METRO MINING LIMITED — Interim / Quarterly Report 2012

Apr 29, 2012

2012 QUARTERLY REPORT March

Corporate details

METROCOAL LIMITED | ABN 45 117 763 443

Quarterly Activities Report For the period ended 31 March 2012

ASX CODE: MTE

Issued Capital (31/03/2012)

208,883,663 shares issued

8,500,000 Unlisted Directors’ Options

6,620,000 Unlisted management and employee options

1,445 Shareholders

Top 20 Shareholders

Hold 75.61% 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 & Company Secretary Mr Lindsay Ward – Non-executive Director Mr. Wang Dongping – Non-executive Director Mr. Robert Finch – Alternate Director to Mr. Wang

Mr Mike O’Brien – Chief Executive Officer Mr Theo Psaros – Chief Operating Officer Mr Neil Mackenzie-Forbes – Joint Venture General Manager Mr Nicholas Villa – Project Manager Mr. Edward Radley – Geology Manager

Largest Shareholders

Front Row L-R – Lindsay Ward, Dongping Wang, David Barwick, John Haley. Back Row L-R – Robert Finch, Theo Psaros, Mike O’Brien, Michael Hansel, Andrew Gillies

Metallica Minerals Limited 30.78% Dadi Engineering Development Group 19.63% Merrill Lynch (Australia) Nominees Pty Ltd 14.29%

Cash Balance

As at 31 March 2012, MTE’s cash balance was approximately $19.2 million

MetroCoal Quarterly Report March 2012

Highlights for the quarter

• Bundi 2012 Drilling Program commenced in February with an allowance for up to 80 holes to be drilled. Three rigs are currently drilling in the 100% owned Bundi Project progressing towards a mine footprint for Bundi as well as increasing the Indicated Resource.

• Bundi Project advancing with work continuing on Environmental Impact Studies including Flora & Fauna, Aquatic Ecology and Soil Studies. Comprehensive washability tests are also being carried out in tandem with geotechnical studies as part of the project concept study.

• Columboola Joint Venture Drilling Program continues with 54 holes (for 27,763m) drilled to date. Macalister and Condamine Seam Packages continue to demonstrate good continuity and correlation. Resource estimation for the Condamine Seam is underway.

• Tenement to Terminal (3TL) , of which we hold a 20% shareholding, submits Initial Advice Statement to Queensland Government. 3TL has sought approval for a terminal of up to 50 million tonnes per annum and with favourable engineering and environmental reports has commenced the Project Development Phase.

Figure 1 – Location Map of 3TL Gladstone port proposal

MetroCoal Quarterly Report March 2012

Resources

MetroCoal Underground Thermal Coal Resources

	Norwood	**Bundi1 **	Juandah
						Total Resources
Resource				**Columboola2 **	Dalby West3
Inferred Indicated	156 Mt -	1410.9Mt 150.9Mt	224 Mt 24Mt	1297Mt (635 Mt)# -	520Mt	3607.9 Mt 174.9 Mt
Total	156 Mt	1561.8Mt	248 Mt	1297 Mt	520Mt
						3782.8 Mt

• 1 See MTE ASX Announcement 14 December 2011 – 230% INCREASE IN BUNDI PROJECT AREA RESOURCE TO 1561.8 MILLION TONNES

• 2 See MTE ASX Announcement 18 November 2011 – COLUMBOOLA JV INCREASES RESOURCE BY 757 MILLION TONNES TO 1.297 BILLION TONNES

• 3 See MTE ASX Announcement 9 December 2011 – DALBY WEST PROJECT – MAIDEN INFERRED RESOURCE OF 520 MILLION TONNES

• MTE JV share = 49%

Corporate Activities

MetroCoal marketing of a JV interest in EPCs 1164/1251/1609, Wandoan West

The process of seeking a JV partner for the Bundi Project continues. While several non-binding indicative offers have been received, none met the criteria set by MTE. MTE is continuing to seek a JV partner for this thermal coal project. The Chairman and CEO of MTE recently returned from very positive meetings with interested parties in China arranged by the Dadi Engineering Group. Discussions continue with these parties. MTE remains committed to securing a JV partner on beneficial terms to all MTE shareholders.

Dadi Engineering increased its shareholding in MTE

MTE’s significant shareholder, DADI Engineering Group increased its shareholding to 19.6% following its purchase of a further nine million shares in MTE in an off market transaction from Metallica Minerals Limited. MetroCoal welcomes DADI’s increased involement and continuing support into 2012.

