Bandanna Energy Limited (ASX:BND) Commences Pre Feasibility Study for South Galilee Project

Brisbane, Mar 18, 2010 AEST (ABN Newswire) - Bandanna Energy Limited (ASX:BND) is pleased to announce that the Operator of the South Galilee Project Joint Venture, AMCI (Alpha) Pty Ltd, has commenced Pre Feasibility Studies (PFS) following the award of various contracts. The PFS follows successful completion of a Concept Study which identified a conceptual open cut and underground mine development of 43 years mine life, with an average annual production of between 15 and 20 Mt of thermal coal, centred on EPC 1049.

The South Galilee Project lies adjacent to Waratah Coal's/Resource House's "China First" Project and south of Hancock Prospecting's Kevins Corner and Alpha projects (refer Figure), the respective proponents of both currently submitting EIS' with a view to fast-tracking development of their projects, targeting first first coal production by the end of 2013. The South Galilee Project is the only ASX listed project in this newly emerging, world class, thermal coal province to have completed a concept study and moved through to PFS status.

Approximately 7,000 m of additional drilling is programmed during the PFS which will concentrate on upgrading the current 982 Mt of JORC compliant resource* in the proposed open cut footprint, corresponding to the nominal first 20 years of mine life. This drilling should deliver a substantial increase in the confidence level of the resource which currently stands at 922 Mt of JORC compliant Inferred and 60 Mt of JORC compliant Indicated.

MB Mining has been contracted to undertake open cut and underground studies of a number of mining scenarios and to provide details on equipment, capital and operating costs as part of a detailed mining method analysis. Aurecon Hatch has been appointed as contractor to work through site infrastructure requirements and complete the overall PFS. Coal quality and processing requirements will be undertaken by A & B Mylec Pty Ltd. Matrixplus is undertaken the environmental studies as part of an Environmental Impact Statement. It is estimated that the PFS will be completed by first quarter 2011.

The South Galilee Project is a Joint Venture between Alpha Coal Pty Ltd (a wholly owned subsidiary of Bandanna Energy Limited) and AMCI (Alpha) Pty Ltd (AMCI) whereby AMCI is acquiring the right to earn up to 50% interest by expending up to $25 mil. To date AMCI has expended approximately $6.2 million and the proposed PFS budget will be fully funded by AMCI as part of their farmin arrangements.

This PFS is seen to be an important milestone for the future development of what Bandanna believes is a very important asset. The Company's Managing Director Dr Ray Shaw commented that progression of this project into the PFS stage fits well with the recent announcement of the appointment of Waratah's former Exploration Manager, Mr David Campbell, as Bandanna's new Manager - Exploration and increasing sector attention towards the Galilee Basin development.

"With Resource House expected to undertake an IPO and Hancock's commencing a significant bulk sampling program we anticipate that 2010 will prove to be a significant year for Galilee Basin coal stakeholders", Dr Shaw concluded.

Further information concerning the South Galilee Project can be obtained from the Company's Web Site at http://www.bandannaenergy.com.au

Contact

Dr Ray Shaw Managing Director Tel: +61-7-3041-4400 Fax: +61-7-3041-4444