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1 International Coal Limited INTERNATIONAL COAL LIMITED (ABN ) FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2013 Page 1 of 17

2 Interim Financial Report for the Half Year Ended 31 December 2013 Corporate Directory ABN Directors Mr John Lester Non Executive Chairman Mr Hugh Dai Executive Director Mr Noel Halgreen Non Executive Director Company Secretary Ms Kate O'Donohue Company Matters Registered Office ANZ Bank Building Level 15, 324 Queen Street Brisbane Queensland 4000 Principal Place of Business ANZ Bank Building Level 15, 324 Queen Street Brisbane Queensland 4000 Share Registry Link Market Services Limited Level 15, 324 Queen Street Brisbane Queensland 4000 Solicitors CBP Lawyers Level Queen Street Brisbane Queensland 4000 Auditors Hall Chadwick Level 40 2 Park Street Sydney New South Wales 2000 Bankers Commonwealth Bank of Australia Ltd Website Page 2 of 17

3 Contents Corporate Directory 2 Director's Report 4 Directors 4 Result 4 Review of Operations 4 Bundaberg Project 4 Consuelo Project 5 South Blackall Project 5 Corporate Activities 6 Competent Person's Statement 6 Auditor's Independence Declaration 8 Consolidated Statement of Profit or Loss and other Comprehensive Income for Half Year Ended 31 December Consolidated Statement of Financial Position for Half Year Ended 31 December Consolidated Statement of Changes in Equity for the Half Year Ended 31 December Consolidated Statement of Cash Flows for Half Year Ended 31 December Notes to the Half Year Financial Statements 13 Directors' Declaration 15 Independent Audit Review Report 16 Page 3 of 17

4 Director's Report Directors The name of directors who held office during or since the end of the half year reporting period are: John Lester Non Executive Chairman Hugh Dai Executive Director Noel Halgreen Non Executive Director Result The loss after tax for the half year ended 31 December 2013 was $424,613. Review of Operations 31 st January 2014: International Coal Limited (ASX: ICX) continued to receive positive results from its key coking coal projects at Bundaberg and Consuelo. The second half of 2013 saw the Company make significant progress drilling and exploring these key projects and lay the groundwork for a successful At 1 January, 2014, ICX and its subsidiaries (Gen Resources and Great White Nominees) held the following tenements: Bundaberg Project (Maryborough Basin) EPC 2194 (75%), EPC 2195 (75%), EPC 2196 (75%) Consuelo Project (Bowen Basin) EPC 2332 (20%) EPC 2318 (20%) South Blackall Project (Eromanga Basin) EPC 2197 (100%) Don Juan Project (Surat Basin) EPC 2286 (46%) Other Projects EPC 2861 (100%) During the quarter, ICX retained all of its core granted tenements. Exploration Permit for Coal (EPC 2327) in the Consuelo Project exited the native title notification period in late December Grant is expected within 30 days of the end of this notification period (i.e. January 2014). During the quarter, exploration activities focused on the Bundaberg and Consuelo Project with desktop studies and compliance work carried out on the remaining tenements. Bundaberg Project The Company completed drilling at Bundaberg (Figure 1) during the reporting period as scheduled and the results were released on 17 December An inferred Resource of 37.9Mt of hard coking coal was reported following the drilling of two exploration holes and an update of the related geological model (Figure 1). This was an increase of 33% from previously announced results. The Inferred Resource was reported to the new reporting standards required by the ASX and Joint Ore Reserve Committee (JORC 2012). International Coal Limited is not aware of any new information or data that materially affects the information included in the announcement of 17 December Further, that in regard to the estimates provided in that announcement, all material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not materially changed. These results were from the same seams that were sampled and found to have hard coking coal characteristics comparable to hard coking coal mines in the Bowen Basin. The Company is working with Fox Resources who hold ground adjacent to the south of EPC The two companies developed a data sharing arrangement to enable the development of the resource as a whole. Page 4 of 17

