 10 of this Prospectus, the Company has entered into the Share Sale Agreement to acquire Delta Coal. The Share Sale Agreement is conditional upon the Company obtaining all necessary regulatory and Shareholder approvals.

At the Annual General Meeting the Company will be seeking Shareholder approval for a change in nature and scale of activities. In the event Shareholder approval is obtained, ASX will require the Company to re-comply with Chapters 1 and 2 of the ASX Listing Rules. This Prospectus is issued to assist the Company to re-comply with these requirements.

The Company will be suspended from Official Quotation from the time of the Annual General Meeting and will not be reinstated until satisfaction of the conditions to the Offer and ASX approving the Company’s re-compliance with Chapters 1 and 2 of the ASX Listing Rules.

There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation on the ASX. In the event the conditions to the Offer are not satisfied or the Company does not receive conditional approval for re-quotation on ASX then the Company will not proceed with the Offer and will repay all application monies received. In this instance, the conditions precedent to the Share Sale Agreement would not be satisfied and the acquisition of the Kinney Project would not proceed.

Specific Risks

The business, assets and operations of the Company are and will be subject to certain risk factors that have the potential to influence the operating and financial performance of the Company. These risks can impact on the value of an investment in the Securities of the Company.

The Company aims to manage these risks by carefully planning its activities and implementing risk control measures. Some of the risks are, however, highly unpredictable and the extent to which the Company can effectively manage them is limited.

Set out below are specific risks that the Company is exposed to.

Risk Area	Risks	Further details
Change in	There is a risk that the Company may not be able	Section 9.2
Nature and	to meet the requirements of the ASX for
Scale of	reinstatement to the Official List. Should this occur,
Activities	the Securities offered under this Prospectus (and
	the Company’s existing issued Shares) will not be
	able to be traded on the ASX until such time as

those requirements can be met, if at all.

Future Funding In addition to the initial consideration of $6,916,000 Section 9.3 Risk (or $US7,000,000 at a foreign exchange rate of A$/US$1.012), the Company is required to pay Carbon Resources:

First Deferred Consideration - $2,964,000 (or US$3,000,000 at a foreign exchange rate of A$/US$1.012), on or before 1 June 2012; and
Second Deferred Consideration $14,820,000 (or US$15,000,000 at a foreign exchange rate of A$/US$1.012), which is payable upon the first to occur of:
completion of the Bankable Feasibility Study with New Horizon’s Board making a Positive Decision to Mine; or
1 December 2014,

pursuant to the Asset Purchase Agreement.

If the Offer is not fully subscribed, the Company may be required to seek further funding in order to meet the First Deferred Consideration payment. If funding is not available on satisfactory terms or at all, then the Company may be unable to pay the First Deferred Consideration, which would amount to a material breach under the terms of the Asset Purchase Agreement. If such a breach was not remedied, it would result in the the Kinney Project being returned to Carbon Resources and the Company will retain no interest in the Kinney Project.

There can be no assurance that funding will be available on satisfactory terms or at all. If the Bankable Feasibility Study is not completed and the Positive Decision to Mine is not made within 36 months of Closing of the Asset Purchase Agreement, then the Kinney Project will be returned to Carbon Resources in accordance with the Asset Purchase Agreement and the Company will forfeit the consideration paid to Carbon Resources as at that date and any funds expended on the project to that date will be lost.

Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities.

Conditions of the Pursuant to the Share Sale Agreement Section 9.4 Share Sale (summarised in Section 10.1) the Company has Agreement and agreed to acquire Delta Coal subject to the Asset Purchase fulfilment of certain conditions including Carbon Agreement and Resources obtaining the approval of the Contract Risk bankruptcy court (Bankruptcy Court) for either:

• the dismissal of a case in the District of New Mexico No. 10-16104-j11 (New Mexico Case);

or • the approval of the Asset Purchase Agreement by Shareholders, The Company will not proceed with the Acquisition until these conditions are satisfied. The Company is assisting Carbon Resources in the Bankruptcy Court proceedings and believes that there is a strong case for Bankruptcy Court to approve the Asset Purchase Agreement as this provides for all creditors (both secured and unsecured) to be paid, in full. On completion of the Acquisition, the Company’s primary asset will be its proposed interest in the Kinney Project held pursuant to the Asset Purchase Agreement with Carbon Resources. The Company will be reliant on Carbon Resources complying with the terms and conditions of the Asset Purchase Agreement, including transferring the Permit to Wasatch following Wasatch’s satisfaction of the Grant Conditions, and the conditions attaching to the leases which comprise the Project. If Carbon Resources fails to transfer the Permit to Wasatch, the Company will not obtain an interest in the Permit.

Requirements for Assuming completion of the Acquisition, Section 9.5 Permits and development of the Kinney Project depends, Licences amongst other things, upon the Company being granted a permit to mine the coal resource. In order for the Permit to be issued to Carbon Resources, Wasatch must comply with the Grant Conditions within one year of Closing. Carbon Resources must then transfer the Permit to Wasatch in order for the Company to obtain an interest in the Kinney Project. Although conditional approval to grant the Permit has been given by DOGM, there is no guarantee that the Grant Conditions will be satisfied by Wasatch or, if the Grant Conditions are satisfied, that Carbon Resources will transfer the Permit to Wasatch once the Permit is issued. Further, assuming the Permit is issued to Wasatch, the ability of the Company to obtain, sustain or renew such licences and permits on acceptable terms is subject to change in regulations and policies and is at the discretion of the applicable regulatory authorities. The failure of the Company to obtain, sustain or renew licences and permits on acceptable terms could adversely impact the Company’s operations and its financial results. Risks relating to The Kinney Project is located in Utah, in the USA. Section 9.6 the Kinney There is no guarantee that the Bankable Feasibility Project Study will result in a Positive Decision to Mine. If the

Bankable Feasibility Study is not completed and the positive decision to mine made within 36 months of Closing of the Asset Purchase Agreement, then the Kinney Project will be returned to Carbon Resources in accordance with the Asset Purchase Agreement and the Company will retain no interest in the Kinney Project, forfeit the consideration paid to Carbon Resources as at that date and any funds expended on the Project to that date will be lost. Changes to Utah’s mining or investment policies and legislation or a shift in political attitude may adversely affect the Company’s operations and profitability.

The Company will be subject to the risks associated with operating in Utah. Such risks can include economic instability, currency nonconvertibility or instability and changes of law affecting foreign ownership, government participation, taxation, working conditions, rates of exchange, exchange control, exploration licensing, export duties, repatriation of income or return of capital, environmental protection, mine safety, labour relations as well as government control over mineral properties or government regulations. Further, future political and economic conditions in the USA and adoption of different policies regarding foreign development and ownership of mineral resources may have a material adverse effect on the Company’s business.

Exploration and The outcome of the Company’s proposed Section 9.8 Production Risks exploration, Bankable Feasibility Study, project development and possible production programs will affect the future performance of the Company and the price of its Shares. If and when the Company commences production, the production may be curtailed or shut down for considerable periods of time owing to a range of factors such as disruptions to transport infrastructure, lack of market demand, government regulation, production allocations or force majeure events. If these curtailments continue for a considerable period of time, they are likely to have a materially adverse effect on the operations and/or financial position of the Company. Foreign The payment of the Kinney Project Acquisition is in Section 9.9 Exchange Rate US dollars and any revenue received by the Risk Company would likely be in US dollars derived from the sale of coal and a substantial portion of the Company’s operating expenses would also be incurred in US dollars. Coal is sold in the USA market and around the world based principally on

a US dollar price. Furthermore, the income and expenditure accounts will be prepared in Australian dollars (AUD). Therefore Australian dollar reported revenue will be directly impacted by movements in the USA dollar coal price and the USD/AUD exchange rates. Movements in the USD/AUD exchange rates may adversely or beneficially affect the Company’s results or operations and cash flows.

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company and Shareholders should refer to the risk factors set out in full in Section 9 of this Prospectus (and the Report on the Kinney Project) before making a decision to subscribe for Securities under this Prospectus.

Substantial Shareholders – as at the date of this Prospectus

Those Shareholders holding a relevant interest in 5% or more of the Shares on issue as at the date of this Prospectus are as follows:

Substantial Shareholder	Shares	Options	% (undiluted)	% (fully diluted)
Ascent Capital Holdings Pty	3,375,000	3,375,000	16.46	3.2
Ltd and Gary Steinepreis1
Jason Peterson1	1,640,000	1,640,000	8.00	1.5
Timothy Flavel1	1,220,000	1,220,000	5.95	1.1

Notes:

1 Including associated persons and entities.

Substantial Shareholders – On completion of the Acquisition and the Offer

No existing Substantial Shareholders will have a relevant interest in 5% or more of the Shares on completion of the Acquisition and the Offer (assuming no existing substantial Shareholder subscribes and receives additional Shares pursuant to the Offer and $16.5 million is raised pursuant to the Offer).

The Company will announce to the ASX details of its Top 20 Shareholders (following completion of the Offer) prior to the Shares re-commencing trading on ASX.

Financial Information

Following the Company’s proposed acquisition of Delta Coal and the right to acquire the Kinney Project, the Company will be in the early stages of exploring the land the subject of the Project.

The Company’s start up funding will be generated from the Offer the subject of this Prospectus. The Company expects to raise further funding from the issue of securities in the future. Following the acquisition of the Kinney Project, if the Company’s proposed exploration is successful and the Company chooses to develop the Project then the Company may also consider debt funding.

As a result, the Company is not in a position to disclose any key financial ratios other than its statement of financial position which is set out in the Investigating Accountant’s Report in Section 7. Investors should read the Investigating Accountant’s Report in full.

Directors

EXISTING DIRECTORS

Mr Gary Steinepreis Executive Chairman

Mr Steinepreis holds a Bachelor of Commerce degree from the University of Western Australia and is a Chartered Accountant.

Mr Steinepreis provides corporate management and accounting advice to a number of companies involved in the resource, technology and leisure industries. He is a director of a number of ASX listed entities and is the managing director of Ascent Capital Holdings Pty Ltd (Ascent Capital).

Mr Robert Hodby Non-Executive Director

Mr Hodby holds a Bachelor of Commerce from Murdoch University and is a member of CPA Australia and Chartered Secretaries Australia. Mr Hodby provides corporate, management and accounting advice to a number of companies involved in the resource and energy industries.

Mr Hodby is the Company Secretary of NeuroDiscovery Ltd and Torrens Energy Limited a non-executive director of Robe Australia Ltd.

Mr Hodby intends to step down from his role as a Director to the Company following completion of the Acquisition.

Mr Patrick Burke Non-Executive Director

Mr Burke holds a Bachelor of Laws degree from the University of Western Australia. He has approximately fifteen years experience working in law firms and companies in Australia and Ireland. His expertise is in corporate, commercial and securities law with an emphasis on capital raisings and mergers and acquisitions. He contributes general corporate and legal skills along with a strong knowledge of the ASX requirements. He is a director of a number of ASX listed entities.

Mr Burke intends to step down from his role as a Director to the Company following completion of the Acquisition.

PROPOSED DIRECTORS AND SENIOR MANAGEMENT

Michael Placha

Proposed Executive Director / Chief Executive Officer

Mr Placha has worked on various international projects throughout his 35-year career in the US, Australia, Canada, Indonesia, China, Russia, Germany and Italy. Mr Placha earned his Bachelor of Science degree in extractive metallurgy from The Pennsylvania State University.

Mr Placha was Senior Vice President of Signal Peak Energy/Global Rail Group from 2006 through 2010 responsible for the financing and development of a $350 million underground longwall mine, rail and surface facilities in Montana.

Mr Placha led the design and construction of a 36 mile (58 Km) rail spur and 15MTPY coal handling, processing and loadout facilities.

From 2004 until 2006 as President of Sedgman, Canada, Mr Placha was responsible for design and construction of two metallurgical facilities in British Columbia.

Prior to this, Mr Placha spent 16 years with Cyprus Coal and its successor companies working in operations, engineering and sales and marketing.

Carl Coward

Proposed Non-Executive Director

Mr Coward’s qualifications include a Bachelor of Commerce from Curtin University of Technology in Perth, Western Australia. Mr Coward has several years experience in investment banking with a particular focus on the natural resources sector. He has recently been involved in thermal coal projects in Indonesia, South Africa and North America.

Mr Coward is currently an Associate Director of corporate advisor Delta Capital and has been instrumental in identifying and managing the Acquisition.

Greg Hunt

Proposed Chief Operating Officer

Mr Hunt grew up in the mining business, working in his father’s uranium mining company in Southern Utah, and at age 24 took over management of the company.

After earning a Bachelor Degree and Masters in Geology, Mr Hunt became a coal mine geologist working through the ranks for 14 years to become a recognized expert in predicting mining conditions and the daily challenges of underground coal mine production operations.

As Chief Geologist for Cyprus Coal Company he was responsible for technical evaluations of multiple domestic and international coal mine acquisitions and responsible for the daily application of mine geology, mine safety and efficiency at seven Cyprus Mines.

Mr Hunt successfully managed the exploration, dirt-work construction, and reclamation of dozens of drilling programs both in-mine and surface. As part of the management team of an underground coal mine, Mr Hunt instituted successful programs integrating mine geology into every significant mining decision. Mr Hunt managed a successful outcome in relation to a controversial NEPA process of a mine expansion and managed all aspects of permitting of a new underground coal mine.

Mr Hunt has worked as a consultant to the current owners of the Kinney Project for the past 10 years and as such has a detailed knowledge of all aspects of the Kinney Project geology.

Disclosure of Interests

Directors are not required under the Constitution to hold any Securities.

The Directors and Proposed Directors have the right to participate on the same terms as

other investors in the Offer.

As at the date of this Prospectus, the current Directors and the Proposed Directors have relevant interests in Securities as follows:

Current Director	Shares	Options
Gary Steinepreis	3,375,000	3,275,000
Patrick Burke	130,000	130,000
Robert Hodby	200,000	200,000
Proposed Director	Shares	Options
Mike Placha1	Nil	5,000,000
Carl Coward2	419,000	Nil

Notes:

1 The Options are not yet issued and are subject to shareholder approval. The vesting conditions of the 5 million Options are set out in Section 10.6(e).
2 Mr Coward is one of the Vendors to the Acquisition and, subject to Shareholder approval being granted at the Annual General Meeting, will receive 2 million Consideration Shares (as described in Section 10.1(a)(i) of this Prospectus) at settlement of the Share Sale Agreement. Mr Coward may also receive up to a further:
(a) 2 million Class A Performance Shares;
(b) 2 million Class B Performance Shares; and
(c) 2 million Class C Performance Shares,

subject to the satisfaction of the milestones referred to in Section 10.1(c).

Remuneration

The annual remuneration payable to each of the Directors at the date of this Prospectus is as follows:

Current Director	Annual Remuneration ($)
Gary Steinepreis1,2	29,000
Patrick Burke1	9,000
Robert Hodby1	9,000
Proposed Directors on	Proposed Annual Remuneration ($)
Completion
Gary Steinepreis1	36,000
Mike Placha3	198,000
Carl Coward4	36,000

Notes:

1 Paid in the form of consulting fees and therefore not inclusive of superannuation.
2 Ascent Capital Holdings Pty Ltd, a company which Gary Steinepreis is the Managing Director of, was paid $20,000 by the Company for management services associated with the Company’s admission to the Official List in 2010. Mr Steinepreis has further accrued fees of $50,000 for additional services provided to the Company in relation to the Kinney Project.

3 Mr Placha will be paid in United States dollars and at a foreign exchange rate of A$/US$1.012 his salary equates to US$200,000. Mr Placha is employed pursuant to an executive services agreement with Wasatch Natural Resources, LLC (Wasatch), which will be a wholly owned subsidiary of New Horizon following completion of the Acquisition. Mr Placha’s salary also includes performance based bonuses. Refer to Section 10.3 for further details.
4 Mr Coward is currently an Associate Director of Delta Capital, which is acting as a manager to the Company in relation to this Offer. The fees payable to Delta Capital for this service are disclosed in Section 10.4.

Expenses of the Offer

The total expenses of the Offer (assuming the Offer is fully subscribed to raise $16.5 million) are set out in the table below:

Item of Expenditure		Amount ($)
ASIC Fees		2,137
ASX Fees		50,000
Experts’ Fees		40,000
Legal Fees		40,000
Due diligence work	on Kinney
Project acquisition		250,000
Fees to Joint Lead Managers to		990,000
the Offer and holders of an
Australian Financial	Services
License1
Miscellaneous		27,863
TOTAL		1,400,000

Notes:

1 Assumes Offer is fully subscribed.

1. CORPORATE DIRECTORY

Current Directors

Gary Steinepreis Executive Chairman

Robert Hodby Non-Executive Director

Solicitors Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000

Patrick Burke Non-Executive Director

Proposed Directors

Share Registry*

Mike Placha Computershare Investor Services Pty Chief Executive Officer and Executive Limited Director Level 2, Reserve Bank Building, Carl Coward 45 St Georges Terrace Non-Executive Director PERTH WA 6000 Investor enquiries: 1300 557 010 Telephone: +61 8 9323 2000 Facsimile: +61 8 9323 2033

Company Secretary Auditor* Gary Steinepreis BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008 ASX Code Website Current: NHO www.newhorizonminerals.com.au

Registered Office Independent Geologist Level 1 Behre Dolbear & Company (USA), 33 Ord Street Inc. WEST PERTH WA 6005 999 Eighteenth Street, Suite 1500 Telephone: +61 8 9420 9300 Denver, Colorado 80202 Facsimile: +61 8 9420 9399

Joint Lead Managers Investigating Accountant Patersons Securities Limited BDO Corporate Finance (WA) Pty (AFSL No. 239052) Ltd 38 Station Street Level 48 SUBIACO WA 6008 264 George Street SYDNEY NSW 2000 Telephone +61 8 6382 4600 Delta Capital Pty Ltd Facsimile: +61 8 6382 4601 (AFSL No. 277935) Level 3, BGC Centre 28 The Esplanade PERTH WA 6000 Cunningham Peterson Sharbanee Securities Pty Ltd (AFSL No. 294848) Level 34 Exchange Plaza 2 The Esplanade PERTH WA 6000

Prospectus Manager

Ascent Capital Holdings Pty Ltd Level 1, 33 Ord Street WEST PERTH WA 6005

*These entities are included for information purposes only. They have not been involved in the preparation of this Prospectus.

2. CHAIRMAN’S LETTER

Dear Investor

On behalf of the Directors of New Horizon Minerals Limited, I am pleased to present this Prospectus offering you the opportunity to become a Shareholder in, or to increase your shareholding in, the Company.

The Company has entered into an agreement to acquire Delta Coal Fund Pty Ltd (Delta Coal), which holds an exclusive right to acquire 100% of the Kinney Project in Utah, USA (Kinney Project or Project). The Kinney Project lies in the Eastern Wasatch Plateau which is within the Uinta Basin Coal Field, a mature coal producing region which has historically produced over 30 million tonnes of coal per annum.

The Kinney Project consists of a coal lease with the main “Kinney Parcel” (3,620 acres; 1,465 hectares) positioned adjacent to open Federal coal lands that together form a logical mining unit accessible only through the planned Kinney portals.

The change of strategic direction for the Company will see a change in the composition of the Board of Directors. On completion of the Acquisition a new and experienced Board will be appointed with strong corporate, technical and operational skills and I have every confidence in their ability to deliver this Project for the benefit of all Shareholders. It is intended that the Board will continue to evolve with the appointment of new members in future as the Company makes the transition to its objective of becoming a coal producer.

The Board looks forward to welcoming you as a Shareholder and appreciates the support of its existing Shareholders who participate in the Offer.

Yours sincerely

Gary Steinepreis EXECUTIVE CHAIRMAN

3. DETAILS OF THE OFFER

3.1 Applications

Applications for Securities under the Offer must be made using the Offer Application Form.

Payment for the Securities must be made in full at the issue price of $0.22 per Share. Applications must be for a minimum of 10,000 Shares (and 10,000 Free Attaching Options) and thereafter in multiples of 1,000 Shares (and 1,000 Free Attaching Options). Completed Application Forms and accompanying cheques must be mailed or delivered to the Company’s Share Registry, as follows:

Computershare Investor Services Pty Limited GPO Box D182 PERTH WA 6840

Cheques should be made payable to “New Horizon Minerals Ltd” and crossed “Not Negotiable”.

Completed Application Forms must be received at the above address by no later than the relevant Closing Date.

Electronic payments may be made by consulting the Company.

