Ldd_-_pt_mitra_setia_tanah_bumbu Dtd.021209[1]

LEGAL DUE DILIGENCE REPORT ON PT MITRA SETIA TANAH BUMBU

2nd December 2009

PREPARED BY:

Soebagjo, Jatim, Djarot Attorneys at law Sequis Plaza , 17th Floor Jalan Jenderal Sudirman Kav. 25 Jakarta 12920, Indonesia Phone: +62-21-5229765, Fax: +62-21-5229752 – 53 e-mail: [email protected]

In association with: Blake Dawson, Australia

CONTENTS 1.

Terms and Definitions

2.

Executive Summary

3.

Chapter 1

-

Terms and Conditions of Legal Due Diligence

4.

Chapter 2

-

Historical Review on the Incorporation of the Company and the amendments to the Articles of Association of the Company

5.

Chapter 3

-

Corporate Status of the Company & Significant Provisions of the Company’s Articles of Association

6.

Chapter 4

-

Material Licenses, Permits, Approvals & Registration of the Company

7.

Chapter 5

-

Assets of the Company & Insurance Coverage for the Company’s Assets

8.

Chapter 6

-

Material Agreements & Contracts of the Company

9.

Chapter 7

-

Litigation/Legal Proceedings

10.

List of Documents

TERMS AND DEFINITIONS

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“AOA”

:

Articles of Association of PT. Mitra Setia Tanah Bumbu.

“BOC”

:

Board of Commissioners of PT. Mitra Setia Tanah Bumbu.

“BOD”

:

Board of Directors of PT. Mitra Setia Tanah Bumbu.

“Client”

:

The India Cements Limited.

“Company’s Founders” or

:

M. Aliansyah B; Indra Hamita; Bahrun; Liana Hamita.

“Companys’ Shareholders

:

M. Aliansyah B; Bahrun; Fahriani.

“Company”

:

PT. Mitra Setia Tanah Bumbu.

“CVM”

:

CV Mitra Setia Tanah Bumbu.

“DOE”

:

Deed of Establishment No.15 dated 15 December 2004 made before Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu ratified by the MOLHR by virtue of its decree No. C-08063 HT.01.01.TH.2005 dated 28 March 2005.

“GMS”

:

General Meeting of Shareholders of the Company pursuant to the provisions of the AOA. In all cases, the GMS may be an Annual GMS (“AGMS”) or an Extraordinary GMS (“EGMS”).

“Indonesian laws”

:

Indonesian laws and regulations.

“KP”

:

Kuasa Pertambangan or Mining Authorisation.

“LDD Report”

:

Legal Due Diligence Report.

“Manpower Law”

:

Law No.13 of 2003 regarding Manpower.

“MOLHR”

:

Ministry of Law and Human Rights of the Republic of Indonesia (formerly known as the “Minister of Justice of the Republic of Indonesia”).

“New Company Law” “New Mining Law” “NPWP”

:

Law No.40 of 2007 regarding Limited Liability Companies in the Republic of Indonesia.

:

Law No.4 of 2009 regarding Mineral and Coal Mining

:

Nomor Pokok Wajib Pajak or Taxpayer Registration Number.

“Old Company Law” “Old Mining Law” “PT AE”

:

Law No.1 of 1995 regarding Limited Liability Companies in the Republic of Indonesia.

:

Law No.11 of 1967 regarding the Principle Provisions of Mining

:

PT Adcoal Energindo

“PT JSI”

:

PT Jaya Sakti Indotama

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“SITU”

:

Surat Izin Tempat Usaha or Business Location Permit.

“SIUP”

:

Surat Izin Usaha Perdagangan or Trading Business License.

“SJD”

:

Soebagjo Jatim Djarot.

“State Gazette”

:

The State Gazette of the Republic of Indonesia.

“Supplement ” “TDP”

:

Supplement to the State Gazette.

:

Tanda Daftar Certificate.

Perusahaan

or

the

Company

Registration

EXECUTIVE SUMMARY OF LEGAL DUE DILIGENCE REPORT ON THE COMPANY 1.

Status of Incorporation & Current Legal Entity Status The Company has complied with all mandatory administrative processes required in respect of establishment of a limited liability company pursuant to the

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Company Law required at the time of its incorporation and is a legally incorporated company established in Indonesia. Please see comments Chapter 2. 2.

Legal Name, Legal Domicile, and Registered Address The name of the Company is “PT MITRA SETIA TANAH BUMBU”, the legal domicile is in Batulicin district, Tanah Bumbu regency, South Kalimantan province and the registered address as shown in the business location permit issued by Tanah Bumbu Regent is at Jl. PT. Kodeco Km.2,5 Village of Tungkaran Pangeran, Batulicin District,Tanah Bumbu Regency, South Kalimantan Province.

3.

Period of Establishment Unlimited.

4.

Objects & Authorized Business Activities The main objects of the Company as per Article 3 of the AOA are to operate in the field of trading, construction, mining, industry, transportation, agribusiness and services. In order to achieve the aforementioned objects, the Company is authorized to undertake the business activities as listed in item 5 of Chapter 3. Note: We note the objects of the Company are to continue the objects of CVM. However, we have not sighted documents of CVM in order to confirm this.

5.

Current Capital Structure and Shareholding Pursuant to the AOA, the Company was established with the following capital structure and shareholding: Authorized Capital

:

Issued & Paid-up Capital

:

SHAREHOLDERS NAME

IDR1,000,000,000 (one billion Indonesian Rupiah) divided into 1,000 (one thousand) shares, each with a nominal value of IDR1,000,000 (one million Indonesian Rupiah). IDR250,000,000 (two hundred fifty million Indonesian Rupiah) divided into 250 (two hundred fifty) shares, each with a nominal value of IDR1,000,000 (one million Indonesian Rupiah). NUMBER OF SHARES

M. ALIANSYAH B. BAHRUN FAHRIANI TOTAL

75 50 125 250

NOMINAL VALUE (IDR) 75,000,000 50,000,000 125,000,000 250,000,000

% 30 20 50 10 0

Note: The assets of the CVM have been absorbed towards the capital of the Company. Please see item 6 at Chapter 3 for further comments. 6.

BOD & BOC (MANAGEMENT) The Company’s BOD and BOC as of the date of this LDD Report are as follows: BOD:

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President Director Director

: :

M. Aliansyah B. Bahrun

BOC: Commissioner

:

Fahriani

The tenure of both the BOD and BOC is 5 (five) years from 10 April 2008 without prejudice to the right of the GMS to dismiss them at any time and subject to resignations. 7.

Licenses

A. The Company held the following licenses: i.

No.545/37/KP/D.PE dated 2 July 2007 (extension for Exploration KP No. 545/71/KP/D.PE dated September 2005;

ii.

No.545/07-EX/KP/D.PE dated 4 March 2004;

iii.

No.545/12-EX/KP/D.PE dated 21 June 2004;

iv.

No.545/48-EX/KP/D.PE dated 17 March 2005;

v.

No.545/62-EX/KP/D.PE dated 3 September 2005;

B. The Company has the following valid licenses: a.

b. i.

ii. c.

Exploitation KP bearing number : i. 545/150-EX/KP/D.PE dated 12 July 2007; and ii. 545/151-EX/KP/D.PE dated 12 July 2007. Hauling and Selling KP bearing number: 545/150-PP/KP/D.PE dated 12 July 2007; and 545/151-PP/KP/D.PE dated 12 July 2007;

Large Scale Trading December 2004; d.

Business

License

No.278/16-13/SIUP-PB/XII/2004

dated

7

Business Location Permit No.503/187/ITU/2008 dated July 2008

Please see item 7 at Chapter 4 for further comments. 8.

Legal / Litigation Search We await to receive powers of attorney from Clients to conduct court searches in order to confirm that no litigations/legal proceedings have been initiated/pending against the Company or its management.

9.

Apparent Issues

a.

The Company is required to obtain its permanent TDP, as the current TDP has been obtained prior to its incorporation. Please see item 1 in Chapter 4 further comments;

b.

We have not sighted the trading business activity reports of the Company as required under the SIUP and the Decree of Ministry of Industry and Trade of the Republic of Indonesia No. 289/MPP/KEP/10 Year 2001. Please see item 4 in Chapter 4 for further comments. -6–

c.

We have not sighted documents in respect of the KP obligations (please see item 7 in Chapter 4 for further comments). Non compliance of KP obligations can result in revocation of the KP.

d.

We have not sighted the recommendation from the local environmental department on UKL and UPL from the regional authority in charge in the environmental affairs in connection with the Exploitation KP No.545/07EX/KP/D.PE dated 4 March 2004 as extended by Exploitation KP No.545/150EX/KP/D.PE dated 12 July 2007 and construction of Special Port of the Company. Please see item 7 (f) in Chapter 4 for further comments.

e.

We have not sighted the MOLHR approval for Deed No.12 dated 10 April 2008, made by Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu. Please see item 2 in Chapter 2 for further comments.

f.

We have not sighted the renewed or current valid coal trading approval of the Company. Please see item 7 (c) of Chapter 4 for further comments.

g.

We have not sighted the land title certificates standing in the name of the Company or the sale and purchase agreement between the Company and the local land owner. Please see item 1 of Chapter 5 for further comments.

h.

Per Article 1(3) of the New Company Law, the Company is required to participate in the sustainable economic development in order to enhance the quality of life and environment. To this effect we have not sighted any evidence of such participation / any compliance with the laws.

i.

The Company has to adjust its KPs into Operation Production IUP as per the New Mining Law within one year from the date of issuance of the New Mining Law (12 January 2009).

CHAPTER 1 -7–

TERMS AND CONDITIONS OF LEGAL DUE DILIGENCE A.

