Altona Energy Plc / Index: AIM / Epic: ANR / Sector: Exploration & Production 29 October 2010 Altona Energy Plc (Altona or the Company) Final Results and Notice of Annual General Meeting Altona Energy Plc, the AIM listed Australian based energy company, is pleased to announce its results for the year ended 30 June 2010 and gives notice of its Annual General Meeting to be held on 9 December 2010 at 3.30pm at The Westbury Hotel, 37 Conduit Street, Mayfair, London W1S 2YF. Overview � Transformational period for the Company which has significantly de-risked Altona as an investment opportunity � Formed Joint Venture with CNOOC New Energy International (Australia) Pty Ltd, a subsidiary of one of Chinas largest national oil companies, which has the financial and technical capacity to advance the Arckaringa Project in Australia � AU$40 million (circa �24 million) budget agreed for Bankable Feasibility Study, commencing fourth quarter 2010 � Planned base case - a 10mb per year Coal to Liquid plant and 560MW co-generation power facility � Joint Venture to assess the multiple project potential of the deposit, including coal development, Coal to liquid, synthetic natural gas, power co-generation and other potential clean energy projects � Formal approval of the Joint Venture by the Foreign Investment Review Board in Australia � Accepted as a Foundation Member of the Global Carbon Capture and Storage Institute � Strengthened shareholder base - key institutions participated in heavily over subscribed placing The report and accounts for the year ended 30 June 2010 and the Notice of Annual General Meeting will be posted to shareholders on 3 November 2010.

An electronic version of the report and accounts as well as the notice will also be available on the Companys website at www.altonaenergy.com. Chairmans Statement This has been a transformational period for your Company, the major achievement being the signing of a joint venture agreement (JV) with CNOOC New Energy International (Australia) Pty Ltd (CNOOC-NEIA), a subsidiary of one of Chinas largest national oil companies.

With a major internationally recognised partner with the financial and technical resources to materially influence the genesis of the Arckaringa Project (the Project) into development, the Board believes that a step change has occurred, with a resultant substantial de-risking of the Company as an investment opportunity. Notably, the JV agreement has secured funding for the completion of the Bankable Feasibility Study (BFS) for a coal mine and an integrated value-added project, the current base case being a 10mb per year Coal to Liquid (CTL) plant and 560MW co-generation power facility, at the Project.

The Board believes that this is one of the worlds largest undeveloped energy banks, with an estimated 7.8 billion tonne coal deposit in the Arckaringa Basin of South Australia, of which 1.287 billion tonnes is a current JORC-compliant resource.

To place this into context, per Jacobs Engineerings study, assuming a 50% conversion to CTL fuels and 50% to synthetic gas (SNG), Arckaringas total coal resources (both JORC and non-JORC) would represent 28% and 29% of current North Sea proven reserves of oil and gas, respectively. CNOOC-NEIA is acting as manager and operator of the Project, taking responsibility for assessing the full potential of the coal resource, in return for a 51% interest in the exploration licences (ELs).

The JV has agreed the budget for the BFS to the amount of A$40 million (circa �24 million).

Importantly, the JV will not only focus on the BFS but will also assess the multiple project potential of the Arckaringa coal deposit, including coal development, CTL, SNG, power co-generation and other potential clean energy projects.

We envisage that the JV will also enable the targeting of CTL exports to China and other Asian markets. As shareholders will be aware, the scale of the opportunities available to the JV is immense.

It is really only now, with a partner of the stature of CNOOC-NEIA, that there is a belief beginning to materialise in the market that the development strategy is achievable.

This view was endorsed earlier in the year by some key institutions who participated in what was a heavily over-subscribed placing. Most recently, the JV Committee approved the annual budget and work programme of the BFS which will enable CNOOC-NEIA to lead the Project forward.

The first stage starting in the fourth quarter of 2010 and anticipated to last 12 months, has a budget of AU$12 million, after which the second stage, which has a AU$28 million budget, will commence.

Importantly, the finalisation of the budget and work programme means we are now moving from a conceptual and planning phase into the exciting detailed evaluation and execution phase.

Further details of the programme are provided in the Operations Review. On a political level, the Company was pleased to announce in June 2010 the formal approval of the JV by Australias Foreign Investment Review Board (FIRB).

Indeed, the importance of the project was emphasised in June 2010 with the ceremonial signing of the JV at Parliament House in Canberra, Australia, in the presence of Mr.

Xi Jinping, the visiting Vice President of the Peoples Republic of China, Australias Prime Minister at that time, Mr.

Kevin Rudd, and South Australias Minister for Trade and Industry, Mr.

Tom Koutsantonis.

We see the relationship with government in Australia as key to our success and regularly meet with key officials and institutions as part of our regular process to keep all stakeholders informed and up-to-date with our progress. The original strategy and rationale behind the Arckaringa Project remains; the quality of our coal is suitable for conversion to Syngas, using existing tried and tested commercial technologies.

The products from Arckaringa will be highly marketable given growing worldwide energy demand - in particular they would help to fill the projected energy shortfall faced by South Australia, which already has to import all its diesel fuel needs and is forecast to require an additional 1,000MW of base load power over the next 10 years. CTL is an established recognised process that can be applied to our type of coal, which has high moisture content.

