Maintenance agreement PT. Bayan Resources Tbk - Prospectus

Schedule 577 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

28. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued s. Corporate Guarantee Agreement

GBP dan IP On 1 December 2005, GBP and IP entered into a corporate guarantee agreement in respect of the obligations of BI to SMBC amounted US60 million.

29. EMPLOYEE COSTS

31 March 31 December 2008 2007 2007 2006 2005 Unaudited Restated Restated Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,585 24,351 133,709 93,369 59,521 Total remuneration paid to the Board of Directors and Commissioners of the Group amounted to Rp 6,471 31 March 2007: Rp 4,101—unaudited, 31 December 2007: Rp 18,880, 2006: Rp 7,333 and 2005: Rp 4,913.

30. SEGMENT INFORMATION

Information concerning the business segments of the Company and its subsidiaries is as follows: 31 March 2008 Coal Non-coal Eliminations Consolidated Revenue: External segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742,998 29,115 — 772,113 Inter-segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,285 39,999 364,284 — Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067,283 69,114 364,284 772,113 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,246 8,620 33,990 150,876 Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,483 5,529 38,914 118,098 General and administration expenses . . . . . . . . . . . . . . . . . . . . . 25,731 2,603 — 28,334 Operating lossincome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 968 488 4,924 4,444 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,458 14,907 9,854 27,511 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 269 — 721 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,056 5,542 25,051 47,547 Profitloss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . 44,082 8,608 10,273 25,201 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,540 2,946 562 6,156 Minority interest in net income of subsidiaries . . . . . . . . . . . . . 500 — 2,058 2,558 Net incomeloss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,042 5,662 12,893 16,487 Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,543,800 655,915 1,160,269 3,039,446 Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,202,925 690,126 1,022,108 2,870,943 Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,875 12,218 12,717 85,376 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,791 21,362 679 64,474 Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,185 — — 5,185 F-94 Schedule 578 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

30. SEGMENT INFORMATION continued

31 March 2007 Unaudited Coal Non-coal Eliminations Consolidated Revenue: External segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 885,228 27,291 — 912,519 Inter-segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402,769 52,015 454,784 — Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,287,997 79,306 454,784 912,519 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,625 7,894 35,030 248,489 Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,823 536 48,880 110,479 General and administration expenses . . . . . . . . . . . . . . . . . . . . . 16,556 1,324 — 17,880 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,246 6,034 13,850 120,130 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,306 16,034 — 32,340 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 350 — 604 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,643 17,360 5,322 52,681 Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124,837 7,710 8,528 141,075 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,168 6,947 178 40,937 Minority interest in net income of subsidiaries . . . . . . . . . . . . . — — 23 23 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,669 763 8,683 100,115 Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,968,630 709,274 245,077 2,432,827 Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,848,601 730,660 158,900 2,420,361 Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,160 446 4,884 88,722 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,834 20,557 — 67,391 31 December 2007 Coal Non-coal Eliminations Consolidated Revenue: External segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,308,866 142,197 — 3,451,063 Inter-segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,545,586 172,432 1,718,018 — Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,854,452 314,629 1,718,018 3,451,063 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,118,697 8,596 160,703 966,590 Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626,840 6,317 170,184 462,973 General and administration expenses . . . . . . . . . . . . . . . . . . . . . 78,396 16,135 1,423 93,108 Operating incomeloss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413,461 13,856 10,904 410,509 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,674 69,302 4,282 118,694 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,549 1,500 — 3,049 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,499 51,317 12,915 72,901 Profitloss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . 395,835 30,341 2,271 367,765 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,086 6,203 994 112,889 Minority interest in net income of subsidiaries . . . . . . . . . . . . . 760 — 1,376 2,136 Net incomeloss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274,989 24,138 1,889 252,740 Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,162,763 625,315 954,417 2,833,661 Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,809,927 662,511 855,051 2,617,387 Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370,027 89,688 14,657 445,058 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177,280 91,645 — 268,925 Amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,089 — — 5,089 F-95 Schedule 579 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

30. SEGMENT INFORMATION continued

31 December 2006 Restated Coal Non-coal Eliminations Consolidated Revenue: External segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,877,985 117,827 — 2,995,812 Inter-segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,503,401 177,364 1,680,765 — Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,381,386 295,191 1,680,765 2,995,812 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662,459 67,508 53,774 676,193 Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408,195 3,578 22,431 389,342 General and administration expenses . . . . . . . . . . . . . . . . . . . . . 50,901 13,945 — 64,846 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,363 49,985 31,343 222,005 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,168 60,318 — 119,486 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,743 355 — 2,098 Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,899 21,508 1,872 80,535 Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,837 11,530 33,215 185,152 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,432 1,390 1,250 64,072 Minority interests in net income of subsidiaries . . . . . . . . . . . . . — — 81 81 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,405 10,140 34,546 120,999 Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,730,988 732,963 206,932 2,257,019 Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,681,790 776,172 124,515 2,333,447 Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,627 193,666 10,102 594,191 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,046 79,181 — 231,227 31 December 2005 Restated Coal Non-coal Eliminations Consolidated Revenue: External segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,449,443 221,782 — 1,671,225 Inter-segment revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,999 — 21,999 — Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,471,442 221,782 21,999 1,671,225 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245,563 62,121 251 307,433 Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,712 — — 2,712 General and administration expenses . . . . . . . . . . . . . . . . . . . . . 46,257 20,068 3,200 63,125 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,594 42,053 2,949 241,596 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,698 38,784 — 86,482 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 611 — 759 Other expensesincome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,940 2,559 952 32,333 Profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,104 6,439 1,997 123,540 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,983 2,150 1,267 41,866 Minority interests in net income of subsidiaries . . . . . . . . . . . . . — — 34 34 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,121 4,289 3,230 81,640 Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,020,726 528,202 22,530 1,526,398 Segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,170,435 5,724 551,843 1,728,002 Acquisition of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,528 256,008 — 463,536 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,079 44,191 — 210,270 F-96 Schedule 580 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

