STANMORE RESOURCES LIMITED — Investor Presentation 2015

Feb 4, 2015

JOGMEC/ TRADE AND INVESTMENT QUEENSLAND SEMINAR Tokyo - February 2015

IMPORTANT INFORMATION

This document has been prepared by Stanmore Coal Limited (“Stanmore Coal”) for the purpose of providing a company and technical overview to interested analysts/investors. None of Stanmore Coal, nor any of its related bodies corporate, their respective directors, partners, employees or advisers or any other person (“Relevant Parties”) makes any representations or warranty to, or takes responsibility for, the accuracy, reliability or completeness of the information contained in this document, to the recipient of this document (“Recipient”), and nothing contained in it is, or may be relied upon as, a promise or representation, whether as to the past or future.

The information in this document does not purport to be complete nor does it contain all the information that would be required in a disclosure statement or prospectus prepared in accordance with the Corporations Act 2001 (Commonwealth). It should be read in conjunction with Stanmore’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au.

This document is not a recommendation to acquire Stanmore Coal shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial, legal and taxation advice appropriate to their jurisdiction. Except to the extent prohibited by law, the Relevant Parties disclaim all liability that may otherwise arise due to any of this information being inaccurate or incomplete. By obtaining this document, the Recipient releases the Relevant Parties from liability to the Recipient for any loss or damage that it may suffer or incur arising directly or indirectly out of or in connection with any use of or reliance on any of this information, whether such liability arises in contract, tort (including negligence) or otherwise.

This document contains certain “forward-looking statements”. The words “forecast”, “estimate”, “like”, “anticipate”, “project”, “opinion”, “should”, “could”, “may”, “target” and other similar expressions are intended to identify forward looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. You are cautioned not to place undue reliance on forward looking statements.

Although due care and attention has been used in the preparation of forward looking statements, such statements, opinions and estimates are based on assumptions and contingencies that are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance.

Recipients of the document must make their own independent investigations, consideration and evaluation. By accepting this document, the Recipient agrees that if it proceeds further with its investigations, consideration or evaluation of investing in the company it will make and rely solely upon its own investigations and inquiries and will not in any way rely upon this document.

This document is not and should not be considered to form any offer or an invitation to acquire Stanmore Coal shares or any other financial products, and neither this document nor any of its contents will form the basis of any contract or commitment. In particular, this document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any “US person” as defined in Regulation S under the US Securities Act of 1993 (“Securities Act”). Stanmore Coal shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration.

Marketable Reserves Note: The Marketable Coal Reserves of 94Mt is derived from a JORC compliant run of mine (ROM) Probable Coal Reserve of 117.5Mt based on a 14.8% ash product and predicted yield of 80%. The 94Mt marketable reserve is included in the 287Mt total JORC Resource (18Mt Measured + 187Mt Indicated + 82Mt Inferred Resource).

Competent Persons Statement:

The information in this report relating to the Belview Project exploration results and coal resources is based on information compiled by Mr Troy Turner who is a member of the Australian Institute of Mining and Metallurgy and is a full time employee of Xenith Consulting Pty Ltd. Mr Turner is a qualified geologist and 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 Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Turner consents to the inclusion in the report of the matters based on the information, in the form and context in which it appears.

The information in this report relating to all other project exploration results and coal resources is based on information compiled by Mr Troy Turner who is a member of the Australasian Institute of Geoscientists and is a full time employee of Xenith Consulting Pty Ltd. Mr Turner is a qualified geologist and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as Competent Person as defined in the 2004 Edition of the JORC Code. Mr Turner consents to the inclusion in this document of the matters based on the information, in the form and context in which it appears.

The information in this report relating to coal reserves is based on information compiled by Mr Richard Hoskings who is a member of Minserve Pty Ltd. Mr Hoskings is a mining engineer, a Fellow of the Australian Institute of Mining and Metallurgy (AusIMM) and has the relevant experience (30+ years) in relation to the mineralisation being reported to qualify as a Competent Person as defined in the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2004 Edition)”. Mr Hoskings consents to the inclusion in the report of the matters based on the information, in the form and context in which it appears.