South African petrochemicals giant Sasol Ltd has been using the technology commercially for decades in South Africa, a country where currently approximately 30% of gasoline and diesel fuel needs are met through CTL plants.

Indeed Sasol recently announced the success of the worlds first passenger aircraft test flight powered with only synthetic jet fuel produced from the CTL process.

In this vein, Rentech Inc.

announced a Memorandum of Understanding (MOU) with thirteen air carriers in December 2009 to supply aviation fuel; aviation fuel is ideally suited to production from CTL technologies.

Demand for such fuels means that aviation fuel production is one of several high margin products being evaluated for the Arckaringa Project. We understand the technical requirements to develop the Project.

The task now is to design the optimum Project to commercialise first.

A huge amount has been achieved to date and the Board believes that the historical expenditure together with the amount invested by Altona in development studies is already in excess of A$20 million in todays terms.

We have a fantastic team which has been greatly reinforced by CNOOC-NEIs industry knowledge and its extensive in-house expertise, so we are in a strong technical position. Our management team was further strengthened during the period with the appointment of Peter Fagiano as Senior Executive in charge of Project Technology.

Peter has worked closely with Altona on the pre-feasibility study in his role with Jacobs Engineering UK Limited, and while advising Altona in this new role, Peter retains his current role of Director of Operations at Jacobs.

We were delighted by the vote of confidence in his decision to join Altona in a part-time executive role. Remaining on the subject of our team, during the period Norman Kennedy, a Non-executive Director of the Company, stepped down from the Board.

I would like to take this opportunity to again thank him for his contribution to Altona since 2005. In February 2010, we were pleased to appoint Evolution Securities Ltd as the Companys nominated advisor and broker. During the period, we were pleased for Altona to be accepted as a Foundation Member of the Global Carbon Capture and Storage Institute, and the furthering of our long-term relationships with the South Australian Government, particularly the Department of Primary Industries and Resources of South Australia. Financial Review I believe we are seeing an emerging understanding and recognition by the investment community of the exciting significant potential of the Company and the Arckaringa Project.

This is highlighted by Invesco, one of the UKs leading financial institutions, acquiring during the period an interest in approximately 18% of the Company.

In March 2010 we placed 33,333,334 new Ordinary Shares with existing and new institutional investors at 9 pence each to raise gross proceeds of �3.0 million.

These funds are expected to be sufficient to take the Company through to the completion of Stage 1 of the BFS in Q4 2011. The financial loss of the Group for the 12 months ended 30 June 2010 of �2,442,000 (2009: �1,120,000) was in line with expectations and includes a share based payments expense of �1,099,000 (2009: �292,000), as well as the benefit during the period of a �156,000 tax credit (2009: �152,000) in respect of research and development costs available to the Group. Outlook With the foundations now in place with CNOOC-NEIA as our JV partner, we have entered a new and important phase of development for the Company, with the commencement of the BFS.

The first phase will cover key value enhancing activities including mine design and planning, groundwater engineering and environmental studies, all of which will underpin the follow-up engineering of the coal conversion plant, whilst significantly de-risking our business further.

With the work programme now commencing, we aim to regularly provide investors with a clear idea of the value triggers in the project and its huge potential. We have come a very long way forward during a time of great volatility in financial markets and the worst economic down-turn since the 1930s.

Since completing the pre-feasibility study we have advanced the Project through the political process, further detailed technical studies and planning phases, whilst identifying and securing a world class major partner, providing a development and funding framework for the Project and its spin-offs.

Our path as a small company with a massive project has been challenging, and I believe we are gaining recognition on the exciting development potential of Arckaringa.

We will have to face challenges going forward, but I believe we have, in-conjunction with CNOOC-NEIA, the team and resources to overcome these and to deliver the long term objectives.

With this in mind I would like to thank all those involved in the Company for their help as well as our new and existing shareholders for their support, and I look forward to updating you all on our progress throughout the year. Christopher Lambert Chairman 28 October 2010 OPERATIONS REPORT During the year, Altona made significant progress towards the commercialisation of its main business venture: an integrated mine and Coal to Liquids plant with a co-generation power facility utilising the vast coal resources within the Companys tenements in the Arckaringa Basin of South Australia. The Project base case covers a 10 million tonne per annum open cut mine based on the Wintinna coal deposit, to feed: � A CTL plant producing 10 million barrels of distillate per annum; primarily zero sulphur diesel fuel, alongside by-products including naptha, sulphur and water; and � An integrated gasification combined cycle plant producing 560 MW of power available for export. Following the successful conclusion to technical pre feasibility studies on the base case in 2008-09, including the release of a JORC compliant resource estimate for the Wintinna deposit, the main focus shifted this year to the commercial aspects of the Project. The Companys objective was to secure a firm financial footing for both the completion of the BFS and the future development of the Project.

To achieve this objective, the Company management pursued the negotiation of a Joint Venture agreement with CNOOC-NEI, a subsidiary of China National Offshore Oil Corporation, one of the three largest State owned oil companies in the Peoples Republic of China.

CNOOC-NEI specialises in and is dedicated to developing alternative energy sources, renewable energy, energy-efficient products and innovative technologies, including clean coal conversion. After concluding a Memorandum of Understanding and a subsequent Terms Sheet with CNOOC-NEI in 2008 and 2009, the management of both parties worked co-operatively towards a JV agreement while CNOOC-NEI continued its due diligence on the results of Altonas pre feasibility studies and the investment and regulatory environment in Australia and South Australia. By November 2009, Altona had concluded a binding agreement which established the key terms under which CNOOC-NEI would fund the BFS and would facilitate the development of the coal resources contained in the Companys tenements.

