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1 DECEMBER 2011 Issued 31 January 2012 HIGHLIGHTS INDIAN IRON ORE MINING PROJECT Significant on-site work completed and installation of phase one processing infrastructure underway at Kurnool iron beneficiation plant. Key construction, mining, environmental and project management team appointed. On track for completion of phase one plant commissioning in 1Q 2012 and first iron ore sales in 1H QUEENSLAND THERMAL COAL PROJECTS New technical modelling and interpretation reinforces strong project potential for the Company s four world class thermal coal assets in south Queensland. Further progress on advertising and grant process for Exploration Permits for Coal (EPC Applications) 2198, 2336, 2337 & Q 2012 OUTLOOK Kurnool phase one processing infrastructure and commissioning completion. Formal advertising of Exploration Permits for Coal (EPC Applications) 2336, 2337 & Grant of Exploration Permit for Coal EPC Page 1

2 IRON ORE - INDIA CONSTRUCTION OF US$2.3 MILLION KURNOOL IRON ORE BENEFICIATION PLANT During the quarter, site works and erection of a phase one conventional three stage crushing and dry separation plant progressed at the Company s wholly-owned 12-acre Kurnool stockyard site in the southeast Indian state of Andhra Pradesh where NSL is establishing a US$2.3 million, 200,000 tonne per annum capacity iron ore beneficiation operation. Major phase one plant components are on site and being installed and commissioned as planned, with steady state ore production targeted to be 200,000 tonnes per annum. There is potential for saleable product to be produced during the first quarter commissioning cycle which would generate the first of anticipated wider sales and maiden revenue. As part of the phase two beneficiation process, the wet beneficiation plant will continue to be constructed and commissioned through the first half of Work is underway to determine the potential to increase the production over and above the targeted rate of 200,000 tonnes per annum with the incorporation of phase one & two production. The following pictorial sequence shows the increasing construction activity on site at the Kurnool stockyard. For further pictures please refer to Appendix One. Commencement of site works Page 2

3 Commencement of equipment arriving on site Commencement of primary crushing area retaining wall Commencement of primary crushing area equipment footings Page 3

4 Commencement of secondary crushing area retaining wall INDIAN IRON ORE MANAGEMENT TEAM During the December quarter, NSL completed the appointment of its senior Indian-based iron ore project team. The appointments covered the key leadership roles of Construction Manager, Environmental Manager, Mines Manager, Project Controller, General Manager of Human Resources, Administration and Safety, and support staff. KUJA AND MANGAL IRON ORE DEPOSITS - ANDHRA PRADESH No mining activities were undertaken during the quarter at the two iron ore projects, Kuja and Mangal. Kuja is located adjacent the Kurnool stockyard site with Mangal only five kilometres distant. Work continues on finalising mine design, start-up planning and production scheduling work for the two iron ore projects in readiness for the March quarter plant start-up. Commissioning iron ore will be provided from current site stockpiles and third parties. NSL remains the only foreign company to own and operate iron ore mines in India, the world s third largest iron ore exporter and also boasting a strong domestic steel market. Page 4

5 INDIAN IRON ORE MARKETING NSL continued during the December quarter to maintain product offtake dialogue with potential partners overseas, and with domestic Indian metal manufacturers. Given the strength in both demand and pricing of the domestic iron ore market, it is likely the Company may prioritise domestic ex-gate sales ahead of export opportunities. The current domestic ex-gate sales price for 58% Fe material is 4500INR/t (approx US$90/t). THERMAL COAL - QUEENSLAND NEW ASSESSMENT ENHANCES DEVELOPMENT POTENTIAL During the quarter, NSL completed an updated technical modelling and interpretation schedule over the Company s highly prospective thermal coal Exploration Permit Coal (EPC) applications 2198, 2336, 2337 & 2338 in the Eromanga Basin in southwest Queensland. The application areas host a combined total exploration target of between billion tonnes of thermal ¹ coal and are adjacent to similar projects held by East Energy Resources (ASX: EER) and International Coal Limited (ASX: ICX). NSL is intending to schedule an exploration drilling program on the tenement package this year once the applications have been formally granted. A maiden nine hole scoping drill campaign is being considered as a precursor to a full exploration drilling schedule. Key findings (Refer ASX announcement 20 December, 2011 for full details) included that: The four tenement package offers economies of scale and a substantial exploration target of between billion tonnes of thermal ¹ coal. Historical petroleum drilling results have reinforced the proof of the existence of the coal seams. New analysis of historical boreholes supports the presence of a quality thermal coal product. Coal seams in the area are generally 7-15 metres cumulative thickness. The uppermost coal seams are as shallow as 50 metres or less from surface. Commercialisation of the region s coal is being propelled by substantial new investment in export infrastructure, including rail and port. (¹ It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient exploration to define a coal resource. No coal quality data for the project area was uncovered in previous reports. Although a preliminary analysis was undertaken, insufficient data exists to confidently correlate coal seams and generate a grid mesh model. Unexpected Geological loss is designed to account for seam splitting and thinning. It is uncertain whether further exploration may lead to the reporting of a JORC- standard resources, however there is considerable evidence to support the current Exploration Tonnage calculations, and the sufficient coal thicknesses interpreted from historical drilling warrant further investigation). APPLICATIONS PROCEEDING THROUGH GRANT PROCESS NSL was advised during the period by the Queensland Government of continued progress in assessment of the Company s application for granting to it its four thermal coal tenements, covering 2,585 km² in the Eromanga Basin. The Company understands that granting is now pending on the first application, coal exploration permit EPCA 2198, an area totalling 232 km² over 75 sub-blocks located 75 kilometres west of Augathella. It also understands that the remaining three applications are shortly to be advertised under the formal NOTICE OF PROPOSED GRANT OF EXPLORATION PERMIT FOR COAL protocols. Page 5

6 These three applications cover EPCA s 2336, 2337 & 2338, all located in the same general locality as EPCA Native title discussion with relevant parties progressed significantly, with completion expected in the near term. CORPORATE POTENTIAL ACQUISITIONS During the quarter, NSL continued to assess complimentary new bulk commodity mining opportunities to expand our potential production base in Andhra Pradesh. These assessments remain ongoing. The Company continued to progress several opportunities for either outright acquisition and/or joint venture structured agreements over multiple projects across India, together with additional Australian coal tenements. CASH FLOW APPENDIX 5B At the commencement of the December quarter, the Company had an opening cash balance of $4.709 million. The closing cash balance for the quarter ended 31 December 2011 was $3.186 million, boosted by proceeds from the successful $4.3 million capital raising completed in July and September last year via a placement to sophisticated investors and an underwritten renounceable entitlements issue. Regards NSL Consolidated Limited Cedric Goode Managing Director/CEO For more information: Cedric Goode Kevin Skinner NSL Consolidated Field Public Relations Managing Director/CEO / Competent Person s Statement Technical information relating to the coal projects in this announcement has been compiled by Mr Mark Biggs, Principal Geologist of Moultrie Database and Modelling. Mr Biggs is a member of the Australasian Institute of Mining and Metallurgy and has over 24 years of experience relevant to the style and type of coal mineralisation under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined by the Australasian Code for Reporting of Minerals Resources and Reserves (JORC) The estimates of the Coal Exploration Target presented in this Report are considered to be a true reflection of the Coal Exploration Target as at 20 th January 2012 and have been carried out in accordance with the principles and guidelines of the Australian Code for Reporting of Coal Resources and Coal Reserves published in September 2004 (JORC Code). Mr Mark Biggs consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. Page 6

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