Electronic payments must be received by the Company by 1:00pm (WST) on the applicable Closing Date. You should be aware that your own financial institution may implement earlier cut-off times with regard to electronic payment, and you should therefore take this into consideration when making payment. It is your responsibility to ensure that funds submitted electronically are received by 1:00pm (WST) on the Closing Date (as the context permits).

The Offer may be closed at an earlier date and time, at the discretion of the Directors, without prior notice. Applicants are therefore encouraged to submit their Application Forms as early as possible. However, the Company reserves the right to extend the Offer or accept late applications.

3.2 Re-compliance with Chapters 1 and 2 of the ASX Listing Rules

The Company will be suspended from quotation on the ASX from 9 November 2011, the date of its annual general meeting to approve the Transaction associated with change to the nature and scale of the Company’s activities. The Company’s shares will not be reinstated to Official Quotation until ASX approves the Company’s re-compliance with Chapters 1 and 2 of the ASX Listing Rules.

In the event that the Company does not receive conditional approval for requotation on ASX, it will not proceed with the Offer and will repay all application monies received. Should this occur, then the change to the nature and scale of the Company’s activities will not eventuate and the Company’s securities may remain suspended from quotation on ASX.

3.3 Minimum subscription

The minimum subscription to be raised pursuant to this Prospectus is $11 million.

If the minimum subscription has not been raised within four (4) months after the date of this Prospectus, all applications will be dealt with in accordance with the Corporations Act.

3.4 Underwriting

The Offer is not underwritten.

3.5 Joint Lead Managers to the Offer

Delta Capital Pty Ltd (Delta Capital), Patersons Securities Limited (Patersons) and Cunningham Peterson Sharbanee Securities Pty Ltd (CPS Securities) will act as Joint Lead Managers to the Company in relation to the Offer.

Please refer to Section 10 for summaries of the agreements between each of the Joint Lead Managers and the Company.

3.6 Allotment

Allotment of Securities offered by this Prospectus will take place as soon as practicable after the Closing Date of the Offer. Prior to allotment, all application monies shall be held by the Company on trust. The Company, irrespective of whether the allotment of Securities takes place, will retain any interest earned on the application monies.

The Directors reserve the right to allot Securities in full for any application or to allot any lesser number or to decline any application. Where the number of Securities allotted is less than the number applied for, or where no allotment is made, the surplus application monies will be returned by cheque to the applicant within seven (7) days of the allotment date.

3.7 ASX Listing

The Company will not be reinstated to Official Quotation until satisfaction of the conditions to the Offer and ASX approving the Company’s re-compliance with Chapters 1 and 2 of the ASX Listing Rules.

Application for Official Quotation by ASX of the Securities offered pursuant to this Prospectus will be made within 7 days after the date of this Prospectus. If approval is not obtained from ASX before the expiration of 3 months after the date of issue of the Prospectus (or such period as varied by the ASIC), the Company will not issue any Securities and will repay all application monies for the Securities within the time prescribed under the Corporations Act, without interest.

The fact that ASX may grant Official Quotation to the Securities is not to be taken in any way as an indication of the merits of the Company or the Securities now offered for subscription.

3.8 Applicants outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation

of applicable securities laws. No action has been taken to register or qualify these Securities or otherwise permit a public offering of the Securities the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of the Securities pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

3.9 Commissions on Application Forms

The Company reserves the right to pay a commission of 6% (inclusive of goods and services tax) of amounts subscribed to any licensed securities dealers or Australian Financial Services licensee in respect of valid applications lodged and accepted by the Company and bearing the stamp of the licensed securities dealer or Australian Financial Services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian Financial Services licensee.

3.10 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company.

Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Shares allotted to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

3.11 Withdrawal of Offer

This Offer may be withdrawn at any time. In this event, the Company will return all Application monies (without interest) within 28 days of giving the notice of withdrawal.

The risk factors set out in the Investment Overview Section and Section 9, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly, an investment in the Company should be considered speculative.

3.12 Privacy statement

If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

3.13 Queries

Any questions concerning the Offer should be directed to the Company Secretary, Gary Steinepreis on +61 8 9420 9300.

4. COMPANY AND PROJECT OVERVIEW

4.1 Background

The Company is an Australian public company listed on the official list of ASX (ASX code: NHO), which has predominantly operated in the gold and base metal exploration industries in New South Wales. New Horizon is based in Perth and is focused on the acquisition of the Kinney Project.

The Company currently has a 20% interest in the Mount Drysdale Gold and Base Metal Project and the Hora Bore Base Metal Project from Drysdale Resources, with farmin rights to earn an 80% interest in the projects by expending $1 million over 3 years. The current Directors were each appointed on 4 June 2010.

As announced to ASX, the Company has entered into the Share Sale Agreement (summarised in Section 10.1) to acquire Delta Coal from the Vendors.

Pursuant to an Option Agreement between Delta Coal and Carbon Resources dated 17 March 2011, Delta Coal holds an exclusive right to purchase a 100% interest in the Kinney Project, a thermal coal project located near Scofield in Utah in the USA, from Carbon Resources. Pursuant to the Asset Purchase Agreement (as summarised in Section 10.2) Delta Coal has agreed to exercise its right to acquire the Kinney Project from Carbon Resources.

In accordance with the Asset Purchase Agreement, and assuming successful completion of the Offer, Delta Coal will acquire 100% of the Kinney Project and will subsequently assign its interest in the Kinney Project to its wholly owned subsidiary, Wasatch. On completion of the Acquisition, the Company will be renamed “New Horizon Coal Ltd”.

==> picture [377 x 229] intentionally omitted <==

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

New Horizon Coal Ltd
100%
Delta Coal Fund Pty Ltd
100%
Wasatch Natural Resources, LLC
Exclusive right to
purchase 100%
Kinney Project
(Utah, USA)
----- End of picture text -----

Figure 1: Company Structure on completion of the Acquisition

The strategic objectives of the Company are to increase Shareholder value by advancing the Kinney Project toward possible commercial production and growing the Project area through acquisition or lease of further land or projects as and when they become available.

4.2 Previous Exploration

Several companies, including Carbon Resources, have previously drilled the Kinney Project. Over seventy drill holes have been completed on the combined Kinney Project and the adjacent Federal coal lands (Federal Lands) of which thirteen were cored and analysed for coal quality, rock mechanics (geotechnical properties), and environmental baseline chemical parameters of both coal and enclosing roof and floor rock.

Based on available data, the Company’s management believes the in-situ gross calorific value ranges between 6,400 and 6,780 Kcal/Kg (as received basis). The exploration target tonnage within the Kinney Project is 29 to 34 million tonnes. The potential quantity and quality is conceptual in nature and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in determination of a mineral resource.

4.3 Overview of Kinney Project

The Kinney Project lies in the Eastern Wasatch Plateau which is within the Uinta Basin Coal Field, a mature coal producing region which has historically produced over 30 million tonnes of coal per annum.

The Kinney Project consists of the Carbon County Sublease (as further described in the Report on the Kinney Project contained in Section 8) with the main “Kinney Parcel” (3,620 acres; 1,465 hectares) positioned adjacent to open Federal Land that together form a logical mining unit accessible only through the planned Kinney portals.

The Company intends to apply for the Federal Lands following successful completion of the Acquisition. Four additional lease parcels (North, West, Broads Canyon, and Clear Creek) totalling approximately 1,500 acres (607 hectares), are not included in the current exploration target and may represent future upside potential for New Horizon.

The leased coal is “fee coal” and the surface is private, therefore the only permitting agency is DOGM. The Permit (which is discussed in the Report on the Kinney Project in Section 8) has recently been given conditional approval by DOGM. The adjacent Federal Land is administered by the Bureau of Land Management; however, permitting is the same as on fee land.

With data from over seventy drill holes, covering the Kinney Project and the adjacent open Federal Land, the coal deposit on the Kinney Project land is well characterized with a significant amount of detailed geological and engineering work completed by Carbon Resources over the last 10 years.

The coal seams are within the Blackhawk Formation which overlies the Star Point Sandstone in the lower part of the Cretaceous age Mesa Verde Group. The majority of the coal resources in the region are found in the Hiawatha Seam which directly overlies the Spring Canyon Member of the Star Point Sandstone and is the dominant seam throughout the Eastern Wasatch Plateau. Locally the Hiawatha Seam was historically named the Kinney Seam and caps a 100 foot (+/-) stratigraphic interval of economic interest.

Within the Kinney Project the Hiawatha seam ranges from 5 to 11 feet (1.5 to 3.3 m) in thickness and dips an average 3.5 degrees north-east. Several N-S normal faults partition the deposit into multiple mining blocks.

Work is scheduled to commence immediately upon settlement of the Acquisition on:

(a) converting the exploration target to a JORC Code compliant resource before the end of the first quarter of 2012; and
(b) completing a Bankable Feasibility Study in relation to the Kinney Project.

4.4 Infrastructure and Services

The planned Project portal is located approximately 1,800 ft. (550m) from the Union Pacific Rail sub-main. Electricity, potable and non-potable water are readily available at the Kinney Project.

Five of the ten active coal mines in Utah are located within 50 km of the Kinney Project. Two of the coal producers are located in close proximity (8.5 km) to the Kinney Project; Arch Coal’s “Skyline Mine”, which produces approximately 3 million tonnes per annum; and America West Resources “Horizon Mine”, which produces approximately 250,000 tonnes per annum.

4.5 US Coal Market

According to the World Coal Association, the USA has some of the largest coal projects in the world followed by Russia, China and India and is currently the largest exporter of coal in North America, nearly double the export volume of Canada.

Close to half of the USA’s electricity is generated by coal and more than 500,000 people are employed in the USA coal sector.

Recent estimates are showing that the USA is currently exporting approximately 25 million tonnes of bituminous coal (steam). New port developments and expansion of current ports’ capacities is likely to increase current export capacity.

The USA, especially in areas like Utah, has very high quality coal, making USA produced coal an attractive product for both the domestic and export markets.

4.6 Existing business

The Company is undertaking a review of the Mount Drysdale Gold and Base Metal Projects and the Hora Bore Base Metal Project with Drysdale Resources Pty Ltd to determine the future exploration work. The intention of the Company, on completion of the Kinney Project Acquisition, is to complete the review and consider offers to dispose of its 20% interest in these projects. No material commitments have been made on the next phase of the exploration programme on these tenements.

5. CORPORATE GOVERNANCE

The Company has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs.

To the extent applicable, the Company has adopted The Corporate Governance Principles and Recommendations (2nd Edition) as published by ASX Corporate Governance Council (Recommendations).

In light of the Company’s size and nature, the Board considers that the current board is a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed.

The Company’s main corporate governance policies and practices as at the date of this Prospectus are outlined below and the Company’s full Corporate Governance Plan will be available in a dedicated corporate governance information section of the Company’s website.

Board of directors

The Board is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

(a) maintain and increase Shareholder value;
(b) ensure a prudential and ethical basis for the Company’s conduct and activities; and
(c) ensure compliance with the Company’s legal and regulatory objectives.

Consistent with these goals, the Board assumes the following responsibilities:

(a) developing initiatives for profit and asset growth;
(b) reviewing the corporate, commercial and financial performance of the Company on a regular basis;
(c) acting on behalf of, and being accountable to, the Shareholders; and
(d) identifying business risks and implementing actions to manage those risks and corporate systems to assure quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. However, subject thereto, the Company is committed to the following principles:

(a) the Board is to comprise persons with a blend of skills, experience and attributes appropriate for the Company and its business; and
(b) the principal criterion for the appointment of new directors is their ability to add value to the Company and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of the Board membership, but an informal assessment process, facilitated by the Chairman in consultation with the Company’s professional advisors, has been committed to by the Board.

Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

Performance evaluation

In the absence of a nomination committee, the Board will conduct a performance evaluation of its individual Directors on an annual basis. To assist in this process an independent advisor may be used.

Independent professional advice

Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

Remuneration arrangements

The remuneration of an executive Director will be decided by the Board, without the affected executive Director participating in that decision-making process.

The total maximum remuneration of non-executive Directors is initially set by the Constitution and subsequent variation is by ordinary resolution of Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each non-executive Director. The current amount has been set at an amount not to exceed $250,000 per annum.

In addition, a Director may be paid fees or other amounts (i.e. subject to any necessary Shareholder approval, non-cash performance incentives such as Options) as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director.

Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors.

The Board has not established a remuneration committee at this point in the Company’s development. It is considered that the size of the Board along with the level of activity of the Company renders this impractical and the Board, acting without the affected Director participating in the decision making process, currently serves as a remuneration committee.

The Board reviews and approves the remuneration policy to enable the Company to attract and retain executives and Directors who will create value for Shareholders having consideration to the amount considered to be commensurate for a company of its size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

Trading policy

The Board has adopted a policy that sets out the guidelines on the sale and purchase of securities in the Company by its key management personnel (i.e. Directors and, if applicable, any employees reporting directly to the managing director). The policy generally provides that the written acknowledgement of the Chair (or the Board in the case of the Chairman) must be obtained prior to trading.

External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

Audit committee

The Company will not have a separate audit committee until such time as the Board is of a sufficient size and structure, and the Company’s operations are of a sufficient magnitude for a separate committee to be of benefit to the Company. In the meantime, the full Board will carry out the duties that would ordinarily be assigned to that committee under the written terms of reference for that committee, including but not limited to, monitoring and reviewing any matters of significance affecting financial reporting and compliance, the integrity of the financial reporting of the Company, the Company’s internal financial control system and risk management systems and the external audit function.

6. INDEPENDENT GEOLOGIST’S REPORT

==> picture [485 x 88] intentionally omitted <==

NEW HORIZON MINERALS LTD

KINNEY PROJECT GEOLOGY REPORT

(BEHRE DOLBEAR PROJECT 11-142)

OCTOBER 2011

==> picture [339 x 227] intentionally omitted <==

PREPARED BY:

BEHRE DOLBEAR & COMPANY (USA), INC. 999 Eighteenth Street, Suite 1500 Denver, Colorado 80202 (303) 620-0020

Kinney Project Geology Report October 2011

Error! Unknown document property name.

1.0	INTRODUCTION ..................................................................................................................... 1
	1.1 BACKGROUND .......................................................................................................... 1
	1.2 KINNEY PROPERTY .................................................................................................. 1
	1.3 EXPLORATION AND DEVELOPMENT BUDGET ................................................. 2
2.0	METHODOLOGY .................................................................................................................... 6
3.0	GEOLOGY OF THE KINNEY PROPERTY ............................................................................ 7
	3.1 OVERVIEW OF GEOLOGY ....................................................................................... 7
4.0	REFERENCES: ....................................................................................................................... 13

BEHRE DOLBEAR

Project 11-142

Kinney Project Geology Report October 2011

Error! Unknown document property name.

		LIST OFTABLES
Table	1.1	Exploration and Development Budget .......................................................................... 2

		LIST OFFIGURES
Figure	1.1	General Location with Regional Coal Mines and Power Stations ................................ 3
Figure	1.2	Kinney Property Lease and Permit Boundary............................................................... 4
Figure	1.3	Abandoned Underground Workings in Hiawatha Seam ............................................... 5
Figure	3.1	Late Cretaceous Paleogeography (from Dubiel, et al., 1996) ....................................... 7
Figure	3.2	Generalized Stratigraphic Section of the Kinney Property area showing coal beds
		(from Pederson, 1998) .................................................................................................. 8
Figure	3.3	Faults and Drill Hole Location Map ........................................................................... 10
Figure	3.4	Hiawatha Seam Coal Mining Blocks .......................................................................... 11
Figure	3.5	Hiawatha Seam Thickness Isopach Map .................................................................... 12

BEHRE DOLBEAR

Project 11-142

Kinney Project Geology Report October 2011

Error! Unknown document property name.


Glossary of Terms and Abbreviations
Term/ Abbreviation	Description	Definition
CAPEX	Capital Expenditures	Expenditures that are not charged to production costs but are either depreciated of amortized.
Conventional mining methods		A mining method applicable to deposits where the seams are relatively flat lying and use equipment such as longwalls, continuous miners,and related equipment.
FOB	Free-on-Board	Method of selling cargo excluding ocean freight, insurance,and loadingcosts.
graben	specific fault structure	An elongated, downthrown block bounded by two steeply dipping normal faults. Produced in an area of crustal extension.
Gate Entry	Longwall Entry	Access entries specifically configured to support longwall mining.
Headgate	Longwall Entry	Longwall gate entry on fresh air side of longwall face containing main access facilities and conveyors.
IRR	Internal Rate of Return
JORC Code	Joint Ore Reserve Committee	The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004) prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
LW	Longwall	Highly productive method of underground coal mining and a specific type of coal mining equipment.
NPV	Net Present Value	The present value of the expected future cash flows minus the cost.
OPEX	Operating Expenses	Expenses for labor and expendable items used in the miningandprocessingof minerals.
ROM coal	Run-of-Mine coal	Raw coal production from mines prior to coal preparation.
Scoping level accuracy		Accuracy of ±35% to ±40%.
Tailgate	Longwall Entry	Longwall gate entry for return air course, normallyadjacent toprevious LWpanel.
tpd	tonsper day	Measure ofproduction capacity.
tph	tonsper hour	Measure ofproduction capacity.
tpus	tonsper unit shift	Measure of mining productivity.
tpy	tonsperyear	Measure ofproduction capacity.

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DISCLAIMER

Behre Dolbear & Company (USA), Inc. (“Behre Dolbear”) has conducted an independent technical review of the land the subject of a lease held by Carbon Resources (“Kinney Property Lease”), LLC (“Carbon Resources”), which is located within the Wasatch Plateau coal field (“Wasatch Plateau Coal Field”) near Scofield in Carbon County, Utah (“Kinney Property” or “Kinney Project”). A site visit has not been made by Behre Dolbear professionals involved in the preparation of this independent technical report (“Report”). Behre Dolbear has reviewed technical data, reports, and studies produced by other consulting firms as well as information provided by Carbon Resources and others. This review was conducted on a reasonableness basis, and Behre Dolbear has noted herein where such provided information engendered questions. Except for the instances in which we have noted questions or made specific comments regarding the nature of the information, Behre Dolbear has relied upon the information provided as being accurate and suitable for use in this Report. Consent has been given for the distribution of this independent technical review in the form and context in which it appears. Behre Dolbear has no reason to doubt the authenticity or substance of the information provided.

Behre Dolbear assumes no liability for the accuracy of the information provided by the above parties. Behre Dolbear retains the right to change or modify its conclusions if new or undisclosed information is provided that might change its opinion.

Behre Dolbear does not accept any liability other than its statutory liability to any individual, organization, or company and takes no responsibility for any loss or damage arising from the use of this Report, or information, data, or assumptions contained therein. By accepting and using this Behre Dolbear Report, Delta Coal Fund Pty Ltd (“Delta Coal”), New Horizon Minerals Ltd (“Company”), Carbon Resources and others, signify their agreement to indemnify and hold harmless Behre Dolbear, its shareholders, directors, officers, and associates from any and all losses, claims, damages, liabilities, or actions to which they or any of them may become subject under any securities act, statute, or common law and will reimburse them on a current basis for any legal or other expenses incurred by them in connection with investigating any claims or defending any actions.

INDEPENDENCE

Behre Dolbear is not, nor intends to be a director, officer or other direct employee of the Company and have no material interest in the Kinney Project or the Company. The relationship with the Company is solely one of professional association between client and independent consultant. The review work and this Report are prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this Report.

ELECTRONIC DISCLAIMER

Electronic mail copies of this Report are not official unless authenticated and signed by Behre Dolbear and are not to be modified in any manner without Behre Dolbear’s express written consent.

UNITS OF MEASUREMENT AND CURRENCY

Measurement units used in this Report are in the English system. The currency is United States (US) dollars unless specifically stated otherwise.

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1.0 INTRODUCTION

1.1 BACKGROUND

Behre Dolbear has been commissioned by Delta Coal and the related Company to provide an independent technical report describing the geology of the Kinney Project as proposed for development in Carbon County, Utah. This Report is to be included in a prospectus to be lodged by the Company with the Australian Securities and Investments Commission on or about 20 October 2011 (“Prospectus”). The funds raised by the Company pursuant will be used for the acquisition of the Kinney Project, exploration and development of the Kinney Project, and for working capital purposes.

Carbon Resources has leased the coal rights from the coal owner, Carbon County, for the tract shown on Figure 1.2 as the Kinney Property Lease, along with surface rights agreements with several surface owners associated with the Carbon County tract and some adjoining surface areas. Carbon Resources has also applied for and been conditionally granted the necessary mining permits by the State of Utah.

