Nucoal Resources : Annual Report to Shareholders – 30 June 2016

ANNUAL 2016 REPORT NuCoal Resources Ltd ABN 29 060 352 990 Annual Report - 30 June 2016 CONTENTS

Page

Corporate Directory 1

Chairman's Letter 2

Directors' report 4

Auditor's Independence Declaration 18

Corporate governance statement 19

Financial report 25

Independent Auditor's Report 53

Shareholder information 55

NuCoal Resources Ltd Corporate Directory

30 June 2016

Corporate Directory

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

Chairman

G Lewis MAICD

Managing Director

J Beecher B.Com, MBA, FCPA, FAICD

M Davies B.A Hons, MBA

Secretary M Etcell B.Com, CA, MAICD

Principal registered office in Australia Unit 8, 24 Garnett Road

Greenhills NSW 2323

[phone]

Share registry Link Market Services

Level 12, 680 George Street

Sydney NSW 2000

1300 554 474

Auditor Ernst and Young

Ernst and Young Centre 200 George Street

Sydney NSW 2000

Bankers Australia and New Zealand Banking Group Limited 490 King Street

Newcastle West NSW 2300

Westpac Banking Corporation Shop 39 Wallsend Plaza

24 Kokera Street

Wallsend NSW 2287

Stock exchange listings NuCoal Resources Ltd shares are listed on the Australian Securities Exchange. The home exchange is Perth.

Website address www.nucoal.com.au

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A word from our Chairman

Fellow Shareholders

NuCoal Resources Ltd Chairman's Letter 30 June 2016

On behalf of your Directors, I present the Annual Report for the 2015/16 year.

In an overview sense, once again a large part of the company's efforts during the year have been expended pursuing justice for our 3,400 shareholders following the expropriation, without compensation, of our Doyles Creek exploration licence by the State of NSW in early 2014. Details of where we are going with those efforts are discussed below.

This pursuit is not the only thing we have been doing during the year, however. We have been working through the sale of assets (land and tenements) in the Hunter Valley while looking for new assets that could be a basis for recommencing the company's original strategy - which was to become a significant producer of mainly metallurgical coal. The asset sale process has been generally successful, and is continuing, and as a result the company now is reasonably well funded with no debts or substantive liabilities. We have looked at a substantial number of coal assets to date - so far to no avail for varying reasons - but the search continues to find an appropriate asset that suits the requirements of the Company. The current improvement in the coal industry outlook and the divestment programs of some of the major coal companies hopefully offer better opportunities in the year ahead.

In respect of our "justice" activities, the details of our strategy going forward and background information is well presented on our website so it is not repeated here. The date of the last Chairman's letter is a good starting point however - and as at that date it was firmly established and was generally acknowledged that NuCoal's shareholders have been very badly treated by the expropriation without compensation. Our goal was then, and still remains, to turn this acknowledgement into concrete compensation for shareholders.

Avenues to achieve this can be divided into two major areas - domestic and international.

Domestically we are seeking to have relevant politicians in NSW reconsider the law which expropriated our asset. This is being done by education via the media and through meetings to make sure people understand the gravity of what they did by passing the Mining Amendment Act - that the seizure of real assets by decree and exclusion from a right to seek legal redress have no place in a first world country.

Internationally our goal is to commence an action for compensation pursuant to the existing Free Trade Agreement between Australia and the USA (AUSFTA). In respect of this action, approximately 30% of NuCoal's shareholders are US registered Shareholders. The expropriation of the Company's key asset by the Government with no compensation is a clear breach of the AUSFTA. A successful claim could result in a substantial recovery for NuCoal's US shareholders. We are progressing along the following lines:

1. NuCoal has recently engaged a senior lobbying firm in Washington to organise structured meetings and media to highlight our case. Individual US shareholders are writing to and meeting their political representatives to get them to directly intervene.

2. Publication of articles in key US media outlets to further highlight the injustice.

3. Advancing litigation funding arrangements for the arbitration, including reimbursement of NuCoal's costs in getting to the start of the arbitration phase.

We are ensuring that all these efforts are well publicised because we have nothing to hide. We are simply pursuing what we have always been entitled to and what has been denied to us. If any shareholders wish to learn in further detail about our activities they can call me or any member of the NuCoal team and we will be happy to discuss them.

We have further pared expenses during the year by moving all staffing to a part time basis and substantially reducing directors' fees expense. Notwithstanding this "paring", I acknowledge that all involved still give whatever time is needed to keep things progressing. We are therefore confident that your company will be adequately funded to "stay the course" as far as the pursuit of justice is concerned.

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