OBJECTIVE OF LEGAL DUE DILIGENCE AND ROLE OF SJD A.1 OBJECTIVE OF LEGAL DUE DILIGENCE This Legal Due Diligence Report (“LDD Report”) of the Company has been prepared by SJD for the Client in connection with the cooperation of the Company with PT AE (the “Transaction”). A.2 ROLE OF SJD SJD’s role with regard to the Transaction is to conduct a legal due diligence on the Company.

B.

SCOPE OF LEGAL DUE DILIGENCE This LDD Report covers: 1. Corporate status; 2. Review of the Deed of Establishment/Articles of Association and Amendments to the Articles of Association; 3. Latest capital structure, list of shareholders and share ownership composition; 4. Shares and derivatives (as applicable); 5. Transfers of shares from date of incorporation until present date; 6. Commissioners, Directors and Secretaries; 7. Authority of the Commissioners and Directors; 8. Licenses, approvals, permits and registrations; 9. Ownership and/or proprietorship on assets, and insurance coverage on assets; 10. Agreements/contracts or commitments entered into or made with 3rd parties; relating to business activities and/or which are legally binding on the Company. 11. Litigation/legal proceedings filed with authorized judicial bodies.

C.

TERMS OF REFERENCE AND METHOD OF LEGAL DUE DILIGENCE C.1

The legal due diligence (the “LDD”) has been conducted through a review of (relevant) documents provided to us by the Company with focus on legal issues arising from information available in respect of prevailing applicable Indonesian law and regulations.

C.2

The following areas are expressly excluded from the scope of the LDD: a. accounting and financial issues (including, without limitation, validity and review of audited account, financial statements, forecast, budgets, cash flow and certified accounts); b. analysis of risk, liabilities and compliance in respect of its business activities. c. employee provident funds; d. commercial evaluation of the Transaction; e. commercial and financial evaluation of: (a) shares and (b) assets of the Companies; and f. Director’s & Commissioner’s resume details. This LDD Report has been compiled from review of documents provided as copies by the Company as listed in the attachment of this LDD Report.

C.3 C.4

Other reports may also have been commissioned in conjunction with the due diligence exercise by the Client. This LDD Report does not address, or

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purport to address in any detail, items and matters dealt with in those reports and reference should be made to those reports in full. C.5

Save where indicated herein, we have not carried out any independent verification of the information contained in the supplied documents.

C.6 This LDD Report has been prepared on the basis of the following assumptions: a. that all opinions and views expressed to us by the Company or their agents or the managers, employees and advisers are honestly held by them and that all such opinions and views expressed to us were when made and continue to be based on reasonable assumptions and that all statements of fact by any of the foregoing persons were when made and continue to be true, accurate, correct and not misleading in any way; b. that all copies of documents furnished to us as copies are authentic and complete and conform with the originals thereof, and that such originals are authentic; c. that, where a document was provided to us in draft form, it was executed or will be executed in the form of that draft; d. that all agreements, instruments and documents entered into, executed and/or issued by or on behalf of the Company and reviewed by us were duly authorized and were validly executed and that the relevant parties thereto had all necessary capacity under its or their constitutions to do such things; e. that all information or documentation supplied to, or examined by us in connection with the preparation of this LDD Report, or from which this LDD Report was compiled, was and remains true and complete and is not misleading in any way; f. all chops and signatures, where relevant, on all the documents submitted to us, are genuine; g. all necessary Board of Directors and Board of Commissioners and Shareholders meetings have been duly convened and resolutions duly adopted by the Directors and Commissioners and Shareholders (as the case may be) of the Company and, where relevant, by other parties to the documents, and have not been amended or rescinded and remain in full force and effect; h. subject to Clause D.2 hereof, all corporate records including but not limited to minutes, resolutions and records which we may have seen are complete and accurate; i. all signatories to the documents (where relevant) have due authority to execute the same; j. all agreements and documents have been duly authorized, executed and delivered by the parties thereto; k. all statutory requirements and fillings in Indonesia have been complied with save for the ones stated otherwise; and l. there are no provisions of laws or public policy of any applicable jurisdictions outside Indonesia which would be contravened by the execution delivery or performance of the relevant agreements disclosed. C.7

In preparing this LDD Report, we have limited our inquiries to matters of a legal nature and accordingly we have not raised queries in respect of, or otherwise investigated and accordingly express no opinion on any of the matters referred to in Clause C.2 hereof.

C.8

This LDD Report and review of the agreements and documentation contained herein is limited to matters of Indonesian law. We express no opinion with respect to the laws of any other jurisdiction or any documents or agreements which may be subject to, or governed by, the laws of any -9–

other jurisdiction. To the extent that this LDD Report contains, or is compiled from, reports, opinions or memoranda from any other person, that person remains wholly and exclusively responsible for the contents thereof. C.9 D.

The contents of this LDD Report reflect the position made known to us by the Company and/or the Client as at 1st December 2009.

OBSERVATIONS D.1

Apart from the review of the documents supplied to us, we have had to place total reliance on the Company to identify what other documents may be material for the purpose of the legal due diligence exercise and this LDD Report. In other words, we are unable to confirm definitively whether or not all material documents have been disclosed to us by the Company.

D.2

During the course of this LDD exercise, we have encountered several instances of incomplete documentation. Where relevant, such findings are highlighted in the body of this LDD Report.

D.3

Where our LDD Report states “to the best of our knowledge” or “we have not sighted”, this assumes prior requests already made by us for relevant documentation (as applicable) and conclusions made without such documentation or on the basis only of information available/provided to us.

CHAPTER 2 HISTORICAL REVIEW ON THE INCORPORATION AND THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY - 10 –

1.

Deed No.15 dated 15 December 2004 made before Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu, ratified by the MOLHR by its virtue of decree No.C-08063 HT.01.01.TH.2005 dated 28 March 2005, stipulates that the Company’s Founders have agreed to establish a limited liability company named “PT MITRA SETIA TANAH BUMBU”, domiciled in Batulicin – Tanah Bumbu, South Kalimantan. Considering, that the incorporation of the Company has complied with all mandatory administrative processes required in respect of establishment of a limited liability company pursuant to the Old Company Law required at the time of its incorporation, it can therefore concluded that the establishment of the Company and its initial AOA as stipulated in the DOE are valid and legally binding. Note: We note from Article 4 of the AOA, that the payment of shares of PTMSTB is made from the assets of CVM.

2.

Deed No.12 dated 10 April 2008, made by Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu, stipulates the execution of the minutes of meeting of the Company on 10 April 2008, attended by all of the Company’s Founders as stipulated in the DOE, which adopted the following resolutions: a.

Change the Company’s shareholdings as stipulated in Article 4 (2) of the Company’s AOA by sale of 75 (seventy five) shares owned by Indra Hamita and 50 (fifty) shares owned by Liana Hamita in the Company to Fahriani. In this respect, the shareholdings of the Company are follows: SHAREHOLDERS NAME M. ALIANSYAH B. BAHRUN FAHRIANI TOTAL

NUMBER OF SHARES 75 50 125 250

NOMINAL VALUE (IDR)

%

75,000,000 50,000,000 125,000,000 250,000,000

30 20 50 10 0

The share transfer was set out in the deeds of transfer of shares No.13 and No.14 dated 10 April 2008, both deeds made by Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu; b.

Amend the entire provisions of the Company’s AOA with the provisions of the New Company Law.

Note: SJD has been provided with the statement dated 2 April 2009, made by Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu ( “Notary Statement”), stating that the MOLHR approval and State Gazette for Deed No.12 dated 10 April 2008 is still in process. It is our suggestion that the Company to check with the handling notary on the status of issuance of MOLHR approval in connection with the Deed no. 12 dated 10 April 2008 as the statement issued by the notary on the changes having been reported to the MOLHR has been over 3 months.

CHAPTER 3 - 11 –

CORPORATE STATUS OF THE COMPANY & SIGNIFICANT PROVISIONS OF THE COMPANY’S AOA The following are the results of SJD’s legal due diligence on the corporate status of the Company as stipulated in the provisions of the Company’s AOA which is deemed to be significant and/or material in respect of the transaction; such legal due diligence is being based on review of the Company’s AOA by SJD: 1.

Status of Incorporation and Current Legal Entity Status The DOE, which has been ratified by the MOLHR by its virtue of decree No.C08063 HT.01.01.TH.2005 dated 28 March 2005, stipulates that the Company’s Founders have agreed to establish a limited liability company named “PT Mitra Setia Tanah Bumbu” domiciled in Batulicin – Tanah Bumbu, South Kalimantan. Note: We note from Article 4 of the AOA, that the payment of shares of PTMSTB is made from the assets of CVM.

2.

Legal Name, Legal Domicile and Registered Address Pursuant to the provisions of Article 1 (1) of the AOA, the name of the Company is “PT MITRA SETIA TANAH BUMBU”; the legal domicile of the Company is in Batulicin – Tanah Bumbu, South Kalimantan. We have been provided with business location permit No.503/187/ITU/2008 (undated) July 2008 issued by the Regional Secretary (on behalf of the Regent of Tanah Bumbu) confirming Jl. PT. Kodeco Km.2,5 Village of Tungkaran Pangeran, Batulicin District, of Tanah Bumbu Regency, South Kalimantan Province as the registered address of the Company. Note: The aforementioned legal domicile is a part of the Company’s amended AOA in respect of adjustment with the provisions of the New Company Law. However, the amendment to the AOA is pending issuance of MOLHR approval.

3.

Branch Office and/or Representative Office Pursuant to Article 1(2) of the AOA, the Company may establish a branch office or representative office as determined by the BOD. In this connection, we have not sighted documents evidencing establishment of any branch office or representative office of the Company.

4.