Delta Coal has entered into an asset purchase agreement with Carbon Resources to acquire a 100% interest in the Kinney Property Lease from Carbon Resources. The Company has entered into a share sale agreement with the shareholders of Delta Coal, to acquire a 100% interest in Delta Coal.

Figure 1.1 shows the location of the Kinney Project in relation to the other mining complexes in the Price, Utah regional area.

1.2 KINNEY PROPERTY

The Kinney Property lies Southeast of the Scofield Reservoir in Carbon County Utah.

Figure 1.2 shows the Kinney Property Lease from Carbon County and the State of Utah Mining and Reclamation Permit boundary. Carbon Resources has various other tracts of mineral rights adjacent to the Kinney Property Lease that are not shown on the maps. These tracts have minor amounts of coal bearing areas, but are not included in this Report. However, they are material to the overall operation in the long-run and may be detailed in subsequent reports.

The Kinney Property involves two mineable coal seams, the Hiawatha and the UP, both with underground mining potential, but the majority of the coal exploration target is in the Hiawatha seam. The Kinney Property is divided into several small mining blocks by structural faults, which will limit mining to conventional room and pillar mining methods and not allow the more productive longwall methods.

Behre Dolbear has estimated an initial exploration target mineralisation of approximately 29 to 34 million tons associated with the Hiawatha and UP seams on the Kinney Property utilizing extensive exploration records and reports supplied by Carbon Resources and data available from public records. The target mineralisation does not comply with the JORC Code guidelines for the reporting of identified Mineral Resources and Ore Reserves (as those terms are defined in the JORC Code). Therefore this mineralisation is considered to be an Exploration Target estimate. The Company plans to undertake further work to enable the estimates to become JORC Code compliant. On this basis, the potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource under the JORC Code and it is uncertain if further exploration on the Kinney Property will result in the determination of a Mineral Resource or Ore Reserve.

There are abandoned underground workings in both the Hiawatha and UP seams and to a lesser extent, the Colombine seam along the western side of the Kinney Project. These mines developed from the outcrop along Clear Creek as far back as the 1880’s. Carbon Resources has researched these

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mines and has assembled a comprehensive set of maps of the workings. Figure 1.3 shows the extent of the Hiawatha seam workings as compiled by Carbon Resources. The extent of these workings appears limited by faults. There were extensive coal deposits nearby such that these mines did not make the investment to cross the faults to continue development east.

Geologic data for the Kinney Property and surrounding area includes information gathered as far back as the 1880’s when mining first commenced in the area. More recently, exploration programs conducted in 1974, 1976, 1980, 1983, and 2006 provide the basis for review with 87 drill holes now in the database and approximately 30 still are being verified.

Several studies specific to the Kinney Property and many others discussing the regional geology have been utilized to develop the current knowledge base for the Kinney Property. Many of these studies are listed in the list of references at the end of this Report.

1.3 EXPLORATION AND DEVELOPMENT BUDGET

Table 1.1 sets out the current budget developed by the Company for the extensive and detailed evaluation of the Kinney Project’s exploration and development potential (“Kinney Project Resource Work”), which may support the Company completing a bankable feasibility study in relation to the Kinney Project (“Bankable Feasibility Study”) with a positive decision to mine.

TABLE1.1 EXPLORATION ANDDEVELOPMENTBUDGET	TABLE1.1 EXPLORATION ANDDEVELOPMENTBUDGET	TABLE1.1 EXPLORATION ANDDEVELOPMENTBUDGET	TABLE1.1 EXPLORATION ANDDEVELOPMENTBUDGET
	Year 1 $	Year 2 $	TOTAL $
Kinney Project Resource Work	90,000	-	90,000
Pre feasibility mine planning	320,000	-	320,000
Bankable Feasibility Study	335,000	225,000	560,000
Marketing study	50,000	25,000	75,000
Engineering study	25,000	75,000	100,000
Resource drilling	900,000	225,000	1,125,000
Other development	50,000	50,000	100,000
TOTAL	1,770,000	600,000	2,370,000

The budget for the Kinney Project Resource Work (“Exploration and Development Budget”) associated with the Kinney Project will be subject to modification on an ongoing basis depending on the results obtained from exploration and development activities as they progress.

It is considered that the Company’s proposed two year Exploration and Development Budget is reasonable and is consistent with its stated objectives. Furthermore, it is considered that this program is warranted and justified on the basis of the historical exploration activity and demonstrated potential for the Kinney Project to undertake and complete the Kinney Project Resource Work and Bankable Feasibility Study.

The Kinney Project is considered to be sufficiently prospective, subject to varying degrees of risk, to warrant further exploration and development of its economic potential, consistent with the exploration and development programs proposed by the Company.

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Figure 1.1 General Location with Regional Coal Mines and Power Stations

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Figure 1.2 Kinney Property Lease and Permit Boundary

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Figure 1.3 Abandoned Underground Workings in Hiawatha Seam

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2.0 METHODOLOGY

Behre Dolbear received numerous electronic files from Carbon Resources containing information related to Kinney Property and their analysis of same. Behre Dolbear has performed a preliminary review of the information provided by Carbon Resources by compiling some of the map and geologic data into a standard basis to facilitate the review. Behre Dolbear’s geologists and mine engineers are generally familiar with the Kinney Property as a result of having worked on other projects in the same area over a number of years.

There is a large area of unleased Federal land South and adjacent to the Kinney Property (“Federal Land”). This Federal Land is strategic to the overall development of an underground mining complex for the Kinney Property but has not been included in the review of the Kinney Property.

This review is limited to the Hiawatha and UP Seams.

The Behre Dolbear personnel involved in the preparation of this Report include:

Jim Dodd, Project Manager.
Donald P. Bellum, Project Advisor
Jim Kohler, Resource Specialist

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3.0 GEOLOGY OF THE KINNEY PROPERTY

3.1 OVERVIEW OF GEOLOGY

The Kinney Property is contained within the Wasatch Plateau Coal Field in Central Utah. Coal deposits in Central Utah were deposited on the margin of a seaway that occupied the Western Interior of North America during the Late Cretaceous period. At its maximum extent, the seaway extended for 3,000 miles from the North Slope of Alaska to Northern Mexico and was approximately 1,000 miles wide from Central Utah to Minnesota (Roberts, et al, 1995). Figure 3.1 shows the location of this seaway relative to the Wasatch Plateau Coal Field. Coal was deposited in peat swamps developed in the coastal plains adjacent to this seaway.

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Figure 3.1 Late Cretaceous Paleogeography (from Dubiel, et al., 1996)

In the Wasatch Plateau Coal Field, coal deposits of economic interest are found in the lower part of the Upper Cretaceous Blackhawk Formation where it intertongues with the delta-front sandstones of the Star Point sandstone. Coal beds of economic interest are found in the lower third of the

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Blackhawk Formation. In the vicinity of the Kinney Property, two coal beds of economic interest have been identified, the Hiawatha and UP beds. A generalized stratigraphic section showing these beds is shown below in Figure 3.2.

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Figure 3.2 Generalized Stratigraphic Section of the Kinney Property area showing coal beds (from Pederson, 1998)

The structure of the Kinney Property is complex with faults having offsets from near zero to over 200 feet that divide the Kinney Project into smaller mining blocks. These faults have been identified and studied by several geologists over a period of years and Carbon Resources’ analysis is the culmination of those studies with substantial field work and confirmation by Carbon Resources.

The coal measures lie fairly flat and as such, the dip of the seam within each mining block should provide reasonable mining conditions so long as the steeper areas do not have a dip orientation in adverse relation to the joints and cleat orientation of the coal.

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The lowermost potentially minable coal bed in the Kinney Property is the UP seam, which can be correlated over most of the Kinney Property. The UP seam is up to 30 feet thick to the West of the Kinney Property where it has been mined. It thins to the East where it is split by a number of rock partings.

The Hiawatha seam occurs approximately 100 feet above the UP seam and is the uppermost potentially minable coal bed in the Kinney Property. The Hiawatha seam ranges in thickness from about 6 feet to 12 feet within the identified mining blocks. The run-of-mine coal quality appears suitable for local and possibly export steam coal markets. The Hiawatha seam is the dominate seam in the region and is generally consistent in quality with most mines regularly supplying the local power stations.

At this point in time, Carbon Resources’ geological analysis of the Kinney Property and the Kinney Property Lease appears reasonable. The coal in this area appears to maintain a reasonable thickness except in the area where the portals are proposed to be driven, but the thin coal in this area only extends a short distance to the east where it thickens to 8 feet. The Kinney Property Lease area is structurally complex, and the current work has led to the delineation of the mining blocks. However, considerably more work will be required to ensure that the current interpretations are correct which is the purpose of the Exploration and Development Budget being proposed, and as set out in Table 1.1 of this Report.

Behre Dolbear has prepared a series of maps to summarize the Hiawatha seam on the Kinney Property, and to facilitate discussions regarding the coal measures. These maps are based on information supplied by Carbon Resources.

Figure 3.3 illustrates the faults and drill hole locations utilized thus far in Behre Dolbear’s, and generally Carbon Resources’ analysis of the structure of the seams. There are several additional drill holes and other coal seam data points that could be incorporated into future analysis, but additional fieldwork and investigation would be required for them to be included.

Figure 3.4 illustrates the division of the Kinney Property into mining blocks by Carbon Resources, and their relation to the faults and graben structures. Because this mining block division has a significant impact on the overall mining area of the Kinney Project, it is important that additional analysis of Carbon Resources’ designation be undertaken. These mining blocks represent the current estimate of the extent of economical mining on the Kinney Property Lease and adjacent Federal Land. Presently, mine development extending further east in sections 35 and 36 appears impractical due to thinning coal and the displacement of the Fish Creek graben.

Figure 3.5 illustrate the preliminary coal thickness isopach for the Hiawatha seam based upon the data supplied by Carbon Resources.

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Figure 3.3 Faults and Drill Hole Location Map

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Figure 3.4 Hiawatha Seam Coal Mining Blocks

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Figure 3.5 Hiawatha Seam Thickness Isopach Map

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4.0 REFERENCES:

Bechtel Corporation, 1976, Engineering Study and Estimate, Colombine No. 1 for Western Reserve Coal Company Inc. Job No. 11920; Bechtel Corporation

Consolidated Coal Company, 1981, Kinney Property Geologic Maps

Johnson, V. H., 1977, Geology of Coal Areas, East of Scofield Utah, For Itel Resources Corporation

Kamola, D.L. and Van Wagoner, J. C., 1996, Stratigraphy and Faciess Architecture of Paraseuences with Examples from the Spring Canyon Member, Blackhawk Formation, Utah: Published in Sequence Stratigraphy Of Foreland Basin Deposits, Van Wagoner E., Berman G.1., AAPG Bulletin # 64
Morrison Knudsen, 1983, Kinney Property Coal Reserve Evaluation for Pleasant Valley Coal Partners, December 1983

Pederson, D. E. and Geo-Hunt Consulting, 1998, Kinney Property Evaluation

Roberts, L.N.R., and Kirschbaum, M.A., 1995, Paleogeography of the Late Cretaceous of the Western Interior of middle North America—Coal distribution and sediment accumulation: U.S. Geological Survey Professional Paper 1561.
Ryer, T.A., 1981, Deltaic coals of Ferron Sandstone Member of Mancos Shale: Predictive model for Cretaceous coal-bearing strata of the Western Interior: American Association of Petroleum Geologists Bulletin, v. 65

Sanders Associates, Inc., 1976, Coal Resources, Gordon Creek Study Area, Carbon County, Utah

Sanders Associates, Inc., 1976, General Drill Hole and Cross Section Map, Scofield Area, Utah.

Spieker, E.M., 1931, The Wasatch Plateau Coal Fields: USGS, Bulletin 819

Utah Geologic Survey and Hansen, C. D., 1996, Jump Creek Quadrangle Geologic Map, OFR-334 and Personal communication: Utah Geologic Survey

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7. INVESTIGATING ACCOUNTANT’S REPORT

INVESTIGATING ACCOUNTANT’S REPORT New Horizon Minerals Ltd

2 November 2011

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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2 November 2011

The Directors

New Horizon Minerals Ltd Level 1, 33 Ord Street WEST PERTH WA 6005

Dear Sirs

INVESTIGATING ACCOUNTANT’S REPORT

1. Introduction

We have prepared this Investigating Accountant’s Report (“ Report ”) on historical financial information of New Horizon Minerals Ltd ( “New Horizon” or “ the Company ”) for inclusion in the Prospectus. Broadly, the minimum subscription under the Prospectus is 50 million shares at an issue price of $0.22 each together with one free attaching option for every one share subscribed for to raise up to $11 million before costs (“ the Offer ”). The maximum subscription is 75 million shares at an issue price of $0.22 each with one free attaching option for every one share subscribed for to raise up to $16.5 million before costs.

The attaching options will be issued at no cost with an exercise price of $0.20 each and an expiry date of 31 December 2014.

Expressions defined in the prospectus have the same meaning in this Report.

2. Basis of Preparation

This Report has been prepared to provide investors with information on the Statement of Comprehensive Income, Statement of Changes in Equity and the Statement of Financial Position and the pro-forma Statement of Financial Position as noted in Appendices 1, 2 and 3.

This Report does not address the rights attaching to the shares to be issued in accordance with the Prospectus, nor the risk associated with the investment, and has been prepared based on the complete Offer being achieved. Neither BDO Corporate Finance (WA) Pty Ltd nor its related entities (“ BDO ”) has been requested to consider the prospects for the Company, the shares on offer and related pricing issues, nor the merits and risks associated with becoming a shareholder and accordingly has not done so, and does not purport to do so. BDO accordingly takes no responsibility for these matters or for any matter or omission in the Prospectus, other than responsibility for this Report. Risk factors are set out in the Prospectus.

3. Background

New Horizon is a listed public company which was incorporated on 4 June 2010. It listed on the Australian Securities Exchange ( “ASX” ) on 20 October 2010. New Horizon’s Board of Directors is

made up of Gary Steinepreis as Executive Chairman and Robert Hodby and Patrick Burke both as Non Executive Directors.

In July 2010 the Company entered into an agreement with Drysdale Resources Pty Ltd, pursuant to which it acquired a 20% interest in the Mount Drysdale gold and base metals project and a 20% interest in the Hora Bore base metals project, with farm-in rights to earn an 80% interest in the projects by expending $1 million over 3 years.

On 26 September 2011 the Company announced it had entered into a conditional agreement to acquire all the issued share capital of Delta Coal Fund Pty Ltd ( “Delta Coal” ) from the shareholders of Delta Coal ( “Delta Coal Transaction” ). Delta Coal has entered into an asset purchase agreement with Carbon Resources LLC ( “Carbon Resources” ) to acquire a 100% interest in the Kinney #2 thermal coal project ( “Kinney Project” ) located in Utah, USA ( “Asset Purchase Agreement” ).

The acquisition by New Horizon of all the issued capital in Delta Coal is to be settled wholly by the issue of new ordinary shares and performance shares in New Horizon on the following terms:

(a) 10 million ordinary shares, payable upon shareholder approval of the Delta Coal Transaction;
(b) 10 million Class A performance shares, payable if New Horizon releases a public announcement that an indicated JORC Code compliant resource of at least 20 million tonnes has been discovered on the Kinney Project within 12 months of the acquisition date of the Kinney Project ( “Class A Performance Shares”) ;
(c) 10 million Class B performance shares, payable if New Horizon completes a Bankable Feasibility Study with New Horizon’s Board giving a positive decision to mine within 36 months of the acquisition date of the Kinney Project ( “Class B Performance Shares” ); and
(d) 10 million Class C performance shares, payable if new Horizon undertakes development and commercial production of the Kinney Project within 48 months of the acquisition date of the Kinney Project ( “Class C Performance Shares ”).

The Asset Purchase Agreement for the Kinney Project will close on 1 December 2011 and is to be satisfied by the following payments:

(i) At settlement an initial consideration of US$7 million (US$500,000 has already been paid by Delta Coal) ( “Initial Consideration” );
(ii) On or before 1 June 2012 consideration of US$3 million ( “First Deferred Consideration” ); and
(iii) On the completion of a Bankable Feasibility Study with New Horizon’s Board making a positive decision to mine by 1 December 2014, consideration of US$15 million. If the Bankable Feasibility Study is not completed and the positive decision to mine made by this date then the Kinney Project will be returned to Carbon Resources in accordance with the Asset Purchase Agreement ( “Second Deferred Consideration” ).

The acquisition by New Horizon of all the issued capital in Delta Coal is conditional upon:

(a) Confirmation that all the conditions precedent in the Asset Purchase Agreement have been met;
(b) Completion of the Asset Purchase Agreement between Delta Coal and Carbon Resources to give effect to Delta Coal’s option to acquire the Kinney Project, to the sole satisfaction of New Horizon;
(c) Completion of due diligence by New Horizon on Delta Coal, its assets and operations and Asset Purchase Agreement, to the sole satisfaction of New Horizon;
(d) Carbon Resources obtaining the approval of the bankruptcy court for either the dismissal of the case in the District of New Mexico No. 10-16104-j11 or the approval of the Asset Purchase Agreement;
(e) Following completion of the Asset Purchase Agreement, confirmation of Delta Coal’s unencumbered title to, and the tenure of, the Kinney Project and completion of due diligence in relation to the Kinney Project, to New Horizon’s satisfaction;
(f) Completion of a Placement of New Horizon ordinary shares to raise approximately $10 million; and
(g) The Company obtaining all necessary shareholder and regulatory approvals for the acquisition of Delta Coal and the capital raising,

by no later than 31 December 2011.

4. Scope

You have requested BDO to prepare an Investigating Accountant's Report covering the following financial information:

the historical Statement of Financial Position as at 30 June 2011, and the Statement of Comprehensive Income and Statement of Changes in Equity for the period ended on that date, for New Horizon;
the historical Statement of Financial Position as at 30 June 2011, and the Statement of Changes in Equity for the period ended on that date, for Delta Coal;
the pro-forma Statement of Financial Position as at 30 June 2011, and the pro-forma Statement of Changes in Equity for the period ended on that date, reflecting the actual position as at that date, major transactions between that date and the date of our report and the proposed capital raising under the Prospectus;
the accounting policies applied by New Horizon in preparing its financial statements.

The historical financial information set out in the appendices to this Report has been extracted from the financial statements of the Company for year ended 30 June 2011.

The Directors are responsible for the preparation of the historical financial information including determination of the adjustments.

We have conducted our review of the historical financial information in accordance with the Australian Auditing and Assurance Standard ASRE 2405 “Review of Historical Financial Information Other than a Financial Report”. We made such inquiries and performed such procedures as we, in our professional judgment, considered reasonable in the circumstances including:

a review of work papers, accounting records and other documents pertaining to balances in existence at 30 June 2011;
a review of the assumptions used to compile the pro-forma Statement of Financial Position;
a review of the adjustments made to the pro-forma historical financial information;
a comparison of consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in the appendices to this Report; and
enquiry of Directors and others.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Our review was limited primarily to an examination of the historical financial information, the pro-forma financial information, analytical review procedures and discussions with both management and directors. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the historical information or proforma financial information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

support by another person, corporation or an unrelated entity has not been assumed;
the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were sold at the date of this Report; and
the going concern basis of accounting has been adopted.

5. Conclusion

Statement on Historical Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe the historical financial information as set out in the Appendices to this report does not present fairly the financial performance for the year ended 30 June 2011 or the financial position as at 30 June 2011 in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

Statement of Pro-forma Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe the pro-forma financial information does not present fairly the financial position of the Company as at 30 June 2011, in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia as if the proforma transactions had occurred on that date.

6. Subsequent Events

Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief, no other material transactions or events outside of the ordinary business of the Company have come to our attention that would require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive.

