Registered Office: Level 2, 395 Collins Street Melbourne, Victoria 3000 Telephone (03)8611 5320 4th December 2013 ACQUISITION OF CROYDON COAL LTD 3D Resources Ltd. ( 3D Resources or the company ) is pleased to announce it has agreed to acquire Croydon Coal Ltd ( Croydon Coal ) a New Zealand company which owns a 100% interest in a Tangarakau Coalfield exploration project which the Company believes can potentially offer the company a commercial underground coal project in the short to medium term. The acquisition is subject to any regulatory approvals which may be required. Background 3D Resources has entered into an agreement to acquire 100% of Croydon Coal, a New Zealand company that holds 100% of Exploration Permit 40752. This permit covers a strategic part of the Tangarakau Coalfield, which is recognised as one of the largest continuous coal fields in the Taranaki and King Country coalfields of New Zealand. EP40752 (shaded Green)
EP40752 is located 40 kilometres south west from the farming town of Taumarunui, and 100km south west from the city of Hamilton. More importantly it is located within a few kilometres of the Okahukura to Stratford railway line that offers transport options for the coal into both the local market, as well as the export market through the port of New Plymouth. This port is uncongested and can accommodate panamax vessels. EP40752 surrounds Mining Permit MP41511 and shares the old underground workings of an old State coal mine, the Tatu State Mine in the southern boundary of the two permits. From 1940 to 1971, this mine produced over a million tonnes of thermal coal from underground mining, for local domestic consumption. EP40752 comprises 74.38km 2 and contains at least nine drill holes completed mainly by the Government. This drill hole data shows the continuity of the Maryville Coal Measures throughout much of the permit area which comprise at least 9 seams. The main commercial seam, that was the subject of historic mining at the Tatu State Mine, represents a convergence of two seams (Seams 7 & 8). These seams outcrop in the eastern part of the permit and dips to the west at around 3 to 5 degrees. Location of Drill holes and Coal Outcrops in and around EP40752
MP41511 (covering an area of just 3.1km 2 ) is reported to contain a JORC Indicated Resource of 7.3 million gross in-situ tonnes based on an average seam thickness of about 2.0metres. Government drill holes (7864, 7863 and 7860) located some 1.2km, 2.7km and 5.6km north of the mining permit contain coal seam thicknesses of 3.5metres, 2.6metres and 2.03metres of coal respectively for the same coal horizon. Around 3.6km to the south of the mining permit, a recent hole drilled by Solid Energy (9419) have geophysical down the hole logs that indicate there is 2.7metres of potential coal seams with some partings. Only a part of that seam was cored and so sample data is limited. These drill holes confirm that potentially, a mineable coal seam thickness exists over an extensive area both North and South of MP41511, including of course MP41511 itself. The down dip extension to the west remains largely unexplored and, based on the 3-5degree dips prevalent in this area, the main coal seams would be expected to be at around 250-400m below surface at the western boundary of EP40752. It is 3D Resources view, therefore, that within the area surrounding the Mining Permit there is ample room for a target resource potential well in excess of the 20 million gross in-situ tonnes that may be required to give the project a +10year mine life. At this stage the resources in EP40752 are not defined sufficiently to generate a JORC compliant resource but the widely spaced drill hole data demonstrates continuity of potential mineable thicknesses of coal extending over large areas. Both permit areas are located on land owned by the Crown and administered by the Department of Conservation ( DOC ). MP41511 has a land access agreement in place with DOC to mine coal, and EP40752 has a land access agreement in place for defined exploration activities. So there appears to be government support for commercial development of coal in this area. Detailed map showing the locations of drill holes approved by the Government, some of which may be utilised by 3D Resources. The initial program by 3D Resources would aim to confirm continuity of mineable seam thicknesses over a wider area. (N.B. Grid shown on map = 1km x 1km)
Coal Quality Coal quality has been determined from several sources of coal sampling: Samples from six different outcrops from within, east and 1.6km southeast of MP41511; Samples from drill-hole 7864 which intersected 3.5m of coal 1.3km north of MP41511; Samples from the old Tatu State Mine including two run-of-mine analyses and results of analysis of 28 full face channel samples taken from the mine between 1941 and 1961; and Samples taken from the outcrop and exposed coal face at the proposed entrance point for the new underground mine within MP41511. The proximate coal quality parameters, on an air dried basis (except for CV which is gross as received ) are summarised in the table below. CV (GAR) ASH VOL FC TM TS 5700 kcal 5% 40.5% 42.8% 14.5% 1.2% The coal is a high ranking sub-bituminous coal. New Zealand North Island coal, is typically high ranking sub-bituminous, high in vitrinite with reactive qualities, used primarily for feedstock to Huntly Power Station, and Glenbrook Steel Mill, which is a direct reduced iron steel plant, located south of Auckland and west of the Huntly coalfields. Infrastructure One of the attractions of the Croydon Coal project is that it is located close to infrastructure and so any mine development should involve fairly low capital costs.
