ANNUAL REPORTYEAR ENDED 30 JUNE 2012

NuCOAL RESOuRCES LTD

Suite 1, 4 Honeysuckle Drive Newcastle NSW Australia 2300

Phone (02) 4925 8600 Website www.nucoal.com.au ABN 29 060 352 990

For

per

sona

l use

onl

y

www.nucoal.com.auNuCoal Resources Ltd Corporate Directory – 30 June 2012

Share Registry Computershare Investor Services Pty LtdLevel 4, 60 Carrington StreetSydney NSW 2000

Phone 1300 787 272

Auditor Ernst and YoungErnst and Young Centre680 George StreetSydney NSW 2000

Bankers Australia and New Zealand Banking Group Limited490 King Street Newcastle West NSW 2300

Stock exchange listingsNuCoal Resources Ltd shares are listed on the Australian Securities Exchange.

The home exchange is Perth.

Principal registered offi ce in Australia NuCoal Resources LtdSuite 1, 4 Honeysuckle DriveNewcastle NSW Australia 2300

Phone (02) 4925 8600Website www.nucoal.com.auABN 29 060 352 990

DirectorsChairmanGordon Galt B.Eng (Mining, Hons), B.Com, GDip App Fin (Finsia), MAusIMM, MAICD

Managing Director Glen Lewis MAICD

Non-Executive Director James Beecher B.Com, MBA, FCPA, FAICD

Non-Executive Director Michael Chester B.Com, ACA

Non-Executive Director Michael Davies B.A Hons, MBA

Company Secretary Megan Etcell B.Com, CA

Corporate Directory

The Annual General Meeting of NuCoal Resources LtdDate 10am, 27 November 2012

Venue The Westin (Meeting Room IV) 1 Martin Place Sydney NSW 2000

NOTICE

For

per

sona

l use

onl

y

www.nucoal.com.au 3NuCoal Resources Ltd Annual Report Contents – 30 June 2012

The year at a glance

Contents

Chairman’s Letter 4

Directors’ report 6

Corporate 25 Governance Statement

Financial Statements 32

Independent 67 Auditor’s Report to the Members

Shareholder Information 69

For

per

sona

l use

onl

y

NuCoal Resources Ltd Chairman’s Letter – 30 June 20124

A word from our Chairman

Fellow Shareholders On behalf of your Directors, I am pleased to present to you the Annual Report for the 2011/12 Year. The past year has continued to be both exciting and transformational for NuCoal Resources. Throughout this period we have substantially progressed the Doyles Creek project in addition to further securing our project pipeline for the future.

Before looking at progress we would like to acknowledge the support of all our shareholders during the year, and in particular welcome those who participated in our capital raise of $29m in February 2012. The issue was considerably oversubscribed and provided the opportunity for well regarded institutional investors to join the register which will assist with the longer term funding requirements and subsequent development of our projects. Equally, the support from existing shareholders via our Share Purchase Plan (SPP) was most welcome and raised a further $6.3M.

www.nucoal.com.auF

or p

erso

nal u

se o

nly

www.nucoal.com.au NuCoal Resources Ltd Chairman’s Letter – 30 June 2012 (continued) 5

Our flagship project in NuCoal is of course our Doyles Creek Underground Mine and Training School Project in the lower Hunter Valley of NSW. We continue to make excellent progress on the ground, with the completion of the Pre-feasibility Study which showed that a robust project could be developed. We are now moving into a Bankable Feasibility Study and at the same time conducting rigorous Environmental, Cultural and Hydrogeological assessments of the area to facilitate the completion of the Project’s Environmental Impact Statement that will be completed throughout 2013.

The ongoing exploration within the Doyles Creek Project continues to produce outstanding results and demonstrates how important the coal resources in the Project are for all stakeholders. We have completed 51 holes in total and further upgraded our JORC compliant resource to 512 million tonnes with a substantial 119.3 million tonnes being lifted into the Indicated category and a further 23.1Mt now in the Measured category. In addition, we have confirmed a maiden Probable Reserve under the JORC code of 51Mt which provides a tremendous platform for the development of this Project.

The Training Mine part of the Doyles Creek Project was progressed further with the necessary approvals obtained to construct an initial Training Facility on the site to allow the delivery of a number of mining and other related courses. The Training Facility is currently being constructed on site and will be available for course delivery in early 2013.

The Savoy Hill and Dellworth projects have been drilled throughout the year and to date approximately 30 holes across the sites have been completed as well as progressing an Initial Concept Study for the development of the Dellworth Project as a contract opencut supplying the local domestic market. Further adding to the portfolio we have executed the necessary documents to acquire the Plashett tenement from The Bloomfield Group which provides substantial economic and operational synergy to both the Doyles Creek and Savoy Hill projects.

On the people side, the Company is very fortunate to have a very skilled Senior Management Team, led by Managing Director Glen Lewis, that have a proven record of developing coal projects in a timely and cost effective manner. I am happy to welcome the new recruits who have joined the NuCoal team since this time last year and wish to thank all of our staff for their continued efforts throughout the year. You are the firm foundation on which our growing Company is being built.

I would especially like to recognise my fellow Directors and acknowledge their continued guidance and efforts during the year. Together with Management much has been achieved in the corporate area of NuCoal during the year and I look forward to working with our excellent team as we continue to build NuCoal into a dynamic independent coal company over the coming years.

Finally Ladies and Gentlemen, I would like to thank you, our Shareholders, for your continued support along this exciting and rewarding journey. Your willingness to participate in the equity raising early in the year has been much appreciated and will enable us to proceed with all the work we have in hand.

Yours sincerely

Gordon Galt Chairman – NuCoal Resources Ltd

In addition to the Doyles Creek Project, the acquisition of the remaining 51% of Dellworth Pty Ltd which provides a further two exploration tenements within close proximity to the Doyles Creek Project, supports and aligns with our strategy of building an emerging coal mining company based within NSW.

For

per

sona

l use

onl

y

www.nucoal.com.au6

Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of NuCoal Resources Ltd (referred to hereafter as the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2012.

Directors’Report

The report has been divided into four sections as follows:

General Information

Principal activities and review of operations

Remuneration Report

Other Information

A

B

C

D

For

per

sona

l use

onl

y

www.nucoal.com.au NuCoal Resources Ltd Directors’ report – 30 June 2012 (continued) 7

DirectorsThe Directors of the Company at any time during the financial year were, and until the date of this report are:

Non-Executive Chairman

Gordon Galt

Managing Director Glen Lewis

Non-Executive Directors James Beecher Michael Chester Michael Davies

Andrew Poole was a Director from the beginning of the financial year until his resignation on 26 April 2012.

The qualifications, experience, other Directorships and special responsibilities of the Directors in office at the date of this report are:

General Information

Glen Lewis MAICD Managing Director

Glen is a qualified Coal Mine Manager and has worked in the Coal Industry since 1980. Before joining NuCoal, he held the position of General Manager Underground Operations with Xstrata Coal NSW with overall responsibility for 6 operating mines and several projects under construction.

Other current Directorships None

Committees > Member of the Remuneration Committee

Gordon Galt B.Eng (Mining, Hons), B.Com, GDip App Fin (Finsia), MAusIMM, MAICD

Gordon is a mining engineer with extensive coal industry experience. From 1991 Gordon was Operations Manager then General Manager at Ulan Coal in NSW’s Hunter Valley. He became Managing Director at Cumnock Coal in 1996 before taking up roles as Managing Director with Newcrest Mining and in investment banking with ABN AMRO respectively.

Currently Non-executive Director of the following ASX Listed entities: > Aquila Resources Ltd > Discovery Metals Ltd (Chairman) > US Masters Holdings Ltd (Chairman) > Delta SBD Limited (Chairman)

Other current Directorships > Principal and Director of Taurus Funds Management Pty Ltd

Former Directorships in the last three years > Navigator Resources Ltd

Committees > Member of the Remuneration Committee

Non-executive Chairman

A

For

per

sona

l use

onl

y

www.nucoal.com.auNuCoal Resources Ltd Directors’ report – 30 June 2012 (continued)8

Michael Davies B.A (Hons), MBAMichael is a specialist in resource financing, with over 20 years experience in investment banking (Barclays, BZW and ABN AMRO). Michael has extensive commercial experience in the coal industry having been involved in the negotiation of joint venture agreements and acquisition and sale of coal tenements.