Period of Establishment Pursuant to Article 2 of the AOA, the Company has been established for an unlimited period of time.

5.

Objects and Authorized Business Activities Pursuant to Article 3(1) of the AOA, the objects of the Company are to operate in the field of trading, construction, mining, industry, transportation, agribusiness and services.

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In order to achieve, the abovementioned object, pursuant to Article 3 (2) of the AOA, the Company is authorized to conduct the following: (a)

(b)

(c) (d) (e) (f) (g)

business in the field of trading including local, inter-island, import, export and acting as an agent, purveyor, supplier, distributor and agent/representative of other business entities whether for its own account or at the expense of other parties for any kind of tradable goods; business in the field of construction including planning, execution, general contractor amongst other constructions of houses (real estate), industrial zone, buildings, apartment, condominium, bridge, road, pier, airport, park, land filling and leveling, installation of electricity, water, gas and telecommunication, electric navigation and others; business in the field of mining activities of coal, iron sand, gold and marble, as well as exploration, exploitation and marketing of mining products except drilling for oil and gas; business in the field of industry such as hard chalk and limestone; business in the field of transportation both land and sea transportation; business in the field of agriculture, plantation, forestry, animal husbandry, inland and sea fisheries; business in the field of other services, except tax and legal services.

Note : The Company’s objects have been amended along with the adjustment of the AOA with the provisions of the New Company law. Any amendment to the objects per New Company law requires approval from the MOLHR. In this respect, a Notary Statement has been issued to confirm such amendment is pending issuance of the MOLHR approval. 6.

Current Capital Structure and Shareholdings Authorized Capital

:

Issued Capital

:

and

Paid-Up

SHAREHOLDERS NAME M. ALIANSYAH B. BAHRUN FAHRIANI TOTAL

IDR1,000,000,000(one billion Indonesian Rupiah) divided into 1,000 (one thousand) shares, each with a nominal value of IDR1,000,000 (one million Indonesian Rupiah). IDR250,000,000(two hundred fifty million Indonesian Rupiah) divided into 250 (two hundred fifty)shares, each with a nominal value of IDR1,000,000 (one million Indonesian Rupiah).

NUMBER OF SHARES 75 50 125 250

NOMINAL VALUE (IDR) 75,000,000 50,000,000 125,000,000 250,000,000

% 30 20 50 10 0

Note: The issued and paid-up capital of the Company is derived from the assets of CVM. Per Article 34 (2) (3) of the New Company, payment towards shares made in any form other than cash requires of an expert to determine the market value of the assets and the payment of shares in the form of immovable assets must be announced in 1(one) newspaper at least within 14 days from the date of execution of the deed of establishment.

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We have in this respect neither sighted the valuation report issued by the authorized nor the news paper publication. Further, the DOE of the Company stipulates that all legal actions with third parties conducted by CVM, prior to such absorption of CVM’s assets, shall be the liability of the former partners of CVM and therefore personally binding to them; 7.

BOD and BOC (Management) A. Current members of the BOD and BOC BOD: President Director Director

: M. Aliansyah B. : Bahrun

BOC: Commissioner

: Fahriani

The tenure of the BOD and BOC is 5 (five) years from 10 April 2008, without prejudice to the right of the GMS to dismiss them at any time and subject to resignation. B. Appointment of BOD Pursuant to Article 11 of the AOA the appointment of BOD shall be as below: 1.

the Company shall be managed and led by BOD which comprises of 3 (three) Directors. In the event of appointing more than 1 (one) Director, one amongst them may be appointed as the President Director;

2.

members of the BOD are appointed by the GMS for a period of 5 (five) years, without prejudice to the right of the GMS to dismiss them at any time;

3.

if for any reason whatsoever the position of one or more or all members of the BOD becomes vacant, in such a case a GMS shall be convened within a period of 30 (thirty) days since the occurrence of such vacancy to appoint members of BOD by observing the provisions of the laws and regulations and the AOA;

4.

the Company shall be temporarily managed by member of the BOC [appointed in the BOC meeting] if for any reason whatsoever, all the positions of the members of the BOD have become vacant;

5.

a member of the BOD has the right to resign from his/her position by notifying in writing to the Company at least 30 (thirty) days prior to his/her resignation;

6.

the tenure of the member of the BOD expires in the event of: a. tendering resignation in accordance with the provisions of item (5) above; b. no longer qualified as per the prevailing laws and regulations; c. death; d. being dismissed pursuant to GMS resolution.

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Note: Pursuant to Article 11 (1) is 3 (three) the Company is required to be managed by 3 BOD members. However, the Company is managed by 2 directors only. C. Duties and Powers of BOD Pursuant to Article 12 of the AOA the duties and powers of the BOD are as follows: 1.

the BOD shall be entitled to represent the Company in and out of the court of law, in connection with all matters and events, to bind the Company with other parties and vice versa, as well as to perform any act/s on behalf of the Company pertaining to both management and ownership affairs, but with the limitation that to: a. borrow or lend money on behalf of the Company (exclusive of withdrawal of the Company’s money in a bank); b. establish new business or participate in other companies, inside as well as outside of the Republic of Indonesia; requires the approval from BOC.

2.

the President Director shall have the right and authority to act for and on behalf of the BOD and to represent the Company;

3.

in the absence of the President Director which need not be proven to the third parties, a member of the BOD shall have the right and authority to act for and on behalf of the BOD and to represent the Company.

D. Appointment of BOC Pursuant to Article 14 of the AOA the appointment the BOC shall be below: 1. 2. 3. 4.

5. 6.

the BOC comprises of 1 (one) or more members of Commissioners. In the event of appointing more than 1 (one) Commissioners, one amongst them shall be appointed as the President Commissioner; only Indonesian nationality who fulfill the requirements of the prevailing laws and regulations may be appointed as member of the BOC; the members of the BOC are appointed by the GMS for the period of 5 (five) years without prejudice to the right of the GMS to dismiss them at any time; if for any reason whatsoever the position of member of the BOC becomes vacant, then within a period of 30 (thirty) days since the occurrence of such vacancy, a GMS shall be convened for filling the said vacancy, with due observance to the provision stipulated in item 2 above; a member of the BOC has the right to resign from his/her position by notifying in writing to the Company at least 30 (thirty) days prior to his/her resignation; the tenure of a member of the BOC expires in the event of: a. losing his/her Indonesian nationality; b. tendering resignation in accordance with the provisions of item (5) above; c. no longer being qualified as per prevailing laws and regulations; d. death; e. being dismissed pursuant to GMS resolution.

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E.

Duties and Powers of BOC Pursuant to Article 14 of the AOA, the duties and powers of the BOC are as follows: 1.

2. 3.

4.

8.

the BOC is entitled at any time during the business hours of the Company’s office, to enter the building and premises or any other place/s used or controlled by the Company and is entitled to verify accounts, letter and other documents, checking and verifying cash and any other act and is further entitled to be informed of every act carried out by the BOD; the BOD and each member of the BOD shall be obligated to respond to the queries from the BOC; if all members of the BOD are suspended and the Company does not have any member of the BOD, the BOC is obligated to temporarily manage the Company. In such an event, the BOC shall be entitled to confer an interim power on one or more persons amongst them and shall be jointly responsible for such appointment; if there is only one member of the BOC, all the powers and authorities given to the President Commissioner or the members of the BOC under the AOA shall also be valid for him/her.

Working Plan, Financial Year and Annual Report Pursuant to Article 16 of the AOA:

9.

a.

The BOD shall prepare and submit annual working plan, which shall also contain an annual budget, to the BOC no later than 30 (thirty) days prior to the commencement of the following financial year;

b.

The Company’s financial year shall commence from 1 January to 31 December every year. Whereas the 1st Financial Year of the Company shall commence as 10 April 2008 and shall be closed on 31 December 2008;

c.

The BOD shall prepare the annual report and maintain it in the office of the Company for review by the Shareholders as of the date of summon of the Annual GMS.

Share Certificate, Register of Shareholders and Special Register of Shareholders Pursuant to Article 5 of the AOA, evidence of ownership of shares may be in the form of Share Certificate or statement letter or records issued by the Company. Pledging of the Company’s shares are reflected in the register of shareholders and it is therefore relevant to review the register of shareholders and the share certificate of the shareholders in order to confirm the current status of ownership of shares. We have been provided with: a. Collective Share Certificate dated 2 April 2009: i. No.00001 representing 75 (seventy five) shares bearing number 000001 to 0000075 held in the name of M. Aliansyah B, with a nominal value of IDR75,000,000 (seventy five million Indonesian Rupiah); ii. No.00002 representing 50 (fifty) shares bearing the number 0000076 to 0000125, held in the name of Bahrun, with a nominal value of IDR50,000,000 (fifty million Indonesian Rupiah);

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iii.

No.00003 representing 125 (one hundred twenty five) shares bearing the number 00001260000250, held in the name of Fahriani, with a nominal value of IDR 125,000,000 (one hundred twenty five million Indonesian Rupiah).

The above Collective Share Certificates has been legalized by Rasfienora Ronadinihari, S.H., Notary in Batulicin – Tanah Bumbu on 2 April 2009. b. Special Register of Shareholders dated 11 April 2008 confirms that the current Shareholders of the Company is in concurrence with the share composition set out in item 6 of this Chapter. 10. Transfer of Right over Shares Pursuant to Article 7 of the AOA: a. transfer of right over shares shall be made in a deed of transfer of shares (Akta Jual Beli) signed by the transferor and the transferee or their respective representatives; b. the shareholders intending to sell shares shall first offer his/her shares to the other shareholders with details of the price, conditions of sale and notify in writing to the BOD on the said offer; c. the transfer of shares shall obtain the approval from the relevant agency, if required by the laws; d. transfer of right over shares is not permitted from the date of the notice for the GMS until the date of convention of the GMS. Note: The BOD is obligated to record every transfer of shares in the register of shareholders and special register of the shareholders. Further, the Company is obligated to notify any transfer of shares to the MOLHR at the latest 30 (thirty) days from the date of the shareholders resolution.

