Media Release

Solid Energy to undertake exploratory drilling in Eastern Southland

Solid Energy is to undertake a six-month exploratory drilling programme in Eastern Southland to further define its coal resource in the area.

The drilling will start near the site of the former Mataura Opencast Mine in late February, extending to the north and west. Drilling will also be undertaken in the Croydon area to the north of Mataura coalfield, as well as south of Mataura. The drilling will generally be undertaken on land the company owns and with the permission of the landowners on land the company does not own.

Up to five drill rigs will be in operation at any one time at least three will be dedicated to resource definition and one to geotechnical and groundwater studies. In preparation for the drilling programme, buildings at Mataura Mine are currently being refurbished and upgraded to provide office space and facilities to log and store core samples. As well as Solid Energy staff, a number of consultants and contractors will be on site carrying out specialist activities associated with the drilling programme.

Solid Energy currently has access to more than 600 million tonnes of coal, mostly lignite, in the Eastern Southland area through its Ohai, Mataura and New Vale Mines and through an active programme of land acquisition over the last 18 months.

Barry Bragg, Solid Energy's Chief Operating Officer, says: "Over recent months Solid Energy has been actively investigating how it might best use our huge lignite resources in Southland. Our work is looking at a range of options including increased use of lignites by industrial markets, electricity generation, transport fuels, petrochemicals and other products."

"As part of this we need to know a lot more about the resource and its properties. This drilling programme is the first step in helping to answer many of the questions we've got about how we might best develop lignite mining in the area. This will be a fairly lengthy process and we are committed to keeping people informed about our plans as they develop."

"Until the end of last year we were looking at reopening the former Mataura Opencast Mine to serve South Island industrial markets, but we have reassessed this since purchasing New Vale Coal Co Ltd in December. New Vale currently produces for local industry and Fonterra's Edendale Dairy factory and has the potential to expand for other South Island markets. We plan to carry out resource definition drilling at New Vale later in the year."

For further information contact:

Vicki Blyth Telephone: 03 345 6000

Communications Director Mobile: 021 670 250

Solid Energy New Zealand Ltd