Project Awesome Final Due Diligence Report - 22!06!11 - FINAL - OSP

Project Awesome
LEGAL DUE DILIGENCE REPORT

Date: 22JUNE 2011
Warning – this document is strictly confidential
This document is intended only for the use and benefit of the Leviathan Minerals Group Limited. This
document contains information that is confidential, commercially sensitive and subject to legal
professional privilege. Any solicitor/client privilege is not waived or lost by reason of mistaken
delivery or transmission. If you receive a copy of this document but are not an authorised recipient
you must not use, distribute, copy, disclose or take any action in relation to this document or its
contents. You must notify Oentoeng Suria & Partners immediately by telephone + 62 21 299 69 200
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Central Business District, Jakarta 12190, Indonesia.
Project Awesome – Due Diligence Report
In association with BLAKE DAWSON
Overview
Proposed Transaction Leviathan Minerals Group Limited (the Leviathan Group) is proposing to implement a public share offering, expected to take
place under the rules of the US Securities and Exchange Commission, pursuant to which the Leviathan Group will offer
shares in an entity that includes:
(a) PT Aega Prima (AP);
(b) PT Alam Lestari Kencana (ALK);
(c) PT Mitra Sukses Globalindo (MSG);
(d) PT Havilah Abadi Sejahtera (HAS);
(e) PT Mulia Andalan Persada (MAP);
(f) PT Havilah Sukses Bersama (HSB);
(g) PT Leviathan Mining Ekaprima (LME);
(h) PT Andalan Persada Globalindo (APG); and
(i) PT Hamparan Mineral Persada (HMP),
(the Companies), (the Proposed Transaction).
AP, ALK and MSG (the Mining Companies) are principally engaged in the exploration, mining and production of tin in
Indonesia (to the extent carried out by the Companies, the Business). The other companies are holding and sub-holding
companies of the Mining Companies.
Purpose This Report outlines the findings of the legal due diligence conducted on the Companies and the Business (on the Leviathan
Group's behalf) by Oentoeng Suria & Partners between 24 February 2011 to 22 June 2011.
Overview 2
Scope of Work, Assumptions Schedule 2 sets out the Scope of Work, assumptions and qualifications of, and to, this Report and our legal due diligence.
and Qualifications
Structure This Report is divided into two principal parts:
• Part A – Executive Summary which identifies those legal issues and risks of material importance to the Proposed
Transaction; and
• Part B – the detailed report which discusses those issues identified in the Executive Summary in more detail and
discusses those issues you have asked us to consider as part of the Scope of Work.
Part A includes references to Part B where an issue is discussed in more detail in this Report. Please note that Part A is only
a summary and should be read in conjunction with the remainder of this Report.
Glossary Schedule 1 is a glossary of terms used in this Report.
Your Contacts For any questions about this Report please contact:
Simon Fraser
T: (61) 3 9679 3303
E: simon.fraser@blakedawson.com
Sean Prior
T: (62) 21 2996 9216
E: sean.prior@blakedawson.com
Priyatna Yoopie
T: (62) 21 2996 9210
E: priyatna.yoopie@oentoengsuria.com
Overview 3
Contents
1. MATERIAL FINDINGS 2
2. CORPORATE 42
2.1 Corporate structure provided by the Leviathan Group 42

2.2 Corporate structure based on schedules 43
2.3 Proposed Transaction 44
2.4 Legal nature of the Companies 44
2.5 Incorporation status 44
2.6 Shareholders and shareholder rights 44
2.7 Restrictions on transferring shares to foreign parties 44
2.8 Transfer generally and pre-emptive rights 45
2.9 Pledge of shares 45
2.10 Minority shareholders 46
2.11 Capital structure 46
2.12 Business Scope 46
2.13 Other features of the constituent documents 47
2.14 Annual General Meeting of Shareholders 47
2.15 Solvency 47
2.16 Corporate licences, permits and registrations 47
3. MANAGEMENT OF THE COMPANIES 49
3.1 Corporate governance 49

3.2 Board of Directors 49
3.3 Board of Commissioners 50
3.4 Right of the Board of Commissioners to suspend Directors 51
3.5 Transactions requiring Commissioner approval 51
4. MINING AUTHORISATIONS 53
1
4.1 Overview of the Mining Law 53

4.2 Mining authorisations held by the Companies 54
4.3 Verification Searches 55
4.4 Overlapping interests 56
4.5 Terms and conditions of the Mining Companies' mining business licences 57
4.6 Compliance with the terms and conditions of the IUPs and KP 57
4.7 Divestment requirements 58
4.8 Domestic Market Obligation (DMO) 58
4.9 Benchmark price 58
4.10 Obligation to pay Royalties and Deadrent 58
4.11 Obligation to Pay Reclamation Guarantee (Jaminan Reklamasi), Post Mining Guarantee (Jaminan Pascatambang) and Surety Deposit
(Jaminan Kesungguhan) 60
4.12 Reclamation Guarantee 60
4.13 Post Mining Guarantee 61
4.14 Reclamation Guarantee and Post Mining Guarantee for Offshore Mining Activities 61
4.15 Surety Deposit 62
4.16 Extension of Exploration and Production Operation IUPs 62
4.17 Requirement to conduct value added process to mined tin 63
4.18 Export of Tin 63
4.19 Inter-island Trading 64
4.20 Recent Mining Development in Indonesia 64
5. MINING SERVICES 66
5.1 Mining Services Arrangements 66

5.2 Mining services in Indonesia under the Mining Law 66
5.3 Types of services that can be provided under the Mining Law 67
5.4 Tender process for foreign-owned mining services businesses 67
5.5 Prohibition on engaging affiliates and/or subsidiaries 68
5.6 Responsibility 68
5.7 Classification and qualification of mining services company 68
5.8 Obtaining the necessary licences 69
5.9 Period and expiry 69
5.10 Amendment and assignment 70
5.11 Obligations 70
5.12 Sanctions 70
Contents 2
5.13 Transitional provisions 71
6. SHIPPING 72
6.1 Ownership of Cutter Section Dredger by AP 72

6.2 Operations of Cutter Section Dredger by AP 73
6.3 Cabotage 73
7. MATERIAL CONTRACTS 74
7.1 Supply of Tin Ore by AP to ALK 74

7.2 Sale of Tin Ingots By ALK 74
7.3 Lease of Vessel for AP's Mining Operations 74
7.4 Consent issues 74
8. MANPOWER/EMPLOYMENT 75
8.1 Overview of regulatory requirements 75

8.2 Provision of employment related documents 75
8.3 Provision of Manpower Reports 75
8.4 Participation in Jamsostek Program 76
8.5 Provision of Company Regulations 76
8.6 Implementation of Occupational Health and Safety Program 76
8.7 Litigation and breaches 77
9. PROPERTY AND LAND SETTLEMENT 78
9.1 Location and ownership of ALK's smelter 78

9.2 Land settlement in respect of ALK's 6 Production Operation IUPs 78
10. ENVIRONMENT 80
10.1 Overview of environmental regulatory requirements 80

10.2 AP's environmental compliance documents 81
10.3 ALK's environmental compliance documents 82
10.4 ALK's Increased Production Capacity 83
10.5 MSG's Environmental Compliance Documents 83
Contents 3
10.6 Storage and Use of Dangerous Goods and Hazardous Substances 83

10.7 Waste Disposal Management 84
10.8 Environmental breaches 84
11. FORESTRY 85
11.1 Overview of forestry regulatory requirements 85

11.2 Mining operations in protected forest areas 86
11.3 Recent development in forestry in Indonesia 86
11.4 Possible Use of Forestry Area by ALK in Respect of Its 6 Production Operation IUPs 87
12. LITIGATION AND ARBITRATION 88
12.1 Conducting searches 88

12.2 Litigation 88
13. TAX, FINANCIAL AND TECHNICAL DUE DILIGENCE 89
Schedule
1 GLOSSARY 90
2 SCOPE OF WORK, ASSUMPTIONS AND QUALIFICATIONS 92
3 CORPORATE DETAILS 97
4 CORPORATE STATUS 110
5 MANAGEMENT DETAILS 136
6 CONDITIONS OF EXPLORATION IUPS 154
7 CONDITIONS OF PRODUCTION OPERATION IUP 157
8 PROCESSING AND REFINING KP 160
9 DETAILS OF IUPS / KPS 161
Contents 4
10 COURT SEARCHES AND SUMMARY OF LITIGATION 186
11 OVERVIEW OF MINORITY SHAREHOLDER RIGHTS 190
12 DETAILS ON PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF AP 193
13 DETAILS ON PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF ALK 212
14 DETAILS OF PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF MSG 220
Annexure
1 SCOPE OF WORK
Contents 5
Part A – Executive Summary
The table below summarises the findings in relation to the Companies and the Business which we consider material for the Leviathan Group and/or its advisers to be
aware of in the context of the Proposed Transaction.
A number of the findings require further consideration and assessment by the Leviathan Group and/or its advisers.
This Part A should be read in conjunction with the remainder of this Report.
Part A – Executive Summary 1

1. Material Findings
Subject Issue/Description Recommendation Risks / Consequences Timeline /

Responsibility
Limitations on due diligence
Documents not There are still missing documents which we have N/A For our final report, we N/A
provided requested from the Companies. have assumed that a
document which is not
provided is not held by the
Company.
Corporate
Legal nature of the The Companies are private Indonesian companies limited
N/A N/A N/A
Companies by shares and governed by the Company Law. This is the
standard form of private company in Indonesia.
Incorporation status The Companies are validly incorporated under Indonesian

N/A N/A N/A
law.
Capitalisation The Indonesian Company Law uses the concept of

N/A N/A N/A
“authorised capital” to describe the total nominal value of a
company’s shares.
The Company Law requires all companies in Indonesia to
have authorised capital of at least IDR 50,000,000 and
paid-up capital of at least IDR 12,500,000. The
Companies have complied with this requirement.
Companies engaged in mining are subject to a more
onerous obligation. Mining companies are required to
have authorised capital of at least USD 1,000,000
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(approximately IDR 10,000,000,000) and paid-up capital

of at least USD 600,000 (approximately IDR
6,000,000,000). The Mining Companies have complied
with this requirement.
Shareholding Every Indonesian company must have at least two N/A N/A N/A
shareholders. The Companies have complied with this
requirement.
The Companies' shares carry the normal voting and
dividend rights.
Under the Company Law, a shareholder may exercise its
rights as a shareholder (including the right to vote in
shareholders' meetings and the right to receive dividends)
after the shares under its name have been registered in
the Register of Shareholders.
We have sighted the Register of Shareholders and Shares
Certificate for all of the Companies.
Restriction on foreign The Articles of Association of HAS and LME (both PMA If, under the Proposed These are required process N/A
ownership in the Companies) allow shares to be owned by foreign Transaction, shares in steps for the share
Articles of shareholders. APG, MAP, HSB and acquisition elements of the
Association HMP are to be owned by transaction to proceed.
The Articles of Association of APG, MAP, HSB and HMP
restrict the ownership of shares to Indonesian citizens a foreign party, APG, They are not controversial.
MAP, HSB and HMP
and/or Indonesian legal entities.
must be converted into
AP, ALK and MSG have been approved by BKPM to be PMA Companies.
converted into PMA Companies. Conversion requires
Their Articles of Association have also been adjusted to approval from the BKPM
reflect their status as PMA Companies (including allowing and the MOLHR. The
the shares to be owned by foreign sharehareholders), but conversion process takes
they are required to be approved by MOLHR in order to be approximately ten
legally effective. business days (once a
company has submitted
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all of the required

We have been provided with copies of MOLHR Approvals documents to the BKPM).
for AP, ALK and MSG, and therefore ALK,AP and MSG
For companies holding an
are now validly registered as PMA companies.
IUP, the BKPM requires a
recommendation in
favour of the PMA
conversion from the
authority that issued the
IUP.
Transfer and pre- The Articles of Association of each Company state that N/A These are required process N/A
emptive rights in the any shareholder wishing to transfer its shares must: steps for the share
Articles of acquisition elements of the
• first offer them to existing shareholders by
Association transaction to proceed.
notifying them in writing of the terms and price;
They are not controversial.
and
• notify the Board of Directors in writing of the offer.
The Articles of Association of each Company require
shareholders to approve the proposed transfer at a
General Meeting of Shareholders.
The MOLHR must be notified of any proposed transfer of
shares.
BKPM approval is required for any transfers of shares in
AP, ALK, MSG, LME and HAS.
There are no restrictions in the Articles of Association of
each Company on shareholders pledging their shares.
Any existing pledge of shares must be recorded in the
Register of Shareholders of each Company. We have not
been provided with any pledges or other security rights
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over the shares of the Companies.
Business scope of the As part of their conversion into PMA Companies, the N/A N/A N/A
Mining Companies business scope of each of AP, ALK and MSG has been
adjusted to only include tin mining operations. MOLHR
has approved the adjustment of AP, ALK and MSG's
Articles of Association.
Business scope of The business scope of APG, HMP, HSB and MAP, as set N/A Amending Articles is not a N/A
APG, HMP, HSB and out in their respective Articles of Association, includes difficult process and takes
MAP mining of various commodities. If, in the future, these about a month.
companies wish to engage in tin mining activities, they
must (in addition to obtaining the required IUP) amend
their Articles of Association to limit their business scope to
tin mining only.
Management of Indonesian Companies
Limitation on powers Indonesian companies typically have a Board of Directors N/A N/A N/A
and authorities and a Board of Commissioners. The provisions of the
Company Law require Indonesian companies to have at
least one Director and one Commissioner.
The Board of Directors has responsibility for the day-to-
day management of the company and exercises its power
through the passing of resolutions at meetings of the
Board of Directors (or by way of circular resolution). The
Board of Directors can exercise all of the powers of the
company, except where the Company Law requires
approval at a General Meeting of Shareholders or from the
Board of Commissioners. Shareholders can amend the
Articles of Association to limit the powers of the Board of
Directors by requiring Board of Commissioner or
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shareholder approval in specific instances.
Restriction on The Articles of Association of the Mining Companies The Articles of Amending Articles is not a N/A
appointment of provide that the Commissioners of those companies must Association of the Mining difficult process and takes
commissioners be Indonesian citizens. Companies should be about a month.
amended to allow for the
appointment of foreign
commissioners.
Mining Licenses
AP's IUPs N/A N/A – other than to note the N/A

AP holds 3 Production Operation IUPs and 16 Exploration
IUPs. 1 Production Operation IUP and 16 Exploration 2012 expiry date.
IUPs were granted to AP by the Governor of Bangka
Belitung Province on 15 March 2010. The remaining 2
Production Operation IUPs are issued on 3 May 2010 and
30 April 2010 respectively.
The Production Operation IUPs will expire on 13

November 2016, 2 May 2025 and 29 April 2025
respectively. They can be extended twice, for 10 years on
each extension.
All of AP's Exploration IUPs will expire on 4 September

2012.
ALK's KP & IUPs We deal with the issues N/A otherwise – other than N/A
ALK holds a Processing and Refining KP, issued by the
raised here in the section to note the 2011 and 2012
Mayor of the City of Pangkal Pinang in 2006, and
"ALK as the Seller / expiry dates on some of the
subsequently amended in 2008. The Processing and
Exporter of Tin Ingots IUPs.
Refining KP was granted to ALK to allow it to conduct
below".
processing and refining of tin sand and/or tin ore for a
period of 20 years on the basis of a production capacity of
6,000MT/year.
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Responsibility
ALK also holds 6 Production Operation IUPs for tin

mining. These Production Operation IUPs were issued by
the Regent of Bangka on 11 January 2010.
• 2 Production Operation IUPs will expire on 15
March 2013;
March 2012; and
October 2011.
ALK also holds a Transportation and Selling KP issued on
17 April 2008 which expired on 17 April 2011. We have
not seen evidence of the conversion of this license into a
Transportation and Selling IUP under the current Mining
Law.
MSG's IUPs MSG holds 35 Exploration IUPs for tin mining exploration. N/A N/A - other than to note the N/A
The Exploration IUPs were issued by the Governor of 2012 expiry dates.
Bangka Belitung Province on 19 December 2008. The
Exploration IUPs will expire on 18 December 2012.
Existing License issued at Regency Level We have considered this § We note there is no ALK is considering the
ALK Point 1: ALK Point 1 together with specific basis in the most feasible option
ALK's Processing and Refining KP (issued under the old ALK Point 2, ALK Point 3 Mining Law and its taking into account the
Basic validity of mining law) has not yet been converted into a Special
ALK's license to and ALK Point 4. To deal Implementing legal, commercial and
Production Operation IUP for Processing and Refining with all of these points Regulations for the timing considerations.
process and refine tin (under the new Mining Law). together, the following suggestion made
options exist: by MEMR in We estimate that ALK
Our review shows that ALK applied to the Mayor of
respect of ALK Options 1 and 2 may
Pangkalpinang for conversion on 18 April 2010 (before the
• ALK Option 1: Option 2. take approximately 2 to
conversion deadline set by the Mining Law).
relinquish ALK's Specifically: 6 months to complete.
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Responsibility
6 Production
ALK has confirmed that the Mayor of the City of Operation IUPs • Rectification of For ALK Option 3, we
Pangkalpinang has not yet issued the Special Production and upgrade IUPs in this estimate that it will take
Operation IUP for Processing and Refining. ALK's Processing way could be approximately take 2 to
and Refining KP deemed as the 4 weeks to complete.
This means that until the Special Production Operation issuance of a
into a Special
IUP is issued, the status of ALK's permit is uncertain, and new provincial
that, if it was never issued, ALK would not have a valid Production
Operation IUP for Production
permit under the Mining Law to process and refine tin in
Processing and Operation IUP.
Pangkalpinang.
Refining issued New IUPs
Alternative Option applied for by ALK - License issued by the Governor must be
at Provincial Level or MEMR (for tin issued through
from overseas) a tender
We understand that ALK has filed an application to the which will enable process over
Governor of Bangka Belitung Islands Province for ALK to process ground made
obtaining a province-wide, cross-regency Special AP's ore in available for
Production Operation IUP for Processing and Refining. Pangkalpinang licensing. The
and obtain the ground has
We have received a copy of a recommendation from the not yet been
Special
Mayor of Pangkalpinang for the Governor of Bangka made
Tranportation and
Belitung Islands Province to grant ALK a Special available by
Production Operation IUP for Processing and Refining. Selling IUP from
MEMR; central
As ALK already has 6 Production Operation IUPs issued government
by the Bangka Regent (as discussed further below), • ALK Option 2: and the tender
MEMR has informed us that under the Mining Law, ALK MEMR processes
would not be permitted to hold a separate processing suggested ALK have not yet
license to process other parties' tin, no matter who issued converts its been
it. Therefore, if the existing license is not validly existing published, and
converted, then ALK would not be able to use this Processing and new IUPs
alternative license as an option. Refining KP and should not be
its 6 Production issued until
Operation IUPs that has
to become 6 happened.
Production
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Responsibility
Operation IUPs
issued by the • A Production
Governor of Operation IUP
Bangka Belitung also allows the
Islands Province. processing of
As the license ore which is
would be issued mined under
at provincial, not other
regency, level, Production
and a Production Operation
Operation IUP IUPs. The
allows the holder suggestion
to process the here is for ALK
ore mined, to process
MEMR's view is other parties'
that it would tin through the
enable ALK to Production
carry out cross- Operation IUP.
regency mining Processing of
activities another party's
(including ore in this way
processing and can only be
refining in done on a
Pangkalpinang). tolling basis
(the processor
• ALK Option 3:
cannot then
Alternatively ALK take title to the
could:
ore).
o maintain the
6 Production • Nevertheless, the
Operation suggestion is
IUPs and persuasive that
relinquish MEMR may take no
the action if Option 2
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Processing was done.

