METRO MINING LIMITED — Interim / Quarterly Report 2009

Jan 28, 2010

MetroCoal Limited ABN 45 117 763 443

QUARTERLY REPORT DECEMBER 2009

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CORPORATE DETAILS

METROCOAL LIMITED | ABN 45 117 763 443

Quarterly Financial Report For the period ended 31 December 2009 ASX CODE: MTE

Issued Capital (31/12/2009)

141,683,663 shares issued.

141,683,663 shares listed (including 80,000,000 shares held by Metallica Minerals Ltd escrowed for 2 years)

3,500,000 Unlisted Directors’ Options (Director shares escrowed if options exercised) 2,750,000 Unlisted management options

758 Shareholders

Top 20 Shareholders

Hold 71% of listed shares

Directors & Management

Mr David Barwick – Chairman

Mr Andrew Gillies – Non-executive Director

Mr Michael Hansel – Non-executive Director

Mr John Haley – Non-executive Director Mr Mike O’Brien – CEO

Mr Theo Psaros – Chief Operating Officer & Company Secretary Mr Neil Forbes-Mackenzie – Exploration Manager

Largest Shareholders

Metallica Minerals Limited 56% HSBC Custody Nominees (Aust) Ltd 3% National Nominees Ltd 2%

Cash Balance

As at 31 December 2009, MTE’s cash balance was approximately $9.5 million

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METROCOAL QUARTERLY REPORT DECEMBER 2009

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HIGHLIGHTS FOR THE QUARTER

CORPORATE

• On 4 December 2009 MetroCoal (ASX-MTE) successfully listed on the Australian Securities Exchange.

• MetroCoal raised $10 million from the issue of 40 million shares at an issue price of $0.25 per share. The capital raising was underwritten by Patersons Securities Ltd who were appointed Lead Manager and were supported by Bell Potter Securities Ltd.

• MetroCoal’s extensive exploration targets will be used to underpin its dual strategy to: 1. Develop an export thermal coal business through conventional underground mining operations; and

• Develop one or more underground coal gasification (UCG) operation producing syngas for cleaner power generation and potentially clean transport fuels.

EXPLORATION & EVALUATION

• The capital raised in the IPO will allow MetroCoal to focus on its Surat Basin Region coal Exploration Targets of between 2.5 billion and 3.5 billion tonnes* by the end of 2011.

• Included in the exploration target, MetroCoal will also be seeking a target range of 225 to 275 million tonnes* for the purpose of evaluating an underground coal gasification project.

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*Under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (Paragraph 18) the Company is required to make the following statement with regard to Exploration Targets – the potential quantity and quality is conceptual in nature, and that there has been insufficient exploration to define a Mineral Resource of Ore Reserve and that it is uncertain if further exploration will result in the determination of a Mineral Resource of Ore Reserve.

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METROCOAL QUARTERLY REPORT DECEMBER 2009

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CORPORATE STRATEGY

MetroCoal 100% owns an extensive portfolio of wholly-owned tenements in the Surat Basin. MetroCoal’s initial exploration and analysis of historical exploration conducted over the tenements indicates the existence of prospective thermal coal seams located at various depths to the surface. The broad range of thermal coal seam depth has allowed MetroCoal to formulate and implement a unique business plan to further explore and assess the commercial feasibility of the tenements and if appropriate, exploit the tenements through:

1. Conventional opencast and underground mining techniques; and

2. Underground Coal Gasification ( UCG ).

MetroCoal will undertake an extensive exploration and evaluation programme of its tenements in 2010 and 2011 to advance this dual strategy with a view to increasing its thermal coal resource base and supplementing its UCG knowledge base and resource potential. Exploration drilling is scheduled to commence in the first quarter of 2010.

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EXPLORATION & EVALUATION

On 27 January 2010 MetroCoal announced an initial Inferred Resource of 58Mt* in its Bundi Project area. The Bundi Project area, within EPC 1164 Wandoan West, is down dip of Northern Energy Ltd’s (ASX- NEC) Elimatta and Xstrata Ltd’s Wandoan mining project areas and covers an area of some 240km[2] . The 58Mt Inferred Resource is contained within an area of approximately 18km[2] (refer figure below) and is MetroCoal’s maiden underground coal mining resource. The total exploration target for the Bundi Project Area is between 240Mt and 335Mt.

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*Under the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Resources (Paragraph 18) the Company is required to make the following statement with regard to Exploration - Targets the potential quantity and quality is conceptual in nature, and that there has been insufficient exploration to define a Mineral Resource of Ore Reserve and that it is uncertain if further exploration will result in the determination of a Mineral Resource of Ore Resource.

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EXPLORATION & EVALUATION (continued)

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The resource was identified while updating the geological model ahead of the planned exploration program. Drill data used in the model includes data recently released by Queensland Mines and Energy together with data obtained through data swaps with other companies and data from MetroCoal’s earlier drilling program. The data density has proved to be sufficient for estimation of an Inferred Resource compliant with the JORC Code.

