7,650 PT. Bayan Resources Tbk - Prospectus

4.3 Geological Database and Modelling

Geological Database Key elements of the geological database to the end of March 2008 were reviewed by MMC and the following noted: ‰ total of 239 holes have been drilled at Keham and 390 holes at Cilong, ‰ drillholes are typically less than 60 m in depth, ‰ no geophysical logging has been done, ‰ a large number of drillholes have been “touch” cored for coal quality analysis, and ‰ all drillhole locations have been surveyed. The proposed initial pit areas at both Keham and Cilong have been subject to detailed drilling at 50-200m spacing while the remainder of the potential open pit area has been largely subject to semi-detailed drilling approximately 300 m spacing. Geophysical logging which provides a high degree of certainty of data accuracy has not been conducted at GBP Block 1. It is recommended that any future drilling include geophysical logging. The typical suite of geophysical logs for coal exploration includes natural gamma, in situ rock density and calliper borehole diameter. The data that can be obtained includes seam depth and thickness, seam partings, indicative seam quality ash, seam correlations and in the identification of faults. Drillhole depths are typically shallow up to 60m depth and have been drilled “open hole” i.e. noncored with “touch” coring of intersected coal seams. This methodology is widely used in the Indonesian coal industry and is generally acceptable in terms of providing reliable seam data when coal core recoveries are typically greater than 90 based on geologists drill logs. However some coal roof losses do occur through “touch” coring and this can be considered a material issue in the interpretation of thin seams Note: MMC has considered this in resource categorisation, see Section 4.5. Survey Detailed topographic survey has been conducted over the study area and all drillholes have been surveyed by Total Station. Geological Modelling All data including drill logs, coal quality and drillhole survey data have been input into an electronic database. Using Mincom “Stratmodel” mining computer software, Bayan geologists have created a 3-D “surface” model of the deposit. A surface model is built up from individual layers including topographic surface, weathering surface, seam roofs and floors. Mincom software is capable of modelling seam splits and faults. Model Conversion and Resource Estimation The Mincom model was provided to MMC in “gridded” model format and was converted to Minex computer software format. The Minex model was validated against the original Mincom models by comparing total volume of waste and coal and found to have a high degree of accuracy. MMC Coal Resource estimates were derived from the Minex model output. Coal Density MMC used Relative Density RD obtained by applying the Preston-Sanders formula to convert the modelled air dried RD from analyses of coal cores to in situ RD.

4.4 Data Validation

MMC undertook extensive validation of the GBP Block 1 database in order to validate the geological model and to determine the resource categories on which Coal Resource estimates were based, including review of the following: ‰ a significant number of original drill logs in order to validate the coal seam intercepts recorded in the computer database, ‰ drillhole plans for each seam, A-22