7. Assumptions Adopted in Compiling the Pro-forma Statement of Financial Position

The pro-forma Statement of Financial Position post issue is shown in Appendix 2. This has been prepared based on the reviewed financial statements as at 30 June 2011 and the transactions and events relating to the issue of shares under this Prospectus:

The issue of 50 million shares at an issue price of $0.22 cents per share together with one free attaching option for every one share subscribed for to raise up to $11 million before costs (being the minimum subscription);
Capital raising costs of the Offer totalling approximately $1.07 million (being the minimum subscription) to be offset against contributed equity;
The acquisition of 100% of the fully paid ordinary shares in the capital of Delta Coal by New Horizon to be settled with the issue of 10 million ordinary shares at an issue price of $0.22 cents and 30 million performance shares which will be issued subject to certain conversion milestones being achieved on the Kinney Project;
The recognition as a payable of US$9.5 million (AUD$9,386,000 at an FX rate of US$/A$0.988) in Delta Coal for the Initial Consideration and the First Deferred Consideration payments for the Kinney Project;
The payment of US$6.5 million (AUD$6,422,000 at an FX rate of US$/A$0.988) as the Initial Consideration for the Kinney Project paid; and
The repayment of $834,974 in shareholder loans which had been made to Delta Coal.

8. Disclosures

BDO Corporate Finance (WA) Pty Ltd is the corporate advisory arm of BDO in Perth.

Neither BDO Corporate Finance (WA) Pty Ltd nor BDO, nor any director or executive or employee thereof, has any financial interest in the outcome of the proposed transaction except for the normal professional fee due for the preparation of this Report.

Consent to the inclusion of the Investigating Accountant’s Report in the Prospectus in the form and context in which it appears, has been given. At the date of this Report, this consent has not been withdrawn.

Yours faithfully

BDO Corporate Finance (WA) Pty Ltd

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Director

Peter Toll

APPENDIX 1 NEW HORIZON MINERALS LTD

STATEMENT OF COMPREHENSIVE INCOME

	Audited from the date of incorporation on 4-Jun-10 to 30-Jun-11 $
Revenue from continuing operations Other expenses Corporate compliance costs Corporate management fees Audit and non-audit service fees Occupancy costs Exploration expenditure Loss before income tax expense Income tax benefit/(expense) Net Loss for the period	87,366 (15,458) (15,944) (27,000) (28,625) (66,313) (19,698)
	(85,672) -
	(85,672)

The Statement of Comprehensive Income is to be read in conjunction with the notes to and forming part of the historical financial information set out in Appendix 4.

APPENDIX 2 NEW HORIZON MINERALS LTD

STATEMENT OF FINANCIAL POSITION

Notes	New Horizon Delta Coal Audited as at Reviewed as at Pro-forma Pro-forma 30-Jun-11 30-Jun-11 Adjustments After issue $ $ $ $
CURRENT ASSETS Cash and cash equivalents 2 Trade and other receivables 3 TOTAL CURRENT ASSETS NON CURRENT ASSETS Other assets Exploration expenditure 4,11 TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 5 TOTAL CURRENT LIABILITES NON CURRENT LIABILITIES Interest bearing liabilities 6 Deferred tax liability 7,11 TOTAL LIABILITIES NET ASSETS/(LIABILITES) EQUITY Contributed equity 8 Reserves 9 Accumulated losses 10 TOTAL EQUITY	2,369,292 226,465 2,673,026 5,268,783 6,039 1,271 - 7,310
	2,375,331 227,736 2,673,026 5,276,093 10,000 - - 10,000 - 609,156 19,393,506 20,002,662
	10,000 609,156 19,393,506 20,012,662
	2,385,331 836,892 22,066,532 25,288,755
	41,751 - 2,964,000 3,005,751
	41,751 - 2,964,000 3,005,751 - 834,974 (834,974) - - - 2,309,424 2,309,424
	- 834,974 1,474,450 2,309,424
	41,751 834,974 4,438,450 5,315,175

	2,343,580 1,918 17,628,082 19,973,580
	2,245,440 835 12,129,165 14,375,440 183,812 - 5,500,000 5,683,812 (85,672) 1,083 (1,083) (85,672)
	2,343,580 1,918 17,628,082 19,973,580

The pro-forma Statement of Financial Position after Issue is as per the Statement of Financial Position before Issue adjusted for the transactions relating to the issue of shares pursuant to this Prospectus. The Statement of Financial Position is to be read in conjunction with the notes to and forming part of the historical financial information set out in Appendix 4.

APPENDIX 3 NEW HORIZON MINERALS LTD

STATEMENT OF CHANGES IN EQUITY

Notes	New Horizon Delta Coal Audited as at Reviewed as at Pro-forma Pro-forma 30-Jun-11 30-Jun-11 Adjustments After issue $ $ $ $
Balance as at 1 July 2010 Comprehensive income for the period Profit/(Loss) for the period 10 Total comprehensive income for the period Transactions with equity holders in their capacity as equity holders Contributed equity, net of transaction costs 8 Reserves 9 Total transactions with equity holders Balance	- - - - (85,672) 1,083 (1,083) (85,672)
	(85,672) 1,083 (1,083) (85,672)
	2,245,440 835 12,129,165 14,375,440 183,812 - 5,500,000 5,683,812
	2,429,252 835 17,629,165 20,059,252

	2,343,580 1,918 17,628,082 19,973,580

The Statement of Changes in Equity is to be read in conjunction with the notes to and forming part of the historical financial information set out in Appendix 4.

APPENDIX 4 NEW HORIZON MINERALS LTD

NOTES TO AND FORMING PART OF THE HISTORICAL FINANCIAL INFORMATION

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the historical financial information included in this Report have been set out below.

(a) Basis of preparation of historical financial information

The historical financial information has been prepared in accordance with the recognition and measurement, but not all the disclosure requirements of the Australian equivalents to International Financial Reporting Standards (“ AIFRS ”), other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.

(b) Going Concern Basis of Accounting

The historical financial information has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

The ability of the Company to continue as a going concern is dependent on the Company being able to raise funds as proposed under this Prospectus to meet ongoing commitments and for working capital. The Directors may need to raise additional capital or realise assets as required to further explore and evaluate the current opportunities. The Directors believe that the Company will continue as a going concern. As a result the financial information has been prepared on a going concern basis. However should the Company be unsuccessful in undertaking additional raisings or realising assets, the entity may not be able to continue as a going concern. No adjustments have been made relating to the recoverability and classification of liabilities that might be necessary should the Company not continue as a going concern.

(c) Reporting Basis and Conventions

The historical financial information is also prepared on an accrual basis and is based on historic costs and does not take into account changing money values or, except where specifically stated, current valuations of non-current assets.

The following is a summary of the material accounting policies adopted by the company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(d) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Interest income is recognised on a time proportion basis using the effective interest method.

(e) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.

The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability.

No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(f) Impairment of Assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

(g) Cash and Cash Equivalents

For statement of cash flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(h) Trade and Other Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement within 30 days from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off.

An allowance account for doubtful receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the statement of comprehensive income. When a trade receivable for which an impairment allowance has been recognised becomes uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

(i) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid. They are recognised initially at fair value and subsequently at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition.

(j) Contributed Equity

Ordinary shares are classified as equity. Costs associated with capital raisings (exclusive of GST) directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. If the entity reacquires its own equity instruments, eg as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable costs associated with capital raisings (net of income taxes) is recognised directly in equity.

(k) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

(l) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flow on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authorities are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(n) Exploration and Development Expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on a discounted basis. Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(o) Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with entitlements arising from wages and salaries, annual leave and sick leave which will be settled after one year, are measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Other employee benefits payable later than one year are measured at the present value of the estimated future cash outflows to be made for those benefits.

Share-based payments

The Company provides benefits to employees (including directors) of the Company in the form of share options. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employee becomes unconditionally entitled to the options. The fair value of the options granted is measured using Black Scholes valuation model, taking into account the terms and conditions upon which the options were granted.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, on a straight line basis over the period from grant date to the date on which the relevant employees become fully entitled to the award (“vesting date”). The amount recognised as an expense is adjusted to reflect the actual number that vest.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(p) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in profit and loss.

(q) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(r) Jointly Controlled Interests

The proportionate interest in, assets, liabilities and expenses, of any joint interest activity, have been incorporated in the annual financial statements under the appropriate headings.

(s) Business Combinations

The acquisition method of accounting is used to account for all business combinations. Consideration is measured at the fair value of the assets transferred, liabilities incurred and equity interests issued by the group on acquisition date. Consideration also includes the acquisition date fair values of any contingent consideration arrangements, any pre-existing equity interests in the acquiree and share-based payment awards of the acquiree that are required to be replaced in a business combination. The acquisition date is the date on which the group obtains control of the acquiree. Where equity instruments are issued as part of the consideration, the value of the equity instruments is their published market price at the acquisition date unless, in rare circumstances it can be demonstrated that the published price at acquisition date is not fair value and that other evidence and valuation methods provide a more reliable measure of fair value.

Identifiable assets acquired and liabilities and contingent liabilities assumed in business combinations are, with limited exceptions, initially measured at their fair values at acquisition date. Goodwill represents the excess of the consideration transferred and the amount of the non-controlling interest in the acquiree over fair value of the identifiable net assets acquired. If the consideration and non-controlling interest of the acquiree is less than the fair value of the net identifiable assets acquired, the difference is recognised in profit or loss as a bargain purchase price, but only after a reassessment of the identification and measurement of the net assets acquired.

For each business combination, the group measures non-controlling interests at either fair value or at the non-controlling interest's proportionate share of the acquiree's identifiable net assets.

Acquisition-related costs are expensed when incurred. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Where the group obtains control of a subsidiary that was previously accounted for as an equity accounted investment in associate or jointly controlled entity, the group remeasures its previously held equity interest in the acquiree at its acquisition date fair value and the resulting gain or loss is recognised in profit or loss. Where the group obtains control of a subsidiary that was previously accounted for as an available-for-sale investment, any balance on the availablefor-sale reserve related to that investment is recognised in profit or loss as if the group had disposed directly of the previously held interest.

Where settlement of any part of the cash consideration is deferred, the amounts payable in future are discounted to present value at the date of exchange using the entity's incremental borrowing rate as the discount rate.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

Assets and liabilities from business combinations involving entities or businesses under common control are accounted for at the carrying amounts recognised in the group's controlling shareholder's consolidated financial statements.

(t) Accounting estimates and judgements

In the process of applying the accounting policies, management has made certain judgements or estimations which have an effect on the amounts recognised in the financial information.

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Determination of fair values on exploration and evaluation assets acquired in business combinations

On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position at their fair values. In measuring fair value of exploration projects, management considers generally accepted technical valuation methodologies and comparable transactions in determining the fair value. Due to the subjective nature of valuation with respect to exploration projects with limited exploration results, management have determined the price paid to be indicative of its fair value.

Determination of fair values of consideration paid in business combinations

At the time of acquisition, consideration transferred is required to be measured at it acquisition date fair value. With respect to performance shares issued (contingent consideration), management are required to estimate the probability of performance milestones being achieved in determining the acquisition date fair value. Management will continue to monitor and assess the likelihood of this outcome based upon information available at each reporting period.

Recoverability of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the company decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

Valuation of share based payment transactions

The valuation of share-based payment transactions is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black Scholes model taking into account the terms and conditions upon which the instruments were granted.

Taxation

The Company is subject to income taxes in Australia. Significant judgement is required when determining the Company’s provision for income taxes. The Company estimates its tax liabilities based on the Company’s understanding of the tax law.

NOTE 2. CASH AND CASH EQUIVALENTS	Audited 30-Jun-11 $	Pro-forma After issue $
Cash and cash equivalents Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Proceeds from shares issued under this Prospectus Capital raising costs Payment of Initial Consideration for the Kinney Project Repayment of Delta Coal shareholder loans Pro-forma Balance	2,369,292	5,268,783
		2,369,292 226,465 11,000,000 (1,070,000) (6,422,000) (834,974)
		2,899,491
		5,268,783

NOTE 3. TRADE AND OTHER RECEIVABLES	Audited 30-Jun-11 $	Audited 30-Jun-11 $
Trade and other receivables Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Pro-forma Balance	6,039




NOTE 4. EXPLORATION EXPENDITURE	Audited 30-Jun-11 $
Exploration expenditure Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Recognition of US$9.5 million payable by Delta Coal for the Kinney Project Fair value increase for Delta Coal acquisition (refer Note 11) Deferred tax liability uplift recognised on acquisition (refer Notes 7 & 11) Pro-forma Balance	-




NOTE 5. TRADE AND OTHER PAYABLES	Audited 30-Jun-11 $	Pro-forma After issue $
Trade and other payables Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Recognition of US$9.5 million payable by Delta Coal for the Kinney Project Payment of Initial Consideration for the Kinney Project Pro-forma Balance	41,751	3,005,751
		41,751 - 9,386,000 (6,422,000)
		2,964,000
		3,005,751

NOTE 6. INTEREST BEARING LIABILITIES	Audited 30-Jun-11 $	Pro-forma After issue $
Interest bearing liabilities Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Repayment of Delta Coal shareholder loans Pro-forma Balance	-	-
		- 834,974 (834,974)
		-
		-

NOTE 7. DEFERRED TAX LIABILITY	Audited 30-Jun-11 $	Pro-forma After issue $
Deferred tax liability Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Deferred tax liability uplift recognised on acquisition (refer Note 11) Pro-forma Balance	-	2,309,424
		- - 2,309,424
		2,309,424
		2,309,424

Under the accounting standards, the carrying value of the underlying exploration assets of New Horizon is, on consolidation, reflected at its “fair value” $17,693,238- being the fair value increase of $7,698,082 (explained in Note 11) plus the $9,995,156 carrying value in the books of Delta Coal - whereas the “tax base” value (thereof) in the books of Delta Coal is $9,995,156– resulting in a deferred tax liability of $2,309,424 (being 30% - corporate tax rate - of $7,698,082). This tax liability is debited to the asset and the credit is made to the deferred tax liability. This results in a final carrying value of exploration expenditure of $20,002,662.

As there are differences between what a company can deduct for tax and accounting purposes, there will be a difference between a company's income for tax purposes on the one hand and accounting purposes on the other.

A deferred tax liability entry in a company's statement of financial position reflects temporary differences between the company's accounting and tax carrying values. This liability may or may not result in an obligation to pay income tax in any given year hence the deferred status.

The deferred tax liability reflects the fact that, for tax purposes, the consolidated entity will not be able to claim an income tax deduction for the amortisation of that part of the consideration paid by New Horizon for the issued capital of Delta Coal which exceeds the carrying value (for tax purposes) of the underlying assets of (and in the books of) Delta Coal which but for such

liability could give the impression that the amount of $7,698,082 could be claimed as a tax deductable expense when amortised.

New Horizon envisages that, as the consolidated entity amortises the underlying assets in future periods, the consolidated entity will:

(a) debit amortisation expense and credit the carrying value of the underlying assets; and
(b) for an amount equal to 30% (being the corporate tax rate) of (a), debit the deferred tax liability and credit either income tax expense or deferred tax assets (if already brought to account at the time)

NOTE 8. CONTRIBUTED EQUITY	Audited Pro-forma 30-Jun-11 After issue $ $
Contributed equity Adjustments to arrive at the pro-forma balance: Fully paid ordinary share capital at 30 June 2011* Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Elimination of Delta Coal at 30 June 2011 on consolidation Shares issued pursuant to Acquisition of Delta Coal Proceeds from shares issued under this Prospectus Capital raising costs Pro-forma Balance	2,245,440 14,375,440
	Number of shares $ 20,500,000 2,245,440 835 (835) 10,000,000 2,200,000 50,000,000 11,000,000 - (1,070,000)
	60,000,000 12,130,000
	80,500,000 14,375,440
*6,050,000 Shares will be escrow restricted to 17 October 2012

Performance Shares on issue at completion of Offer	Number
Current Performance shares on issue Class A Performance Shares(1) Class B Performance Shares(1) Class C Performance Shares(1) Total Performance Shares on issue at completion of Offer	- 10,000,000 10,000,000 10,000,000
	30,000,000

(1) Performance Shares will convert into fully paid ordinary shares in the Company upon satisfaction of certain milestones which have been set out in the Prospectus.

Options on issue at completion of Offer	Number
Current options on issue(1) Options to be issued as part of Offer(2) Incentive Options to be issued upon shareholder approval(3) Total options on issue at completion of Offer	20,500,000 50,000,000 10,000,000
	80,500,000

(1) These options have an exercise price of $0.20 each and are exercisable on or before 31 December 2014.
(2) A total of 50 million options are to be issued on the basis of one free attaching option for every one share subscribed in the Offer. These options will have an exercise price of $0.20 and will expire on 31 December 2014.
(3) A total of 10 million Incentive Options are to be issued to Greg Hunt and Mike Placha under service agreements with the Company. The Incentive Options will be issued upon shareholder approval at a general meeting to be held on 9 November 2011. The Incentive Options will be issued for nil consideration, have an exercise price of $0.50 and expire 5 years after issue. They will vest on the date on which the last of the following conditions are satisfied:
(i) Completion of a Bankable Feasibility Study that results in Buyer’s board of directors making a positive decision to mine to enable production to commence in relation to the Kinney Project; and
(ii) That this occurs within 36 months of the acquisition of the Kinney Project.

The value of these options are required to be expensed over their vesting period, however since they are yet to be issued no expense has been recorded.

NOTE 9. RESERVES	Audited 30-Jun-11 $	Pro-forma After issue $
Reserves Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Class A Performance shares issued pursuant to Acquisition of Delta Coal Class B Performance shares issued pursuant to Acquisition of Delta Coal Class C Performance shares issued pursuant to Acquisition of Delta Coal Pro-forma Balance	183,812	5,683,812
		183,812 - 2,200,000 1,650,000 1,650,000
		5,500,000
		5,683,812

NOTE 10. ACCUMULATED LOSSES	Audited Pro-forma 30-Jun-11 After issue $ $	Audited Pro-forma 30-Jun-11 After issue $ $
Accumulated losses Adjustments to arrive at the pro-forma balance: Audited balance of New Horizon at 30 June 2011 Pro-forma adjustments: Reviewed balance of Delta Coal at 30 June 2011 Elimination of Delta Coal at 30 June 2011 on consolidation Pro-forma Balance	(85,672) (85,672)
		(85,672) 1,083 (1,083)
		-
		(85,672)

NOTE 11: BUSINESS COMBINATION

A summary of the acquisition details with respect to the Delta Coal Transaction as included in our report is set out below. These details have been determined for the purposes of the proforma adjustments as at 30 June 2011 however will require re-determination as at the successful acquisition date which may result in changes to the values as disclosed below.

Details of the net assets acquired, purchase consideration and notional fair value attributable to the exploration assets are as follows:

	Fair value $
Cash Exploration expenditure Trade and other receivables Trade and other payables Loans Net identifiable assets Purchase consideration comprises: 10 million Ordinary Shares issued at $0.22 each 10 million Class A Performance Shares 10 million Class B Performance Shares 10 million Class C Performance Shares Fair value attributable to exploration assets of Delta Coal Deferred tax liability (DTL) uplift recognised at 30% of the value increase of exploration assets (refer to Note 7) Pro-forma adjustment to exploration assets	226,465 9,995,156 1,271 (9,386,000) (834,974)
	1,918
	2,200,000 2,200,000 1,650,000 1,650,000
	7,700,000
	7,698,082 2,309,424
	10,007,506
* Both these balances have been increased from the 30 June 2011 reviewed balances by $9,386,000 which represents both the Initial Consideration and the First Deferred Consideration amounts payable by Delta Coal for the Kinney Project.

Valuation of Performance Shares	Class A	Class B	Class C
Number	10,000,000	10,000,000	10,000,000
Underlying share price	$0.22	$0.22	$0.22
Probability of achieving milestone	100%	75%	75%
Value of Performance Share	$0.22	$0.17	$0.17
Total Value	2,200,000	1,650,000	1,650,000

The conversion milestone for each class of Performance Share is outlined in the Prospectus.

NOTE 12: RELATED PARTY DISCLOSURES

Transactions with Related Parties and Directors Interests are disclosed in the Prospectus.

NOTE 13: COMMITMENTS AND CONTINGENCIES

In addition to the Initial Consideration and the First Deferred Consideration to be paid relating to the Asset Purchase Agreement for the Kinney Project, New Horizon is required to pay the Second Deferred Consideration amount of US$15 million. This will only be payable on the completion of a Bankable Feasibility Study with New Horizon’s Board making a positive decision to mine by 1 December 2014. If the Bankable Feasibility Study is not completed and the positive decision to mine made by this date the Kinney Project will be returned to Carbon Resources in accordance with the Asset Purchase Agreement.

At the date of the report no other material commitments or contingent liabilities exist that we are aware of, other than those disclosed in the Prospectus.