Following the required establishment of CNOOC-NEIs new Australian subsidiary, CNOOC-NEIA, the Arckaringa Unincorporated Evaluation Joint Venture (UEJV) Agreement was formally signed by Altonas wholly owned subsidiary, Arckaringa Energy Pty Ltd and CNOOC-NEIA on 15 April 2010. The UEJV is now the vehicle which will allow the parties to evaluate and maximise the commercial value of the Companys three EL areas in the Arckaringa Basin of South Australia. Under the terms of the UEJV Agreement, CNOOC-NEIA receives a 51% interest in the ELs (EL 4511, 4512, 4513) in return for: � fully funding the BFS for a coal mine and an integrated value-added project; � acting as the operator to carry out staged evaluation work under the BFS; � taking responsibility for assessing the full potential of the coal resource; and � bringing projects to development. The key aspects of the UEJV Agreement are as follows: � CNOOC-NEIAs funding commitment for the BFS for the Arckaringa Project is A$40 million, with the budget for Stage 1 and Stage 2 of the BFS set at A$12m and A$28m respectively; � Stage 1 involves the completion of a BFS in relation to a project to develop a mine to extract coal from the Arckaringa ELs and a further pre-feasibility study in relation to at least one other value added project, such as a CTL, SNG and integrated power generation project (Nominated Project); � Stage 2 involves the completion of a BFS in respect of the Nominated Project(s) identified in Stage 1 to enable both parties to secure debt funding for the costs of the Nominated Project(s); � In the event that the parties decide to proceed with the commercial development of any Nominated Project, the parties will negotiate and enter into a development agreement for each project, under which the parties will agree their respective interests or failing such agreement, CNOOC-NEIAs interest would increase from 51% to 70%; � CNOOC-NEIA and Altona will work together to obtain funding for the development of any project.

In the event that CNOOC-NEIA wishes to proceed to the development phase of a project prior to the finalisation of the BFS, CNOOC-NEIA will procure the provision of debt funding for both parties to develop the project; � The UEJV will be governed by a Management Committee which will comprise 4 representatives of CNOOC-NEIA and 3 representatives of Altona.

While general business decisions may be determined by a majority of the Management Committee, certain key decisions must be taken unanimously, including any expenditure or contract in excess of A$5m, appointment of key BFS works contractors and entry into material related party contracts; and � An Operating Team headed by CNOOC-NEIA but including staff from both Joint Venture partners, will report to the Management Committee and will be in charge of the overall process of the Arckaringa Project, including the BFS and future construction work, production management and product sales. Both parties bring considerable strengths to the JV.

CNOOC NEI has a strong position in the international energy business backed by in-house expertise, whilst Altona has been able to build a solid base for the BFS through the completion of extensive pre-feasibility studies and historical expenditure on the Arckaringa Project.

The historical expenditure together with the amount invested by Altona in these studies is in excess of A$20 million in todays terms. The UEJV can look forward to an exciting future, not just with the BFS but with the development scope that the coal resource can support.

In the first instance, the BFS will, in step with international and local market demand and the need for innovative clean coal conversion technologies, proceed selectively and progressively with the evaluation of coal development, CTL and/or SNG, power co-generation and a range of other clean energy projects.

Indeed, the BFS may redefine the Base Case developed by Altona.

However, beyond the BFS and any initial project, the JV partners would then be in a strong position to evaluate and commercialise numerous new additional projects to create a multi-project, multi-national business. During 2010-11, the JV will get down to business.

All Australian Federal and State Government consents for the terms of the UEJV Agreement have been received, following a notification of no objection from the Foreign Investment Review Board in May 2010 and subsequent confirmation of South Australian Ministerial consent for the transfer of a 51% interest in the ELs to CNOOC NEIA.

The JV partners have commenced the Stage 1 works programme in the last quarter of 2010 and are in the process of establishing an office in Adelaide. Whilst the focus in the current year has been on the negotiation of the UEJV, Altona has also achieved some important technical milestones.

The Company paved the way for the transfer of interests in the ELs and the start of the BFS work programme by securing subsequent ELs (EL 4511, 4512, 4513) to fully replace the previous ELs that expired as scheduled on 5 June 2010.

These subsequent ELs were granted by Department of Primary Industries and Resources of South Australia (PIRSA) on the basis that the Company had fully complied with the technical, spending and reporting requirements under the previous ELs and that a firm programme was in place to meet future commitments via the BFS. In addition, Altona completed a comprehensive coal quality evaluation of the Wintinna deposit, through its coal quality consultants QCC Resources (part of the Edi Downer Group).

Its report confirmed and expanded on the coal quality profiles developed from historical exploration work and the JORC coal resource estimate concluded last year, and forms a solid base for the detailed assessment of suitable coal gasification technologies during the BFS.

Other technical programmes which Altona had commenced last year as an early start to the BFS (including a "Process Design Package" (PDP) from Jacobs Engineering UK for the delineation of the preferred combination of commercially available CTL and Power technologies, and a Groundwater Management Plan (GMP) from SKM in Adelaide covering mine dewatering and water distribution) were suspended during the current year, pending the negotiation of the UEJV Agreement. Capping off the year was the inclusion of the UEJV Agreement, amongst ten especially selected new agreements between Chinese and Australian commercial interests, at a ceremonial signing in Parliament House Canberra on 21 June 2010.

