Establishment of the Company and other information continued

136 Adaro Energy Annual Report 2008 www.adaro.com Adaro in Summary From Us to You Running Adaro Management Report Owning Adaro PT ADARO ENERGY Tbk Schedule 54 FORMERLY PT PADANG KARUNIA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2008 AND 2007 Expressed in million Rupiah, unless otherwise stated

1. GENERAL continued

c. Coal Cooperation Agreement

Adaro’s activities are governed by the Coal Cooperation Agreement “CCA” which was entered into by Adaro and PT Tambang Batubara Bukit Asam Persero Tbk “PTBA”, formerly Perusahaan Negara Tambang Batubara, on 16 November 1982. Based on Presidential Decree No. 751996 dated 25 September 1996 and the amendment of CCA No. J2Ji.DU5282 between PTBA and Adaro on 27 June 1997, all rights and obligations of PTBA under the CCA were transferred to the Government of the Republic of Indonesia represented by the Minister of Mines and Energy, effective from 1 July 1997. Under the terms of the CCA, Adaro acts as a contractor for the Government which is responsible for coal mining operations in an area located in South Kalimantan. Commencing on 1 July 1999, Adaro adopted the sales-based cash royalty method in accordance with government regulations to satisfy the Government’s production entitlement. Adaro commenced its 30 year operating period on 1 October 1992 with coal produced from the Paringin area of interest. Adaro is entitled to 86.5 of the coal produced with the remaining 13.5 being the Government’s share of production. Adaro’s sales reflect 100 of the revenue generated from coal production and the government royalty expense is recorded a s a cost of revenue.

d. Cooperation Agreement

On 25 August 1990, IBT entered into a Basic Agreement with PT Persero Pelabuhan Indonesia III formerly Perum Pelabuhan III for the construction, development and operation of a Public Coal Port in Pulau Laut, South Kalimantan. On 10 November 1994, IBT and PT Persero Pelabuhan Indonesia III amended the Basic Agreement to become a Cooperation Agreement. Under the terms of the Cooperation Agreement, IBT commenced its 30-year operating period on 21 August 1997. Pursuant to the Cooperation Agreement, IBT has an obligation to pay royalties to PT Persero Pelabuhan Indonesia III based on a certain percentage of revenue from coal bulk terminal management services. As at 31 December 2008, the rate charged to IBT was 4 2007: 4.

e. Coal reserves

Based on the report from Terence Willsteed Associates dated 13 March 2009, the coal reserves of Adaro as at 31 December 2008, were as follows in million tonnes - unaudited: Coal reserves Proven reserves Probable reserves Total Tutupan 432 156 588 Wara 1 198 84 282 630 240 870

f. Exploitationdevelopment area

Total Production Tonnes Name of Location Exploration Licence Acquisition Date Due Date Total Exploration Expenditure US Total Proven Reserves Tonnes Current Year Accumulated Total Production Paringin 24,202,386 - Wara 4,795,349 198,000,000 Tutupan PKP2B - 16 November 1982 1 October 2022 7,703,097 432,000,000 38,482,461 289,528,834 Total 36,700,832 630,000,000 1991 - 2008 Adaro does not have any new exploration areas.