8. REPORT ON THE KINNEY PROJECT

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3 November 2011

The Board of Directors New Horizon Minerals Ltd Level 1, 33 Ord Street WEST PERTH WA 6005

Dear Sirs

REPORT ON KINNEY PROJECT

This Report is prepared for inclusion in a prospectus for the issue of up to 75 million fully paid ordinary shares in the Company (Shares) at an issue price of $0.22 per Share together with one (1) free attaching option for every one (1) Share issued, to raise up to $16.5 million (Prospectus).

Unless otherwise indicated, capitalised terms have the same meaning given to them in the Prospectus.

1. BACKGROUND

1.1 Asset Purchase Agreement

Delta Coal, has entered into the Asset Purchase Agreement to acquire, among other things, a 100% interest in the Kinney Project which is located in Utah in the USA and is comprised of various permits, including the conditionally approved Utah Division of Oil, Gas and Mining (DOGM) Permit Number C0070047 (Permit), the Carbon Resources Sublease (as described in the table in Section 1.3 below), the Telonis Lease (as described in Section 1.3(b) below) and the Surface Fee Land (as described in Section 1.4 below). A summary of the Asset Purchase Agreement is contained in Section 10.2 of the Prospectus.

Pursuant to the Deed of Assignment to be executed on or around Closing between Delta Coal and Wasatch, and in accordance with the terms of the Asset Purchase Agreement which includes the consent of Carbon Resources, Delta Coal agrees to assign its rights under the Asset Purchase Agreement to Wasatch. Wasatch is a 100% subsidiary of Delta Coal and therefore, following completion of the Acquisition, Wasatch will be a 100% subsidiary of the Company.

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The Company has entered into the Share Sale Agreement to acquire Delta Coal. Please refer to Section 10.1 of the Prospectus for a summary of the Share Sale Agreement.

The Asset Purchase Agreement provides that at Closing (on or about 1 December 2011) Carbon Resources shall execute and deliver to Wasatch the documents necessary to transfer the Kinney Project to Wasatch.

Upon completion of the Acquisition, and subject to completion of the Asset Purchase Agreement, the Company will acquire a 100% interest in the Kinney Project in Utah via its then 100% subsidiary, Wasatch.

1.2 Permit

Subject to the satisfaction of the Grant Conditions (which are described in Part VII of the Schedule to this Report), the Permit will be issued pursuant to the Utah Coal Mining and Reclamation Act of 1979, Utah Code Annotated 40-10-1.

The Permit was applied for by Carbon Resources and was approved by DOGM, subject to the satisfaction of the Grant Conditions. Upon the satisfaction of the Grant Conditions, the Permit will be issued. The Permit holder will be required to adhere to the terms and conditions of the Permit.

The proposed mining area is situated North of Scofield, Utah and East of the Utah State Highway 96. The Permit covers an area of approximately 448.14 acres. The Permit area includes:

(a) a portion of the area the subject of the Carbon Resources Sublease (as described in the table in Section 1.3 below);
(b) all of the Telonis Lease Land (as described in Section 1.3(b) below); and
(c) all of the Surface Fee Land (as described in Section 1.4 below).

1.3 Leases and subleases affecting the Kinney Project area

(a) Carbon County Lease and Carbon Resources Sublease

On 5 March 1997, Carbon County, a body politic of the State of Utah (Carbon County) and Western Reserve Coal Company, Incorporated (a company registered in the USA) (Western Reserve) entered into a lease agreement (Carbon County Lease) whereby Carbon County granted Western Reserve:

(i) a leasehold interest in the coal located under the land described in Part II of the Schedule to this Report (Carbon County Lease Land) for the sole purpose of exploring, developing, mining and producing coal;
(ii) the right to remove and sell any coal located on the Carbon County Lease Land; and
(iii) the right to use the surface of the Carbon County Lease Land, to the extent Carbon County has such surface rights.

The Carbon County Lease provides for the payment of a royalty in the amount of:

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(iv) the greater of US$0.50 or 2% of the gross sale price of every tonne of clean coal mined and sold during the term of the Carbon County Lease; or
(v) if the Carbon County Lease is assigned, then the royalty payment increases to the greater of:
(A) US$25,000 per year; or
(B) the greater of US$0.50, or 2%, of the gross sale price of every tonne of clean coal mined and sold during the term of the Carbon County Lease,

(collectively, Carbon County Royalty).

In consideration for the Carbon County Lease, rental of $5,552.56 (or US$5,620 at a foreign exchange rate of A$/US$1.012) per year is payable to Carbon County for the term of the Carbon County Lease (Rent). The Rent will be credited against the first royalties as they accrue under the Carbon County Lease.

The history of the Carbon County Lease is as follows:

Date	Activity	Outcome
31 Dec 2002	Carbon County Lease amended to extend to the primary lease for an additional 10 years. In exchange for the extension of time, Western Reserve agreed to release its interest under the lease over 1,200 acres of land.	Carbon County Lease has 20 year term. Carbon County Lease Land reduced by 1,200 hectares.
2 Dec 2005	Sublease entered into between Western Reserve and WRCC, LLC (WRCC) pursuant to which Western Reserve subleases the Carbon Resources Sublease Land (as described in Part III of the Schedule to this Report) to WRCC, and WRCC assumes the obligations of Western Reserve under the Carbon County Lease (WRCC Sublease). In exchange for the assignment, WRCC entered into a royalty agreement pursuant to which it would pay a royalty to Western Reserve (WRCC Royalty Agreement).	Western Reserve’s rights and obligations under the Carbon County Lease were assigned to WRCC. WRCC liable to pay royalty to Western Reserve.
2 Dec 2005	Sublease entered into between WRCC and Carbon Resources pursuant to which WRCC subleases the Carbon Resources Sublease Land to Carbon Resources, and Carbon Resources assumes the obligations of WRCC under the WRCC Sublease (Carbon Resources Sublease).	WRCC’s rights and obligations under the WRCC Sublease were assigned to Carbon Resources. Carbon Resources assumes WRCC’s obligation to pay royalty to Western Reserve.

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	In consideration for the assignment under the Carbon Resources Sublease, Carbon Resources assumed WRCC’s obligations under the WRCC Royalty Agreement in respect of the Carbon Resources Sublease Land.
26 May 2011	Agreement entered into between WRCC and Carbon Resources which affirmed the Carbon Resources Sublease, following Carbon Resources’ alleged rejection of the Carbon Resources Sublease by law in connection with Carbon Resources’ bankruptcy.	Carbon Resources Sublease affirmed.
12 Sep 2011	Asset Purchase Agreement entered into between Carbon Resources and Delta Coal pursuant to which Carbon Resources’ rights and obligations under the Carbon Resources Sublease will be assigned to Wasatch at Closing in respect of the Wasatch Sublease Land (as described in Part V of the Schedule to this Report). At Closing: • any royalty deed given in connection with the Carbon Resources Sublease or the WRCC Sublease, including the WRCC Royalty Agreement, shall be terminated. The WRCC Sublease and the Carbon Resources Sublease shall be amended to delete the provisions in such leases regarding royalty deeds; and • Wasatch will enter into a new royalty agreement with Western Reserve (Wasatch Royalty Agreement) under which Wasatch will agree to pay the following royalties to Western Reserve: `o`a royalty equal to 4% of gross revenues from coal mined and sold from the Carbon Resources Sublease; and `o`a wheelage royalty equal to 1% with respect to any block of coal on which the royalty paid by Wasatch to the United States Government does not	Carbon Resources Sublease assigned sold to Wasatch. At Closing WRCC Royalty Agreement to be at an end and a new royalty will be payable by Wasatch to Western Reserve in respect of to Wasatch Royalty Agreement.

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exceed 5%, in respect of the Wasatch Sublease Land and the Surface Fee Land (collectively, Wasatch Royalty).

(b) Telonis Lease

On 1 December 2007, Western Reserve and four members of the Telonis family (Telonis Family) entered into a lease agreement (Telonis Lease) whereby the Telonis Family granted Western Reserve a leasehold interest in land described in Part IV of the Schedule to this Report (Telonis Lease Land), for the purpose of constructing, operating, and maintaining buildings and facilities to be used in connection with Western Reserve's coal mine located on the Telonis Lease Land.

The Telonis Lease only grants the lessee surface rights over the Telonis Lease Land and does not grant the lessee a right to remove and sell any oil and gas, timber and other minerals located on the Telonis Lease Land. The Telonis family specifically reserves its subterranean or mineral rights to the extent such uses do not interfere with the lessee's permitted activities on the premises.

The term of the Telonis Lease is 25 years and may be renewed for one additional 5 year term. The Telonis Lease automatically terminates if:

(i) the coal deposits accessed through the Telonis Lease Land have been exhausted; or
(ii) Western Reserve terminates removal of coal and abandons the coal mining operation for 8 consecutive years; or
(iii) DOGM issues a final non-appealable order of closure and reclamation of mining operation over the land the subject of the Telonis Lease.

In consideration for the Telonis Lease rental is payable as follows:

(iv) $2,964 (or US$3,000 at a foreign exchange rate of A$/US$1.012) on or before 31 December 2007 and on or before 31 December of each year thereafter through the end of the year following commencement of mining operations on the premises;
(v) $5,928 (or US$6,000 at a foreign exchange rate of A$/US$1.012) on or before 31 December of each year following commencement of mining operations so long as mining operations are being conducted; and
(vi) $2,964 (or US$3,000 at a foreign exchange rate of A$/US$1.012) per year following termination of mining operations on said property until premises are reclaimed and abandoned by lessee.
(vii) The rental rate increases to $17,784 (or US$18,000 at a foreign exchange rate of A$/US$1.012) annually due on or before January 1 during the 5 year renewal term.

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Pursuant to the Asset Purchase Agreement, Carbon Resources will have the right to purchase the Telonis Lease at Closing, at which time Carbon Resources will transfer its interest in the Telonis Lease to Wasatch.

1.4 Surface Fee Land.

The Surface Fee Land is described in Part VI of the Schedule to this Report. Pursuant to the Asset Purchase Agreement, Wasatch will acquire the Surface Fee Land from Carbon Resources at Closing.

2. SCOPE

We have been requested to report on the Kinney Project, which comprises the Permit, the Carbon Resources Sublease, the Telonis Lease and the Surface Fee Land, which the Company will acquire a 100% interest in following the Acquisition and successful completion of the Asset Purchase Agreement.

Details of the Permit are set out in Part I of the attached Schedule, which forms part of this Report.

The land the subject of the:

(a) Carbon Resources Sublease is set out in Part III of the attached Schedule; and
(b) Telonis Lease is set out in Part IV of the attached Schedule; and
(c) Surface Fee Land is set out in Part VI of the attached Schedule.

3. LIMITATIONS OF REPORT

In preparing this Report, we have relied upon the following documents:

(a) letter from DOGM to Carbon Resources dated 30 June 2011, confirming conditional approval to issue the Permit (DOGM Letter);
(b) draft Permit prepared by DOGM, which was attached to the DOGM Letter;
(c) the Asset Purchase Agreement; and
(d) the Lease Agreements (as defined in Section 1.3) that affect the area the subject of the Permit.

4. SEARCHES

Based upon investigations conducted on our behalf/by our agents, we can confirm that the Permit was applied for by Carbon Resources on 21 February 2008 (Application) and was conditionally approved by DOGM, but not yet granted, on 30 June 2011.

5. OPINION

Subject to the assumptions and qualifications set out in this Report, we are of the view that:

(a) (Company’s Interest): this Report provides an accurate statement as to the Company’s interest in the Kinney Project;

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(b) (Good Standing): this Report provides an accurate statement as to the validity and good standing of the Permit and the validity of the Carbon Resources Sublease and the Telonis Lease; and
(c) (Third party interests): this Report provides an accurate statement as to third party interests, including encumbrances, in relation to the Permit.

6. FINDINGS

We consider the following to be material issues in relation to the Permit:

(a) (Company’s Interest): The Company will, through Wasatch, acquire a 100% interest in the Kinney Project, subject to:
(i) the successful completion of:
- (A) the Acquisition; and
- (B) the Asset Purchase Agreement; and
(ii) satisfaction of the Grant Conditions.
(b) (Formal issue of the Permit): The Surface Mining Control and Reclamation Act of 1977 of the USA provides that, as a prerequisite for obtaining a coal mining permit, a person must post a reclamation bond to ensure that the regulatory authority will have sufficient funds to reclaim the site if the permit holder fails to complete the reclamation plan approved in the permit. On this basis, DOGM has indicated that it will formally issue the Permit upon the satisfaction of the Grant Conditions, which includes lodging the following with DOGM:
(i) a reclamation bond in the amount of at least $2,183,480 (or US$2,210,000 at a foreign exchange rate of A$/US$1.012) (Reclamation Bond); and
(ii) a plan for the future reclamation of the Permit site (Reclamation Plan).

The Grant Conditions, which are described in Part VII of the Schedule to this Report, are standard and we believe that satisfaction of these conditions will result in the Permit being issued to Wasatch, assuming successful completion of the Asset Purchase Agreement.

(c) (Applications for Permit): The Company is not the applicant for the Permit, Carbon Resources is the applicant. Pursuant to the Asset Purchase Agreement and the Deed of Assignment, Carbon Resources will deposit the Permit transfer documents with Wasatch at Closing. Carbon Resources will transfer the Permit to Wasatch once Wasatch posts the Reclamation Bond and Carbon Resources obtains the Permit, which is expected to occur within one year of Closing.

(d) (Term of Permit): The term of the Permit is 5 years from the date of grant.

(Transfer of Permit to Wasatch): Carbon Resources will continue to keep the Permit application active after Closing for one year until Wasatch lodges the Reclamation Bond and the Reclamation Plan with DOGM. Subject to Wasatch lodging the Reclamation Bond and the Reclamation Plan with DOGM, DOGM will issue the final Permit to Carbon Resources, which Permit, at that time, will be valid and

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enforceable. In accordance with the terms of the Asset Purchase Agreement, Carbon Resources will then transfer the Permit to Wasatch and Deed of Assignment. Wasatch will then be responsible for satisfying the Grant Conditions.

(e) (Conditions): The Permit, if granted, will be granted subject to various standard conditions. A failure to comply with these conditions may lead to forfeiture of the Permit.
(f) (Assignment of Rights): The rights under the Permit may not be transferred, assigned or sold without the approval of the Director of DOGM. Transfer, assignment or sale of permit rights must be done in accordance with applicable regulations, including but not limited to Title 30 of the Code of Federal Regulations (CFR) Part 740.13(e) and R645-303 of the Utah Administrative Code.
(g) (Fees): Once the Permit is issued, the permit holder must pay all reclamation fees required by Title 30 of the CFR Part 870 for coal produced under the Permit, for sale, transfer or use.
(h) (Renewal): Upon expiration, the Permit may be renewed for areas within the boundaries of the existing Permit.
(i) (Rights): Assuming that the permit holder complies with the conditions of the Permit as well as other federal, state and local permit requirements for the above activities, the Permit authorises the permit holder to conduct coal mining and reclamation operations on the land within the Permit area.
(j) (Cultural Resources): As is standard for mining permits of this type in Utah, the Permit contains a provision that requires the permit holder to notify DOGM, if, in the course of mining activity, the permit holder identifies previously unknown cultural resources. Upon such notification, DOGM, after coordination with the U.S. Office of Surface Mining Reclamation and Enforcement, shall inform the permit holder of any mitigation efforts which should be implemented.
(k) (Legal Standing and Registration): WRCC and Carbon Resources are currently in default in their native states in the USA and are therefore not in good standing. It is a condition of the Asset Purchase Agreement that Carbon Resources remain in good standing until Closing. It is expected that Carbon Resources be in good standing by closing of the Asset Purchase Agreement.

Western Reserve and WRCC are not registered to do business in Utah. The USA Agent has requested that Western Reserve and WRCC be registered before Closing.

(l) (Royalties): The Wasatch Royalty (as described in Section 1.3) is payable by Wasatch to Western Reserve from Closing in accordance with the terms of the Asset Purchase Agreement and the Wasatch Royalty Agreement.

In addition, the Carbon County Lease requires the payment of the Carbon County Royalty (as described in Section 1.3 above) from the production of coal to Carbon County. This obligation was assumed by Carbon Resources under the Carbon County Sublease (as described in Section 1.3 above). Following Closing, Wasatch will be responsible for the payment of the Carbon County Royalty to Carbon County.

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(m) (Rent): Following Closing, Wasatch will be responsible for payment of the Rent (as described in Section 1.3) to Carbon County for the term of the Carbon County Lease and to the Telonis Family under the Telonis Lease.
(n) (Consents to assignments of Carbon County Lease): It is a condition of assignment of the Carbon County Lease and each sublease of the Carbon County Lease that consent of Carbon County and the assignor be granted prior to such assignment.

7. QUALIFICATIONS AND ASSUMPTIONS

This Report is subject to the following qualifications and assumptions:

(a) we have assumed the accuracy and completeness of all searches and other information or responses which were obtained by our agents in the USA;
(b) this Report does not cover any third party interests, including encumbrances, in relation to the Permit that are not apparent from our searches and the information provided to us;
(c) we have assumed that any agreements provided to us in relation to the Permit, the Carbon Resources Sublease and the Telonis Lease are authentic, were within the powers and capacity of those who executed them, were duly authorised, executed and delivered and are binding on the parties to them;
(d) we have assumed the accuracy and completeness of any instructions or information which we have received from the Company or any of its officers, agents and representatives;
(e) with respect to the Application for the grant of the Permit, we express no opinion as to whether such application will ultimately be granted and that reasonable conditions will be imposed upon grant, although we have no reason to believe that any application will be refused or that unreasonable conditions will be imposed; and
(f) the information in Part I of the Schedule in relation to the Permit is accurate as at the date the relevant searches were obtained. We cannot comment on whether any changes have occurred in respect of the Permit between the date of the searches and the date of the Prospectus.

8. CONSENT

In preparing this Report, we have relied upon information provided by third parties, including government departments in the USA, and have relied upon that information being accurate and up to date. During the course of preparing this Report, nothing has come to our attention that would suggest that this information is inaccurate or incomplete.

This report is given solely for the benefit of the Company and the directors of the Company in connection with the issue of the Prospectus.

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Yours faithfully

STEINEPREIS PAGANIN

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PART I - SCHEDULE

LOCATION	APPLICANT	GRANT DATE	TERM	AREA SIZE	ENCUMBRANCES/ DEALINGS	BONDS
Scofield, Utah, USA	Carbon Resources	Permit Application conditional approved but not yet granted, on 30 June 2011 by DOGM.	5 years	448.14 acres		Reclamation Bond to be paid prior to Permit being issued

PART II – CARBON COUNTY LEASE LAND

TOWNSHIP 12 SOUTH. RANGE 6 EAST. SLB & M

SECTION 24: E1/2SE1/4

SECTION 25: E1/2E1/2

SECTION 36: N1/2N1/2; S1/2S1/2

TOWNSHIP 12 SOUTH. RANGE 7 EAST. SLB & M

SECTION 30: SW1/4

SECTION 31: NW1/4NW1/4; SE1/4SW1/4

SECTION 31: S1/2NE1/4; N1/2SE1/4 SECTION 32: SW1/4NW1/4; W1/2SW1/4 SECTION 33: S1/2SW1/4 SECTION 35: ALL SECTION 36: ALL

TOWNSHIP 13 SOUTH. RANGE 6 EAST. SLB & M

SECTION 1: W1/2

SECTION 12: NW1/4NW1/4; SW1/4SW1/4

TOWNSHIP 13 SOUTH. RANGE 7 EAST. SLB & M

SECTION 3: NW1/4

SECTION 4: ALL SECTION 5: E1/2E1/2 SECTION 9: N1/2NW1/4 SECTION 16: SE1/4NW1/4; E1/2SW1/4; SW1/4NE1/4; W1/2SE1/4 SECTION 21: SE1/4; E1/2SW1/4 SECTION 28: E1/2; E1/2W1/2 SECTION 33:E1/2NE1/4; SW1/4NE1/4; NE1/4SE1/4

TOWNSHIP 12 SOUTH. RANGE 7 EAST. SLB & M

SECTION 5: NW1/4NW1/4; SE1/4SW1/4 SECTION 8: NW1/4NW1/4; SW1/4NW1/4 SECTION 33: S1/2NW1/4; SW1/4NE1/4; N1/2S1/2; S1/2SE1/4 SECTION 34: ALL

PART III – CARBON RESOURCES SUBLEASE LAND

TOWNSHIP 12 SOUTH. RANGE 7 EAST. SLB & M

SECTION 33: S1/2SW1/4 SECTION 35: ALL SECTION 36: ALL

TOWNSHIP 13 SOUTH. RANGE 7 EAST. SLB & M

SECTION 3: NW1/4

TOWNSHIP 12 SOUTH. RANGE 7 EAST. SLB & M

SECTION 33: S1/2NW1/4; SW1/4NE1/4; N1/2S1/2; S1/2SE1/4

SECTION 34: ALL

PART IV – TELONIS LEASE LAND

Property located in Section 33, Township 12 South, Range 7 Fast, Salt Lake Base & Meridian.