Other current Directorships Non-executive Director of the following entities: > US Masters Holding Ltd (ASX Listed) > Principal and Director of Taurus Funds Management Pty Ltd

Committees > Member of the Audit and Compliance Committee > Member of the Health & Safety Committee > Member of the Remuneration Committee

James Beecher B. Com, MBA, FCPA, FAICDJames has over 30 years experience in senior finance, accounting and Company secretarial positions in resources, financial services and service companies. James has held Chief Financial Officer or Finance Director positions within NRMA Limited, Savage Resources Limited and Austen & Butta Limited. James is also Deputy Chair of the Australian Institute of Company Directors’ reporting Committee and was a member of the Urgent Issues Group of the Australian Accounting Standards Board.

Other current Directorships > Non-executive Director of ASX Listed US Masters Holdings Ltd

Former Directorships in the last three years > MIL Resources Ltd

Committees > Chair of the Audit and Compliance Committee > Member of the Health and Safety Committee > Member of the Remuneration Committee

Michael Chester B.Com, ACA Mike has over 26 years experience in the resources sector in the areas of investment banking, mining company research and analysis with companies including Salomon Smith Barney/County Natwest and McIntosh Securities. In addition, Mike has significant expertise in financial modelling, funds management and project analysis.

Other current Directorships Non-executive Director of the following ASX Listed entities: > Black Fire Minerals Limited > Syrah Resources Ltd > Guildford Coal Limited

Former Directorships in the last three years > Carpentaria Exploration Limited

Committees > Chair of the Health and Safety Committee > Member of the Audit and Compliance Committee> Member of the Remuneration Committee

Non-executive Director

Non-executive Director

Non-executive Director

For

per

sona

l use

onl

y

www.nucoal.com.au NuCoal Resources Ltd Directors’ report – 30 June 2012 (continued) 9

A Number of meetings held during the time the Director held office or was a member of the committee during the period.

B Number of meetings attended.

* NuCoal Resources does not have a fully constituted Nominations Committee, however, as and when required the full Board participates as the Nominations Committee in order to fulfil its corporate governance responsibilities.

** Not a member of the relevant committee. The entire Board acts as the Remuneration Committee.

^ Andrew Poole resigned as Non-executive Director effective 26 April 2012.

Board Committee Meetings

Board Meetings*

Audit & Compliance

Health & Safety

Remuneration

Director A B A B A B A B

Gordon Galt 11 10 ** ** 2 2 2 2

Glen Lewis 11 11 ** ** ** ** 2 2

James Beecher 11 11 2 2 1 1 2 2

Michael Chester 11 9 1 1 2 1 2 2

Michael Davies 11 10 - - 1 1 2 1

Andrew Poole^ 9 7 2 1 1 1 1 1

Megan Etcell B.Com, CA

Company Secretary Megan is the Commercial Manager and Company Secretary of the Company.

She holds a Bachelor of Commerce with majors in Financial Accounting, Management Accounting and Finance and is a qualified Chartered Accountant.

Directors’ MeetingsThe following table sets out the number of Board and committee meetings attended by each of the Directors who held office during the financial year:

For

per

sona

l use

onl

y

www.nucoal.com.au10 NuCoal Resources Ltd Directors’ report – Review of Operations

The principal activity of the Group during the year was continued exploration drilling and environmental baseline studies at the Company’s three project areas in the Hunter Valley of NSW and completion of a Pre-feasibility Study for the Doyles Creek Underground Mine and Training School Project.

PROJECT REVIEW, STRATEGIES & FUTURE PROSPECTS

EL Compliance

An independent third party audit of the Doyles Creek Exploration Licence (EL) was conducted in September 2011 by Safety and Forensic Engineering Pty Ltd (SAFE) at the request of the NSW Department of Trade and Investment, Regional Infrastructure and Services as a second stage of a state-wide review of all current EL’s ordered by the NSW Government earlier in the year.

In its final report SAFE stated: “Doyles Creek Mining Pty Ltd was able to demonstrate via comprehensive documentation and site implementation activities that it was meeting the EL Conditions to a satisfactory level, and in some cases over and above the standard required when measured against the protocol requirements and the EL Conditions including Special Conditions”.

Assessment Lease Application

An application for an Assessment Lease (AL) over the area covered by EL7270 was lodged and accepted with Industry & Investment NSW - Mineral Resources in March 2012. The Assessment Lease was applied for as the next stage in the process towards securing an authority to mine in the Doyles Creek area.

Exploration Results

The JORC Resource Statement for the Doyles Creek Project was upgraded in April 2012 by independent consultants Palaris Mining Pty Ltd. The results of the upgrade, as shown in Table 1, identified 23.1Mt reported in the Measured category and 119.3Mt reported in the Indicated category.

The substantial increase of Measured Resources identified in April 2012 further supports the development of the Project with a good spread of resources across all 5 minable coal seams.

Importantly, a substantial increase in Measured and Indicated Resources in the targeted low ash Whynot seam establishes the first 10 years of mine life without the need for a wash plant.

An Initial Ore Reserve for the Doyles Creek Project was announced in September 2012. Refer to ‘Matters subsequent to the end of the financial year’ on page 14 for further information.

Principal activities and review of operations

B

Doyles Creek Underground Mine and Training School Project (Doyles Creek Project)

For

per

sona

l use

onl

y

www.nucoal.com.au 11NuCoal Resources Ltd Directors’ report – Review of Operations (continued)

External Relations

In November 2011, the NSW Minister for Resources and Energy, The Hon Chris Hartcher (‘the Minister’), introduced a resolution into the Parliament to formally refer the awarding of EL 7270 by the former Labor Minister for Mineral Resources, Mr Macdonald, to the Independent Commission Against Corruption (‘ICAC’).

The Company has fully cooperated with, and assisted ICAC as requested.

It is in the interests of the Doyles Creek Project and our shareholders that all relevant facts are brought to light and thoroughly investigated as quickly as possible.

ICAC announced the final timetable for public hearings in September 2012. Refer to ‘Matters subsequent to the end of the financial year’ on page 14 for further information.

Doyles Creek Training School

Development application approval was received from Singleton Council for Stage 1 of the proposed training facilities at The Doyles Creek Underground Mine Training School site in May 2012. Delivery of the first training, Certificate IV course in Mining, will be offered in early 2013.

Planning for Stage 2 of the Training Facilities is well underway and a Development Application has been submitted to Singleton Council for a simulated underground mine training facility. The facility will provide a simulated underground environment to allow training to be delivered prior to the underground mine being constructed to address the critical skills shortage in the Mining Industry.

Earthworks close to the facility will provide opportunity for machinery operation courses. This facility will allow delivery of a hands-on Certificate II RII09 Underground Coal Mining that provides valuable experience in the early stages of training.

Doyles Creek Community Foundation

Although commercial mining operations have not yet begun, Doyles Creek Mining Pty Ltd (Doyles Creek) has provided funding in the form of an annual Community Grant to assist community based not for profit entities with the services they provide to the community.

In February 2012, four recipients were awarded $10,000 each as part of the 2012 Community Grants Program.

> The Hunter Youth Mentor Collaborative > The Tom Farrell Institute, University of Newcastle > The Hunter Melanoma Foundation > The Jerrys Plains School of Arts Hall Inc

Exploration Results

SeamMeasured Resources

(Mt)

Ash % (ad)

Indicated Resources

(Mt)

Ash % (ad)

Inferred Resources

(Mt)

Ash % (ad)

Total Resources

(Mt)

Av Seam thickness

(m)Product

West Borehole

9.4 33.5 23.5 34.2 19 34.9 51.9 2.35 Thermal

Whybrow 0.0 - 13.9 22.6 93.2 23.3 107.1 3.5Thermal

/ SS

Redbank Creek

0.0 - 19.9 36.3 89 36.4 108.9 5.36 Thermal

Whynot 13.7 8.3 41.6 7.3 29.5 8.0 84.8 2.45 SS

Woodlands Hill

0.0 - 20.4 45.7 138.8 47.0 159.2 3.65 SS

TOTAL 23.1 119.3 369.5 511.9

Table 1 - EL 7270, Doyles Creek Measured, Indicated and Inferred Resources

For

per

sona

l use

onl

y

12 www.nucoal.com.auNuCoal Resources Ltd Directors’ report – Review of Operations (continued)

Savoy Hill ProjectDrilling commenced on EL 6812 during September 2011. To date a total of 11 holes have been drilled.