30. SEGMENT INFORMATION continued

Geographic segment information as a secondary segment is as follows: 31 March 31 December 2008 2007 2007 2006 2005 Unaudited Restated Restated Sales area —Europe, Taiwan and Korea . . . . . . . . . . . . . . . . . . . . . . . . . . 306,121 385,351 1,701,091 — — —Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,664 249,046 814,880 — — —South East Asia excluding Indonesia, India and Pakistan 244,950 250,831 743,130 2,877,985 81,992 —Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,378 27,291 191,962 117,827 1,589,233 772,113 912,519 3,451,063 2,995,812 1,671,225

31. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

31 March 2008 Foreign currency Rupiah equivalent Assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 19,549,417 180,187 Trade receivables —third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 37,474,586 345,536 —related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 760,836 7,001 Other receivables —third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 1,330,523 12,263 —related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 3,522,936 32,471 Advances and prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 1,247,540 11,356 SGD 84,162 562 EUR 444,950 6,536 Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 5,399,501 49,767 Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 5,800,000 53,459 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,138 Liabilities Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 58,244,079 536,651 SGD 470,789 3,146 EUR 371,997 5,416 AUD 73,985 625 £ 5,608 103 JPY 1,711,031 158 MYR 9,398 27 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 20,173,373 185,932 Current maturities of long term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 33.893.176 312.394 Current maturities of finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 1,235,153 11,384 Current maturities of derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 19,986,695 184,217 Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 628,460 5,793 Long term loans, net of current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 102.747.394 947.023 Finance leases, net of current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 779,863 7,188 Derivative liabilities, net of current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US 14,676,183 135,270 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,335,327 Net Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,636,189 If assets and liabilities in foreign currencies as at 31 March 2008 are translated using the exchange rates as at the date of this report, the total net foreign currency liabilities of the Group will decrease by approximately Rp 34,877. F-97 Schedule 581 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

32. FINANCIAL RISK MANAGEMENT

The Group has conducted a risk management review to identify, measure, monitor and manage the basic risks in the Group. In order to overcome the risk of operational revenue continuity of the Group in the future, the Group has long-term sales contracts with its customers. In addition, the Group also has long-term contracts with its mining contractors to ensure that the Group is able to meet the commitments under its long-term sales contracts. The Group has entered into most of its sales contracts in US Dollars and the Group’s loans are also in US Dollars, which indirectly, represents a natural hedge on the risk of fluctuation in the US DollarRupiah exchange rate. The Group also entered into a coal swap contract to hedge future coal sales prices. In order to reduce the risk of fluctuation in interest rates which increases the uncertainty of the cash flow for interest payments in the future, the Group has entered into an interest rate swap contract, converting a variable interest rate to a fixed interest rate.

33. SUBSEQUENT EVENTS

a. On 1 April 2008, GBP entered into an agreement with PT Lanay Jaya Group for construction of trans Kalimantan road relocation of 3,600 metres with total value of Rp 10,883 excluding VAT. The work is commenced on 5 May 2008 until 4 September 2008. b. On 3 April 2008, BT entered into a sale agreement with PT Kaltim Supacoal, a related party. BT will supply 1,600,000 tonnes of coal per year. The price is based on the quality of coal supplied. On the same date, the Company entered into an upgraded coal briquette purchase agreement with PT Kaltim Supacoal. Under the agreement PT Kaltim Supacoal will sell between 500,000 tonnes to 1,500,000 tonnes of upgraded coal briquettes per year. The price is based on the quality of coal supplied. The agreement is valid until the concession period of BT is expired, the reserve of coal in BT consession is depleted or the coal purchase agreement between PT Kaltim Supacoal and BT is terminated. c. On 5 April 2008, GBP entered into a technical services agreement with Kopex S.A. for feasibility study on underground coal mines. The value of the contract is US350,000. d. According to the Decree of the Regent of Kutai Kartanegara No. 540027KP_EpDPE_IVIV2008 dated 7 April 2008, BT has been granted Exploitation Mining Rights for a consecutive twenty-year period to 7 April 2028 and mining area granted was 3,015 hectares. e. On 7 April 2008, GBP entered into an agreement with PT Kalimantan Citra Bara “KCB”, a related party, for utilisation of KCB’s haul road and barge loading facility at Tanjung Harapan on the Mahakam river. The fee for the use of the haul road is US0.30MT and US2.50MT for other services covered under the agreement. The fee is to be increased by 2 on 1 January 2009 and at the start of each calendar year thereafter. The agreement is valid until the expiration of GBP’s CCoW or when GBP ceases its mining operations in Block I and notifies KCB of its intention to terminate the agreement. f. On 9 April 2008, the Company entered into a marketing and coal sales agency agreement with Constellation Energy Commodities Group Inc. “CEC”. Based on the agreement, CEC was appointed to provide marketing and sales agency services relating to the sale of coal in order to find potential customers and conduct price negotiations, including determination of shipment schedule according to the conditions arranged. Based on the contract, CEC will receive a commission fee from the Company amounting to 2 from selling price multiply by quantity of coal sold. The agreement is valid from 1 January 2009 to 31 December 2018. g. On 10 April 2008, the Company obtained syndicated credit facilities amounting to US300 million, which are valid for five years, from ING Bank N.V., Singapore Branch, Standard Chartered Bank, Jakarta Branch, and SMBC. Based on the agreement, Standard Chartered Bank, Hongkong Branch, was appointed as lead facility agent. F-98 Schedule 582 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