Other Corporate Activities

MTE increased its field operations team with the addition of Denise Seery as Project Geologist. Denise holds a BSc in Geology from the University College Dublin, Ireland and has over 3 years’ experience as an Exploration Geologist, working extensively in the Galilee Basin and Surat Basin where she has been responsible for coordinating teams of contractors on multiple rigs whilst managing accurate geological data collection. Denise is currently the Project Geologist for MetroCoal at the Bundi Project, Surat Basin, where she capitalises on her knowledge of the Juandah Coal measures and her experience as a coordinator.

MetroCoal Quarterly Report March 2012

Boom – March 2012

Queensland’s premier newspaper the “Courier Mail” featured MetroCoal in the second Edition of its new Magazine BOOM. An excerpt from the publication can be downloaded from the MTE website – www.metrocoal.com.au.

Wandoan Community Events

MetroCoal continued its strong support for community organisations and events in the Surat Basin. MTE was a major sponsor of the Wandoan Cancer Charity Rodeo and the Wandoan Race Day. The Charity Rodeo was a huge success raising around $27,000 for Angel Flight and the Taroom/Wandoan Palliative Care Fund

EXPLORATION & EVALUATION

Bundi Project

During the March quarter, MTE began its 2012 drilling program in the Bundi Project Area as planned. Three drill rigs are currently working within the Bundi Project, with the intention of advancing study towards the first Measured Resource, increasing confidence in the Inferred Resource model zones and expanding the Indicated zone.

The 2012 Bundi program has allowed for up to 80 holes to be drilled. The 36 holes planned for the initial phase are shown in Figure 2 below. These holes are intended to improve our confidence in the resource and to increase the Indicated Resource together with a small expansion of the total Inferred Resource. The second phase of the program will include additional holes aimed at identifying our first Measured Resource.

Importantly, the Bundi Project has expanded in area following the granting of EPC1609 to MTE. EPC1609 includes 5 sub blocks in three additional areas to the north and north-east of EPC1164 and EPC1251. These new areas adjoin the core mining study area. MetroCoal intends to drill the EPC1609 sub blocks that are near the mining study area as part of the 2012 drilling program.

MetroCoal Quarterly Report March 2012

MTE has also advanced work outside of exploration including:

• The engagement of Environmental Consultants, E3 responsible for the Bundi Project’s Environment Impact Studies. This work includes a suite of environmental studies satisfying the Terms of Reference for the EIS.

• Washability studies on the thermal coal across the Bundi Project to create an accurate characterisation of the product.

• Engagement of Mining Consultancy Services (Australia) Pty Ltd (MCS) to complete the concept study for the Bundi Project. The scope of this work will initially present the concept study and progress to a pre-feasibility study in late 2012. MTE expects to release the results of the concept study in the 3[rd] quarter of 2012; and

• MTE will also be starting seismic studies in the Bundi Project area in late June 2012. Confidence gained from exploration results continues to confirm the continuity and correlation of the coal seams. The seismic work will advance this understanding to a significant level aiding the progression toward a Mining Lease Application.

Figure 2 Bundi Project Area

MetroCoal Quarterly Report March 2012

Columboola JV Project

Drilling continues in the Columboola Project with 2 rigs currently working. MTE and its JV partner, SinoCoal Resources are very pleased with the progress to date in confirming attractive coal seam packages within the Columboola Project. To date 54 holes (for 27,763m) have been drilled. Macalister and Condamine Seam Packages continue to demonstrate good continuity and correlation in the project area.

External work is also underway for resource estimation for the Condamine Seam.

A review of the project data will commence shortly and from that review, a conceptual mining target will be generated from which to plan Stage 3 Drilling in 2012. The Stage 3 program will target prospective areas and increase the drilling density to increase the resource status to include a significant portion of Indicated resource. It is anticipated that up to 40 holes part core will be required to be completed.

Figure 3 – Columboola EPC 1165

MetroCoal Quarterly Report March 2012

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Figure 4
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MetroCoal Quarterly Report March 2012