Dellworth ProjectThe exploration program for EL 6594 commenced in February 2012. A total of 12 drill holes have been completed and logged and initial results are yet to be received.

Corporate

Acquisition of Dellworth Pty Ltd

On 20 April 2011, the Company acquired a 49% stake in Dellworth Pty Ltd (Dellworth), owner of EL 6812 and EL 6594, for A$1,420,000 (A$1,102,500 scrip plus cash of A$318,000 for repayment of shareholder loans). On 14 September 2011, the Company announced that regulatory approval had been obtained to acquire the remaining 51% of Dellworth for a nominated value of A$1,147,500 in NuCoal scrip. The NSW Minister for Resources and Energy, the Hon. Chris Hartcher, granted approval for the Company to acquire the remaining 51% of issued shares in Dellworth in September 2011. A performance payment of A$1,000,000 (cash or scrip) is payable to the vendors of Dellworth upon successful verification of coal targets.

Capital Raising

On 2 March 2012 the Company successfully completed a $29 million placement to fund the progression of exploration and development of the Group’s new and existing projects. The Company issued 96.6 million new fully paid ordinary shares to a number of existing and new institutional and sophisticated investors at A$0.30 per share.

On 18 April 2012 the Company successfully completed its Share Purchase Plan (SPP) raising $6.3 million. The SPP followed the institutional placement of 2 March 2012 and a total of 21,113,185 new shares at an issue price of $0.30 per share were issued as part of the SPP. Cash raised through the placement and SPP totalled $35.3 million. These funds have placed the Company in a strong position to continue to progress its exploration and development plans across its portfolio of tenements.

Bayswater Power Station

Ravensworth

Lake Liddell

Plashett Dam

Jerrys Plains

Hunter River

New England

Highway

EL 6594 Dellworth

EL 7270 Doyles Creek

EL 6812Savoy Hill

EL 6705Plashett

TO BE ACquIRED AS PART OF THE PLASHETT ACquISITION

For

per

sona

l use

onl

y

www.nucoal.com.au 13NuCoal Resources Ltd Directors’ report – Review of Operations (continued)Acquisition of Plashett Exploration Licence (EL 6705)

On 2 May 2012 the Company announced the execution of a Share Sale & Purchase Agreement (SSPA) for the acquisition of Plashett Exploration Licence 6705 (Plashett EL) from Big Ben Holdings Pty Ltd (BBH), part of The Bloomfield Group.

The Plashett EL is strategically located, with the southern boundary of the EL being located approximately 500 metres north of the Doyles Creek Underground Mine and Training School Project, and the northern boundary being located approximately 1,800 metres from NuCoal’s Savoy Hill Project (EL 6812).

The SSPA allows for the Company to acquire the Plashett coal assets from BBH via a staged, all-scrip transaction, based on verification of coal targets as follows:

> An initial share issue equivalent to $10.5 million being 35,000,000 ordinary NuCoal shares to BBH on completion;

> The second share issue equivalent to $29.25 million calculated on the 20 day VWAP (less exploration expenses of approximately $2 million) when a 100 Mt JORC Compliant Inferred Resource is confirmed; and

> The third share issue equivalent to $36.25 million calculated on the 20 day VWAP (less exploration and analysis expenses of approximately $3 million) upon achieving a total of 200 Mt JORC Compliant Inferred Resource in accordance with the JORC code.

Completion of the transaction is anticipated to occur by December 2012, subject to conditions precedent being achieved, and once the acquisition is finalised, the Managing Director of BBH and The Bloomfield Group, Mr John Richards, will be invited to join the Board of NuCoal as a Non-Executive Director. In addition to being a director of the privately-owned Bloomfield Group, Mr Richards is a director of Port Waratah Coal Services.

Doyles Creek Joint Venture Formation

On 28 May 2012 the Company announced the execution of a Heads of Agreement with Mitsui Matsushima International Pty Ltd to jointly develop the Company’s Doyles Creek Underground Mine and Training School Project (100%) in the NSW Hunter Valley.

Key terms of the Heads of Agreement are:

> MMI has the right to earn up to a 10% equity in the Project by spending up to A$40m on the Doyles Creek Project;

> Following completion of a Bankable Feasibility Study, MMI will have an option to purchase an additional interest of up to 10% in the Project at a pre-determined valuation which is dependent on the level of end-user offtake commitment made at the time of exercise of the option; and

> MMI will be entitled to exclusively introduce the coal from the Project to customers in Japan.

Finalisation of contractual documents occurred in September 2012, and there is a success fee in respect of this transaction. Refer to ‘Matters subsequent to the end of the financial year’ on page 14 for further information.

For

per

sona

l use

onl

y

14 www.nucoal.com.auNuCoal Resources Ltd Directors’ report – Review of Operations (continued)

Results of OperationsThe Group recorded a loss from ordinary activities for the year ended 30 June 2012 of $4.2 million compared to a loss of $3.4 million in 2011.

Net cash inflows from operating, investing and financing activities were $5.5 million compared to net cash inflows of $18.8 million in 2011.

The net asset position of the Group at 30 June 2012 was $69.4 million (30 June 2011: $38.7 million).

Dividends – NuCoal Resources Ltd No dividends were paid to members during the financial year ended 30 June 2012 (2011: nil). No dividend is recommended in respect of the financial year ended 30 June 2012.

Significant changes in the state of affairsOther than those matters listed in this report, there have been no significant changes in the state of affairs of the Group during the period.

Matters subsequent to the end of the financial yearDoyles Creek Pre-Feasibility Study

On 2 July 2012 NuCoal announced the outcomes of the Doyles Creek Underground Coal Mine Pre-Feasibility Study prepared by independent consultants Palaris Mining Pty Ltd which confirmed its technical viability and robust economics. The Project is projected to be in the lowest quartile of operating costs for seaborne metallurgical coal projects and forecast to generate a substantial Net Present Value (after tax) of $523 million at a 10% discount rate.

ICAC Update

On 7 August 2012 ICAC announced the timing of public hearings as part of its investigation into the awarding of specific exploration licences in NSW, including EL 7270 held by the Company’s subsidiary Doyles Creek Mining Pty Ltd.

In relation to the forthcoming hearings the Company will continue to assist ICAC as required. ICAC announced in September 2012 that the public hearing specific to EL 7270 will now commence in March 2013.

Initial Ore Reserve Statement

On 10 September 2012, the Company announced an initial Probable Ore Reserve of 50.9Mt across two of the five identified target seams for the Doyles Creek Project. Further work will be carried out to convert an increasing proportion of the remainder of the 512Mt of measured, indicated and inferred resources to progressively upgrade ore reserves.

Doyles Creek Joint Venture Contract Finalisation

Finalisation of definitive contractual documents with MMI for the Doyles Creek Project was announced on 17 September 2012. Completion of the transaction is subject to certain conditions being achieved, including relevant regulatory approvals, and there is a success fee in respect of this transaction.

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Consolidated Group, the results of those operations or the state of affairs of the Group in the future financial years.

Likely developments and expected results of operationsOther than as referred to in this report, further information as to likely developments in the operations of the Group and the expected results of those operations would, in the opinion of the Directors, be speculative.

For

per

sona

l use

onl

y

www.nucoal.com.au NuCoal Resources Ltd Directors’ report – Remuneration Report 15

Remuneration Report (Audited)

C

The audited remuneration report for the year ended 30 June 2012 outlines the remuneration arrangements of the Company in accordance with Section 300A of the Corporations Act 2001 and its regulations.

This information has been audited as required by section 308(3C) of the Corporations Act 2001.

The remuneration report details the remuneration arrangements for the Company’s key management personnel (KMP) during the financial year ended 30 June 2012. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company and other designated senior executives, and includes the five highest remunerated executives of the Company.

The remuneration report is set out under the following main headings:

A. Role of the remuneration committee

B. Principles used to determine the nature and amount of remuneration

C. Details of remuneration

D. Service agreements

E. Share based compensation

For

per

sona

l use

onl

y

www.nucoal.com.auNuCoal Resources Ltd Directors’ report – Remuneration Report (continued)16

B. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATIONRemuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and Executives. In accordance with the Company’s Remuneration Policy, remuneration packages include a balance between fixed and incentive pay, reflecting short and long term performance objectives which align with the Company’s circumstances and objectives.