33. SUBSEQUENT EVENTS continued

h. On 16 April 2008, all outstanding loans of WBM, FKP, DPP and GBP to BI have been settled Note 17. i. On 18 April 2008, FKP and TSA entered into an overburden, coal mining and coal hauling agreement with PT Bangun Karya Pratama Lestari. The agreement is effective on 1 May 2008. The agreement will expire on 13 April 2013 or after the contractor has removed overburden of 50 million bcm and 3.75 million tonnes of coal, whichever is earlier. j. On 18 April 2008, all outstanding loans of DPP to SMBC and Korea Development Bank have been settled see Note 17. On the same date, the interest rate swap agreement with SMBC was terminated see Note 18b. k. On 18 April 2008, all outstanding loans of the Company to Merrill have been settled see Note 14. l. Based on the Annual General Meeting of Shareholders held on 22 April 2008, the shareholders decided the following: ‰ Establishment of a general reserve from retained earnings amounting to Rp 60 billion in accordance with the requirements of The Limited Liability Company Law of the Republic of Indonesia No. 402007 refer to Note 20 ‰ Declaration of the dividend for 2007 amounting to Rp 120 billion. m. On 24 April 2008, the guarantee from the Company, GBP, and WBM to the master lease agreement and loan facility of ANZ has been released refer to Note 28q. n. The Group entered into an agreement for construction of coal stockpiles and coal loading terminal as follows: i On 2 April 2008, PIK entered into an agreement with PT Nirmala Matranusa for the construction of coal loading jetty phase 3 at Lubuk Tutung, Bengalon, East Kutai, East Kalimantan with a total contract value of US27,000,000. The construction will commence effectively on 16 April 2008 for 24 months period. ii On 15 April 2008, WBM entered into an agreement with PT Nirmala Matranusa for the construction of coal stockpiles phase 3 at Satui, Tanah Bumbu, South Kalimantan with a total contract value of US3,500,000. The construction will commence effectively on 30 April 2008 for 8 months period. iii On 17 April 2008, IP entered into an agreement with PT Nirmala Matranusa for construction of intermediate coal stockpiles at Tabang, Kutai Kertanegara, East Kalimantan, with a total contract value of US978,050. The construction will commence effectively on 1 May 2008 for 8 months period. iv On 22 May 2008, FKP entered into an agreement with PT Nirmala Matranusa for construction of coal loading jetty phase 2 at Muara Bunyut, Melak, West Kutai, East Kalimantan, with a total contract value of US8,100,000. The construction will commence effectively on 31 May 2008 for 12 months period. v On 23 May 2008, WBM entered into an agreement with PT Matranusa for construction of coal stockpiles phase 3 at Satui, Tanah Bumbu, South Kalimantan, with a total contract value of US10,200,000. The construction will commence effectively on 31 May 2008 for 12 months period. o. Based on the Decree of The Minister of Energy and Mineral Resources of the Republic of Indonesia No. 317.K30DJB2008, dated 29 April 2008, TSA entered into the production stage for KW03PB0059 block on 2,404 hectares which is valid until 23 April 2038. F-99 Schedule 583 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

33. SUBSEQUENT EVENTS continued

p. Based on the Decree of the Minister of Energy and Mineral Resources of the Republic of Indonesia No. 318.K30DJB2008, dated 29 April 2008, FKP entered into the production stage for KW05PB0058 block on 2,490 hectares which is valid until 23 April 2038. q. On 29 April 2008, IP and PSNU has terminated the coal shipping agreement dated 7 January 2008. The termination is effective on 1 May 2008. r. On 30 April 2008, IP terminated a coal mining services agreement with PAI, effective 1 May 2008 refer to Note 28a. s. On 30 April 2008, FSP terminated a coal mining service agreement with PAI, effective 1 May 2008 refer to Note 28a. t. Based on a survey performed by Minarco Mineconsult in May 2008, life of mine average stripping ratios of GBP Block—II, PIK, WBM and TSA is 19.4:1, 7.8:1, 15.0:1 and 13.0:1, respectively see Note 13. u. On 5 May 2008, WBM entered into an agreement for coal exploitation activities and construction of mining facilities at WBM CCoW area which overlapped with the area of PT Hutan Rindang Banua’s Utilisation Rights of Forest Industry “Hak Pengusahan Hutan Industri”. WBM will pay compensation to PT Hutan Rindang Banua amounted Rp 8,893 and will be settled in three installments until 7 August 2008. v. On 29 May 2008, the Company provided Letters of Undertaking to PT Leighton Contractors Indonesia “LCI” in relation with an overburden agreement between LCI and WBM refer to Note 28a dated 3 August 2007. The letters stated that the Company will purchase certain heavy equipment as determined under the letters from LCI if WBM does not assign LCI with the new overburden agreement. The letters are valid until LCI obtained a new overburden agreement from WBM. w. On 30 May 2008, the Company entered into a sale and purchase agreement with BI to acquire ownership in PT Kaltim Supacoal, a joint venture company between BI and Binderless Coal Briquetting Company Pte. Ltd., “Binderless” with a purchase price amounting to US612,500 plus all liabilities incurred regarding the credit facility received from BI. BI owns 49 of PT Kaltim Supacoal and Binderless owns 51. The agreement also covers the sale and transfer of loan facility agreement from BI amounting to US25 million. The value of sale and transfer of loan facility is amounting to the loan outstanding under the loan facility agreement at the date of the execution of this agreement. The agreement will be completed before 31 December 2008. x. Based on Notarial Deed No.7 of Aulia Taufani, S.H., as a replacement of Sutjipto, S.H., notary in Jakarta, dated 2 June 2008, the Company’s shareholders agreed to amend the Company’s Articles of Association in accordance with the regulation of Capital Markets and Financial Institution Supervisory Agency and the Limited Liability Company Law of Republic of Indonesia No. 402007. The Notarial Deed was approved by the Minister of Law and Human Rights of the Republic of Indonesia in Decree No. AHU-AH.01.10 TH.2008 dated 9 June 2008. y. On 4 June 2008, the Company and BE entered into a sale and purchase agreement to acquire 100 ownership in PT Muji Lines “Muji”, a related party, with Low Tuck Kwong, Jenny Quantero and Engki Wibowo with a purchase price amounting to Rp 1,000. In March 2008, DPP gave notice to ASL Energy Pte. Ltd., of its intention to exercise the option. Either DPP or its nominee, Muji, will purchase the Floating Terminal Pontoon for an aggregate purchase price estimated at US34.0 million, subject to adjustment based on the net book value on the completion date. As at 31 March 2008, the Floating Terminal Pontoon is owned by ASL Energy Pte. Ltd. F-100 Schedule 583 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