CHAPTER 4 MATERIAL LICENSES, PERMITS, APPROVALS & REGISTRATION OF THE COMPANY - 17 –

1.

Mandatory Company Registration We have been provided with TDP bearing No.16130000298 dated 7 December 2004 issued in the name of the Company by the Industrial, Trade, Cooperation and Investment Service of Tanah Bumbu. The following are the details of the Company’s registration pursuant to the TDP: Status Address

:

Main line of business

:

Name of the Management/responsible person Valid until :

: Head Office Jl. PT Kodeco Km. 2,5 RT24 Village of Tungkaran Pangeran, District of Batulicin, Regency of Tanah Bumbu. Trading based on compensation or contract and mining. : M. Aliansyah B. 7 December 2009

In view of the above, it can be concluded that the Company has complied with its obligation in accordance with Law No.3 of 1982 regarding Mandatory Registration of Companies and Decree of the Ministry of Industry and Trade of the Republic of Indonesia No.596/MPP/KEP/9/2004 Year 2004 dated 23 September 2004 regarding Standard of Organization of Mandatory Company Registry as the prevailing regulation concerning TDP at that time. Based on SJD’s review on the TDP, it is noted that: a. the TDP was issued on 7 December 2004, while the DOE is dated 15 December 2004; b. the TDP was issued prior to Company’s incorporation . In view of the above, it is required of the Company to obtain a permanent TDP. Note: Pursuant to Article 2 of the Decree of the Ministry of Trade of the Republic of Indonesia No.37/M-DAG/PER/9/2007 the Company is obligated to obtain TDP within 3 (three) months from the date of issuance of MOLHR approval, failing which the Company’s Directors may be imprisoned for a maximum period of 1 (one) month or the Company may be imposed with fine of IDR3, 000,000(three million Rupiah). We suggest the Company to process the new TDP after the MOLHR approval on Deed No.12 dated 10 April 2008 has been obtained and provide us with the new TDP. 2.

Statement Letter of Domicile We have been provided with the business location permit (Surat Izin Tempat Usaha – SITU) No.503/187/ITU/2008 dated July 2008 issued by the Regional Secretary (on behalf of the Tanah Bumbu regent), confirming Jl. PT. Kodeco Km.2,5 Village of Tungkaran Pangeran, District of Batulicin, Regency of Tanah Bumbu as the domicile of the Company. The business location permit is valid for 3 (three) years as from 9 July 2008 to 9 July 2011.

- 18 –

Note: We note that the business location permit is undated. Therefore, we suggest the Company to obtain a new business location permit which stipulates the date of issuance and validity period of the business location permit. 3.

Tax Payer Registration Pursuant to the following documents issued by the tax service office of Banjarbaru:

(a) (b)

NPWP Card with registration No.02.242.868.4-732.000; and Statement letter of registration No.PEM-10309/WPJ.14/KP.0603/2004 dated 27 December 2004;

it can be concluded that the Company is a registered tax payer since 27 December 2004 as required by the prevailing Indonesian tax laws and regulations with the following details:

(a) (b)

Line of Business Classification Registered Address

(c)

Type of Tax Obligated to Pay

:

: 45000 – Construction. Jl. PT Kodeco Km. 2,5, RT24/RW024 Tungkaran Pangeran - Batulicin : under Article 21, Article 25, and Article 29.

Note: Pursuant to Law No.6 of 1983 regarding general taxation provisions and procedures lastly amended by law No.28 of 2007 in conjunction with the decree of the Ministry of Finance No.552/KMK.04/2000 lastly amended by the decree of the Ministry of Finance No.571/KMK.03/2003, the Company is not yet classified as the Taxable Entrepreneur (Pengusaha Kena Pajak) and therefore the Company is not obligated to register its business to the Directorate General of Tax to be affirmed as the Taxable Entrepreneur. The Company shall obtain taxable entrepreneur affirmation letter in the event of the Company’s turnover being over IDR600.000.000 (six hundred million Indonesian Rupiah) per year. 4.

Trading Business License (SIUP) Based on SJD’s review of the SIUP No.278/16-13/SIUP-PB/XII/2004 dated 7 December 2004 issued in the name of the Company by the Trade, Cooperation, Small and Medium Scale Enterprises and Investment Service of Tanah Bumbu, it can be concluded that the Company has complied with its obligation to obtain SIUP in respect of its trading business activities pursuant to the Decree of Ministry of Industry and Trade of the Republic of Indonesia No. 289/MPP/KEP/10 Year 2001 dated 5 October 2001 regarding the Standard Rules on the Issuance of SIUP as the prevailing regulation concerning SIUP at that time. The Company’s SIUP is valid for conducting trading business activities in the territory of the Republic of Indonesia. The SIUP is valid for the period of 5 (five) years from the date of the issuance and shall be valid until 7 December 2009. The following are the details of the Company’s SIUP: a.

field of Business

:

b. c.

type of Business Activities type of traded

:

- 19 –

trading based on compensation contract and mining. trading of goods and services.

or

services/goods d.

:

mining, sale and purchase of coal, iron ore, industry, shipping, land and sea transportation.

Obligations: (i) (ii)

to submit trading business activity report annually (at the latest 31 January of the following year); to renew this Trading Business License by 7 December 2009.

Note: We have not been provided with the trading business activity reports. Pursuant to the decree of the Ministry of Trade of the Republic of Indonesia No.36/M-DAG/PER/9/2007 regarding issuance of the trading business license (“Reg No. 36/2007”), any company that fails to submit activity report shall be issued with a Non-compliance letter. In the event of the Company not reporting its activity within the following 3 (three) upon issuance of the non compliance letters, the SIUP will be suspended for 3 (three) months. Pursuant to Article 22 of Reg No. 36/2007) further non compliance after suspension of SIUP will result in revocation of the SIUP. 5.

Nuisance (Act) Permit We have not been provided with the Nuisance (Act) Permit. Pursuant to Hinder Ordonantie (Nuisance Act) No.226 of 1926, the buildings owned by the Company may be closed and sealed if any company fails to obtain a nuisance permit. Further, the owner or holder or manager of such building may be imprisoned for a maximum period of 2 (two) months.

6.

Licenses & Obligations in respect of Manpower Utilization by the Company

6.1 Mandatory Manpower Report We have not sighted the Mandatory Manpower Report of the Company. Pursuant to Law No.7 of 1981 regarding the Mandatory Manpower Report, every company shall submit a manpower report to the Ministry of Manpower and Transmigration or the appointed official. The violation for not submitting the manpower report will attract imprisonment for a maximum period of 3 (three) months or a fine of maximum IDR 1,000,000, (one million Indonesian Rupiah). 6.2 Employee Social Security Program (Jaminan Sosial Tenaga Kerja – “Jamsostek”) We have not sighted document of the Company participating in Jamsostek program. Note: Pursuant to Law No.3 of 1992 regarding the Jamsostek and government regulation no.14 of 1993 regarding implementation of Jamsostek, lastly amended by government regulation no.7 of 2007, which stipulates that companies employing 10 (ten) or more employees or pay wages atleast IDR1,000,000 (one million Rupiah) per month must participate in Jamsostek. 6.3 Expatriate Manpower Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing – “RPTKA”) We have not sighted RPTKA obtained by the Company.

- 20 –

Note: Pursuant to Article 43 of the Manpower Law, every company employing expatriates should obtain RPTKA which is legalized by the Ministry of Manpower and Transmigration. 6.4 Expatriate Work Permit (Izin Mempekerjakan Tenaga Kerja Asing – “IMTA”) We have not sighted IMTA obtained by the Company. Note: Pursuant to Article 42 of the Manpower law, requires every company employing expatriates to obtain the IMTA from the Ministry of Manpower and Transmigration. Companies employing expatriates without obtaining IMTA shall be imprisoned for a minimum of 1 (one) year upto a maximum of 4 (four) years and/or imposed with a fine of at least IDR 100,000,000 (one hundred million Indonesian Rupiah) to IDR 400,000,000 (four hundred million Indonesian Rupiah). Note: SJD has been provided with a letter No.020/MSTB/IV/09 dated 30 March 2009 stating that the Company is not in operation and therefore does not have to comply with the obligations in respect of manpower. 7.

License relating to Mining

a.

NO

List of KPs held by the Company:

KP and Date of Issuance

AREA CODE

VALIDITY

HECTARES

TB.03SEPPR05

2 (two) years

2,363,9

. Exploration KP 1.

No.545/05/KP/D.PE dated 4 September 2003

from the date of issuance.

2.

No.545/61.A/KP/D.PE dated

TB.04AGPR64.A

2 August 2004

2 (two) years

1,057

from the date of issuance.

Extension of Exploration KP 3.

No.545/71/KP/D.PE dated 3

TB.03SEPPR05

September 2005 - 1st

1 (one) year from 4

Extension;

September

Note : The KP does not

2005 to 3

explicitly refer to the

September

Exploration KP ( item

2006.

no.1) . However, the area code referred to in the instant KP is the same as that of the area code referred to in item no. 1 KP above. - 21 –

1,161,2

4.

No.545/37/KP/D.PE dated 2

TB.03SEPPR05

July 2007 - 2nd Extension

2 (two) years

553,4

from 4

for Exploration KP

September

No.545/71/KP/D.PE dated 3

2006 to 3

September 2005

September 2008.

Exploitation KP 5.

