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Lubelski Węgiel
Lubelski Węgiel Bogdanka S.A.

Development Prospects Unchanged

Friday, 2012-08-24
Announcement by the Management Board of Lubelski Węgiel BOGDANKA S.A.

Bogdanka’s Potential Secures Long Term Perspectives for its Development

In relation to a release, published on 9 August 2012 by Prairie Downs Metals Limited (Prairie), an Australian Securities Exchange (ASX) listed company, announcing that “Prairie Downs Secures a Large Coal Project in Poland”, as well as announcing the granting, by the Polish Ministry of the Environment, of hard coal exploration licenses within the areas of Kulik, Syczyn, Kopina and Cyców, i.e. in a direct vicinity of the extraction activity of Lubelski Węgiel Bogdanka S.A. The Management Board hereby declares that the measures undertaken by the above company do not restrict or affect the pursuance of Bogdanka’s strategic goals and long-term development plans.
Following its analysis of the release, the Management Board points that the release refers to the hard coal exploration license granted for three years and obliging that specified measures be taken in that period.

The LW Bogdanka S.A.’s Management Board believes, based on information held, its knowledge and experience in mining and geology, that commercial likelihood of completing of the described Prairie’s project, as well as that of any other entity, involving future transformation of the licence for resource exploration into a resource excavation (mining) licence and constructing a mine, is practically close to zero.

Technical and economic obstacles will always include the lack of independent and necessary transport and energy infrastructure on the areas referred to above.

The only entity that owns such infrastructure and has necessary knowledge and experience with respect to the use of the described seams is LW Bogdanka. Further, it is the sole entity – as compared to other greenfield investors – that may guarantee a significantly lower cost of access to the resources.

It is beyond the Company’s control to whom the exploration licences are granted (they have already been granted to Kompania Węglowa, Prairie Downs Metals Limited and others) or will possibly be granted in future, by the authorised government bodies. Moreover, it is the state that owns all natural resources and pursues its own policy of making them available for the purposes of exploration and use. In each case however, the economic efficiency of undertaken projects is verified by the market reality.

Lubelski Węgiel Bogdanka is deeply involved in the procedure for obtaining a mining licence in the adjacent areas in compliance with binding Polish regulations. Due to the high degree of work progress combined with its potential and assets held, the Company can safely compete with each entity planning coal mining in the Lublin region.
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