The Board ensures that executive reward satisfies the following key criteria for good reward governance practices: > competitiveness and reasonableness; > acceptability to shareholders; > performance linkage / alignment of executive

compensation;> transparency; and > capital management.

The Board has established a Remuneration Committee, currently sitting as the full Board, which provides advice on remuneration and incentive policies and practices. The Committee also provides specific recommendations on remuneration packages and other terms of employment for executive Directors, Non-executive Directors and other senior Executives. The Corporate Governance Statement at page 25 provides further information on the role of this committee. Where necessary the Board will obtain independent advice on the appropriateness of remuneration packages.

Non-executive Remuneration

Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. The Chairman’s fees are determined independently to the fees of Non-executive Directors based on comparative roles in the external market. Fees paid to Non-executive Directors are reviewed annually by the Remuneration Committee.

Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $350,000 per annum and was approved by shareholders at the General Meeting on 28 May 2011.

Directors’ base fees during the year were $43,600 per annum, with the Chairman receiving twice the base fee, $87,200 per annum. This base fee covered all main Board activities and membership of any Board Committee.

Effective 1 July 2012, Directors are now entitled to membership fees ($3,500 per Membership held, $7,000 for Chairman) in addition to the base fee.

Non-executive Directors are eligible to receive performance related compensation via participation in the Employee Share Plan (ESP). Participation by Directors in the ESP is conditional on shareholder approval as per ASX listing rule 10.14.

A. ROLE OF THE REMUNERATION COMMITTEEThe remuneration committee is primarily responsible for making recommendations to the Board on:

> Non-executive Director fees;

> Remuneration levels of executive Directors and other key management personnel;

> The over-arching executive remuneration framework and operation of the incentive plan; and

> Key performance indicators and performance hurdles for the executive team.

The objective is to ensure that the remuneration policies and structures are fair and competitive and aligned with the long-term interest of the Company. In doing this, the remuneration committee seeks advice from independent remuneration consultants where applicable.

The Corporate Governance Statement on page 27 provides further information on the role of this committee.

For

per

sona

l use

onl

y

www.nucoal.com.au NuCoal Resources Ltd Directors’ report – Remuneration Report (continued) 17

Executive Remuneration

The executive pay and reward framework has three components: i Base pay and benefits, including superannuation ii Short-term performance incentives iii Long-term incentives through

participation in the Employee Share Plan (ESP)

The combination of these comprises an executive’s total remuneration.

i Base Pay Base pay is structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits at the executive’s discretion and includes contributions to employee superannuation funds.

Executive base pay is reviewed annually to ensure it is competitive with the market, it is also reviewed on promotion. Executive contracts do not identify guaranteed increases in base pay.

ii Short Term Incentives Each year job goals are set for the Managing Director and senior Executives. These job goals are focused on the growth of the business and include business performance and technical measures. Bonuses are awarded annually upon successful achievement of job goals.

The Remuneration Committee recommends the bonus incentive to be paid to the Managing Director for approval by the Board, and the Managing Director recommends the bonus incentive to be paid for other senior executives for approval by the Remuneration Committee.

iii Long Term Incentives Long term incentives are provided to eligible employees via participation in the Employee Share Plan. Shares issued via the ESP are directly related to the performance of the Company as they are conditional on the Company’s share price reaching a set value for a designated period of time.

Use of Remuneration Consultants

The Group did not engage independent remuneration consultants during the financial year ended 30 June 2012.

Remuneration approval at FY2011 Annual General

The FY2011 remuneration report received positive shareholder approval at the FY2011 Annual General Meeting with a vote of 97% in favour.

C. DETAILS OF REMUNERATIONDetails of the remuneration paid to Directors, the key management personnel of the Company (as defined in AASB 124 Related Party Disclosures) and specified executives are set out in the following tables.

The key management personnel of the Group are the Directors of NuCoal Resources Ltd and those executives that report directly to the Managing Director, being:

> Gary Cambourn General Manager Operations

> Megan Etcell Commercial Manager and Company Secretary

> Maree Roberts Director, Doyles Creek Training School

> Kenneth Barry^ Safety, Training and Compliance Manager (until 23 April 2012)

^ The Group underwent a corporate restructure in

April 2012. As a result of the restructure, the role of Safety, Training and Compliance Manager now reports to the General Manager Operations. There have been no changes since the end of the reporting period.

For

per

sona

l use

onl

y

18 www.nucoal.com.auNuCoal Resources Ltd Directors’ report – Remuneration Report (continued)

2012 Short-term benefitsPost-

employment benefits

Other long term benefits

Share-based payment

Non-executive Directors

Cash Salary & Fees

$

Cash Bonus $

Super-annuation

$

Long Service Leave

$

Shares (a) $

Total $

Gordon Galt 80,000 - 7,200 - - 87,200

James Beecher 40,000 - 3,600 - - 43,600

Michael Chester 40,000 - 3,600 - - 43,600

Michael Davies 40,000 - 3,600 - - 43,600

Andrew Poole* 33,333 - 3,000 - - 36,333

Sub-total Non-executive Directors

233,333 - 21,000 - - 254,333

Executive Directors

Cash Salary & Fees

$

Cash Bonus $

Super-annuation

$

Long Service Leave

$

Shares (a) $

Total $

Glen Lewis 246,233 - 22,161 22,504 - 290,898

Other key management personnel (Group)

Cash Salary & Fees

$

Cash Bonus $

Super-annuation

$

Long Service Leave

$

Shares (a) $

Total $

Gary Cambourn 243,441 28,128 50,000 26,873 31,878 380,320

Megan Etcell 153,669 19,404 15,577 16,607 31,878 237,135

Maree Roberts# 158,975 8,933 26,012 7,946 - 201,866

Kenneth Barry^ 156,595 27,077 16,530 19,353 31,878 251,433

Total Key Management Compensation (Group)

1,192,246 83,542 151,280 93,283 95,634 1,615,985

(a) No shares were granted during the financial year and no shares vested or were provided for during the year as a result of vesting conditions being met. The shares have not been paid in cash. The value of the shares has been calculated as set out in section (e) – ‘Share based compensation’ on page 20. The shares will only have a value if the Company’s share price exceeds 60c, 80c and $1.00.

* Andrew Poole resigned as Non-executive Director effective 26 April 2012.# Maree Roberts commenced on 29 August 2011. ^ Ceased being a member of key management personnel effective 23 April 2012 as a result of corporate restructure.

Key management personnel remuneration The following tables show details of the remuneration received by the Directors and the key management personnel of the group for the current and previous financial years.

For

per

sona

l use

onl

y

www.nucoal.com.au 19NuCoal Resources Ltd Directors’ report – Remuneration Report (continued)

2011 Short-term benefitsPost-

employment benefits

Other long term benefits

Share-based payment

Non-executive Directors

Cash Salary & Fees

$

Cash Bonus $

Super-annuation

$

Long Service Leave

$

Shares (a) $

Total $

Gordon Galt 80,000 - 7,200 - - 87,200

James Beecher 40,000 - 3,600 - - 43,600

Michael Chester 40,000 - 3,600 - - 43,600

Michael Davies 40,000 - 3,600 - - 43,600

Andrew Poole 40,000 - 3,600 - - 43,600

Sub-total Non-executive Directors

240,000 21,600 - - 261,600

Executive Directors

Cash Salary & Fees

$

Cash Bonus $

Super-annuation

$

Long Service Leave

$

Shares (a) $

Total $

Glen Lewis 369,824 - 25,000 23,164 - 417,988

Other key management personnel (Group)

Cash Salary & Fees

$

Cash Bonus $

Super-annuation

$

Long Service Leave

$

Shares (a) $

Total $

Gary Cambourn 210,988 11,800 41,355 10,864 213,898 488,905

Megan Etcell 123,853 10,192 12,064 5,708 213,898 365,715

Kenneth Barry 180,550 23,119 18,330 9,926 213,898 445,823

Total Key Management Compensation (Group)

1,125,215 45,111 118,349 49,662 641,694 1,980,031

(a) The shares have not been paid in cash. The value of the shares has been calculated as set out in section (e) – ‘Share based compensation’ on page 20. The shares will only have a value if the Company’s share price exceeds 60c, 80c and $1.00.

No termination benefits were paid to Directors or key management personnel during the year (2011: nil).