No.545/07-EX/KP/D.PE

TB.03SEPPR05

dated 4 March 2004

3 (three)

199,8

years from the date of issuance.

6.

No.545/12-EX/KP/D.PE

TB.03SEPPR05

dated 21 June 2004

3 (three)

192,2

years from the date of issuance.

7.

No.545/48-EX/KP/D.PE

TB.03SEPPR05

dated 17 March 2005

3 (three)

184,2

years from the date of issuance.

8.

No.545/62-EX/KP/D.PE

TB.03SEPPR05

dated 3 September 2005

3 (three)

199,9

years from the date of issuance.

Note: The KPs referred to at item nos. 5 to 8 do not explicitly refer to the extensions of Exploration KP (item no. 4). However, the area code referred to in the above KPs are the same, as that of the area code referred to in item no. 4 above [technically the Exploration KP as referred at item no.1]. Extension of Exploitation KP 9.

No.545/150-EX/KP/D.PE dated 12 July 2007 -1

10.

TB.03SEPPR05 st

3 (three) years from 4

Extension of KP referred to

March 2007 to

in item no.5

3 March 2010

No.545/151-EX/KP/D.PE dated

12

July

199,8

TB.03SEPPR05

2007-1st

3 (three)

192,2

years from 21

Extension of KP referred to

June 2007 to

in item no.6

20 June 2010

Hauling and Selling KP 11.

No.545/07-PP/KP/D.PE

TB.03SEPPR05

dated 4 March 2004

3 (three) years from the

- 22 –

-

date of issuance 12.

No.545/12-PP/KP/D.PE/2004

TB.03SEPPR05

dated 21 June 2004

3 (three)

-

years from the date of issuance

13.

No.545/48-PP/KP/D.PE

TB.03SEPPR05

dated 17 March 2005

3 (three)

-

years from the date of issuance

14.

No.545/62-PP/KP/D.PE

TB.03SEPPR05

dated 3 September 2005

3 (three)

-

years from the date of issuance

Extension of Hauling and Selling KP 15.

No.545/150-PP/KP/D.PE

3

(three)

years from 4

Extension of KP referred to

March 2007 to

in item no. 11.

3 March 2010

dated 12 July 2007 - 1

16.

TB.03SEPPR05 st

No.545/151-PP/KP/D.PE

TB.03SEPPR05

3

(three)

dated 12 July 2007 - 1st

years from 21

Extension of KP referred to

June 2007 to

in item no. 12

20 June 2010

b.

199,8

192,2

Summary of KPs: i. Exploitation KPs 1) Decree of the regent of Tanah Bumbu No.545/150EX/KP/D.PE dated 12 July 2007 regarding the first extension of Exploitation KP The first extension of Exploitation KP granted the extension for the Decree of the Regent of Tanah Bumbu No. 545/07-EX/KP/D.PE dated 4 March 2004. This First Extension of Exploitation KP grants the Company to exploit coal mineral located in: District : Kusan Hulu Regency : Tanah Bumbu; Province : South Kalimantan; Area : 199,8 Ha; Area Code : TB 03 SEPPR 05; Block : MSTB Block I; Issuance Date : 12 July 2007; Valid for : 3 years.

- 23 –

This first extension of Exploitation KP is granted for a period of 3 (three) years and retrospectively valid from 4 March 2007 until 3 March 2010 and may be revoked at any time if the Company does not comply with the prevailing laws and regulations and the obligations hereunder: a) comply with the laws and regulations related to the granting of the KP; b) notify the regional government of Tanah Bumbu regency prior to commencement of the activities; c) the relationship between the Company and third parties shall be the responsibility of the Company in accordance to the applicable laws; d) to pay the dead rent and exploitation fee in accordance with the applicable laws and shall be fully paid before the expiry of the KP; e) to resolve the overlapping issue in accordance with the applicable laws prior to the commencement of the activities if the mining area overlaps with the interest or right of the others; f) i). shall provide 3 (three) copies of working plan and budget to the Tanah Bumbu regent c.q. Mining and Energy Service of Tanah Bumbu at the latest 30 (thirty) days as from the date of issuance of the KP; ii). provide 1 (one) copy of quarterly report to Tanah Bumbu regent and 2 (two) copies of such report to the Mining and Energy Service; g) shall provide road or other facilities to the other KP holder; h) in respect of supervising: i). the Company shall appoint the head of mining engineering who shall be responsible in respect of work health and safety as well as environment in the field of general mining; ii). supervisory is conducted by the mining inspector and the official appointed by the mining and energy service of Tanah Bumbu regency; iii). the Company is entitled to check and confirm the identity of the supervising officer by requesting for the identity card and letter of assignment of the mining inspector or the appointed official to be shown; i) i). application for a KP extension shall be submitted at least 3 (three) months prior to expiry of the KP together with the evidence of the fulfillment of obligations; ii). failure to comply with item (a) above will result in: expiration of the KP by virtue of law and all the mining activities shall cease; removal of the Company’s properties no later than 6 (six) months as from the date of expiry of the KP, except materials/buildings used for the purpose of public interest; settle unfinished/unsettled obligations. j) have domicile in the district of Tanah Bumbu regency; k) i). the Company shall obtain prior written recommendation/approval from the Tanah Bumbu regent c.q. mining and energy service should the Company intend to cooperate with third party/ies; ii). the Company is required to obtain prior written approval from the Tanah Bumbu regent should the Company intend to cooperate with foreign investor in the framework of Coal Contract of Work.

- 24 –

2) Decree of the regent of Tanah Bumbu No.545/151EX/KP/D.PE dated 12 July 2007 regarding first extension of Exploitation KP The first extension of Exploitation KP issued to the Company is an extension in respect of decree of the Tanah Bumbu regent No. 545/12-EX/KP/D.PE dated 21 June 2004 which grants the Company to exploit coal mineral located in: District : Kusan Hulu; Regency : Tanah Bumbu; Province : South Kalimantan; Area : 192,2 Ha; Area Code : TB 03 SEPPR 05; Block : MSTB Block II Issuance Date : 12 July 2007; Valid for : 3 years. This first extension of Exploitation KP is granted for a period of 3 (three) years and retrospectively valid as from 21 June 2007 until 21 June 2010 and may be revoked at any time if the Company does not comply with the prevailing laws and regulations and the obligations hereunder: a) shall comply with the laws and regulations related to the granting of the KP; b) notify the regional government of Tanah Bumbu regency prior to commencement of the activities; c) the relationship between the Company with the third parties shall be the responsibility of the Company in accordance with the applicable laws; d) to pay the dead rent and exploitation fee in accordance to the applicable laws and shall be fully paid before the expiry of the KP; e) shall resolve the overlapping issue in accordance with the applicable laws prior to the commencement of the activities if the mining area overlaps with the interest or right of the others; f) i). shall provide 3 (three) copies of working plan and budget to the Regent of Tanah Bumbu c.q. Mining and Energy Service of Tanah Bumbu at the latest 30 (thirty) days as from the date of issuance of the KP; ii). provide 1 (one) copy of quarterly report to the Regent of Tanah Bumbu and copied 2 (two) copies of such to the Mining and Energy Service; g) shall provide road or other facilities to the other KP holder; h) in respect of supervising: i). the Company shall appoint the head of mining engineering who is responsible in respect of work health and safety as well as environment in the field of general mining; ii). supervision conducted by the mining inspector and the official appointed by the mining and energy service of the Tanah Bumbu regency; iii). the Company is entitled to check and confirm the identity of the supervising officer by requesting for the identity card and/or letter of assignment of the mining inspector or the appointed official; i) i). application for an extension of the KP shall be submitted at least 3 (three) months prior to the expiry of the KP

- 25 –

j) k)

together with the evidence of the fulfillment of obligations; ii). failure to comply with item (a) above will result in: expiration of the KP by virtue of law and all the mining activities shall cease; removal of the Company’s properties no later than 6 (six) months as from the date of expiry of the KP, except materials/buildings used for the purpose of public interest; settle unfinished/unsettled obligations. have domicile in the District Court of the Regency of Tanah Bumbu; i). if the Company have the intention to have cooperation with third party, the Company shall obtained prior written recommendation/approval from the Regent of Tanah Bumbu c.q. Mining and Energy Service; ii). if the Company have the intention to have cooperation with foreign investor in the framework of Coal Contract of Work, the Company shall obtained prior written approval from the Regent of Tanah Bumbu.

In relation to both Exploitation KPs above (and their previous KPs), we have not sighted documents evidencing the: i. payments of dead rent and exploitation fee; ii. notification to the Regional Government of Tanah Bumbu regency prior to commencement of the activities; iii. receipt of submission of working plan and budget Tanah Bumbu regent c.q. mining and energy service of Tanah Bumbu; iv. receipt of submission of quarterly and annual report to the of Tanah Bumbu regent, copied to the mining and energy service/ Note: The KP may be revoked if the Company fails to comply with any of the above KP’s obligations and conditions ii.

Hauling and Selling KPs 1) Decree of the regent of Tanah Bumbu No.545/150PP/KP/D.PE dated 12 July 2007 regarding the first extension of Hauling and Selling KP. This first extension of Hauling and Selling KP issued to the Company is in respect of an extension to the decree of the regent of Tanah Bumbu No. 545/07-PP/KP/D.PE dated 4 March 2004 which grants the Company to haul and to sell coal mineral located in: District : Kusan Hulu; Regency : Tanah Bumbu; Province : South Kalimantan; Area : 199.8 Ha; Area Code : TB 03 SEPPR 05; Block : MSTB Block II Issuance Date : 12 July 2007; Valid for : 3 years This first extension of hauling and selling KP is granted for a period of 3 (three) years and retrospectively valid from 4 March 2007 until 3 March 2010 and may be revoked at any time if the Company does not comply with the prevailing laws and regulations.

