TO: ASX COMPANY ANNOUNCEMENTS OFFICE

1 December 2014
ASX Code: MTN

MARATHON ANNOUNCES FARM-IN TO LEIGH CREEK ENERGY PROJECT

Marathon Resources Limited ("Marathon") is pleased to announce that it has signed a Non-Binding Term Sheet to undertake due diligence investigations, and subject to all relevant approvals, to farm-in on the Leigh Creek Energy Project.
The Leigh Creek Energy Project ("LCEP") is owned by ARP TriEnergy Pty Ltd ("TriE"), a private Australian company and is focused on generating significant new energy sources by producing gas supplies from the vast Leigh Creek coal reserves via In-Situ Gasification ("ISG"). TriE is currently Marathon's largest shareholder, holding 19.99% of shares.
The Non-Binding Term Sheet also contemplates the grant to Marathon of an option to acquire all of the issued share capital of TriE from its existing shareholders in return for the issue of 138 million Marathon shares. The option will be exercisable during the period of 18 months following its approval by Marathon shareholders.

Background

Marathon has been reviewing projects for an appropriate investment with the potential to add significant value to its shareholders in the context of an equity markets environment where capital is constrained for modest sized mining and energy companies. The Company is especially pleased that the LCEP project is located in South Australia.
The Marathon Board has looked at many opportunities in Australia and overseas but now believes it has met the chosen criteria of providing low risk and low cost appraisal drilling, a project managed by credible people and an entry price which was reasonable.
The Board considers the LCEP an outstanding low risk opportunity and one which is fairly priced.
South Australia has a formal regulatory environment for ISG projects.

The Project

The LCEP is located at Leigh Creek in central South Australia approximately
500km north of Adelaide, over and around the existing coalfield, and is contained within the newly released Petroleum Exploration Licence ("PEL") 650, itself

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contained within Petroleum Exploration Licence Application ("PELA") 647 - both assets of TriE. In addition, TriE also is the holder of two Exploration Licence Applications and another four Petroleum Exploration Licence Applications, of which one is located in the Cooper Basin Region.
The proposed LCEP project intends to develop an ISG process at depth (400m -
1,500m) using standard oil industry drilling techniques.
ISG facilities operate by drilling two opposite sides of an underground coal seam. One well injects air or oxygen into the coal seam to initiate the gasification reaction. The other well is used to return syngas to the surface where it can be processed further for power, gas, and chemical purposes.

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In-Situ Gasification (ISG)

ISG is a proven technology and has been in commercial operation in Russia for over 50 years.
ISG does not involve coal mining, handling or transportation and there are fewer environmental impacts than associated with coal mining as the process includes pollutant capture and there is no landfill disposal required.
Leigh Creek has excellent existing infrastructure including a rail line, sealed main regional road access, high voltage power, water, airfield and other services associated with the adjoining townships of Leigh Creek and Copley.
The LCEP is outside the Great Artesian Basin.

Term Sheet Summary

A Non-Binding Term Sheet has been signed between the parties.
It is intended that binding transaction documents be signed as soon as possible subject to final negotiations.
The Non-Binding Term Sheet is structured as follows:
• Marathon will enter into a due diligence agreement pursuant to which it will receive the exclusive right to undertake due diligence investigations on the TriE tenements (Tenements) until 31 December 2014 (or such later date as agreed) in return for expending $400,000 on exploration activities pursuant to an agreed due diligence program.

• TriE will provide consulting services to Marathon in relation to a range of projects currently under consideration by Marathon, including the Tenements, in return for fees to be negotiated, but not exceeding $160,000 in respect of the Tenements.

• The parties will enter into a farm-in agreement and associated joint venture agreement pursuant to which Marathon will earn a 10% undivided interest in the Tenements in consideration for expending $600,000 on exploration activities.

• Marathon will be granted an option over all of the issued capital of TriE, exercisable during the period of 18 months following the date of Marathon shareholders approving the grant of the option. On exercise of the option, Marathon will, issue 138 million new ordinary shares to TriE shareholders (which, based on the current share structure of Marathon, will represent 60% of the total expanded capital base).