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CONTENTS

1. About Stanmore Coal

2. Update and Overview of JOGMEC Funded Exploration Programs

3. Surat Basin Opportunity

4. Australian Coal Market Outlook

Appendix 1 – Surat Basin Coal Characteristics

3

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Contents
1. About Stanmore
2. Update and overview of JOGMEC
3. Australia Coal Market Outlook
4. Surat Basin Opportunities
1. About Stanmore Coal
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• Queensland based coal development company

• Advanced thermal and metallurgical coal development projects

• Emerging coking coal producer at Belview

• Additional pipeline of attractive projects

• Rail and port infrastructure in place for key coking coal projects

• Strong Board and management team with proven track record of developing and operating coal mines

• Small, highly skilled team with low overhead cost base

• Well funded with a strong shareholder base

• No take or pay obligations

• Actively pursing further opportunities in the down-cycle

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ASX Code SMR Total JORC Resource [4]
20% 20% Sprint Capital 933.2 Mt
Share price A$0.09
Measured and
Board and
indicated JORC
Management
Shares 209.1m Resource [4]
Institutionals
231 Mt
21%
Market cap $18.8m [2] 39% Other JORC Marketable
Reserves
Cash A$17.2m [3] 94 Mt
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Key Executives

20 years in engineering, project management, resource financing and M&A.

Mine manager with 30 + years experience, mainly in the Bowen Basin. Most recently General Manager at Minerva, Yarrabee and Sonoma mines.

10 years of accounting and finance experience in the resource and financial sector.

Non-Executive Board

Mining engineer with 40 years experience in coal, formerly CEO of Anglo Coal Australia, Chairman of DBCT Port and Director of PWCS Port.

Over 40 years of Bowen Basin coal experience including all phases of coal mine development at Burton, South Blackwater and Goonyella coal mines. Formerly Director of DBCT Port.

Extensive experience in commercialising resources companies, former executive director of Arrow Energy and current Chairman of Bizzell Capital Partners.

Co-founder and MD of Sprint Capital Partners. More than 20 years experience in investment banking and private equity in Asia.

Experience in a wide range of industries including mining, oil & gas exploration, forestry, biotechnology and government utilities. He was recently the nonexecutive chairman of TFS Corporation Limited and non-executive director of Buccaneer Energy Limited.

6

2. Update & Overview of JOGMEC Funded Exploration Programs

8

CLIFFORD PROJECT Regional Context

EPC 1274 & 1276

• Northern Surat Basin, close vicinity of townships of Taroom & Wandoan

• Proximal to Stanmore’s The Range Project, a 5Mtpa advanced thermal coal project

• Directly north of Glencore Wandoan Mining Lease complex & New Hope Corporation’s Elimatta Mining Lease Application

• New Hope Corporation recently enhanced foothold in the region with the purchase of 51% of Collingwood, Taroom & Woori Mining Lease Applications from Cockatoo Coal for A$25 million[1]

• High quality, low emission export thermal coal product potential, well suited to Asian markets

• 1Source: ASX Announcement, New Hope Corporation, 23/12/2014, COK: Sale of Interest in North Surat Joint Venture

9

CLIFFORD PROJECT Joint Exploration Agreement

• Exploration agreement signed in December 2013 between Stanmore Coal (SMR) & Japan Oil, Gas and Metals National Corporation (JOGMEC) to provide A$4.5 million over 3 years to earn up to a 40% economic interest in the Clifford Project

• At completion of the farmin JOGMEC plans to on-sell the project interest to Japanese power generators/end-users

• Two more years to complete program after current 2014/15 drilling

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campaign
JOGMEC STANMORE
100% OWNED
(FARMOUT TO
UP TO 40%
JOGMEC)
ECONOMIC
INTEREST
CLIFFORD
PROJECT
EXPLORATION
FUNDING (VIA
FARMIN)
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CLIFFORD PROJECT Location & Geological Concept

EPC 1274 & 1276

• Extensive tenure area in excess of 1100km[2]

• Historically held by MIM/ Xstrata and others

• Several hundred historical coal boreholes in area

• Shallow weathering profile

• Stanmore has conducted an extensive review of the tenements to identify areas with potential for shallow coal amenable to opencut mining

• Geological assessments identified several target areas for shallow coal exploration as follows:

• EPC 1274: Liberty, Horseshoe

• EPC 1276: Grange, Ye-Olde, Ye-Olde South

• Initial field works commenced in 2013, works presently accelerating with JOGMEC support

• Targeting Initial JORC resources to be announced 1[st] half 2015

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CLIFFORD PROJECT Stratigraphy