Key management personnel remuneration (continued)

For

per

sona

l use

onl

y

20 www.nucoal.com.auNuCoal Resources Ltd Directors’ report – Remuneration Report (continued)

Name Term of agreement

Glen LewisOn-going commencing 7 September 2009

Gary Cambourn

On-going commencing 1 June 2010

Megan Etcell

On-going commencing 17 May 2010

Maree Roberts

On-going commencing 29 August 2011

Kenneth Barry

On-going commencing 15 February 2010

E. SHARE BASED COMPENSATION

The Employee Share Plan (ESP) is the Company’s long-term incentive (LTI) scheme for Directors’ (Executive and Non-executive), selected key executives and other persons as nominated by the Board.

The Managing Director recommends eligible employees who are entitled to participate in the scheme and seeks approval from the Board.

Under the ESP, eligible participants may be granted shares on terms and conditions determined by the Board and as documented in the Share Plan Rules and Trust Deed. Shares granted to participants are to be held in Trust until vesting conditions attached to the shares are satisfied. When vesting conditions are satisfied, the shares are exercised and delivered from the Trust to the eligible participant at nil cost. Shares granted under the ESP do not have an expiry date.

Grant Date Vesting conditions* Exercise price Fair value per share

26 October 2010 0.60 cents $ 0.00 $ 0.29

26 October 2010 0.80 cents $ 0.00 $ 0.22

26 October 2010 1.00 dollar $ 0.00 $ 0.22

28 May 2010 0.60 cents $ 0.00 $ 0.19

28 May 2010 0.80 cents $ 0.00 $ 0.17

28 May 2010 1.00 dollar $ 0.00 $ 0.16

* Shares will be issued to participants from the Share Plan Trustee when vesting conditions are met. Shares will vest when the share price exceeds the nominated value for more than ten non consecutive days of trading.

The terms and conditions of shares granted affecting remuneration in the current or a future reporting period are as follows:

D. SERVICE AGREEMENTS

On appointment to the Board, all Non-executive Directors enter into a service agreement with the Company in the form of a letter of appointment.

Remuneration and other terms of employment for the Managing Director and other key management personnel are also formalised in service agreements. Senior executive agreements provide for the provision of performance-related cash bonuses, and participation, when eligible, in the NuCoal Resources Employee Share Plan. Other major provisions of the agreements relating to remuneration are set out below.

All contracts with executives may be terminated by either providing one month’s written notice, or immediately in the case of gross misconduct.

For

per

sona

l use

onl

y

www.nucoal.com.au 21NuCoal Resources Ltd Directors’ report – Remuneration Report (continued)

2011

Directors of NuCoal Resources Ltd

Number of shares granted

Value of shares at grant date*

Number of shares vested

Number of shares issued to

eligible participant

Gordon Galt - - - -

Glen Lewis - - - -

James Beecher - - - -

Michael Chester - - - -

Michael Davies - - - -

Andrew Poole - - - -

Other key management personnel of the Group

Number of shares granted

Value of shares at grant date*

Number of shares vested

Number of shares issued to

eligible participant

Megan Etcell 1,000,000 245,776 - -

Gary Cambourn 1,000,000 245,776 - -

Kenneth Barry 1,000,000 245,776 - -

* The value at grant date of options granted during the year as part of remuneration has been calculated in accordance with AASB 2 Share-Based Payments.

Grant Date Expiry Date* Exercise priceFair value

of shares on grant date

Estimated Volatility

Risk free interest rate

Dividend yield

26 October 2010 n/a $0.00 $0.2910 70% 5.10% 0.00%

26 October 2010 n/a $0.00 $0.2231 70% 5.10% 0.00%

26 October 2010 n/a $0.00 $0.2231 70% 5.10% 0.00%

* Shares issued under the Employee Share Plan during the year have no set expiry date. The fair value of the shares has been calculated based on the expectation that key management personnel will remain with the Group for a period of at least five years.

The assessed fair value of shares at grant date is calculated using a binomial option pricing model, with the fair value of shares being allocated in the period in which the shares are granted. The binomial option pricing model takes into account a number of factors including, the exercise price, the term of the share, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the share, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the share.

The table below identifies the factors used by the Group in calculating the fair value of shares granted in 2011.

2012

No shares were granted during the financial year and no shares vested or were provided for during the year as a result of vesting conditions being met.

2011

The number of shares granted and vested, and shares provided during FY2011 as a result of vesting conditions being met are detailed in the table below.

For

per

sona

l use

onl

y

22 www.nucoal.com.auNuCoal Resources Ltd Directors’ report – Remuneration Report (continued)

Namei. Value at grant

date $ii. Value at

exercise date $iii. Value at lapse date $

Gordon Galt - - -

Glen Lewis - - -

James Beecher - - -

Michael Chester - - -

Michael Davies - - -

Andrew Poole - - -

Megan Etcell 245,776 - -

Gary Cambourn 245,776 - -

Kenneth Barry 245,776 - -

Total* 737,328 - -

The following table summarises the value of shares granted, exercised or lapsed during 2011. i The value at grant date

calculated in accordance with AASB2 Share Based Payments of shares granted during the year as part of remuneration.

ii The value at exercise date of shares that were granted as part of remuneration and were exercised during 2011.

iii The value at lapse date of shares that were granted as part of remuneration and that lapsed during 2011.

* The shares have not been paid in cash. The value of the shares has been calculated as set out in section (e) – ‘Share based compensation’ on page 20. The shares will only have a value if the Company’s share price exceeds 60c, 80c and $1.00.

The following information does not form part of the remuneration report.

Insurance of Officers

The Company indemnifies each of its Directors, Officers and Company Secretary. The Company indemnifies each Director or Officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the liability arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and applications for such proceedings.

The Company must use its best endeavours to insure a Director or Officer against liability, which does not arise out of a conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its best endeavours to insure a Director or Officer against liability for costs and expenses incurred in defending proceedings whether civil or criminal.

The Consolidated Group has paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses insurance contracts for current and former Directors, Executive Officers and Secretaries. The Directors have not included details of the premium paid in respect of the Directors’ and Officers’ liability and legal expenses’ insurance contracts; as such disclosure is prohibited under the terms of the contract.

Environmental regulation

The Company’s operations are subject to significant environmental regulations under both Commonwealth and State legislation in relation to its activities. The Board monitors compliance with environmental regulations and the Directors are not aware of any significant breaches of these regulations during the period covered by this report.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. The Company was not a party to any such proceedings during the year.

D. OTHER INFORMATION

For

per

sona

l use

onl

y

www.nucoal.com.au 23NuCoal Resources Ltd Directors’ report – 30 June 2012 (continued)

Non-audit services

Details of the fees and charges for the provision of audit and non-audit services provided by Ernst & Young are included in Note 24 of the Financial Statements. The Audit Committee has developed a policy to ensure that the independence of the Company’s auditor is not impaired by providing non audit services to the Company so that both the Company and the external auditor can comply with relevant auditor independence rules which apply in the various jurisdictions in which the Group operates.

No Officer of the Group who held office during the financial year, and no current Officer, was formerly a partner of Ernst & Young.

The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are satisfied that the services did not compromise the external auditor’s independence for the following reasons:

> all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Company to ensure they do not impact the integrity and objectivity of the auditor; and

> non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

The information in this report that relates to exploration results and mineral resources 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 in this report disclosed by the Company, of the matters based on his information, in the form and context in which it appears.

The Underground Reserves estimate is based on information compiled by Mr Michael Barker, who is a Member of the Australasian Institute of Mining and Metallurgy (112634). Mr Barker is General Manager, Underground Services for 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. Mr Barker has over 16 years’ experience in the estimation, assessment, evaluation and economic extraction of Coal Reserves. He consents to the inclusion of this Reserve Estimate in reports disclosed by the Company in the form in which it appears.

This estimation of Underground Coal Reserves has been undertaken by a team of people in the Palaris Mining office and in co-operation with technical staff employed by NuCoal Resources Ltd. Mr Barker is satisfied that the work of the other contributors is acceptable, and Mr Barker accepts responsibility and accountability for the Underground Coal Reserve estimate documentation under the Code.

This Directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001.

Rounding of amounts

The Company is of a kind referred to in ASIC Class Order 98/100 and, in accordance with that Class Order, amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars, unless otherwise stated.

Auditor’s independence declaration

The auditor’s independence declaration, as required under section 307C of the Corporations Act 2001, for the year ended 30 June 2012 has been received and can be found on page 24 of this combined report.

