Atrum Coal NL: Annual 2016 Report to Shareholders

Sydney - Atrum Coal NL (ASX:ATU) (OTCMKTS:ATRCF) is pleased to provide the company's Annual Report 2016 to shareholders.

OPERATIONS REVIEW

Company Overview

The company is an emerging metallurgical coal explorer and developer. The Company has a substantial coal position in British Columbia, Canada which, as a region boasts:

- Abundance of high quality anthracite coals

- Well-developed rail and port infrastructure with excess capacity

- Access to deep sea ports

- Competitive shipping distance to Asia

- Positive government stance on mining

Atrum is developing the world's largest high grade anthracite deposit at Groundhog, which has a JORC resource of 1.57 billion tonnes of anthracite. Our Board of Directors and Management Team have a strong track record in identifying and developing world-class coal assets.

Groundhog Project, British Columbia - Background

The Groundhog Anthracite Project (Groundhog) is located in the Groundhog Coalfield in the northern part of the Bowser Basin in north-western British Columbia, approximately 890km northwest of Vancouver, 150km northeast of Stewart, and 300km northeast of Prince Rupert. The project is located near key mining infrastructure including rail, port, road, power and water facilities. It is 150km north-east of a deep-sea port in the town of Stewart.

Groundhog now comprises 88 granted coal licenses covering an area of more than 800km2. Fortytwo (42) of these licenses were converted from license applications in September 2016. Our tenements are prospective for high-grade and ultra-high-grade anthracite suitable for use in blast furnace steelmaking, the manufacture of specialty steels and alloys in electric arc furnaces, as filter media, feedstock for chemical production and an economic alternative to graphite for industrial applications.

Operational activities

Bulk Sample Permit

A significant achievement for Atrum this year was securing the permits necessary to allow the mining of up to 100,000 tonnes of anthracite from Groundhog North (refer to ASX Announcement dated 9 May 2016 'Bulk Sample Permit Received' for further information). Granted in May 2016, two key permits included:

(a) an amendment to Atrum's Mineral & Coal Exploration Activities and Reclamation Permit (also known as "Bulk Sample Permit") to mine the bulk sample; and

(b) a Special Use Permit to use an existing railbed subgrade for land access to move equipment to the mine site and to transport the sample to the railway connection point.

Receipt of these permits has enabled Atrum to advance more detailed planning of the bulk sample mining activities, with a total bulk sample size of up to 100,000 tonnes approved for extraction by surface and underground mining methods to supply customers' trial cargoes of Groundhog Ultra High Grade anthracite. The ultra-high grade lump and fine anthracite produced from the bulk sample are expected to be sold to customers for trials in blast furnace and sinter plants, with the potential to provide a portion of the product for beneficiation for specialty industrial users. These customer trials will assist the Company to secure long-term offtake agreements for supply of Groundhog Ultra High Grade anthracite.

Preliminary works, including engineering design, contractor selection and commercial discussions with the rail provider, are underway. Ground access to Groundhog will aid in reducing operating costs and creating the initial supply chain to the market place and customers.

Exploration

Exploration activities focused on consolidating knowledge of the two key economic target seams, namely the Discovery B seam and the lower Duke E seam. Significantly improved float sink yields for the Duke E seam (yields ~80%, compared to previous average yields of ~60%) were identified in the Eastern Resource Block of Groundhog North that provide the potential for economic development once the area has been further explored.

Additional field mapping undertaken in the September Quarter 2015 identified more outcropping anthracite seams, this time very close to the planned Bulk Sample area. Geological interpretation, sampling and coinciding quality results validated it as the Duke E seam.

Updated Pre-Feasibility Study

The Company completed an updated Pre-Feasibility Study (PFS), which includes underground mines in the Discovery B and Duke E horizons, and low cost highwall options in Discovery B and Duke E seams (refer to ASX Announcement dated 22 June 2016 'Updated Pre-Feasibility Study' for further information).

A phased approach to entering into production is included in the development plan for Groundhog North, commencing with a low capital cost mine of 880,000 saleable tonnes per year (Phase 1).

The smaller Phase 1 mine will allow the Company to:

- Establish operations in the area;

- Prove the logistics chain for transporting larger amounts of product;

- Continue to develop long term and sustainable relationships with the Company's Aboriginal Partners;

- Train Aboriginal and local personnel to build a workforce that will support sustainable, longterm operations;

- Establish customer channels;

- Investigate alternative high value markets;

- Increase debt funding potential for the larger mine development, providing superior shareholder returns by leveraging greater debt servicing ratios from cash reserves;

- Generate early cash flows, not just for the Company, but for local families, contractors, communities, and government; and

- Build credibility with a range of key stakeholders, including parties interested in the Company's growth and value potential.

The Company has started engaging with potential strategic investors in relation to funding the bulk sample extraction and, subject to permitting, a low capital cost Phase 1 mine development. Another option being considered by the Company at present is for a low cost 250,000tpa mine following the outcropping and shallow Duke E seam. This will be progressed in the coming year.

Panorama North Project, British Columbia

The Panorama North Project is approximately 15km southwest and contiguous with the Groundhog Project in British Columbia, Canada. It comprises 12 granted coal licenses over an area of approximately 7,359 hectares. Until last month, no drilling has been conducted in this area with the exception of shallow auger holes. Under JORC 2012 Guidelines, it is considered an area of interest only. The entire Panorama area comprises 30 coal licenses covering an area of 27,970 hectares including Panorama North, Panorama South and Panorama West.

On 29 August 2016 the Company announced it entered into a Joint Exploration Agreement (JEA) with Japan Oil, Gas and Metals National Corporation (JOGMEC). Under the agreement, JOGMEC will spend up to C$5.0 Million in cash or in kind over three years in return for an up to 35% equitable interest in the Panorama North Project. A small drilling program was completed at Panorama North over a four-week period in October 2016 and the Company looks forward to providing results later in the year.

To view the full report, please visit:
http://abnnewswire.net/lnk/N0XUML66

About Atrum Coal NL:

Atrum Coal NL (ASX:ATU) is an emerging metallurgical coal explorer and developer.

The Company has a substantial coal position in British Columbia which, as a region boasts:

- Abundance of high quality PCI, coking and anthracite coals
- Well developed rail and port infrastructure with excess capacity
- Access to deep sea ports
- Competitive shipping distance to Asia
- Positive government stance on mining

The Company is building a quality portfolio of metallurgical coal assets suited to the Asian export market and the Board of Directors have a strong track record in identifying and developing world class coal assets in Australia and abroad.



Contact:

Atrum Coal NL
Robert W. Bell Executive Chairman
M: +1-604-763-4180
E: rbell@atrumcoal.com

Theo Renard Company Secretary
M: +61-430-205-889
E: trenard@atrumcoal.com

Nathan Ryan Investor Relations
M: +61-420-582-887
E: nathan@atrumcoal.com