WALLOON SUBGROUP (COAL MEASURES)

PROJECT SUB-AREAS

• Walloon Sub-Group divides into the following:

• Juandah Coal Measures (upper coal bearing unit)

• Tangalooma Sandstone (sandstone unit - minor coal)

• Taroom Coal Measures (lower coal bearing unit)

CLIFFORD PROJECT COAL MEASURES

• Typically targets Lower Juandah Seams:

• Wambo, Iona, Argyle or

• Taroom Coal Measures seams

• Auburn, Bulwer, Condamine

• Discovery

• Ye Olde

• Horseshoe

--------------------

• Grange

• Horseshoe

• Liberty

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13

BELVIEW PROJECT Overview

Significant coking coal project in the Bowen Basin 100% owned

• Substantial coking coal deposit in heart of the Bowen Basin – 342 Mt JORC Inferred Resource

• Infrastructure in place – located on existing Blackwater Rail Line to Gladstone Port

• Surrounded by operating coking coal mines

• One of limited number of large scale coking coal projects in Queensland

• Mining lease application submitted

• Stanmore is working with exploration funding partners Taiheiyo Kouhatsu and JOGMEC to undertake further drilling and development work

14

BELVIEW PROJECT Coal Quality

Initial coal quality test results are positive

• Coal testing from bore cores indicate that Belview will produce a Hard Coking Coal (“HCC”) primary product and a secondary low volatile Pulverised Coal Injection (“PCI”) product

• HCC quality is excellent, exhibiting low ash, low volatile matter and low sulphur

• PCI quality is also very good, exhibiting high calorific value, low volatile matter and low sulphur

• Overall washed total yield is in the range of 73% to 83% for two high value metallurgical coal products (62% HCC, 38% PCI)

Parameter1		Primary HCC Product	Secondary PCI Product
Product Split	%	62	38
Inherent Moisture	%	1.5	1.5
Ash	%	7.5 - 8.0	9.5
Volatile Matter	%	19.5	18.0
Fixed Carbon	%	71.0 – 71.5	71.0
Total Sulphur	%	0.40	0.40
Phosphorus	%	0.07-0.1	0.07
Calorific Value	kcal/kg	7,750	7,500
Crucible Swell Number (CSN)		6 – 8	n/a
Maximum Fluidity	ddpm	20 - 70	n/a
Vitrinite Reflectance (RoMax)	%	1.45	1.45

1. Adb unless otherwise noted

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BELVIEW PROJECT Stratigraphy

RANGAL COAL MEASURES

• Coal bearing sedimentary sequence

• Aries, Castor, Pollux & Pisces seams

SEAM THICKNESS (INDICATED TARGET AREA)

• Aries – variable, thin in north thickens in south

• Castor and Castor splits – variable, typically 1.5 to 2.5m

• Pollux – laterally persistent, typically 3-4 metres thickness

• Pisces (Upper) – variable, typically 1 to 2.5 metres

SAMPLE POLLUX & GEOPHYSICS (HOLE CQBN003)

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BELVIEW PROJECT

Previous Work

 EPC 1186 & EPC 1114: 23 previous boreholes

 JORC Inferred Resource of 342Mt

• Main resource contained in Pollux seam (166Mt)

EPC	Operator	Operator	Operator	Operator	Target	Target	Target	Period	Period	Period	Period	Number holes	Number holes
EPC1114	BOW Energy				Coal Seam Gas			2009 - 2010				1
EPC1186	BOW Energy				Coal Seam Gas			2009 - 2010				1
EPC1114	Stanmore Coal				Coal			2011				6
EPC1186	Waratah Coal				Coal			2009 - 2012				6
EPC1186	Stanmore Coal				Coal			2013				7
EPC1186	Stanmore Coal				Coal			2013 - 2014				2
						Raw Air Dried Coal Quality (adb) Moisture % Ash % Fixed Carbon % Volatile Matter % Total Sulphur % Calorific Value MJ/kg 1.7 29 52.5 17 0.4 18.2 1.5 16.2 63.7 18.8 0.38 29.2 1.2 13.5 65.2 20.1 0.37 30.3 2.1 17.4 64.6 17.1 0.39 29.9 1.6 20.7 59.8 18.1 0.39 25.3
Seam		Mass (Mt)	Thickness (m)	Insitu RD		Raw Air Dried Coal Quality (adb)
						Moisture %	Ash %		Fixed Carbon %	Volatile Matter %	Total Sulphur %		Calorific Value MJ/kg
Total Castor		132	2.5	1.57		1.7	29		52.5	17	0.4		18.2
Total Pollux		166	3.3	1.44		1.5	16.2		63.7	18.8	0.38		29.2
Total Gemini		23	6.7	1.42		1.2	13.5		65.2	20.1	0.37		30.3
Total Pisces Upper		21	2	1.44		2.1	17.4		64.6	17.1	0.39		29.9
Total Resource		342		1.49		1.6	20.7		59.8	18.1	0.39		25.3

