COAL MINING PROJECTS BUSINESS ACTIVITIES AND PROSPECTS OF THE COMPANY AND SUBSIDIARIES

BIB The work area of BIB is specified under Second Generation of Contract of Work No. 007PKPTBA-BI1994 dated August 15, 1994 between the government and PT Tambang Batubara Bukit Asam for initial work area covering 93,164 hectares. This agreement was amended in 1997, with the transfer of all rights and obligations of PT Tambang Batubara Bukit Asam. Through the release of land rights, the area of BIB has been reduced to become 24,100 hectares. The following map shows the layout of the PKP2B project site of BIB: Stripping ratio of BIB in the period ended June 30, 2011 ranged from 1:3 up to 1:4 and for the years 2009 and 2010 respectively of 1:3 up to 1:4 and 1:5.07 up to 1:5.72. Like most coal mines in Indonesia, BIB relies on the use of mining contractors services to perform all of the mining activities, starting from the land opening, removal of topsoil and OB, coal mining, coal transportation and dewatering. The contractors use conventional small-scale mining equipments such as excavators and trucks. Mining operations of BIB are performed by mining contractors which operate under instructions of the Company. The operation in Sebamban was first started in the Andaru pit at the end of 2006. Since the work area is near the sea, BIB has a mine location which is near to port facilities. Batulaki block is located 13 km from coal processingcrushing and barge loading facilities in Abidin Port. Menwhile, Sebamban block is located at a distance of 7 km from coal processingcrushing and barge loading facilities in Bunati Port. Work area of Kusan Block and Girimulya Block are located at a distance of approximately 27 km and 44 km from coal processingcrushing and barge loading facilities in Bunati Port. KIM The mining activities of KIM and its subsidiaries are conducted by obtaining Mining Permits which validity periods vary between 6 to 20 years. The mining locations of KIM and its subsidiaries are shown in the following map: West KIM has a stripping ratio of 1:5,6. East Kim has a stripping ratio of 1:6.9. Similar to BIB, the mining operations of KIM rely on the use of mining contractors services. All of the mining activities, starting from the land opening, removal of topsoil and OB, coal mining, coal transportation and dewatering are conducted by the contractors. The contractors use conventional small- scale mining equipments such as excavators and trucks. Currently most of the coal from the mining location of KIM are sold to China and India besides to the related parties of to the Company. Coal sales to the related parties are performed in normal commercial arm’s length basis. The work area of KIM is located at an approximate distance of 260 km from Teluk Bayur Port, Padang and 260 km from Telang Dukuh Port, Jambi. TKS The mining activities of TKS in Muara Teweh is performed by obtaining IUP-Operation No. 188.452072010 dated April 26, 2010, and IUP-Operation No. 188.452082010 on 26 April 2010. These mining permits are valid for periods of 16 to 18 years. The mining location of TKS is shown in the following map: GEMS plans to transport the coal from the mining location of TKS through the coal hauling road in approximately 70 km long to the Barito River, to the area of piling, crushing and barge loading facilities. From this location the coal will be transported through the river to the transshipment point to be loaded into larger capacity coal freighter in estuary of Barito River in Banjarmasin Port.

8. EXPLORATION ACTIVITIES

The entire technical activities of mining activities including topographic mapping, geological modeling, optimization of reserves and subsidiaries’ mine planning studies are conducted with the support of a series of integrated exploration activities that are used as the basis for the implementation of feasibility study of the mine. Exploration drilling in the mining areas of BIB has been done in 1998 and 2003. Broader programs were performed from 2006 and continuing in 2010. There were at least 1,334 holes with an approximate total depth of 113,000 feet in this location, with distance between the drill point ranged from 50-200 meters in Batulaki and Sebamban blocks, and 150-200 meters in Girimulya and Kusan blocks. The exploration drilling activities were performed by following the JORC standard. The drilling statistical data is summarized in the following table: Block Number of open holes Num ber of coring holes Tot al Bat ulaki 238 55 293 Sebam ban 170 39 209 Kusan 501 154 655 Girimulya 154 23 177 Source: The Company For the mining areas of KIM, the exploration drilling was conducted since 2007 with 198 total drill holes. Intensive drilling was completed in October 2010 to 304 holes with depths ranging from 50 meters to 200. The drilling statistical data is summarized in the following table: Block Num ber of open holes Num ber of coring holes Tot al KIM East 128 70 198 KIM West 73 33 106 Source: The Company For the mining areas of TKS, the exploration drilling was conducted since 2005 with 335 drill holes and total depth of 20,287 meter. Drill point plan, geological models, mining location plan of subsidiaries were verified by the mining consultants to ensure the location of the drill point and optimal the mine planning.