- 26 –

2) Decree of the regent of Tanah Bumbu No.545/151PP/KP/D.PE dated 12 July 2007 regarding the first extension on Mining Authorization of Hauling and Selling. This first extension of hauling and selling KP granted to the Company by virtue of decree of the regent of Tanah Bumbu No. 545/12-PP/KP/D.PE dated 21 June 2004 which KP grants the Company to haul and to sell coal mineral located in: District : Kusan Hulu; Regency : Tanah Bumbu; Province : South Kalimantan; Area : 192.2 Ha; Area Code : TB 03 SEPPR 05; Block : MSTB Block II Issuance Date : 12 July 2007; Valid for : 3 years This first extension of hauling and selling KP is granted for the period of 3 (three) years and retrospectively valid from 21 June 2007 until 20 June 2010, and may be revoked at any time if the Company does not comply with the prevailing laws and regulations. Note: The above KPs have been issued in accordance with the Old Mining Law. The New Mining Law came into effect from 12 of January 2009, and in this connection, it is required of all KP holders to adjust their KPs to become Izin Usaha Pertambangan (“IUP”)- Mining License. The implementing regulations in connection with the New Mining Law have not been issued as yet. We suggest the Company to constantly check with the relevant local authority/ies as well as the department of energy and mineral resources (Energi dan Sumber Daya Mineral - ESDM) in this connection. Further, we note the issuance of the circular bearing no.03.E//DJB/2009, dated 30 January 2009, issued by the ESDM to the governors and mayors/regents in the entire Republic of Indonesia on the New Mining Law (the “Circular”). Pursuant to the Circular, every valid KP issued prior to the issuance of the New Mining Law, will still be valid until its expiration and the KP is required to be adjusted to become an IUP within 1 (one) year as from date of issuance of the New Mining Law. It is also required of every holder of Exploration and Exploitation KP to submit an activity plan on all of the KP areas and to obtain an approval from the KP issuer, such plan is also reuired to be copied to the Director General of Mineral, Coal, and Geothermal. We therefore recommend the Company to: i. adjust its KPs to become the IUP; and ii. prepare and submit an activity plan in respect all of the KP areas. c.

Approval for purchasing/selling Coal (Coal Trader) 13/PD/XI/2004 dated 26 November 2004 (“Approval”).

No.06/16-

The Company was granted with an Approval issued by the Industry, Trade, Cooperation, Small and Medium Scale Enterprises and Investment Service of Tanah Bumbu, with the following conditions: i. ii.

report every change of the Company, address of the Company and management of the Company at the latest 30 (thirty) days as from the date of such changes; comply with the provisions on coal shipment as regulated under the Decree of the Governor No.0314 of 2002 dated 5 August 2002 which has

- 27 –

been amended with the Decree of the Governor of South Kalimantan No.0213 of 2004 dated 12 April 2004; iii. acknowledgement is valid for 1 (one) year as from the date of the issuance; violation on point (i) to (iii) above will result in suspension or revocation of Acknowledgement. Note: The Approval is valid for 1 (one) year from the date of issuance being 26 November 2004 and has expired on 26 November 2005 and we have not sighted the renewal/current valid coal trading acknowledgement. d.

Recommendation Letter No.545/313.9/PU/TAMBEN/2008 dated 31 March 2008 on Mining Cooperation (the “Letter”). The Company has been issued with the Letter from the Regent of Tanah Bumbu with the following conditions in connection with the Company having coal mining cooperation with PT JSI: i.

the mining activities shall be conducted within the mining area of the Company, as set out in the Exploitation KP of the Company pursuant to the Decree of the Regent of Tanah Bumbu: a) No.545/62-EX/KP/D.PE dated 3 September 2005; b) No.545/48-EX/KP/D.PE dated 17 March 2005; c) No.545/150-EX/KP/D.PE dated 12 July 2007; d) No.545/151-EX/KP/D.PE dated 12 July 2007; e) No.545/37/KP/D.PE dated 2 July 2007; f) with Area Code TB 03 SEPPR 05; ii. the mining activities shall refer to the right and an environmental friendly mining norms and to observe the social condition of the local people, to conduct Community Development programs and reclamation; iii. PT JSI shall be fully responsible and comply with the obligations pursuant to the applicable laws and regulations in general mining; iv. The Company and PT JSI shall fulfill the obligations under the cooperation agreement executed by and between the parties on 14 December 2007, legalized by Notary Rasfienora Ronadinihari, SH, Notary in Batulicin under No.738/Leg/XII/2007. e.

Recommendation Letter No.545/443/PU/TAMBEN/2009 dated 11 June 2009 on Amendment of the Mining Cooperation (the “Letter”). The Company has been issued with the Letter from the Regent of Tanah Bumbu with the following conditions in connection with the amendment of the Mining Cooperation Agreement executed between the Company and PT AE: i

the mining activities shall be conducted within the mining area of the Company, as set out in the Exploitation KP of the Company pursuant to the Decree of the Regent of Tanah Bumbu: a) No.545/151-EX/KP/D.PE dated 12 July 2007; b) No.545/48-EX/KP/D.PE dated 17 March 2005; c) No.545/62-EX/KP/D.PE dated 3 September 2007; d) No.545/62-EX/KP/D.PE dated 12 July 2007; e) No.545/62-EX/KP/D.PE dated 2 July 2007 f) with Area Code TB 03 SEPPR 05 ii the mining activities shall refer to the right and an environmental friendly mining norms and to observe the social condition of the local people, to conduct Community Development programs and reclamation; iii the Company shall be fully responsible and comply with the obligations pursuant to the applicable laws and regulations in general mining; - 28 –

iv

f.

The Company and PT AE shall fulfill the obligations under the cooperation agreement executed by and between the parties on 8 June 2009, legalized by Notary Herminda BR Ginting, SH, Notary in Banjarmasin under No.3877/L/VI/2009.

Recommendation No.AL.641/1/3/SKTB-2005 dated 1 March 2005 on Special Port (“Recommendation”). The Company has been issued with the Recommendation, issued by the Port Administrator of Kotabaru. The Recommendation was issued to the Company to construct a special port in Sebamban, Sungai Loban district, Tanah Bumbu regency, South Kalimantan province.

g.

Environmental Impact Assessment (AMDAL) and Environmental Management Effort Report (UKL) - Environmental Monitoring Effort Report (UPL) i.

With respect to the Exploitation KPs held by the Company, we have been provided with the UKL – UPL No.12 dated December 2003, we note that the UKL – UPL was prepared only for the Exploitation KP No.545/12PP/KP/D.PE dated 21 June 2004 as extended by Exploitation KP No.545/151-EX/KP/D.PE dated 12 July 2007; In relation to the above, we have not sighted the: a) Recommendation from the Tanah Bumbu Regent for UKL – UPL No.12 dated December 2003; b) UKL – UPL and the recommendation for the Exploitation KP No.545/07-EX/KP/D.PE dated 4 March 2004 as extended by Exploitation KP No.545/150-EX/KP/D.PE dated 12 July 2007; c) UKL – UPL and the recommendation for the Exploitation KP No.545/48-EX/KP/D.PE dated 17 March 2005 and Exploitation KP No.545/62-EX/KP/D.PE dated 3 September 2005.

ii. In respect of construction of special port of the Company, we have not sighted the UKL and UPL recommendation issued by the regional authority in charge of the environmental affairs, as required by the Decree 86 of 2002. Note: We have been provided with letter No.020/MSTB/IV/09 dated 30 March 2009 stating that the Company’s AMDAL is still in process. In this connection, pursuant to the Ministry for the Environment Regulation No.11 of 2006 a company is not obligated to prepare AMDAL if the KP areas are less than 200 Ha. and the annual coal production is less than 250.000 tons. However, it is still obligated to prepare the UKL – UPL as required under Decree 86 of 2002 and obtain recommendation from the Tanah Bumbu Regent. Considering that the area for each Exploitation KPs of the Company (including Exploitation KP No.545/12-PP/KP/D.PE dated 21 June 2004 as extended by Exploitation KP No.545/151-EX/KP/D.PE dated 12 July 2007) is less than 200 Ha. and that the annual production is less than 250.000 tons, the Company is not obligated to prepare an AMDAL and obtain AMDAL approval from the Tanah Bumbu Regent. However, the Company is still obligated to prepare UKL – UPL as required under the Decree of the Ministry for the Environment No.86 of 2002 and shall obtain the recommendation from the Tanah Bumbu Regent. 8.

KP Confirmation: - 29 –

We await Client’s to provide power of attorney to conduct KP search. 9.

Mapping: SJD has obtained map from the Directorate General of Mineral, Coal and Geothermal of the Department of Energy and Mineral Resources dated 25 March 2009 which reflects that a. Exploitation KP No. 545/150-EX/KP/D.PE dated 12 July 2007; and b. Exploitation KP No.545/151-EX/KP/D.PE dated 12 July 2007, are not overlapping with other coal mining area of other companies.

CHAPTER 5 ASSETS OF THE COMPANY & INSURANCE COVERAGE FOR THE COMPANY’S ASSETS

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1.

Land, Machineries & Buildings: We have been provided with Statements bearing no: a. 33/SK/KD.SL/XII/04 dated 15 December 2004 issued by the Village Head of Sebamban Lama which states that the Company has right over the mining roads with a length of ± 18 Km, acquired by the Company from the land title holders, with a purchase price of IDR35,000 /m2;

b.

34/SK/KD.SL/XII/04 dated 15 December 2004 issued by the Village Head of Sebamban Lama which states that the Company has right over the port and stockpile with an area for ± 57 hectares, acquired by the Company from the land title holders, with purchase price IDR50,000 /m2;

c.