Tenement Schedule

Tenement	Project Name	Holder/ Applicant	Status (Expiry date)	No. Sub Block	Commodity Targeted
EPC 1152	Lockyer Valley	MetroCoal Limited	Granted (11/12/2012)	74	Thermal Coal
EPC 1159	Injune Creek	MetroCoal Limited	Renewed (11/12/2012)	237	Thermal Coal
EPC 1164	Wandoan West	MetroCoal Limited	Renewed (11/12/2012)	215	Thermal Coal
EPC 1165	Columboola	MetroCoal Limited – 49%	Renewed (9/12/2012))	294	Thermal Coal
EPC 1166	Dalby West	MetroCoal Limited	Granted (11/12/2012)	97	Thermal Coal
EPC 1167	Roma North	MetroCoal Limited	Renewed (11/12/2012)	289	Thermal Coal
EPC 1251	Wandoan West 2	MetroCoal Limited	Granted (16/9/2013)	19	Thermal Coal
EPC 1501	Dugandan	MetroCoal Limited	Granted (28/9/2014)	20	Thermal Coal
EPC 1609	Wandoan West 3	MetroCoal Limited	Granted (29/1/2017)	18	Thermal Coal
EPCA 1640	Pentland South	MetroCoal Limited	Application	114	Thermal Coal
EPCA 2187	MacMillan	MetroCoal Limited	Application	20	Coking Coal
EPCA 2234	Wandoan West 4	MetroCoal Limited	Application	3	Thermal Coal
EPCA 2786	Cooloomala	MetroCoal Limited – 49%	Application	101	Thermal Coal
MDLA 406	Juandah	MetroCoal Limited	Application	4986 ha	Thermal Coal & UCG

Competent Person Statement

The information in this Quarterly Report that relates to Exploration Results and Data 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 MetroCoal’s Joint Venture General Manager. 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 ‘Australiasian code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Mackenzie-Forbes has consented in writing to the inclusion in this announcement of the matters based on the information in the form and context it appears.

MetroCoal Quarterly Report March 2012

REGISTERED OFFICE

Cnr. Lytton Road and Stafford St, East Brisbane QLD 4169 GPO Box 122 Brisbane QLD 4001

T (07) 3249 3040 F (07) 3249 3041

MetroCoal Quarterly Report March 2012

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

	METROCOAL LIMITED	METROCOAL LIMITED	METROCOAL LIMITED	METROCOAL LIMITED
	ABN 45 117 763 443 Consolidated statement of cash flows
			31/03/2012
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid and GST refunded 1.7 Other (provide details if material) Net Operating Cash Flows		Current quarter $A’000		Year to date (9 months) $A’000
		0 (2,209) 0 0 (572) 0 157 0 45 0		0 (8,666) 0 0 (1,603) 0 466 0 521 0
		(2,579)		(9,283)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		(1,342) (108) 0 0 0 0 0 0		(4,437) (108) 0 0 0 0 0 0
		(1,342)		(4,545)
		(3,921)		(13,827)
1.13 Total operating and investing cash flows (brought forward)		(3,921)		(13,827)

• See chapter 19 for defined terms.

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Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) - Issue costs Net financing cash flows	0 0 0 0 0 (25)	24,050 0 0 (1,000) 0 (1,589)
	(25)	21,461
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(3,945) 23,160 0	7,634 11,581 0
	19,215	19,215

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

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		75
		Nil
1.25	Explanation necessaryfor an understandingof the transactions
	Directors’Fees

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

Nil

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Nil

• See chapter 19 for defined terms.

Appendix 5B Page 2

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1	Loan facilities
3.2	Credit standby arrangements

Amount available		Amount used
$A’000		$A’000
	--		--
	--		--

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	3,000
	0
	0
	450
Total	3,450

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	5,970	3,030
	13,245	20,130
	0	0
	0	0
Total: cash at end of quarter(item 1.22)	19,215	23,160

Changes in interests in mining tenements

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

• See chapter 19 for defined terms.

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Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

6.2 Interests in mining tenements acquired or increased

Issued and quoted securities at end of current quarter

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

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions	--	--	--	--
	--	--	--	--
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	208,733,663	208,733,663
	--	--	--	--
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	--	--	--	--
	--	--	--	--

• See chapter 19 for defined terms.

Appendix 5B Page 4

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Appendix 5B Mining exploration entity quarterly report

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7.7 Options Exercise price Expiry date
(description 5,620,000
and conversion unlisted options 25 cents 4 December 2012
500,000
factor)
unlisted options 25 cents 4 December 2014
3,250,000
unlisted options 40 cents 19 November 2013
750,000 unlisted
options 50 cents 18 May 2014
2,500,000
Unlisted options 75 cents 25 November 2013
2,500,000
Unlisted options 78 cents 25 November 2013
7.8 Issued during
quarter -- -- -- --
7.9 Exercised
during quarter
7.10 Expired during
quarter -- -- -- --
7.11 Debentures
(totals only) -- --
7.12 Unsecured
notes (totals -- --
only)
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Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 27 April 2012 (Company Secretary)

Print name: JOHN HALEY

Notes

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

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

• See chapter 19 for defined terms.

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Appendix 5B Page 5

Appendix 5B Mining exploration entity quarterly report

change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

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

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

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

• See chapter 19 for defined terms.

Appendix 5B Page 6

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