The formal signing of the Agreement by CNOOC President Fu Chengyu and Altona Energy Chairman Chris Lambert was witnessed by the Vice President of the Peoples Republic of China and the Prime Minister of Australia.

This event represented a strong endorsement for the future success of the JV and the Project. As already mentioned, the JV recently unanimously approved the annual budget and work programme of the BFS which will see the commencement of technical studies in the fourth quarter of 2010.

The JV agreed that CNOOC-NEIA will manage and operate the BFS work programme initially utilising its in-house technical resources, augmented by leading specialised consultants and actively assisted by the Altona team. The approved work programme to date includes: � detailed review of coal deposit geology and consideration of supplemental drilling; � groundwater investigation and verification; � groundwater management research and design; � environmental baseline studies; � open cut coal mining methodology options; and � product market research This work programme will help build the basis for the detailed design phase of the BFS covering mine design for an open cut mine and coal processing options (including CTL and power) for the planned mining capacity of 15 mtpa and a complete environmental management programme and approvals process. Chris Schrape Managing Director 28 October 2010 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2010
Group
Notes 2010 �000 2009 �000
Share based payments expense
(1,099) (292) Other administrative expenses
(1,512) (1,037) Total administrative expenses and loss from operations
4 (2,611) (1,329) Finance income
5 13 57 Loss before taxation
(2,598) (1,272) Tax
9 156 152 Loss for the year attributable to the equity holders of the parent.
(2,442) (1,120)
Other comprehensive income
Exchange differences on translating foreign operations
1,113 135 Total comprehensive loss attributable to the equity holders of the parent
(1,329) (985)
Loss per share expressed in pence - Basic and diluted attributable to the equity holders of the parent
8 (0.64p) (0.31p)
All of the operations are considered to be continuing. STATEMENTS OF FINANCIAL POSITION As at 30 June 2010
Notes Group 2010 �000 Group 2009 �000 Company 2010 �000 Company 2009 �000 ASSETS
Non-current assets
Intangible assets 10 10,039 6,609 - - Property, plant and equipment 11 11 30 10 29 Investment in subsidiaries 12 - - 1,432 - Other receivables 13 85 39 8,947 6,785 Total non-current assets
10,135 6,678 10,389 6,814 Current assets
Trade and other receivables 13 221 217 56 52 Cash and cash equivalents
2,427 305 2,417 303 Total current assets
2,648 522 2,473 355
TOTAL ASSETS
12,783 7,200 12,862 7,169
LIABILITIES
Non-current liabilities
Provisions 15 300 - 300 -
Current liabilities
Trade and other payables 14 291 210 112 107 Provisions 15 100 - 100 -
391 210 212 107
TOTAL LIABILITIES
691 210 512 107
NET ASSETS
12,092 6,990 12,350 7,062
EQUITY
Issued capital 16 414 358 414 358 Share premium
10,394 6,550 10,394 6,550 Merger reserve
2,001 2,001 2,001 2,001 Share based payments reserve
2,948 693 2,948 693 Foreign exchange reserve
1,756 643 - - Retained deficit
(5,421) (3,255) (3,407) (2,540) TOTAL EQUITY
12,092 6,990 12,350 7,062
STATEMENT OF CASH FLOWS For the year ended 30 June 2010
Group Company
2010 �000 2009 �000 2010 �000 2009 �000 Operating activities
Loss before taxation
(2,598) (1,272) (1,143) (990) Finance income
(13) (57) (7) (57) Depreciation
19 19 19 18 Foreign exchange on loans to controlled entities - - (1,129) (135) Share options expensed
1,099 292 1,099 292 (Increase) / decrease in receivables
(46) 28 (50) 21 Increase / (decrease) in payables
41 116 5 (30) Cash used in operations
(1,498) (874) (1,206) (881) Income tax benefit received
152 - - - Net cash flows used in operating activities (1,346) (874) (1,206) (881)
Investing activities
Payments to acquire intangible fixed assets (445) (1,598) - - Loans to subsidiary
- - (587) (1,588) Interest received
13 57 7 57 Net cash flows used in investing activities (432) (1,541) (580) (1,531)
Financing activities
Proceeds from issue of shares
4,095 - 4,095 - Issue costs paid
(195) - (195) - Net cash inflow from financing
3,900 - 3,900 -
Net increase / (decrease) in cash and cash equivalents 2,122 (2,415) 2,114 (2,412) Cash and cash equivalents at beginning of the year 305 2,720 303 2,715 Cash and cash equivalents at 30 June 2,427 305 2,417 303
STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2010
Share capital Share Premium Merger reserve Share based payment reserve Foreign currency translation reserve Retained deficit Total equity Group �000 �000 �000 �000 �000 �000 �000 As at 1 July 2008 358 6,550 2,001 401 508 (2,135) 7,683 Total comprehensive loss for the period - - - - 135 (1,120) (985) Share based payments - - - 292 - - 292 Balance at 30 June 2009 358 6,550 2,001 693 643 (3,255) 6,990
Total comprehensive loss for the period - - - - 1,113 (2,442) (1,329) Issue of share capital 56 4,039 - - - - 4,095 Costs of issue of share capital - (195) - - - - (195) Transfer on exercise of options - - - (56) - 56 - Share based payments - - - 2,531 - - 2,531 Cancellation of options - - - (220) - 220 - Balance at 30 June 2010 414 10,394 2,001 2,948 1,756 (5,421) 12,092
Company �000 �000 �000 �000 �000 �000 �000 As at 1 July 2008 358 6,550 2,001 401 - (1,550) 7,760 Total comprehensive loss for the period - - - - - (990) (990) Share based payments - - - 292 - - 292 Balance at 30 June 2009 358 6,550 2,001 693 - (2,540) 7,062
Total comprehensive loss for the period - - - - - (1,143) (1,143) Issue of share capital 56 4,039 - - - - 4,095 Costs of issue of share capital - (195) - - - - (195) Transfer on exercise of options - - - (56) - 56 - Share based payments - - - 2,531 - - 2,531 Cancellation of options - - - (220) - 220 - Balance at 30 June 2010 414 10,394 2,001 2,948 - (3,407) 12,350
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.