and Refining However, given the
KP (together issues with the
with the suggestion above,
expired ALK we recommend that
Selling KP); a higher level of
and comfort be
o AP could obtained from
MEMR if Leviathan
purchase/lea
intended to go
se the
smelter from down this route
ALK and given the lack of a
full legal basis for
conduct the
its suggestion.
smelting
itself (AP's
• Also ALK should
Production
confirm whether the
Operation
Special Production
IUPs allow
Operation IUP for
AP to smelt
Processing and
its own tin,
Refining will be
within the
issued by the
area in
Mayor of the City of
which the
Pangkalpinang or
IUPs were
by the Governor of
issued. AP's
Bangka Belitung
IUPs were
Islands Province as
issued by
we currently see
the
two document
Governor of
streams.
Bangka
Belitung ALK should also
Islands provide a letter
Province issued by the
and issuing authority of
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Responsibility
therefore the IUP clarifying

enable AP to the status of the
conduct application for
smelting on conversion.
its own tin
anywhere in
the province,
including
Pangkalpina
ng); and
o For ALK's tin
in Bangka
Regecy, AP
can smelt it
for ALK
(tolling
arrangement
) OR ALK
can build a
smelter in
Bangka for
its 6
Operation
Production
IUPs.
ALK Point 2
ALK's 6 Production Operation IUPs were issued by • MEMR We have the same issues Please see above.
Processing of Tin suggested that with MEMR's proposal as
Bangka Regency and allow ALK to smelt its own tin within
Mined Pursuant to the area in which the IUPs were issued. Accordingly, the ALK could opt for set out in ALK Point 1.
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Responsibility
ALK's 6 Production IUPs require the processing of tin mined from the mining Option 2 as it
Operation IUPs areas to be conducted in Bangka Regency. would enable
ALK to conduct
However, ALK has informed us that the tin is currently cross regency
being processed in ALK's existing smelter located in the mining activities
city of Pangkalpinang under ALK's Processing and (including
Refining KP. This is outside Bangka Regency. processing and
refining of tin
This applies even though ALK's processing and refining mined from
license was (subject to being validly converted) issued by Bangka in
the mayor of Pangkalpinang. Pangkalpinang).
The other
solutions listed in
ALK Point 1 also
apply here.
ALK Point 3 Under the Mining Law and its implementing regulations, • MEMR We have the same issues Please see above.
Processing of tin as the holder of a Processing and Refining KP issued by suggested that with MEMR's proposal as
sourced from AP by the Mayor of Pangkalpinang, ALK is only allowed to ALK opt for set out in ALK Point 1.
ALK process tin sourced from Pangkalpinang area (even if it Option 2 as it
did not have the six Operation Production IUPs). would enable
Currently, tin being mined by AP (and processed by ALK) ALK to conduct
is not sourced from the Pangkalpinang area. cross regency
mining activities
(including
processing and
refining of tin
mined from
Bangka in
Pangkalpinang).
The other
solutions listed
in ALK Point 1
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also apply here.
ALK Point 4 • ALK must have a Transportation and Selling IUP If ALK intends to sell AP's
Please see above.
ALK as the to buy tin from AP and subsequently sell tin. tin, then Option 1 as
Seller/Exporter of • We have been provided with a selling license in discussed above will be
AP's Tin KP form (under the previous mining law) issued relevant whereby ALK
on 17 April 2008 which expired on 17 April 2011. needs to relinquish its 6
We have not seen evidence of the conversion of Production Operation
this license into a Transportation and Selling IUP IUPs and apply for a
under the current Mining Law. ALK therefore has Transportation and
no current selling license. Selling IUP issued by
Governor or MEMR (if
• In any event, because ALK already has 6
ALK will be exporting tin
Production Operation IUPs issued by the Bangka
ingots). It would be
Regent (as discussed further above), MEMR's
permitted to hold this
view is that ALK is not allowed to have a
together with a
standalone Transportation and Selling IUP under
Processing and Refining
the Mining Law.
IUP issued by Governor.
• This issue only applies to AP's tin. ALK is
permitted, under its six Operation Production Alternatively ALK could
IUPs, to transport and sell the ore mined from convert the sale contract
those IUPs. from AP into a tolling
arrangement in which AP
keeps title to the ore and
ALK just processes it
(assuming the 6
Operation Production
IUPs have been
converted as stated in
Option 2).
Verification Searches The Energy and Mineral Resources Service Office of N/A N/A N/A
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Bangka Belitung Islands Province (as the issuing authority

of IUPs of AP and MSG and ALK's KP) has confirmed the
validity of all of the IUPs granted to AP and MSG, and
ALK's Processing and Refining KP. It has also confirmed
that:
• AP, MSG and ALK have no outstanding
obligations in respect of their respective IUPs and
KP; and
• the Energy and Mineral Resources Service Office
of Bangka Belitung Islands Province has never
imposed any penalties/sanctions on AP, MSG and
ALK in respect of the mining operations carried
out under their respective IUPs and KP.
The Energy and Mineral Resources Service Office of
Bangka Regency, in its capacity as the issuer of ALK's 6
Production Operation IUPs, has confirmed the validity of
ALK's 6 Production Operation IUPs. However, the
response from the Energy and Mineral Resources Service
Office of Bangka Regency does not include confirmations
on whether: (a) ALK has outstanding obligations in respect
of ALK's 6 Production Operation IUPs and (b) the Energy
and Mineral Resources Service Office of Bangka Regency
has ever imposed any penalties/sanctions on ALK in
respect of the mining operations carried out under ALK's 6
Production Operation IUPs.
The dates these searches were conducted are set out in

the schedules to this Report.
Overlapping Searches The Department of Energy and Mineral Resources of the On 6 May 2011, OSP has If the refusal by the Unofficial response
Republic of Indonesia has confimed that there are no been provided with 2 Department of Energy and from the Directorate
overlapping issues in relation to the IUPs granted to ALK, additional Production Mineral Resources of the General of Oil and Gas
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AP and MSG. Operation IUPs Republic of Indonesia of the Department of

The Energy and Mineral Resources Service Office of registered under AP (No. continues, then a search in Energy and Mineral
409 and No. 418). relation to these 2 new Resources of the
Bangka Belitung Islands Province has confirmed that:
OSP has conducted IUPs will not be completed Republic of Indonesia is
• there are no overlapping issues in relation to the and potential overlapping targeted to be obtained
overlapping searches at
IUPs granted to AP and MSG; and issues may not be during the course of
the Energy and Mineral
• there are no overlapping issues in relation to disclosed. next week.
Resources Service Office
ALK's KP (this confirmation is issued by the of Bangka Belitung There could be overlaps in
Energy and Mineral Resources Service Office of Islands Province in relation to the oil and gas
Bangka Belitung Islands Province as the authority respect of these 2 new searches referred to in this
overseeing ALK's KP) IUPs. The results were section as we have not
The Energy and Mineral Resources Service Office of that there are no received official
Bangka Regency has confimed that there are no overlapping issues in confirmation that there are
overlapping issues in relation to the ALK's 6 Production relation to these 2 new none.
Operation IUPs. IUPs. All searches in any event
The Forestry Service Office of the Bangka Regency has The Department of only produce results
confimed that the mining area pursuant to ALK's 6 Energy and Mineral reflecting what has been
Production Operations IUPs are all located outside forest Resources of the reported to the relevant
area. Republic of Indonesia is department – there is no
currently not performing guaranteed central register.
We have received confirmation from the Forestry overlapping searches and Therefore, even if all
Planology Agency of the Department of Forestry of the has not specified when searches showed clean title
Republic of Indonesia that, while five of the mining areas these searches will it might be possible that
under the Production Operation IUPs of ALK are located resume. This currently there were overlaps.
in a Non Forestry Area (Area Penggunaan Lain), the only affects the 2 new
mining area under ALK's Production Operation IUP No. Please refer to the item
IUPs. below on possible use of
188.4/075/Tamben/2010 dated 11 January 2010 (area
width approximately 3 hectares) is located in a Permanent the forestry area by ALK in
Production Forest (Areal Hutan Produksi Tetap). This respect of its 6 Production
directly contradicts the confirmation received regionally. Operation IUPs for further
details on the forestry issue
raised in this section.
The dates these searches were conducted are set out in
the schedules to this Report.
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The Directorate General of Oil and Gas of the Department

of Energy and Mineral Resources of the Republic of
Indonesia has confirmed to us that they are not in the
position to issue an official response to our overlapping
searches application (they have informed us that it is a
policy decision – they do not provide official confirmation).
We have obtained unofficial confirmation from them that
there are no overlapping issues in relation to the IUPs
granted to ALK, AP and MSG (including AP's 2 additional
IUPs).
Compliance with the We have requested documents which show that the All outstanding Failure to comply with any
terms and conditions Mining Companies have complied with the conditions of compliance documents in of these conditions will put For our final report, we
of the IUPs and KP their respective IUPs and KP. As at the date of this relation to the Mining in question the good
have assumed that
Report, we have received limited data. Companies should be standing of the Mining
documents related to
The absence of these compliance documents raises provided. Companies and may compliance on the
constitute a breach of the
concerns as to whether the Mining Companies have terms and conditions of
IUP, which can lead to
complied with the conditions of their respective IUPs and the IUPs which are not
suspension or revocation of
KP. provided are not held
the IUP. by the Mining
Compliance of the Mining Companies with the conditions
of their IUPs is material for the purpose of extending or Article 110 of Government Companies.
upgrading the IUPs in the future. Regulation No 23 of 2010
provides that violations to
The relevant mining authorities have confirmed in writing the conditions of an IUP (as
that the Mining Companies have no outstanding stated in Government
obligations in relation to their respective IUPs and KP. Regulation No 23 of 2010)
However, to confirm the accuracy of the statements made can result in an
by the authorities, we recommend all outstanding administrative sanction in
compliance documents be provided. the form of:
• written warnings;
• temporary
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suspension of the
IUP; and/or
• revocation of the
IUP or IUPK.
Divestment A foreign entity who owns shares in an Indonesian N/A N/A – except for ALK N/A
company that holds an IUP issued under the Mining Law, planning.
must divest its shares in that company within 5 years of
the commencement of production so that Indonesian
parties own a minimum of 20% of the issued shares.
Divestment may occur on a progressive basis.
AP and MSG are 80% foreign-owned / 20% Indonesian-
owned. This means that the divestment requirement is not
applicable to AP and MSG (provided AP and MSG
maintain their current shareholding composition).
ALK, being 99% foreign owned, is currently subject to the
divestment requirement. As the Operation Production
IUPs were issued on 11 January 2010, this requirement
must be met by 11 January 2015.
Domestic market MEMR Regulation No 34 of 2009 regarding the N/A Allow for the possibility that N/A
obligation Prioritisation of Mineral and Coal Mining Supply for this obligation is imposed
Domestic Needs (Minister Regulation No 34 of 2009) on these companies later.
requires ALK and AP (and MSG during its production If so, then any export
stage) to prioritize the supply of minerals for domestic arrangements of the
needs and to sell a minimum percentage of the minerals companies will need to be
that they produce to domestic mineral users. adjusted accordingly.
The minimum percentage is determined by the Minister
and set out in a Ministerial Decree. The Ministerial Decree
has not yet been made in the case of tin.
Benchmark Price Government Regulation No 23 of 2010 and Minister To confirm that ALK and Non compliance with the N/A
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Responsibility
Regulation No 17 of 2010 regarding the Procedures to AP meet the benchmark benchmark price
Determine Benchmark Price for the Sale of Mineral and pricing requirements set requirement can result in an
Coal (Minister Regulation No 17 of 2010) require every by the Director General, administrative sanction in
holder of a Production Operation IUP/IUPK to sell the we recommend that ALK the form of:
minerals that they produce with reference to the and AP provide statement • written warnings;
benchmark price. The benchmark price for tin as ferrous letters confirming and
mineral is determined by the Director General on behalf of describing their • temporary
the Minister. compliance. suspension of the
IUP; and/or
For the month of May 2011, the benchmark price of tin We have received
was the price of "M-1 Cash Mean Settlement prior to the confirmation from AP and • revocation of IUP
issuance of the invoice and B/L in accordance with the ALK both dated 28 April or IUPK.
London Metal Exchange Index". 2011 stipulating that AP
The Legal Data contains an agreement for the supply of and ALK have been using
the Benchmark Pricing as
tin ore by AP to ALK, which stipulates that the calculation
determined by the
of the purchase price of the tin ore is to be based on the
Government of the
prevailing market price at the time AP sells the tin ore to
Republic of Indonesia as
ALK.
their pricing calculation
The Legal Data also contains an agreement for the sale of for the sale of its tin.
tin ingots by ALK to certain foreign parties using a specific
We have not conducted
pricing formula based on the London Metal Index.
financial verification of
this nor have we
assessed whether the
prevailing market price
and the benchmark price
would be considered
equal.
Obligation to pay We have received written confirmation from the relevant N/A N/A N/A
deadrent and mining authorities that the Mining Companies do not have
royalties any outstanding obligations in relation to their respective
IUPs and KP. We assume that this written confirmation
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covers the payment of deadrents and royalties. However,

to confirm this assumption, evidence of payment should
be provided.
In that respect, we have been provided documents in
relation to the payment of deadrents and royalties by the
Mining Companies from the date of issuance of their
respective IUPs, with exception the evidence of payment
for the 2011 deadrent which is still not due, and will be
paid by the mining companies upon receiving request for
deadrent payment from the relevant authorities.
Details of the payment compliance of AP, ALK and MSG
are set out in Schedules 12, 13 and 14.
Obligation to Pay We have received written confirmation from the relevant N/A Failure to pay the N/A
Reclamation mining authorities that the Mining Companies do not have Reclamation Guarantee,
Guarantee (Jaminan any outstanding obligations in relation to their respective Post Mining Guarantee and
Reklamasi), Post IUPs and KP. We assume that this written confirmation Surety Deposit when due
Mining Guarantee covers the payment of the Reclamation Guarantee, Post will prejudice the good
(Jaminan Mining Guarantee and Surety Deposit. standing of the holder of an
Pascatambang) and IUP.
We note that Government Regulation No. 78 of 2010 on
Surety Deposit
Reclamation and Post Mining Activities imposes the
(Jaminan
obligation to mining companies to prepare and submit
Kesungguhan)
Reclamation Plan and Post Mining Plan, and
subsequently pay Reclamation Guarantee and Post
Mining Guarantee in the amounts as reflected in said
Plans. However, the regulations and procedures
implementing the said obligation for offshore mining
activies are still unavailable, and therefore the mining
companies conducting offshore mining mining activities
(i.e. AP and MSG) are restricted in implementing such
obligations.
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Neverthless, as the obligation is still in force, technically

the mining authorities may collect the payment of
Reclamation Guarantee and Post Mining Guarantee, and
in that case (as evidenced by AP), the mining companies
are still be required to pay.
Extensions of IUPs Exploration IUPs can be granted for a maximum of 8 Relevant when If not extended, the IUPs N/A
years, including 1 year of general surveys, 3 years of considering the expiry lapse.
exploration (which can be extended twice for 1 year on dates mentioned above.
each extension) and 1 year feasibility study (which can be
extended once for 1 year). Based on the wording of the
Mining Law, such extensions are subject to approval by
the government authority issuing the IUP. Law No.4 of
2009 is silent on how to apply for an extension of an
Exploration IUP.
Production Operation IUPs for metal minerals may be
granted for a period of 20 years and may be extended
twice, for 10 years on each extension. An application to
extend a Production Operation IUP must be made with the
relevant authority at least 6 months before the expiration
of the IUP and not more than 2 years before the expiration
of the IUP.
Requirement to • Article 90 of Government Regulation No. 23 of Unless the proposed new Any sales arrangements N/A
conduct value added 2010 imposes an obligation on mining companies regulation has which are contemplated in
process to tin mined (rather than third party refiners) to carry out retrospective effect the future may have to be
processing and refining activities on mining (which we regard as restructured to ensure that
commodities to add value to them. unlikely), sales in the AP, for example, processes
past, where ALK its ore before first sale.
• The obligation is expressed in extremely broad
processed after the point This would probably be
and vague terms and there have been no
of first sale, should not be acceptable to do under a
implementing regulations. For example, a mining
challenged. tolling arrangement
company could be required to process prior to first
(assuming a new regulation
sale of tin ore, or may be allowed to do the
20

Responsibility
processing further down the transaction chain. allows that) but that could
still affect the economics of
• The obligation is currently not being enforced by
the project.
the Government, in the absence of a Regulation
to be issued by MEMR governing the
implementation of this obligation. We understand
that this regulation is currently being drafted by
MEMR.
• MEMR has informed us that a favoured option
being discussed in MEMR while formulating the
proposed MEMR regulation is that the value
added processing must be conducted prior to the
first point of sale.
• The MEMR has informed us that this policy is
aimed at improving the government's royalty
income by increasing the value of the products
when the royalty is calculated.
• Various public statements by MEMR officials have
clearly indicated that a mining company should
not have to build its own processing and refining
infrastructure, but can instead use that of a third
party.
There is no definite target date for the issuance of
this Regulation.
Export of tin
The export of tin can only be in the form of tin bar. N/A N/A N/A
Currently, Indonesia does not impose any quota on the
export of tin bar.
Since 2007, the government has been discussing the

possibility of imposing a quota on the export of tin
bar. However, no quota has been implemented and no
draft implementing regulation has been issued by the
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government for public review (which would be part of the

usual socialisation process for a new regulation of this
type).
Under the Decree of the Mayor of Pangkal Pinang dated

17 April 2008, ALK is allowed to produce a maximum of
6,000 MT per annum of tin bar, which it may subsequently
export.
The Regulation of the Ministry of Trade No. 04/M-

DAG/PER/1/2007 on the Export of Tin Bar (Tin
Acknowledgment Regulation) also provides that a Tin
Exporter Acknowledgment (Pengakuan Sebagai Esportir
Timah Batangan) is required before tin bar may be
exported. ALK has obtained Acknowledgment as a
Registered Tin Bar Exporter (Pengakuan Sebagai
Eksportir Timah Batangan – ET Timah) No 14/DAGLU/ET-
TIMAH/11/2008, dated 21 November 2008. The ET Timah
allows ALK to conduct tin trading and exporting.
The Tin Acknowledgment Regulation also sets out the

rules on the types of tin bar which may be exported by a
tin bar exporter. The following rules apply:
§ The tin ore used to produce the tin bar must be

sourced from the:
o holder of a Exploitation KP (now a

Production Operation IUP) and
Processing and Refining KP (now a
Processing and Refining IUP) ; or
o holder of a Contract of Work; or
o holder of a Exploitation KP having a
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Cooperation Contract with the holder of a

Processing and Refining KP.
§ There must be full payment of royalties for the tin

bar which is to be exported.
§ The tin bar must have a tin metal value of at least

99.85%.
Inter-Island Trading of • Regulation of the Minister of Trade No. 19/M- If AP and ALK can select The Inter Island Trading For our final report, we
Tin DAG/PER/2007 (Inter Island Trading an appropriate structure
Regulation was issued prior have assumed that
Regulation) provides that non refined tin which is from the options above,
to the Mining Law. There is documents relating to
still in the form of ores or tin sand concentrates or this should involve AP
no adjustment or inter-island trading of
is not in the form of bars (Non Refined Tin) which (the holder of Production amendment process to take tin which have not
is traded inter-island must only be traded by a: Operation IUPs) selling account of the Mining Law provided by AP are not
tin to a holder of a
o holder of a Contract of Work or (especially in respect of held by AP.
Exploitation KP (now Production companies with Selling
Operation IUP); KP holder, and this IUP).
should be acceptable
o also holding an agreement with a under the Inter-Island Companies failing to
Processing and Refining KP holder; and Trading Regulation. comply with the Inter Island
o holding an Inter-Island Non Refined Tin We have seen no Trading Regulation can be
Trading Approval (Surat Persetujuan evidence that any given written warnings
Perdagangan Bijih Timah Antar Pulau – company holds a and/or be blacklisted by the
SPPBAP). SPPBAP. If the trading Head of the Regional
was inter-island, AP Trading Service Office and
• The tin ores can only be sold to a holder of a
would need a SPPBAP will not be able to obtain a
Processing and Refining KP.
before each trade of ore future SPPBAP.
• The SPPBAP is to be obtained prior to the tin to ALK and would have
leaving the departing port and for each shipment. needed one historically.
• The Inter Island Trading Regulation provides the
procedures and required documents for obtaining
the SPPBAP.
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• The SPPBAP is issued to the holder of a Contract

of Work or the Exploitation KP (now Production
Operation IUP) by the Head of the Regional
Trading Service Office of the region where the
Non Refined Tin is sourced.
• According to the Inter Island Trading Regulation
inter island trading means port to port trading
between islands or port to port trading within an
island.
• The Inter Island Trading Regulation was
promulgated to prevent smuggling of tin ore. The
monitoring system is based on the issuance of a
SPPBAP for each delivery of tin. The Head of
Trade Service Office in the regency/municipality in
respect of the location of smelter will need to
confirm the arrival of tin ore based on the amount
stipulated in the SPPBAP.
Recent Mining Data Provision and Publication of a register of Mining AP, ALK and MSG to
Development in Tenements monitor on any updates
Indonesia The Ministry of Energy and Mineral Resources of the from MEMR on the
Republic of Indonesia (MEMR) is currently gathering all development of this issue
data and documents on mining licences (Izin Usaha in respect of ALK, AP and
Pertambangan - IUP) issued by the Governors and MSG's IUPs so that
Regents for the purpose of verification and reconciliation timely objections (if
of the database on existing mining areas. necessary) can be
submitted within the time
Based on a Press Release by MEMR, the Governors and
Regents are required to provide all data by 6 June 2011. frames.
The Director General of Minerals and Coal (Direktur
Jenderal Mineral dan Batubara) of MEMR has indicated in
several newspaper reports that failure to comply with the 6
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June 2011 deadline may lead to exclusion of the IUP
mining area from the National Database for Minerals and
Coal Mining and/or revocation of such non reported IUP.
Verification Process by MEMR
From the deadline of 6 June 2011 until the end of June
2011, MEMR will conduct a verification on the soundness
of the IUPs.
As part of the verification process of converted IUPs,
MEMR will look at the historical background of each IUP
stretching from the issuance of the Mining Authorisation
(Kuasa Pertambangan - KP) i.e. from its first chain of
licensing that was issued for the mining tenement. For
IUPs issued based on an application and area reservation
made prior to the Mining Law 2009, MEMR will review the
application documents and the area reservation.
Result of Verification Process
We understand from our discussions with MEMR that from
the verification process:
• MEMR will identify the IUPs as either "clear and
clean" or "problematic";
• We have been informed that MEMR plans to
announce the results of such verifications (Findings)
on its website and/or in a national newspaper at the
latest 30 June 2011;
• Subsequent to the announcement, MEMR will set a
certain period (currently it is consideribg 7 days) for
filing of objections by stakeholders (IUP holders,
Governor and/or Regents) on the Findings (the
Objection Period).
Our research with MEMR shows that MEMR is still
coordinating with the Governors, Regents and the
Department of Domestic Affairs of the Republic of
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Indonesia on the settlement of issues raised in the
Findings, including legal action to be taken in respect of
IUPs still regarded as problematic upon conclusion of the
Objection Period. We understand this to be a very fluid
process which is still at a nascent stage and we will
continue to closely monitor the developments in this
respect. MEMR has confirmed that revocation of IUPs by
MEMR is unlikely due to the fact that the authority to
revoke an IUP legally lies with the issuer of the IUP (i.e.
Governors or Regents).
Status of AP, ALK and MSG's IUPs
• AP and MSG: The Official Search Results Letters
issued to OSP by the Governor of Bangka Belitung
Province (as the issuer of the IUPs of AP and MSG),
confirm that all of the AP IUPs and MSG IUPs have
in fact been registered with MEMR as the central
mining authority. Therefore, it can be concluded that
MEMR already has details of the AP and MSG IUPs
in its database. Further, the Legal Department of
Leviathan has confirmed (based on its meetings with
the local mining office of Bangka Belitung Province)
that detail on all of the AP and all of the MSG IUPs
have been submitted to MEMR prior to the 6 June
2011 deadline.
• ALK: The Official Search Results Letter issued to
OSP by the Regent of Bangka Regency (as the issuer
of ALK's 6 onshore IUPs) does not identify whether
the ALK IUPs have been registered with the MEMR.
However, the Legal Department of Leviathan has
confirmed (based on their meetings with the local
mining office of Bangka Regency) that ALKs 6 IUPs
(onshore) have been registered with the MEMR.
Accordingly even if the Governor/Regent fails to register
the data (as it should have) by 6 June 2011, the
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companies should be able to register an objection if the
tenements are not included in the MEMR register.
Mining Services Arrangements
Existing mining The Mining Companies have advised that they are not N/A N/A N/A
services arrangement currently enagaging the services of any mining services
companies.
Shipping Arrangements
Cabotage Article 8 (1) of Law Number 17 of 2008 on Shipping N/A N/A – just explanation. N/A
(Shipping Law) states that vessels operating between
Indonesian islands or ports within Indonesian waters must
carry Indonesian flag. Also Article 158 (2) (c) of Shipping
Law stipulates that to be able to register a vessel in
Indonesia, a company must be majority owned by
Indonesians (at least 51% Indonesian owned).
Additionally, to operate a vessel within Indonesian waters
(including for dredging, barging etc), a vessel owning
company may either obtain a shipping business licence
(SIUPAL) or special shipping licence for vessels (known
as SIOPSUS) depending on its line of business and
activities.
A shipping company holding a SIUPAL must not
undertake any other business (eg mining services) other
than shipping and the shipping company must be majority
owned by Indonesian (at least 51% Indonesian owned).
Meanwhile as a one of the prerequisites for obtaining a
SIUPAL, a PMA company must own at least one vessel
larger than 5,000 gross tonnage (GT).
For the non-shipping companies, it may obtain a special
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license for operating its vessels for supporting its main

activities. Therefore, the mining companies will need to
obtain SIOPSUS for operating its vessels (on the grounds
that the vessel is required to the carry out activities which
are incidental to the company's primary activity). The
ownership threshold (as discussed above) for registration
of a vessel also applies in this case.
Indonesian Shipping Law stipulates that any party
operating a vessel without SIUPAL or SIOPSUS may be
subjected to a maximum 1 year imprisonment or a
maximum fine of IDR 200,000,000.
Ownership of cutter Short Term solution: Indonesian Shipping Law We estimate that the
AP owns a cutter suction dredger named Aega 1.
suction dredger by stipulates that any party long term solution may
AP to obtain SIOPSUS
AP We have received the following documents in respect of which operates a vessel take approximately 4 to
for Aega 1. Under the
ownership of Aega I: regulation, the process without a SIUPAL or 6 weeks to complete.
SIOPSUS may be
for obtaining SIOPSUS
• Certificate of Nationality No. PK.674/1247/SL- will take approximately 14 subjected to a maximum 1
PM/DK-08 dated 11 September 2008 issued by (one) year imprisonment or
working days from the
the Directorate General of Sea Transportation of date of submission a maximum fine of IDR
the Department of Transportation of the Republic (subject to the completion 200,000,000 (two hundred
of Indonesia which declared Aega 1 as an million Rupiah).
of the application and
Indonesian vessel in accordance with the supporting documents).
prevailing laws and therefore is authorised to sail
under the Flag of the Republic of Indonesia; and
• International Tonnage Certificate No. 4175/Bc

dated 29 July 2008 issued by the Sunda Kelapa Long term solution:
Port Administrator on behalf of Minister of AP to transfer Aega 1 to a
Transportation of the Republic of Indonesia. third party shipping
company having a
Therefore, AP has obtained the complete documentation SIUPAL which will then
required in respect of the registration of ownership of charter Aega 1 to AP.
Aega I. The third party shipping
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company shall also