A railroad passes the mine area, and a rail siding area has been identified 10km from mine mouth by tarred road. Alternatively, consideration can be given to installing a 3km overland conveyor from mine mouth to the rail siding if warranted. The freight railroad travels 110km southwest from the siding to the town of Stratford, and a further 40km northeast direct to the Port of New Plymouth. The same railroad joins the main trunk-line and travels 300km north to Huntly Power Station and then across to Glenbrook Steel. The railroad is currently moth-balled, but the Government railroad operator, Kiwirail, has indicated it will upgrade and re-commission the railroad at its cost, to be amortised in the haulage fee over the life of mine. The Port of New Plymouth has a 12 metre draft which was dredged in 2006 in anticipation of being the point of export for Pike River coal. The Company understands that Bathurst Resources Limited is also planning to utilise the Port for the export of its West Coast coal production by barging the coal from Westport in the South Island to New Plymouth for loading onto panamax vessels. 500KVA power can be supplied to the mine area at around $250,000, although supporting generator power would also be needed. Alternatively, at an estimated cost of $1 million, 1000KVA can be supplied which would be sufficient for an underground mine producing 1 million tonnes per annum. Target Markets The potential markets for the coal include both domestic supply in the North Island and export. Domestic demand in the North Island of New Zealand is driven by Huntly Power Station, a 1500MW Power Station designed for natural gas and coal consumption, and the Glenbrook Steel Mill, a direct reduced iron steel plant that sources its iron from nearby beach iron sands. Coal to the Power Station and the Steel Mill is supplied by Solid Energy New Zealand Limited s Huntly mines, as well as coal imported by the Power Station and the Steel Mill via the Port of Tauranga in the Eastern Bay of Plenty (typically imported from Indonesia and Australia). Apart from Fonterra, who supply their own milk factory, Solid Energy New Zealand Limited ( Solid Energy ) is the North Island s only significant coal producer and supplier. There are also several industrial users within the region of EP40752 who have a demand for coal, and who are supplied from quite a distance by Solid Energy. The financial and operational challenges of Solid Energy are well publicised. 3D Resources sees an opportunity to mitigate supplier risk for the Power Station and the Steel Mill, and to possibly be a cheaper source of supply to local industrial users in the North Island. With the availability of rail to the Port of New Plymouth, the export market provides Croydon Coal with good diversification of its coal and its customer base. About Croydon Coal Croydon Coal is a New Zealand company with 8million shares on issue. Croydon Coal s sole asset is a 100% interest in EP40752 which it acquired from Solid Energy New Zealand Ltd(Solid Energy)
by an agreement dated April 2013. EP40752 has been transferred to Croydon Coal with the payment to Solid Energy as follows: A cash payment ofnz$50,000 payable on the approval by the relevant Government authority to a two year extension of the permit from 7 November, 2013 to 6 November, 2015; and a cash payment of NZ$700,000 upon the Company being granted a mining permit; or If after 6 November, 2015 the Company does not apply for a mining permit but applies for and obtains an appraisal extension, a cash payment of NZ$200,000 on being granted that extension; and a cash payment of NZ$500,000 upon being granted a mining permit. If no mining permit is applied for and granted by 6 November, 2019, that is to say the Company has surrendered EP40752, there is a residual cash payment of NZ$200,000. At this stage the permit has been transferred to Croydon Coal in July 2013 but has yet to be granted a 2 year extension by Crown Minerals. This is expected to be processed in the next 1-2 months. Terms of the Acquisition 3D Resources has entered into an agreement to acquire all of the issued shares in Croydon Coal in consideration for $10,000 plus 40 million 3D Resources shares to be issued in four tranches: $10,000 plus 10million 3D Resources fully paid Ordinary shares to be issued when the Solid Energy terms of transfer are met and an extension to the license is granted by Crown Minerals(Tranche One); A further 10million 3D Resources fully paid Ordinary shares issued when a JORC Inferred Resource of more than 20million tonnes is identified on EP40752 and a positive Pre- Feasibility Study is completed.(tranche Two); A further 10million 3D Resources fully paid Ordinary shares issued when 3D acquires the rights to or ownership of MP41511 (Tranche Three); and A further 10million 3D Resources fully paid Ordinary shares when a Mining Permit is granted in respects of a part or all of EP40752(Tranche Four). The issue of 40million ordinary shares in 3D Resources represents a possible 14.2% of the current capital of 3D Resources. Conditions The acquisition is conditional upon: 3D Resources completing due diligence by 17 December 2013; Compliance with all necessary regulatory approvals including any ASX approvals that may be required as well as Crown Minerals approval to the transfer of control of Croydon Coal;
3D Resources completing a placement of at least $400,000 from the shortfall in the rights issue announced on 25 th October 2013 in order to assist fund the early stages of the project. A separate announcement will be made in respect to that placement in due course. For Further Information, Contact Andrew Draffin (Company Secretary) Telephone: +61 3 8611 5333 Peter Mitchell (Managing Director) Telephone: +61 3 9606 0688 info@3dresources.com.au Information in this ASX Announcement relating to Exploration Results and geological data has been compiled by Mr. Peter Mitchell who is a Member of the Australian Institute of Mining and Metallurgy and is Managing Director of 3D Resources Ltd. He has sufficient experience that is relevant to the types of deposits being explored for and qualifies as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004 Edition). Peter Mitchell has consented to the release of the announcement.