ACCOUNTING POLICIES The principal accounting policies are summarised below.

They have been applied consistently throughout the year. BASIS OF PREPARATION The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (�000) unless otherwise stated. The financial statements have been prepared on a going concern basis.

As is common with many junior mining companies, the Company raises money for exploration and capital projects as and when required.

There can be no assurance that the Groups projects will be fully developed in accordance with current plans or completed on time or to budget.

Future work on the development of these projects, the levels of production and financial returns arising there from may be adversely affected by factors outside the control of the Group.

Under the terms of the UEJV, a subsidiary of CNOOC-NE1, will fund the BFS for the Arckaringa Project and thereby the Groups licence commitments. Notwithstanding the loss incurred during the year, the Directors are of the opinion that based on the Group and Companys cash flow forecasts and expected discretionary and contractual commitments the preparation of the Group and Companys accounts on a going concern basis is appropriate.

This is a critical stage in the development of the Arckaringa project and the Directors can confirm that working capital will be managed to ensure sufficient funding is retained by the Group to allow it to meet its commitments as they fall due and for it to continue as a going concern for the foreseeable future. These financial statements have been prepared in accordance with IFRS as adopted for use in the European Union (EU), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. NEW STANDARDS AND INTERPRETATIONS The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period. The IASB and IFRIC have issued the following standards and interpretations: There following were amendments to published standards and interpretations to existing standards effective in the year adopted by the Group. International Accounting Standards (IAS/IFRS) Effective date (periods beginning on or after) IAS 1 Amendment - Presentation of financial statements: a revised presentation 1 Jan 2009 IAS 23 Amendment - Borrowing costs 1 Jan 2009 IFRS 2 Share-based payment: vesting conditions and cancellations 1 Jan 2009 IFRS 7 Amendment - Improving Disclosures about Financial Instruments Improvements to IFRSs (2009) 1 Jan 2009 IAS 27 Amendment - Consolidated and separate financial statements 1 Jul 2009 IFRS 3 Revised - Business combinations 1 Jul 2009
New Standards effective in the year relevant to the Group: International Accounting Standards (IAS/IFRS) Effective date (periods beginning on or after) IFRS 8 Operating Segments 1 Jan 2009
The adoption of IFRS 8 and the amendment to IAS 1 and IFRS 7 affected the presentation and disclosure of the financial statements.

The amendment to IAS 23, IFRS 3 and IFRS 2 did not have any financial effect in the year however the accounting policies of the group have been updated to reflect the required amendments. Standards, interpretations and amendments to published standards effective in the year but which are not relevant to the Group: IFRIC 16 Hedges of a Net Investment in a Foreign Operation 1 Oct 2008 IFRS 1 & IAS 27 Amendments - Cost of an Investment in a subsidiary, jointly controlled entity or associate 1 Jan 2009 IFRS 2 Amendment - Vesting conditions and cancellations 1 Jan 2009 IAS 32 & 1 Amendments - Puttable financial instruments and obligations arising on Liquidation 1 Jan 2009 IFRIC 15 Agreements for the Construction of Real Estate 1 Jan 2009 IFRIC 9 & IAS 39 Amendments - Embedded derivatives 30 Jun 2009 IAS 39 Amendment -Recognition and measurement: Eligible hedged items 1 Jul 2009 IFRIC 17 Distributions of non-cash assets to owners 1 Jul 2009 IFRIC 18 Transfers of assets from customers 1 Jul 2009 IFRS 1 First-time adoption of international accounting standards 1 Jul 2009
Standards, Interpretations and amendments, which are effective for reporting periods beginning after the date of these financial statements: IFRS 1 Additional exemptions for first-time adopters 1 Jan 2010 IFRS 2 Amendment - Group cash-settled share based payment transactions 1 Jan 2010
Improvements to IFRSs (2009) generally 1 Jan 2010 IAS 32 Amendment - Classification of rights issues 1 Feb 2010 IFRIC19* Extinguishing financial liabilities with equity instruments 1 Apr 2010 IFRS 1 Amendment - first-time adopters of IFRS 1 Jul 2010 IAS 24 Revised - Related party disclosures 1 Jan 2011 IFRIC 14 Amendment to IFRIC 14 - IAS 19 Limit on a defined benefit asset, Minimum funding requirements and their interaction Improvements to IFRSs (2010)* 1 Jan 2011
generally 1 Jan 2011 IFRS9* Financial instruments 1 Jan 2013
The adoption of IFRS 9 will eventually replace IAS 39 in its entirety and consequently may have a material affect the presentation, classification, measurement and disclosures of the Groups financial instruments.

