METRO MINING LIMITED — M&A Activity 2013

Nov 21, 2013

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ASX ANNOUNCEMENT

22 November 2013

METROCOAL AND CAPE ALUMINA AGREE NOT TO PROCEED WITH MERGER

MetroCoal Limited (ASX: MTE “ MetroCoal” ) and Cape Alumina Limited (ASX: CBX " Cape” ) have agreed not to proceed with the proposed merger following an announcement by the Queensland Government (20 November 2013) which will have a material impact on the viability of Cape Alumina‟s flagship Pisolite Hills project on western Cape York.

On 25 September 2013, MetroCoal and Cape announced that they have signed a Merger Implementation Agreement ( MIA ) to merge by way of a scheme of arrangement ( Merger ) to be approved by the shareholders of Cape. Under the timetable for the Merger, the meeting of the Cape shareholders to approve the Merger was to be held on 9 December 2013.

Development by Cape of the Pisolite Hills Project was put on hold in October 2010 after the Queensland Government at the time imposed 500 metre wide buffer zones around waterways in the vicinity of the project area as part of the declaration of the Wenlock River as a wild river area. This had the effect of reducing the bauxite resources available to the project.

In October 2012 the current Queensland Government declared the Pisolite Hills Project a “significant project” and as a result Cape resumed work on technical and environmental studies for the Pisolite Hills Project. It was expected that the current Queensland Government would lift the wild rivers declaration to allow Cape to resume work on the Pisolite Hills Project.

Before committing to the Merger, MetroCoal consulted with Government as part of the due diligence process to seek the necessary assurances the Pisolite Hills would be allowed to proceed subject to the proposed development plans meeting all necessary environmental and other requirements.

On 20 November 2013, the Queensland Government announced it would introduce legislation to declare the Steve Irwin Wildlife Reserve and the Wenlock River on Cape York Peninsula a “Strategic Environmental Area” effectively banning any mining on the site ( Queensland Government Announcement ).

Cape‟s flagship project, Pisolite Hills, is located within the Steve Irwin Wildlife Reserve. According to the Queensland Government Announcement, the proposed declaration which is to be carried out under the Cape York Regional Plan, would exclude any open cut or strip mining from taking place in the Steve Irwin Wildlife Reserve. As a result, the entire area of the Pisolite Hills Project will not be able to be mined.

As a consequence, MetroCoal and Cape have agreed not to proceed with the Merger.

MetroCoal had entered into the merger process following extensive due diligence which included meetings and discussions with senior Queensland Government officials. In particular, a significant component of the due diligence concentrated on the many Queensland Government assurances of its intention to repeal the Wild Rivers Act and replace it with an alternative plan that would allow mining subject to the mine plans meeting the necessary environmental requirements. The proposed mine developments would provide employment opportunities and other benefits for the Cape York community.

MetroCoal Chairman Stephen Everett said “MetroCoal has no choice but not to proceed with the merger.”

“The new legislation bans any mining activities from ever occurring in the Pisolite Hills Project area.”

“Despite declaring Pisolite Hills a „significant‟ project in October 2012 and making regular assurances over many months that the project‟s assessment would be determined by due process, the State Government unexpectedly announced on Wednesday that mining would not be allowed in the most valuable part of the Pisolite Hills Project area,” Mr Everett said.

“MetroCoal and Cape Alumina were given no prior warning of the Government‟s intentions and are bitterly disappointed with this outcome, which is confusing, frustrating in the extreme and goes against all prior indications and consultation.”

“The proposed merger is no longer in the best interests of MetroCoal shareholders.”

“The MetroCoal Board remains committed to, and will now re-focus its efforts to seeking alternative opportunities to realise value for shareholders. We will keep the market updated with regards to any proposals.”

For further information, please contact: Mr Stephen Everett Mr, Michael O’Brien Chairman Chief Executive Officer

Phone: +61 (7) 32493040 Fax: +61 (7) 32493041 Email: admin@metrocoal.com.au Postal Address: GPO Box 122, Brisbane QLD 4001 www.metrocoal.com.au