5 Consuelo Project EPC 2332 and 2318 (Consuelo Project) were granted in July 2013 and EPC 2327 has been granted subsequent to the reporting period A desktop geological review was compiled on the Consuelo Project (Figure 1) in the southern Bowen Basin near Rolleston. The Company currently holds a 20% interest (Coal Face Resources holds the remaining 80%) in the Consuelo Project and is currently exercising its option to earn in up to 71% of the project. The studies substantiated the potential for semi-soft coking and thermal coal products. The review indicated that EPC 2327 has the highest potential for coal at open cut depths of all the Consuelo Project tenements (EPC 2327, 2318, 2332). The new studies have uncovered drilling and seismic information that suggests there is potential for coal seam(s) up to 4m thick to occur between 45m and 100m in the northwest of the tenement. The Company is currently earning a major stake (up to 71%) in the Consuelo Project - a potentially large semi-soft coking and thermal coal prospect in the Bowen Basin, one of the world's premier coal basins. The Company intends to commence drilling at the Consuelo Project as soon as landholder negotiations and clearance work is completed. Early discussions with rail and port operators for the Consuelo and Bundaberg projects also progressed during the reporting period as part of the ICX's strategy to fast track the development of these projects. South Blackall Project The Company continues to research options for the development of its South Blackall Project (Figure 1) in the Eromanga Basin and remains committed to the commercialisation of this large thermal coal asset. Improvements in our operations saw a continued reduction in our administration costs from the previous quarter. The Company remains in a position to progress exploration on our projects and expects to produce further results on its key project in coming months. The Board and management remain in discussions with strategic investors and continue to look for other project opportunities that fit International Coal's strategic focus on achieving coal production by 2017 or earlier. Other Projects Joint venture work at Don Juan (EPC 2286) focussed on further desktop studies and land clearances, primarily led by joint venture partner Coal Face Resources Pty Ltd. The company is reviewing options for commercialising this project. An option for purchase was negotiated with Blackall Capital Pty Ltd for non-core assets (EPC 2702 and 2861) near Emerald following the grant of EPC This option has resulted in the sale of EPC 2702 in December Proceeds of the sale of these assets will be used to fund development of our core projects (Consuelo and Bundaberg) and will be included in the financial statements for the next reporting period. These decisions are consistent with our continued effort to focus on our core assets at Consuelo and Bundaberg. Page 5 of 17

6 Figure 1 Location of key projects held or part held by International Coal Limited and related companies m t0 n rvt BLACKWATER A S GMR Rail Proposal Land as tenure Granted Con7POlng APPtcal. Exulornon PEIT,0 Proposal Land Ocean Sedimentary INN &IS South Steckel, Project D017 Juan Project TAROOM WANDOAN Surat Rao Project Bowen stein Surat Basin E Bests Marybefou0117 Been QHILPIE CHARLEVILLE ROMA ' MILES Infrastructure Coakhautape railway Bat Proposed refreay One (approarnate) NW road Inehway sheeny oce ' ST. GEORGE e. tamuji9 tan International jest/jo oa.00 International Coal Projects Location Map Corporate Activities Corporate activity continued to focus on marketing the Company and managing its reporting and compliance activities. Management continued to achieve improvements in operational efficiencies during the reporting period through stronger pre-expenditure controls and negotiation on contractor rates following the contraction of the coal industry through These efforts saw the Company maintain a strong financial position into Our corporate marketing activities were aimed at maintaining the Company's profile and key stakeholder relationships. A number of Asian investors continued to express an interest in the Company and its coal assets. The Board continues to develop these relationships for the Company's long term benefit, particularly as our projects move beyond exploration toward mine development. COMPETENT PERSON'S STATEMENT All JORC Inferred Resource and Exploration Target estimates discussed in this report have been released previously. Technical information relating to the coal projects in this announcement has been compiled by several technical specialists and reviewed and signed-off by Mr Mark Biggs, Principal Geologist formerly of Moultrie Database and Modelling and now of ROM Resources. Mr Biggs is a member of the Australasian Institute of Mining and Metallurgy and has over 29 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 Mineral Resources and Reserves (JORC Code 2012). The estimates of the Coal Resources presented in this Report are considered to be a true reflection of the Coal Resources as at 30 th November 2013 and have been carried out in accordance with the principles and guidelines of the JORC Code With respect to Exploration Targets and Inferred Resource estimates mentioned for South Blackall and Consuelo, this information was prepared and first disclosed under the JORC Code It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Finally, 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 of 17

7 Events Subsequent to reporting date No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of the operations, or the state of affairs of the Group in future financial years. Rounding of Amounts The consolidated group has applied the relief available to it in ASIC Class Order 98/100 and accordingly certain amounts in the financial report and the directors report have been rounded off to the nearest $1,000. Auditor's Independence Declaration The lead auditor's independence declaration under s 307C of the Corporations Act 2001 is set out on page 8 for the half-year ended 31 December This directors' report is signed in accordance with a resolution of the Board of Directors. Directo Dated this day of 2014 Page 7 of 17

