July 31, 2007 The current exploration programme is designed to extend the historic BHP Mitsui detailed stratigraphic mapping by using hyperspectral methods and ground geological mapping to delineate the folds and prospective coal bearing horizons. A HYMAP survey over a portion of the Bee Creek tenement has been flown with preliminary interpretations completed. This work will be extended during the next twelve months from which drill targets are expected to be defined and tested. The exploration programme during the reporting period completed 1,272 metres of open hole and 55 metres of conventional core drilling. The open holes were designed as scout holes to test for the occurrence of Moranbah Coal Measures in the western part of the lease; however no
intersections of Moranbah coal were encountered. The core holes targeted the known coal resources of the Elphinstone and Hynds seams (Rangal Coal Measures) extending south from the Broughton Deposit.