Ownership of Indonesian flagged vessels are restricted to procure the new vessels
a company which is majority owned by Indonesians. and charter them to AP.
Based on the Legal Data, at the time AP registered Aega
We note that Leviathan is
1, the shareholding of AP was 100% owned by
currently working on the
Indonesians. Therefore, it can be concluded that
necessary arrangements
registration was valid under the law. The Indonesian
Shipping Law does not regulate matters dealing with effect for the long term solution.
of the change of status into a PT PMA to the registration
of an Indonesian flagged vessel.
Nonetheless, as AP is currently a foreign investment

company and majority owned by foreign party, should AP
require to purchase new vessels in the future, AP will
have difficulties in registration of its new vessel as the
Shipping Law does not permit any registration of vessels
which are not majority owned by Indonesian parties.
Operation of cutter AP is currently operating AEGA 1 without the necessary See Recommendation Indonesian Shipping Law Please see above.
suction dredger by license from the Department of Transportation. above. stipulates that any party
AP operating a vessel without
For operating a vessel, a company should either have
SIUPAL or SIOPSUS. Different requirements apply for the SIUPAL or SIOPSUS may
relevant licenses. For SIUPAL, the line of business of the be subjected to a maximum
company should only be shipping. This is not suitable for 1 (one) year imprisonment
mining companies. or a maximum fine of IDR
200,000,000 (two hundred
However, for mining companies operating vessels, the million Rupiah).
mining companies may apply for a SIOPSUS. AP may
apply for a SIOPSUS for operating the AEGA 1. As
discussed above, AP will not be able to register its new
vessels as an Indonesian flag vessel as currently AP is
not majority owned by the Indonesian parties.
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Material Contracts
Supply of tin ore by AP and ALK have entered into a Cooperation Agreement AP to confirm whether Amendment process is We estimate that the
AP to ALK for Supply of Tin Ore under which AP supplies ALK with this Cooperation primarily commercial. amendment process
tin ore produced from AP's 310 Ha mining area located in Agreement also covers may take
the territory of Teluk Kelabat Sea in Bangka Belitung supply of tin ore produced approximately 2 weeks
Islands Province and granted under Production Operation from AP's Production to complete.
IUP No. 188.44/102/DPE/2010 dated 15 March 2010. Operation IUPs No. We note that this issue
188.44/409/DPE/2010
We note that the period of the Cooperation Agreement is will not be relevant if
dated 30 April 2011 and
not clearly defined in the Cooperation Agreement. As such Option 3 is taken.
No.
the period of the Cooperation Agreement may be deemed 188.44/418/DPE/2010
as perpetual. dated 3 May 2011.
According to one of the conditions stipulated under AP's We recommend that the
Production Operation IUPs, any contract of sale of tin ore Cooperation Agreement
exceeding three (3) years will need to be approved by be amended to reflect a
MEMR. It may therefore be necessary for AP to obtain less than 3 years (i.e.
approval from MEMR considering that the Cooperation annually) validity period
Agreement could be deemed to be perpetual. (Note: AP and to clarify the point
has confirmed that such approval is unavailable) above.
Lease of vessel for AP and PT Manggala Gita Karya (PT MGK) entered into a N/A N/A N/A
AP's mining Leasing of Mining Equipment Agreement on 2 November
operations 2009 and as amended by the Amendment Agreement
dated 19 May 2011, under which AP agreed to lease a
vessel from PT MGK for AP to conduct its offshore tin
mining activities.
Consent issues None of the contracts provided contain change of control

N/A N/A N/A
provisions, confidentiality restrictions or restraint of trade
provisions.
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Employment
Compliance with AP and ALK have complied with the obligations in respect
N/A N/A N/A
Manpower Laws of employment matter as required by the prevailing
Manpower Laws.
Based on the statement letters from MSG, MAP, HSB,
HAS, LME, APG and HMP, they have confirmed that there
is no employee registered under MSG, MAP, HSB, HAS,
LME, APG and HMP respectively.
Therefore, based solely on that evidence the obligations in
respect employment matters are not applicable to MSG,
MAP, HSB, HAS, LME, APG and HMP.
Implementation of N/A N/A N/A

For the Cutter Suction Dredger, AP has obtained
procedures on
Operational License issued by the Head of Energy and
occupational health
Mining Service Office of Bangka Belitung Islands Province
and safety in tin
concerning AP's compliance with the relevant regulation
mining operations
on Occupational Health and Safety Program in respect of
the operation of vessel Aega 1.
Pursuant to Decrees of the Head of Social and Manpower
Service Office of Pangkalpinang No.
17/P2K3/Dinsosnaker/V/2011 and No.
18/P2K3/Dinsosnaker/V/2011 both dated 25 May 2011,
the Social and Manpower Service Office of Pangkalpinang
has validated the Supervising Committee for Occupational
Health and Safety of AP and ALK which will supervise the
implementation of occupational health and safety
procedures in tin mining exploration or exploitation.
On 16 May 2011, we were provided Statement Letter No.
030/AP/Legla-L/V/2011 and Statement Letter No.
029/ALK/Legal-L/V/2011, both dated 11 May 2011 and
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issued by AP and ALK respectively, stipulating that both

companies have been implementing the procedure on
occupational health and safety in each stage of the
production process and that the procedure is in progress
of being registered with the Government as required by
the laws of Indonesia.
Employment litigation
We have submitted litigation searches to the Industrial N/A N/A N/A
and breaches
Relations Courts in:
• the Special Capital Region of Jakarta Province in
Jakarta for MSG, HAS, MAP, HSB, LME, APG
and HMP; and
• the Bangka Belitung Islands Province in
Pangkalpinang for AP, ALK and MSG.
• The Industrial Relations Court of the Bangka
Belitung Islands Province in Pangkalpinang has
confirmed that there is no litigation in relation to
the employees of AP, ALK and MSG.
• The Industrial Relationship Court of the Special
Capital Region of Jakarta Province in Jakarta has
confirmed that there is no litigation in relation to
the employees of MSG, HAS, MAP, HSB, LME,
APG and HMP.
The dates on which these searches were conducted are
set out in the schedules to this Report.
Property and Land Settlement
Location and ALK has obtained the following approvals/permits for N/A N/A N/A
ownership of ALK's establishing and operating its smelter in ALK's plot of land:
Smelter
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• For the construction of the smelter, ALK was

granted a Building Construction Permit (Izin
Mendirikan Bangunan – IMB) by the Mayor of
Pangkalpinang under Decree
No.169/SK/TKLHP/2007 dated 16 July 2007;
• Nuisance Permit (Surat Izin Gangguan) pursuant
to the Decree of Head of Pangkal Pinang
Intergrated Licensing Services Office
No.01234/KEP-IZIN/KPPT/XI/2010 dated 22
November 2010, allowing the use of the plot of
land for warehouse and tin smelter and valid till 22
November 2015; and
• Industrial Business Licence (Izin Usaha Industri)
pursuant to the Decree of Head of Pangkal
Pinang Intergrated Licensing Services Office No.
01236/KEP-IZIN/KPPT/XI/2010 dated 22
November 2010, for the production of tin ingot
and valid for as long as ALK continues its
business.
Land Settlement in ALK has confirmed that ALK has not entered into any ALK to provide OSP with There may be risk that the N/A
respect of ALK's 6 settlement agreement with the original landowners but it Statement Letter issued landowners prohibit or
Production Operation has paid the landowners compensation to use the land for by the landowners restrict access to the mining
IUPs tin mining operations. The main reason for this stipulating their area.
arrangement is that the original landowners do not wish to agreement to grant full
release title to the relevant lands to ALK. access to ALK and utilise
the land for tin mining
Also, a location permit is typically required to acquire land
operations.
for mining from the original landowners. ALK has informed
us that it is not required to obtain a location permit since
the locations under its 6 production operation IUPs have
ALK to provide OSP with
been designated in the official spatial plan (rencana tata
a Statement Letter issued
ruang & tata wilayah) as mining areas.
by the Regional Office of
33

Responsibility
National Land Office

and/or Bangka Regent
testifying the non
requirement of a location
permit.
Environmental
AP's Environmental The Legal Data does not contain AMDAL documents AP should provide the Failure to submit the For our final report, we
Compliance (comprise of KA-ANDAL, ANDAL, RKL and RPL) for AP's following documents: periodic reports may result have assumed that
Documents Exploration IUP or documents showing AP's compliance in the revocation of AP's environmental
with the requirement to submit periodical reports (as o the AMDAL Exploration Environmental compliance documents
required under AP's Exploration Environmental Feasibility documents in Feasibility Approval, which which have not been
Approval). respect of its in turn may lead to provided by AP are not
Exploration IUP; revocation of the business held by AP.
and licence (i.e. the Exploration
The Legal Data does not contain AMDAL documents or IUPs).
Environmental Feasibility Approval in respect of AP's o the AMDAL
operation and production activities under its Production document and
Operation IUP. The AMDAL document should have been Environmental
prepared by AP during the exploration stage and the Feasibility
Environmental Feasibility Approval should have been Approval in
obtained by AP before it began its operation and respect of its
production activities pursuant to its Production Operation Production
IUP. Operation IUP.
AP has provided OSP on

6 May 2011 with the KA-
ANDAL for AP's
Exploration IUPs. In that
respect, the ANDAL, RKL
and RPL for AP's
Exploration IUPs are still
outstanding.
34

Responsibility
AP explained to OSP that

because AP's Production
Operation IUPs are
originating from AP's
Exploration IUP
(Exploration IUP No.
170), then the AMDAL
document and
Environmental Feasibility
Approval are incorporated
into the Exploration IUPs'
AMDAL document and
Environmental Feasibility
Approval.
OSP requires supporting

documents from AP
stipulating that AP's
Production Operation
IUPs are originating from
Exploration IUP No. 170 .
OSP will also confirm on
this issue upon
conducting verification
search for AP's 2 new
IUPs (Production
Operation IUP No. 409
and No. 418).
ALK's environmental The Legal Data does not contain any documents showing ALK should provide Failure to submit the For our final report, we
compliance ALK's compliance with the requirement to submit documents showing its periodic reports may result have assumed that
35

Responsibility
documents periodical reports (as required under ALK's KP compliance with the in the revocation of ALK's environmental
Environmental Feasibility Approval). requirement to submit KP Environmental compliance documents
ALK's AMDAL document and Environmental Feasibility periodical reports in Feasibility Approval and which have not been
relation to its Processing ALK's IUP Environmental provided by ALK are
Approval are issued under the name of CV Alam Lestari
Kencana, a limited partnership of ALK's founders (the and Refining KP. Feasibility Approval, which not held by ALK.
original holder of the Processing and Refining KP). The ALK should also update in turn may lead to
revocation of their business
Processing and Refining KP was updated in 2008 to show its AMDAL document and
licences (i.e. the
ALK as the correct holder of the KP However, the AMDAL its Environmental
document and Environmental Feasibility Approval were Feasibility Approval to
KP and the 6 Production
not updated. show that ALK is the
current owner and Operation IUPs).
The Legal Data does not contain any documents showing
operator of the smelter.
ALK's compliance with the requirement to submit
periodical reports in respect of its Production Operation ALK should provide
IUPs. documents showing its
compliance with the
requirement to submit
periodical reports in
respect of its Production
Operation IUPs.
Impact of ALK's ALK's Processing & Refining KP was issued in 2006. It ALK should provide an Failure to produce new For our final report, we
increased production was later amended in 2008 when it increased its updated AMDAL AMDAL documents and have assumed that
capacity to its production capacity from 2,000 MT/year to 6,000 MT/year. document and obtain a new Environmental environmental
environmental Environmental Feasibility Feasibility Approval may compliance documents
Under ALK's KP Environmental Feasibility Approval, if
compliance Approval. ALK should result in the revocation of which have not been
ALK increases its production capacity, it must produce
new AMDAL documents and obtain a new Environmental also provide a Statement ALK's KP Environmental provided by ALK are
Letter from the Mayor of Feasibility Approval, which not held by ALK.
Feasibility Approval. ALK's existing KP Environmental
Feasibility Approval will become invalid. The Legal Data Pangkalpinang clarifying in turn may lead to
does not contain the new AMDAL document or a new that ALK's existing KP revocation of its business
Environmental Feasibility Approval. Environmental Feasibility licence (i.e. the Processing
Approval is still deemed and Refining KP).
On 19 May 2011, we were provided with a Statement to be valid pending the
36

Responsibility
Letter dated 11 May 2011 issued by ALK, stipulating that issue of the updated
in respect of increased production capacity, ALK is in the AMDAL document and
process of adjusting the existing AMDAL documents and adjusted Environmental
Environmental Feasibility Approval. Feasibility Approval.
MSG's environmental The Legal Data does not contain any documents showing MSG should provide Failure to submit the For our final report, we
compliance MSGs compliance with the requirement to submit documents showing its periodic reports may result have assumed that
documents periodical reports on the implementation of environmental compliance with the in the revocation of MSG's environmental
management and monitoring in respect of its Exploration requirement to submit Environmental Feasibility compliance documents
IUPs. periodical reports in Approval, which in turn may which have not been
relation to its Exploration lead to revocation of the provided by MSG are
IUPs. business licence (i.e. the not held by MSG.
Exploration IUPs).
Storage and Use of ALK has obtained Permit for Storage and Use of ALK to provide the Failure to comply with the For our final report, we
dangerous goods and Dangerous Goods and Hazardous Substances for storing renewed Permit for requirement to obtain have assumed that
hazardous and use of waste products in form of uncleaned oil Storage and Use of Permit for Storage and Use documents related to
substances (minyak kotor) and oil slob for substitute of fuel substitute Dangerous Goods and of Dangerous Goods and storage and use of
for the tin furnace pursuant to Decree of the State Minister Hazardous Substances. Hazardous Substances dangerous goods and
for the Environmental Affairs No. 776 year 2008 dated 8 may result in revocation of hazardous substances
October 2008 and valid till 8 October 2010. Currently ALK ALK's operational license which have not been
is renewing the Permit based on the receipt for the (i.e. ALK's KP). provided by ALK are
renewal application letter issued by Ministry of not held by ALK.
Environment dated 26 April 2011.
AP and MSG have confirmed via Statement Letters dated
25 April 2011 that currently AP and MSG do not use
Storage and Use of Dangerous Goods and Hazardous
Substances in their respective operations.
Waste disposal Tin mining operations generate various waste products, ALK to provide the As above. For our final report, we
management including smelter slag and/or discarded gravel. Smelter contract with the said have assumed that
slag can contain traces of lead and arsenic, so disposal in handler of waste documents related to
37

Responsibility
a safe way is important in order to avoid potential liability disposal, evidence of waste disposal
for harm to the environment and possible breaches of the registration of the said management which
environmental compliance provisions. handler with the local have not been
AP and MSG have confirmed via Statement Letters dated environmental authorities, provided by ALK are
25 April 2011 that currently they do not produce waste. and evidence showing not held by ALK.
that the waste diposal
ALK has confimed that ALK is currently producing waste, location is authorized to
whereas the disposal of such waste is being handled by used for such purpose.
another company registered at the local environmental
authorities.
Forestry
Possible use of ALK has been granted 6 Production Operation IUPs which ALK should have a N/A We estimate that it may
forestry area by ALK are all located in onshore Bangka Regency. borrow use permit to take approximately 3 to
in respect of Its 6 The Forestry Service Office of the Bangka Regency has mine in ALK's Production 6 months to process
confirmed that the locations of these 6 Production Operation IUP No. the borrow use permit,
IUPs
Operation IUPs are all located outside forest area of 188.4/075/Tamben/2010 provided that the
Bangka Regency. However, we have received dated 11 January 2010 overlapped area is not
confirmation from the Forestry Planology Agency of the which is located in a part of primary forest or
Department of Forestry of the Republic of Indonesia that, Permanent Production peat land.
while five of the mining areas under the Production Forest (Areal Hutan
Operation IUPs of ALK are located in a Non Forestry Area Produksi Tetap).
(Area Penggunaan Lain), the mining area under ALK's
Production Operation IUP No. 188.4/075/Tamben/2010 ALK to confirm whether it
dated 11 January 2010 (area width approximately 3 has a borrow use permit.
hectares) is located in a Permanent Production Forest We note that this would
(Areal Hutan Produksi Tetap). This directly contradicts the only be necessary to
confirmation received regionally. actually mine the area,
although these permits
can take a long time to
obtain.
38

Responsibility
Recent Development
The government enacted a Presidential Instruction on 20 With regard to the mining If the overlapped areas falls
in Forestry in
May 2011 (the PI 10/2011) which refers to a area under ALK's within primary natural
Indonesia
moratorium/suspension on the issuance of certain Production Operation IUP forests and/or peat land,
licenses on utilisation/commercialisation of forest areas No. the areas will be subjected
(including the borrow and use permit). 188.4/075/Tamben/2010 to the moratorium and
dated 11 January 2010 therefore ALK will not be
PI 10/2011 instructs the Ministry of Forestry to suspend which has been able to conduct mining
the issuance of new licenses for forest utilisation and confirmed as located in a operations in those areas.
commercialisation of primary natural forests and peat land Permanent Production
located in: Forest (Areal Hutan
Produksi Tetap), ALK will
(a) conservation forests; need to check whether
the overlapped areas are
(b) protected forests; and
located in primary natural
(c) production forests (including limited production forests and/or peat land.
forests, permanent production forests, convertible
production forests).
An indicative map showing areas in Indonesia classified

as primary natural forests and peat lands in which
suspension of forestry commercialisation/utilisation
applies is attached to PI 10/2011.
Suspension of the issuance of new licenses / permits /

recommendations and the granting of land title is to be
applicable for two years commencing from 20 May 2011
(ending in 20 May 2013).
The suspension shall not be applicable for utilisation of

primary natural forests and peat land forests for:
(d) applications which have been granted an in-

principle approval by the Ministry of Forestry (for
a borrow use permit, an in-principle approval is
39

Responsibility
the initial borrow use permit where the holder is

required to satisfy certain obligations before it
can be granted a final borrow use permit);
(e) implementation of national development which is

vital including for geothermal, oil and gas,
electricity and areas for rice paddy and
sugarcane;
(f) extension of existing forest

utilisation/commercialisation provided the
operating business license is still valid; and
(g) for restoring the ecosystem.
Litigation and Arbitration
Court searches We have conducted litigation searches in the following

N/A N/A
courts:
• District Courts of Pangkal Pinang (for AP and
ALK), Sungailiat (AP), North Jakarta (MAP, HSB,
LME, HAS, MSG, HMP) and East Jakarta (APG);
• Commercial Court of Jakarta (AP, ALK, MAP,
HSB, LME, HAS, MSG, HMP and APG);
• State Administrative Court of Palembang (AP,
ALK & MSG) and Jakarta (MAP, HSB, LME, HAS,
APG and HMP);
• Industrial Relationship Court of Pangkalpinang
(AP, ALK &MSG) and Jakarta (MAP, HSB, LME,
HAS, MSG, APG, HMP);
• Indonesian National Board of Arbitration (AP,
40

