Previous Coal Resource and Reserve Statements

2. COMPETENT PERSONS STATEMENT

The information in the report, to which this statement is attached, that relates to the Coal Resources of PT. Gunungbayan Pratamacoal Block 1, is based on information compiled and reviewed by Mr. William Park, who is a Member of the Australian Institute of Geoscientists and works full time for Minarco-MineConsult Pty Ltd. William Park, signing on behalf of Minarco-MineConsult Pty Ltd, is a qualified Geologist who has more than 30 years of relevant mining and geological experience in coal, working for major mining companies and as a consultant. During this time he has either managed or contributed significantly to numerous mining studies related to the estimation, assessment, evaluation and economic extraction of coal in Australia, New Zealand, the Philippines and Indonesia. He has sufficient experience which is relevant to the style and type of deposit under consideration and to the activity he is undertaking to qualify him as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. WILLIAM PARK BSc Geology, BEcon, MAIG The estimates of Coal Resources presented in this Statement have been carried out in accordance with the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” December, 2004. The information in the report, to which this statement is attached, that relates to the Coal Reserves of PT. Gunungbayan Pratamacoal Block 1, is based on information compiled and reviewed by Mr. Paul Westcott, 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, a member of the Mineral Industries Consultants Association and is a full time employee of Minarco-MineConsult Pty Ltd. He has more than 30 years experience in the coal mining industry, during which time he has acted mainly as a consultant to the industry and has either managed or contributed significantly to several hundred mining studies related to the estimation, assessment, evaluation and economic extraction of coal in Australia, New Zealand, Thailand, South America, South Africa, Mongolia, Bangladesh, Ireland, and Indonesia. He has sufficient experience which is relevant to the style of mineralization and types of coal deposits under consideration, and to the activity he is undertaking, to qualify him as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. PAUL WESTCOTT BE Mining, Hons FAusIMM, CPMin, MMICA, MAIME The estimates of Coal Reserves presented in this Statement have been carried out in accordance with the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” December, 2004. The above-mentioned persons have no interest whatsoever in the mining assets reviewed and will gain no reward for the provision of this Coal Resource and Reserve Statement. Minarco-MineConsult will receive a professional fee for the preparation of this statement. A-19

3. PROJECT DESCRIPTION

3.1 General Background

GBP is one of six coal projects operated by PT Bayan Resources Bayan. A separate Coal Resource and Reserves report is being prepared for each of the Bayan coal projects.

3.2 Location and Titles

GBP is located in the province of East Kalimantan, Indonesia, and consists of two separate concession blocks, GBP Block 1 to the east and GBP Block 2 to the west as shown on Figure 1. The terrain is relatively flat to undulating and lightly wooded with sparse settlement. There are several nearby villages. The deposit is 30 km south of the Mahakam at the nearest point. GBP is a second generation Coal Contract of Work or CCOW issued by the Indonesian Government which covers a total area of 24,055 Ha, of which Block 1 covers an area of 8,365 Ha Block 1 = KW.05PB0165. The CCOW covers the area of mining and stipulates various government payments and conditions that need to be met as part of the contract.

3.3 Mining Operations

There are four deposits in the lease area: Keham, Cilong, SP and Mantan. This report only includes Keham and Cilong as only limited data is available for the Mantan and SP Blocks. It is understood that mining is to commence in Keham block in 2009. The current planned mine life is 4 years. The proposed mining method can be described as “multi seam, moderate dip shallow open cut coal mining using truck and shovel equipment in a haulback operation.” After the initial box cut waste has been hauled to ex-pit dumps, waste will be hauled back into the mined out area, when pit room is available and the dump area will then 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.”

3.4 Infrastructure of Site Facilities

At the Keham Block it is proposed to utilise the facilities and infrastructure of KCB, 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. There are several towns within the surrounding area from where operators will be sourced.

3.5 Transport and Coal Handling

Coal from Keham will be trucked approximately 75km from the pit to the KCB barge loader on the Mahakam River via the KCB haul road and Cilong coal will be hauled approximately 30 km to a proposed new barge loader. The coal will then be barged approximately 290 km from the KCB barge loader and 360km from the new Cilong Barge Loader to the Balikpapan Coal Terminal.

3.6 Marketing

The coal is very high energy relative to other Indonesian export coals and can be sold as a semisoft coking coal. It is therefore very suited to blending or selling at a premium to the benchmark price. A premium has been factored into the Coal Reserve estimates.

4. GEOLOGY, COAL QUALITY AND COAL RESOURCE ESTIMATE

4.1 Geology Overview

The resources are high volatile bituminous coal occurring in the Lower Miocene age Pamaluan Formation. The deposits are relatively small multiple-seam deposits. 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 sub-seams or seam splits occur from 0.2-2.5 m in thickness. A-20 The generalised stratigraphic column showing seam nomenclature is on Figure 2. Average seam thickness per seam by block is shown in Tables 4.1 and 4.2 below. The seams are folded around a north plunging syncline, with dips of 10-15 degrees steepening towards the flanks of the syncline. A number of representative cross-sections for each block are shown on Figure 3 and Figure 4. Table 4.1—Seam Thickness—Keham Block Seam No of Points Thickness m Max Min Average 8U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 1.0 0.2 0.6 8L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 1.1 0.1 0.4 7U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 1.1 0.1 0.5 7L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 2.0 0.1 0.7 Table 4.2—Seam Thickness—Cilong Block Seam No. of Points Thickness m Max Min Average 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 1.2 0.2 0.6 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 0.8 0.2 0.4 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 2.5 0.0 0.8

4.2 Coal Quality

The coal is very high energy average 7,210 kcalkg gar and medium ash 6-7 adb bituminous coal with variable sulphur content 0.4-3.3 adb with an average of 1.5 adb at Keham and 1.2 adb at Cilong. Average coal qualities for both blocks are given in Tables 4.3 and 4.4. A 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. “Touch” coring results in some coal loss at the seam roof, therefore in thinner seams there may be a degree of sample bias. Table 4.3—Average Coal Quality—Keham Block Seam No of Points TM IM Ash TS CV kcalkg ar adb adb adb adb gar 8U . . . . . . . . . . . . 56 7.8 2.2 6.9 2.23 7,700 7,260 8L . . . . . . . . . . . . 17 8.9 2.4 7.3 1.58 7,640 7,140 7U . . . . . . . . . . . . 27 9.1 2.8 10.9 2.35 7,290 6,820 7L . . . . . . . . . . . . 42 8.6 3.3 5.0 0.55 7,720 7,300 TotalAve. . . . . . 8.4

2.8 6.7

1.47 7,650

7,200 Table 4.4—Average Coal Quality—Cilong Block Seam No of Points TM IM Ash TS CV kealkg ar adb adb adb adb gar 7 . . . . . . . . . . . . . . 46 8.2 2.8 8.3 1.23 7,480 7,060 6 . . . . . . . . . . . . . . 19 8.3 2.6 5.8 2.19 7,730 7,280 5 . . . . . . . . . . . . . . 62 8.8 2.9 5.0 0.48 7,860 7,380 TotalAve. . . . . . . 8.4

2.8 6.6

1.15 7,660

7,220 A-21