33. SUBSEQUENT EVENTS continued

z. Subsequent to 31 March 2008, the Company has agreed to offset an aggregate of US6 million against future coal sales to Constellation Energy Commodities Inc. The offset is applicable for certain shipments scheduled after 31 March 2008. As at the date of the consolidated financial statements, the agreement related to this matter is still under negotiation. aa. On 19 June 2008, GBP entered into an overburden removal, mining and coal hauling agreement with PT Madhani Talatah Nusantara “Madhani” in GBP Block I project. The agreement commenced on 1 July 2008 and Madhani will perform overburden removal up to 80 million BCM and coal mining and hauling up to 4 million tonnes. GBP has an option to increase or decrease the monthly overburden removal and production and coal hauling up to 15 from the agreed quantity. The agreement will expire on 31 August 2013 or when the agreed quantity is achieved, whichever is earlier. ab. As part of its Initial Public Offering, the Company can allocate offered shares to one or more investors at the offering price with certain conditions in the amount of up to 333,333,500 shares, or 10 of the Company’s shares, which will be calculated after the public offering is completed. The investor assigned is Enel Investment Holding B.V a subsidiary of Enel Trade S.p.A. In relation to this matter, the Company is required to enter into the second long-term sales contract with Enel Trade S.p.A. The Group estimates that this agreement will require the Group to deliver coal in a certain annual quantity from January 2010 to December 2019. ac. On 10 July 2008, the Company and Low Tuck Kwong, its major shareholder, received a notification letter from Sukamto Sia who claims that he is entitled to 50 of the Group’s shares. Through his attorney, Sukamto Sia claims that Low Tuck Kwong agreed to provide these shares to him in return for unspecified amount of financing provided to Low Tuck Kwong in 1996. Management believes that there is no dealings made by the Company and Low Tuck Kwong in this matter, other than Low Tuck Kwong as a plaintiff in a litigation in Hong Kong involving a company in which Sukamto Sia owned an 80 interest and as a director. In the litigation Low Tuck Kwong obtained a judgement in 2001 against that company for approximately HK108.4 million equivalent to Rp128,346 plus interest from 22 July 2000. That company is in the process of being liquidated because it was unable to satisfy 2001 judgement. In June 2008, the provisional liquidator obtained an interim court order against Sukamto Sia, which purports to be effective worldwide, to freeze his assets and those of his co-defendant up to a value of HK277 million equivalent to Rp327,968, pending the resolution of the proceedings against him and his co-defendant. As such, the Company believes that the claim is without merit and therefore no financial impact should be considered in the Group’s consolidated financial statements as of 31 March 2008.

34. INDONESIAN ECONOMIC CONDITIONS

The Indonesian economy continued to improve during 2007. The government’s commitment to the set of conservative macro-economic policy guidelines, re-profiling of domestic debt and fiscal discipline, introduced during the second half of 2005, has further stabilised the Indonesian economy and this has resulted in improved country risk ratings and a stable exchange rate. Indonesia’s sustainable return to economic stability depends on the effectiveness of measures taken by the government, decisions of international lending organisations, changes in global economic conditions and other factors, including regulatory and political developments, which are beyond the Group’s control. In the mining sector, companies are facing the following additional challenges: ‰ uncertainty due to delays in finalising the implementing regulations for the Autonomy Laws as well as recent calls to revise these Laws; ‰ uncertainty due to the pending new Mining Law and the form and content of the next generation of mining contracts; F-101 Schedule 584 PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

34. INDONESIAN ECONOMIC CONDITIONS continued

‰ confusion regarding recent changes to Taxation and Hazardous Waste Management regulations and the impact of the Forestry Law; ‰ continued disputes with local communities who are requesting additional compensation and employment from companies operating in their areas; and ‰ rising security concerns in the industry caused by illegal mining activities. Collectively, these challenges are adversely affecting companies in the following manner: ‰ local governments trying to apply local levies on companies in order to fund their budgets; ‰ problems in seeking additional finance both in terms of cost andor the amounts of funding provided; ‰ new investment is either being postponed or cancelled; ‰ local governments applying pressure to companies to contribute additional funds to development programs; ‰ delays in restitution of VAT for companies with 3 rd generation Contracts of Work and other taxes; ‰ reduced profitability through production disruptions and in some sectors oversupply of mining product; and ‰ difficulties in ensuring compliance with environmental obligations as a result of illegal mining activities. Although currently not all of the challenges mentioned above are applicable for the Group, these challenges may, in time, affect the Group’s operations and related results and have been carefully considered by management when evaluating the level of current and future activity in Indonesia as well as the impact or impairment on its existing operations. These circumstances give rise to continued economic and political uncertainties which may ultimately impact the Group. No adjustments relating to these uncertainties have been included in the financial statements as at 31 March 2008.

35. LIQUIDITY

As at 31 March 2008, the Group has negative working capital of Rp 822,551. Management has undertaken a detailed analysis of the forecasted cash flows of the Company for the 12 months ending 31 March 2009. Based on the forecast for the next 12 months, management has determined that sufficient liquidity exists to fund the operations of the business, planned capital expenditure and repayments of bank loans during that period. In preparing the forecast, management has reviewed historic cash requirements of the Group as well as key factors which may impact the operations of the Group during the next 12-month period, and is of the opinion that the assumptions and sensitivities which are included in the cash flow forecast are reasonable. However, as with all assumptions in regard to future events, these are subject to inherent limitations and uncertainties and some or all of these assumptions may not be realised. Further, the shareholders of the Company have approved a plan to conduct an Initial Public Offering of the Company’s shares, which is expected to generate funds to repay debt and reduce its gearing. As such, the Company is confident that it will continue as a going concern. The accompanying financial statements do not include the effect of any adjustments that may be necessary if the Company is not able to continue as a going concern. F-102 Schedule 5X PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

36. PROSPECTIVE ACCOUNTING PRONOUNCEMENTS

The Indonesian Institute of Accountants has issued revisions of the following accounting standards: ‰ SFAS 50 Revised 2006—Financial Instruments: Presentation and Disclosure applicable for financial statements covering periods beginning on or after 1 January 2009. ‰ SFAS 55 Revised 2006—Financial Instruments: Recognition and Measurement applicable for financial statements covering periods beginning on or after 1 January 2009. The Group is still evaluating the possible impact of these standards on the consolidated financial statements.