On behalf of the Directors,

Gordon Galt Chairman – NuCoal Resources Ltd Sydney, 28 September 2012

For

per

sona

l use

onl

y

24 www.nucoal.com.auNuCoal Resources Ltd Directors’ report – 30 June 2012 (continued)F

or p

erso

nal u

se o

nly

www.nucoal.com.au 25NuCoal Resources Ltd Corporate Governance Statement

The Board has delegated responsibility for the day to day operational, corporate and administrative activities of the Group to the Managing Director and executive management.

The Board is responsible for reviewing the role and responsibilities of management through various committees it has developed.

Directors are entitled to request additional information, including external advice, at any time to enable them to discharge their duties effectively. Review of the Board Charter occurs annually.

The Board of Directors of NuCoal Resources Ltd is responsible for establishing the corporate governance framework of the Company, having regard to the ASX Corporate Governance Council (ASX Recommendations) published guidelines as well as its corporate governance principles and recommendations. Various corporate governance practices are discussed within this statement. For further information on corporate governance policies adopted by the Company, refer to our website: www.nucoal.com.au.

In accordance with Listing Rule 4.10, this Corporate Governance Statement discloses the extent to which the Company has followed the ASX Recommendations. Where a Recommendation has not been followed, the Company will disclose the reasons why the Recommendation has not been followed. Unless otherwise stated, the Company has adhered to the ASX Recommendations for the year to 30 June 2012.

This Statement applies to NuCoal Resources Ltd (the Company) and all entities under its control, collectively referred to as the Group.

Board responsibilities

The Board has adopted a formal Board Charter, which sets out the functions reserved to the Board.

The Board’s primary role is the protection and enhancement of long-term shareholder value. It guides and monitors the business and affairs of the Group on behalf of the shareholders by whom they are elected and to whom they are accountable.

To fulfil this role, the Board, as set out in the Board Charter, is responsible for the overall corporate governance of the Group including:> approving the Company’s Corporate Strategy and monitoring its

implementation;> approving the appointment of the Managing Director;> reviewing and monitoring systems of risk management and internal

control, and ethical and legal compliance;> approving major capital expenditure, acquisitions and divestitures; and> monitoring and reviewing policies and processes aimed at ensuring

the integrity of financial and other reporting.

Corporate Governance Statement

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

The Board is committed to best practice corporate governance principles appropriate for the size, type and activity of NuCoal.

For

per

sona

l use

onl

y

26 www.nucoal.com.auNuCoal Resources Ltd Corporate Governance Statement (continued)

The performance evaluation process for the Managing Director and Senior Executives takes the form of an individual assessment by the Remuneration Committee in the case of the Managing Director, and in the case of senior executives, by the Managing Director.

Performance outcomes are linked to short-term incentives and recommendations are made by the Remuneration Committee to the Board for approval.

Annual performance assessments occur in January each year.

The size and composition of the Board is determined in accordance with the Company’s Constitution.

The formal Board Charter requires that the Board comprise Directors with a broad range of skills, expertise and experience from a diverse range of backgrounds. Board composition is reviewed annually to consider whether it has the appropriate mix of Directors with the expertise and experience suitable for the purpose of fulfilling its collective responsibilities on behalf of shareholders. Where a vacancy exists, for whatever reason, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board may select candidates with the relevant qualifications, skills and experience.

The Board currently comprises four Non-executive Directors, including the Chairman, and one Executive Director, being the Managing Director.

Information about the skills, experience and expertise and period in office of each Director who served during the year ended 30 June 2012 is set out in the Directors’ report on pages 7 to 9.

Independence of Directors

The Board has adopted the definition of independence as set out in the ASX Principles and Recommendations. Having regard to the definition, the Board considers a Director to be independent if he or she is not a member of management and is free of any interest and any business or other relationship which would, or could reasonably be perceived to, materially interfere with the independent exercise of their judgement. The Board assesses the materiality of any given relationship that may affect independence on a case by case basis. Each Non-executive Director is required to regularly disclose to the Board all information that may be relevant to this

assessment, including their interest in contracts and other Directorships and offices held.

The Company has noted ASX Recommendation 2.1 that the Board consist of a majority of independent Directors, and that it has not followed this recommendation during the 2011/2012 year.

Of the four Directors, James Beecher and Michael Chester are considered by the Board to constitute Independent Directors. During the 2011/2012 year neither of the independent Directors had any interest or relationship that could, or could reasonably be perceived to, materially interfere with the independent exercise of their judgement. Gordon Galt (Chairman) and Michael Davies are Executive Directors of one of the Company’s major shareholders, Taurus Funds Management, and as a result of this relationship are not considered to be independent by the Board.

Notwithstanding the Council’s recommendation that the majority of the Board should be independent, the Board is of the opinion that the objectives and current strategy of the Group are best served and achieved by a Board comprised of a majority of persons associated with the Group since its inception, irrespective of their degree of independence. In addition, the Board considers the expertise and skill of Directors to be paramount to the Group’s success and believes that the current Board composition provides a range of skills and expertise to properly fulfill its responsibilities.

The Board also acknowledges that all Directors, whether independent or not, should bring an independent judgement to bear on Board decisions. To facilitate this, each Director has access in appropriate circumstances to independent professional advice at the Company’s expense.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Performance Evaluation

A formal performance evaluation of the Managing Director and senior executives occurs annually.

For

per

sona

l use

onl

y

www.nucoal.com.au 27NuCoal Resources Ltd Corporate Governance Statement (continued)Standing Board Committees

To assist in the discharge of its duties, the Board has established the following standing committees (“Committees”):

> Remuneration Committee (ASX Recommendation 8.1); > Audit and Compliance Committee (ASX Recommendation 4.1); and > Health and Safety Committee.

The Company does not have a fully constituted Nominations Committee, however, as and when required the full Board participates as the Nominations Committee in order to fulfill its corporate governance responsibilities in regard to:

> Board appointments and performance; > Directors’ induction program; > Committee membership; and > Other relevant matters.

Further information on each Committee is set out below and elsewhere in this Statement. Additional details in relation to the members of each Committee, as well as the number of times each Committee met during the 2011/2012 year and each member’s attendance at those meetings are set out in page 9 of the Directors’ report.

Remuneration Committee

The entire Board acts as the Remuneration Committee. The role, responsibilities, composition, structure and membership requirements of the Remuneration Committee are set out in the Remuneration Committee Charter which can be found in the ‘Company Information’ section on the Company’s website (ASX Recommendation 8.1).

Nomination Committee

The Directors believe that the size of the Board does not currently justify the establishment of a separate Nomination Committee of the Board as recommended by ASX Recommendation 2.4.

All matters which might otherwise be dealt with by a Nomination Committee are considered at meetings of the full Board. The Board will continue to review the necessity to establish a separate Nomination Committee.

Appointment of Directors

The Nomination Committee, currently serving as the whole Board, makes recommendations regarding the criteria for Board membership, processes for the review of the performance of individual Directors and the Board as a whole, and Board succession plans.

All Directors, other than the Managing Director, are subject to re-election in accordance with the Company’s Constitution and the ASX Listing Rules.

Role of the Chairman and the Managing Director

The roles of the Chairman and Managing Director are exercised by separate individuals (ASX Recommendation 2.3).

The Chairman, Gordon Galt, is responsible for leading the Board. His role includes ensuring the efficient organisation of the Board’s functions, facilitating effective contribution by all Directors and promotion of constructive relations between the Board and management. The Chairman’s role also includes ensuring that the Board is provided with all information related to the Company’s operation and strategies to assist in the discharge of the Board’s duties, reviewing corporate governance matters with the Company Secretary and reporting on those matters to the Board.

The Company has noted ASX Recommendation 2.2 that the Chairperson be an independent Director, and that it has not followed this recommendation during the 2011/2012 year. Although the Chairman is not considered to be independent, by virtue of his Directorship of Taurus Funds Management, the Board believes that he is the most appropriate person for the role, given his extensive business experience, particularly in the areas of coal mining and exploration.

The Managing Director, Glen Lewis, is responsible to the Board for the discharge of the management function and the implementation of corporate objectives determined by the Board.

For

per

sona

l use

onl

y

28 www.nucoal.com.auNuCoal Resources Ltd Corporate Governance Statement (continued)

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING Code of Conduct

The Company is committed to acting ethically and responsibly in all of its business dealings.

