July 2004

GLOUCESTER COAL LTD

Stratford CHPPA Time Line Of Change

1999 to 2004 ..

August 2004

Coal Processing & Change

• Why change?• Coal Properties Change• Markets Change• Economics change

• The Coal Handling & Processing Plant “CHPP” or “washery” needs to change or react to any of the above to allow the company to sell the product for a profit.

August 2004

SCPL CHPP 1995

• Original Design 350 tph Sedgman Plant approx $17M– two stage DMC with two stage spiral processing and codisposal

reject system.– Avon seams low OB:Coal ratio approx 2.4 : 1– Highly faulted multiple seams– High dilution, interburden often mined– Contract mining– 10% ash Coking Product : Strat Coke Coal, high fluidity, medium

sulphur 0.5– 19% ash Thermal Product : Strat Therm – known that some coal rejected to the codisposal dams.

August 2004

SCPL CHPP

• 1996 Heavy Media Bath : Capacity 550 tph ($4.6M)

• 1997 Flotation Plant & TBS ($4.8M)

• 1998 Mining and Processing ok Corporate in decline, The impact of the Forex contracts

August 2004

SCPL CHPP 1999

• More of the same from 1998

• Changing company structure, not only Contract Mining but the site moves under a new contract arrangement to Total Resource Management, where HWE operate the mine and the processing plant.

August 2004

SCPL CHPP 2000

• Contractors are perceived as good things, we use them for our maintenance, servicing, etc often regarded as more flexible then a permanent workforce. What happens when you want to change the contract?

• CIM (GCL) enter the Domestic market with contracts to Delta and Macgen. Along with Macgen comes ANR. There is change in all parts of the industry.

• Taking coal from Stratford to Bayswater is the real Coals to Newcastle story (there is more then profit economics here).

• Higher ash spec, just raise the SG, less rejects to pump.

August 2004

SCPL CHPP 2001/02/03

• HWE contract operator for the CHPP.• A key point in the contract states that the plant is to be

maintained to meet marketing requirements.• This was interpreted as being that as long as the plant

operated reliably until the end of the contract (March 2003) you could spend as much or as little on the plant as required.

• During this time new primary cyclones were installed and under a shared cost basis new spirals were installed.

• New (more expensive) flotation reagents were trialled and under an hourly cost arrangement, were implemented to improve yield.

August 2004

CIM - GCL 2002/03

• Company changes name from CIM Resources to Gloucester Coal Ltd

• GCL owns 90% SCPL and 100% DCPL• Planning for BRN Bowens Road North Mine and Duralie• UK Coal still 97% owners of GCL (share issue)• Capital of $18M for Duralie Mine approved• HWE mining contractor for BRN & Duralie• Barclay Mowlem contractor for the Duralie CHP and

Train Loader and Stratford Train Unloading Facility• Commence marketing of Gloucester Coal products

August 2004

GCL 2003 - 2004

• Corporately this sees the exit of UK Coal from the share register - 97% of shares distributed to institutional investors.

• New members appointed to the Board• Refinancing of $50M (A) in bank debt• $80M in tax credits• Next 5 year plan OK, next decade is on the white board• Planning at this stage is underground at Duralie and the

OC mining of other deposits adjacent to Stratford and around the district.

August 2004

DURALIE MINE & CHP 2003

• GCL brings the Duralie mine and facilities on line for less then $18M

• On the high grading of the deposit with the depressed prices this represented nearly $2/tonne capital

• Facilities are ROM hopper, rotary breaker, train loading bin of 2300t capacity

• Coal railed to Stratford for processing, unloading facility included in the capital.

• Rotary Breaker, ex Endeavour• Train Loading Bin, ex Wallarah

August 2004

DURALIE CHP

• The plant is manned with one operator.• Railing contractor loads and unloads the train.• Over 1.5 million tonnes have been railed.• Mining, railing revolves around the JIT concept• The coal is tipped directly into the ROM hopper, sized by

the rotary breaker and loaded on the train. Mining continues to replenish the Bin while the train is away. System works well with tight supervision from the Resource Superintendent. Sometimes it does go astray.

• Occasionally we have had coal mined,processed and railed to the port within the 24 hour window.

August 2004

SCPL CHPP 2003/4

• HWE continued to operate the CHPP under a cost plus arrangement until March 2004.

• Management transition from HWE to GCL– Workforce transition, certified agreement.– Declared Plant Status (CMRA)

All this organisational change while continuing to operate the plant.

August 2004

SCPL CHPP 2004

• Mining areas of BRN and Duralie vastly different to the Avon. Single seams 10 metres thick v’s multiple seams with interburden and rock.

• Impact upon plant Heavy Media Bath no longer required.• Projected ROM tonnage reduced 2.7Mtpa• Bypass crushing system implemented• Continue processing Codisposal dams Slimes Plant• Smaller workforce pool• Train Loading requirements ie, the trains are always

scheduled on the weekend at night when volunteers cannot be found. Create a roster that covers this.

August 2004

March 2004 Bypass Crushing

• The original concept had evolved on site, nothing revolutionary

• Belt plough on a sloping conveyor required a fair amount of tuning of the plough positions.

• Marketing reconfigured the product stockpile arrangement

• Missing 8kW’s of power (14%) on Product Conveyor

• Changing market, constantly requires the review of the coal quality and whether it is processed for a small % of coking properties or crushed.

August 2004

BRN Seam

• Single seam 10 metres thick, dipping.

August 2004

Avon Seam – Codisposal Area

• Avon Seams Faulted mining area

August 2004

CHPP 2004 DMB Decommissioned

• As the new mining areas are predominantly single thick seams, with any interburden quite soft. The need for the DMB was not required.

• It also simplified the bypass crushing concept.

• Fitted with the strategy of crushing a % of BRN coal, and having a rotary breaker removing all of the rock at Duralie, the high operating cost of the bath could not be justified.

• It was now only removing 20 to 50 tph of reject as against 100 to 150tph previously.

August 2004

CHPP 2004 Slimes Processing

• In processing material from the earlier codisposal dams the material settled with lens of slimes which, typically hold clays and moisture very well.

• In reprocessing this material it has always presented a materialhandling problem to the raw coal, (and still does with a 3 hour delay recently when 1 or 2 buckets were accidentally fed)

• A shredder similar in construction to a sizer wil extrude the material directly into a sump whereby it will be pumped into the plant.

• From there the fines and flotation will process the material.• Expected completion late October early November 2004

August 2004

S CHPP 2004 Slimes Processing

• Shredder

August 2004

S CHPP 2004 Slimes Processing

• Typical maximum product size from shredder

August 2004

SCPL CHPP 2005

• With the improved coal prices (thankyou China) the economic minelimits/life change.

• Increased tonnages being reviewed (like everybody else)• Review process based upon the new ROM feed• Target 500tph with in the limits of the plant or feed quality.• Make basic improvements to the plant facilities• Reward the workforce with improved skills or training that are

beneficial to the company now and the employee for the future• Existing mining contracts are to 2008• Planning past that …