37. ACCOUNT RECLASSIFICATION

Certain comparative figures in the consolidated financial statements for the years ended 31 December 2007, 2006 and 2005 have been amended to conform with the basis on which the consolidated financial statements for the three month period ended 31 March 2008 have been presented.

38. REISSUANCE OF CONSOLIDATED FINANCIAL STATEMENTS

For the purpose of its Initial Public Offering, the Company has reissued the consolidated financial statements as at 31 March 2008 and 31 December 2007, 2006 and 2005 and for the three month period ended 31 March 2008 and for the years ended 31 December 2007, 2006 and 2005, in order to conform with the relevant disclosure requirements of the capital market regulator. The amendments are as follows: ‰ Presentation of other receivables from related parties as non-current assets in the consolidated balance sheets, which has also been amended in Note 7. ‰ Additional disclosure of conformity with the regulation of BAPEPAM LK in relation to the presentation of the consolidated financial statements in Note 2. ‰ Disclosure of investigation on GBP regarding coal sales price in long-term coal sales and purchase agreement with one of its third party customers in Note 28g. ‰ Additional disclosure for financial risk management in Note 32. ‰ Additional disclosure of the price term for coal and briquettes agreements between PT Kaltim Supacoal, BT and the Company in Note 33b. ‰ Additional disclosure of financial ratio covenant and guarantee for syndicated credit facilities from ING Bank N.V., Singapore Branch, Standard Chartered Bank, Jakarta Branch and SMBC in Note 33g. ‰ Additional disclosure of percentage of ownership acquired of shares of Muji in Note 33y. ‰ Additional disclosure for approval from Minister of Law and Human Rights of the Republic of Indonesia on Notarial Deed No. 7 dated 2 June 2008 in Note 33x. ‰ Disclosure for mining service agreement between GBP and Madhani in Note 33aa. ‰ Disclosure for the requirement to enter into long-term contract agreement with Enel Trade S.p.A in Note 33ab. F-103 Schedule 5X PT BAYAN RESOURCES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2008 AND 2007 AND 31 DECEMBER 2007, 2006 AND 2005 Expressed in million Indonesian Rupiah, unless otherwise stated