The Corporate Code of Conduct adopted by the Board provides a guide for all Directors, Officers, employees, contractors and consultants as to the practices necessary to maintain confidence in the Company’s integrity, the standards for dealing with obligations to external stakeholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

In addition, the Corporate Code of Conduct specifically addresses conflicts of interest, business gifts and entertainment, improper use of the Company’s property and assets, dealing with Government officials, political activities and reporting unlawful and unethical behaviour.

The Corporate Code of Conduct can be found in the ‘Company Information’ section on the Company’s website.

Diversity and Equal Opportunity

The Company is committed to workplace diversity, with a particular focus on supporting the representation of women at a senior level and on the Board.

In light of the type, size, attributes of the industry and activities of the Company, the Board does not currently consider it appropriate to set a quota based target for the proportion of women to sit on the Board or to hold Senior Executive positions.

Specific objectives and a diversity policy have not yet been set by the Company, however regarding gender diversity in the Company for the current reporting period to 30 June 2012, the Company had:

> No female Directors of a total of 5 Directors, however the role of Company Secretary is held by a female;

> 2 females holding Senior Executive positions out of a total of 3 Senior Executive positions;

> Female employees account for in excess of 50% of the Company’s entire workforce.

The Company remains committed to filling available Board and Senior Executive positions as they arise with appointments based on an individual’s capability to enhance the contributions of the existing Board and executive team.

Performance Evaluation

The Board acknowledges the importance of the regular review of its performance and the performance of its Committees against appropriate measures. The Board is committed to periodically reviewing the Board, its Committees and the Directors’ performance and effectiveness.

No formal evaluation was conducted during the 2011/2012 year; however the Board is considering utilising an independent consulting group to facilitate a formal Board review.

For

per

sona

l use

onl

y

www.nucoal.com.au 29NuCoal Resources Ltd Corporate Governance Statement (continued)PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL STATEMENTSThe Board has ultimate responsibility for ensuring the integrity of the Company’s financial reporting. To assist in discharging its responsibility, the Board has put in place a structure of review and authorisation designed to ensure the truthful and factual presentation of the Company’s financial position.

Audit and Compliance Committee

The Board has established an Audit and Compliance Committee to assist in discharging its responsibilities relating to the financial report and audit processes, systems of internal controls, the process for monitoring compliance with applicable laws, regulations and codes of conduct (including in relation to related party transactions) and risk management systems.

The current members of the Audit and Compliance Committee are: > James Beecher (Chairman) – independent; > Michael Chester – independent; and > Michael Davies – not independent.

In line with ASX Recommendation 2.4, the Audit and Compliance Committee consists of a majority of independent Directors. The Audit and Compliance Committee Charter can be found in the ‘Company Information’ section on the Company’s website.

Specifically, the role of the Audit and Compliance Committee includes: > review, assess and approve the annual reports, the

half year financial statements and all other financial information published by the company or released to the market;

> assist the Board in reviewing the effectiveness of the organisation’s internal control environment covering: > effectiveness and efficiency of operations;

> reliability of financial statements; and > compliance with applicable laws and regulations;> oversee the effective operation of the risk

management framework;> recommend to the Board the appointment, removal

and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit and assess performance;

> consider the independence and competence of the external auditor on an ongoing basis;

> review and approve the level of non audit services provided by the external auditors and ensure it does not adversely impact on auditor independence;

> review and monitor related party transactions and assess their propriety; and

> report to the Board on matters relevant to the committee’s role and responsibilities.

The Audit and Compliance Committee has full access to, and the co-operation of, management and full discretion to invite a Director, members of management, or the external auditor (with or without management present) to attend its meetings. The Audit and Compliance Committee also has the authority to conduct or authorise special investigations, and engage independent advisers as required to assist in those investigations.

The Audit and Compliance Committee meets as required, but at a minimum at least twice per year.

Declaration

The Managing Director, Company Secretary / Commercial Manager have provided a written declaration in accordance with section 295A of the Corporations Act 2001 to the Board that the financial reports for the Company and the individual entities it comprises are complete and present a true and fair view of the Company’s financial position and performance in accordance with the relevant accounting standards.

External Auditor Independence

The Company’s policy is to appoint an external auditor who is suitably qualified and whose independence is unequivocal. The external auditors are required to provide an annual declaration of their independence to the Audit and Compliance Committee, and attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Review of performance of the external auditor occurs annually. Where appropriate, the Board and the Audit and Compliance Committee engage independent experts or professional advisors to assist with the identification and/or management of any key risk areas identified.

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURESContinuous Disclosure

The Board has adopted a Continuous Disclosure Policy that sets out the Company’s commitment to continuous disclosure and establishes a best practice procedure relating to compliance with continuous disclosure obligations. The Policy identifies material price-sensitive information, requires the reporting of such information to the Company Secretary for review and ensures that the Company and individual Officers of the Company are aware of the penalties for contravening relevant legislative provisions and ASX Listing Rules.

The Company Secretary is primarily responsible for the management of the Continuous Disclosure Policy and for all communications with the ASX in relation to continuous disclosure issues. However, no announcements are made to the ASX without the prior approval of the Managing Director (or his delegate). All material disclosed to the ASX is published on the Company’s website.

For

per

sona

l use

onl

y

30 www.nucoal.com.auNuCoal Resources Ltd Corporate Governance Statement (continued)

PRINCIPLE 7: RECOGNISE AND MANAGE RISK Risk Management and Internal Controls

The Company is committed to understanding and effectively managing risk to provide greater certainty and confidence for its security holders, employees, customers, suppliers and the communities in which it operates. A Risk Management Policy covering organisational, financial and operational aspects of the Company’s affairs has been adopted by the Board. The Risk Management Policy may be found in the ‘Company Information’ section on the Company’s website.

The Audit and Compliance Committee assists the Board in discharging these responsibilities (ASX Recommendation 7.1). The Committee has oversight of the adequacy and effectiveness of the Company’s risk management, including the establishment and maintenance or risk identification and management processes and the review of the Company’s assessment of material business risks (financial and non-financial). Refer to page 29 of the Corporate Governance Statement which outlines the specific roles and responsibilities of the Audit and Compliance Committee.

The Managing Director is accountable to the Board for the implementation of risk management processes in line with good corporate governance.

Information on compliance with significant environmental regulations is set out in the Directors’ report.

Assurance by the Managing Director and Commercial Manager

The Managing Director and Company Secretary /Commercial Manager provide a written statement to the Board that:

> the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on sound systems of risk management and internal compliance and control which implement the policies of the Board; and

> the systems of risk management and internal compliance and control are operating efficiently and effectively in all material respects in relation to financial reporting risks (ASX Recommendation 7.3).

The Board has received the Managing Director’s and Company Secretary / Commercial Manager’s written assurance on financial reporting risks in respect of the 2011/2012 financial year.

PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITY HOLDERS Shareholder Communications

The Board has adopted a Shareholder Communication and Privacy Policy to assist with communication of information to the market in a timely and efficient manner. A copy of these policies may be found in the ‘Company Information’ section on the Company’s website. It is Company policy to ensure all material disclosed to the ASX is published on the Company’s website.

NuCoal aims to ensure that its shareholders, on behalf of whom the Board acts, are informed of all information necessary to assess the performance and Directors of the Company.

Information is communicated to shareholders and the market through:

> The Annual Report;

> Other periodic reports (Half Year and Quarterly Reports), which are lodged through the ASX and are available for shareholder scrutiny;

> Other announcements made in accordance with the ASX Listing Rules;

> Special purpose information memoranda issued to shareholders, as appropriate;

> The Annual General Meeting and other meetings, as appropriate; and

> The Company’s website.

For

per

sona

l use

onl

y

www.nucoal.com.au 31NuCoal Resources Ltd Corporate Governance Statement (continued)

The Company’s corporate governance policies can be viewed at its website: www.nucoal.com.au

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY Remuneration Policies

The Board acknowledges the need to adopt remuneration policies that attract and maintain talented and motivated Directors and employees so as to encourage enhanced performance and to pursue long-term growth and success for the Company. The Board also recognises the importance of there being a clear relationship between performance and remuneration.

The Company’s remuneration policies and details of the nature and amount of remuneration paid to Directors’ and key executives during the year are set out in the Directors’ report on pages 15 to 22 (ASX Recommendation 8.2 and 8.3).