Beginning at a point on the east right-of-way line of Utah State Highway 96, said point being further described as being S00° 14'01"E, 1652.62 feet along the west section line of Section 33, Township 12 South, Range 7 East, Salt Lake Base and Meridian in Carbon County, Utah and N90° 00'00" E, 235.93 feet from said west line of Section 33; thence along said east right-of-way line the following three courses, N11° 02'21" E, 75.98 feet; thence N18° 41'18"E, 180.40 feet; thence N10° 47'24"E, 82.52 feet; thence along the Telonis north property line N90° 00'00"E, 285.41 feet; thence S01° 17'17"W, 175.81 feet; thence S26° 57'44"W, 450.28 feet; thence SO° 14'01"E, 1947.79 feet; thence S90° 00'00"W, 400.00 feet to the west line of the Telonis property, which is the west line of said Section 33, thence NO° 14'01"W, 2200.00 feet along said section line being also the west line of the Telonis property, thence N90° 00'00"E, 235.93 feet to the point of beginning. Containing 22.88 acres.

PART V – WASATCH S UBLEASE LAND

TOWNSHIP 12 SOUTH, RANGE 7 EAST, SLB&M

SECTION 33: S 1/2 NW 1/4; SW 1/4 NE 1/4; N 1/2 S 1/2, S 1/2 SE 1/4; S 1/2 SW 1/4

SECTION 34: ALL SECTION 35: ALL SECTION 36: ALL

TOWNSHIP 13 SOUTH, RANGE 7 EAST, SLB&M

SECTION 3: NW 1/4 SECTION 4: ALL SECTION 5: E 1/2 E 1/2 SECTION 9: N 1/2 NW1/4 SECTION 16: SE 1/4 NW 1/4; E 1/2 SW 1/4; SW 1/4 NE 1/4; W 1/2 SE 1/4 SECTION 21: SE 1/4; E 1/2 SW 1/4 SECTION 28: E 1/2; E 1/2 W 1/2 SECTION 33: E 1/2 NE1/4; SW 1/4 NE 1/4; NE 1/4 SE 1/4

PART VI – S URFACE FEE L AND

Parcel of land lying in the East ½ of Section 32, Township 12 South, Range 7 East, SLB&M, Carbon County, Utah, more particularly described as follows:

Beginning at a point which lies North, a distance of 1320.00 feet from the Southeast Corner of Section 32, T12S, R7E, SLB&M; thence South 89°59’00” West a distance of 920.00 feet, more or less, to the intersection of the East Right of Way boundary of the State Road 96; thence in a Northerly direction along said East highway Right of Way boundary, a distance of 270.00 feet; thence in a Northeasterly direction along said highway boundary a distance of 317.10 feet; thence North 45°32’00” East along said highway boundary a distance of 465.40 feet; thence in a Northeasterly direction along said highway boundary 733.00 feet, more or less, to the intersection of said highway boundary, and the East boundary of said Section 32; thence South a distance of 1475.00 feet, more or less, to the point of beginning.

Less and excepting therefrom a parcel of land more particularly described as follows:

Commencing at the Southeast corner of said Northeast ¼ of the Southeast ¼ of said Section 32, running thence North along the Section line 330 feet, more or less, to a point 50 fee North of the railway track of the Union Pacific Railway running across said land; thence in a Southwesterly direction parallel with and 50 fee distance from center line of said track, 412.5 feet, more or less, to the south line of said Northeast ¼ of the SE ¼; thence East 132 feet, more or less, to the point of beginning.

Also less and excepting any and all rights, title and interest, if any, acquired by The Atchison, Topeka and Santa Fe Railway Company and the Star Lake Railroad Company prior to January 1, 1991, in and to the above described real property.

Also less and exception any portion lying within the Union Pacific Railroad Right of Way or any other Railroad Right of Way.

PART VII – GRANT CONDITIONS

The permit holder will submit water quality data for the Permit in an electronic format through the Electronic Data Input web site.
Once information on Water Right # 91-4026 has been verified, the permit holder must update Section 731.800 - Water Rights of the MRP within 60 days. Maps 30 and 31 will need to be updated accordingly to reflect the water right(s) as ponds. Exhibit 13 will need to be updated with the water rights database record. Please add language to the PHC to account for these ponds and discuss preventing or minimizing water loss from ponds.
At the Permit site, surface water stations Miller Outlet, RES-1 and Mud Creek reported orthophosphate concentrations in their baseline dataset. Orthophosphate is one from of phosphate and may not be an accurate representation of the total phosphate present in a sample. Total phosphate is a listed Total Maximum Daily Load (TMDL) pollutant for Scofield Reservoir by the Utah DEQ
(http://www.waterquality.utah.gov/TMDL/Scofield_Res_TMDL.pdf). The Permit holder will be required to modify the surface water component of their water monitoring plan to monitor for total phosphate instead of orthophosphate within 60 days of permit approval.
A bond in the amount of at least $2,183,480 (or US$2,210,000 at a foreign exchange rate of A$/US$1.012) must be posted with DOGM prior to Permit being issued. Within 60 days of Permit approval, the permit holder will be required to make the necessary corrections to the escalation section of the bond calculation summary.
In compliance with R645-302-320, the permit holder must conduct vegetation surveys and analyses of the areas identified as potential Alluvial Valley Floors adjacent to the Permit area. The surveys must be completed and the analyses and results submitted to DOGM for incorporation in the MRP by the end of the calendar year 2011.

9. RISK FACTORS

THE RISKS CONTAINED BOTH IN THE INVESTMENT OVERVIEW SECTION, THE REPORT ON THE KINNEY PROJECT AND THIS SECTION 9 SHOULD BE CONSIDERED CAREFULLY BY POTENTIAL INVESTORS.

9.1 Introduction

An investment in the Company is not risk free and prospective new investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Securities.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

In common with other companies operating in the coal industry sector, the Company is engaged in activities that involve a high degree of risk. Material risks that may affect the Company include:

SPECIFIC RISKS

9.2 Change in nature and scale of activities

As the Company has no prior involvement in the coal industry, the acquisition of Delta Coal constitutes a significant change in the nature and scale of the Company’s activities and the Company needs to comply with Chapters 1 and 2 of the ASX Listing Rules as if it were seeking admission to the Official List of ASX.

The Company proposes to obtain Shareholder approval for a change in nature and scale of its activities at the Annual General Meeting. ASX requires the Company to re-comply with Chapters 1 and 2 of the ASX Listing Rules.

There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation on the ASX. In the event the conditions to the Offer are not satisfied or the Company does not receive conditional approval for re-quotation on ASX then the Company will not proceed with the Offer and will repay all application monies received.

9.3 Funding Risk

The Directors believe that upon the successful completion of the Offer, the Company will have sufficient funds to adequately meet the Company’s planned exploration budget and short term working capital requirements. In the event that the Offer is not completed successfully, the Company holds sufficient funds to meet existing commitments as and when they fall due. However, the Company may require further financing in order to meet its obligations under the Asset Purchase Agreement.

In addition to the initial consideration of $6,916,000 (or $US7,000,000 at a foreign exchange rate of A$/US$1.012), the Company is required to pay Carbon Resources:

(a) First Deferred Consideration - $2,964,000 (or US$3,000,000 at a foreign exchange rate of A$/US$1.012), on or before 1 June 2012; and

(b) Second Deferred Consideration - a non-recourse consideration amount of $14,820,000 (or US$15,000,000 at a foreign exchange rate of A$/US$1.012), which is payable upon the first to occur of:
(i) completion of the Bankable Feasibility Study with New Horizon’s Board making a Positive Decision to Mine; or
(ii) 1 December 2014,

pursuant to the Asset Purchase Agreement.

There can be no assurance that such funding will be available on satisfactory terms or at all. If the Bankable Feasibility Study is not completed and the Positive Decision to Mine is not made within 36 months of Closing of the Asset Purchase Agreement, then the Kinney Project will be returned to Carbon Resources in accordance with the Asset Purchase Agreement and the Company will retain no interest in the Kinney Project, forfeit the consideration paid to Carbon Resources as at that date and any funds expended on the Project to that date will be lost.

Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities.

9.4 Conditions of the Share Sale Agreement and Asset Purchase Agreement and Contract Risk

Pursuant to the Share Sale Agreement (summarised in Section 10.1) the Company has agreed to acquire Delta Coal subject to the fulfilment of certain conditions including Carbon Resources obtaining the approval of the Bankruptcy Court for either:

(a) the dismissal of the New Mexico Case; or
(b) the approval of the Asset Purchase Agreement,

by 31 December 2011. The Company is entitled to waive these conditions pursuant to the terms of the Asset Purchase Agreement. The Company will not proceed with the Acquisition until these conditions are satisfied.

The Company is assisting Carbon Resources in the Bankruptcy Court proceedings and believes that there is a strong case for Bankruptcy Court to approve the Asset Purchase Agreement as this provides for all creditors (both secured and unsecured) to be paid, in full.

On completion of the Acquisition, the Company’s primary asset will be its proposed interest in the Kinney Project held pursuant to the Asset Purchase Agreement with Carbon Resources. The Company will be reliant on Carbon Resources complying with the terms and conditions of the Asset Purchase Agreement, including transferring the Permit to Wasatch following Wasatch’s satisfaction of the Grant Conditions, and the conditions attaching to the leases which comprise the Project. If Carbon Resources fails to transfer the Permit to Wasatch, the Company will not obtain an interest in the Permit.

Further, if the Company fails to satisfy its obligations under the Share Sale Agreement within the specified periods, the Share Sale Agreement could be terminated and, in this circumstance, the Company will lose all its rights to the Project.

The Asset Purchase Agreement is governed by Utah law or jurisdictions outside Australia. Legal action instituted in Australia or overseas can be costly. There is a risk that the Company may not be able to seek the legal redress that it could expect under Australian law, and there can be no guarantee that a legal remedy will ultimately be granted on the appropriate terms.

9.5 Requirements for Permits and Licences

The Surface Mining Control and Reclamation Act of 1977 of the USA provides that, as a prerequisite for obtaining a coal mining permit, a person must post a reclamation bond to ensure that the regulatory authority will have sufficient funds to reclaim the site if the permittee fails to complete the reclamation plan approved in the permit.

Assuming completion of the Acquisition, development of the Kinney Project depends, amongst other things, upon the Company being granted a permit to mine the coal resource. In order for the Permit to be issued to Carbon Resources, Wasatch must comply with the Grant conditions within one year of Closing. Carbon Resources must then transfer the Permit to Wasatch in order for the Company to obtain an interest in the Kinney Project.

Although conditional approval to grant the Permit has been given by DOGM, there is no guarantee that the Grant Conditions will be satisfied by Wasatch or, if the Grant Conditions are satisfied, that Carbon Resources will transfer the Permit to Wasatch once the Permit is issued.

Further, assuming the Permit is issued to Wasatch, the ability of the Company to obtain, sustain or renew such licences and permits on acceptable terms is subject to change in regulations and policies and is at the discretion of the applicable regulatory authorities.

The failure of the Company to obtain, sustain or renew licences and permits on acceptable terms could adversely impact the Company’s operations and its financial results.

9.6 Risks relating to the Kinney Project

On completion of the Acquisition, the Company will be conducting its activities in Utah in the USA. The Directors believe that the Utah State Government and the USA Federal Government support the development of natural resources by foreign investors. However there is no assurance that future political and economic conditions in the USA will not result in the Government of Utah and/or

the Federal Government of the USA adopting different policies regarding foreign development and ownership of mineral resources.

Any changes in policy may result in legislative changes affecting ownership of assets, taxation, rates of exchange, environmental protection, labour relations, repatriation of income and return on capital, all of which may affect the Company’s ability to develop the Kinney Project. Changes to Utah’s mining or investment policies and legislation or a shift in political attitude may adversely affect the Company’s operations and profitability.

Outcomes in courts in the USA may be less predictable than in Australia, which could affect the enforceability of contracts entered into by the Company or its subsidiaries in the USA.

The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on the operations or profitability of the Company. The Company has made its investment and strategic decisions based on the information currently available to the Directors. However, should there be any material change in the political, economic, legal and social environments in the USA, the Directors may reassess investment decisions and commitments to assets in the USA.

9.7 Exploration and Development Rights

Acquisition and retention of exploration and development rights is a detailed and time-consuming process. There is no guarantee that the Company will be granted future exploration rights necessary to develop the Kinney Project on acceptable terms, in a timely manner or at all. A wide range of factors and principles must be taken into account by the Federal and State regulatory authorities in Utah when considering applications for drilling rights. The factors taken into account include the drilling must not result in unacceptable pollution, ecological degradation or damage to the environment, and the applicant must have the ability to comply with the relevant provisions of the health and safety regulations.

Drilling rights and development rights are liable to be cancelled or suspended for breach of the terms of the right and non-compliance with permits.

9.8 Exploration and Production Risks

The business of coal exploration, project development and possible production involves inherent risks. Success depends on the successful exploration appraisal, design and construction of efficient recovery and processing facilities, competent operational and managerial performance, and efficient distribution and marketing services. Exploration is a speculative endeavour and production operations can be hampered by engineering difficulties, cost overruns, inconsistent recovery rates and other unforeseen events.

The outcome of the Company’s proposed exploration, project development and production programs will affect the future performance of the Company and the price of its Shares.

If and when the Company commences production, the production may be curtailed or shut down for considerable periods of time owing to a range of factors such as disruptions to transport infrastructure, lack of market demand, government regulation, production allocations or force majeure events. If these

curtailments continue for a considerable period of time, they are likely to have a materially adverse effect on the operations and/or financial position of the Company.

9.9 Foreign Exchange Rate Risk

The payment of the Kinney Project Acquisition is in US dollars and any revenue received by the Company would likely be in US dollars derived from the sale of coal and a substantial portion of the Company’s operating expenses would also be incurred in US dollars. Coal is sold in the USA market and around the world based principally on a US dollar price. Furthermore, the income and expenditure accounts will be prepared in Australian dollars (AUD). Therefore Australian dollar reported revenue will be directly impacted by movements in the USA dollar coal price and the USD/AUD exchange rates. Movements in the USD/AUD exchange rates may adversely or beneficially affect the Company’s results or operations and cash flows.

9.10 Coal Price Volatility

Substantially all of the Company’s revenues and cash flows (should the Company enter production) will be derived from the sale of coal. Therefore, the financial performance of the Company would be exposed to fluctuations in the Coal price. Historically, the Coal price has fluctuated widely and has experienced periods of significant decline. Coal prices are affected by numerous factors and events that are beyond the control of the Company. These factors and events include general economic activity, world demand, forward selling activity as well as general global economic conditions and political trends.

If coal prices should fall below or remain below the Company’s cost of production for any sustained period due to these or other factors and events, the Company’s exploration and proposed production could be delayed or even abandoned. A delay in exploration or production or the abandonment of one or more of the Company’s leasehold tenements may require the Company to write down its coal reserves and resources and may have a material adverse effect on the Company’s production, earnings and financial position.

GENERAL RISKS

9.11 General Economic Risks

Factors such as inflation, currency fluctuations, interest rates, supply and demand of capital and industrial disruption have an impact on business costs, commodity prices and stock market prices. The Company’s operating costs, possible future revenues and future profitability can be affected by these factors, which are beyond the control of the Company.

9.12 Regulatory Risk

The Company’s proposed drilling operations and exploration and development activities at the Project will be subject to extensive laws and regulations relating to numerous matters, including various resource licence consent conditions pertaining to environmental compliance and rehabilitation, taxation, social and labour relations, health and worker safety, waste disposal, water use, protection of the environment, successful land claims and heritage matters, protection of endangered and protected species and other matters. The Company will

regularly require permits from regulatory authorities to authorise the Company’s operations. These permits relate to exploration, development, production and rehabilitation activities.

Obtaining necessary permits can be a time-consuming process and there is a risk that the Company may not obtain these permits on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining necessary permits and complying with these permits and applicable laws and regulations could materially delay or restrict the Company from proceeding with the development of a project or the operation or further development of a reserve. Any failure to comply with applicable laws and regulations or permits, even if inadvertent, could result in material fines, penalties or other liabilities. In extreme cases, failure could result in suspension of the Company’s activities or forfeiture of resource tenements.

9.13 International Operations

International sales and operations are subject to a number of risks, including:

(a) potential difficulties in enforcing agreements (including joint venture agreements) and collecting receivables through foreign local systems;
(b) potential difficulties in protecting intellectual property;
(c) increases in costs for transportation and shipping; and
(d) restrictive governmental actions, such as imposition of trade quotas, tariffs and other taxes.

Any of these factors could materially and adversely affect the Company’s business, results of operations and financial condition.

9.14 Competition

The Company will compete with other companies, including major coal companies. Some of these companies have greater financial and other resources than the Company and, as a result, may be in a better position to compete for future business opportunities. There can be no assurance that the Company can compete effectively with these companies.

9.15 Joint Venture Parties, Agents and Contractors

The Directors are unable to predict the risk of financial failure or default by a participant in any earn-in agreement or joint venture to which the Company may become a party, the insolvency or managerial failure by which any of the contractors to be used in the future by the Company in any of its activities, or the insolvency or other managerial failure by any of the other service providers to be used in the future by the Company for any activity.

9.16 Future Capital Needs

Significant future funding will be required by the Company to develop the Project. There can be no assurance that such funding will be available on satisfactory terms or at all. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities.

9.17 Potential Acquisitions

As part of its business strategy, the Company intends to make acquisitions of, or significant investments in, complementary companies or projects. Any such future transactions would be accompanied by the risks commonly encountered in making such acquisitions.

9.18 Reliance on Key Personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

9.19 Insurance

Insurance against all risks associated with coal production is not always available or affordable. The Company will maintain insurance where it is considered appropriate for its needs; however, it will not be insured against all risks either because appropriate cover is not available or because the Directors consider the required premiums to be excessive having regard to the benefits that would accrue.

9.20 Environmental, Health and Safety Matters

The Company will be subject to environmental laws and regulations in connection with operations it may pursue in the coal industry, which operations are currently in Utah. The Company intends to conduct its activities in an environmentally responsible manner and in accordance with all applicable laws. However, the Company may be the subject of accidents or unforeseen circumstances that could subject the Company to extensive liability.

Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations that may be adopted in the future, including whether any such laws or regulations would materially increase the Company's cost of doing business or affect its operations in any area.

9.21 Market conditions

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(a) general economic outlook;
(b) interest rates and inflation rates;
(c) currency fluctuations;
(d) changes in investor sentiment toward particular market sectors; (e) the demand for, and supply of, capital; and

(f) terrorism or other hostilities.

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

9.22 Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Company’s securities.

10. MATERIAL CONTRACTS

Details of the Share Sale Agreement, and other material agreements to which the Company is a party, are set out below.

10.1 Share Sale Agreement – Acquisition of Delta Coal

On 21 September 2011, the Company and all of the shareholders of Delta Coal (Vendors) entered into a Share Sale Agreement pursuant to which the Company will acquire a 100% interest in Delta Coal. The material terms of the Share Sale Agreement are as follows:

(a) (Conditions Precedent): the Share Sale Agreement is conditional upon the following conditions being satisfied:
(i) confirmation that all of the conditions precedent in the Asset Purchase Agreement have been met;
(ii) completion of the Asset Purchase Agreement between Delta Coal and Carbon Resources to give effect to Delta Coal’s option to acquire the Kinney Project, to the sole satisfaction of the Company;
(iii) completion of due diligence by the Company on Delta Coal, its assets and operations and Asset Purchase Agreement, to the sole satisfaction of the Company;
(iv) Carbon Resources obtaining the approval of the bankruptcy court for either the dismissal of the case in the District of New Mexico No. 10-16104-j11 or the approval of the Asset Purchase Agreement;
(v) following completion of the Asset Purchase Agreement, confirmation of Delta Coal’s unencumbered title to, and the tenure of, the Kinney Project and completion of due diligence in relation to the Kinney Project, to the Company’s satisfaction;
(vi) completion by the Company of a placement of between 37 million and 46 million Shares at an issue price of $0.22 each, together with a free attaching option to acquire a Share on the basis of 1 Placement Option for every 1 Share subscribed for under the Placement and exercisable at $0.20 each on or before 31 December 2014, to raise at least $8,140,000 and up to $10,120,000 (Capital Raising Condition); and
(vii) the Company obtaining all necessary Shareholder and regulatory approvals for the Acquisition and the placement required pursuant to the Capital Raising Condition,

by no later than 31 December 2011.