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BELVIEW PROJECT

Current Indicated 6 Hole Program

• 6 partial core holes, Rangal Coal Measure sequence

• Follow up previous Inferred Resource work

• Full suite of coal analysis, raw, dry & wet sizing, float-sink, 2 stage clean coal (Coking & PCI)

• Complimentary geotechnical testing (UCS, Slake)

• Finalise field work in February (weather permitting)

• Coal quality work ongoing, will support resource report completion in 1H 2015

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3. Surat Basin Opportunity

SURAT BASIN OPPORTUNITY Overview

• The Surat Basin will provide long term supply of high energy, low emission thermal coal at globally competitive operating costs which can underpin much of Japan’s future energy requirements

• Surat Basin coal’s unique environmental features provides long term certainty around coal quality and emission controls

• Investment in the Surat Basin creates the opportunity to control a substantial body of low cost export grade thermal coal in an jurisdiction with low sovereign risk and strong historical investment ties to Japan

• Stanmore Coal’s The Range Project is significantly advanced having completed a bankable feasibility study and EIS.

Surat Basin Highlights

• High energy, low emission coal with superior environmental characteristics

• Suitable for ultra-super critical power-plants

• Security of coal supply – up to 100Mtpa for over 50 years

• Low cost energy source

• Well defined infrastructure solution - awaiting mine asset investment support

• Government support for opening the Northern Surat Basin

• Finance available from various infrastructure investors

• Short lead time to commence construction

• With JOGMEC support, Stanmore is proving up other nearby deposits which will add critical mass to the planned Surat Basin Rail line.

20

SURAT BASIN Japan currently has some of the highest electricity cost in the world

21

SURAT BASIN Coal Offers a Low Cost Source of Energy for Japan

 New power stations for Japan should feature:

• Strong environmental qualities

• Inexpensive fuel source

• Stable source of fuel supply

• Coal offers the cheapest form of reliable fuel for new Japanese power stations

Source: The institute of Energy Economics, Japan, METI

• It is estimated that up to 10 GW of new coal fired power is planned for Japan[1]

1 Source: Stanmore Coal, METI

22

THE RANGE PROJECT

Open cut, high energy, export grade thermal coal mine 100% owned

• Feasibility Study complete on 5 Mtpa open cut export thermal coal mine over 25 years

• EIS completed and Mining Lease in process

• High energy, low emission thermal coal

Quality	Surat	Comment
	Walloon
	Coals
Sulfur (%)	0.4	Low levels of trace elements and low emissions of atmospheric pollutants (oxides of sulfur, nitrogen and
Nitrogen (% ult daf)	1.1	particulates) mean excellent environmental performance
Ash (%)	10	Lower than Newcastle benchmark
CO2 (kg/MWh S/O)	920-940	Contain up to 30% more organically bound hydrogen than most thermal coals, resulting in lower CO2
Ash fusion temp (C)	1,420	High ash fusion and favourable ash composition mean that slagging and fouling problems are minimal or eliminated
Volatile matter (%)	40-42	Very high, consistent with its high rank and produces rapid combustion and good burnout

23

SURAT BASIN A High Quality, Low Emission Source of Coal

• Surat Basin Coal’s emissions profile has the potential to outperform Japan’s existing emission requirements and designates it strongly as a coal for future long term use

“Surat Basin thermal coal exhibits superior environmental features when compared with existing and forecast global supply alternatives, containing less SO2, NOx and CO2 than almost all other coals in the export market.”