[un numbered ]/SK/KD.M-KA/XII/04 dated 15 December 2004 issued by the Village Head of Mangkalapi which states that the Company has right over the mining roads of ± 17 Km in length, acquired by the Company from the land title holders, with purchase price IDR35,000,-/m2;

d.

038/SK/KD.M-KA/04 dated 15 December 2004 issued by the village Head of Mangkalapi which states that the Company has right over the coal mining area with the following details: i. Exploration KP No.545/05/KP/DP dated 4 September 2003 with an area of 2,363,9 hectares; and ii. Exploration KP No.545/61 A/KP/DPE dated 2 August 2004 with an area of 1,057 hectares; which was acquired by ways of compensation to the land title holders, with compensation IDR5,000,-/m2.

Note : Per law no.5 of 1960 in respect of Agrarian Laws and its implementing regulations, the procedures of land release are as follows: a. Execution of deed of land release before the land deed official or head of district or regent; b. Application for land title to the regional office of the National Land Agency (Badan Pertanahan Nasional – BPN). c. There are 3 (three) types of land titles provided for mining activities namely: i. right of ownership (hak milik), which can only be granted to individual mining permit holder; ii. right to build (hak guna bangunan), which is used for the constructions of facilities and infrastructures for mining operations (e.g. processing and refining plants, fixed equipments, and special port); iii. right to use (hak pakai), which is used for the mining area. d. Granting of land title by the BPN by issuing land title certificate. In this respect, we have not sighted any land title certificates standing in the name of the Company or the deed of land release by the local land owner in favour of the Company. Further, we have been provided with letters No.019/MSTB/III/2009 dated 16 March 2009 and No.020/MSTB/IV/09 dated 30 March 2009 of the President Director of stating that the Company does not have any assets, either moveable or immovable assets, except the KPs issued for the Company. We note that these statement letters is in contradiction with the above statement letters, issued by

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the village head of Sebamban Lama and Mangkalapi (the Company to confirm in this respect). 2.

Leased Properties and/or Assets: We have not sighted documents regarding leased properties/assets.

3.

Vehicles: We have not sighted documents regarding vehicles owned by the Company.

4.

Material Acquisitions and/or Disposals and/or Encumbrance of Assets We have not sighted documents regarding material acquisitions/disposals of assets. SJD has been provided with letter No.020/MSTB/IV/09 dated 30 March 2009, which states that the KP of the Company is not being encumbered. Note: KP cannot be an object of security. BOD & BOC Statement: We have been provided with an undated BOD & BOC Statement which states that until 12 July 2009 the Company: a. does not own movable or immovable assets; b. has not lent/leased any immovable property to any party; c. has not been a guarantor in any transaction; d. has not obtained any loan from any bank, non bank financial institution or any party;

5.

Insurance Coverage for the Company’s Assets We have not sighted documents regarding insurance coverage on the Company’s assets.

6.

Additional Documents We have not sighted documents in connection with release of land and use of general facility (such as water, electricity, road, etc) with the other KP holders in the region if any in the event of commencing the mining activities.

CHAPTER 6 MATERIAL AGREEMENTS & OTHER AGREEMENTS OF THE COMPANY

SJD have been provided with the following agreements: - 32 –

1.

Cooperation Agreement on Natural Resources Indonesian Coal Mining dated 14 December 2007

Management

on

The Cooperation Agreement on Natural Resources Management on Indonesian Coal Mining dated 14 December 2007 was entered by and between the Company and PT AE represented by PTJSI, in this matter represented by Sankaran Sundaraman (hereinafter referred to as the “Management Cooperation Agreement”). The Management Cooperation Agreement is for PTAE to provide services to the Company in respect of management, production, marketing, and finance of the coal mining activities. The following are the significant terms and conditions of the Management Cooperation Agreement: a.

Scope of Services Any services required by the Company in connection with exploitation, transporting and marketing, as well as the financing. In relation to the above, PT AE may also conduct production, transporting, marketing, procurement, port operation, demolition (processing), as well as selling for both domestic and overseas.

b.

Coal Sales All proceeds in connection with sale of coal shall be received by the PT JSI as the representative of PT AE

c.

Supervising The Company is entitled to appoint its representative to supervise the services provided, in respect of the production capacities as well as payments of royalty to the Company

d.

Period of Service The period of services is until the depletion of the coal mineral.

e.

Royalty Payment The Company shall receive royalty in the amount of USD2.65/MT. The Company agrees that the construction of facilities and infrastructures shall take approximately 6 (six) months from the date of this Management Cooperation Agreement and during the construction of such infrastructure, PT AE will not pay any compensation/down payment to the Company. However, if PT AE fails to commence production after the said 6 (six) months, PT AE is obligated to pay a penalty (10.000 tons per month) until the commencement of production and the payment of royalty shall be adjusted in the future with payment of production.

f.

Taxes All taxes arising from the payments of royalty shall be borne by the Company.

g.

Obligations of the Parties - 33 –

Obligations of the Company: The Company shall be responsible to obtain: i. all the required licenses/approvals for the mining or related activities. If the licenses/approvals expire, the Company shall be responsible to extend the period on its own cost. ii. the Certificate of Origin (Surat Keterangan Asal Barang) and the documents related to the export of coal production on the expense of PT AE and all costs shall be converted with the payment of royalty. iii. the approval from the relevant agency (i.e. Bupati) in respect of this agreement. Obligations of PT AE: PTAE shall be responsible to: i. finance the mining activities. ii. recover land which has already been drilled and has no coal deposit as well as such mine has already depleted. h.

Insurance PT AE is obligated to pay the insurance premium.

i.

Dispute Settlement Any dispute arising out of and in connection with the Mining Cooperation Agreement shall be attempted to be resolved amicably. However, if such deliberation fails any settlement, the dispute will be finally referred to the District Court of South Jakarta.

Note: We have been provided with: a. Letter No.153/MSTB/XII/07 dated 14 December 2007, issued by the President Director of the Company which acknowledges PT JSI payments as below: i. goodwill in the amount of IDR3,460,000,000 (three billion four hundred sixty million Indonesian Rupiah) as land fee with an area of ± 1,845 hectares; and ii. royalty in the amount of IDR 2,000,000,000,- (two billion Indonesian Rupiah); while the down payment for land fee will be paid by PT JSI after PT AE commences the production. b. Power of Attorney dated 11 November 2007 from PT AE to PT JSI authorizing the BOD of PT JSI to represent PT AE and sign the Management Cooperation Agreement; c. Substitution Power of Attorney dated 12 November 2007 from the BOD of PT JSI (represented by its President Director, Sundaraman Nalini) to Sankaran Sundaraman, Commissioner of PT JSI, to sign the Management Cooperation Agreement. The Management Cooperation Agreement has been amended by Amendment of Cooperation Agreement on Natural Resources Management on Indonesian Coal Mining dated 8 June 2009 (please see point 2 below).

2.

Amendment to the Management Cooperation Agreement dated 8 June 2009. The Amendment to the Management Cooperation Agreement dated 8 June 2009 was entered by and between the Company and PT AE, in this matter represented by Sunderajen based on Power of Attorney dated 18 May 2009 (hereinafter - 34 –

referred to as the “Amendment to the Agreement”).

Management Cooperation

The Amendment to the Management Cooperation Agreement is for PT AE to provide services to the Company in respect of management, production, marketing, and finance of the coal mining activities. The following are the significant terms and conditions of the Amendment of Management Cooperation Agreement: a.

Scope of Services Any services required by the Company in connection with exploitation, transporting and marketing, as well as the financing. In relation to the above, PT AE may also conduct production, transporting, marketing, procurement, port operation, demolition (processing), as well as selling for both domestic and overseas.

b.

Coal Sales All proceeds in connection with sale of coal shall be received by the PT AE

c.

Supervising The Company is entitled to appoint its representative to supervise the services provided, in respect of the production capacities as well as payments of royalty to the Company.

d.

Period of Service The period of services is until the depletion of the coal mineral.

e.

Royalty Payment The Company shall receive royalty in the amount of USD2.65/MT. The down payment of royalty shall be paid after the production has commenced. The Company agrees that the construction of facilities and infrastructures shall take approximately 6 (six) months from the date of this Amendment to the Management Cooperation Agreement and during the construction of such infrastructure, PT AE is not obligated to pay any compensation/down payment to the Company. The cost for the construction of infrastructure shall be deducted from the royalty payable by PT AE to the Company. However, if PT AE fails to commence production after the lapse of 6 (six) months period, PT AE shall be required is obligated to pay a penalty (10,000 tons per month) until the commencement of production and the payment of royalty shall be adjusted in the future with payment of production. Upon the Company’s settlement all of the cost incurred by PT AE for the construction of the infrastructure, the entire infrastructure shall be owned by the Company.

f.

Taxes All taxes arising from the payments of royalty shall be borne by the Company.

g.

Obligations of the Parties Obligations of the Company: - 35 –

The Company shall be responsible to obtain: i. all the required licenses/approvals for the mining or related activities. If the licenses/approvals expire, the Company shall be responsible to extend the period on its own cost. ii. the Certificate of Origin (Surat Keterangan Asal Barang) and the documents related to the export of coal production on the expense of PT AE and all costs shall be converted with the payment of royalty. iii. the approval from the relevant agency (i.e. Bupati) in respect of this agreement. Obligations of PT AE: PTAE shall be responsible to: i. finance the mining activities. ii. conduct reclamation which includes recovery of already been drilled and reforested . h.

land which has

Insurance PT AE is obligated to pay the insurance premium.

i.