(b) (Consideration): the consideration payable by the Company for Delta Coal is:
(i) 10 million Shares (Consideration Shares);

(ii) 10 million Class A performance shares in the Company (Class A Performance Shares);
(iii) 10 million Class B performance shares in the Company (Class B Performance Shares); and
(iv) 10 million Class C performance shares in the Company (Class C Performance Shares),

(collectively, Consideration Securities).

The Consideration Securities will be issued and allotted to Vendors at settlement of the Share Sale Agreement and will be voluntarily escrowed until that date which is 12 months from the date of their individual issue, or such time as determined by the ASX. If a Milestone is met then the ordinary Shares issued will be escrowed from the original escrow date of the Performance Shares being issued.

The conversion of the Class A, B and C Performance Shares (together, Performance Shares) into fully paid ordinary Shares in the Company is subject to the satisfaction of the milestones set out at Section 10.1(c) below.

(c) (Conversion of Performance Shares): The Performance Shares will convert into Shares following satisfaction of the below 3 milestones in relation to the Kinney Project (Milestones):
(i) if New Horizon publicly announces that an indicated JORC Code compliant resource (as this term is defined in the JORC Code) of at least 20 million tonnes has been discovered on the Kinney Project (Mineral Product) within 12 months of the Asset Purchase Agreement Completion Date (as defined in Section 10.2(a) below), the Class A Performance Shares will convert into Shares (Milestone A);
(ii) if New Horizon completes a Bankable Feasibility Study with a Positive Decision to Mine in relation to the Kinney Project within 36 months of the Asset Purchase Agreement Completion Date, the Class B Performance Shares will convert into Shares (Milestone B); and
(iii) if New Horizon undertakes development and commercial production of the Mineral Product within 48 months of the Asset Purchase Agreement Completion Date or a change in control event occurs, the Class C Performance Shares will convert into Shares (Milestone C).
(d) (Settlement): settlement of the Share Sale Agreement will occur on or before 1 November 2011 or such other time and date as the parties agree in writing.
(e) (Representations and Warranties): the Share Sale Agreement contains representations and warranties standard for an agreement of this nature.

10.2 Asset Purchase Agreement – Acquisition of the Kinney Project

On 12 September 2011, Delta Coal and Carbon Resources entered into the Asset Purchase Agreement pursuant to which Delta Coal exercised its option to acquire a 100% interest in the Kinney Project.

The material terms of the Asset Purchase Agreement are as follows:

(a) (Conditions Precedent): the Asset Purchase Agreement is conditional upon the following conditions precedent being satisfied:
(i) neither Carbon Resources or Delta Coal being in breach of their covenants or agreements under the Asset Purchase Agreement;
(ii) all representations and warranties of Carbon Resources and Delta Coal being true;
(iii) the Asset Purchase Agreement, and all transactions contemplated by it, being approved by the Bankruptcy Court in connection with the case in the District of New Mexico No. 10-16104-j11;
(iv) Carbon Resources delivering all material documents and other information required under the Asset Purchase Agreement to Delta Coal;
(v) there being no material adverse change in the financial condition of Carbon Resources or the Kinney Project;
(vi) the members of the Company approving the purchase of the Kinney Project by Delta Coal and the purchase of Delta Coal by the Company;
(vii) Delta Coal being issued an owner’s policy of title insurance insuring the Kinney Project;
(viii) all licences, permits, approvals, reports, mining materials and mining tenements being transferred or assigned to Delta Coal and all acts necessary to complete such transfers being completed;
(ix) there being no change in control of Carbon Resources; and
(x) Delta Coal completing and being satisfied with its due diligence review; and
(xi) Carbon Resources amending its disclosure statement and amended plan of reorganisation of debtor-in-possession (both dated 10 July 2011) to provide for all holders of claims in classes 1 – 5 of those documents to be paid in full on the reorganisation confirmed by the Bankruptcy Court in the case in the District of New Mexico No. 10-16104-j11,

by completion of the Asset Purchase Agreement (1 December 2011 unless otherwise agreed) (Asset Purchase Agreement Completion).

(b) (Consideration): The consideration payable by Delta Coal to Carbon Resources pursuant to the Asset Purchase Agreement is $24,70,000 (or US$25,000,000 at a foreign exchange rate of A$/US$1.012), to be paid as follows:
(i) $494,000 (or US$500,000 at a foreign exchange rate of A$/US$1.012), which was paid as a non-refundable deposit (Deposit) to an escrow agent by Delta Coal, applied by the escrow agent as follows:
- (A) $247,000 (or US$250,000 at a foreign exchange rate of A$/US$1.012) was paid to Carbon Resources on the execution of the Asset Purchase Agreement; and
- (B) $247,000 (or US$250,000 at a foreign exchange rate of A$/US$1.012) will be paid to Carbon Resources on the Asset Purchase Agreement Completion Date;
(ii) $6,422,000 (or US$6,500,000 at a foreign exchange rate of A$/US$1.012) in immediately available funds, to be paid to Carbon Resources on the Asset Purchase Agreement Completion Date; and
(iii) $17,784,000 (or US$18,000,000 at a foreign exchange rate of A$/US$1.012) in the form of a promissory note set up in two parts, to be delivered to Carbon Resources in the amounts and at the times set out below:
- (A) a $2,964,000 (or US$3,000,000 at a foreign exchange rate of A$/US$1.012) recourse promissory note, to be delivered on or before six months from the Asset Purchase Agreement Completion Date; and
- (B) a $14,820,000 (or US$15,000,000 at a foreign exchange rate of A$/US$1.012) non-recourse promissory note, to be delivered upon the first to occur of:
  - (I) Wasatch completing a Bankable Feasibility Study on the Kinney Project that results in Delta Coal’s board of directors making a Positive Decision to Mine the Kinney Project; or
  - (II) 36 months after the Asset Purchase Agreement Completion Date,

and in the event that the Bankable Feasibility Study does not result in a Positive Decision to Mine and 36 months has expired then the Kinney Project will be transferred back to Carbon Resources in accordance with the Asset Purchase Agreement and the Company will retain no interest in the Kinney Project, forfeit the consideration paid to Carbon Resources as at that date and any funds expended on the Project to that date will be lost.

(c) (Assignment of Option Agreement): Pursuant to a Deed of Assignment with Wasatch, Delta Coal will transfer all of its rights and obligations

under the Option Agreement and Asset Purchase Agreement to Wasatch.

(d) (Representations and Warranties): the Asset Purchase Agreement contains representations and warranties standard for an agreement of this nature.
(e) (Governing Law): The Asset Purchase Agreement is governed and is to be construed under the laws of the State of Utah.

10.3 Mandate with Patersons

Pursuant to a mandate between Patersons and New Horizon dated 13 September 2011 (Patersons Mandate), Patersons has agreed to act as Lead Manager to the Offer.

The Consideration payable by the Company to Patersons is 6% of the gross dollar amount raised by Paterons pursuant to this Prospectus.

The Company will reimburse Patersons for its out of pocket expenses related to the Offer and Patersons will obtain the Company’s prior consent before incurring an expense greater than $2,000.

The Patersons Mandate otherwise contains standard clauses typical for an agreement of this nature.

10.4 Mandate with Delta Capital

Pursuant to a mandate between Delta Capital and New Horizon dated 12 September 2011 (Delta Capital Mandate), Delta Capital has agreed to act as manager to the Offer.

The Consideration payable by the Company to Delta Capital is 6% of the funds raised by Delta Capital pursuant to this Prospectus.

The Company will reimburse Delta Capital for its out of pocket expenses related to the Offer and Delta Capital will obtain the Company’s prior consent before incurring an expense greater than $500.

10.5 Mandate with CPS Securities

Pursuant to a mandate between CPS Securities and New Horizon dated 19 September 2011 (CPS Mandate), CPS Securities has agreed to act as comanager and a Joint Lead Manager to the Offer.

The consideration payable by the Company to CPS Securities is 6% of the funds raised by CPS Securities pursuant to this Prospectus.

The Company will reimburse CPS Securities for it’s out of pocket expenses related to the Offer and CPS Securities will obtain the Company’s prior consent before incurring an expense greater than $2,000.

10.6 Executive Services Agreement with Mike Placha

Wasatch entered into an executive services agreement with Mike Placha pursuant to which Mr Placha will serve Wasatch as its Chief Executive Officer.

Following completion of the Acquisition, Wasatch will be a 100% subsidiary of the Company.

The material terms of the agreement are as follows:

(a) the agreement has a term of 1 year commencing on 1 August 2011 and, at the election of Wasatch, the term may be extended for a further period of 1 year;
(b) Wasatch will pay Mr Placha a salary of $197,600 (or US$200,000 at a foreign exchange rate of A$/US$1.012) (exclusive of superannuation and GST) (Salary), which is payable in equal monthly instalments and which will be reviewed annually;
(c) subject to proof, Wasatch will reimburse Mr Placha for all reasonable expenses incurred in the performance of his duties;
(d) Mr Placha will be eligible for the following performance based bonuses:
(i) a bonus of $49,400 (or US$50,000 at a foreign exchange rate of A$/US$1.012) if Wasatch publicly announces that a measured JORC Code compliant resource of at least 20,000,000 tonnes has been discovered within 12 months of the Kinney Project Acquisition Date;
(ii) a bonus of $247,000 (or US$250,000 at a foreign exchange rate of A$/US$1.012) if Wasatch completes the Bankable Feasibility Study that results in the board of Wasatch making a decision to mine within 36 months of the Kinney Project Acquisition Date; and
(iii) a bonus of $988,000 (or US$1 million at a foreign exchange rate of A$/US$1.012) for every 50,000,000 tonnes of indicated JORC Code compliant resource that is discovered or acquired through exploration on a project that is introduced by Mr Placha;
(e) Mr Placha will receive 5 million Options exercisable at $0.50 per Option within 5 years of the Options being issued. The Options will only vest on the date on which the Bankable Feasibility Study on the Kinney Project results in a Positive Decision to Mine the Kinney Project, provided that date is within 36 months after the Kinney Project Acquisition Date. If these conditions are not met, then Mr Placha’s 5 million Options will not vest and will lapse; and
(f) the agreement contains termination provisions that are customary for an agreement of this type.

10.7 Executive Services Agreement with Carl Coward

The Company entered into an Executive Services Agreement with Carl Coward pursuant to which Mr Coward will serve the Company as a Non-Executive Director.

The material terms of the agreement are as follows:

(a) the agreement has a term of 3 years from the date of re-election;
(b) the Company will pay Mr Coward a salary of $36,000 (including superannuation) from the pool of Non-Executive Director fees which may be varied by the Board from time to time. Additional fees are paid for participation on Board Committees and any special duties;
(c) work undertaken on additional executive duties will be paid a commercial rate and will not form part of the Non-Executive Director fees;
(d) Mr Coward is entitled to enter into a Deed of Indemnity and Access, covering the subjects of indemnity of Directors, Directors’ and Officers’ insurance and access to Company documentation; and
(e) Mr Coward may resign at any time upon giving 1 month’s written notice.

10.8 Executive Services Agreement with Gary Steinepreis

The Company entered into an Executive Services Agreement with Gary Steinepreis pursuant to which Mr Steinepreis will serve the Company as a NonExecutive Director.

The material terms of the agreement are as follows:

(a) the agreement has a term of 3 years from the date of re-election;
(b) the Company will pay Mr Steinepreis $36,000 (including superannuation) from the pool of Non-Executive Director fees which may be varied by the Board from time to time. Additional fees are paid for participation on Board Committees and any special duties;
(c) work undertaken on additional executive duties will be paid a commercial rate and will not form part of the Non-Executive Director fees;
(d) Mr Steinepreis is entitled to enter into a Deed of Indemnity and Access, covering the subjects of indemnity of Directors, Directors’ and Officers’ insurance and access to Company documentation; and
(e) Mr Steinepreis may resign at any time upon giving 1 month’s written notice.

10.9 Executive Services Agreement with Greg Hunt

Wasatch entered into an Executive Services Agreement with Greg Hunt pursuant to which Mr Hunt will serve Wasatch as Chief Operating Officer.

The material terms of the agreement are as follows:

(a) the agreement has a term of 2 year commencing on the Kinney Project Acquisition Date and, at the election of Wasatch, the term may be extended for a further period of 1 year;
(b) Wasatch will pay Mr Hunt a salary of $128,440 (or US$130,000 at a foreign exchange rate of A$/US$1.012) (exclusive of superannuation and GST)

(Salary), which is payable in equal monthly instalments and which will be reviewed annually;

(c) subject to proof, Wasatch will reimburse Mr Hunt for all reasonable expenses incurred in the performance of his duties;
(d)

Mr Hunt will be eligible for the following performance based bonuses:

(i) a bonus of $49,400 (or US$50,000 at a foreign exchange rate of A$/US$1.012) if Wasatch publicly announces that a measured JORC Code compliant resource of at least 20,000,000 tonnes has been discovered within 12 months of the Kinney Project Acquisition Date;
(ii) a bonus of $247,000 (or US$250,000 at a foreign exchange rate of A$/US$1.012) if Wasatch completes the Bankable Feasibility Study that results in the board of Wasatch making a decision to mine within 36 months of the Kinney Project Acquisition Date; and
(iii) a bonus of $988,000 (or US$1 million at a foreign exchange rate of A$/US$1.012) for every 50,000,000 tonnes of indicated JORC Code compliant resource that is discovered or acquired through exploration on a project that is introduced by Mr Hunt;
(e) Mr Hunt will receive 5 million Options exercisable at $0.50 per Option within 5 years of the Options being issued. The Options will only vest on the date on which the Bankable Feasibility Study on the Kinney Project results in a Positive Decision to Mine the Kinney Project, provided that date is within 36 months after the Kinney Project Acquisition Date. If these conditions are not met, then Mr Hunt’s 5 million Options will not vest and will lapse; and
(f) the agreement contains termination provisions that are customary for an agreement of this type.

10.10 Deed of Assignment

Delta Coal and Wasatch will enter into the Deed of Assignment under which Delta Coal will assign its right to acquire the Kinney Project, pursuant to the Option Agreement, to Wasatch and Wasatch will assume Delta Coal’s obligations under that agreement. Carbon Resources has agreed to the assignment of Delta Coal’s rights and obligations to Wasatch under the Asset Purchase Agreement.

11. ADDITIONAL INFORMATION

The rights, privileges and restrictions attaching to Shares as set out in the Constitution can be summarised as follows:

11.1 Rights attaching to Shares

The rights, privileges and restrictions attaching to Shares can be summarised as follows:

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution of the Company.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders:

(i) each shareholder entitled to vote may vote in person or by proxy, attorney or representative;
(ii) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and
(iii) on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such shares registered in the shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

(c)

Dividend rights

Subject to the rights of persons (if any) entitled to shares with special rights to dividends, the Directors may declare a final dividend out of profits in accordance with the Corporations Act and may authorise the payment or crediting by the Company to the shareholders of such a dividend. The Directors may authorise the payment or crediting by the Company to the shareholders of such interim dividends as appear to the Directors to be justified by the profits of the Company. Subject to the rights of persons (if any) entitled to shares with special rights as to dividends, all dividends are to be declared and paid according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such shares, in accordance with Part 2H.5 of Chapter 2H of the Corporations

Act. Interest may not be paid by the Company in respect of any dividend, whether final or interim.

(d)

Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other Securities in respect of which there is any liability. Where an order is made for the winding up of the Company or it is resolved by special resolution to wind up the Company, then on a distribution of assets to members, Shares classified by ASX as restricted securities at the time of the commencement of the winding up shall rank in priority after all other Shares.

(e) Transfer of Shares

Generally, Shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the Listing Rules.

(f) Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

11.2 Terms and Conditions of Free Attaching Options

The Free Attaching Options entitle the holder to subscribe for Shares on the following terms and conditions:

(a) Each Free Attaching Option gives the Optionholder the right to subscribe for one (1) Share. To obtain the right given by each Free Attaching Option, the Optionholder must exercise the Free Attaching Options in accordance with the terms and conditions of the Free Attaching Options.

(b) The Free Attaching Options will expire at 5.00pm (WST) on 31 December 2014 (Expiry Date). Any Free Attaching Options not exercised before the Expiry Date will automatically lapse on the Expiry Date.
(c) The amount payable upon exercise of each Free Attaching Option will be $0.20 (Exercise Price).
(d) The Free Attaching Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.
(e) An Optionholder may exercise their Free Attaching Options by lodging with the Company, before the Expiry Date:
(i) a written notice of exercise of Free Attaching Options specifying the number of Free Attaching Options being exercised; and
(ii) a cheque or electronic funds transfer for the Exercise Price for the number of Free Attaching Options being exercised;

(collectively, Exercise Notice).

(f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
(g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Free Attaching Options specified in the Exercise Notice.
(h)
The Free Attaching Options are transferable.
(i) All Shares allotted upon the exercise of Free Attaching Options will upon allotment rank pari passu in all respects with other Shares.
(j) The Company will apply for quotation of the Free Attaching Options on ASX.
(k) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
(l) There are no participating rights or entitlements inherent in the Free Attaching Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Free Attaching Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Free Attaching Options prior to the date for determining entitlements to participate in any such issue.
(m) A Free Attaching Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Free Attaching Option can be exercised.

11.3 Deeds of indemnity, insurance and access

The Company will enter into a deed of indemnity, insurance and access with each of the Proposed Directors. Under these deeds, the Company agrees to indemnify each Proposed Director to the extent permitted by the Corporations Act against any liability arising as a result of the Proposed Director acting in the capacity as a director of the Company. The Company is also required to maintain insurance policies for the benefit of the Current Directors and the Proposed Directors and must also allow the Current Directors and the Proposed Directors to inspect Company documents in certain circumstances.

11.4 Fees and benefits

Other than as set out below or elsewhere in this Prospectus, no:

(a) Director or Proposed Director of the Company;
(b) person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus;
(c) promoter of the Company; or
(d) underwriter (but not a sub-underwriter) to the issue or a financial services licensee named in the Prospectus as a financial services licensee involved in the issue,

has, or had within 2 years before lodgement of this Prospectus with the ASIC, any interest in:

(e) the formation or promotion of the Company;
(f) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the offer of Securities under this Prospectus; or
(g) the offer of Securities under this Prospectus,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons as an inducement to become, or to qualify as, a Director or Proposed Director of the Company or for services rendered in connection with the formation or promotion of the Company or the offer of Securities under this Prospectus.

Behre Dolbear & Company (USA), Inc. (Behre) has acted as the Independent Geologist and has prepared an Independent Geologist’s Report which has been included in Section 6 of this Prospectus. The Company estimates that it will pay Behre a total of $20,000 for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Behre have not received any other fees from the Company.

BDO Corporate Finance (WA) Pty Ltd (BDO) has acted as Investigating Accountant and has prepared an Investigating Accountant’s Report which has been included in Section 7 of this Prospectus. The Company estimates it will pay BDO a total of $15,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding

lodgement of this Prospectus with the ASIC, BDO has received $8,000 in other fees from the Company.

Steinepreis Paganin has acted as the Australian solicitors to the Company in relation to the Offer and has:

(a) been involved in due diligence enquiries on Australian and US legal matters; and
(b) prepared the Report on the Kinney Project, which is included in Section 8 of this Prospectus and is based upon information supplied by an agent for the Company in the USA.

The Company estimates it will pay Steinepreis Paganin $40,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has received approximately $40,000 in other fees for legal services.

Patersons has acted as a Joint Lead Manager to the Offer. The Company estimates it will pay Patersons a total of $300,000 for these services if the minimum subscription to the Offer is achieved and up to $420,000 if the Offer is fully subscribed. During the 24 months preceding lodgement of this Prospectus with the ASIC, Patersons has received no other fees from the Company.

Delta Capital has acted as a Joint Lead Manager to the Offer. The Company estimates it will pay Delta Capital a total of $150,000 for these services if the Offer is fully subscribed. During the 24 months preceding lodgement of this Prospectus with the ASIC, Delta Capital has received no other fees from the Company.