Responsibility
ALK, MAP, HSB, LME, HAS, MSG, HMP and

APG);
• Tax Court (AP, ALK, MAP, HSB, LME, HAS,
MSG, HMP and APG).
Pursuant to the results of our independent searches
above, the Companies, the members of Board of
Directors, Board of Commissioners as well as the
Companies' shareholders are not registered in the
registers of the relevant courts/arbitration institution either
as claimant, respondent, plaintiff and/or defendant.
The dates which these searches were conducted are set

out in the schedules to this Report.
Tax, financial and technical due diligence
Tax, financial and We have not conducted a tax, financial or technical due It is not unusual for
technical due diligence. Indonesian companies to
diligence have taxation arrears and
to have accrued liabilities
to the tax office. These
liabilities may not come to
light until considerable
time in the future. We
recommend that tax
advisers conduct a
comprehensive tax due
diligence to identify and
quantify any potential
liabilities to the tax office.
41
Project Awesome – DRAFT INTERIM DUE DILIGENCE REPORT
Part B – Detailed due diligence
2.1 Corporate structure provided by the Leviathan Group

2. Corporate
The diagram below sets out the corporate structure of the Leviathan
Overview Group, as represented by the Leviathan Group.
This part of the Report provides details of matters arising from our
review of the Companies' corporate structure and records.
LEVIATHAN GROUP
Our due diligence investigations are based on a review of the Legal

Data. Hamparan Grand Succeed Top Yield Andalan
1% 99% 99% 1%
In conducting our review we have largely relied on information and
LME HAS
documents provided to us by the Companies. This information is not 99%
80% 80%
always independently verifiable.
MSG AP ALK
Key findings finalshareholders: final shareholders: final shareholders:
LME : 80% HAS : 80% HAS : 99%
Our key findings are set out in the sections below. Mulia : 20% Mulia : 20% HSB : 1%
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC 42

Project Awesome – DUE DILIGENCE REPORT
2.2 Corporate structure based on schedules
The diagram below sets out the corporate structure of the Leviathan Group, based on the information contained in the schedules of this Report.
LEVIATHAN GROUP CORPORATE STRUCTURE
Ricky Suwandi Toni

Tong Pin
Ferlanico Sukarti Siswoyudho
50% 50%
50% 50%
PT Hamparan PT Andalan
GRAND SUCCEED TOP YIELD
INVESTMENTS LTD
Mineral Persada Persada
HOLDINGS LTD
(HMP) Globalindo (APG)
99% 1% Hadi Rudy

Tsjiam 99% 1% Aurelia
Wiratama Wijaya
Gunawan Supardi
Legawa Liong
50% 50% 50% 50%
PT Leviathan PT Mulia Andalan PT Havilah Abadi PT Havilah

Mining Ekaprima Persada Sejahtera Sukses Bersama
(LME) (MAP) (HAS) (HSB)
20%
20% 80% 99% 1%
80%
PT Mitra Sukses PT Alam Lestari

PT Aega Prima
Globalindo Kencana
(AP)
(MSG) (ALK)
43
Details of the shareholding compositions of the Companies are set

2.3 Proposed Transaction out in Schedule 3.
The Leviathan Group is proposing to implement a public share Under the Company Law, a shareholder may exercise its rights as a
offering, expected to take place under the rules of the US Securities shareholder (including the right to vote in shareholders' meetings and
and Exchange Commission, pursuant to which the Leviathan Group the right to receive dividends), after the shares under its name have
will offer shares in an entity that includes the Companies. been registered in the Register of Shareholders.
The Mining Companies (AP, ALK and MSG) are the only entities Previously, we did not have the Registers of Shareholders for AP,
within the group of Companies that hold material assets. ALK, MSG and MAP. The Register of Shareholders for HSB was also
incomplete.
The Mining Companies are principally engaged in the exploration,
mining and production of tin in Indonesia. On 21 April 2011, we received the complete Register of Shareholders
in respect of HSB.
2.4 Legal nature of the Companies
On 29 April 2011, we received the Register of Shareholders of AP,
The Companies are private Indonesian companies limited by shares ALK and MAP.
and governed by the Company Law. This is the standard form of
private company in Indonesia. On 6 May 2011, we received the Register of Shareholders of MSG.
2.5 Incorporation status We note that the Company Law does not impose any penalties for
non compliance in having Registers of Shareholders.
In order to establish an Indonesian company, the original
shareholders of the company must execute a Deed of Establishment 2.7 Restrictions on transferring shares to foreign parties
(before a notary), which contains the Articles of Association of the
company. The Deed of Establishment is then submitted (usually by AP, ALK and MSG
the notary) to the MOLHR for ratification. Under the Company Law, a
company is regarded as incorporated as a separate legal entity once The Articles of Association of AP, ALK and MSG restrict the
the MOLHR ratifies its Deed of Establishment. ownership of shares to Indonesian citizens and/or Indonesian legal
entities.
The Companies are validly incorporated under Indonesian law.
This is inconsistent with other Legal Data provided, which indicates
2.6 Shareholders and shareholder rights that the BKPM has approved the conversion of AP, ALK and MSG
from domestic companies to PMA Companies.
Every Indonesian company must have at least two shareholders.
As part of the conversion process, the Articles of Association of a
The Companies have complied with this requirement. company (under which foreign ownership is restricted) must be

amended by the company to allow for foreign ownership of shares. takes approximately ten business days (once a company submits all
The amendment must be approved by the MOLHR. the required documents to the BKPM).
Previously, we received two inconsistent versions of the Articles of For companies holding an IUP, the BKPM requires a recommendation,
Association of AP, ALK and MSG. As a result, we were unable to in favour of the PMA conversion, from the authority that issued the
determine which versions were submitted to the MOLHR for approval. IUP.
The issuing notary has now provided us with the most recent Articles LME and HAS
of Association of AP, ALK and MSG (which, amongst other things,
allows for foreign ownership of shares). The issuing notary also The Articles of Association of HAS and LME (both PMA Companies)
provided written confirmation that the Articles of Association were the allow shares to be owned by foreign shareholders.
Articles of Association submitted to the MOLHR for approval.
2.8 Transfer generally and pre-emptive rights
We have not been provided with the approval from the MOLHR in
relation to the Articles of Association of AP, ALK and MSG. The Articles of Association of each Company state that any
shareholder wishing to transfer its shares must:
On 11 May 2011, we received written confirmation from the issuing
notary that the Articles of Association of AP, ALK and MSG are still (a) first offer them to existing shareholders by notifying them in
being processed by MOLHR for approval. writing of the terms and price; and
Recommendation: To confirm that foreign shareholders are entitled (b) notify the Board of Directors in writing of the offer.
to hold shares in AP, ALK and MSG, we require the approval of the
The Articles of Association of each Company also require the
MOLHR for the Articles of Association of AP, ALK and MSG.
shareholders to approve the proposed transfer at a General Meeting
We have been provided with copies of MOLHR Approvals for AP ALK of Shareholders.
and MSG, and therefore ALK, AP and MSG are now validly
The MOLHR must be notified of any proposed transfer of shares. The
registered as PMA companies.
Companies which have PMA status also need to obtain BKPM
approval for the proposed transfer of shares.
APG, MAP, HSB and HMP The transfer of shares must be by notarial deed of share transfer,
signed by the transferor and the transferee, or their respective
The Articles of Association of APG, MAP, HSB and HMP restrict representatives.
ownership of shares to Indonesian citizens and/or Indonesian legal
entities. 2.9 Pledge of shares
If, under the Proposed Transaction, shares in APG, MAP, HSB and There are no restrictions in the Articles of Association of each
HMP are to be owned by a foreign party, APG, MAP, HSB and HMP Company on shareholders pledging their shares.
must be converted into PMA Companies. Conversion requires
approval from the BKPM and the MOLHR. The conversion process
45
Any existing pledge of shares must be recorded in the Register of mining company must limit the business scope of that company to
Shareholders of each Company. mining activities only and to mining of a single commodity (Directive).
The Registers of Shareholders which we have been provided do not AP, ALK and MSG
contain any information on pledges. We have also not been provided
with any pledges or other security documents in relation to the shares The business scope of each of AP, ALK and MSG, as currently set
of the Companies. out in their Articles of Association, consists of a wide range of mining
activities and mining commodities. The Articles of Association of AP,
2.10 Minority shareholders ALK and MSG do not comply with the Directive.
Minority (or equal) shareholders have certain rights under Indonesian The issuing notary has provided us with the most recent Articles of
law (leaving aside additional rights granted in shareholders Association of AP, ALK and MSG (which, amongst other things,
agreements). An overview of these rights is given in Schedule 11. stipulates the business scope of the Mining Companies to be tin
mining operatons). The issuing notary also provided written
2.11 Capital structure confirmation that the Articles of Association were the Articles of
Association being submitted to the MOLHR for approval. However, we
The Company Law uses the concept of “authorised capital” to have not been provided with the MOLHR approval for the amended
describe the total nominal value of a company’s shares. Articles of Association.
Under the Company Law, all companies in Indonesia are required to Recommendation: To confirm whether the business scope of AP,
have authorised capital of at least IDR 50,000,000 and paid-up capital ALK and MSG has been validly amended, we require the approval of
of at least IDR 12,500,000. The Companies have complied with this the MOLHR for the amended Articles of Association of AP, ALK and
requirement. MSG.
Companies engaged in mining are subject to a more onerous We have been provided with copies of MOLHR Approvals for AP, ALK
obligation. Mining companies are required to have authorised capital and MSG, and therefore ALK, AP and MSG are now validly
of at least USD 1,000,000 (approximately IDR 10,000,000,000) and registered as PMA companies. MOLHR Approval from MSG is still
paid-up capital of at least USD 600,000 (approximately IDR being processed.
6,000,000,000). The Mining Companies have complied this
requirement. APG, HMP, HSB and MAP
Details of the capital structure of each Company are set out in The business scope of APG, HMP, HSB and MAP, as set out in their
Schedule 3. Articles of Association, includes mining of various commodities. If, in
the future, these companies wish to engage in tin mining activities,
2.12 Business Scope they must (in addition to obtaining the required business licence)
amend their Articles of Association to limit their business scope to tin
The Directorate General has given a directive to the MOLHR
mining only.
(pursuant to ESDM letter dated 31 August 2010 (Ref No
2540/30/SDB/2010) which states that the Articles of Association of a
46
Schedule 4 sets more information on the business scope of each 2.16 Corporate licences, permits and registrations
Company.
It is usual for Indonesian companies to obtain various licences,
2.13 Other features of the constituent documents permits and registrations in respect of their legal standing and general
business operations.
The Companies are established for an indefinite period of time.
Set out below are the key licences we would expect the Companies to
Indonesian companies are required to have a "domicile" (regency hold:
government area in which its head office is located). Branch offices
can be located in other “domiciles”. (a) Corporate Registration Certificate (Tanda Daftar Perusahaan
– TDP);
Schedule 3 sets more information on the domicile of each Company.
(b) Letter of Company Domicile (Surat Keterangan Domisili
Under Indonesian procedural law, claims are filed in the District Court Perusahaan – SKDP);
having jurisdiction over the domicile of the defendant. Accordingly,
any claim brought against a company can be identified in the District (c) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –
Court having jurisdiction over that company. Please see section 12 NPWP); and
for details of claims involving the Companies.
(d) Trading Business Licence (Surat Ijin Usaha Perdagangan –
2.14 Annual General Meeting of Shareholders SIUP).
Under Article 78(2) of the Company Law, a company is obliged to

hold an Annual General Meeting of Shareholders within six months of
its financial year end. The financial year of each Company runs from 1
January to 31 December.
The Legal Data did not contain any documents showing that the
Companies have complied with this obligation.
The Company Law does not impose any penalties for non-compliance
in respect of this matter.
2.15 Solvency
We have conducted litigation searches in the Commercial Courts

having jurisdiction over the domicile of the Companies in order to
establish whether any legal action has been commenced against any
of the Companies in respect of insolvency or winding up. The results
of the searches confirmed that the Companies are not insolvent or
wound up.
47
The key missing licences for the Companies are highlighted in red in
the table below:
Entity TDP SKDP NPWP SIUP
AP √ √ √
ALK √ √ √
MSG √ Expired √ √
HAS √ √ √ √
MAP √ √ √ √
HSB √ √ √ √
LME √ √ √ √
APG √ √ √ √
HMP √ √ √ √
We have requested the missing licences from the Companies.
In addition to the above, under the Investment Law, PMA Companies

are required to obtain approvals and registration from the BKPM. ALK,
AP, MSG, LME and HAS have obtained the required approvals from
the BKPM.
We note that the prevailing laws on SIUP and SKDP do not impose
penalties for non-compliance of having SIUP and SKDP.
48
Directors and Commissioners are appointed and removed at a

General Meeting of Shareholders (not by the Board of Directors). A
3. Management of the Companies person cannot be both a Director and Commissioner of the same
company.
Overview
The shareholders of Indonesian companies have a greater role in
Indonesian companies typically have a Board of Directors and a corporate decision making than is common in some other jurisdictions,
Board of Commissioners. The Company Law requires Indonesian as both the Company Law and typical Articles of Association reserve
companies to have at least one Director and one Commissioner. many decisions for the General Meeting of Shareholders (for example,
the appointment and removal of Directors and Commissioners).
The Board of Directors is responsible for the day-to-day management
of the company and exercises its power through the passing of Key findings
resolutions at meetings of the Board of Directors or by way of circular
resolution. Our key findings are set out in the sections below.
The Board of Directors can exercise all the powers of the company, 3.1 Corporate governance
except where the Articles of Association or the Company Law
requires the Board of Directors to obtain approval at a General The Legal Data did not indicate that the Companies have any
Meeting of Shareholders or from the Board of Commissioners. corporate governance procedures that are additional to the
procedures set out in the Articles of Association of each Company
If there is more than one Director, one Director must be appointed as and the Company Law.
the “President Director”. The President Director has the role of an
executive director and is generally able to legally bind the company to This is a common situation for non-listed Indonesian companies.
transactions in the ordinary course of business (subject to restrictions
3.2 Board of Directors
in the Articles of Association and the Company Law).
Directors in Indonesian companies are appointed by resolutions of
The Board of Commissioners may give policy advice to the Directors
shareholders at a General Meeting of Shareholders. The original
and has a general supervisory role with certain limited powers (for
Directors of a company are appointed by the founders of the company
example, the Board of Commissioners may temporarily suspend a
and can be determined by reference to its Deed of Establishment.
Director until a General Meeting of Shareholders resolves whether to
Any subsequent changes to the composition of the Board of Directors
confirm or revoke the suspension or 30 days elapses, whichever
are disclosed in the most recent minutes of a General Meeting of
happens first).
Shareholders appointing a Director (subject to any subsequent
If there is more than one Commissioner, one Commissioner must be resignations, suspensions or removals).
appointed as the “President Commissioner”. The role of the President
A summary of the provisions in the Articles of Association of each
Commissioner is largely ceremonial. The Company Law provides that
Company relating to its Directors is as follows:
if there is more than one Commissioner, the Board of Commissioners
must act collectively. (a) (number of Directors) the Company to be lead and
managed by at least one Director, except for:
49
(i) AP, which is to be managed by 5 Directors; 3.3 Board of Commissioners
(ii) ALK and MSG, which are to be managed by 3 Commissioners in Indonesian companies are appointed by
Directors, resolutions of shareholders at a General Meeting of Shareholders.
The original Commissioners of a company are appointed by the
(iii) and if more than one Director is appointed to the founders of the company and can be determined by reference to its
Company, one of the Directors must be appointed as Deed of Establishment. Any subsequent changes to the composition
the President Director; of the Board of Commissioners can be determined by examining the
most recent minutes of the General Meeting of Shareholders
(b) (restrictions) there are no restrictions on the nationality of appointing a Commissioner (subject to any subsequent resignations
the persons to be appointed as Directors; or removals).
(c) (appointment and dismissal) Directors are appointed at a A summary of the provisions in the Articles of Association of each
General Meeting of Shareholders and may be dismissed at a Company relating to its Commissioners is as follows:
General Meeting of Shareholders at any time;
(a) (minimum number) the Articles of Association (and the
(d) (period of office) Directors are appointed for five years Company Law) require a minimum of one Commissioner. If
(unless removed earlier at a General Meeting of more than one Commissioner is appointed, one of the
Shareholders); Commissioners must be appointed as the President
Commissioner;
(e) (vacancies) if one or more Director positions becomes
vacant, a General Meeting of Shareholders must be (b) (no maximum number) the Articles of Association do not
convened within 30 days to fill the vacancy; place a limit on the number of Commissioners the Company
can have;
(f) (total vacancy) if all the Director positions become vacant,
the Company will be managed temporarily by a (c) (restrictions) only Indonesian citizens (who qualify under
Commissioner appointed by the Board of Commissioners; Indonesian law) can be appointed as Commissioners (except
for HAS, LME and APG - the Articles of Associations of HAS,
(g) (resignation) a Director can resign by giving 30 days prior
LME and APG do not impose this restriction);
written notice to the Company; and
(d) (appointment and dismissal) Commissioners are appointed
(h) (authority of the President Director) the President Director
at a General Meeting of Shareholders and may be dismissed
is entitled and authorised to represent the Company on behalf
at a General Meeting of Shareholders at any time;
of the Board of Directors. If the President Director is absent
or is prevented from being present (which does not have to (e) (period of office) Commissioners are appointed for five
be proven to any third party), then another Director is entitled years (unless removed earlier at a General Meeting of
to act for and on behalf of the Board of Directors and Shareholders);
represent the Company.
50
(f) (vacancies) if a Commissioner position becomes vacant, a 3.5 Transactions requiring Commissioner approval
General Meeting of Shareholders must be convened within 30
days to fill the vacancy; The following actions of the Board of Directors of AP, ALK, MSG,
HAS and HSB require prior written approval from their respective
(g) (resignation) a Commissioner can resign by giving 30 days Boards of Commissioners:
prior written notice to the Company; and
(a) borrowing or lending money on behalf of the Company
(h) (information gathering rights) during a Company's office (excluding withdrawing the Company's money from the bank);
hours, each Commissioner is entitled to enter the building or and
other premises used or owned by the Company to examine
books, letters or other evidence concerning the Company. (b) establishing a new company or investing in another company,
Each Commissioner is also entitled to receive information on inside or outside of Indonesia.
every action conducted by the Board of Directors. The Board
of Directors and each member of the Board of Directors are The Articles of Associations of the remaining Companies (LME, HMP,
required to provide information to the Commissioners on APG and MAP) also require the following actions of the Board of
request by the Commissioners. Directors to be approved by the Board of Commissioners (in addition
to the terms above):
Recommendation: The Articles of Association of the the relevant
Companies should be amended to allow for the appointment of LME
foreign Commissioners.
(i) buying, selling or obtaining or transfering rights over
3.4 Right of the Board of Commissioners to suspend Directors fixed assets and companies or encumbering LME's
assets;
The Company Law provides that the Board of Commissioners are
entitled to temporarily suspend one or more of the Directors if the (ii) binding LME as a guarantor; and
relevant Director acts in a manner which is not in accordance with the
(iii) mortgaging movable assets owned by LME.
Articles of Association of the company or the prevailing laws. The
suspension must be notified to the Director concerned, together with HMP and AP
the reasons for the suspension.
(i) purchasing, selling or otherwise acquiring or
Within 30 days of the suspension of a Director, a General Meeting of assigning its rights over fixed assets and companies;
Shareholders must be held to determine whether to reinstate or
permanently discharge the Director. The suspension lapses if the (ii) giving security, by way of pledging, fiducia, or
General Meeting of Shareholders is not held in time. If the Board of otherwise encumbering the assets of HMP and APG;
Commissioners suspends all of the members of the Board of and
Directors, the Board of Commissioners or one or more
Commissioners appointed by the Board of Commissioners may (iii) binding HMP and APG as guarantor.
temporarily manage the company.
51
MAP
(i) purchasing immovable assets or securing assets of

