Bandanna Energy Limited (ASX:BND) Significant Increase in Indicated Resources for Springsure Creek Project

Brisbane, Dec 21, 2011 AEST (ABN Newswire) - Bandanna Energy Limited (ASX:BND), through its wholly owned subsidiary Springsure Creek Coal Pty Ltd, is pleased to announce that Xenith Consulting has certified resources in the Springton domain totalling 255.9 million tonnes. This Resource comprises Inferred Resources of 109.7 million tonnes and Indicated Resources of 146.1 million tonnes. The new Resource Statement follows the completion of boreholes of the targeted Aries 2 seam since July 2011.

The Springton domain was the focus of drilling from July 2011 and has recently been curtailed due to inclement weather. No drilling occurred in the Turkey Creek, Moorooloo and Arcturus domains and previous resource certifications by Resolve Geo remain for those sections of the deposit.

JORC Resources for Springsure Creek now total 490.5 million tonnes comprising Inferred Resources of 262.5 million tonnes and Indicated Resources of 228 million tonnes. This represents an overall increase of 31% compared to the last Resource Statement issued in July 2011, however, the 76% increase in Indicated resource demonstrates Springsure Creek Coal's determination to substantially increase resource confidence ahead of proposed development in 2014.

Additional to the A2 seam, Springsure Creek Coal is pleased to announce the incorporation of 29.3Mt of Inferred Resources in the Castor Seam within the Springton South domain. The Castor Seam underlies the Aries 2 Seam and has potential to be mined post or pre Aries 2 development. The Castor Seam has mineable thicknesses in excess of 2.0m with insitu ash 10-12% and CV 26.0 KJ/Kg adb

Springsure Creek Coal is currently undertaking a Definitive Feasibility Study (DFS) for its Springsure Creek Project and the large increase in Indicated Resources can now be fed into the advanced mine design as part of this process. Prior to this update, 75% of Indicated Resources were converted to Probable Reserve through the mine design process.

Drilling Program 2012 - Resources and Reserves Design

The Bandanna Energy Pty Ltd Board has approved the 2012 Drilling Budget for Springsure Creek. The Budget allows for two drill rigs completing some 80 drill holes to achieve two distinct aims:

- One rig targeting the compilation of Measured Resources sufficient to underpin Proven and Marketable Reserves for the first 10-15 years of longwall production;

- The second rig to maintain the expansion of Indicated Resources to the south east and south west of existing Indicated Resources and Probable Reserve.

All holes will also collect geotechnical, gas, hydrological and other data consistent with the requirements of the DFS.

Bandanna Energy Managing Director, Dr Ray Shaw commented, "this increase in resources, and in particular the marked rise in Indicated Resources, not only defines Springsure Creek as a world class thermal coal resource project but showcases Bandanna's resolve to consistently meet its exploration, environmental and engineering targets and timelines and for the project to remain on course for coal production in FY2014."

Springsure Creek is located within Bandanna's group of Bowen Basin Projects.

Bandanna has secured 4 Mtpa export capacity for Springsure Creek through Stage 1 of the Wiggins Island Coal Export Terminal (WICET) at Gladstone, following the signing of a "take or pay" agreement in October 2011.

The full version of the EPC 891 Springsure Creek Resource Statement can be viewed at the Company website http://www.bandannaenergy.com.au.

Contact

Dr Ray Shaw Bandanna Energy Limited Tel: +61-7-3041-4400