Nucoal Resources : Annual Report to Shareholders – 30 June 2017

ANNUAL REPORT NuCoal Resources Ltd ABN 29 060 352 990 Annual Report - 30 June 2017 Contents Page Corporate Directory 1 Chairman's Letter 2 Directors' report 3 Auditor's Independence Declaration 15 Corporate governance statement 16 Financial report 22 Independent Auditor's Report 48 Shareholder information 52

NuCoal Resources Ltd Corporate Directory

30 June 2017

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

Chairman

G Lewis MAICD

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 Sydney. Website address www.nucoal.com.au

www.nucoal.com.au 1

A word from our Chairman

Fellow Shareholders

NuCoal Resources Ltd Chairman's Letter 30 June 2017

On behalf of your Directors, I present the Annual Report for the 2016/17 year.

As an overview of the past year, I have to report that once again a large part of the company's efforts have been focused on pursuing justice for our 2,900 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 sales process has been successful - with all remaining properties held within the Jerrys Plain area being the subject of a sales contract signed in September 2017. On finalisation of this sale, the company will be reasonably well funded with no debts or substantive liabilities.

On the "new asset" side, we have looked at a substantial number of coal assets to date - so far to no avail for varying reasons. The current improvement in the coal industry outlook and the divestment programs of some of the major coal companies may offer better opportunities in the year ahead.

In respect of our "justice" activities, it is no longer disputed that NuCoal's shareholders have been very badly treated by the NSW Government, and our goal remains to obtain appropriate compensation for shareholders. It is important to note that our domestic and international efforts have, or have access to, whatever funding is needed to "stay the course" as far as the pursuit of justice is concerned.

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. To progress this claim, BGR Group, a senior lobbying firm in Washington, continues to meet with relevant US Government Officials, and individual US shareholders have continued to write to and meet with their political representatives. Domestically we have maintained a program of meetings to keep our issue in front of the NSW Government. Compensation agreements with Shenua and BHP in the past year present clear precedents for compensating companies who relinquish their exploration properties.

We still consider that justice can prevail and that the rule of law will finally rule leading to the company and its shareholders finally receiving fair and equitable treatment. We believe that as time progresses our case will only become stronger. The NuCoal case will continue to be a thorn in the sides of the NSW and Australian Governments and its implications will be more obvious to potential investors. Our job is to make sure that we persist and continually press our case in any and all available forums. The bottom line is that NuCoal has no intention of giving up on pursuing justice.

I always thank you, our shareholders, in my Chairman's letter and this year is no exception. Your response to our struggles with the Government has been overwhelmingly positive and we acknowledge your support - and thanks as always to my fellow Directors and to Ms Etcell our CEO for your continued work on your shareholders' behalf.

Yours sincerely

Gordon Galt

Chairman - NuCoal Resources Ltd

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