Dispute Settlement Any dispute arising out of and in connection with the Amendment of Mining Cooperation Agreement shall be attempted to be resolved amicably. However, if such deliberation fails any settlement, the dispute will be finally referred to the District Court of South Jakarta or District Court of Batulicin.

Letter issued by the Regent of Tanah Bumbu a.

The Regent of Tanah Bumbu has issued a letter bearing number 545/443/PU/TAMBEN/2009 dated 11 June 2009, in respect of the Amendment to the Management Cooperation Agreement with the following conditions: i. that the mining activities shall be conducted within the mining area of the Company , as set out in the Exploitation KP of the Company pursuant to the Decree of the Regent of Tanah Bumbu: a) No.545/151-EX/KP/D.PE dated 12 July 2007; b) No.545/148-EX/KP/D.PE dated 17 March 2005; c) No.545/62-EX/KP/D.PE dated 3 September 2007; d) No.545/62-EX/KP/D.PE dated 12 July 2007 e) No.545/62-EX/KP/D.PE dated 2 July 2007 with Area Code TB 03 SEPPR 05; ii. that the mining activities shall refer to the correct and environmental oriented mining norms and to observe the social condition of the local people, to conduct Community Development programs and reclamation; iii.that the Company shall be fully responsible and comply with all obligations pursuant to the applicable laws and regulations in general mining; iv. that the the Company and PT AE shall fulfill the obligations under the cooperation agreement executed by and between the parties on 8 June 2009, legalized by Notary Herminda BR Ginting, SH, Notary in Banjarmasin under No. 3877/L/VI/2009. Note:

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The New Mining Law has reduced the scope of services that can be provided by Mining Service Company, the exploitation or processing and refining has now been excluded. 3.

Cooperation Agreement of Coal Mining dated 14 July 2003. The Cooperation Agreement of the coal mining dated 14 July 2003 was entered by and between CVM and local land owners of the village of Hati’if and Mangkalapi (hereinafter referred to as the “local land owner”), in this matter represented by Amiruddin as the Village Head of Hati if and Muhammad Dong as the Village Head of Mangkalapi (“hereinafter referred to as the “Cooperation Agreement of Coal Mining”). The following are the significant terms and conditions of the Cooperation Agreement of Coal Mining: a. The local land owner agree to render the management of the coal mining area to CVM; b. The management of the coal mining area shall include: i. arrangement and processing of licenses related to the mining operations; ii. CVM is responsible to prepare and execute any agreement with any party to ensure the performance of the agreement; iii. the Company agree to pay the production results with the local land owner in the amount as follows: • land fee in the amount of IDR4,000/metric tons; • village treasury in the amount of IDR1,500/metric tons; and • fee for the processing the land in the amount of IDR2,000/metric tons. The Cooperation Agreement of Coal Mining has been enclosed with the following documents: a. letter dated 14 July 2003on land management; b. letter dated 5 January 2003on the right over the land; The above letters have been collectively executed by the villagers of Mangkalapi. Note: 1. Bhupathi of the relevant regent had the right under the Old Mining Law to issue the KP and the area to mine would be identified in the said KP. 2. We note that the Cooperation Agreement of Coal Mining has been executed by CVM. Pursuant to Article 4 of the AOA of the Company, all legal actions with third parties conducted by the partners of CVM, prior to such absorption of its assets shall be the liability of the former partners of CVM and therefore personally binding to them. In this connection, it is therefore required of the shareholders of the Company to formally acknowledge the execution of this agreement by holding a shareholders meeting.

CHAPTER 7 LEGAL/LITIGATION PROCEEDINGS

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SJD has been provided with Letter No.020/MSTB/IV/09 dated 30 March 2009, stating that the Company is not involved in any case, whether on civil, criminal or any other case which may be detrimental to the Investor. However, it is our suggestion that the Client conduct an independent search in order to ensure no litigation/legal proceedings are filed/pending in courts against the Company or its management.

LIST OF DOCUMENTS 1.

Corporate Documents a. Deed of Establishment No.15 dated 15 December 2004, made before Rasfienora Ronadinihari, S.H., Notary in Batulicin - South Kalimantan; - 38 –

b. c. d. e.

Approval from the Ministry of Law and Human Rights by its virtue of Decree No.C-08063 HT.01.01.TH.2005 dated 28 March 2005; Deed of Minutes of Meeting No.12 dated 10 April 2008, made before Rasfienora Ronadinihari, S.H., Notary in Batulicin; Deed of Share Transfer No.13 dated 10 April 2008, made before Rasfienora Ronadinihari, S.H., Notary in Batulicin; Deed of Share Transfer No.14 dated 10 April 2008, made before Rasfienora Ronadinihari, S.H., Notary in Batulicin.

2.

Licenses a. Taxpayer Registration Number (Nomor Pokok Wajib Pajak – NPWP) No.02.242.868.4-732.000; b. Registered Statement (Surat Keterangan Terdaftar – SKT) No.PEM10309/WPJ.14/KP.0603/2004 dated 27 December 2004; c. Large Scale Trading Business License (Surat Ijin Usaha Perdagangan – SIUP) No.278/16-13/SIUP-PB/XII/2004 dated 7 December 2004; d. Company Registration Certificate (Tanda Daftar Perusahaan - TDP) No.16130000298 dated 7 December 2004; e. Business Location Permit (Surat Izin Tempat Usaha) No.503/187/ITU/2008 dated July 2008

3.

Mining Licenses/Permits/Approvals/Recommendations a. Exploration KP No. 545/05/KP/D.PE dated 4 September 2003; b. Exploration KP No.545/61.A/KP/D.PE dated 2 August 2004; c. Exploration KP No.545/71/KP/D.PE dated 3 September 2005; d. Exploration KP No.545/37/KP/D.PE dated 2 July 2007; e. Exploitation KP No.545/07-EX/KP/D.PE dated 4 March 2004; f. Exploitation KP No.545/12-EX/KP/D.PE/2004 dated 21 June 2004; g. Exploitation KP No.545/48-EX/KP/D.PE dated 17 March 2005; h. Exploitation KP No.545/62-EX/KP/D.PE dated 3 September 2005; i. Exploitation KP No.545/150-EX/KP/D.PE dated 12 July 2007; j. Exploitation KP No.545/151-EX/KP/D.PE dated 12 July 2007; k. Hauling and Selling KP No.545/07-PP/KP/D.PE dated 4 March 2004; l. Hauling and Selling KP No.545/12-PP/KP/D.PE/2004 dated 21 June 2004; m. Hauling and Selling KP No.545/48-PP/KP/D.PE dated 17 March 2005; n. Hauling and Selling KP No.545/62-PP/KP/D.PE dated 3 September 2005; o. Hauling and Selling KP No.545/150-PP/KP/D.PE dated 12 July 2007; p. Hauling and Selling KP No.545/151-PP/KP/D.PE dated 12 July 2007; q. Acknowledgement as Coal Trader No.06/16-13/PD/XI/2004 dated 26 November 2004; r. Recommendation No.545/331.9/PU/TAMBEN/2008 dated 31 March 2008 to conduct mining; s. Recommendation No.545/443/PU/TAMBEN/2009 dated 11 June 2009 to conduct mining; t. Recommendation No.AL.641/1/3/SKTB-2005 dated 1 March 2005 regarding Port Location for the Company;

4.

Assets Documentation a. Statement No.33/SK/KD.SL/XII/04 dated 15 December 2004 from the Village Head of Sebamban Lama; b. Statement No.34/SK/KD.SL/XII/04 dated 15 December 2004 from the Village Head of Sebamban Lama; c. Statement No.[*]/SK/KD.M-KA/XII/04 dated 15 December 2004 from the Village Head of Mangkalapi; d. Statement No.038/SK/KD.M-KA/04 dated 15 December 2004 from the Village Head of Mangkalapi.

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5.

Agreements a. Cooperation Agreement of Natural Resources Management on Indonesian Coal Mining dated 14 December 2007 with PT AE (represented by PT Jaya Sakti Indotama); b. Amendment of Cooperation Agreement of Natural Resources Management on Indonesian Coal Mining dated 8 June 2009 with PT AE; c. Cooperation Agreement of Coal Mining Activities dated 14 July 2003 with the local people in Hati’if Village and Mangkalapi Village, Sub-District of Kusan Hulu.

6.

Other Documents a. Environmental Management Efforts Report (UKL) – Environmental Monitoring Efforts Report (UPL) No.12 dated December 2003; b. Statement dated 2 April 2009 from Rasfienora Ronadinihari, Notary in Batulicin – Tanah Bumbu; c. Collective Share Certificates No.00001 to No.00003 dated 2 April 2009; d. Special Register of Shareholders dated 11 April 2008; e. Map from the Directorate General of Mineral, Coal and Geothermal of the Department of Energy and Mineral Resources dated 25 March 2009; f. Statement No.153/MSTB/XII/97 dated 14 December 2007 (in relation with the Cooperation Agreement dated 14 December 2007); g. Power of Attorney dated 11 November 2007 from PT AE to PT JSI authorizing the BOD of PT JSI to represent PT AE to sign the Management Cooperation Agreement; h. Substitution Power of Attorney dated 12 November 2007 from the BOD of PT JSI to Sankaran Sundaraman, Commissioner of PT JSI, to sign the Management Cooperation Agreement i. Power of Attorney dated 18 May 2009 from Tony Adam, Director of PT AE, to Sunderajen, to sign the Amendment of Cooperation Agreement of Natural Resources Management on Indonesian Coal Mining dated 8 June 2009; j. Statement No.019/MSTB/III/2009 dated 16 March 2009, from the President Director of PT Mitra Setia Tanah Bumbu; and k. Statement No.020/MSTB/IV/09 dated 30 March 2009, from the President Director of PT Mitra Setia Tanah Bumbu.

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