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FSE - Firestone Energy Limited - Quarterly activities report for the period to 31 December 2010 and Cautionary announcement FIRESTONE ENERGY LIMITED (formerly: Centralian Minerals Limited (Incorporated in Australia) (Registration number ABN 058 436 794) Share code on the JSE Limited: FSE Share code on the ASX: FSE ISIN: AU000000FSE6 (SA company registration number 2008/023973/10) ("FSE" or "the Company" ASX Release - 28th January 2011 ABN 71 058 436 794 QUARTERLY ACTIVITIES REPORT FOR THE PERIOD TO 31 December 2010 AND CAUTIONARY ANNOUNCEMENT The Board of Firestone Energy Limited (ASX / JSE: FSE) is pleased to provide shareholders with its Quarterly Activities Report for the 3 month period ended 31 December 2010. HIGHLIGHTS FSE`s major shareholder, Sekoko Resources, raises R250m with Industrial Development Corporation to fund Sekoko`s portion of mine construction; Completed off-take discussions, and agreement expected to be signed shortly; On target to begin mine construction in the second half of 2011; Definitive Feasibility Study "DFS" completed and approved by the board on the 31st of October 2010; Submitted Environmental Impact Assessment / Environmental Management Programme Report, and have therefore, complied with all requirements for Mining Rights application. We expect Record Of Decisions and Mining Rights approval within the first half of 2011; Letter of interest signed for purchase of Wash plant and long lead plant items; Rail design work, environmental study and public participation commenced; Hooikraal surface rights ownership transferred to FSE`s name and secured a 12 month purchase option for Massenberg surface rights; Cornerstone Investor activity and interest on-going; Secured and opened an office in Lephalale town within vicinity of the Waterberg Project. OVERVIEW The principle focus of the Company over the past quarter has been to: finalise the DFS on the Waterberg Project; Complete the Environmental Impact Assessment studies and submit Environmental Management Program Report as legally required within 90days of submitting Mining Rights application; Secure the off-take agreements; and Secure the surface rights. The Board is pleased to report favourable performance on the above objectives. WATERBERG COAL PROJECT Definitive Feasibility Study (DFS) The DFS proved that the Waterberg Project can run a profitable 20 year coal mine premised on power station type coal. The DFS did not take into account export coal, metallurgical and low phosphorus coal. A separate short term study is to commence to confirm yields, volumes, transport and market for these products which are by their nature more lucrative than power station coal. The board approved the power station coal DFS on the 31st of October 2010. Project Update A letter of interest was signed for a purpose built modular plant that will be suitable for the mine plan as detailed in the DFS. Long lead items relating to this plant have already been ordered by the supplier at their own cost. The final plant purchase agreement will be signed after off-take agreements have been signed and funding has been confirmed. Hooikraal surface rights ownership has been registered into FSE`s name. FSE now owns two surface rights being Smitspan and Hooikraal. The outstanding payments on the surface rights are currently being paid as per an agreed programme of payment. FSE signed a 12 month option in November 2010 to purchase Massenberg surface rights, FSE is negotiating a further option to purchase Vetleegte. FSE has signed a lease for an office in Lephalale within the Waterberg vicinity. This further proves the interest and commitment by FSE to start mining operations in the Waterberg area and contribute to the economic growth and well being of the Lephalale Municipality, Limpopo Province and South Africa as a whole. Socio-economic impact studies have commenced and are progressing well. Ground water and air quality monitoring studies commenced and are progressing as intended. Regulatory Approvals As part of the Mining Right Application various statutory compliance supporting documents were lodged with the South African government regulatory authorities during the quarter. Milestones achieved within the Feasibility Study phase, include: Lodgement of the Environmental Management Plan (Dept of Mineral Resources/Dept of Environmental Affairs & Tourism); Lodgement of the Water Use Licence Application (Dept of Water Affairs). We have confirmed with current major users of water in the Waterberg area that there is spare capacity of water to accommodate start up of our mining activities. The Company is expecting that the regulatory approvals will still be granted prior to the first half of 2011. Further commitments will be made for procurement of long-lead items for the Water Coal Project and construction is scheduled to commence following receipt of final regulatory approvals. MARKETING Following the approval of the DFS by the board of FSE on the 31st of October 2010, the potential off-taker requested time to study the contents and results of the DFS. This resulted in FSE not being able to conclude and sign an off- take agreement by the 31st of December 2010 due to further work, changes and comments requested by the off-taker following the DFS finalisation. The potential off-taker satisfied themselves with the contents and changes to the DFS early in January 2011 and therefore the Sekoko/FSE JV is likely to sign the off-take agreement before the end of the first quarter of 2011. Markets for export coal and metallurgical coal have been identified. These customers are adamant that they will commit to an off-take discussion on presentation of a DFS report reflecting viability, yields, volumes and costing of such coal. FSE plans to complete the prime products DFS before the end of 2011. CORPORATE It was reported in the first quarter, as part of the post quarter activities, that Amanda Matthee resigned from FSE as a director and was replaced by Mr Sizwe Nkosi as the Finance Director. On the 31st of December 2010, Mr John Wallington resigned from the board of FSE to pursue personal interests. In early January 2011 Mr Timothy Tebeila resigned from the Firestone board to remove himself from any future conflicts of interests that he may be presented with by virtue of his directorships of Sekoko Resources and Firestone Energy Limited. As at the 31st of December 2010 the Company had a positive cash balance of $1.6m. CAUTIONARY ANNOUNCEMENT Shareholders are advised that the company has entered negotiations, which if successfully concluded may have a material effect on the price of the company`s securities. Accordingly, shareholders are advised to exercise caution when dealing in the company`s securities until a full announcement is made. GENERAL Firestone Energy is an independent Australian exploration company focused on developing coal projects in South Africa. The company is currently exploring the richly endowed Waterberg coal field in the Limpopo Province of South Africa The Company is committed to value-added growth through becoming an independent coal and energy producer at its projects in South Africa The Company has entered into two joint ventures with Sekoko Resources; a South African black empowerment company (BEE) and Sekoko has two directors on the Board of Firestone Energy. Corporate Details ASX: FSE JSE: FSE Issued Capital: 2,401 million ordinary shares Major Shareholders: Sekoko Resources (Pty) Ltd Colbern Fiduciary Nominees Ltd Bell Potter Nominees Ltd Directors and Officers: Non Executive Directors: John Dreyer (Chairman) Sizwe Nkosi Colin McIntyre David Perkins Company Secretary Jerry Monzu Contact: Unit B9,, 431 Roberts Road Subiaco, Western Australia 6008 Tel: +61 (0)8 9287 4600 Web: www.firestoneenergy.com.au For further information please contact: Jerry Monzu Company Secretary Tel: +61 8 9287 4600 www.firestoneenergy.com.au 28 January 2011 Pretoria Sponsor and Corporate Advisor River Group Date: 28/01/2011 13:25:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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