No other standard, interpretations and amendments are expected to affect the Group in future periods. Items marked * had not yet been endorsed by the European Union at the date that these financial statements were approved and authorised for issue by the Board. BASIS OF CONSOLIDATION The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries).

Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All inter-group transactions, balances, income and expenses are eliminated in full on consolidation. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (i) Impairment of intangibles The Group determines whether intangibles are impaired when facts and circumstances suggest that the carrying amount may exceed its recoverable amount.

Such indicators include the point at which a determination is made as to whether or not commercial reserves exist.

The carrying amount of intangibles at 30 June 2010 was �10,039,000 (2009: �6,609,000), refer note 10. (ii) Share based payment transactions The Group measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the date at which they are granted.

The fair value is determined using a Black-Scholes model.

Refer to Note 17 for variables entered into the model. FOREIGN CURRENCIES The functional currency and presentation currency of the company is UK Pounds Sterling. Transactions entered into by group entities in currency other than the currency of the primary economic environment in which they operate (the "functional" currency) are recorded at rates ruling when the transactions occur.

Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Pounds Sterling at the foreign exchange rates ruling at the dates the fair value was determined. On consolidation, the results of the operations are translated into Pounds Sterling at average rates approximating to those ruling when the transactions took place.

All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date.

Exchange differences arising on translating the opening net assets at closing rate are recognised directly in equity (the "foreign exchange reserve"). Exchange differences recognised in the statement of comprehensive income of group entities separate financial statements on the translation of long-term monetary items forming part of the Groups net investment in the overseas operation concerned are reclassified to the foreign exchange reserve if the item is denominated in the functional currency of the Company or the overseas operation concerned. BUSINESS COMBINATIONS Acquisitions of subsidiaries and businesses are accounted for using the purchase method.

The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.

The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Revised Business Combinations are recognised at their fair values at the acquisition date. JOINTLY CONTROLLED ASSETS Jointly controlled assets are arrangements in which the Group holds an interest on a long term basis which are jointly controlled by the Group and one or more venturers under a contractual arrangement.

The Groups exploration, development and production activities are sometimes conducted jointly with other companies in this way.

Since these arrangements do not constitute entities in their own right, the consolidated financial statements reflect the Groups costs incurred and assets and liabilities, which are directly related to the Groups interest and contribution. TAXATION Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised except for differences arising on investments in subsidiaries and jointly controlled entities where the group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of the deferred tax assets is restricted to those instances where it is probable that the taxable profit will be available against which the difference can be utilised. Deferred tax is calculated based on rates enacted or substantively enacted at the reporting date and expected to apply when the related deferred tax asset is realised or liability settled. Current and deferred tax is charged or credited in the consolidated statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the related tax is also dealt with in equity. Research and Development tax credits are recognised when they can be determined to be reliably measured. PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. INTANGIBLE ASSETS - EXPLORATION AND EVALUATION ASSETS Exploration and evaluation expenditure in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions must also be met: a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale, or b) Exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include the acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities.

General, administrative and share based payment costs are only included in the measurement of exploration and evaluation costs where they are related directly to exploration and evaluation activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts or circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.

The recoverable amount of the exploration and evaluation asset (or the cash-generating unit(s) (CGU) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any).

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost less depreciation and any impairment. The carrying amount of property, plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets.

The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal.

The expected net cash flows have been discounted to their present value in determining recoverable amounts. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probably that future economic benefit associated with the item will flow to the entity and the cost of the item can be measured reliably.

All other repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred. Depreciation Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value.

Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis. The following useful lives are used in the calculation of depreciation: Plant and equipment 3 -5 years LEASING Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an operating lease), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term.

The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

The land and buildings elements of property leases are considered separately for the purposes of lease classification. FINANCIAL ASSETS The only financial assets currently held by the Group are classified as loans and receivables and cash and cash equivalents.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

For receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income.

On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. Loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position. Included within loans and receivables are cash and cash equivalents which include cash in hand and other short term highly liquid investments with a maturity of three months or less.

Any interest earned is accrued monthly and classified as interest.

Short term deposits comprise deposits made for varying periods of between one day and three months. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above. Derecognition Financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the asset and substantially all the risk and rewards of ownership of the asset to another entity. FINANCIAL LIABILITIES The Group classifies its financial liabilities into one category.

This is other financial liabilities.

At present, the Group does not have any liabilities classified as fair value through profit or loss. The Groups accounting policy for the other financial liabilities category is as follows: Trade payables and other short-term monetary liabilities, are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

All interest and other borrowing costs incurred in connection with the above are expensed as incurred and reported as part of financing costs in the consolidated statement of comprehensive income. Derecognition Financial liabilities The Group derecognises financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they expire. THE COMPANYS INVESTMENTS IN SUBSIDIARIES In its separate financial statements the Company recognises its investments in subsidiaries at cost, less any provision for impairment.

The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the acquisition.