MAP which are less than 50% of the total net assets
of MAP in one or more transactions; and
(ii) selling, assigning, or releasing rights over MAP's

assets which are less than 50% of the total net assets
of MAP in one or more transactions.
The above limitations on the powers of the Board of Directors are

standard for the Articles of Association of Indonesian companies.
52
Usaha Pertambangan – WIUP) subject to prescribed minimum and

maximum limits.
4. Mining Authorisations
There are two types of IUP:
Overview
(a) an Exploration IUP, which authorizes the holder to conduct
This part of the Report provides details of the current Mining Law and general survey, exploration and feasibility studies; and
matters arising from our review of the Companies' Mining
Authorisations. (b) a Production Operation IUP, which authorizes the holder to
conduct construction, mining, processing and purification,
Our due diligence investigations are based on a review of the Legal hauling and selling.
Data.
Under the Mining Law, a holder of an Exploration IUP is guaranteed
4.1 Overview of the Mining Law to be granted a Production Operation IUP.
On 12 January 2009, Law No 4 of 2009 on Mineral and Coal Mining The requirements for IUPs under the Mining Law do not correlate
(the Mining Law) came into effect. The Mining Law replaced Law No exactly with the requirements for KPs under the Old Mining Law.
11 of 1967 (the Old Mining Law) and made significant changes to
Indonesia’s mining regulatory regime which operated for more than 40 The Government Regulation of the Republic of Indonesia No 23 of
years. 2010 regarding the Implementation of Mineral and Coal Mining
Business Activity (Government Regulation No 23 of 2010) required
Under the Old Mining Law, mining activities were permitted to be all existing KPs to be converted into IUPs before 1 May 2010.
carried out under a mining authorisation known as Kuasa
Pertambangan (KP). There are a number of transitional issues Under the Mining Law, an IUP holder is only allowed to hold one IUP.
relating to KPs issued under the Old Mining Law. However, transitional provisions in Government Regulation No 23 of
2010 allow mining concession holders who held more than one
The Mining Law now provides for new forms of mining rights known concession before the enforcement of Mining Law, to convert those
as: concessions to IUPs and hold on to them until expiry (subject to
compliance with the conditions of the IUPs and the prevailing laws
(a) Mining Business Permits (Izin Usaha Pertambangan – IUP) – and regulations).
basic permits for conducting a mining enterprise within an IUP
area; and The current situation in relation to the Mining Law is that:
(b) Special Mining Business Permits (Izin Usaha Pertambangan (a) KPs should have been converted to IUPs, as required under
Khusus – IUPK) – permits for conducting a mining enterprise the implementing regulations; and
within an IUPK area.
(b) IUPs in relation to new work areas are not yet being issued.
For IUPs that are not "conversions" from KPs, every holder of an IUP This is because the Government is still considering what
will firstly need to obtain a Mining Business Permit Area (Wilayah Izin mining areas will be opened up for tendering.
53
A significant development in the Mining Law is that it now permits (d) Schedule 9 – Details on each of the IUPs held by AP, ALK
foreign investors (which includes a company incorporated in and MSG.
Indonesia with foreign ownership) to directly own shares in an IUP or
IUPK holder. Foreign companies are not permitted to hold IUPs AP
directly.
AP holds 3 Production Operation IUPs and 16 Exploration IUPs. 1
A company holding an IUP can be converted to a PMA Company Production Operation IUP and 16 Exploration IUPs were granted to
(open for foreign investment) if approved by the BKPM. AP by the Governor of Bangka Belitung Province on 15 March 2010.
The remaining 2 Production Operation IUPs were granted on 3 May
The BKPM requires the following, as a prerequisite to approving a 2010 and 30 April 2010 respectively.
conversion:
The Production Operation IUPs will expire on 13 November 2016, 2
(a) a recommendation from the authority who issued the IUP. May 2025 and 29 April 2025 respectively. They can be extended
(The requirement for a recommendation is set out in MEMR twice, for 10 years on each extension.
Regulation No 5 of 2010).
All of AP's Exploration IUPs will expire on 4 September 2012.
(b) PMA Companies engaging in mining activities must have
authorised capital of at least USD 1,000,000 (approximately Details of AP's IUPs are summarised in Schedule 9.
IDR 10,000,000,000) and paid-up capital of at least USD
600,000 (approximately IDR 6,000,000,000). ALK
The process of conversion takes approximately 10 business days ALK holds a Processing and Refining KP issued by the Mayor of the
(once the required documents are submitted to the BKPM). City of Pangkal Pinang in 2006, and subsequently amended in 2008.
The Processing and Refining KP was granted to ALK to conduct
Key findings processing and refining of tin sand and/or tin ore, for the period of 20
years, and on the basis of production capacity of 6,000MT/year.
4.2 Mining authorisations held by the Companies
ALK's Processing and Refining KP has not been converted to a
Set out below are summaries of the Mining Authorisations granted to Production Operation IUP specifically for Processing and Refining.
each Company. However, our review shows that ALK applied to the Mayor of
Pangkalpinang for conversion on 18 April 2010, before the Mining
More information on each of the mining authorisations is contained in: Law conversion deadline of 1 May 2010.
(a) Schedule 6 – Conditions of an Exploration IUP; ALK also holds a Transportation and Selling KP issued on 17 April
2008 which has expired on 17 April 2011. We have not seen this
(b) Schedule 7 – Conditions of a Production Operation IUP; license converted into a Transportation and Selling IUP under the
current Mining Law.
(c) Schedule 8 – Conditions of a Processing and Refining KP;
and
54
In addition to the above KPs, ALK also holds 6 Production Operation The searches:
IUPs for tin mining. The 6 Production Operation IUPS were issued to
ALK by the Regent of Bangka on 11 January 2010. (a) allow us to confirm the validity of the IUPs;
(a) Two of the Production Operation IUPs will expire on 15 March (b) allow us to confirm the contents of the copies of the IUPs
2013. provided to us by the Mining Companies; and
(b) Two of the Production Operation IUPs will expire on 14 March (c) assist us in assessing compliance by the Mining Companies
2012. with the terms of the IUPs.
(c) Two of the Production Operation IUPs will expire on 30 The Energy and Mineral Resources Service Office of Bangka Belitung
October 2011. Islands Province has confirmed the validity of all of the IUPs granted
to AP and MSG, and ALK's Processing and Refining KP. It has also
Details on ALK's KPs and IUPs are summarised in Schedule 9. confirmed that:
MSG (a) AP, MSG and ALK have no outstanding obligations in respect
of their respective IUPs and KP; and
MSG holds 35 Exploration IUPs for tin mining explorations issued by
the Governor of Bangka Belitung Province on 19 December 2008. (b) the Energy and Mineral Resources Service Office of Bangka
Belitung Islands Province has never imposed any
MSG's 35 Exploration IUPs will expire on 18 December 2012. penalties/sanctions on AP, MSG and ALK in respect of the
mining operations carried out under their respective IUPs and
Details of MSG's IUPs are summarised in Schedule 9. KP.
4.3 Verification Searches The Energy and Mineral Resources Service Office of Bangka
Regency has confirmed the validity of ALK's 6 Production Operation
We have conducted independent verification searches on the IUPs of
IUPs.
ALK, AP and MSG with the following government institutions:
However, the response from the Energy and Mineral Resources
(a) The Energy and Mineral Resources Service Office of Bangka
Service Office of Bangka Regency does not include confirmations as
Belitung Islands Province, in its capacity as the issuer of IUPs
to whether:
granted to AP and MSG;
(a) ALK has outstanding obligations in respect of ALK's 6
(b) The Energy and Mineral Resources Service Office of Bangka
Production Operation IUPs; and
Regency, in its capacity as the issuer of ALK's 6 Production
Operation IUPs; and (b) the Energy and Mineral Resources Service Office of Bangka
Regency has ever imposed any penalties/sanctions on ALK in
(c) The Energy and Mineral Resources Service Office of Bangka
respect of the mining operations carried out under its 6
Belitung Islands Province, in its capacity as the authority
overseeing ALK's Processing and Refining KP.
55
On 6 May 2011, OSP was provided with 2 additional Production (c) The Energy and Mineral Resources Service Office of Bangka
Operation IUPs registered under AP (No. 409 and No. 418). OSP has Regency (these searches cover ALK's 6 Production
completed verification searches at the Energy and Mineral Resources Operation IUPs);
Service Office of Bangka Belitung Islands Province in respect of these
2 new IUPs, as a result of which the Energy and Mineral Resources (d) The Energy and Mineral Resources Service Office of the City
Service Office of Bangka Belitung Islands Province has confirmed the of Pangkal Pinang (these searches cover ALK's Processing
validity of these 2 additional Production Operation IUPs, and also and Refining KP);
confirmed that:
(e) The Directorate General of Oil and Gas of the Department of
(c) AP has no outstanding obligations in respect of these 2 Energy and Mineral Resources of the Republic of Indonesia
additional Production Operations IUPs; and (these searches cover all of IUPs granted to ALK, AP and
MSG);
(d) the Energy and Mineral Resources Service Office of Bangka
Belitung Islands Province has never imposed any (f) The Forestry Service Office of the Bangka Regency (these
penalties/sanctions on AP in respect of the mining operations searches cover ALK's 6 Production Operation IUPs); and
carried out under these 2 additional Production Operations
IUPs. (g) The Forestry Planology Agency of the Department of Forestry
of the Republic of Indonesia (in its capacity as the central
The dates on which these searches were conducted are set out in the database of all existing forestry areas in Indonesia).
schedules to this Report.
We set out below the results of the overlapping search.
The Department of Energy and Mineral Resources of the Republic of

4.4 Overlapping interests Indonesia has confimed that there are no overlapping issues in
relation to the IUPs granted to ALK, AP and MSG.
We have conducted independent overlapping searches with the
following government institutions to assess whether the mining areas The Energy and Mineral Resources Service Office of Bangka Belitung
pursuant to the IUPs of ALK, AP and MSG overlap with any other Islands Province has confirmed that:
tenements (including mining, forestry and/or oil and gas interests):
(a) there are no overlapping issues in relation to the IUPs
(a) The Department of Energy and Mineral Resources of the granted to AP and MSG; and
Republic of Indonesia (these searches cover the IUPs and KP
of ALK, AP and MSG); (b) there are no overlapping issues in relation to ALK's KP (this
confirmation was issued by the Energy and Mineral
(b) The Energy and Mineral Resources Service Office of Bangka Resources Service Office of Bangka Belitung Islands
Belitung Islands Province (these searches cover the IUPs Province as the authority overseeing ALK's KP).
granted to AP and MSG);
The Energy and Mineral Resources Service Office of Bangka
Regency has confimed that there are no overlapping issues in relation
to the ALK's 6 Production Operation IUPs.
56
The Forestry Service Office of the Bangka Regency has confimed that 4.5 Terms and conditions of the Mining Companies' mining business
the mining areas pursuant to ALK's 6 Production Operation IUPs are licences
all located outside of forest areas. However, we have received
confirmation from the Forestry Planology Agency of the Department of The terms and conditions of the IUPs are set out in Schedule 9.
Forestry of the Republic of Indonesia that, while five of the mining
areas under the Production Operation IUPs of ALK are located in a 4.6 Compliance with the terms and conditions of the IUPs and KP
Non Forestry Area (Area Penggunaan Lain), the mining area under
Our due diligence investigations relating to compliance are based on
ALK's Production Operation IUP No. 188.4/075/Tamben/2010 dated
a review of the relevant documents in the Legal Data and the results
11 January 2010 (area width approximately 3 hectares) is located in a
of the verification searches (Verification Searches).
Permanent Production Forest (Areal Hutan Produksi Tetap). This
directly contradicts the confirmation received regionally. Please refer We have requested documents which show the Mining Companies
to section 11.4. have complied with the conditions of their respective IUPs and KP. As
The Directorate General of Oil and Gas of the Department of Energy at the date of this Report, we have received limited data.
and Mineral Resources of the Republic of Indonesia has confirmed to
us that they are not in the position to issue an official response to our The absence of these compliance documents raises concerns about
overlapping searches application. We have obtained unofficial whether the Mining Companies have complied with the conditions of
confirmation from them that there are no overlapping issues in relation their respective IUPs and KP. Failure to comply with any of these
to the IUPs granted to ALK, AP and MSG. conditions will put in question the good standing of the Mining
Company and may constitute a breach of the IUP, which can lead to
The dates on which these searches were conducted are set out in the suspension or revocation of the IUP.
schedules to this Report.
Article 110 of Government Regulation No 23 of 2010 provides that
On 6 May 2011, OSP has been provided with 2 additional Production
violations to the conditions of an IUP (as stated in Government
Operation IUPs registered under AP (No. 409 and No. 418). Regulation No 23 of 2010) can result in an administrative sanction in
OSP has conducted overlapping searches at the Energy and Mineral the form of:
Resources Service Office of Bangka Belitung Islands Province in
respect of these 2 new IUPs. The results were that there are no (a) written warnings;
overlapping issues in relation to these 2 new IUPs.
(b) temporary suspension of the IUP; and/or
Indonesia is currently not performing overlapping searches and has (c) revocation of IUP or IUPK.
not specified when these searches will resume. This currently only
affects the 2 new IUPs. Compliance of the Mining Companies with the conditions of their IUPs
is material for the purpose of extending or upgrading the IUPs in the
As the Directorate General of Oil and Gas of the Department of future.
Energy and Mineral Resources of the Republic of Indonesia is not
issuing official responses to applications for overlapping searches, Recommendation: The relevant mining authorities have confirmed in
OSP has obtained unofficial response from them that there are no writing that the Mining Companies have no outstanding obligations in
overlapping issues in relation to these 2 additional IUPs. relation to their respective IUPs and KP. However, to confirm the
57
accuracy of the statements made by the authorities, we recommend requires the holder of a Production Operation IUP to sell the minerals
all outstanding compliance documents be provided. that they produce at or above the minimum/benchmark price.
4.7 Divestment requirements The benchmark price for tin as ferrous mineral is determined by the
Director General on behalf of the Minister.
A foreign entity that owns shares in an Indonesian company that
holds a IUP issued under the Mining Law, must divest its shares in For the month of May 2011, the benchmark price of tin was the price
that company within 5 years of the commencement of production such of "M-1 Cash Mean Settlement prior to the issuance of invoice and
that Indonesian parties own a minimum of 20% of the issued shares. B/L in accordance with the London Metal Exchange Index."
Divestment occurs on a progressive basis.
The Legal Data contains an agreement for the supply of tin ore by AP
AP and MSG are 80% foreign-owned / 20% Indonesian-owned. This to ALK, which stipulates that the calculation of the purchase price of
means that the divestment requirement is not applicable to AP and the tin is to be based on the prevailing market price at the time AP
MSG (provided AP and MSG maintain their current shareholding sells the tin ore to ALK.
compositions).
The Legal Data also contains an agreement for the sale of tin ingots
ALK, being 99% foreign owned, is currently subject to the divestment by ALK to certain parties using a specific pricing formula based on the
requirement. London Metal Exchange Index.
4.8 Domestic Market Obligation (DMO) Non compliance with the benchmark price requirement can result in
an administrative sanction in the form of:
ALK and AP (and MSG during its production stage) are required by
Minister of Energy and Mineral Resources Regulation No 34 of 2009 (a) written warnings;
regarding the Prioritisation of Mineral and Coal Mining Supply for
Domestic Needs (Minister Regulation No 34 of 2009) to: (b) temporary suspension of the IUP; and/or
(a) prioritise the supply of minerals for domestic needs; and (c) revocation of IUP or IUPK.
(b) sell a minimum percentage of the minerals that they produce We have received confirmation from AP and ALK both dated 28 April
to domestic mineral users. 2011 that AP and ALK have been using the Benchmark Pricing as
determined by the Government of the Republic of Indonesia as their
The minimum percentage is determined by the Minister of Energy and pricing calculation for the sale of tin.
Mineral Resources and set out in a Ministerial Decree. The Ministerial
Decree has not yet been made. 4.10 Obligation to pay Royalties and Deadrent
4.9 Benchmark price Under the Mining Law, holders of Exploration IUPs and Production
Operation IUPs are required to pay deadrent and royalties (the
Government Regulation No 23 of 2010 and Minister Regulation No 17 general obligation is also provided for in the IUP instrument).
of 2010 regarding the Procedures to Determine Benchmark Price for Deadrent and royalties are called Non Tax State Revenues.
the Sale of Mineral and Coal (Minister Regulation No 17 of 2010)
58
The tariff of deadrent and royalty payable by the holder of a KP/IUP is

Phase Tariff
set out in Government Regulation No 45 of 2003 regarding the Tariff
on Type of Non Tax State Revenue Applied to the Department of exploitation Second year: Per Ha / year (tariff
Energy and Mineral Resources (Government Regulation No 45 of facilities IDR 8,000)
2003). Third year: Per Ha / year (tariff IDR
8,000)
(a) Deadrent
Exploitation First phase for laterite deposit and
Under the Circular Letter of the Directorate General of / production surface deposit: Per Ha / year
Geology and Mineral Resources No 32.E/35/DJB/2009 (tariff IDR 15,000)
(Circular Letter No 32 of 2009), the formula to calculate the
Second phase for primary deposit
deadrent is:
and alluvial deposit: (tariff IDR
Total area of the KP/IUP x Tariff 25,000)
Under Government Regulation No 45 of 2003, the deadrent (b) Royalty