Lindsay Juniper, 2013

24

SURAT BASIN Addressing Challenges of Low HGI

• Low HGI coals have been utilised successfully in a number of Japanese power plants for many years

• To compensate for increased hardness of Surat Basin coals, classifier settings can be adjusted to accommodate coarser PF without compromising carbon in ash targets and maintain maximum boiler efficiency

• Experience shows that accommodating for lower HGI does not have a material net impact on milling costs compared to other coals

Low HGI Coal Queensland Case Study (Spero, C 1998)

• At Tarong and Swanbank power stations, low HGI Walloon (Surat equivalent) coals are pulverised less than other coals with > 4555% passing 75 µm rather than the usual 70% passing 75 µm

• By doing this, mill power consumption is kept down to the same level as for coals with high HGI pulverised to a finer size and mill wear is minimised

• Even at the coarser grind size, the high reactivity of Walloon coals leads to lower carbon in ash values than other coals

• Surat Basin coals are highly suitable for new power generation assets where milling capacity can be designed in advance to address low HGI

• Considerable technical data is available addressing the issue of HGI in Surat Basin Coals

25

SURAT BASIN

Surat Coal Can Play An Important Role In Satisfying Japan’s Future Energy Needs

Key features of Surat Basin Coals

•	Significant coal	> 6 billion tonnes of resource supporting
	resource	at least 50Mtpa for over 100 years
•	High quality coal	High energy, low emission thermal coal
	– superior	complementing existing Asian coal
	environmental	supply sources
	properties
•	Cost effective	Low strip ratio, open cut mining,
	coal source	compelling value-in-use leads to lower
		cost of energy
•	Coal already	Long successful track record in power
	used extensively	generation in Australia and Asia (Japan
	in power	and Taiwan)
	generation
•	Clear path to	Close proximity to existing and proposed
	market	port and rail infrastructure with
		opportunity for significant expansion
•	Stable	Located in a favourable jurisdiction with
	jurisdiction	a long history of consistent coal supply
•	Significant	Key deposits are owned by large coal
	financial	companies such as Glencore, New Hope
	backing	and Mitsui

26

4. Australia Coal Market Outlook

THE THERMAL COAL MARKET IS DRIVEN BY STRONG UNDERLYING DEMAND

• Currently 41% of global electricity is generated by coal

• Global demand for electricity is likely to double over the next three decades

• Over the last three years, coal consumption has grown materially within:

• India – 25% (pop 1.25 bn.)

• ASEAN – 22% (pop 600 m)  China – 20% (pop 1.35 bn.)

Both India and ASEAN have a per capita energy consumption level that is 1/8[th] of OECD countries

 Coal was the world’s fastest growing energy source every year for the past 10 years

Source 1: World Coal Association

28

AS A LOW COST, RELIABLE FORM OF BASE-LOAD ENERGY, SEABORNE COAL MARKET GROWTH WILL BE SUBSTANTIAL

 Coal is forecast to account for more than 60% of the power mix in non-OECD Asia  China, India and ASEAN will require the largest import demand growth for thermal coal  Over 0.9 billion tonnes per annum of additional seaborne coal is forecast by 2035[1] in these regions

Seaborne thermal coal demand forecast in the Pacific basin (Mt, %)[1]

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1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
China India NEA SEA
Source: Wood Mackenzie Coal Market Service
Mt
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	Country (region)	2014 imports (Mt)	2035 imports (Mt est.)	Seaborne Growth (Mt)
	ASEAN	62	253	191 (308%)
	India	142	462	320 (225%)
	China	198	592	394 (199%)
	Total			905 (225%)
	Note 1: Wood	Mackenzie Coal Market Service

29

CHINA’S DEMAND FOR ELECTRICITY WILL CONTINUE TO GROW SUBSTANTIALLY

China’s growth in perspective

• China’s rapid economic growth over several past decades will continue at a slower pace but off a much higher base

• Coal played a significant role in China’s incredible growth in power demand

• In 2014, 73% of electricity generation was fuelled by coal[1]

• China’s annual coal demand is forecast to increase by 476Mtpa by 2018 – this is more than Australia’s total exports in 2013[2]

Source 1: Platts May 2014 Source 2: IEA World Energy Outlook 2013

30

JAPAN’S LONG TERM ENERGY SECURITY IS CHALLENGED BY THE GAP LEFT BY NUCLEAR

Japan’s existing & planned coal-fired power plants

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132°E 140°E
RUS
KAZ
MONG
CHI JAP
INDA VIE
IND
A US
Sea of Japan
JAPAN
Tokyo
Nagoya
Osaka
14
Operating
Proposed/Under Construction
Coal Port
132°E 140°E
km Source: Wood Mackenzie
0 100 200 400
38°N 38°N
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Sources