CPS Securities has acted as a Joint Lead Manager to the Offer. The Company estimates it will pay CPS Securities a total of $165,000 for these services if the Offer is fully subscribed. During the 24 months preceding lodgement of this Prospectus with the ASIC, CPS Securities has received fees of $60,000 from the Company in relation to the Company’s initial public offering in 2010.

11.5 Consents

Each of the parties referred to in this section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this Section; and
(b) to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section.

Behre has given its written consent to being named as the Independent Geologist to the Company in this Prospectus and to the inclusion of the Independent Geologist’s Report in Section 6 in the form and context in which the report is included and to the inclusion of those statements in Section 4 of this Prospectus attributable to the Independent Geologist in the form and context in which they are included. Behre has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

BDO has given its written consent to being named as Investigating Accountant in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 7 in the form and context in which the report is included. BDO has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given their written consent to being named as the solicitors to the Company in this Prospectus and to the inclusion of the Report on the Kinney Project in Section 8 of this Prospectus in the form and context in which the report is included. Steinepreis Paganin has not withdrawn their consent prior to the lodgement of this Prospectus with the ASIC.

Computershare has given its written consent to being named as the share registry to the Company in this Prospectus. Computershare has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Patersons has given its written consent to being named as a Joint Lead Manager to the Offer. Patersons has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Delta Capital has given its written consent to being named as Joint Lead Manager to the Offer. Delta Capital has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

CPS Securities has given its written consent to being named as Joint Lead Manager to the Offer. CPS Securities has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

11.6 Restricted Securities

ASX has indicated that certain existing security holders may be required to enter into agreements which restrict dealings in Securities held by them. These agreements will be entered into in accordance with the Listing Rules.

11.7 Litigation

As at the date of this Prospectus, the Company is not involved in any legal proceedings and neither the Directors nor Proposed Directors are aware of any legal proceedings pending or threatened against the Company.

11.8 Electronic Prospectus

Pursuant to Class Order 00/044, the ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with the ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please email the Company at [email protected] and the Company will send you, for free, either a hard copy or a further electronic copy of the Prospectus or both. Alternatively, you may obtain a copy of the Prospectus from the Company’s website at www.newhorizonminerals.com.au.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

11.9 Taxation

The acquisition and disposal of Shares in the Company will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisors accept no liability and responsibility with respect to the taxation consequences of subscribing for Securities under this Prospectus.

11.10 Forecasts

Following completion of the Acquisition, the Company will be an exploration company. Given the speculative nature of coal exploration, production cannot be guaranteed and there exist significant uncertainties associated with forecasting future revenue. On this basis, neither the Directors nor the Proposed Directors believe that reliable forecasts can be prepared and accordingly have not included forecasts in this Prospectus.

12. DIRECTORS’ AND PROPOSED DIRECTORS’ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors and Proposed Directors.

In accordance with Section 720 of the Corporations Act, each Director and Proposed Director has consented to the lodgement of this Prospectus with the ASIC.

_______ Gary Steinepreis Executive Chairman For and on behalf of New Horizon Minerals Limited

13. GLOSSARY

Where the following terms are used in this Prospectus they have the following meanings:

A$, $ or AUD means an Australian dollar.

Acquisition or Transaction means the acquisition by the Company of Delta Coal pursuant to the Share Sale Agreement.

Annual General Meeting means the annual general meeting of the Company held 9 November 2011.

Applicant means a Shareholder or other party who applies for Securities pursuant to the Offer.

Application Form means the Offer Application Form as the case determines attached to or accompanying this Prospectus relating to the Offer.

ASIC means the Australian Securities & Investments Commission.

Asset Purchase Agreement means the agreement summarised in Section 10.2 pursuant to which the Delta Coal will acquire the Kinney Project.

Asset Purchase Agreement Completion Date means the date that is on or before 1 December 2011.

ASX means ASX Limited (ACN 008 624 691) or the Australian Securities Exchange (as the context requires).

ASX Listing Rules or Listing Rules means the official listing rules of ASX.

Bankable Feasibility Study is defined as an extensive and detailed evaluation to be recorded in a report on the commercial and technical feasibility of the mining and production of coal in commercial quantities. The study shall include, in reasonable detail, an estimate with regards to the coal reserves, a description of the suggested methods of breakage, haulage and extraction, a description of proposed methods for processing and waste disposal, an economic evaluation that shall include an estimate of capital expenditure requirements and operating and taxation costs, an estimate of the operating levels, environmental costs, shutdown and reclamation costs related to the Kinney Project and a study on the size of the market for the coal to be mined and estimated sales prices. In addition, the study must be prepared in accordance with the requirements of the JORC Code and be Bankable. Bankable in this context shall mean that it must be credible and detailed enough, and to be prepared in such a manner and with all information that an independent financial institution reasonably requires to provide project finance for the Kinney Project.

Behre means Behre Dolbear & Company (USA), Inc.

Board means the board of Directors as constituted from time to time.

Business Day means a week day when trading banks are ordinarily open for business in Perth, Western Australia.

Carbon County means a body politic of the State of Utah.

Carbon County Sublease means the sublease between Western Reserve Coal Company, Inc. (a company registered in the USA) (Western Reserve) and Carbon Resources dated 2 December 2005, as amended by the agreement between Western Reserve and Carbon Resources dated 26 May 2011, which will be assigned to Wasatch by Carbon Resources at Closing of the Asset Purchase Agreement.

Carbon Resources means Carbon Resources, LLC, a company registered in the USA.

Class A Performance Shares means the class A performance shares that the Company will issue to the Vendors, subject to the satisfaction of Milestone A, as described in Section 10.1.

Class B Performance Shares means the class B performance shares that the Company will issue to the Vendors, subject to the satisfaction of Milestone B, as described in Section 10.1.

Class C Performance Shares means the class C performance shares that the Company will issue to the Vendors, subject to the satisfaction of Milestone C, as described in Section 10.1.

Closing means the date on which the Asset Purchase Agreement completes, which is expected to be on or around 1 December 2011.

Closing Date means the time and date provided in the Investment Overview section.

Company or New Horizon means New Horizon Minerals Ltd (to be re-named “New Horizon Coal Ltd” on completion of the Acquisition) (ACN 143 932 110).

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

CPS Mandate means the mandate summarised in Section 10.5 between the Company and CPS Securities.

CPS Securities means Cunningham Peterson Sharbanee Securities Pty Ltd (ACN 088 055 636).

Current Directors means Gary Steinepreis, Patrick Burke and Robert Hodby.

Deed of Assignment means the deed of assignment and assumption between Delta Coal and Wasatch, which will be signed on or around Closing, as further described in the “Business Model” section of the Investment Overview.

Delta Capital means Delta Capital Pty Ltd (ACN 109 059 181).

Delta Capital Mandate means the mandate summarised in Section 10.4 between the Company and Delta Capital.

Delta Coal means Delta Coal Fund Pty Ltd (ACN 149 580 085).

Directors means the current directors of the Company as at the date of this Prospectus.

DOGM means the Department of Natural Resources, Division of Oil, Gas and Mining in Utah, USA.

EST means Eastern Standard Time as observed in Sydney, New South Wales.

First Deferred Consideration means the $2,964,000 (or US$3,000,000 at a foreign exchange rate of A$/US$1.012), which is payable to Carbon Resources pursuant to the Asset Purchase Agreement, which is described in Section 10.2.

Free Attaching Option means a free attaching option offer pursuant to this Prospectus, on the terms and conditions contained in Section 11.2.

Grant Conditions means the lodgement of:

(a) a reclamation bond of at least $2,183,480 (or US$2,210,000 at a foreign exchange rate of A$/US$1.012) (Reclamation Bond); and
(b) a plan for the future reclamation of the Permit site (Reclamation Plan

with DOGM, which must be completed as a pre-condition of the Permit being granted.

Joint Lead Managers means Delta Capital, Patersons and CPS Securities and Joint Lead Manager means any one of them.

JORC means the Australasian Joint Ore Reserves Committee for reporting Mineral Resources and Ore Reserves.

Kinney Project or Project means the coal bed methane project located near Scofield, Utah, USA, which the Company will acquire a 100% interest in subject to completion of the Asset Purchase Agreement, as described in the Business Model Section of the Investment Overview Section and the Report on the Kinney Project, contained in Section 8.

Kinney Project Acquisition Date means the date that is on or before 1 December 2011.

New Mexico Case means the case in the District of New Mexico No. 10-16104-j11 in which Carbon Resources is involved.

Offer means the offer to Shareholders and investors to apply for Shares and Free Attaching Options, as set out in Section 3 of this Prospectus.

Official List means the Official List of ASX.

Official Quotation means official quotation by ASX in accordance with the Listing Rules.

Option means an option to acquire a Share.

Patersons means Patersons Securities Limited (ACN 008 896 311).

Patersons Mandate means the mandate summarised in Section 10.3 between the Company and Patersons.

Permit means the conditionally approved DOGM Permit Number C0070047, which is located in Utah, USA and which will be acquired by the Company subject to completion of the Asset Purchase Agreement, completion of the Acquisition and satisfaction of the Grant Conditions within one year of closing.

Proposed Directors means the proposed Directors of the Company following completion of the Acquisition being Mike Placha and Carl Coward, further details of which are set out in the Investment Overview Section of this Prospectus.

Prospectus means this prospectus.

Reclamation Bond means the reclamation bond in the amount of at least $2,183,480 (or US$2,210,000 at a foreign exchange rate of A$/US$1.012) that must be lodged with DOGM as a pre-condition of the Permit being granted.

Reclamation Plan means the plan for the reclamation of the Permit area, which must be lodged with DOGM as a pre-condition of the Permit being granted.

Offer means the offer of up to 75 million Shares (and up to 75 million free attaching Options), on the terms set out in the Investment Overview Section of this Prospectus.

Offer Application Form means the Offer application form attached to or accompanying this Prospectus relating to the Public Offer.

Option means an option to acquire a Share.

Option Agreement means the option agreement between Delta Coal and Carbon Resources dated 17 March 2011, pursuant to which Delta Coal acquired a right to acquire 100% of the Kinney Project.

Positive Decision to Mine means a decision made by the board of the Company, through Wasatch, to proceed to mining in respect of the Kinney Project based upon the results of the Bankable Feasibility Study.

Second Deferred Consideration means the $14,820,000 (or US$15,000,000 at a foreign exchange rate of A$/US$1.012), which is payable subject to the satisfaction of certain conditions to Carbon Resources pursuant to the Asset Purchase Agreement, which is described in Section 10.2.

Securities means Shares and Free Attaching Options.

Share means a fully paid ordinary share in the capital of the Company.

Share Registry means Computershare Investor Services Pty Limited (ACN 078 279 277).

Shareholder means a holder of Shares.

Share Sale Agreement means the agreement summarised in Section 10.1 pursuant to which the Company will acquire Delta Coal.

USA means the United States of America.

US$ means the currency of the USA.

Vendors means all of the current shareholders of Delta Coal.

Wasatch means Wasatch Natural Resources, LLC, a company registered in the USA. Wasatch is a 100% subsidiary of Delta Coal and therefore, following completion of the Acquisition, will be a 100% subsidiary of the Company.

WST means Western Standard Time as observed in Perth, Western Australia.

New Horizon Minerals Ltd ABN ��

Registry Use Only

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Application Form

Broker Code

Adviser Code

This Application Form is important. If you are in doubt as to how to deal with it, please contact your stockbroker or professional adviser without delay. You should read the entire prospectus carefully before completing this form. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the prospectus.

A I/we apply for

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B
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I/we lodge full Application Money

A$

Number of Shares in��Ltd at A$0.2� per Share�� such lesser number of Shares which may be allocated to me/us �

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C Individual/Joint applications - refer to naming standards overleaf for correct forms of registrable title(s)
Title or Company Name Given Name(s) Surname
Joint Applicant 2 or Account Designation
Joint Applicant 3 or Account Designation
D Enter your postal address - Include State and Postcode
Unit Street Number Street Name or PO Box /Other Information
City / Suburb / Town State Postcode
E Enter your contact details
Contact Name Telephone Number - Business Hours / After Hours
( )
F CHESS Participant
Holder Identification Number (HIN)
Please note that if you supply a CHESS HIN but the name and address details on your form do not
correspond exactly with the registration details held at CHESS, your application will be deemed to be made
X without the CHESS HIN, and any securities issued as a result of the �� will be held on the Issuer Sponsored
subregister.
Payment details – Please note that funds are unable to be directly debited from your bank account
G Drawer Cheque Number BSB Number Account Number Amount of cheque
A$
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Make your cheque or bank draft payable to �� Ltd ��

By submitting this Application Form, I/we declare that this application is completed and lodged according to the Prospectus and the declarations/statements on the reverse of this Application form and I/we declare that all details and statements made by me/us (including the declaration on the reverse of this Application Form) are complete and accurate. I/we agree to be bound by the Constitution of the Company.

See back of form for completion guidelines

��

SAMP_PAYMENT_000000/000001/000001/i

How to complete this form

Shares Applied for

CHESS

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F
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A Shares Applied for Enter the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares��. ��hares must be in multiples of 1,000 �hares.

��(the � Company � ) will apply to the ASX to participate in CHESS, operated by ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of Australian Securities Exchange Limited. In CHESS, the company will operate an electronic CHESS Subregister of security holdings and an electronic Issuer Sponsored Subregister of security holdings. Together the two Subregisters will make up the Company’s principal register of securities. The Company will not be issuing certificates to applicants in respect of Shares allotted. If you are a CHESS participant (or are sponsored by a CHESS participant) and you wish to hold Shares allotted to you under this Application on the CHESS Subregister, enter your CHESS HIN. Otherwise, leave this section blank and on allotment, you will be sponsored by the Company and allocated a Securityholder Reference Number (SRN).

B Application Monies

Enter the amount of Application Monies. To calculate the amount, multiply the number of Shares by the price per Share.

C Applicant Name(s)

Enter the full name you wish to appear on the statement of share holding. This must be either your own name or the name of a company. Up to 3 joint Applicants may register. You should refer to the table below for the correct forms of registrable title. Applications using the wrong form of names may be rejected. Clearing House Electronic Subregister System (CHESS) participants should complete their name identically to that presently registered in the CHESS system.

G Payment

Make your cheque or bank draft payable to �� Ltd in Australian currency and cross it Not Negotiable. Your cheque or bank draft must be drawn on an Australian Bank.

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D Postal Address
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Enter your postal address for all correspondence. All communications Complete the cheque details in the boxes provided. The total amount to you from the Registry will be mailed to the person(s) and address as must agree with the amount shown in box B. Please note that funds are shown. For joint Applicants, only one address can be entered. unable to be directly debited from your bank account. Cheques will be processed on the day of receipt and as such, E Contact Details sufficient cleared funds must be held in your account as cheques Enter your contact details. These are not compulsory but will assist us if returned unpaid may not be re-presented and may result in your we need to contact you. Application being rejected. Paperclip (do not staple) your cheque(s) to the Application Form where indicated. Cash will not be accepted. Receipt for payment will not be forwarded .

Before completing the Application Form the applicant(s) should read this �rospectus to which this application relates. By lodging the Application Form, the �pplicant agrees that this application for Shares in �� is upon and subject to the terms of the �rospectus and the Constitution of �� agrees to take any number of Shares that may be allotted to the Applicant(s) pursuant to the �rospectus and declares that all details and statements made are complete and accurate. It is not necessary to sign the Application Form.

Lodgement of Application

Application Forms must be received by Computershare Investor Services Pty Limited �� Perth by no later than 5��pm AWST on ��. You should allow sufficient time �� ��ccur. Return the Application Form with cheque(s) attached to:

Computershare Investor Services Pty Limited GPO Box D182 PERTH WA 6840

Neither CIS nor the Company accepts any responsibility if you lodge the Application Form at any other address or by any other means.

Privacy Statement

Personal information is collected on this form by CIS, as registrar for securities issuers (“the issuer”), for the purpose of �� payments and other corporate actions and communications. Your personal information may be disclosed to our �� or mail service providers, or as otherwise required or permitted by law. If you would like details of your �� inaccurate, incorrect or out of date, please contact CIS. In accordance with the Corporations Act �� in addition to general corporate communications. You may elect not to receive marketing �� form or e-mail [email protected]

If you have any enquiries concerning your application, please contact the Computershare Investor Services Pty Limited on 1300 850 505.

Correct forms of registrable title(s)

Note that ONLY legal entities are allowed to hold Shares. Applications must be made in the name(s) of natural persons, companies or other legal entities in accordance with the Corporations Act. At least one full given name and the surname is required for each natural person. The name of the beneficial owner or any other registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms of registrable title(s) below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual - Use given name(s) in full, not initials	Mr John Alfred Smith	J.A Smith
Joint - Usegiven name(s)in full, not initials	Mr John Alfred Smith & Mrs Janet Marie Smith	John Alfred & Janet Marie Smith
Company - Use companytitle, not abbreviations	ABC Pty Ltd	ABC P/L ABC Co
Trusts - Use trustee(s) personal name(s) - Do not use the name of the trust	Ms Penny Smith	Penny Smith Family Trust
Deceased Estates - Use executor(s) personal name(s) - Do not use the name of the deceased	Mr Michael Smith	Estate of Late John Smith
Minor (a person under the age of 18) - Use the name of a responsible adult with an appropriate designation	Mr John Alfred Smith	Peter Smith
Partnerships - Use partners personal name(s) - Do not use the name of the partnership	Mr John Smith & Mr Michael Smith	John Smith & Son
Clubs/Unincorporated Bodies/Business Names - Use office bearer(s) personal name(s) - Do not use the name of the club etc	Mrs Janet Smith	ABC Tennis Association
Superannuation Funds - Use the name of trustee of the fund - Do not use the name of the fund	John Smith Pty Ltd	John Smith Pty Ltd Superannuation Fund

AI assistant

HELIOS ENERGY LTD — Capital/Financing Update 2011

65047_rns_2011-11-02_14b980ad-0bf3-43fb-900d-5b1ff721ae6a.pdf

NEW HORIZON MINERALS LTD (TO BE RENAMED NEW HORIZON COAL LTD) ACN 143 932 110

PROSPECTUS

Joint lead managers:

IMPORTANT INFORMATION

CHANGE IN NATURE AND SCALE OF ACTIVITIES AND RE-COMPLIANCE WITH THE ASX LISTING RULES

IMPORTANT NOTICE

RISK FACTORS

COMPETENT PERSON’S STATEMENT

DIAGRAMS

WEB SITE – ELECTRONIC PROSPECTUS

CONTENTS

INVESTMENT OVERVIEW

Important Notice

The Offer

Summary of the Offer

Business Model – Change of Direction

(collectively, Kinney Project).

Indicative Timetable

Purpose of the Offer and Use of Proceeds

Notes:

Capital Structure

Notes:

Restricted securities

Change in Nature and Scale of Activities

Specific Risks

Substantial Shareholders – as at the date of this Prospectus

Notes:

Substantial Shareholders – On completion of the Acquisition and the Offer

Financial Information

Directors

EXISTING DIRECTORS

Mr Gary Steinepreis Executive Chairman

Mr Robert Hodby Non-Executive Director

Mr Patrick Burke Non-Executive Director

PROPOSED DIRECTORS AND SENIOR MANAGEMENT

Michael Placha

Proposed Executive Director / Chief Executive Officer

Carl Coward

Proposed Non-Executive Director

Greg Hunt

Proposed Chief Operating Officer

Disclosure of Interests

other investors in the Offer.

Notes:

Remuneration

Notes:

Expenses of the Offer

Notes:

1. CORPORATE DIRECTORY

Current Directors

Proposed Directors

Share Registry*

Prospectus Manager

2. CHAIRMAN’S LETTER

Gary Steinepreis EXECUTIVE CHAIRMAN

3. DETAILS OF THE OFFER

3.1 Applications

3.2 Re-compliance with Chapters 1 and 2 of the ASX Listing Rules

3.3 Minimum subscription

3.4 Underwriting

3.5 Joint Lead Managers to the Offer

3.6 Allotment

3.7 ASX Listing

3.8

Applicants outside Australia

3.9

Commissions on Application Forms

3.10 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

3.11 Withdrawal of Offer

3.12 Privacy statement

3.13 Queries

4. COMPANY AND PROJECT OVERVIEW

4.1 Background

4.2 Previous Exploration

4.3 Overview of Kinney Project

4.4 Infrastructure and Services

4.5 US Coal Market

HELIOS ENERGY LTD Capital/Financing Update 2011