Ambre Energy’s overall strategic business plan in the US is to acquire and operate producing assets, with idle production capacity, in a relatively undervalued domestic market and utilize that idle capacity to service the booming export market, particularly Asia.

The USA has the largest coal reserves in the world and the Powder River Basin (PRB) in Montana and Wyoming produces the cheapest coal in the world on a Free on Rail basis. Mining conditions in this region can only be described as spectacular with massive seams under relatively low levels of cover. The relatively high moisture content of these coals is offset by very low ash and sulphur levels which has underwritten significant growth in the sales of these coals both in the US and the Asian thermal 15 2011 Annual Report coal market. Powder River Basin coal is shipped across the US and used to generate electricity in 38 US states.

Coals such as those at Ambre Energy’s newly acquired Decker coal mine based in Montana are the best suited coals for the Asian export market. In addition to the state’s geographical advantage to the US west coast, the Montana coals have higher energy levels compared to the southern PRB in Wyoming.

The Powder River Basin currently represents approximately 50% of the US’s total coal production and the reserves are massive. The key to accessing the Asian export market is port capacity. The US west coast currently supplies only 8Mtpa of Asia’s total thermal coal demand of 550Mtpa. Current port capacity restricts any further growth.

In 2009, coal accounted for 28% of global energy use and generated 42% of the world’s electricity. Japan is the world’s largest coal importer (182 million tons in 2009), South Korea imported 110 million tons and Taiwan imported 65 million tons. Asia’s thermal coal demand is forecast (Wood Mackenzie) to increase by 560Mtpa over the next 10 years. The US can only participate in this phenomenal growth if new port capacity comes on stream. Ambre Energy’s Millennium Bulk Terminals port at Longview in Washington State could be the next shorebased coal loading facility to be commissioned.

Ambre is seeking to join the Asian export market earlier through a barge and transshipment operation on the Columbia River. The company’s plan is to load barges at the Port of Morrow in Oregon and transship to panamax sized vessels nearer the mouth of the Columbia River. Ambre plans to ship first coal via transshipment in 2013 followed by coal through the Millennium shore based terminal in 2014-15. Ambre’s first mover status with new export coal port capacity will give the company a significant competitive edge over other US coal exporters to the Asian market.

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For five years, Ambre Energy has been evaluating US coal regions and deposits to identify acquisition opportunities that would build a supply base for sale through the company’s coal marketing business to domestic and international customers.

Large coal deposits with low ash content and low to moderate moisture content located close to rail infrastructure have been the target. In particular, Ambre Energy conducted technical due diligence and market assessments over two operating coal mines - the Decker Coal Mine (Decker) and the Black Butte Coal Mine (Black Butte), and two non-operating coal deposits known as the Big Horn Deposit (Big Horn) and the Rosebud Deposit (Rosebud) in Montana and Wyoming.

Successful negotiations during 2010/11 resulted in Ambre Energy acquiring a stake in these assets previously held by Level 3 Communications, which includes 50% ownership of the Decker and Black Butte mines and 100% ownership of the Big Horn and Rosebud deposits. With these acquisitions complete, Ambre Energy is on track to becoming a major supplier of US thermal coal to the international market.

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The Decker coal mine (Decker) is situated in the north-western section of the Powder River Basin. Located within Big Horn County in the state of Montana, the project consists of two distinct areas, East Decker and West Decker.

The West and East Decker mines were started in the 1970s as two separate mining operations which came together under the Decker Coal Company in the late 1980s. Since the commencement of operations at both, the mines have produced approximately 330 million tons of coal. The mines are serviced by BNSF Railway with two rail loops and load out facilities, one for each mine.

Ownership of the mines is now a 50/50 joint venture between Ambre Energy and Cloud Peak Energy, with Ambre Energy responsible for operating the mine and marketing the coal.

The Decker mine produces approximately three million short tons of low ash, low sulphur, sub-bituminous coal each year which is currently sold into the domestic thermal market. An independent JORC-compliant assessment indicates a sizable resource of 415.6 million short tons remained at Decker as at 19 May 2010.

*The Resources estimate is based on information compiled by Dr. Ian Stone, who is a Member of the Australasian Institute of Mining and Metallurgy (102087). Dr. Stone is Manager, Geology of Palaris Mining Pty Ltd. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr. Stone has over 30 years experience in exploration and mining of coal deposits. Dr. Stone consents to the inclusion of this Resource Estimate in reports disclosed by the Company in the form in which it appears.

Ambre Energy will be seeking to strengthen relationships with existing customers and explore opportunities for additional domestic sales. The company also intends ultimately to increase coal production to take advantage of demand for coal from North Asian customers via Ambre Energy’s port infrastructure in the US west coast region.

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The Black Butte mine is located in the Green River Basin in Sweetwater County, south west Wyoming.

The Black Butte and Leucite Hills mines were started in the 1970s as two separate mining operations which came together under the Black Butte Coal Company in 1988. The mines are serviced by Union Pacific railroad.

Black Butte is now operated by a 50/50 joint venture between Ambre Energy and Anadarko Petroleum Corporation (APC). As with Decker Mine, Ambre Energy is responsible for operating the mine and marketing the coal.

The mine is a mixed dragline plus truck and shovel stripping operation targeting production of approximately 3.5 million 16 short tons of coal each year. This low ash, sub-bituminous coal is currently sold on the domestic market. An independent JORC-compliant assessment of the modelled and permitted areas shows a resource estimate of 127.68 million short tons as at 28 April 2010.

*The Resources estimate is based on information compiled by Dr. Ian Stone, who is a Member of the Australasian Institute of Mining and Metallurgy (102087). Dr. Stone is Manager, Geology of Palaris Mining Pty Ltd. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person, as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr. Stone has over 30 years experience in exploration and mining of coal deposits. Dr. Stone consents to the inclusion of this Resource Estimate in reports disclosed by the Company in the form in which it appears.

As with Decker Mine, Ambre Energy will seek to maintain existing domestic contracts and investigate options for new domestic sales. There are also opportunities to increase coal production for the international seaborne market.

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As part of the mine acquisition transaction completed in November 2011, Ambre Energy assumed 100% ownership of the Big Horn coal deposit and the Rosebud coal deposit in Wyoming, USA.

The Big Horn coal deposit is located in the Northern Powder River Basin in Sheridan County, Wyoming, approximately 15 miles south west of Decker. A mine was operated at the site from 1944 until 2000, producing up to 4.5 million short tons of coal per year at the height of its productivity. Today the mine is fully reclaimed with the exception of some infrastructure and a solid waste disposal site.

The Rosebud coal deposit is located north of Hanna, Wyoming in the Hanna Basin, Carbon County, Wyoming. The Rosebud Mine was opened in 1955 and operated until the early 1990s. The mine produced approximately 3 million tons per year at the height of its productivity in the 1970s. Today, the mine is nearly fully reclaimed and no coal production occurs.

While the deposits are not currently being mined, there are significant potential resources available at Big Horn and Rosebud. Resource estimates indicate a combined total of more than 500 million tons of coal across both deposits in permitted and unpermitted areas that could be readily developed with appropriate approvals. Development of these deposits remains an option for Ambre Energy in coming years as supply sources are considered for its thermal coal export business.

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