• Simultaneously with the issue of the new shares, Marathon will cancel TriE's current 19.99% shareholding, with the effect that TriE shareholders will ultimately hold 65.16% of Marathon shares on issue, with existing Marathon shareholders holding the balance 34.84%.

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Shareholders in Marathon will be asked to approve the transactions contemplated by the Non-Binding Term Sheet at two separate Extraordinary General Meetings. At the first, shareholders will be asked to approve the farm-in arrangement and the grant of the option to Marathon. The issue of Marathon shares upon exercise of
the option, and the related share cancellation will be the subject of a second
Extraordinary General Meeting, required in the event that the option is exercised.

New Marathon Director

Separately, Marathon is pleased to announce that Mr Justyn Peters - currently Executive Chairman of TriE - has been appointed a director of Marathon, effective immediately, as the nominee of TriE which currently owns 19.99% of Marathon.
Mr Peters was formerly a senior executive with Linc Energy, a world leader in ISG technology. His qualifications include a Bachelor of Laws and Bachelor of Arts (Politics and Jurisprudence) from the University of Adelaide. Mr Peters held senior management positions with the Queensland Environmental Protection Authority and was head of Property and Environment for Air Services Australia.
The Chief Executive Officer of TriE (which will undertake the role of operator under the proposed joint venture arrangement) is Mr David Shearwood who has had 28 years' experience as a fund manager, strategist, director and investment banker at firms including Macquarie Bank, Westpac, QBE Insurance, Atom Funds Management, Du Pont and Rio Tinto. He was an early investor and backer of Linc Energy's growth in the ISG industry. Mr Shearwood's qualifications include a Bachelor of Engineering (Mining Hons) from the University of Sydney (1984), the AICD Company Directors Course Diploma from the Australian Institute of
Company Directors (2000 with order of merit), a Graduate Diploma in Applied Finance and Investment from the Australian Securities Institute (2000) and a Professional Diploma in Human Resources (2006) from Deakin University and the Australian Human Resource Institute.
Should Marathon elect to exercise the option to acquire TriE at some future date, the Board of Marathon will then be restructured such that existing Marathon directors will hold two (2) positions and nominees of TriE will hold three (3) positions.

Project Funding and Risk

Although a significant amount of work has already been done defining a resource at the LCEP and securing PEL 650, the proposed farm-in by Marathon is designed to be a relatively short and cost effective process to improve the resource
standard. The 2014 South Australian Fuel and Technology Report produced by Australian Energy Market Operator (AEMO) tabled1 150 Million Tonnes (mt) of "Measured-Indicated" coal and 350mt of "Inferred" coal resources within the area covered by PEL 650.
The present Leigh Creek coal mine is owned and operated by Alinta Energy Limited and coal is transported by rail to the coal-fired power station at Port Augusta. The LCEP project is complementary to the current operations by Alinta

1 Table 2-1 South Australian coal resources- reference Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE). Coal Resources in South Australia - in situ tonnage and quality.

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Energy Limited and importantly adds jobs to further support the Leigh Creek community.
Marathon believes the due diligence and exploration program (including drilling) contemplated for the next 6 months can establish considerable resources to required disclosure standards.

Gas markets on the East coast of Australia

The market for gas in eastern Australia is prospective and demand for gas is strong. Planned exports of LNG will require additional gas sources for extension and expansion of existing projects. Additionally some domestic demand is not fully contracted. This situation has been exacerbated by existing gas shortages and the doubts over supply of coal seam gas from New South Wales resources.
Such factors all combine to make the LCEP an attractive opportunity to supply gas to domestic markets and industrial consumers in Australia.

TriE is a major shareholder of Marathon

TriE became Marathon's major shareholder with 19.99% of the issued capital acquired on 8th October 2014 and both companies have worked closely to
develop a firm working relationship which has led to the transactions contemplated by the Non-Binding Term Sheet.

Summary

The Board of Marathon has examined many projects throughout Australia and overseas and believes the LCEP offers an exciting prospect to develop a significant energy and mining company providing jobs and a royalty stream for South Australia.

Media Contacts:

Peter Williams John Field Chairman Managing Director Marathon Resources Limited Field Public Relations (08) 8348 3500 (08) 8234 9555
(0) 418 819 527

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