Role of Nomination and Remuneration Committee

The function of the Nomination Committee is carried out by the Board as a whole. The role of the Nomination Committee includes appointment and assessment of performance of Directors, review of Board and Committee members and performance, and Board succession planning.

The Remuneration Committee, currently sitting as the full Board, reviews the general remuneration framework for Directors and Executives. The Remuneration Committee also review the Company’s obligations on matters such as superannuation and other employment benefits and entitlements.

Members of management may attend meetings of the Nomination or Remuneration Committees by invitation, however may not be present during, or participate in deliberations where the matter does or could affect their position, remuneration or other related matters.

From time to time, external specialists’ remuneration advice is sought in respect of general remuneration arrangements and, in particular, advice on remuneration market movements is sought on an annual basis.

Executive Remuneration

The Managing Director and other Senior Executives (including the Company Secretary) are remunerated through a combination of: > Base remuneration; > Short-term performance-based cash bonuses; and > Long-term performance based incentives pursuant to

a long term incentive plan.

Details of the remuneration paid to the Managing Director and key management personnel are set out in the Remuneration Report at pages 15 to 22 of the Directors’ report.

Non-executive Director Remuneration

The Company has noted ASX Recommendations 8.2 and 8.3 that Non-executive Directors not be provided with equity-based compensation, and that it has not followed these recommendations.

The remuneration policy for Non-executive Directors and the amount of remuneration paid to Non-executive Directors is discussed in detail in the Remuneration Report at pages 15 to 22 of the Directors Report.

Non-executive Directors are remunerated through a combination of: > Base remuneration; and > Long-term performance based incentives pursuant

to a long term incentive plan.

Details of the remuneration paid to the Managing Director, and key management personnel are set out in the Remuneration Report on pages 15 to 22.

For

per

sona

l use

onl

y

32 www.nucoal.com.au

This financial report is the consolidated financial report for the consolidated entity consisting of NuCoal Resources Ltd and its subsidiaries. This financial report is presented in the Australian currency.

NuCoal Resources Ltd is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX). The registered office and principal place of business is: Suite 1, 4 Honeysuckle Drive, Newcastle NSW 2300.

A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’ report on pages 6 to 24, which is not part of these financial statements.

The financial report of NuCoal Resources Ltd for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of Directors on 28 September 2012. The company has the power to amend and reissue the financial statements.

Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information is available on our website: www.nucoal.com.au.

Contents33 Statement of Comprehensive Income

34 Statement of Financial Position

35 Statement of Changes in Equity

36 Statement of Cash Flows

37 Notes to the Financial Statements

66 Directors Declaration

67 Independent Auditor’s Report to the Members

Annual Financial Statements

30 June 2012

ABN 29 060 352 990

NuCoal Resources Ltd Annual Financial Statements – 30 June 2012

For

per

sona

l use

onl

y

www.nucoal.com.au

Annual Financial Statements

33

Continuing Operations Notes2012 $’000

2011 $’000

Other income 5 1,324 963

Administration expenses (497) (362)

Accounting and audit fees (168) (129)

Company secretarial fees - (5)

Consultants (434) (658)

Depreciation 6 (49) (28)

Directors fees (255) (265)

Donations (442) (173)

Employee benefits expense 6 (2,313) (1,998)

Finance costs (57) (46)

Insurance (154) (90)

Legal fees (703) (256)

Listing fees (153) (126)

Rent (149) (130)

Travel (70) (54)

Other expenses (80) (13)

Loss before income tax (4,200) (3,370)

Income tax expense 7 - -

Loss for the year (4,200) (3,370)

Loss is attributable to:

Equity holders of NuCoal Resources Ltd (4,200) (3,370)

Non controlling interest - -

Other comprehensive income / (loss) - -

Total comprehensive income / (loss) for the year (4,200) (3,370)

Total comprehensive income / (loss) is attributable to:

Equity holders of NuCoal Resources Ltd (4,200) (3,370)

Non controlling interest - -

Earnings per share for loss attributable to the ordinary equity holders of the company:

Notes Cents Cents

Basic earnings per ordinary share 32 (0.61) (0.55)

Diluted earnings per ordinary share 32 (0.61) (0.55)

The above statement of comprehensive income is to be read in conjunction with the accompanying notes.

Statement of comprehensive income for the year ended 30 June 2012

NuCoal Resources Ltd Annual Financial Statements – 30 June 2012 (continued)

For

per

sona

l use

onl

y

34 www.nucoal.com.auNuCoal Resources Ltd Annual Financial Statements – 30 June 2012 (continued)

Assets Notes2012 $’000

2011 $’000

Current assets

Cash and cash equivalents 8 32,721 27,238

Restricted cash and cash equivalents 8 4,249 -

Trade and other receivables 9 501 598

Total current assets 37,471 27,836

Non-current assets

Trade and other receivables 10 34 -

Property, plant and equipment 11 9,576 2,540

Exploration and evaluation expenditure 12 25,465 13,335

Total non-current assets 35,075 15,875

Total assets 72,546 43,711

Liabilities Notes2012 $’000

2011 $’000

Current liabilities

Trade and other payables 14 2,994 4,200

Borrowings 15 - 550

Total current liabilities 2,994 4,750

Non-current liabilities

Other liabilities 16 - 211

Provisions 18 128 57

Total non-current liabilities 128 268

Total liabilities 3,122 5,018

Net assets 69,424 38,693

Equity Notes2012 $’000

2011 $’000

Share Capital 19 88,138 53,308

Reserves 20 4,608 4,507

Accumulated Losses 21 (23,322) (19,122)

Total equity 69,424 38,693

The above statement of financial position is to be read in conjunction with the accompanying notes.

Statement of financial position as at 30 June 2012

For

per

sona

l use

onl

y

www.nucoal.com.au 35NuCoal Resources Ltd Annual Financial Statements – 30 June 2012 (continued)

Attributable to the owners of NuCoal Resources Ltd

NotesContributed

equity $’000

Reserves $’000

Accumulated losses $’000

Total Equity $’000

Balance at 1 July 2010 22,998 3,826 (15,752) 11,072

Loss for the year - - (3,370) (3,370)

Other comprehensive income / (loss) for the year

- - - -

Total comprehensive income / (loss) for the year

- - (3,370) (3,370)

Employee share options – value of employee services

20 - 681 - 681

Contributions of equity 31,103 - - 31,103

Transaction costs (793) - - (793)

Balance at 30 June 2011 53,308 4,507 (19,122) 38,693

Loss for the year - - (4,200) (4,200)

Other comprehensive income / (loss) for the year

- - - -

Total comprehensive income / (loss) for the year

- - (4,200) (4,200)

Employee share options – value of employee services

20 - 101 - 101

Contributions of equity 36,478 - - 36,478

Transactions costs (1,648) - - (1,648)

Balance at 30 June 2012 88,138 4,608 (23,322) 69,424

The above statement of changes in equity is to be read in conjunction with the accompanying notes.

Statement of changes in equity for the year ended 30 June 2012

For

per

sona

l use

onl

y

36 www.nucoal.com.auNuCoal Resources Ltd Annual Financial Statements – 30 June 2012 (continued)

Cash flows from operating activities Notes2012 $’000

2011 $’000

Payments to suppliers and employees (inclusive of goods and services tax)

(5,485) (3,165)

Net cash (outflow) inflow from operating activities 31 (5,485) (3,165)

Cash flows from investing activities Notes2012 $’000

2011 $’000

Net cash acquired on group recapitalisation - 40

Payments for property, plant and equipment (7,085) (768)

Payments for exploration and evaluation (12,218) (7,533)

Proceeds from investments - 150

Payments for restricted cash and cash equivalents (4,249) -

Interest received 1,381 838

Rental income received 7 -

Net cash (outflow) inflow from investing activities (22,164) (7,273)

Cash flows from financing activities Notes2012 $’000

2011 $’000

Proceeds from issues of shares and other equity securities 35,330 30,000

Transaction costs (1,648) (793)

Repayment of borrowings (550) -

Net cash inflow (outflow) from financing activities 33,132 29,207

Net increase (decrease) in cash and cash equivalents 5,483 18,769

Cash and cash equivalents at the beginning of the financial year 27,238 8,469

Cash and cash equivalents at the end of year 8 32,721 27,238

The above statement of cash flows is to be read in conjunction with the accompanying notes.

Consolidated statement of cas