tariff applicable to each phase is:
Under the Circular Letter No 32 of 2009, the formula for
Phase Tariff calculation of the royalty is:
General First year: Per Ha / year (tariff IDR Amount excavated materials being sold x sale
survey 500) price x tariff
Second year: Per Ha / year (tariff
Under Government Regulation No 45 of 2003, the royalty
IDR 1,000)
tariff applicable to tin is:
Exploration First year: Per Ha / year (tariff IDR
2,000) 3.00% from the sale price for every tonne
Second year: Per Ha / year (tariff The sale price is the Free on Board (FOB) price. The FOB
IDR 2,500) price is the price at the sale point of the transporting vessel.
Third year: Per Ha / year (tariff IDR
3,000) (c) The higher of:
First year extension: Per Ha / year (i) the price of the non ferrous mineral agreed between
(tariff IDR 5,000) the holder of the Production Operation IUP and the
Second year extension: Per Ha / buyer; or
year (tariff IDR 7,000)
(ii) the benchmark price,
Construction First year: Per Ha / year (tariff IDR
of 8,000)
59
is used to calculate the Non-Tax State Revenue (Penerimaan Mining Authorization, Contract of Works and Coal Contract of
Negara Bukan Pajak – PNBP) and regional tax for non Works Applicants (MR 135/1996);
ferrous minerals.
(d) Decree of the Director General of General Mining No.
We have requested documents in relation to payment of deadrents 01.E/80/DJP/1996 on Deposit of Surety Deposit of Mining
and royalties by the Mining Companies. Very few documents have Authorization/Contract of Work/Coal Contract of Work (SE
been provided. 01E/1996); and
Failure to pay deadrent or royalties when due, will prejudice the good (e) Decree of the Director General of General Mining No.
standing of the holder of the IUP. 155.K/861/DDJP/1996 on Procedures for the Release of
Surety Deposits (SE 155K/1996).
We have received written confirmation from the relevant mining
authorities that the Mining Companies do not have any outstanding 4.12 Reclamation Guarantee
obligations in relation to their respective IUPs and KP. We assume
that the written confirmation covers the payment of deadrents and A reclamation guarantee under GR 78/2010 is a one time deposit (not
royalties. However, to confirm this, evidence of payment should also placed annually) which covers the whole period of reclamation in the
be provided. exploration and production operation phases. The deposit of this
reclamation guarantee does not release an IUP holder from
Schedules 12, 13 and 14 detail evidence which we have sighted in implementing its reclamation obligations. If the reclamation guarantee
respect of payment of deadrent and royalties by AP, ALK and MSG is not enough to meet the reclamation obligations, the IUP holder
respectively. must meet them.
4.11 Obligation to Pay Reclamation Guarantee (Jaminan Reklamasi), In the event the IUP holder is deemed to be unsuccessful in
Post Mining Guarantee (Jaminan Pascatambang) and Surety implementing reclamation, the issuing authority or local authority can
Deposit (Jaminan Kesungguhan) require a third party to implement a part or the whole of the
reclamation activity by using the reclamation guarantee. GR 78/2010
The Mining Companies are required to pay a Reclamation Guarantee differentiates between the types of reclamation guarantees in the
(Jaminan Reklamasi), Post Mining Guarantee (Jaminan exploration and in the production operation phase which can be
Pascatambang) and Surety Deposit (Jaminan Kesungguhan) provided by the IUP holder.
pursuant to the following regulations:
(a) Exploration Phase
(a) Government Regulation No. 78 of 2010 on Reclamation and
Post Mining (GR 78/2010); A reclamation guarantee for the exploration phase must be in
the form of a time deposit in a state bank. A company must
(b) Regulation of the Minister of Energy and Mineral Resources place a reclamation guarantee for the exploration phase
No. 18 of 2008 on Reclamation and Mine Closing (MR within 30 calendar days of the work and budget plan for the
18/2008); exploration phase being approved by the relevant authority.
(c) Decree of the Minister of Mining and Energy No. (b) Production Operation Phase
135.K/201/M.PE/1996 on Evidencing Ability and Capability of
60
A company must place a reclamation guarantee for the (ii) is a company having a paid up and stored capital of
production operation phase within 30 calendar days of the at least US $25,000,000 as stated in the audited
reclamation plan being approved by the relevant authority. financial statements prepared by a public accountant
which is registered in the Ministry of Finance.
A reclamation guarantee for the production operation phase
can be in the form of: 4.13 Post Mining Guarantee
(i) a joint (escrow) account in a state bank (in the form of A post mining guarantee under GR 78/2010 is a placed annually in
a joint account between the IUP holder and the the form of a time deposit. A post mining guarantee is required to be
issuing authority of the IUP); placed within 30 calendar days of the post mining plan of the IUP
holder being approved by the relevant authority. The deposit of this
(ii) a time deposit in a state bank; post mining guarantee does not release an IUP holder from
implementing its post mining obligations. If the post mining guarantee
(iii) a bank guarantee from a state bank or an Indonesian is not enough to meet the obligations, the IUP holder must meet them.
commercial bank; or
In the event the IUP holder is deemed to be unsuccessful in
(iv) accounting reserves. implementing post mining, the issuing authority or local authority can
require a third party to implement a part or the whole of the post
An IUP holder can apply for a release of the reclamation
mining activity by using the post mining guarantee. In the event the
guarantee to the issuing authority based on the level of
mining activity ends before the expiration of the IUP, the IUP holder
success of the reclamation. This means that once a
must provide the post mining guarantee in accordance with the post
reclamation guarantee is placed it can only be released after
mining guarantee which has been approved by the relevant authority.
evaluation by the relevant authorities on how the reclamation
has been implemented. New implementing regulations for GR 78/2010 provides no explanation as to whose name the time
GR 78/2010 have not been issued. deposit should be opened in. In this respect, MR 18/2008 provides
that the time deposit has to be opened in the name of the issuing
GR 78/2010 provides no explanation as to whose name the
authority of the KP (now IUP) representing (qualita qua) the KP (now
time deposit must be opened in. In this respect, MR 18/2008
IUP) holder.
provides that the time deposit has to be opened in the name
of the issuing authority of the KP (now IUP) representing 4.14 Reclamation Guarantee and Post Mining Guarantee for Offshore
(qualita qua) the KP (now IUP) holder. There is no clear Mining Activities
explanation on how a reclamation guarantee which takes the
form of accounting reserves is to be placed. MR 18/2008
provides that placement of a reclamation guarantee in the We note that GR 78/2010 imposes the obligation to mining companies
form of an accounting reserve can only be done if the to prepare and submit Reclamation Plan and Post Mining Plan, and
company: subsequently pay Reclamation Guarantee and Post Mining
Guarantee in the amounts as reflected in said Plans. However, the
(i) is a publicly listed company, listed on the Indonesian regulations and procedures implementing the said obligation for
or foreign stock exchange; or offshore mining activies are still unavailable, and therefore the mining
61
companies conducting offshore mining mining activities (i.e. AP and CCOWs to evidence their ability and capability. A surety
MSG) are restricted in implementing such obligations. deposit is to be placed in the form of a time deposit in the
name of the Director General of General Mining (Direktur
Neverthless, as the obligation is still in force, technically the mining Jenderal Pertambangan Umum) representing (qualita qua)
authorities may collect the payment of Reclamation Guarantee and the applicant. MR 135/1996 provides that the amount of the
Post Mining Guarantee, and in that case (as evidenced by AP), the surety deposit shall be calculated by multiplying the width of
mining companies are still be required to pay. the applied concession area with the tariff of IDR 10,000 or
US $5 per hectare. In the event the applied concession area
4.15 Surety Deposit is wider than the width as stipulated by the law, the tariff of
the surety deposit shall be IDR 20,000 or US $10 per hectare.
Surety deposits are present both in the old and the new mining law
regime. Pursuant to SE 01E/1996 placement of surety deposits is to be made
to the Directorate General of General Mining's account at Bank
(a) Under the new mining law
Negara Indonesia (BNI), Wisma Baja Branch.
The surety deposit amounts to 10 percent of the
SE 155K/1996 provides that the release of surety deposits is to be
compensation amount for the information data or the total
done in stages. For KPs release of the surety deposit is to be done in
investment replacement for the ending of the mining licence
relation to its activity phase. The final release is done during the
business area (Wilayah Izin Usaha Pertambangan – WIUP)
second year of the exploration phase. For CoWs and CCoWs the
tender. Article 13(4)(b) of GR 23/2010 made the surety
surety deposit is to be released when the contract has been signed or
deposit a supporting document to satisfy the auction
within six months of the signing date of the contract, unless caused by
requirements of the WIUP. GR 23/2010 provides no
the negligence or error of the CoW or CCoW contractor.
explanation as to whose name the surety deposit should be in.
Schedules 12, 13 and 14 detail evidence which has sighted in respect
No implementing regulation of the new mining law has been
of payment of the Reclamation Guarantee, Post Mining Guarantee
issued specifically dealing with the rules to the creation of a
and Surety Deposit by AP, ALK and MSG respectively.
surety deposit. MR 135 1996 provides that a time deposit is
to be created in the name of the Director General of General 4.16 Extension of Exploration and Production Operation IUPs
Mining (Direktur Jenderal Pertambangan Umum) representing
(qualita qua) the applicant (now the WIUP tender participant). Exploration IUPs for metal minerals can be granted for a maximum of
GR 23/2010 provides no explanation as to how to calculate 8 years, including 1 year of general surveys, 3 years of exploration
the 10 percent of the compensation amount for the (which may be extended twice, for 1 year on each extensions) and 1
information data or the total investment replacement for the year feasibility study (which may be extended once for 1 year).
ending of the WIUP tender.
Based on the wording of the Mining Law, such extensions are subject
(b) Under the old mining law to approval by the government authority issuing the IUP. Law No.4 of
2009 is silent on how to apply for an extension to an Exploration IUP.
Under the old mining law, through MR 135/1996, the surety
deposit is to be provided by applicants of KPs, COWs or
62
Production Operation IUPs for metal minerals may be granted for a MEMR has informed us that a favoured option being discussed in
period of 20 years and can be extended twice, for 10 years on each MEMR while formulating the proposed MEMR regulation is that the
extension. An application to extend a Production Operation IUP must value added processing must be conducted prior to the first point of
be made to the relevant authority at least 6 months before the sale.
expiration of the IUP and not more than 2 years before the expiration
of the IUP. The application must, at the very least, be accompanied MEMR has informed us that this policy is aimed at improving the
by: government's royalty income by increasing the value of the products
when the royalty is calculated.
(a) maps and boundaries and coordinates of the area;
Various public statements by MEMR officials have clearly indicated
(b) evidence of settlement of deadrents and royalties in the last that a mining company should not have to build its own processing
three years; and refining infrastructure, but can instead use that of a third party.
(c) a final report on activity of production operation; 4.18 Export of Tin
(d) a report on implementation of environmental management; The export of tin can only be in the form of tin bar. Currently,
Indonesia does not impose any quota on the export of tin bar.
(e) a work program and budget; and
Since 2007, the government has been discussing the possibility of
(f) a balance of resources and reserves. imposing a quota on the export of tin bar. However, no quota has
been implemented and no draft implementing regulation has been
4.17 Requirement to conduct value added process to mined tin issued by the government for public review (which would be part of
the usual socialisation process for a new regulation of this type).
Article 90 of Government Regulation No. 23 of 2010 imposes an
obligation on mining companies (rather than third party refiners) to Under the Decree of Mayor of Pangkal Pinang dated 17 April 2008,
carry out processing and refining mining commodities to add value to ALK is allowed to produce a maximum of 6,000 MT per annum of tin
them. bar, which it may subsequently export.
The obligation is expressed in extremely broad and vague terms and The Regulation of the Ministry of Trade No. 04/M-DAG/PER/1/2007
there have been no implementing regulations. For example, a mining on the Export of Tin Bar (Tin Acknowledgment Regulation) also
company could be required to process prior to first sale of tin ore, or provides that a Tin Exporter Acknowledgment (Pengakuan Sebagai
may be allowed to do the processing further down the transaction Esportir Timah Batangan) is required before tin bar may be exported.
chain. ALK has obtained Acknowledgment as a Registered Tin Bar Exporter
(Pengakuan Sebagai Eksportir Timah Batangan – ET Timah) No
The obligation is currently not being enforced by the Government, in
14/DAGLU/ET-TIMAH/11/2008, dated 21 November 2008. The ET
the absence of regulation to be issued by MEMR governing the
Timah allows ALK to conduct tin trading and exporting.
implementation of this obligation. We understand that this regulation
is currently being drafted by MEMR.
63
The Tin Acknowledgment Regulation also sets the rules on types of The tin ores can only be sold to a holder of a Processing and Refining
tin bar which may be exported by a tin bar exporter. The following KP.
rules apply:
The SPPBAP is to be obtained prior to the tin leaving the departing
§ The tin ore used to produce the tin bar must be sourced from port and for each shipment.
the:
The Inter Island Trading Regulation provides the procedures and
o holder of a Exploitation KP (now a Production required documents for obtaining the SPPBAP.
Operation IUP) and a Processing and Refining
KP (now Processing and Refining IUP) ; The SPPBAP is issued to the holder of a Contract of Work or the
Exploitation KP (now Production Operation IUP) by the Head of the
o holder of a Contract of Work; and Regional Trading Service Office of the region where the Non Refined
Tin is sourced.
o holder of a Exploitation KP having a Cooperation
Contract with the holder of a Processing and Refining According to the Inter Island Trading Regulation inter island trading
KP. means port to port trading between islands or port to port trading
within an island.
§ There must be full payment of royalties for the tin bar which is
The Inter Island Trading Regulation was promulgated to prevent
to be exported.
smuggling of tin ore. The monitoring system is based on the issuance
§ The tin bar must have a tin metal value of at least 99.85%. of a SPPBAP for each delivery of tin. The Head of Trade Service
Office in the regency/municipality in respect of the location of smelter
4.19 Inter-island Trading will need to confirm the arrival of tin ore based on the amount
stipulated in the SPPBAP.
Regulation of the Minister of Trade No. 19/M-DAG/PER/2007 (Inter
Recommendation:
Island Trading Regulation) provides that non refined tin which is still
in the form of ores or tin sand concentrates or is not in the form of If AP and ALK can select an appropriate structure from the options set
bars (Non Refined Tin) which is traded inter-island must only be out in this document, this should involve AP (the holder of Production
traded by a: Operation IUPs) selling tin to a holder of a Processing and Refining
KP, and this should be acceptable under the Inter-Island Trading
§ holder of a Contract of Work or Exploitation KP (now
Regulation.
Production Operation IUP);
We have seen no evidence that any company holds a SPPBAP. If
§ also holding an agreement with a Processing and Refining KP
the trading was inter-island, AP would need a SPPBAP before each
holder; and
trade of ore to ALK and would have needed one historically.
§ holding an Inter-Island Non Refined Tin Trading Approval
4.20 Recent Mining Development in Indonesia
(Surat Persetujuan Perdagangan Bijih Timah Antar Pulau –
SPPBAP). The Ministry of Energy and Mineral Resources of the Republic of
Indonesia (MEMR) is currently gathering all data and documents on
64
mining licences (Izin Usaha Pertambangan - IUP) issued by the Findings, including any legal action to be taken in respect of IUPs still
Governors and Regents for the purpose of verification and regarded as problematic upon conclusion of the Objection Period. We
reconciliation of database on existing mining areas. understand this to be a very fluid process which is still at a nascent
Based on a Press Release by MEMR, the Governors and Regents stage and we will continue to closely monitor the developments in this
respect. MEMR has confirmed that revocation of IUPs by MEMR is
are required to provide all data by 6 June 2011. The Director General
of Minerals and Coal (Direktur Jenderal Mineral dan Batubara) of unlikely due to the fact that the authority to revoke an IUP legally lies
with the issuer of the IUP (i.e. Governors or Regents).
MEMR has indicated in several newspaper reports that failure to
comply with the 6 June 2011 deadline may lead to exclusion of the Status of AP, ALK and MSG's IUPs
IUP mining area from the National Database for Minerals and Coal
• AP and MSG: The Official Search Results Letters issued to
Mining and/or revocation of such non reported IUP.
OSP by the Governor of Bangka Belitung Province (as the
Verification Process by MEMR issuer of the IUPs of AP and MSG), confirm that all of the AP
From the deadline of 6 June 2011 until the end of June 2011, MEMR IUPs and MSG IUPs have in fact been registered with MEMR
will conduct a verification on the soundness of the IUPs. as the central mining authority. Therefore, it can be concluded
that MEMR already has the details of AP and MSG IUPs in its
As part of the verification process of converted IUPs, MEMR will look database. Further, the Legal Department of Leviathan has
at the historical background of each IUP stretching from the issuance confirmed (based on its meetings with the local mining office of
of the Mining Authorisations (Kuasa Pertambangan - KP) i.e. from its Bangka Belitung Province) that detail on all of the AP and MSG
first chain of licensing that was issued for the mining tenement. For IUPs was submitted to MEMR prior to the 6 June 2011 deadline.
IUPs issued based on an application and area reservation made prior
to the Mining Law 2009, MEMR will review the application documents • ALK: The Official Search Results Letter issued to OSP by the
and the area reservation. Regent of Bangka Regency (as the issuer of ALK's 6 onshore
IUPs) does not identify whether the ALK IUPs have been
Result of Verification Process registered with the MEMR. However, the Legal Department of
We understand from our discussions with MEMR that from the Leviathan has confirmed (based on its meetings with the local
verification process: mining office of Bangka Regency) that ALKs 6 IUPs (onshore)
have been registered with MEMR.
• MEMR will identify the IUPs as either "clear and clean" or
"problematic"; Accordingly even if the Governors/Regents fail to register the data (as
they should have) by 6 June 2011, the affeceted mining companies
• We have been informed that MEMR plans to announce the would be able to register an objection if the tenements are not
results of such verifications (Findings) on its website and/or in included in the MEMR register.
a national newspaper at the latest 30 June 2011;
Recommendation:
• Subsequent to the announcement, MEMR will set a certain
period (currently it is considering 7 days) for filing of objections AP, ALK and MSG to monitor on any updates from MEMR on the
by stakeholders (IUP holders, Governor and/or Regents) on the development of this issue in respect of ALK, AP and MSG's IUPs so
Findings (the Objection Period). that timely objections (if necessary) can be submitted within the time
frames.
Our research with MEMR shows that MEMR is still coordinating with
the Governors, Regents and the Department of Domestic Affairs of
the Republic of Indonesia on the settlement of issues raised in the
65
The holder of an IUP or IUPK is prohibited from engaging its

5. Mining Services subsidiary and/or affiliates in the field of mining services within the
mining areas they commercialize, unless it has obtained the approval
from the Minister of Energy and Mineral Resources. Approval from the
Overview Minister of Energy and Mineral Resources must be granted if:
This part of the Report provides details of matters arising from our (a) there are no available mining services companies of a similar
review of the mining services arrangements. type in the areas; or
Key findings (b) there are no mining services companies interested or capable
of providing the services.
5.1 Mining Services Arrangements
Mining services can be carried out by:
The Mining Companies have advised that they are not currently
enagaging the services of any mining services companies. (a) business entities, consisting of State-Owned Enterprises
(BUMN), Regional-Owned Enterprises (BUMD), or private
business entities (in the form of Limited Liability Companies);
Additional Information
(b) cooperatives (Koperasi); or
5.2 Mining services in Indonesia under the Mining Law
(c) individuals, limited partnerships (Commanditaire Vennotschap
The Indonesian government enacted Law No.4 of 2009 on Minerals – CV) or firms.
and Coal Mining (Mining Law) on 12 January 2009. The Mining Law
A mining services company can be classified as either:
significantly changes the system that has regulated the Indonesian
mining industry for more than 40 years. One of the significant (a) a local mining services company, which includes a Regional-
changes is in respect of mining services. Owned Enterprise (BUMD), private business entity (in the
form of Limited Liability Company), Cooperative (Koperasi),
Under the Mining Law, the holder of an IUP or IUPK is required to
limited partnership (Commanditaire Vennotschap – CV), firm
conduct mining activities itself (and not contract out these activities,
or individual; or
except for processing and refining). There are specified exceptions in
the Minister Regulation No.28 of 2009 on Mining Services, which (b) a national mining services company, which includes a State-
provides that certain activities can be delegated to a mining services Owned Enterprise (BUMN), private business entity (in the
company. These activities are: form of Limited Liability Company) or individual.
(a) stripping of overburden, which consists of stripping, loading The holder of an IUP or IUPK must engage local and/or national
and removal (stripping) of overburden (including by an mining services companies for mining services (i.e. for services other
explosion); and than the mining itself). In the event no local and/or national mining
services companies are available, the holder of IUP or IUPK may
(b) transportation of minerals or coal.
66
engage 'other mining services companies' (which includes PMA (vii) post-mining and reclamations; (reclamation, mine
Companies). closure, preparation and ordering of land, cultivation,
hydroseeding, planting treatment); and
Dredges and subsea mining expertise in the Bangka region is likely to
be held by PT Timah. We assume that PT Timah would not be willing (viii) occupational health and safety (technical examination
to make its mining dredges and local expertise available to a and testing, mining occupational health and safety
competitor. audit and occupational health and safety training).
5.3 Types of services that can be provided under the Mining Law (b) Consultation, planning and testing of equipment in the field of
mining or processing and refining, including:
A mining services company is allowed to provide the following
services: (i) in relation to processing and refining, coal blending,
coal processing, mineral processing, mineral refining;
(a) Consultation, planning, execution and testing of equipment in or
the field of:
(ii) in relation to mining, mining demolition and crushing,
(i) general survey work; excavation of minerals or coal and loading and
transportation of mineral or coal.
(ii) exploration (exploration management, positioning,
mapping, geology and geophysics, geochemical, 5.4 Tender process for foreign-owned mining services businesses
underground survey, geotechnical, drilling and
exploration sampling; The holder of an IUP or IUPK can utilise a mining services company if:
(iii) feasibility study (AMDAL and composing feasibility (a) the activity work plan has been approved by the Minister,
study); Governor, or Regent/Mayor in accordance with their
respective authority; and
(iv) mining construction (underground mine, open-cut
mine, underwater mine, mining commissioning, (b) it prioritises the utilisation of a local mining services company
cementing of underground mine, mine ventilation, and/or national mining services company.
processing and refining, mine road, explosive
warehouse); In the event that there is no local mining services company and/or
national mining services company, the holder of an IUP or IUPK can
(v) transportation (using truck, using trolley, using belt- utilise the services of an 'other mining services company', provided
conveyor, using barge, using pipe); that:
(vi) mining environment (mining water management, (a) an announcement has been made to the mass media and
mining environment audit, erosion control); there are no local and/or national mining services companies
which are financially and technically capable of conducting
the services required; and
67
(b) the other mining services company sub-contracts the services (b) there is no mining services company that is interested or
to a local mining services company in accordance with its capable, based on the following criteria:
capability.
(i) sufficient investment;
The holder of an IUP or IUPK is prohibited from receiving a fee from
the works carried out by a mining services company. (ii) sufficient working capital; and
5.5 Prohibition on engaging affiliates and/or subsidiaries (iii) competent employees in the field of mining,
The Minister Regulation states that the holder of an IUP or IUPK is as required by the holder of IUP or IUPK; or
prohibited from using a subsidiary and/or affiliate to supply mining
services in its commercialised mining area, unless it has obtained (c) the approval is granted after the holder of the IUP or the IUPK:
approval from the Directorate General on behalf of the Minister.
(i) announces the mining services tender in local and/or
Regulation No 376.K/30/DJB/2010 of 2010 on Application Procedures national mass media, but there is no mining services
and Requirements for Approval on the Participation of Subsidiary company that is interested or capable (financially and
and/or Affiliate in Mining Services Business, issued by the Director technically); and
General of Minerals, Coal and Geothermal, defines subsidiary and/or
(ii) guarantees that there is no transfer pricing or transfer
affiliate (Affiliate) as a business entity with any one of the following
profit and that if there has been either transfer pricing
relationships with the holder of an IUP or IUPK:
or a transfer profit, it has been reported to the
(a) the holder of the IUP or the IUPK is a direct shareholder of at Directorate General.
least 20% of the shares in the mining services company;
5.6 Responsibility
(b) the holder of the IUP or the IUPK is a direct shareholder and
The holder of the IUP or the IUPK continues to be responsible for
holds more than 50% of the voting rights in the mining
mining performed in the permit area under a mining services contract.
services company (under an agreement for direct control of
In other words, the IUP or IUPK holder is responsible (and liable in
financial and operational policies); or
the event of a breach) for aspects of technical operations,
(c) the holder of the IUP or the IUPK has the power to appoint occupational health and safety, and environmental protection.
and dismiss the director of finance and/or director of
5.7 Classification and qualification of mining services company
operations (or equivalent) of the mining services company.
A mining services company must obtain a classification and a
The enagement of an Affiliate will be approved by the Directorate
qualification certificate from an independent institution (or from the
General if:
Minister, Governor, or Regent/Mayor in accordance with their
(a) there is no homogenous mining services company in the respective authority, if an institution has not been established).
regency/municipality and/or province; or
68
(a) (Classification) A mining services company must have at mining services activities within the territory of the
least one of the following employees (but it can have several relevant regency/municipality.
or all of them):
(b) The written application to obtain a registration certificate (SKT)
(i) consultant; is submitted to the:
(ii) planner; (i) Minister, for a non-core mining services company to

engage in non-core mining services activities in the
(iii) executor; and/or entire territory of the Republic of Indonesia;
(iv) equipment examiner. (ii) Governor, for a non-core mining services company to
engage in non-core mining services activities within
(b) (Qualification) A mining services company can be: the territory of the relevant province; or
(i) Large scale - for a mining services company with net (iii) Regent/Municipality, for a non-core mining services
assets of more than IDR 5,000,000,000 (five billion company to engage in non-core mining services
Rupiah), exclusive of its land and business premises; activities within the territory of the relevant
and regency/municipality.
(ii) Small scale - for a mining services company with net (c) If the application is complete and correct, the Minister,
assets of up to IDR 5,000,000,000, (five billion Governor, or Regent/Mayor, in accordance with their
Rupiah), exclusive of its land and business premises. respective authority, will conduct an evaluation before
granting the approval or refusal. The granting or refusal of an
5.8 Obtaining the necessary licences
IUJP or SKT must be given within 14 business days of the
(a) The written application to obtain a business licence to application (assuming all of the application requirements have
conduct mining services (IUJP) is submitted to the: been met).
(i) Minister, for a national mining services company and 5.9 Period and expiry
other mining services company to engage in mining
The IUJP or SKT is granted for the maximum of 3 years and can be
services activities in the entire territory of the
extended by submitting an application for extension at least 1 month
Republic of Indonesia;
before the IUJP or SKT expires.
(ii) Governor, for a local mining services company and
The IUJP or SKT will expire if:
other mining services company to engage in mining
services activities within the territory of the relevant (a) the validity period has ended and no application for extension
province; or is submitted;
(iii) Regent/Mayor, for a local mining services company (b) returned by the holder of the IUJP or SKT by written
and other mining services company to engage in statement, before the expiry; or
69
(c) revoked by the issuer of the IUJP or SKT. revenue, local or national products and services or
import, and community development; and
5.10 Amendment and assignment
(xi) appoint an operational person in-charge in the field to
Changes to the classification and/or qualification of a mining services ensure the aspects of mining technical, mining
company must be notified to and approved by the Minister, Governor occupational health and safety, and mining
or Regent/Major (as applicable). environmental protection; and
The IUJP or SKT cannot be transferred to another party. (b) the holder of an IUJP or SKT issued by the Minister must
report its licence to the relevant Governor or Regent/Mayor.
5.11 Obligations The the holder of an IUJP or SKT issued by the Governor
must report its licence to the relevant Regent/Mayor.
(a) The holder of the IUJP or SKT is obliged to:
5.12 Sanctions
(i) utilise domestic product;
(a) The Minister, Governor or Regent/Mayor, in accordance with
(ii) utilise local sub-contractors;
their respective authority, can impose administrative
(iii) utilise local manpower; sanctions on the holder of an IUJP or SKT who commits the
following violations:
(iv) carry out its activities pursuant to its type and field of
business; (i) does not carry out its activities in accordance with the
IUJP or SKT;
(v) submit every mining services contract entered into
with the holder of an IUP or IUPK; (ii) fails to submit a quarterly report 3 times in a row;
(vi) carry out environmental management efforts pursuant (iii) fails to carry out its obligations as set out in the
to the prevailing laws; Regulation of the Minister of Energy and Mineral
Resources No.28 of 2009; or
(vii) optimise national products and services;
(iv) provides incorrect data or false documents.
(viii) implement occupational health and safety provisions
pursuant to the prevailing laws; (b) The administrative sanctions can be in the form of:
(ix) assist with a community development and (i) a non-compliance letter;

empowerment program;
(ii) temporary cessation of part or the entire mining
(x) prepare and submit quarterly and annual activity services activity; or
reports, which cover the investment, contract value,
(iii) revocation of an IUJP or SKT.
contract realisation, contract assignor, employees,
master-list of equipment, state revenue, regional
70
5.13 Transitional provisions
An IUJP issued before the enactment of the Minister Regulation will

remain valid until its expiry and its implementation must follow the
provisions of the Minister Regulation.
A KP holder that utilises a mining services company, under the

previous laws, must adjust its mining services arrangements within 3
years (at the latest 30 September 2012).
A KP holder that will use a mining services company in the future

must follow the provisions of the Minister Regulation.
An application for an IUJP which still in process must be processed in

accordance with the provisions of the Minister Regulation.
71
the Republic of Indonesia which declared Aega 1 as an