It also includes share based payments issued to employees of the Company for services provided to subsidiaries. FINANCE INCOME Finance income is recognised as interest accrues using the effective interest method.

This is a method of calculating the amortised cost of a financial assets and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. MERGER RESERVE The difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange has been credited to a merger reserve account, in accordance with the merger relief provisions of the Companies Act 2006 and accordingly no share premium for such transactions has been setup. SHARE BASED PAYMENTS The Group issues equity-settled share-based payments to certain employees.

Equity-settled share-based payments are measured at fair value at the date of grant.

The equity-settled share-based payments are expensed to the consolidated statement of comprehensive income or capitalised to investments or intangibles in the statement of financial position over a straight line basis over the vesting period based on the Groups estimate of shares that will eventually vest. Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received over a straight line basis over the vesting period based on the Groups estimate of shares that will eventually vest, except where it is in respect to costs associated with the issue of securities, in which case it is charged to the share premium account. Where equity instruments do not vest, are cancelled, or lapse, the amount recognised is reversed directly through the retained deficit. 2.

FINANCIAL INSTRUMENTS - RISK MANAGEMENT The financial instruments were categorised as follows:
Loans and receivables Other financial liabilities Total Group 30 June 2010 �000 �000 �000 Assets as per statement of financial position
Other receivables - non current 85 - 85 Trade and other receivables 35 - 35 Cash and cash equivalents 2,427 - 2,427
2,547 - 2,547
Liabilities as per statement of financial position
Trade and other payables - 291 291
- 291 291
Group 30 June 2009
Assets as per statement of financial position
Other receivables - non current 39 - 39 Trade and other receivables 40 - 40 Cash and cash equivalents 305 - 305
384 - 384
Liabilities as per statement of financial position
Trade and other payables - 210 210
- 210 210
Company 30 June 2010
Assets as per statement of financial position
Other receivables - non current 82 - 82 Trade and other receivables 32 - 32 Cash and cash equivalents 2,417 - 2,417
2,531 - 2,531
Liabilities as per statement of financial position
Trade and other payables - 112 112
- 112 112
Company 30 June 2009
Assets as per statement of financial position
Other receivables - non current 36 - 36 Trade and other receivables 27 - 27 Cash and cash equivalents 303 - 303
366 - 366
Liabilities as per statement of financial position
Trade and other payables - 107 107
- 107 107
The Groups financial instruments comprise of cash and sundry receivables and payables that arise directly from its operations. The main risks arising from the Groups financial instruments are credit risk, liquidity risk and currency risk.

The Directors review and agree policies for managing these risks and these are summarised below.

There have been no substantive changes to the Groups exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. There is no significant difference between the carrying value and fair value of receivables and cash and cash equivalents. Credit Risk Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group.

The Group has adopted a policy of only dealing with creditworthy counterparties, as assessed by the Directors using relevant available information. Credit risk also arises on cash and cash equivalents and deposits with banks and financial institutions.

The Groups cash deposits are only held in banks and financial institutions which are independently rated with a minimum credit agency rating of A. There were no bad debts recognised during the period and there is no provision required at the reporting date. Liquidity risk Liquidity risk arises from the Groups management of working capital.

It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

Short term payables are classified as those payables that are due within 30 days. The Groups policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.

To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 45 days. Currency risk The functional currencies of the companies in the Group are Pounds Sterling and Australian Dollars.

The Group does not hedge against the effects of movements in exchange rates.

These risks are monitored by the Board on a regular basis. The following table discloses the year end rates applied by the Group for the purposes of producing the financial statements: Foreign currency units to �1.00 GBP
Australian Dollar At 30 June 2010
1.76 At 30 June 2009
2.05
The carrying amounts of the Groups foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
Liabilities Assets
2010 �000 2009 �000 2010 �000 2009 �000 Australian Dollar
180 103 179 170
The impact of a 10% fluctuation in the value of the Australia Dollar would result in net translation gains or losses of �Nil (2009: �7,000) movement in the consolidated statement of comprehensive income and net assets of the Group.

The only monetary asset the Company has is the intercompany loan.

A 10% fluctuation in the value of the Australian Dollar would result in a net translation gain or loss of �1,030,000 (2009: �675,000) Borrowing facilities and interest rate risk The Group and Company finances its operations through the issue of equity share capital.

There are no significant borrowings and therefore no significant exposure to interest rate fluctuations. The Group and Company manages the interest rate risk associated with the Group and Company cash assets by ensuring that interest rates are as favourable as possible, whether this is through investment in floating or fixed interest rate deposits, whilst managing the access the Group and Company requires to the funds for working capital purposes. The interest rate profile of the Groups cash and cash equivalents was as follows:
30 June 2010
Pound Sterling �000 Australian Dollar �000 Total
�000 Cash at bank floating interest rate
2,381 - 2,381 Cash at bank on which no interest is received
36 10 46
2,417 10 2,427
30 June 2009
Pound Sterling �000 Australian Dollar �000 Total
�000 Cash at bank floating interest rate
302 - 302 Cash at bank on which no interest is received
1 2 3
303 2 305
At reporting date, cash at bank floating interest rate is accruing weighted average interest of 0.92% (2009: 0.76%).