8 HALL CHADWICK r2 Chartered Accountants and Business Advisers A4 INTERNATIONAL COAL LIMITED AND CONTROLLED ENTITIES ABN AUDITOR'S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF INTERNATIONAL COAL LIMITED I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2013 there has been no contraventions of: a. the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and b. any applicable code of professional conduct in relation to the review. C HALL CHADWICK Level 40, 2 Park Street Sydney, NSW 2000 DREW TOWNSEND PARTNER 12 March 2014 SYDNEY Level 40 2 Park Street Sydney NSW 2000 Australia GPO Box 3555 Sydney NSW 2001 Ph: (612) Fx : (612) NEWCASTLE Ph: (612) Fx : (612) PARRAMATTA Ph: (612) Fx : (612) PENRITH Ph: (612) Fx : (612) MELBOURNE Ph: (613) Fx : (613) PERTH Ph: (618) Fx : (618) BRISBANE Ph: (617) Fx: (617) GOLD COAST Ph: (617) Fx : (617) A member of AGN International Ltd, a worldwide association of separate and independent accounting and consulting firms SYDNEY NEWCASTLE PARRAMATTA PENRITH MELBOURNE PERTH BRISBANE GOLD COAST Liability limited by a scheme approved under Professional Standards Legislation. Page 8 of 17

9 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2013 Consolidated Group 31/12/2013 $000 31/12/2012 $000 Revenue - Interest Income Administration expenses (98) (179) Compliance expenses (42) (37) Consultancy costs (171) (101) Employee benefit expenses (119) (564) Exploration costs (18) Insurance costs (13) (25) Loss before income tax (425) (813) Income tax expense Loss for the period (425) (813) Other Comprehensive income Total Comprehensive Loss for the period (425) (813) Basic earnings per share (cents) ($0.003) ($0.006) Diluted earnings per share (cents) ($0.002) ($0.006) The accompanying notes form part of these financial statements. Page 9 of 17

10 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013 Consolidated Group ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Exploration and Evaluation Assets Mineral Assets Plant & Equipment Intangible Assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY Note 5 31/12/ /06/2013 $000 $000 1,574 1, ,630 2,237 3,318 8, ,271 7, ,968 11,064 13,598 13, ,056 12,611 15,122 2,009 (4,075) 14,309 1,952 (3,650) 13,056 12,611 The accompanying notes form part of these financial statements. Page 10 of 17

11 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF- YEAR ENDED 31 DECEMBER 2013 Ordinary Option Consolidated Group Shares Retained Earnings Reserve Total $000 $000 $000 $000 Balance at 1 July ,309 (3,650) 1,952 12,611 Loss for the period (425) (425) Total comprehensive income for the period - (425) (425) Transactions with owners, in their capacity as owners, and other transfers Shares issued during the period Options granted during the period Total transactions with owners and other transfers Balance at 31 December ,122 (4,075) 2,009 13,056 Ordinary Option Consolidated Group Shares Retained Earnings Reserve Total $000 $000 $000 $000 Balance at 1 July ,574 (2,385) 1,948 13,137 Loss for the period - (813) - (813) Total comprehensive income for the period - (813) - (813) Transactions with owners, in their capacity as owners, and other transfers Shares issued during the period Options granted during the period - - Total transactions with owners and other transfers Balance at 31 December ,174 (3,198) 1,948 12,924 The accompanying notes form part of these financial statements. Page 11 of 17

12 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER /12/ /12/2012 $000 $000 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees (548) (937) Sundry Income 18 Interest and other receipts Income Tax R&D Refund 708 Net cash (used in)/provided by operating activities 182 (826) CASH FLOWS FROM INVESTING ACTIVITIES Payments for Mineral Assets (126) Payments for Exploration and Evaluation Assets (67) (777) Net cash used in investing activities (67) (903) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Cost of issue of shares Net cash (used in)/provided by financing activities Net increase/(decrease) in cash held 115 (1,729) Cash and cash equivalents at beginning of period 1,459 3,965 Cash and cash equivalents at end of period 1,574 2,236 The accompanying notes form part of these financial statements. Page 12 of 17

13 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation These general purpose interim financial statements for half-year reporting period ended 31 December 2013 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. This interim financial report is intended to provide users with an update on the latest annual financial statements of International Coal Limited and its controlled entities (referred to as the consolidated group or the Group). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2013, together with any public announcements made during the following half-year. Significant Accounting Policies (a) Changes in accounting policies and disclosures 1. Basis of consolidation Adoption of AASB 10 resulted in change in the definition of control. Under the new definition, the group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated group has reviewed its investments in other entities to assess whether the consolidated treatment in relation to these entities is different under AASB 10 than under the previous applicable standard. No differences were found and therefore no adjustments to any of the carrying amounts in the financial statements are required as a result of adoption of AASB 10. (b) New and amended standards and interpretations The Group has adopted the following new and revised Australian Accounting Standards from 1 July 2013 together with consequential amendments to other Standards: AASB 10: Consolidated Financial Statements AASB 127: Separate Financial Statements (August 2011) AASB 11: Joint Arrangements AASB 128: Investments in Associates and Joint Ventures (August 2011) AASB 12: Disclosure of Interests in Other Entities AASB : Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards; and AASB : Amendments to Australian Accounting Standards Transition Guidance and Other Amendments. These Standards became mandatorily applicable from 1 January 2013 and became applicable to the Group for the first time in the current half-year reporting period 1 July 2013 to 31 December The Group has applied these Accounting Standards retrospectively in accordance with AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors and the specific transition requirements in AASB 10 and AASB 11. The adoption of these standards has not had a material impact on the financial statements of the consolidated group. Where required, new disclosures introduced by these standards have been included in these interim financial statements. Page 13 of 17