• 1: Platts May 2014

• 2: IEA World Energy Outlook 2013

• Approximately 270 million MWh per annum of nuclear energy generation capacity has been idled post the Great East Japan earthquake

• This equates to approximately 90Mtpa[3] of high energy coal supply into new ultra super critical power plants

• Clean Surat Basin coal offers a long term reliable and environmentally friendly energy source to fill the ongoing shortfall from nuclear

• The projected generating shortfall presents an opportunity to develop and secure a cost-effective and reliable energy solution based on new coal-fired generation powered by clean Surat coal

Japan Generated Output by Year

Nuclear has been replaced by expensive LNG and Oil

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Nuclear has been replaced by expensive LNG and Oil • Nuclear has
phased out to
12,000
nearly zero, from
10,000 an average
contribution of
8,000 28% (2003-2010)
6,000 • The shortfall has
been replaced by
4,000
LNG (27% to 42% [1] )
2,000 and Oil (10% to
16% [1] )
-
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Nuclear Coal LNG Oil Hydro Renewables
100m kWh
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1. Lindsay Juniper

31

CURRENT DEPRESSED COAL PRICES ARE A RESULT OF SIGNIFICANT NEW SUPPLY WHICH HAS FLOODED THE MARKET

• The price boom of 2008-2011 resulted in many new projects being developed. This new wave of supply has resulted in a material reduction in price for both thermal and metallurgical coal despite the demand profile continuing to grow

• The current low price acts as a disincentive for new project development. Over time supply demand balance will return putting upward pressure on prices

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Coal price over time (AUD and USD)
+A$450/t
350
300
250
200
150
100
50
–
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14
A$ HCC A$ Export Thermal US$ HCC US$ Export Thermal
Coal Price ($/FOBt)
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Source: RBA, Platts, Stanmore analysis

32

THE COST OF EXTRACTION FUNDAMENTALS WILL DRIVE THE COAL PRICE UP OVER THE LONG TERM

• The cost of extraction increases over time as resources get deeper and mines deplete

Thermal coal spot price versus 90[th] percentile cost

• If market prices stay around this level for a sustained period, three things are likely:

• Existing mines will close – supply side rationalisation will continue

• New and replacement mines will be delayed – incentive price for most new coal projects is higher than current prices

• More coal fired power stations will be built in Asia – coal is the most reliable and cost effective fuel source for electricity generation

Source: Wood Mackenzie Coal Supply Service and Coal Market Service

The next up cycle could be more pronounced – increasing regulatory constraints will delay the supply response

33

COAL’S IMPACT ON THE ENVIRONMENTAL CAN BE MINIMIZED THROUGH THE USE OF HIGH ENERGY, LOW EMISSION COALS

Coal demand over time in Japan vs suspended particulate matter

• Burning high quality thermal coal will reduce the emission profile of emerging economies

• In Japan, air pollution has historically decreased as coal consumption increased due to highly efficient, ultra supercritical coal plants

• Queensland in particular is endowed with substantial deposits of high energy, low emission thermal coal which will be increasingly sought after in Asian markets

Coal demand over time in Japan vs sulfur dioxide levels

Sources: New Hope Coal Presentation

Air Pollution: “FY 2004 Status of Air Pollution” by Ministry of the Environment; Government of Japan Coal Demand: 1970 to 2000: “Annual Report for Energy Production and Supply-demand Figures” (edition for each year) by Ministry of Economy, Trade and Industry; Government of Japan. 2000 onwards: “Foreign Trade Statistics” by Ministry of Finance; Government of Japan

34

THE ADOPTION OF MODERN, PROVEN TECHNOLOGY WILL DRIVE BETTER ENVIRONMENTAL OUTCOMES

• Upgrading the world’s current coal-fueled fleet with advanced supercritical technology could deliver a:

• 90 percent improvement in sulfur dioxide emissions rates;

• Japan’s Ministry of Economy, Trade and Industry estimates that if China, India and the USA could achieve the same thermal efficiency as todays’ Japanese plants, CO2 emissions would reduce by approximately 1.5 billion tonnes per annum[2]

• 93 percent less nitrogen oxide emissions rates; and

• .