Indonesian vessel in accordance with the prevailing laws and
6. Shipping therefore is authorised to sail under the Flag of the Republic
of Indonesia; and
Overview
(b) International Tonnage Certificate No. 4175/Bc dated 29 July
This part of the Report provides details of matters arising from our 2008 issued by the Sunda Kelapa Port Administrator on
review of the shipping arrangements. behalf of Minister of Transportation of the Republic of
Indonesia.
Key findings
Therefore, AP has obtained the complete documentation required in
6.1 Ownership of Cutter Section Dredger by AP respect of the registration of ownership of Aega I.
AP owns a cutter suction dredger named Aega 1. Ownership of Indonesian flagged vessels are restricted to a company
which is majority owned by Indonesians. Based on the Legal Data, at
The Legal Data contains a Registration Deed for the cutter suction the time AP registered Aega 1, the shareholding of AP was 100%
dredger, Aega I. The Registration Deed is numbered 5310, dated 12 owned by Indonesians. Therefore, it can be concluded that
August 2008 and was issued by the Registrant Official for the registration was valid under the law. The Indonesian Shipping Law
Transfer of Title of Vessel of the Directorate General of Sea does not regulate on matters dealing with effect of the change of
Transportation – Department of Transportation. status into a PT PMA to the registration of an Indonesian flagged
vessel.
The cutter suction dredger has the length of 68 meters, a
width/breadth of 15 meters and a depth of 2,35 meters. The gross Nonetheless, as AP is currently a foreign investment company and
tonnage of the cutter suction dredger is 336 GT, while the net tonnage majority owned by foreign party, should AP requires to purchase new
is 101 GT. The cutter suction dredger is described as being built in vessels in the future, AP will have difficulties in registration of its new
Thailand in 2007, and as being made from steel with a Mitsubishi vessel as the Shipping Law does not permit any registration of
main engine. vessels which are not majority owned by Indonesian parties.
We received a Provisional Certificate of Nationality and Provisional Recommendation:
International Tonnage Certificate for Aega I, both dated 11 July 2008
and which expired on 11 October 2008 and 11 September 2008 Short Term solution:
respectively.
AP to obtain a SIOPSUS for Aega 1. Under the regulation, the
On 11 May 2011, we received the following documents in respect of process for obtaining a SIOPSUS will take approximately 14 working
ownership of Aega I: days (subject to the completion of the application and supporting
documents).
(a) Certificate of Nationality No. PK.674/1247/SL-PM/DK-08
dated 11 September 2008 issued by the Directorate General Long term solution:
of Sea Transportation of the Department of Transportation of

AP to transfer Aega 1 to a third party shipping company having obtain a shipping business licence (SIUPAL) or special shipping
SIUPAL which will then charter Aega 1 to AP. The third party licence for vessels (known as SIOPSUS) depending on its line of
shipping company shall also procure the new vessels and charter business and activities.
them to AP.
A shipping company holding a SIUPAL must not undertake any other
We note that Leviathan is currently working on the necessary business (eg mining services) other than shipping and the shipping
arrangement for the long term solution. company must be majority owned by Indonesian (at least 51%
Indonesian owned). Meanwhile as a one of the prerequisites for
6.2 Operations of Cutter Section Dredger by AP obtaining a SIUPAL, a PMA company must own at least one vessel
larger than 5,000 gross tonnage (GT).
AP is currently operating Aega 1 without the necessary license from
the Department of Transportation. For the non-shipping companies, it may obtain a special license for
operating its vessels for supporting its main activities. Therefore, the
For operating a vessel, a company should either have SIUPAL or mining companies will need to obtain SIOPSUS for operating its
SIOPSUS. Different requirements apply for the relevant licenses. For vessels (on the grounds that the vessel is required to the carry out
SIUPAL, the line of business of the company should only be shipping. activities which are incidental to the company's primary activity). The
This is not suitable for mining companies. ownership threshold (as discussed above) for registration of a vessel
also applies in this case.
However, for mining companies operating vessels, the mining
companies may apply for SIOPSUS. AP may apply the SIOPSUS for Indonesian Shipping Law stipulates that any party operating a vessel
operating the Aega 1. As discussed above, AP will not be able to without SIUPAL or SIOPSUS may be subjected to a maximum 1 year
register its new vessels as an Indonesian flag vessel as currently AP imprisonment or a maximum fine of IDR 200,000,000.
is not majority owned by the Indonesian parties.
Recommendation: Please see recommendation in section 6.1.
Additional Information
6.3 Cabotage
Article 8 (1) of Law Number 17 of 2008 on Shipping (Shipping Law)

states that vessels operating between Indonesian islands or ports
within Indonesian waters must carry Indonesian flag. Also Article 158
(2) (c) of Shipping Law stipulates that to be able to register a vessel
in Indonesia, a company must be majority owned by Indonesians (at
least 51% Indonesian owned).
Additionally, to operate a vessel within Indonesian waters (including

for dredging, barging etc), a vessel owning company may either

188.44/409/DPE/2010 dated 30 April 2011 and No.

188.44/418/DPE/2010 dated 3 May 2011.
7. Material Contracts
Recommendation: The Cooperation Agreement should be amended
Overview to reflect a validity period of less than 3 years (i.e. annually).
This part of the Report provides details of matters arising from our 7.2 Sale of Tin Ingots By ALK
review of the Material Contracts.
The Legal Data contains 5 contracts governing the sale/supply of tin
Key findings ingots to various overseas parties. ALK has confirmed that these
contracts are the only contracts on the sale/supply of tin ingots by
7.1 Supply of Tin Ore by AP to ALK ALK for 2011.
AP and ALK have entered into a Cooperation Agreement for Supply A summary of the key terms of the Agreement are set out in Schedule
of Tin Ore under which AP supplies ALK with tin ore produced from 9 (in relation to ALK).
AP's 310 Ha mining area located in the territory of Teluk Kelabat Sea
in Bangka Belitung Islands Province and granted under Production 7.3 Lease of Vessel for AP's Mining Operations
Operation IUP No. 188.44/102/DPE/2010 dated 15 March 2010
(Cooperation Agreement). AP and PT Manggala Gita Karya (PT MGK) entered into a Leasing of
Mining Equipment Agreement on 2 November 2009 and an
A summary of the key terms of the Cooperation Agreement are set Amendment Agreement dated 19 May 2011, under which AP agreed
out in Schedule 9 (in relation to AP and ALK). to lease a vessel for its mining activities and hires personnel from PT
MGK to operate the vessel.
We note that the period of the Cooperation Agreement is not clearly
defined in the Cooperation Agreement. As such, the period of the 7.4 Consent issues
Cooperation Agreement may be deemed to be perpetual.
None of the contracts provided contain change of control provisions,
According to one of the conditions stipulated under the AP's confidentiality restrictions or restraint of trade provisions.
Production Operation IUPs, any contract of sale of tin ore exceeding
three years will need to be approved by MEMR.
If AP is selling tin ore to ALK for an indefinite period under the

Cooperation Agreement, AP may be required to obtain approval from
MEMR. We note that AP has confirmed that such approval is
unavailable.
AP should confirm whether the Cooperation Agreement also covers

supply of tin ore produced from AP's Production Operation IUPs No.

Key findings
8. Manpower/Employment 8.2 Provision of employment related documents
Overview The Manpower Reports for ALK and AP, as of 21 March 2011,
provide that ALK has 57 employees and AP has 20 employees.
This part of the Report provides details of matters arising from our
review of the materials provided to us relevant to We have not been provided with any employment related documents
manpower/employment issues. for MSG, HAS, MAP, HSB, LME, APG or HMP.
8.1 Overview of regulatory requirements Recommendation: To assess if there are any employment related
issues, we require all employment documents for the Companies,
Law No 13 of 2003 regarding Manpower (Manpower Law) came into including details of all employees and years of service and wages.
force on 25 February 2003. One of the basic aims of the Manpower
Law is to give better legal protection to workers but at the same time Based on the statement letters from MSG, MAP, HSB, HAS, LME,
create an employment framework that is company friendly and APG and HMP, there are no employees registered under MSG, MAP,
conducive to investment. HSB, HAS, LME, APG and HMP.
The Manpower Law recognizes two types of employment agreements: 8.3 Provision of Manpower Reports
(a) a fixed term employment agreement; and Law No 7 of 1981 regarding Mandatory Manpower Report requires
every company to submit a manpower report to the Ministry of
(b) a permanent (non-fixed term) employment agreement. Manpower and Transmigration or an appointed official. Failure to
comply with this requirement may result in the imprisonment of the
A fixed term agreement may only be made for certain work that management of the company for a maximum of three months or a
according to its type and nature can be completed within a specific maximum fine of IDR 1,000,000.
time period.
We have been provided Manpower Reports for AP and ALK. These
Under Article 163 of the Manpower Law, if there is a change in control reports have been acknowledged by the relevant manpower
of the employer or a change in the status of employer (merger, authorities.
acquisition etc) employees may elect to resign if they are not willing to
continue after the change. If an employee elects to resign on this We have not been provided with Manpower Reports for MSG, HAS,
basis the employee is entitled to receive a severance payment MAP, HSB, LME, APG or HMP.
calculated under Article 156 of the Manpower Law. This severance
payment consists of two components- the number of months the Recommendation: MSG, HAS, MAP, HSB, LME, APG and HMP
employee has been employed and a multiple of the employee’s should provide their respective Manpower Reports, or confirm that
monthly salary. they do not have any employees.

Based on the statement letters from MSG, MAP, HSB, HAS, LME, (a) provide documents showing participation of their employees
APG and HMP, there are no employees registered under MSG, MAP, in the Jamsostek program; or
HSB, HAS, LME, APG and HMP.
(b) confirm that they do not have any employees.
8.4 Participation in Jamsostek Program
Based on the statement letters from MSG, MAP, HSB, HAS, LME,
Law No 3 of 1992 regarding Manpower Social Security and APG and HMP, there are no employees registered under MSG, MAP,
Government Regulation No 14 of 1993, amended most recently by HSB, HAS, LME, APG and HMP.
Government Regulation No 1 of 2009 regarding the Implementation of
Manpower Social Security Program, requires every company which 8.5 Provision of Company Regulations
employs at least ten employees to enrol its employees in the
government employee social security program (known as The Manpower Law requires every company which employs at least
Jamsostek). Failure to comply with this requirement may result in ten employees to establish a set of internal company regulations.
revocation of the company's business licence. Failure to comply with this requirement may result in a fine of between
IDR 5,000,000 and IDR 50,000,000.
According to AP's Manpower Report, AP has registered its employees
under the Jamsostek program. The Jamostek program covers We have been provided with AP and ALK's Company Regulations.
occupational accident security, death security, retirement security and These Company Regulations have been validated by the relevant
healthcare security. local manpower authorities.
According to ALK's Manpower Report and the Certificate of We have not been provided with Company Regulations for MSG, HAS,
Participation issued by PT Jamsostek (Persero), ALK has registered MAP, HSB, LME, APG or HMP.
its employees under the Jamsostek program. The Jamostek program
Recommendation: MSG, HAS, MAP, HSB, LME, APG and
covers occupational accident security, death security, retirement
HMPshould:
security and healthcare security.
(a) provide their respective Company Regulations; or
According to HAS' Certificate of Participation issued by PT Jamsostek
(Persero), ALK has registered its employees under the Jamsostek (b) confirm that they do not have any employees.
Program. However, we have not been provided with HAS' Manpower
Report or other documents describing the scope of coverage of HAS' Based on the statement letters from MSG, MAP, HSB, HAS, LME,
Jamsostek program. APG and HMP, there are no employees registered under MSG, MAP,
HSB, HAS, LME, APG and HMP.
We have not been provided with any documents evidencing
participation of the employees of MSG, MAP, HSB, LME, APG and 8.6 Implementation of Occupational Health and Safety Program
HMP in the Jamsostek program.
For the Cutter Suction Dredger, AP has obtained Operational License
Recommendation: MSG, HAS, MAP, HSB, LME, APG and HMP issued by the Head of Energy and Mining Service Office of Bangka
should: Belitung Islands Province concerning AP's compliance with the

relevant regulation on Occupational Health and Safety Program in The dates on which these searches were conducted are set out in the
respect of the operation of vessel Aega 1. schedules to this Report.
Pursuant to Decrees of the Head of Social and Manpower Service

Office of Pangkalpinang No. 17/P2K3/Dinsosnaker/V/2011 and No.
18/P2K3/Dinsosnaker/V/2011 both dated 25 May 2011, the Social
and Manpower Service Office of Pangkalpinang has validated the
Supervising Committee for Occupational Health and Safety of AP and
ALK which will supervise the implementation of occupational health
and safety procedures in tin mining exploration or exploitation by AP
and ALK.
On 16 May 2011, we were provided Statement Letter No.

030/AP/Legla-L/V/2011 and Statement Letter No. 029/ALK/Legal-
L/V/2011, both dated 11 May 2011 and issued by AP and ALK
respectively, stipulating that both companies have been implementing
the procedure on occupational health and safety in each stage of the
production process and that the procedure is in progress of being
registered with the Government as required by the laws of Indonesia.
8.7 Litigation and breaches
We submitted litigation searches to the Industrial Relations Courts in:
(a) the Special Capital Region of Jakarta Province in Jakarta for

MSG, HAS, MAP, HSB, LME, APG and HMP; and
(b) the Bangka Belitung Islands Province in Pangkalpinang for

AP, ALK and MSG.
The Industrial Relations Court of the Bangka Belitung Islands

Province in Pangkalpinang has confirmed that there is no litigation in
relation to the employees of AP, ALK and MSG.
The Industrial Relationship Court of the Special Capital Region of

Jakarta Province in Jakarta has confirmed that there is no litigation in
relation to the employees of MSG, HAS, MAP, HSB, LME, APG and
HMP.

(c) Industrial Business Licence (Izin Usaha Industri) pursuant to

the Decree of Head of Pangkal Pinang Intergrated Licensing
9. Property and Land Settlement Services Office No. 01236/KEP-IZIN/KPPT/XI/2010 dated 22
November 2010, for the production of tin ingot and valid for as
Overview long as ALK continues its business.
This part of the Report provides details of matters arising from our 9.2 Land settlement in respect of ALK's 6 Production Operation IUPs
review of the materials provided to us relevant to property and
landowner compensation issues. Under the Mining Law, an IUP holder is required to come to an
agreement with and compensate land owners owning land covered by
Key findings the area of the KP/IUP for loss or disruption of their surface rights.
9.1 Location and ownership of ALK's smelter The agreement with land owners can be in the form of lease of land,
sale and purchase or borrow and use of land.
We have been provided with a Land Title Certificate of Right to Build
(Hak Guna Bangunan – HGB) No.679 dated 19 May 2005 for a plot of The Directorate General of Minerals Coal and Geothermal has stated
land with area width of 3,840 m2 and registered under the name of in public forums that compensation should not be based on the value
ALK. According to the Legal Data, the plot of land was acquired by of the underlying minerals. This is logically correct as Indonesian land
ALK pursuant to Deed of Sale and Purchase of Land No. 62/2010 titles do not give any rights over land or minerals underneath the
dated 19 August 2010, executed by ALK and En Fuk (as the original surface. A correct basis for determining compensation where, for
owner of the plot of land). example, a plantation is affected would be to determine the loss of
revenue from the number of plantation trees destroyed.
ALK has informed us that its smelter is located on this plot of land.
ALK has confirmed that ALK has not entered into any settlement
ALK has obtained the following approvals/permits for establishing and agreement with the original owners of the land the subject of ALK's
operating its smelter: Production Operation IUPs (the Bangka Regency Mining Areas) but
has paid the landowners compensation to use the land for tin mining
(a) Building Construction Permit (Izin Mendirikan Bangunan – operations. The main reason for this arrangement is that the original
IMB) by the Mayor of Pangkalpinang under Decree landowners do not wish to release title to the lands to ALK.
No.169/SK/TKLHP/2007 dated 16 July 2007, for the
construction of the smelter; In relation to the above, there may be risk that the landowners prohibit
or restrict access to the Bangka Regency Mining Areas.
(b) Nuisance Permit (Surat Izin Gangguan) pursuant to the
Decree of Head of Pangkal Pinang Intergrated Licensing Also, a location permit is typically required to acquire land for mining
Services Office No.01234/KEP-IZIN/KPPT/XI/2010 dated 22 from the original landowners. ALK has informed us that it is not
November 2010, allowing the use of the plot of land for required to obtain a location permit since the locations under its 6
warehouse and tin smelter and valid till 22 November 2015; production operation IUPs have been designated in the official spatial
and plan (rencana tata ruang & tata wilayah) as mining areas.

Recommendation: ALK to provide OSP with: (a) a Statement Letter

issued by the landowners stipulating their agreement to grant full
access to ALK and utilise the Bangka Regency Mining Areas for tin
mining operations; and (b) a Statement Letter issued by the Regional
Office of National Land Office and/or Bangka Regent testifying the
non requirement of location permit.

circumstances, to the extent that they do not contradict the

Environmental Law.
10. Environment
Under the Old Environmental Law and its implementing regulations:
Overview
(a) an AMDAL is not required to be prepared for general survey
This part of the Report provides details of matters arising from our and exploration activities; and
review of the materials provided to us relevant to the environment.
(b) an AMDAL must be prepared and approved in order for a
10.1 Overview of environmental regulatory requirements business to enter into the exploitation (operation and
production) phase.
On 3 October 2009, the Indonesian Government passed Law No 32
of 2009 regarding Environmental Protection and Management (the Projects (or sub-projects) which are not required to produce an
Environmental Law), replacing Law No 23 of 1997 on Environmental AMDAL may nevertheless still be required to produce Environmental
Management (the Old Environment Law). Management Efforts (UKL) and Environmental Monitoring Efforts
(UPL).
Under the Environmental Law, every business activity having
significant impact on the environment (like mining operations) is Technical guidelines announced by the Minister of Energy and
required to carry out an environmental impact assessment (known as Mineral Resources state that regional governments are responsible
an AMDAL). for approving AMDALs in their respective jurisdictions and for
supervising environmental management and the monitoring efforts of
Based on the assessment of the AMDAL by the Commission of an IUP holder. Further details regarding AMDAL requirements are set
AMDAL Assessment, the Minister, Governor, or Mayor/Regent (in out in Government Regulation No 27 of 1999 on Environmental
accordance with their respective authority) must specify a decree of Impact Assessment, which is the implementing regulation of the Old
environmental feasibility. The decree of environmental feasibilityis Environmental Law.
used as the basis for the issue of an environmental licence by the
Minister, Governor, or Mayor/Regent (as applicable). The Under the Old Environmental Law and its implementing regulations,
environmental licence is a pre-requisite to obtaining the relevant an AMDAL consists of several components, namely:
business licence.
(a) a framework of reference document used to establish the
One of the business activities that must have an AMDAL is the framework for the AMDAL (KA-ANDAL);
exploitation of mineral resources. The Minister for Environmental
Affairs is responsible for issuing a list of the types of businesses (b) an environmental impact analysis report (ANDAL);
which must produce an AMDAL as a pre-requisite to being licenced. (c) an environmental management plan (RKL); and
There are only a few implementing regulations that have been issued
(d) an environmental monitoring plan (RPL).
in relation to the Environmental Law. As a result, the implementing
regulations of the Old Environment Law still apply in some

Although the components of an AMDAL have not been specified, the AP's Exploration Environmental Feasibility Approval shows that AP
Environmental Law stipulates that an AMDAL document must contain has complied with the requirements to produce an AMDAL and obtain
the following: approval for its AMDAL document.
(a) an assessment of the impact of the business activities plan; We have not been provided with an AMDAL document for AP's
Exploration IUPs.
(b) an evaluation of the activities in the area surrounding the
location of the business; Under AP's Exploration Environmental Feasibility Approval, AP is
required to submit periodical reports on the implementation of
(c) feedback from the community on the business activities plan; environmental management and monitoring. The periodical reports
must be submitted every six months to the Governor of Bangka
(d) an estimation of the impact and significance of the impact that Belitung Islands Province.
may occur if the business activities plan is implemented;
We have not been provided with documents showing AP's
(e) a holistic evaluation of the impact that may occur to determine compliance with the requirement to submit periodical reports. Failure
the environmental feasibility; and to submit the periodic reports may result in the revocation of AP's
Exploration Environmental Feasibility Approval, which in turn may
(f) an environmental management and monitoring plan.
lead to revocation of the business licences (i.e. the Exploration IUPs).
In addition to the requirement to obtain an environmental licence,
We have not been provided with an AMDAL document or an
every business and/or activity that has the potential to cause a
Environmental Feasibility Approval for AP's Production Operation
significant impact on the environment, a threat to the ecosystem and
IUPs. The AMDAL document should have been prepared by AP
life, and/or human health and safety must also conduct an
during the exploration stage and the Environmental Feasibility
environmental risk analysis.
Approval should have been obtained by AP before it began its
A number of other regulations also apply to mining operations, production and operation activities.
requiring operators to obtain licences for the disposal of waste water
Recommendation: AP should provide the following documents:
and toxic or hazardous materials.
(a) the AMDAL document in respect of its Exploration IUP and
Key findings
documents showing compliance with the requirement to
10.2 AP's environmental compliance documents submit periodical reports; and
AP has obtained Environmetal Feasibility Approval in respect of its (b) the AMDAL document and Environmental Feasibility Approval
Exploration IUP. This is evidenced by Decree of the Governor of in respect of its Production Operation IUPs.
Bangka Belitung Islands Province No. 188.44/316/BLHD/2010 dated
On 6 May 2011, AP provided us with the KA-ANDAL for AP's
31 March 2010 (the AP's Exploration Environmental Feasibility
Exploration IUPs. The ANDAL, RKL and RPL for AP's Exploration
Approval).
IUPs are still outstanding.