14 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) Going Concern The consolidated entity has recorded a net loss of $424,613 for the half year ended 31 December 2013, and has no ongoing source of operating income. At 31 December 2013 the consolidated entity had net assets of $13,055,292. The financial report has been prepared on a going concern basis which assumes the realisation of assets and extinguishment of liabilities in the normal course of business and at the amounts stated in the financial statements. The directors believe the going concern basis is appropriate for the following reasons: At 31 December 2013 the consolidated entity had cash and cash equivalents of $1,574,078. The directors have prepared cash flow forecasts which include a further capital raising planned for the second half of 2014 to meet all planned expenditure programs. Based on the above, the directors are satisfied that the consolidated entity will be able to fund its operations and continue as going concern, and it is appropriate that the financial statements have been prepared on that basis. NOTE 2: CONTINGENT LIABILITIES The company had no contingent liabilities at 31 December NOTE 3: SEGMENT INFORMATION International Coal Limited operates within the exploration industry in Queensland, Australia NOTE 4: SUBSEQUENT EVENTS No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of the operations, or the state of affairs of the Group in future financial years. NOTE 5: CONTRIBUTED EQUITY 31/12/ /06/2013 $000 $000 a) Issued and fully paid shares 15,122 14,309 15,122 14,309 b) Movement in Issued and fully paid shares Number of $'000 Shares Balance at Beginning of the period 138,730,003 14,309 Issues under Agreement with Coal Face Resources Pty Ltd 10 October ,250, Balance at the end of the period 152,980,003 15,122 Page 14 of 17

15 Interim Financial Report for the Half-year Ended 31 December 2 DIRECTORS' DECLARATION In accordance with a resolution of the directors of International Coal Limited, the directors of the company declare that: 1. The financial statements and notes, as set out on pages 9 to 14 are in accordance with the Corporations Act 2001, including: a, complying with Accounting Standard AASB 134: Interim Financial Reporting; and b, giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and of its performance for the half-year ended on that date. 2. In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Page 15 af 17

16 HALL CHADWICK r2 Chartered Accountants and Business Advisers INTERNATIONAL COAL LIMITED AND CONTROLLED ENTITIES ABN INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF INTERNATIONAL COAL LIMITED Report on the Half-year Financial Report We have reviewed the accompanying half-year financial report of International Coal Limited, which comprises the consolidated statement of financial position as at 31 December 2013, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information and the directors' declaration. Directors' Responsibility for the Half-Year Financial Report The directors of International Coal Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of International Coal Limited financial position as at 31 December 2013 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations As the auditor of International Coal Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. SYDNEY Level 40 2 Park Street Sydney NSW 2000 Australia GPO Box 3555 Sydney NSW 2001 Ph: (612) Fx : (612) NEWCASTLE Ph: (612) Fx : (612) PARRAMATTA Ph: (612) Fx : (612) PENRITH Ph: (612) Fx : (612) MELBOURNE Ph: (613) Fx : (613) PERTH Ph: (618) Fx : (618) BRISBANE Ph: (617) Fx: (617) GOLD COAST Ph: (617) Fx : (617) Independence In conducting our review, we have complied with the independence requirements of the Corporations Act A member of AGN International Ltd, a worldwide association of separate and independent accounting and consulting firms SYDNEY NEWCASTLE PARRAMATTA PENRITH MELBOURNE PERTH BRISBANE GOLD COAST Liability limited by a scheme approved under Professional Standards Legislation. Paae 16 of 17

17 HALL CHADWICK a INTERNATIONAL COAL LIMITED AND CONTROLLED ENTITIES ABN INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF INTERNATIONAL COAL LIMITED Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of International Coal Limited is not in accordance with the Corporations Act 2001 including: (I) (ii) giving a true and fair view of International Coal Limited's financial position as at 31 December 2013 and of its performance for the half-year ended on that date; and complying with AASB 134: Interim Financial Reporting and the Corporations Regulations Emphasis of Matter Without modifying our conclusion, we draw attention to Note 1 in the half year financial report which indicates that the consolidated entity incurred a net loss of $424,613 and has no ongoing source of operating income for the half year ended 31 December These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity's ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report. HALL CHADWICK Level 40, 2 Park Street Sydney, NSW 2000 DREW TOWNSEND PARTNER 12 March 2014 Page 17 of 17