38. REISSUANCE OF CONSOLIDATED FINANCIAL STATEMENTS Continued

‰ Disclosure for potential legal case involving the Company and Low Tuck Kwong in Note 33ac. ‰ Change in negative working capital amount due to reclassification of other receivables from related parties from current to non-current assets in Note 35. The Company’s Board of Directors has approved the reissuance of the consolidated financial statements of the Group as at 31 March 2008 and 31 December 2007, 2006 and 2005 and for the three month period ended 31 March 2008 and for the years ended 31 December 2007, 2006 and 2005. There are no material changes between the previous consolidated financial statements issued and the reissued consolidated financial statements as at 31 March 2008 and 31 December 2007, 2006 and 2005 and for the three month period ended 31 March 2008 and for the years ended 31 December 2007, 2006 and 2005, except as described above. F-104 Appendix A Statements of Open Cut Coal Resources and Reserves as of March 31, 2008 of PT Bayan Resources Tbk A-1 A-2 PT. Gunungbayan Pratamacoal GBP Block 1 CILONG AND KEHAM OPEN CUT COAL DEPOSITS STATEMENT OF OPEN CUT COAL RESOURCES AND RESERVES AS AT 31 st March 2008. May 2008 Job 3318a_GBP1_May A-3 CONFIDENTIALITY AND USE OF INTELLECTUAL PROPERTY The information contained in this document is solely for the use of the client identified on the coversheet for the purpose for which it has been prepared. This document, comprising figures, tables, appendices or any other inclusions remains the intellectual property of Minarco MineConsult. No party or individual shall copy, modify, or publish the aforesaid material, or any part thereof, without written authorisation from Minarco-MineConsult and full and proper acknowledgement of Minarco-MineConsult’s contribution. The title of this report and any associated work remains with Minarco-MineConsult and does not pass to the Company until all consideration has been paid in full. A-4 EXECUTIVE SUMMARY Minarco-MineConsult Pty Ltd MMC was commissioned by PT. Bayan Resources Bayan to complete an independent estimate hereafter, referred to as the “Statement” of the Open Cut Coal Resources and Reserves of PT. Gunungbayan Pratamacoal Block 1 hereafter referred to as “GBP Block 1” in East Kalimantan, Indonesia refer Figure 1. The Statement reports the Coal Resources and Reserves as at 31 st March, 2008 and has been undertaken in compliance with the requirements of the reporting guidelines of the 2004 Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia “The JORC Code”. GBP is one of six coal projects operated by Bayan and a separate Coal Resource and Reserves report is being prepared for each project. There are two separate mining areas in the GBP lease, Blocks 1 and 2. GBP Block 1 is the subject of this report. GBP Block 1 consists of four separate coal blocks; Keham Block in the south; Cilong and SP Blocks in the north and Mantan Block in the northeast. This Statement only reports on the Coal Resources of Keham and Cilong Blocks due to the limited data available for the Mantan and SP Blocks. GBP Block 1 is near to the PT Kartika Selabumi Mining KSM concession which lies to the east where Bayan’s related party, PT Kalimantan Citra Bara KCB currently is undertaking contract mining within the KSM concession. A total of four coal seams and sub-seams or seam splits have been identified in the Keham Block and they range in thickness from 0.1 - 2.0 m. In Cilong Block three main seams and multiple subseams or seam splits occur from 0.2-2.5 m in thickness. The seams are folded around a north plunging syncline, with dips of 10-15 degrees. The coal has low Total Moisture TM average 8.4, with very high energy average Calorific Value, CV 7,210 kcalkg gross as received, gar and medium ash 6-7 air dried basis, adb bituminous coal with a variable sulphur content 0.4-3.3 adb, averaging 1.5 adb at Keham and 1.2 adb at Cilong. The mining method can be described as “multi seam, moderate dip shallow open cut coal mine using truck and shovel equipment in a haulback operation.” After an initial box cut, waste is to be hauled back into the mined out area and the dump area is then to be rehabilitated. The proposed open cut operation will use hydraulic excavators and trucks to mine the coal and waste. The run-of-mine ROM coal is not washed but is to be crushed to produce a semi-soft coking export coal. At the Keham Block it is proposed to utilise KCB facilities and infrastructure at KSM including offices and a camp with associated haul road, barge loader, power and water supply. The Cilong Block will require the construction of separate facilities and a new haul road to the proposed new barge loader on the Mahakam River. Both Keham and Cilong Blocks have been subject to close-spaced open hole drilling with “touch” coring of coal seams for obtaining coal samples for analysis. No geophysical logging was done and due to the relatively thin coal seams and the use of “touch” coring, the level of confidence of data is such that the Coal Resource estimates are of maximum Indicated status. The Keham Block Coal Resources are estimated to total 3.9 million tonnes Mt, of which 2.9 Mt are classed as Indicated with the balance of 1.0 Mt as Inferred. The Cilong Block Coal Resources are estimated to total 5.5 million tonnes Mt, of which 4.7 Mt are classed as Indicated with the balance of 0.8 Mt as Inferred. Coal Reserves were estimated by applying mining factors and exclusion criteria to the Coal Resources. The mining factors such as recovery and dilution were defined based on the proposed open cut mining method. The exclusion criteria included the lease boundary and a minimum working section thickness. Minex “Optimiser” software was used to generate a series of incremental pit shells which reflect different economic scenarios and changes in the breakeven incremental strip ratio. Results were examined and the preferred pit shells were then selected by determining the breakeven strip ratio corresponding to the predicted mining economics. Coal quantities within these pit shells were then evaluated so that only Indicated Coal Resources were classified as Reserves. Based on this approach for Keham a total of 0.5 Mt of Probable Open Cut Coal Reserves at an average strip ratio of 20.9 bcm tonne was estimated. The average coal quality at Keham is TM 8.4, CV 6,970 kcalkg gar, ash 8.7 as received, ar, and sulphur content 1.5 ar. For Cilong a total of 1.5 Mt of Probable Open Cut Coal Reserves at an average strip ratio 16.8 bcm tonne was estimated. The average Total Moisture TM is 8.4, CV 7,230 kcalkg gar, ash 7.4 ar, and sulphur content 0.9 ar. A-5 All the Coal Reserves are classified as “Probable” based on the level of detail completed in the mine planning and also the level of confidence in the Coal Resources. Coal Resources are reported inclusive of Coal Reserves that is, Coal Reserves are not additional to Coal Resources. There are a number of planning issues which may impact on the stated mining reserves. These include: ‰ future exploration drilling and updates to the geological model, ‰ ongoing mine planning including different mining equipment and more detailed planning of the start up period and the box cut design. These issues may cause the pit shells and mining quantities to change in future JORC statements. The Coal Resource estimates in the report were estimated by Mr. William Park, BSc Geology, BEcon, MAIG who is a Member of the Australian Institute of Geoscientists. The estimates are based on information compiled and reviewed by Mr Park. He is a full time employee of MMC and has sufficient experience which is relevant to the style and type of deposit under consideration and to the activity undertaken to qualify him as a Competent Person as defined in the 2004 Edition of the JORC Code. The Coal Reserve estimates in the report were estimated by Mr Paul Westcott BE Mining, Hons, FAusIMM, CPMin, MMICA, MAIME, who is a Chartered Professional Mining Engineer, a Fellow of the Australasian Institute of Mining and Metallurgy, a Member of the American Institute of Mining Engineers, and a member of the Mineral Industries Consultants Association. The estimates are based on information compiled and reviewed by Mr Westcott. He is a full time employee of MMC and has sufficient experience which is relevant to the style and type of deposit under consideration and to the activity undertaken to qualify him as a Competent Person as defined in the 2004 Edition of the JORC Code. This report may only be presented in its entirety. Parties wishing to publish or edit selected parts of the text, or use the Statement for public reporting, must obtain prior written approval from MMC and the signatories of this report. A-6 M A K A S S A R S T R A I T M A K A S S A R S T R A I T Sunga i Belayan R iv e r R iv er Senyiu r Ri ver S. Kedang Kepala S ek ur au Ri ve r