As required by IFRS 7, the Group has estimated the interest rate sensitivity on year end balances and determined that a two percentage point increase or decrease in the interest rate earned on floating rate deposits would have caused a corresponding increase or decrease in net income in the amount of �48,000 (2009: �6,000). Capital Management The Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained losses as well as the reserves (consisting of share based payments reserve, foreign currency translation reserve and merger reserve). The Groups objective when maintaining capital is to safeguard the entitys ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders. The Company meets its capital needs by equity financing.

The Group sets the amount of capital it requires to fund the Groups project evaluation costs and administration expenses.

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The Company and Group do not have any derivative instruments or hedging instruments.

It has been determined that a sensitivity analysis will not be representative of the Companys and Groups position in relation to market risk and therefore, such an analysis has not been undertaken. Fair values The fair values of the Group and Companys financial instruments approximates to their carrying value. 3.

REVENUE AND SEGMENTAL INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segment and that make strategic decisions, has been identified as the Board of Directors. The Group had no operating revenue during the period. The Group operates in one segment, the exploration and evaluation of coal.

The Parent Company operates a head office based in the United Kingdom which incurred certain administration and corporate costs.

The Groups operations span two countries, Australia and the United Kingdom. Segment result
Segment result
Continuing operations
2010 �000 2009 �000 Coal (Australia)
(333) (148) Administration and Corporate (United Kingdom)
(2,278) (1,181)
(2,611) (1,329) Finance income
13 57 Loss before tax
(2,598) (1,272) Income tax benefit
156 152 Loss after tax
(2,442) (1,120)
The share based payment charge is included within the United Kingdom segment result. Segment assets and liabilities
Non-Current Assets Non-Current Liabilities
2010 �000 2009 �000 2010 �000 2009 �000 Coal (Australia) 10,043 6,613 - - Administration and Corporate (United Kingdom) 92 65 300 - Total of all segments 10,135 6,678 300 -
Total Assets Total Liabilities
2010 �000 2009 �000 2010 �000 2009 �000 Coal (Australia) 10,218 6,779 180 103 Administration and Corporate (United Kingdom) 2,565 421 511 107 Total of all segments 12,783 7,200 691 210
Other segment information
Depreciation and amortisation Capital expenditure
Continuing operations 2010 �000 2009 �000 2010 �000 2009 �000 Coal (Australia) - 1 2,327 1,568 Administration and Corporate (United Kingdom) 19 18 - -
19 19 2,327 1,568
4.

LOSS FROM OPERATIONS
Group
2010 �000 2009 �000
This has been arrived at after charging/(crediting):
Audit fee
21 20 Fees payable to the Companys auditor and its associates in respect of :
The auditing of accounts of subsidiaries of the Company pursuant to legislation
7 4 Depreciation
19 19 Staff costs1
471 220 Share based payments expense2
1,099 292 Operating lease charges - land and buildings
48 42 Net foreign currency losses
2 2
1 The Group recognised salaries and fees and long term payments of �1,083,000 (2009: �450,000) during the year, of which �612,000 (2009: �230,000) was capitalised to intangibles. 2 The Group recognised �2,531,000 (2009: �292,000) related to equity-settled share based payment transactions during the year, of which �1,432,000 (2009: Nil) was capitalised to intangibles. 5.

FINANCE INCOME
Group
2010 �000 2009 �000
Bank interest received / receivable
13 57
6.

STAFF COSTS (INCLUDING DIRECTORS)
Group Company
2010 �000 2009 �000 2010 �000 2009 �000 Salaries and fees 668 440 489 334 Long term benefits/incentives 415 10 - - Share based payments 1,848 292 1,848 292 Salaries expense 2,931 742 2,337 626 Capitalised to intangible assets (2,044) (230) (1,514) (114) Total 887 512 823 512
The Group averaged 8 employees during the period ended 30 June 2010 (2009: 7 employees).

The Company averaged 7 employees during the period (2009: 6 employees).

The amount capitalised to intangible assets relates to a portion of the staff costs in connection with three of the Groups Directors. Directors have been assessed as the only key management of the Group.
Fees / Salary Long term incentives Pension Share based payments Total
2010 2009
�000 �000 �000 �000 �000 �000 Christopher Lambert 184 - - 152 336 214 Christopher Schrape 167 - 15 98 280 186 Anthony Samaha 117 - - 71 188 146 Michael Zheng 62 4001 - 1,4342 1,896 60 Phillip Sutherland 24 - - 1 25 42 Norman Kennedy3 22 - - 92 114 54 Total Key Management 2010 576 400 15 1,848 2,839 - Total Key Management 2009 408 - 10 284 - 702
1 Included in Mr Zhengs long term incentives is the provision for �400,000 in success fees payable in respect to UEJV performance milestones (refer Note 15 and Note 19). 2 Share based payments for Mr Zheng are in respect of UEJV success fees related to the issue of 2,500,000 ordinary shares upon satisfaction of conditions precedent to the UEJV and the issue of 6,500,000 options exercisable at 0.1p, of which 3,000,000 vest upon completion of Stage 1 of the BFS and 3,500,000 vest upon completion of Stage 2 of the BFS (refer Note 19). 3 Norman Kennedy resigned as a Director on 16 April 2010. The total amount payable to the highest paid director in respect of emoluments was �184,000 (2009: �144,000). No Directors exercised any share options during the period.

The pension relate to compulsory superannuation in Australia. The Company provides Directors and Officers liabi