The primary target is an underground mining resource in the Macalister Upper Seam of the Juandah Coal Measures within the Bundi Project Area. The Inferred Resource estimate is based on a working section used comprising the MU30, MU40 and MU50 plies. The Macalister Lower Seam and other coal seams and splits have been excluded from the resource estimate.

These plies have been selected as they are continuous and correlateable across the resource area and provide a sound basis for an underground mining resource. Initial raw coal quality data suggests that the resource will be suited to the production of a thermal coal product. Average thickness of the working section is 2.2m at a depth between 106m and 186m.

The estimate is considered to be conservative with the focus on a continuous, correlateable coal seam. The planned exploration program and future modelling is expected to increase the resource by extending the resource area, potentially including additional plies of the Macalister Upper and where possible including the Macalister Middle and Macalister Lower seams.

Competent Person Statement

**The information in this Quarterly Report that relates to in situ coal resources potential is based on information compiled by GeoConsult Pty Ltd and reviewed by Warwick Smyth, who is a member of the Australasian Institute of Mining and Metallurgy (CP) Geology; and the Australian Institute of Geoscientists. Warwick Smyth is a qualified geologist (BSc Geol, Grad Dip AF&I, MAusIMM (CP), MGSA, MAIG), and a Principal Consultant for GeoConsult Pty. Ltd. and has over 17 years experience which is relevant to the style of mineralisation, the type of deposit under consideration and to the activity which has been undertaken to qualify as a Competent Person as defined by the 2004 edition of the Australian Code for Reporting of Coal Resources. Neither Warwick Smyth nor GeoConsult Pty Ltd has any material interest or entitlement, direct or indirect, in the securities of MetroCoal or the Projects. GeoConsult has been commissioned to provide geological services to MetroCoal since early 2008. Fees for the preparation of this report are on a time and materials basis.

Warwick Smyth and GeoConsult Pty Ltd consent to the use of this statement and references to it and extracts from it, in the form and context in which they are included. Apart from the above, neither the whole nor any part of the statement document, nor references thereto, may be included in, or with, or attached to any document, circular, resolution, letter or statement without the prior written consent of Warwick Smyth or GeoConsult Pty Ltd.

*The information in this Announcement that relates to the Exploration results and Exploration Targets is based on information compiled by Mr Neil Mackenzie-Forbes who is a Member of the Australian Institute of Geoscientists (Membership No 2035). Mr Mackenzie-Forbes is currently the exploration manager of MetroCoal. Mr Mackenzie-Forbes 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 Mackenzie-Forbes has consented in writing to the inclusion in this Prospectus of the matters based on the information in the form and context it appears.

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TENEMENT SCHEDULE

Tenement	Project	Holder/ Applicant	Status	No. Sub Block	Commodity	Min. Annual
	Name		(Expiry date)		Targeted	Expenditure
EPC 1152	Lockyer	MetroCoal Limited	Granted	150	Open Cut Thermal	$60,000
	Valley		(11/12/2012)		Coal & UCG
EPC 1159	Injune	MetroCoal Limited	Granted	237	Open Cut Thermal	$60,000
	Creek		(11/12/2010)		Coal & UCG
EPC 1164	Wandoan	MetroCoal Limited	Granted	215	Open Cut Thermal	$60,000
	West		(11/12/2010)		Coal & UCG
EPC 1165	Columboola	MetroCoal Limited	Granted	294	Open Cut Thermal	$60,000
			(9/12/2010)		Coal & UCG
EPC 1166	Dalby West	MetroCoal Limited	Granted	97	Open Cut Thermal	$60,000
			(11/12/2012)		Coal & UCG
EPC 1167	Roma North	MetroCoal Limited	Granted	289	Open Cut Thermal	$60,000
			(11/12/2010)		Coal & UCG
EPC 1251	Wandoan	MetroCoal Limited	Granted	19	Open Cut Thermal	$20,000
	West 2		(16/9/2013)		Coal & UCG
EPC 1501	Dugandan	MetroCoal Limited	Granted	20	Open Cut Thermal	$10,000
			(28/9/2014)		Coal & UCG
EPCA 1609	Wandoan	MetroCoal Limited	Application	18	Open Cut Thermal	$40,000
	West 3				Coal & UCG
EPCA 1640	Pentland	MetroCoal Limited	Application	114	Open Cut Thermal	$120,000
	South				Coal & UCG
MDLA 406	Juandah	MetroCoal Limited	Application	4986 ha	Open Cut Thermal	$330,000
					Coal & UCG
MDLA 417	Elle	MetroCoal Limited	Application	24534.86 ha	Open Cut Thermal	$100,000
					Coal & UCG
MDLA 418	Kay	MetroCoal Limited	Application	1837.5 ha	Open Cut Thermal	$100,000
					Coal & UCG
MDLA 419	Jay	MetroCoal Limited	Application	4254.85 ha	Open Cut Thermal	$100,000
					Coal & UCG

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www.metrocoal.com.au

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