S. K

in ta p Kec il S . K l e d a a n Sungai Mahakam Sungai Ba rito 00 °3000 LS 00 °00 00 1 15 °3000 1 16 °0000 1° 0 00 LS 1° 0 00 LU 1° 30 0 LS 2° 00 0 LS 1 16 °3000 1 17 °0000 1 17 °3000 1 18 °0000 1 15 °0000 2° 30 0 LS 3° 00 0 LS 3° 30 0 LS 00 °3000 LU Mahakam Riv er S. Pi na ng S. B e n g a l o n S. Kedang Pahu SAMARINDA KAB. KUTAI TIMUR KAB. KUTAI BARAT KAB. PASIR BALIKPAPAN KALIMANTAN TENGAH TIMUR GBP BLOCK 1 - CILONG AND KEHAM DEPOSITS LOCATION PLAN JORC RESOURCES AND RESERVES STATEMENT 31st March 2008 Date: May 2008 Job No: 3318M a Figure: 1 PT Bayan Resources Sangkulirang Asemasem SP II BR. TONGKOK TERING Muara Tae TANJUNG BALUI Transhipment point Laminpulut Benanga TABANG Umaq Dian MUARA KAMAN Pendamaran Tuana Tuha Muai Gunung Sari Buluk Sen Penoon KEMBANG JANGGUT KOTA BANGUN D. Semayang Ma. ANCALONG Long Nah SENYIUR Ma.BENGKAL D. Melintang Muara muntai Rimbaayu DAMAI MUARALAWA MELAK B C T MUARA NYAHING TamiangLayang TANJUNG Ampah S. BARI T O BUNTOK BETUNG BANGKANAI KINTAP SUNGAIDANAU BONTANG BANJARMASIN MARTAPURA SANGKULIRANG LONG IKIS T. GROGOT BATULICIN SATUI PELEIHARI Muara Bengalon Lebuk Tutung To Senyiur ± 67 Km LINGAU Sepaso KAB. KUTAI KARTANEGARA KALIMANTAN KALIMANTAN SELATAN MUARATEWEH MUARA PAHU MR.BUNYUT SANTAN TG. MARANGKAYU MUARA BADAK LEBAK CILONG Gulf of Carpentaria INDONESIA K a l i m a n t a n Borneo Balikpapan Palangkaraya Samarinda Pontianak K a l i m a n t a n Laut MALAYSIA BRUNEI DARUSSALAM Bandar Seri Begawan anjungredeb T Banjarmasin BLOK II PT.GUNUNG BAYAN PRATAMA COAL BLOK I PT.GBP N 15 30 60 BLOK II PT.GUNUNG BAYAN PRATAMA COAL BLOK I PT.GBP A-7 GBP - BLOCK 1 CILONG AND KEHAM DEPOSITS JORC RESOURCES AND RESERVES STATEMENT 31st March 2008 Date: May 2008 Job No: 3318M a Figure: 2 PT Bayan Resources GENERAL STRATIGRAPHY SEAM 7= 0.7 OPEN CUT SEAM NAME THICKNESS m CURRENT PROPOSED POTENTIAL SEAM 7L= 0.13 IB = 38.30m IB = 2.10m IB = 8.40m IB = 26.30m IB = 15.50m IB = 106.80m IB = 3.60m IB = 28.40m Continued over SEAM 6= 0.34 SEAM 5U= 0.12 SEAM 5= 0.9 SEAM 5L= 0.12 SEAM 1A= 0.25 IB = 28.40m IB = 1.70m IB = 20.10m IB = 68.80m IB = 14.50m IB = 28.00m IB = 7.40m SEAM S5= 0.88 OPEN CUT CURRENT PROPOSED POTENTIAL SEAM NAME THICKNESS m OPEN CUT CURRENT PROPOSED POTENTIAL SEAM 8U= 0.52 SEAM NAME THICKNESS m GBP- BLOCK 1 CILONG GBP- BLOCK 1 KEHAM SEAM S5= 0.88 SEAM S5= 0.88 SEAM 8L= 0.25 SEAM 7U= 0.62 SEAM 7L= 0.50 A-8 GBP BLOCK 1 KEHAM TYPICAL CROSS SECTIONS JORC RESOURCES AND RESERVES STATEMENT 31st March 2008 Date: May 2008 Job No: 3318M a Figure: 3 PT Bayan Resources -100Z 0Z 100Z 200Z 300Z 400Z 500Z -100Z 0Z 100Z 200Z 300Z 400Z 500Z -100Z 0Z 100Z 200Z 300Z 400Z 500Z -100Z 0Z 100Z 200Z 300Z 400Z 500Z 450000X -100Z 0Z 100Z 200Z 300Z 400Z 500Z -100Z 0Z 100Z 200Z 300Z 400Z 500Z SECTION 1 SECTION 4 SECTION 8 K E H M - 8 K EHM - 6 K E HM - 4 KE H M -1 1 1 1 2 5 1 2 5 1 2 5 1 5 1 5 1 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 1 7 5 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 2 5 2 5 2 5 2 5 2 5 2 5 2 5 2 5 2 5 2 7 5 2 7 5 2 7 5 2 7 5 3 3 448000E 449000E 450000E 451000E 452000E 453000E 454000E 448000E 449000E 450000E 451000E 452000E 453000E 454000E 9931000N 9932000N 9933000N 9934000N 9935000N 9936000N 9937000N 9938000N 1 4 8 9931000N 9932000N 9933000N 9934000N 9935000N 9936000N 9937000N 9938000N TOPOGRAPHY BASE OF WEATHERING TOPOGRAPHY BASE OF WEATHERING TOPOGRAPHY BASE OF WEATHERING A-9 A-10 A-11 A-12 GBP BLOCK 1 KEHAM - OPTIMISED PIT SHELL JORC RESOURCES AND RESERVES STATEMENT 31st March 2008 Date: May 2008 Job No: 3318M a Figure: 7 PT Bayan Resources Lease Boundary Pit Outlines A-13 GBP BLOCK 1 CILONG - OPTIMISED PIT SHELL JORC RESOURCES AND RESERVES STATEMENT 31st March 2008 Date: May 2008 Job No: 3318M a Figure: 8 PT Bayan Resources Lease Boundary Pit Outlines A-14 Table of Contents Page No. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.1 I NTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.2 A PPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.3 R ELEVANT R EPORT AND S TUDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1.4 P REVIOUS C OAL R ESOURCE AND R ESERVE S TATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2. COMPETENT PERSONS STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3. PROJECT DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.1 G ENERAL B ACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.2 L OCATION AND T ITLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.3 M INING O PERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.4 I NFRASTRUCTURE OF S ITE F ACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.5 T RANSPORT AND C OAL H ANDLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3.6 M ARKETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4. GEOLOGY, COAL QUALITY AND COAL RESOURCE ESTIMATE . . . . . . . . . . . . . . . . . . .

20 4.1 G EOLOGY O VERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.2 C OAL Q UALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.3 G EOLOGICAL D ATABASE AND M ODELLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.4 D ATA V ALIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.5 G EOLOGICAL C ONFIDENCE AND R ESOURCE C ATEGORIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.6 C OAL R ESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5. COAL RESERVE ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.1 C OAL R ESOURCE E STIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.2 S TUDY S TATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.3 C UT - OFF P ARAMETERS AND P IT L IMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.4 M INING F ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.5 M ETALLURGICAL F ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.6 C OST AND R EVENUE F ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.7 M ARKETING AND P RODUCT S PECIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.8 O THER R ELEVANT F ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.9 C LASSIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 5.10 A UDITS AND R EVIEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 5.11 D ISCUSSION OF R ELATIVE A CCURACY AND C ONFIDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 5.12 R ESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 5.13 S UMMARY T ABLE OF M ODEL D ATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 A-15 List of Tables Table No. Description Page No Table 4.1 — Seam Thickness—Keham Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 4.2 — Seam Thickness—Cilong Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 4.3 — Average Coal Quality—Keham Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 4.4 — Average Coal Quality—Cilong Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 4.5 — Resource Categorisation Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Table 4.6 — Resources Summary—Keham Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 4.7 — Resources Summary—Cilong Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 5.1 — Probable Open Cut Coal Reserves—Keham Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Table 5.2 — Probable Open Cut Reserves—Cilong Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Table 5.3 — Summary of Model Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 List of Figures These follow the Executive Summary Figure No. Description Figure 1 Location Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 2 General Stratigraphy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 3 Keham Typical Cross Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 4 Cilong Typical Cross Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 5 Keham Resource Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 6 Cilong Resource Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 7 Keham Pit Shells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 8 Cilong Pit Shells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 A-16

