ASX Announcement. Appointment of Preferred Contractor for CHPP Construction at Colton Mine

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1 ASX Announcement December 13, 2010 Appointment of Preferred Contractor for CHPP Construction at Colton Coal Mine and further Progress on Surat Basin Rail support NEC s Timetable for Coal Production Northern Energy Corporation Limited today announced two important milestones in the planned development of the Maryborough Hard Coking Coal Project (Colton Coal Mine) and the Elimatta Thermal Coal Mine Project (Elimatta) respectively. Key Points: Conditional approval of the EIS for the Surat Basin Rail Line, announced on December 11 by the Queensland Government, underpins confidence in Elimatta Mine project timetable Appointment by Northern Energy Corporation (NEC) of Newcastle-based engineering and construction company, ema Mining Solutions Pty Ltd (ema), as Preferred Contractor for the design and construction of the Coal Handling and Preparation Plant (CHPP) for Colton Coal Mine at Maryborough, Queensland. A three-stage contract mandates early contractor involvement, with the prospect of ongoing operating support following commissioning of the CHPP. The appointment of the Preferred Contractor is an important prerequisite for production at Colton Mine by mid-2012 and is a further indicator of the progression of this project. Appointment of Preferred Contractor for CHPP Construction at Colton Mine The Company has reached agreement with ema Mining Solutions Pty Ltd to provide engineering and design services for the Colton Mine s CHPP to enable the project to be fully scoped, costed and ready for construction once environmental and other government approvals are received. Subject to satisfactory completion of stage 1 of the contract, ema will construct the CHPP off-site in transportable modules prior to assembling the facility on site following the granting of the Mining Lease; Subject to satisfactory completion of stage 2 of the contract, ema will provide engineering and operating advice to NEC operations and maintenance personnel for a period of several years following commissioning of the CHPP. The Northern Energy Board welcomes ema Mining Solutions to the Colton Coal Mine project, said Keith Barker, NEC s Managing Director. The Colton Coal Mine will be the first operating mine in NEC s portfolio of mine projects. 1

2 Today s announcement marks a further step towards production at Colton, expected by mid Last week we also announced the opening of an NEC office in Maryborough, a practical example of the transition of NEC from coal explorer to coal producer. So far we have received expressions of interest from up to 1000 applicants for positions at the Colton Mine, Mr Barker said Conditional Approval of EIS for the Surat Basin Rail Line Northern Energy was pleased to note the announcement by the Queensland Government on December 11 that the State s Co-ordinator-General has granted conditional approval of the Environmental Impact Statement (EIS) for the proposed 210 km rail line between Wandoan and Banana, the so-called Southern Missing Link. The open access rail line will allow for the transport of coal from the Surat Basin to the Port of Gladstone and first exports are forecast to begin as early as The EIS approval follows recent State Government approval of the proposed $3 billion Wandoan Coal Project managed by Xstrata Coal and is another important milestone in the development of the essential rail and ports infrastructure that will enable Northern Energy to commence exports of thermal coal from its Elimatta mine project by 2015 This latest positive announcement by the Queensland Government provides further reinforcement for our view that the Surat Basin will be the State s next major coal-producing region, said Mr Barker. The steady progress being made in the development of both the Surat Basin Rail project and the Wiggins Island Coal Export Terminal underpin our confidence that Northern Energy s Elimatta mine project will meet its production target date. For and on behalf of the Board Paul Marshall Company Secretary For further information contact: Keith Barker Media enquiries: Managing Director Phone: (07) About The Maryborough Project and Colton Mine The Colton Mine (MLA 50273, 50274) is planned to produce 0.5Mtpa of hard coking coal and offers the opportunity for early production in mid-2012, subject to statutory approvals and final project design and commitment. In parallel with this development NEC plans further exploration and evaluation within the Maryborough Project area with the objective being to extend the resource of hard coking coal and increase the size of the mine development over time. Current conceptual development work is targeting a mine size of 2-3Mtpa from mid

3 About ema Mining Solutions Pty Ltd ema Mining Solutions provides coal producers access to cutting edge technologies in: - Coal Handling & Preparation Process Design - Process Engineering- - Design and Detail Drafting- - Project Management Based in Newcastle, Australia, ema Mining Solutions caters to the world coal market. In close proximity to the Hunter Valley coal precinct, our experience has led us into neighbouring coal fields in Bowen Basin and Central Queensland, as well as the emerging industry in India and China. About the Elimatta Thermal Coal Mine Project The Elimatta mine (EPC 650 and MDL (app) 373) is located approximately 30km west of the township of Wandoan in the Surat Basin and has been confirmed as a large resource of low ash, high volatile thermal coal. A detailed life of mine has been developed for the deposit, which is estimated at more than 29 years and will be developed as an open cut mine with a projected production rate of 5Mtpa. Production is expected to commence in 2014 with first shipments planned for

4 Joint Statement: Premier and Minister for the Arts The Honourable Anna Bligh Minister for Infrastructure and Planning The Honourable Stirling Hinchliffe Saturday, December 11, 2010 SOUTHERN MISSING LINK CLEARS STATE S ENVIRONMENTAL ASSESSMENT The State Government has given the green light to the proposed $1 billion Surat Basin Rail (SBR) project after three years of rigorous environmental assessment. Premier Anna Bligh has welcomed Coordinator-General Graeme Newton s conditional approval of the environmental impact statement (EIS) for the proposed new rail line between Wandoan and Banana known as the Southern Missing Link. The move follows the state government s recent approval of the proposed $3 billion Wandoan Coal project, which would produce coal to be transported on the railway line to port facilities at Gladstone. Up to 1,000 workers would be employed during construction of the railway, with a further 44 positions required to operate and maintain the infrastructure. This project would open up the Surat Basin as the next major new export region for Queensland, Ms Bligh said. This proposed project comprises a 210-kilometre multi-user, open access rail line to allow for the transport of coal from the Surat Basin to the Port of Gladstone for export. It will enable the development of significant coal resources estimated at four billion tonnes in the Surat Basin and generate up to an estimated $300 million in royalties per year. The project will see coal from the Surat Basin transported along QR National s Moura Line and the proposed Moura Link rail project, to the proposed Wiggins Island Coal Export Terminal at the Port of Gladstone. Coordinator-General Graeme Newton said the release of his report for the Surat Basin Rail project contains a comprehensive list of 115 conditions and recommendations for the construction and operation of the project. These conditions set requirements and procedures with respect to a number of key environmental and social issues, Mr Newton said. These include: A range of measures to protect and minimise fragmentation of properties, vegetation and habitat A comprehensive weed and pest management plan to control the spread of weeds and pests 4

5 Limits on the amount of groundwater used in the construction of the project to maintain water quality and quantity The preparation and implementation of a coal dust management plan to control the loss of coal dust Development of a temporary accommodation facility guideline to minimise the impact on the local housing market A local industry participation plan to ensure the local community gains the maximum economic benefit from the project Plans and protocols to manage social impacts of the project. This is yet another example of the Government delivering for, and listening to regional Queensland. The proponent, a consortium comprising of ATEC Dawson Valley Railway Pty Ltd, Xstrata Coal Surat Basin Rail Pty Ltd and QR Surat Basin Pty Ltd, anticipates construction of the railway and its associated facilities could commence in The first coal exports are forecast to begin as early as The Coordinator-General s Report is available from the Department of Infrastructure and Planning s website at: dip.qld.gov.au/projects/transport/rail/surat-basin-rail.html Media contact: