conti, page-8

Debt.

The parent entity issued $2,500,000 of convertible notes on 16 May 2012. In July 2012, $1,250,000 was converted
to equity through the issue of shares. In December 2012, $1,200,000 was repaid in cash. The remaining $50,000
was forgiven

The parent entity issued $1,000,000 of convertible notes on 5 November 2010. The notes are convertible at the
option of the holder based upon the share price at the time of conversion. At inception, the conversion rate was
$0.80. On 5 November 2011 the conversion rate was reset to the higher of $0.60 or the 15 day VWAP prior to the
first anniversary date. On 5 November 2012 the conversion rate will reset to the higher of $0.55 or the 15 day
VWAP prior to the first anniversary date. On 5 November 2013 the conversion rate will reset to the higher of $0.55 or
the 15 day VWAP prior to first anniversary date. Interest is payable bi-annually at a rate of 10% per annum either in
cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. All stated conversion rates have
been adjusted for the 10:1 equity consolidation that occurred on 26 August 2011. The maturity date of the
convertible notes is 5 November 2013

The parent entity issued $100,000 of convertible notes on 26 November 2010. The notes are convertible at the
option of the holder based upon the share price at the time of conversion. Interest is payable bi-annually at a rate of
10% per annum. The maturity date of the convertible note is 26 November 2013.

The parent entity issued $4,900,000 of convertible notes on 26 November 2010. At inception, the conversion rate
was $0.80. On 26 November 2011 the conversion rate was reset to the higher of $0.60 or the 15 day VWAP prior to
the first anniversary date. On 26 November 2012 the conversion rate was reset to the higher of $0.55 or the 15 day
VWAP prior to the first anniversary date. On 26 November 2013 the conversion rate will reset to the higher of $0.55
or the 15 day VWAP prior to first anniversary date. Interest is payable bi-annually at a rate of 10% per annum either
in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. The notes are convertible at
the option of the holder based upon the share price at the time of conversion. Interest is payable annually at a rate
of 10% per annum either in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. All
stated conversion rates have been adjusted for the 10:1 equity consolidation that occurred on 26 August 2011. The
maturity date of the convertible note is 26 November 2013.

The parent entity issued $350,000 of convertible notes on 10 December 2012. The notes are convertible at the
option of the holder at the rate that is the lower of 130% of the 10 day trading VWAP after the execution date or 90%
of the 10 day trading VWAP prior to the conversion date. Interest of 10% was paid upfront through the issue of
939,346 fully paid ordinary shares. The maturity date of the convertible note is 9 May 2013; the note was converted
prior to maturity in January 2013

Loan is interest bearing at 10% per annum and repayable on or before 30 June 2013.
(g) Loan is interest bearing at 10% per annum and repayable on or before 30 June 2013

The parent entity secured an $850,000 note facility on 6 December 2012. The notes are interest bearing at a rate of
5% per annum. During the half year, the Group issued 2,000,000 fully paid ordinary shares with a value of $88,000
and 6,000,000 options exercisable at $0.057 on or before 6 December 2017 with a value of $219,000 to the lender
as consideration for the provision of the facility. The notes are to be repaid in instalments through 30 April 2013,
which is the maturity date.

The working capital facility has been provided by Stonebridge Trading 36 Pty Ltd, a Group with a non-controlling interest in the Group. The facility is interest free with no set term of repayment.

The Group’s initial drawdown of the ABSA Capital project finance facility occurred 12 December 2012, providing the
Group with funding to meet outstanding capital development costs and underground mine equipment costs. The
ABSA Capital facility is denominated in South African Rand and is repayable in escalating amounts during the
second month of each quarter commencing August 2014 and concluding November 2019. The percentage of the
facility to be repaid each calendar year is as follows: 2014 – 2%; 2015 – 11.28%; 2016 – 15.64%; 2017 – 21.32%;
2018 – 24.88%; and 2019 – 24.88%. The facility is secured over all assets of Penumbra Coal Mining (Pty) Ltd
(“Penumbra”), including project bank accounts, trade and other debtors, property and equipment, contractual rights
to licences/permits, and Witbank farms. The facility is guaranteed by Continental Coal Ltd (“CCC”), the Group’s
South African subsidiary Continental Coal Ltd (“CCL”), and Mashala Resources (Pty) Ltd. Additionally, Mashala has
provided its shareholding in Penumbra and its inter-company loan receivable from Penumbra as security for the facility. Half of the drawdown bears interest at JIBAR at drawdown date, the remaining half is fixed with interest rate
swaps as disclosed at note 7(b).

The parent entity issued $10,000,000 of convertible notes on 25 February 2011. The notes are convertible at a fixed
rate of $0.80 at the option of the holder. Interest is payable annually at a rate of 10% per annum either in cash or in shares at a 5% discount to the 30 day VWAP at the option of the holder. The maturity date of the convertible note is 25 February 2014.

Related party borrowings of $25,843,842 relate to ZAR 140,000,000 received from SIOC-cdt, the Group’s South
African BEE partner during the 2012 financial year, and ZAR 75,000,000 transferred from the Group’s inter-Group
loan to SIOC-cdt during the 2012. The loan is interest bearing at the South African Prime Rate, which is 8.50% at 31
December 2012, and repayable (pro-rata with the inter-company loan payable to the parent entity) as and when the
Group has the necessary cash available having regard to the foreseeable cash flow requirements of the Group with
reference to its budgeted expenditure requirements. In effect, while classified as a liability the SIOC financing would be paid pro-rata from distributions to the parent entity (74%) and SIOC (26%) and should not be viewed as a
borrowing in the traditional sense from a third party financier.

In addition to the facilities described above, the Group has secured a $15,000,000 standby facility of which nil was drawn down at 31 December 2012. During the half year, the Group issued 6,741,573 fully paid ordinary shares having a total value of $297,000 to the investor as consideration for the provision of the facility. Subsequent to 31 December 2012, the Group has drawn down $200,000 under the facility.

42,102,894 Ordinary Fully Paid Shares issued
on the conversion of debt and accrued interest
and fees to equity

4,200,000 Ordinary Fully Paid Shares issued to
settle royalty liabilities

VMR has already advanced A$2.0m of the Private Placement as a secured interim loan, which will convert into shares upon shareholders approval at the General Meeting

10,681,818 Ordinary Fully Paid Shares issued
at the election of the convertible note holder to
meet A$500,000 interest payment due on
convertible note facility

Offtake. Conversions. warrants. bank debt. facilities.

You can dress it up in what ever custom you want, but it's all still just debt!

Tomorrow will most likely show low cash again.