METRO MINING LIMITED — Interim / Quarterly Report 2012

Jan 29, 2013

2012 QUARTERLY REPORT December

Corporate details

METROCOAL LIMITED | ABN 45 117 763 443

Quarterly Activities Report For the period ended 31 December 2012

ASX CODE: MTE

Issued Capital (31/12/2012)

208,883,663 shares issued

6,000,000 Unlisted Directors’ Options

4,500,000 Unlisted management and employee options 6,250,000 Other Unlisted options

1,525 Shareholders

Top 20 Shareholders

Hold 76.09%of listed shares

Directors & Management

Mr Stephen Everett - 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

Metallica Minerals Limited	30.78%
Dadi Engineering Development Group	19.63%
Merrill Lynch (Australia) Nominees Pty Limited	16.07%

Cash Balance

As at 31 December 2012, MTE’s cash balance was approximately $11.2million

MetroCoal Quarterly Report December 2012

Highlights for the quarter

• Goombi confirms Probable Reserve of 26.2 million tonnes. Significant progress has been made on the Goombi open cut project within the Columboola JV area (EPC 1165). MetroCoal Limited (ASX: MTE) and its JV partner, SinoCoal Resources Pty Ltd were pleased to release a series of announcements that culminated in the upgrade of the Goombi Resource to a Probable Reserve of 26.2Mt.*

• The interpretation of the October 2012 seismic program at the Bundi Project (100% owned) was completed during December 2012. The results were positive and in particular, provided evidence that the target thermal coal seams are continuous over large distances.

• MTE reached an agreement with Australia Pacific LNG (APLNG) on overlapping tenements in EPC 1164 and EPC 1167. In signing this binding agreement, MTE has a clear path to a future Mining Lease for the Norwood Project and in other overlapping areas, MTE and APLNG have agreed to look for mutually acceptable arrangements for co-development.

• The development of rail infrastructure for the Surat Basin took a further step forward with the passing of Surat Basin Rail legislation by the Queensland Government. The SBR Bill is a key step in facilitating the delivery of essential rail infrastructure that will enable the transport of coal to the Port of Gladstone.

• The duplication of the shipping channels in Gladstone Harbour reached a further important milestone with the finalisation of the terms of reference by the Queensland CoordinatorGeneral. The Queensland Government had received public and advisory comments on the draft terms of reference clearing the way for the Environmental Impact Statement. The proposed duplication of the shipping channels will be of significant benefit for Tenement to Terminal Pty Ltd.’s (3TL) Yarwun coal port project, of which MTE holds a key 20% shareholding.

Resources

MetroCoal Thermal Coal Reserves & Resources

	MTE Ownership	Resources(Mt)	Resources(Mt)	Resources(Mt)	Reserves (Mt)
Project
		Indicated	Inferred	Total
Columboola	49%	94.7	1,618	1,712.7
Goombi	49%	4.9	13.8	18.7	26.2
Bundi	100%	1,315.8	246.3	1,562.1
Dalby West	100%	520		520
Juandah	100%	224	24.4	248.4
Norwood	100%	156		156
TOTAL		2,315.4	1902.5	4,217.9	26.2

MetroCoal Quarterly Report December 2012

Columboola Joint Venture

Goombi Project

During the December 2012 quarter, the Columboola JV was pleased to announce the identification of the Goombi coal deposit within EPC 1165 located south east of the Yancoal Cameby Downs Mine. Goombi was identified following the systematic exploration drilling coverage across the Macalister Seam package within EPC 1165. These drilling results identified a well-developed Kogan Seam averaging three metres in thickness and together with the deeper Macalister Seams the cumulative coal thickness presents attractive stripping rations between 4.1 and 6.1.

An initial Inferred resource of 45 Mt of shallow thermal coal was announced in early November 2012 highlighting the favourable stripping ratio and potential for exporting through the Port of Brisbane. The resource confidence was increased in mid-November with 31.1 Mt of the resource upgraded to indicated status with the receipt of coal quality analysis.

A Probable Reserve of 26.2 Mt with a stripping ratio of 5.9:1 was announced in December. Preliminary economic analysis indicates the deposit is potentially economic and steps to progress the project have been initiated.

The JV is reviewing the environmental approval process to determine if the project will require an EIS. Planning is also underway for additional exploration and drilling to increase the resource confidence to a Measured status and to improve the resource limits definition.

