Terracom : Announcement - Further Extension to Blair Athol Mine Life

5 September 2017

TerraCom Limited (TerraCom or the Company) (ASX:TER) is pleased to announce a further upgrade to the Blair Athol Mine JORC Reserve and Resources.‌

Independent experts Xenith Consulting Pty Ltd (Xenith) and TerraCom have conducted further work since the last announcement in November 2016 and has been able to upgrade the total Blair Athol Mine JORC Reserves to 15.6mt and increase the JORC Measured Resource to 21.9mt. The coal reserves and resources have been estimated in accordance with the standards outlined in the JORC code (JORC, 2012) and the Coal Guidelines 2014.

Further work since TerraCom completed the acquisition of the Blair Athol Mine, which included the detailed assessment of all boreholes using historical data on site has enabled Xenith to extend the Reserves by 2.1mt adding one extra year to mine life, which now totals 8 years based on ~2 million tonnes per annum (mtpa), which is derived from the Reserves estimate presented in this announcement.

The JORC Resource has improved in confidence with the JORC Measured Resource increasing 9.5mt from 12.4mt to 21.9mt.

TerraCom are in the process of further developing this increased JORC Measured Resource and plan to convert the economic areas of the Measured Resource into Reserves which could add an additional three to five years onto the Blair Athol Mine Life (based on 2mtpa which is derived from the Reserves estimate presented in this announcement). The coal reserves and resources have been estimated in accordance with the standards outlined in the JORC code (JORC, 2012) and the Coal Guidelines 2014.

Chairman Mr Wal King stated that "this reserve upgrade is significant for the Blair Athol Mine as it enables the mine plan to be extended to 8 years at ~2mtpa".

Mr King went on to say that "the measured resource upgrade is significant as it has the potential to increase the mine life for a further 3 to 5 years".

Reserves

Coal reserves have been estimated in accordance with the requirements of the 2012 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code). The estimate was compiled by a Competent Person from Xenith Consulting and has been signed off accordingly.

The total open cut coal reserves for Blair Athol Mine are presented in Table 1.

Table 1 - Blair Athol Mine Open Cut Reserves Estimate

* Tonnages and qualities in the above table are expressed on a "ROM" basis, incorporating the effects of mining losses and dilution, and on a 17.0% ROM moisture basis.

The marketable coal for Blair Athol Mine is thermal product only. Estimates have been made for the most likely split of the ROM coal to bypass or to process in the Coal Preparation Plant (CPP) to blend together to produce an export quality thermal coal at 12.5% ash on an air-dried basis (adb). This has formed the basis of an estimate of Marketable reserves that correspond to the ROM reserve estimates. Therefore, Marketable Coal Reserves are a sub-set of Coal Reserves.

All Marketable Reserves tonnages have been expressed on a Washed Moisture Basis, which varies depending on the proportion of Bypass coal and is typically 17.7%.

Table 2 - Blair Athol Open Cut Marketable Coal Reserve Estimate

*Total Marketable Coal is nominally at 12.5% ash (adb).

Maps relating to the JORC estimate can be found in Appendix 1 and Table 1 can be found in Appendix 2. For a full list of the drill hole dataset, please go to below link:

http://terracomresources.com/australian-projects/blair-athol-operations/

Resources

Coal resources have been estimated in accordance with the requirements of the 2012 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code). The estimate was compiled a Competent Person from Xenith Consulting and has been signed off accordingly.

The Coal Resource Estimate carried out in July and August 2017 for the Blair Athol Coal Mine was focused on the Seam 4 Measured and Indicated resource areas. In comparison with the previous JORC Estimate from 2016, this update incorporates 41 additional points of observation ('PoB') intersecting the Seam 4 Upper, and 31 PoB intersecting Seam 4 Lower.

In this update 2017, the Total Coal Resource remains 44 mt as estimated in October 2016.

Considering the two Seam 4 plies (4U, 4L), this update shows an upgrade of 9.5 mt into the Measured resource category, and 3 mt into the Indicated category.

The table below shows the comparison between the 2016 and 2017 Resources estimations.

Table 3- Resource Comparison Table - Seam 4.

Table 4- Resource Table Seam 3.

The tonnes have been estimated by applying an insitu density with standard bed moisture of 17%.

The coal at Blair Athol is a low rank, medium - high volatile, low ash, low sulphur thermal coal. Air dried moisture is on average approximately 6%. On an air dried basis (adb) the specific energy typically ranges between 21 and 26 MJ/kg, while the raw ash (adb) ranges between 13 - 20 % for the 4 Upper seam and 22 - 25 % for the 4 Lower seam. The specific energy for seam 3 is 27MJ/kg and the raw ash (adb) is 9.1%

This Reserves Estimate has been prepared by Mr John Cawte. The estimates of Open Cut Coal Reserves for the Blair Athol coal mine as at 30 September 2016 presented in this report have been carried out under the guidelines of the 2012 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code).

John Cawte is an employee of Xenith Consulting Pty Ltd. He has a Bachelor in Mining Engineering from University of Queensland and a Diploma of Business. He has over 20 years of experience in mining in the open cut coal mining industry that is relevant to the style of mineralisation and type of deposit described in the report, and the type of activity involved in the estimation of the coal reserves. John Cawte is a member of the Australasian Institute of Mining and Metallurgy and qualifies as a Competent Person under the JORC Code.

John Cawte consents to the release of this announcement

The information in this report relating to exploration results and coal resources is based on information compiled by Mr Troy Turner who is a member of the Australasian Institute of Mining and Metallurgy and is a full-time employee of Xenith Consulting Pty Ltd.

Mr Turner is a qualified geologist and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves."

Neither John Cawte, Troy Turner, nor Xenith Consulting Pty Ltd has any material interest or entitlement, direct or indirect, in the securities of TerraCom Limited or any associated companies. Fees for the preparation of this report are on a time and materials basis only.

Troy Turner consents to the release of this announcement

The depletion limits are adopted from the survey completed at the cessation of mining by Rio Tinto so no arithmetic adjustments have been made to take into account post-survey as there has been no change.

Small differences may be present in the totals due to tonnes information being rounded so as to reflect the usual uncertainty associated with the estimate.

This Announcement contains certain "forward‐looking statements". The words "anticipate", "believe", "expect", "project", "forecast", "estimate", "likely", "intend", "should", "could", "may",

"target", "plan", "consider", "foresee", "aim", "will" and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future production, resources, reserves, sales, capital expenditure, earnings and financial position and performance are also

forward‐looking statements. Such forward‐looking statements are not guarantees of future

performance and involve known and unknown risks, uncertainties and other factors, many of which

are outside the control of TerraCom.