• virtually zero particulates[1]

Source 1: Peabody Energy: Advanced energy for life.com Source 2: Japan’s Energy Policy and the Direction of Coal Policy, September 2014

CO2 reduction potential of coal-fired power plants by increased efficiency

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Source: VGB Power Tech, 2010
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35

AUSTRALIA IS WELL-PLACED TO BENEFIT GIVEN THE VAST QUANTITIES OF HIGH QUALITY COAL FROM ITS PRIMARY COAL BASINS

• Australia has abundant supply of good quality relatively shallow coal such as that located in the Surat Basin.

• Globally coal exports are expected to double over the next 20 years to meet the projected demand in developing regions

• This requires large increases in exports from Australia, Indonesia and the US

• Constraints exist on further exports from the US and Indonesia

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2014 Seaborne Exports (Mt) 2035 Seaborne Exports (Mt)
936 Mt 1,860 Mt
20% Australia 80 25% Australia
134
Indonesia 102 457 Indonesia
52
102 189 USA 129 USA
Colombia Colombia
75
South Africa South Africa
78 340
Russia Russia
39
619
401
Other Other
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Source: Wood Mackenzie Coal Market Service; Stanmore analysis

36

TIMING IS GOOD FOR INVESTMENT IN HIGH QUALITY THERMAL COAL OF THE SURAT BASIN

• Project valuations are at the bottom of the cycle driven by the low coal price

• Long term demand for high quality coal in Asia is set for a substantial increase

• The trend to cleaner coal is likely to continue

 The opportunity exists now for Japan to secure its future coal needs for many years in the Surat Basin

For further information please contact

Nick Jorss Managing Director PH: +61 3238 1000 nick.jorss@stanmorecoal.com.au

Mike McKee Chief Operating Officer PH: +61 3238 1000 mike.mckee@stanmorecoal.com.au

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Appendix 1 – Surat Basin Coal Characteristics

SURAT BASIN Excellent Environmental Performance

Quality	Quality	Specification	Comment
•	Low SO2emissions	Sulphur 0.4%	Low to moderate inherent sulphur content High absorption of sulphur in ash (up to 25%)
•	Low NOxemissions	Nitrogen 1.1% (ult daf)	Low nitrogen content High volatile content (Fuel Ratio = 1.0)
•	Low CO2emissions	920 – 940 kg/MWh	Lower than most export coals due to high rank High hydrogen content provides additional energy without generation of CO2 For an 800MW plant burning a Surat Basin Coal, the reduction in CO2emissions would be in excess of
			550,000 tonnes of CO2/year compared to a low rank Indonesian coal or 350,000 tonnes compared to the
			Galilee basin
•	Low particulate emissions	1-5 mg/Nm3	Very low fly ash resistivity means electrostatic precipitator (ESP) efficiency is excellent Low ash
•	Low trace elements	Arsenic, Boron, Cadmium, Lead, Mercury, Molybdenum, Selenium	Trace element levels compare very favourably with other globally traded coals Gaseous emissions extremely low compared to statutory limits in Australian Leachates in fly ash expected to contain levels significantly lower than Japanese guideline limits

 These attributes result in Surat Basin Coal having a high Value-In-Use (“VIU”) compared to range of other coals in the export market

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SURAT BASIN Superior Operating Parameters

 Surat Basin coals have been used successfully in Queensland and Asia over a long period

 In addition to their favourable environmental characteristics, Surat Basin coals also demonstrate the following beneficial operating features:

Parameter

Comment

• 

• Low ash deposition Low slagging and fouling factors due to high ash fusion temperature and low Sodium Oxide (Na2O) in ash  Demonstrated by experience at Swanbank and Tarong power stations

• Particularly evident compared to Chinese and Indonesian coals

• •  Superior ignition and High volatile content leads to excellent burnout characteristics and low carbon-in-ash burnout

• • Low mill wear  Low quartz content compared to other Australian coals • Low dust emissions  Low relative dustiness of washed product due to HGI •  Low self heating Low propensity for spontaneous combustion during transportation and storage (ignition temperatures in excess of 150 degrees Celsius are required)

• • HGI  Queensland power plant experience has shown that the perceived disadvantage of low HGI is overcome by adjusting milling practices to produce a coarser grind

• Assisted by naturally high combustion reactivity

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