Figure 1 – Goombi Project Area

MetroCoal Quarterly Report December 2012

Overlapping Tenure update Columboola JV

During the December quarter, MTE disclosed that it had been negotiating the terms of a co-development agreement in relation to EPC 1165 with QGC Limited. Since that announcement, SinoCoal Resources Pty Ltd and MTE have made a submission to the Queensland Department of Natural Resources and Mines and remain hopeful that the outcome will meet the Queensland Government’s preferred policy outcome of codevelopment wherever possible.

Further meetings have been held with QGC in January. MTE remains committed to achieving an outcome that is mutually beneficial for the Columboola JV and QGC.

Bundi Project – Seismic Program

In the December 2012 quarter, MTE completed the interpretation of the 2D seismic program carried out in October (see Figure 1 below). This seismic program was designed to provide continuous information on the coal seam horizons over extended distances and to identify any geological structures present in the proposed mining area. This data provides a valuable addition to bore hole information. The seismic program, including data processing and interpretation was carried out by Velseis Pty Ltd.

Figure 2 – Seismic Traverse, 2D Program 2012

MetroCoal Quarterly Report December 2012

Data quality was excellent and confirmed the continuity of the proposed mining horizon as initially interpreted from the exploration boreholes. Data interpretation also showed limited structure in the area with only several widely spaced, sub vertical faults. The geological model is being updated to include the results of the seismic program, which will then be incorporated in the mine design.

Overlapping Tenure update Bundi Project

MTE was pleased to announce in November 2012 that it had executed a co-development agreement with Queensland Gas Pty Ltd and their joint venture partners with respect to the Bundi Project and MTE’s 100% owned EPCs 1164, 1167, 1251 and 1609.

The agreement provides MTE with a clear path to a future Mining Lease in its Bundi Project area and for the QGC gas project to achieve its commercial outcomes.

Corporate Activities

MetroCoal finished the December 2012 quarter in a strong financial position with $11.2 million cash on hand after completing drilling programs at Bundi and Columboola, released the results of the Bundi Scoping Study and completed the Bundi seismic program. Importantly, with the current status of the thermal coal market, MTE has already undertaken a concerted review of all expenditure so that it can ensure it is in a sound financial position when market conditions improve.

The announcement by the Queensland Government that it had passed the Surat Basin Rail legislation was another important step in the development of necessary infrastructure projects that will unlock the vast thermal coal resources located in the Surat Basin. MTE is looking forward to further progress between Surat Basin Rail and the Queensland Government on aspects such as land acquisition for the rail corridor and finalisation of all necessary agreements.

The Queensland Government announced on 11 December 2012 that the terms of reference for the duplication of the key shipping channels in Gladstone had been finalised by the Queensland Coordinator General. Deputy Premier and Minister for State Development, Infrastructure and Planning, Jeff Seeney, advised that this would now enable the preparation of an Environmental Impact Statement. He added that the duplication of the shipping channels would allow two-way traffic and more efficient and effective use of Gladstone Harbour.

MTE is very pleased with this progress in Gladstone as it will be a major development for not only all planned projects at Gladstone but potentially for the Tenement to Terminal (3TL) planned coal terminal in which MetroCoal has a twenty per cent (20%) shareholding.

On 25 January 2013, MTE received approximately $1.57m as a tax refund under the Federal Government’s Research and Development Tax Incentive program for expenditure in relation to the development of the Bundi thermal coal underground project.

MetroCoal Quarterly Report December 2012

Figure 3 – MetroCoal’s Surat Basin Coal Tenements

Competent Person Statements

The information in this Announcement that relates to the Compilation of existing data and Exploration Results is based on information compiled by Mr Ed Radley who is a Member of the Australian Institute of Mining and Metallurgy (MAusIMM) (Membership No 300512). Mr Ed Radley is a fulltime employee of MetroCoal Ltd, in the role of Geological Manager, Mr Ed Radley 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 Ed Radley has consented in writing for inclusion in this announcement the matters based on the information in the form and context it appears.

The reported Coal Reserves have been reviewed by Mr Chris Cooper. Mr Cooper is a Chartered Engineer and Member of the UK Institute of Materials Minerals and Mining and registered engineer under F.E.A.N.I. He has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking, to qualify as a Competent Person under ROPO associations with Aus IMM as defined in the ‘Australasian Code for Reporting of Mineral Resources and Ore Reserves’ of December 2004 (“JORC Code”) as prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia.

Mr Cooper has no material interest or entitlement, direct or indirect, in the securities of MetroCoal or the Projects. Mr Cooper has been commissioned to provide services to MetroCoal. Fees for the preparation of this report are on a time and materials basis. Mr Cooper consents to the use of this statement and references to it and extracts from it, in the form and context in which they are included.

MetroCoal Quarterly Report December 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 December 2012