1. INTRODUCTION

1.1 Introduction

Minarco-MineConsult Pty Ltd MMC was commissioned by PT. Bayan Resources Bayan to complete an independent estimate hereafter, referred to as the “Statement” of the Open Cut Coal Resources and Reserves of their PT. Gunungbayan Pratamacoal Block 1 hereafter referred to as GBP Block 1 mining tenement located in East Kalimantan, Indonesia. The Statement reports the Coal Resources and Reserves as at 31 st March, 2008 and has been undertaken in compliance with the requirements of the reporting guidelines of the 2004 Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia “The JORC Code”. MMC has adopted the following terms for the reporting of Coal Resources and Reserves: ‰ Coal Resources as used in this report are the same as “Mineral Resource” in The JORC Code and “Geological Resources”, a common term used in the industry. ‰ Coal Resources have been subdivided into Measured, Indicated and Inferred Resources to reflect the confidence in the underlying resource data. ‰ Coal Reserves as used in this report are the same as “Ore Reserves” in The JORC Code and “Mining Reserves”, a common term used in the industry. Coal Reserves include geological and mining losses, roof and floor loss and dilution. ‰ Coal Reserves have been subdivided into Proved and Probable to reflect the confidence in the underlying resource data and mine planning detail. ‰ Marketable Reserves allow for practical yields in a beneficiation plant, which is commonly known in the industry as “product coal”. The GBP Block 1 coal will not require washing, therefore Marketable Reserves are equal to Coal Reserves. ‰ Coal Resources are reported inclusive of Coal Reserves, that is, Coal Reserves are not additional to Coal Resources. Additional terminology applied within this report includes the following: ‰ Geological Model or “In Situ” Model is the computerised three dimensional representation of the coal deposit based on topographic survey data, coal seam data derived from outcrop, drillhole or other data points, including coal thickness and quality. ‰ Optimiser is the Minex software applied to the geological model to determine the economic pit limits by the application of such factors as geological and mining losses, loss and dilution, geotechnical slope design and costrevenue inputs. ‰ Optimised Pit Shell is the three dimensional economic pit limit determined using the Optimiser. ‰ Mineable Pit Shell is the optimised pit shell after modification to conform to a practical pit design. ‰ Mineable In Situ Coal non-JORC terminology as used in this report is in situ coal within the mineable pit shell ‰ Run of Mine ROM Coal non-JORC terminology as used in this report is coal in the mineable pit shell after application of geological and mining losses, roof and floor loss and dilution. ROM may include some Inferred coal resources.

1.2 Approach

The process adopted for completing the Statement is described below. 1. An “in situ” geological model was created by Bayan geologists working on the GBP Block 1 project using Mincom software. This model had no cut off criteria applied, hence the term “in situ” model. 2. This model and underlying raw data such as borehole logs, coal quality reports and geophysical logs were reviewed by MMC geologist, Mr William Park. 3. The Mincom model was then imported into Minex software. The reason for this step was to allow mine planning software called the “Optimiser” to be run. A-17 4. The geological model was categorised into Indicated and Inferred confidence areas and then coal volumes, tonnages and qualities were estimated and reported in these categories after applying any cut-off criteria. 5. Cross sections, plans and deposit characteristics such as structure, number and thickness of seams were examined in conjunction with the proposed equipment and mining method to decide on minimum mining thickness, coal losses and dilution factors. These factors were then used to convert the in situ geological model to a ROM model. 6. Costs and revenue factors were supplied by Bayan and checked for reasonableness by MMC. These were then converted to a form to suit the Optimiser software and together with other criteria such as depth constraints, geotechnical criteria and minimum mining thickness, a series of pit shells were derived for varying revenue inputs. 7. Pit shells “Optimised Pit Shells” were selected and minor adjustments made as necessary to form practical pit designs “Mineable Pit Shells”. These pit shells formed the basis of the subsequent reserves estimates. 8. The Indicated confidence limits were overlaid on these pit shells and any Inferred tonnes were excluded from the estimate. 9. The quantities were then scheduled and tested in an economic model including capital and operating costs to check the overall economic viability of the results. 10. The Coal Reserves were categorised as Probable based on the Coal Resource confidence and the level of detail in the mine planning. 11. Checks were undertaken and results and supporting information documented in this report.

1.3 Relevant Report and Studies

The following reports, documents and studies were used as reference material in the preparation of the Statement. 1. Preston, KB and Sanders, RH, “Estimating the In-Situ Relative Density of Coal”, Australian Coal Geology, Vol 9, pp22-26, May 1993. 2. Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves, 2003. 3. Australasian Code for Reporting of Mineral Resources and Ore Reserves, The JORC Code, 2004. 4. “PT. Gunungbayan Pratamacoal, GBP Block 1, Cilong and Keham Open Cut Coal Deposits Statement of Open Cut Coal Resources and Reserves as at 30 th September 2007”. MMC Job number 3181M.” 5. “PT. Gunungbayan Pratamacoal, GBP Block 1, Cilong and Keham Open Cut Coal Deposits Statement of Open Cut Coal Resources and Reserves as at 31 st January 2008”. MMC Job number 3318M_a.

1.4 Previous Coal Resource and Reserve Statements

MMC has previously prepared two Coal Resource and Reserve statements compliant with the JORC Code for this project dated 30 th September 2007 and 31 st January 2008. There has been no mining or updated geology since 31 st January 2008, therefore there is no change to previously reported estimates. A-18