Coal Quality 4.3 PT. Bayan Resources Tbk - Prospectus

A majority of number of drill holes are “touch” cored and samples were submitted for analytical testwork, which typically included Total Moisture, Proximate Analysis, Total Sulphur, Calorific Value and Relative Density test work. Key observations in regard to the coal qualities are as follows: ‰ detailed coal quality data is available for all seams except Seam 1, ‰ coal quality data from mined out areas has been used to supplement drill core quality data, ‰ “touch” coring results in some coal seam roof loss, therefore in thinner seams there may be a degree of sample bias.

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 4,727 open holes have been drilled, ‰ drillholes are typically less than 60 m in depth, ‰ the majority of drillholes have not been geophysically logged, although recent drillholes have been geophysically logged, ‰ a large number of drillholes have been “touch” cored for coal quality analysis, and ‰ all drillhole locations have been surveyed. The majority of proposed pit areas has been subject to drilling at 50-100m spacing while the remainder of the potential open pit areas has been largely subject to semi-detailed drilling approximately 250-500 m spacing. Drilling in potential open cut areas is typically shallow less than 60 m depth, however deeper hole drilling has been conducted in potential underground mining areas of several seams on a 500m grid spacing. Geophysical logging which provides a high degree of certainty of data accuracy has not been routinely conducted at GBP Block 2 although recent drillholes have been geophysically logged. 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 identification of faults. Drillholes have been drilled “open hole” i.e. non-cored 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. In summary, GBP Block 2 has been subject to relatively detailed, predominantly shallow open hole drilling with “touch” coring of coal seams. However due to the limited geophysical logging, MMC is of the opinion that the majority of Coal Resources are of Indicated status. Ongoing detailed drilling at GBP Block 2, including deep hole drilling, additional coal quality data and geophysical logging is expected to raise the level of confidence of Coal Resource estimates in future reports. Survey Detailed topographic survey has been conducted over study area and all drillholes have been surveyed by Total Station. Survey of mined out coal seams is conducted routinely and the geological model includes floor survey data for current active pits. 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. A-46