AP explained to us that because AP's Production Operation IUPs updated in 2008 to show ALK as the correct holder of the KP.
originate from AP's Exploration IUP (Exploration IUP No. 170), the However, the AMDAL document and Environmental Feasibility
AMDAL document and Environmental Feasibility Approval are Approval were not updated.
incorporated into AMDAL document and Environmental Feasibility
Approval for the Exploration IUP. ALK has obtained Environmental Feasibility Approval in respect of its
Production Operation IUPs. This is evidenced by Decree Head of
We require supporting documents from AP stipulating that AP's Department of Environmental of Regency of Bangka No.
Production Operation IUPs originate from Exploration IUP No. 170 . 660/253/LH/2007 dated 9 May 2008 (the ALK's Production
Environmental Feasibility Approval).
We will also confirm this issue by conducting verification searches for
AP's 2 new Production Operation IUPs (Production Operation IUP No. Under ALK's Production Environmental Feasibility Approval, ALK is
409 and No. 418). required to submit periodical reports on the implementation of
environmental management and monitoring. The periodical reports
10.3 ALK's environmental compliance documents must be submitted every six months to the Regent of Bangka.
ALK has obtained Environmental Feasibility Approval for its We have not been provided with documents showing ALK's
Processing and Refining KP. This is evidenced by Decree of the compliance with the requirement to submit periodical reports in
Mayor of the City of Pangkalpinang No. 153 TAHUN 2005 dated 17 respect of its Production Operation IUPs. Failure to comply may
June 2005 (the ALK's KP Environmental Feasibility Approval). result in the revocation of ALK's Production Environmental Feasibility
Approval, which in turn may lead to revocation of the business licence
ALK's KP Environmental Feasibility Approval shows that ALK has (i.e. the 6 Production Operation IUPs).
complied with the requirements to produce an AMDAL document and
obtain approval for its AMDAL document. Recommendation:
Under ALK's KP Environmental Feasibility Approval, ALK is required ALK should update its AMDAL document and its Environmental
to submit periodical reports on the implementation of environmental Feasibility Approval to reflect ALK as the current owner and operator
management and monitoring. The periodical reports must be of the smelter.
submitted every six months to the Mayor of the City of Pangkalpinang.
ALK should provide documents showing its compliance with the
We have not been provided with documents showing ALK's requirement to submit periodical reports in relation to its Processing
compliance with the requirement to submit periodical reports. Failure and Refining KP.
to comply may result in the revocation of ALK's KP Environmental
Feasibility Approval, which in turn may lead to revocation of the ALK should provide documents showing its compliance with the
business licence (i.e. the Processing and Refining KP). requirement to submit periodical reports in respect of its mining
operations under its 6 Production Operation IUPs.
Both the AMDAL document and ALK's Environmental Feasibility
Approval are issued under the name of CV Alam Lestari Kencana, a
limited partnership of ALK's founders (the original holder of the
Processing and Refining KP). The Processing and Refining KP was

10.4 ALK's Increased Production Capacity Under MSG's Environmental Feasibility Approval, MSG is required to
submit periodical reports on the implementation of environmental
ALK's Processing & Refining KP was issued in 2006. It was later management and monitoring. The periodical reports must be
amended in 2008 when its production capacity was increased from submitted every six months to the Governor of Bangka Belitung
2,000 MT/year to 6,000 MT/year. Province.
Under ALK's KP Environmental Feasibility Approval, if ALK increases Recommendation: MSG should provide the periodical reports on the
its production capacity, it must: implementation of environmental management and monitoring.
(a) produce a new AMDAL document; and 10.6 Storage and Use of Dangerous Goods and Hazardous
Substances
(b) obtain a new Environmental Feasibility Approval.
ALK previously held a Permit for Storage and Use of Dangerous
ALK's existing KP Environmental Feasibility Approval will become Goods and Hazardous Substances. This permit was for:
invalid if the above conditions are not satsified.
(a) storing uncleaned oil (minyak kotor); and
We have not been provided with ALK's new AMDAL document or its
new Environmental Feasibility Approval. (b) using oil slob as a fuel substitute in the tin furnace.
On 19 May 2011, we were provided with a Statement Letter dated 11 The permit was issued on 8 October 2008, pursuant to Decree of the
May 2011 issued by ALK, stipulating that in respect of increased State Minister for the Environmental Affairs No. 776 year 2008, and
production capacity, ALK is in the process of adjusting the existing expired on 8 October 2010.
AMDAL documents and Environmental Feasibility Approval.
ALK has recently applied to renew the permit. We have seen
Recommendation: ALK should provide an updated AMDAL evidence of receipt by Ministry of Environment of ALK's renewal
document and Environmental Feasibility Approval. ALK should also application letter. ALK's renewal application letter was received by the
provide a Statement Letter from the Mayor of Pangkalpinang clarifying Ministry of Environment on 26 April 2011.
that ALK's existing KP Environmental Feasibility Approval is still
deemed as valid pending the issue of the updated AMDAL document The permit requires that a renewal application be made at least 2
and adjusted Environmental Feasibility Approval. months before the expiry of the permit. ALK's renewal application was
received by the Ministry of Environment nearly 6 months after the
10.5 MSG's Environmental Compliance Documents permit had expired.
MSG obtained an Environmental Feasibility Approval in respect of its Under the Decree of the State Minister for the Environmental Affairs
Exploration IUPs. This is evidenced by Decree of the Governor of No. 776 year 2008, ALK is obliged to submit an activity realisation
Bangka Belitung Province No. 188.44/778/BLHD/2010 dated 19 report on the utilisation of hazardous and toxic materials and the
October 2010 (the MSG's Environmental Feasibility Approval). results of air emissions tests at least every 3 months to the:

(a) State Minister for the Environmental Affairs c.q. Deputy of Recommendation: ALK to provide the contract with the said handler
Management of Hazardous and Toxic Materials and Waste of of waste disposal, and evidence of registration of the said handler
Hazardous and Toxic Materials; with the local environmental authorities.
(b) Governor of Bangka Belitung c.q. Head of Regional 10.8 Environmental breaches
Environmental Impact Management Board of the Province of
Bangka Belitung; Based on Legal Data provided, we are unable to identify whether the
Mining Companies have committed any environmental breaches or
(c) Mayor of Pangkalpinang c.q Head of the Environmental, potential breaches.
Gardening and Cleanliness Service; and
(d) Head of Environmental Management Centre for the Region of

Sumatra.
We have been advised (by Statement Letters dated 25 April 2011)

that AP and MSG do not currently store and use dangerous goods
and hazardous substances in their respective operations.
Failure to comply with the requirement to obtain a Permit for Storage

and Use of Dangerous Goods and Hazardous Substances may result
in the revocation of ALK's operational licence (i.e. ALK's KP).
Recommendation: ALK should provide the renewed Permit for

Storage and Use of Dangerous Goods and Hazardous Substances.
10.7 Waste Disposal Management

Tin mining operations generate various waste products, including
smelter slag and/or discarded gravel. Smelter slag can contain traces
of lead and arsenic, so disposal in a safe way is important in order to
avoid potential liability for harm to the environment and possible
breaches of the environmental compliance provisions.
AP and MSG have confirmed via Statement Letters dated 25 April
2011 that currently they do not produce waste.
ALK has confimed that ALK is currently producing waste, whereas the
disposal of such waste is being handled by another company
registered at the local environmental authorities.

(b) payment of the applicable costs for the compensation for the
loss of the existing trees, as well as other payment obligations;
11. Forestry
(c) payment of an amount representing investment costs for
Overview forest management or utilisation to any holders of an existing
forest utilisation licence - this is based on the coverage of the
This part of the Report provides details of matters arising from our forest area under the Exploration Permit;
review of the materials provided to us relevant to forestry issues.
(d) the holder may not construct permanent establishments;
11.1 Overview of forestry regulatory requirements
(e) implement forest protection measures including (i) securing
Law No 41 of 1999 on Forestry as amended Law No 19 of 2004 the licence holders working area, including the forest, the
(Forestry Law) prohibits open-cut mining in a protected forest area forest area and forest products including plants and animals
and requires an IUP holder and contractors under Contracts of Work (ii) preventing forest destruction caused by cattle and humans,
to obtain an "izin pinjam pakai" (borrow and use permit) from the forest fires, pests, and other natural diseases (iii) taking initial
Forestry Department for mining operations in: actions which are required to overcome forest security
disturbance in the working area; and (iv) reporting every
(a) forest areas producing forest products (that is, those areas breach of law in the working area to the closest forestry
that have the primary purpose of producing forest products); agency;
and
(f) undertake reclamation and reforestation of the forest areas
(b) protected forest areas. prior to the expiry of the permit; and
This requirement is implemented by the Minister of Forestry (g) grant easy and continuing access to forest authorities from
Regulation No P.18/Menhut-II/2011 TAHUN 2011 on the Guidelines both the central and regional offices to conduct field
for the Borrow-Use of Forest Areas and Government Regulation No monitoring and evaluation.
24 of 2010 on the Utilisation of Forest Area (the Pinjam Pakai
Regulations). The Pinjam Pakai Regulations provide that compensation, either in
the form of replacement land or a monetary payment, must be
For purposes of conducting general survey and exploration activities provided for the use of the forest area. The compensation:
in the forest areas, an IUP holder and the contractors under the
Contracts of Work are required to apply for an exploration permit from (a) will be in the form of land that is not in a forest area if the area
the Forestry Department (the Exploration Permit). of forest in the province is less than 30% of the total area of
the province and with the compensation ratio of at least 1:2;
Upon obtaining an Exploration Permit, a holder must comply with the or
following obligations:
(b) will be in the form of non tax state revenue (known as PNBP)
(a) prepare and submit a compliance report to the Minister on a and reforestation if the area of the forest in the province is
semester by semester basis; more than 30% of the total area of the province.

The amount of PNBP is governed by Government Regulation No 2 of of mining activities may only be obtained for a maximum forest area
2008 which sets out the following general formula: equivalent to 10% of the total concession or managed areas.
PNBP = (L1 x tariff) + (L2 x 4 x tariff) + (L3 x 2 x tariff) 11.2 Mining operations in protected forest areas
IDR/Year
Mining operations in protected forest areas can only be conducted
Where: underground and must obtain the borrow and use permit within the
protected forest areas.
L1 is the area (in hectares) affected permanently by the use
of the forest area for supporting infrastructure and the The borrow and use permit will typically specify:
opening of a mining site during the utilisation period of the
forest area; (a) the boundaries of the mining operations within the protected
forest area;
L2 is the forest area (in hectares) temporarily used which will
be reclaimed; and (b) the permitted duration of the mining operations in that area;
and
L3 is the area (in hectares) affected permanently by the use
of the forest area which cannot be reclaimed. (c) the environmental sustainability requirements that apply.
The tariff amounts are: Prior to the issue of the borrow and use permit, the Minister of
Forestry will first issue a principal approval (persetujuan prinsip or PP).
(a) between IDR 2,250,000 per hectare per year and The PP sets out a number of undertakings that must be fulfilled by the
IDR3,000,000 per hectare per year for mining activities in a applicant within two years. The PP may be extended at the discretion
protected forest; and of the Ministry of Forestry. The applicant must fulfil all of the
undertakings under the PP before the Ministry of Forestry will issue
(b) between IDR 1,800,000 per hectare per year and IDR the borrow and use permit.
2,400,000 per hectare per year in a production forest.
11.3 Recent development in forestry in Indonesia
Actual calculations depend on the situation each year (eg how much
reclamation has occurred). The government enacted a Presidential Instruction on 20 May 2011
(the PI 10/2011) which refers to a moratorium/suspension on the
Borrow and use permits are valid for 20 years and may be extended if issuance of certain licenses on utilisation/commercialisation of forest
the KP/IUP remains in force (without prejudice to the rights of the areas (including the borrow and use permit).
Minister of Forestry to revoke the permit if any applicable laws or
regulations have been breached). PI 10/2011 instructs Ministry of Forestry to suspend the issuance of
new licenses for forest utilisation and commercialisation of primary
A "10% rule" in force contemplates that in the event that forest areas natural forests and peat land located in:
are subject to a forestry concession (either granted to private parties
or state owned companies/entities), a pinjam pakai for the purposes (a) conservation forests;

(b) protected forests; and Key findings
(c) production forests (including limited production forests, 11.4 Possible Use of Forestry Area by ALK in Respect of Its 6
permanent production forests, convertible production forests). Production Operation IUPs
An indicative map showing areas in Indonesia classified as primary ALK has been granted 6 Production Operation IUPs which are all
natural forests and peat lands in which suspension of forestry located in onshore Bangka Regency. The Forestry Service Office of
commercialisation/utilisation applies is attached to PI 10/2011. the Bangka Regency has confirmed that the locations of these 6
Production Operation IUPs are all outside the forest area of Bangka
Suspension of the issuance of new licenses / permits / Regency.
recommendations and the granting of land title is to be applicable for
two years commencing from 20 May 2011 (ending on 20 May 2013). However, we have received confirmation from the Forestry Planology
Agency of the Department of Forestry of the Republic of Indonesia
The suspension shall not be applicable for utilisation of primary that, while five of the mining areas under the Production Operation
natural forests and peat land forests for: IUPs of ALK are located in a Non Forestry Area (Area Penggunaan
Lain), the mining area under ALK's Production Operation IUP No.
(a) applications which have been granted an in-principle approval 188.4/075/Tamben/2010 dated 11 January 2010 (area width
from the Ministry of Forestry (for a borrow use permit, an in- approximately 3 hectares) is located in a Permanent Production
principle approval is the initial borrow use permit where the Forest (Areal Hutan Produksi Tetap). This directly contradicts the
holder is required to satisfy certain obligations before it can confirmation received regionally.
be granted a final borrow use permit);
Recommendation: ALK should have a Borrow Use Permit to mine in
(b) implementation of national development which is vital ALK's Production Operation IUP No. 188.4/075/Tamben/2010 dated
including for geothermal, oil and gas, electricity and areas for 11 January 2010 which is located in a Permanent Production Forest
rice paddy and sugarcane; (Areal Hutan Produksi Tetap). ALK to confirm on the borrow use
permit.
(c) extension of existing forest utilisation/commercialisation
provided the operating business license is still valid; and
(d) for restoring the ecosystem.
Recommendation: With regard to the mining area under ALK's

Production Operation IUP No. 188.4/075/Tamben/2010 dated 11
January 2010 which has been confirmed as located in a Permanent
Production Forest (Areal Hutan Produksi Tetap), ALK will need to
check whether the overlapped areas are located in primary natural
forests and/or peat land.

(f) Tax Court (AP, ALK, MAP, HSB, LME, HAS, MSG, HMP and
APG).
12. Litigation and arbitration
Pursuant to the results of our independent searches, the Companies,
Overview the members of Board of Directors, Board of Commissioners and the
Companies' shareholders are not registered in the registers of the
This part of the Report provides details of matters arising from our relevant courts/arbitration institution either as a claimant, respondent,
review of the materials provided to us relevant to existing, pending or plaintiff and/or defendant.
potential litigation or arbitration (other than any litigation relating to
employment issues section 8.7). The dates of which these searches 12.2 Litigation
were conducted are set out in the schedules to this Report.
The Legal Data did not contain any litigation related documents.
12.1 Conducting searches
Litigation searches are conducted in Indonesia by obtaining a

statement letter from the courts having jurisdiction over the business
domicile of a company and the courts located in the province in which
the company carries on its business. This involves physically visiting
the relevant courts and submitting an application letter to obtain
formal statement letters from the courts.
We have conducted litigation searches in the following courts:
(a) District Courts of Pangkal Pinang (for AP and ALK),

Sungailiat (AP), North Jakarta (MAP, HSB, LME, HAS, MSG,
HMP) and East Jakarta (APG);
(b) Commercial Court of Jakarta (AP, ALK, MAP, HSB, LME,

HAS, MSG, HMP and APG);
(c) State Administrative Court of Palembang (AP, ALK & MSG)

and Jakarta (MAP, HSB, LME, HAS, APG and HMP);
(d) Industrial Relationship Court of Pangkalpinang (AP, ALK

&MSG) and Jakarta (MAP, HSB, LME, HAS, MSG, APG,
HMP);
(e) Indonesian National Board of Arbitration (AP, ALK, MAP,

HSB, LME, HAS, MSG, HMP and APG); and

13. Tax, Financial and Technical Due Diligence
Overview
We have not conducted a tax, financial or technical due diligence.
As a result, we cannot confirm whether any of the Companies have

entered into financing arrangements with third parties.
Recommendation: We recommend that a tax, financial and technical

due diligence be conducted (if it has not already been conducted).
It is not unusual for Indonesian companies to have taxation arrears

and accrued liabilities to the tax office. These liabilities may not come
to light until considerable time in the future.
We recommend that tax advisers conduct a comprehensive tax due

diligence to identify and quantify any potential liabilities to the tax
office.

Schedule 1 Term Meaning
GLOSSARY Legal Data means the documents made available to Oentoeng

Suria & Partners and reviewed by Oentoeng Suria &
Partners for the purpose of this Report.
The meanings of terms used in this document are set out below.
MOLHR means Menteri Hukum dan Hak Asasi Manusia
Term Meaning Republik Indonesia (Minister of Law and Human
Rights of the Republic of Indonesia).
BKPM means Badan Koordinasi Penanaman Modal (the
Indonesian Capital Investment Coordination Board). MEMR means Menteri Energi dan Sumber Daya Mineral
Republik Indonesia (Minister of Energy and Mining
Business means the business of the Mining Companies. Resources of the Republic of Indonesia).
Material Contracts means each of the contracts identified under Section

Company Law means Law No 40 of 2007 on Limited Liability
7 of this Report.
Companies.
Materiality means issues regarded by us to be material to the

Dollars and $ means, unless stated otherwise, United States
Threshold business operations of the Companies.
Dollars.
General Meeting Mining means either a KP issued under the Old Mining Law
means a general meeting of the shareholders of the
of Shareholders Authorisation or an IUP issued under the Mining Law.
company, which may be an extraordinary general
meeting or an annual general meeting.
Mining Law means Law No 4 of 2009 on Mineral and Coal Mining.
IUP means Izin Usaha Pertambangan (mining business
licence) issued under the Mining Law. Old Mining Law means Law No 11 of 1967, dated 2 December 1967,
Regarding the Main Provisions of Mining.
Investment Law means Law No 25 of 2007 on Capital Investment.
PMA Company means Perusahaan Penanaman Modal Asing (foreign
KP means Kuasa Pertambangan (mining licence) issued capital investment company) – an Indonesian
under the Old Mining Law. incorporated company which has received approval
from the BKPM for foreign investment.
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 1 Glossay 90
Term Meaning
Report means this legal due diligence report prepared by

Oentoeng Suria & Partners, dated 22 June 2011.
Scope of Work means the scope of work as agreed by you and as

set out in Annexure A of Schedule 2.
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 1 Glossary 91
2.2 Excluded matters reviewed and investigations made by us

Schedule 2 as part of the legal due diligence.
We have not made enquiries in relation to,
SCOPE OF WORK, ASSUMPTIONS AND and are not responsible for reporting on 5. Assumptions
QUALIFICATIONS matters which are not included in the
Scope of Work. 5.1 General
In particular, we have not conducted a For the purposes of preparing this Report
1. Reliance we have made certain assumptions. The
review of documents related to tax,
financial or technical matters. fact that we have made an assumption in
This Report is confidential. It has been
this Report does not imply that we have
prepared for the benefit of the Leviathan
3. Materials reviewed made any enquiry to verify that
Group solely for the purpose of assessing
assumption.
the legal risks associated with the In preparing this report we have relied
Proposed Transaction and may be relied solely on the Legal Data listed in The persons involved in the production of
on by the Leviathan Group. Attachment 1 to this Report. this Report are not to the best of their
knowledge aware of any circumstances
This Report is not to be relied on by, or Where a part of this Report specifically which would affect the correctness of any
disclosed to, any other person or for any lists material reviewed, that material has assumption.
other purpose or quoted or referred to in only been reviewed for the purposes of
any public document or filed with any that part of the Report. No assumption is limited by reference to
government or other agency or other any other assumption or qualification.
person except with our prior written There may be information provided to us
consent (and in accordance with any or which is available on a public register This Report deals only with the laws of the
conditions stated in such consent). which we have not searched, or Legal Republic of Indonesia in force at the date
Data outside the Scope of Work which we of this report, and not with any other
2. Scope have not reviewed, and which, if reviewed, applicable laws.
would have raised issues properly the
2.1 Legal due diligence 5.2 Information
subject of this Report.
This Report contains the results of our We have assumed that:
4. Materiality
legal due diligence review of issues
arising in relation to each of the Our instructions were to report on issues (a) the parties responsible for
Companies. The scope of this legal due which meet the Materiality Threshold compiling the Legal Data,
diligence and our approach in undertaking arising in relation to each of the including the Leviathan Group
the legal due diligence is set out more Companies. This Report covers those and its advisers, have exercised
fully in Annexure A of this Schedule. issues but should not be taken to their judgment as to the
comprehensively cover all documents information that they consider
material to the Proposed
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 2 Scope of work, assumptions and qualifications 92
Project Awesome –DUE DILIGENCE REPORT
Transaction. We are not able to (g) the Legal Data has been filed the operation of part or all of that
comment on whether there are and indexed correctly, except to document, all conditions
any other matters not brought to the extent we have identified any precedent have been satisfied or
your attention which you would inconsistency or issue in this waived in accordance with the
regard as influential in deciding Report. terms of the document;
whether or not to participate in the
Proposed Transaction; (h) (e) the authenticity of all signatures,
seals and dates and of any stamp
(b) all documents provided to us by 5.3 Assumptions as to validity of duty paid or marked on
the Leviathan Group and/or its documents documents;
advisers are reliable, accurate
and complete; In relation to the Legal Data, we have (f) that all documents that should
assumed as follows: have been stamped, have been or
(c) no document has been tampered will be duly stamped and will not
with, modified or edited in any (a) the completeness and conformity incur penalties or fines for late or
way by any person once it has of originals of all copies of inadequate stamping; and
been made available documents (including unexecuted
(electronically or otherwise) to copies and documents placed (g) that the relevant parties have not
Oentoeng Suria & Partners, electronically provided to us); engaged in any conduct which
except to the extent notified to us; amounts to a breach of any of
(b) where a document reviewed was their respective contractual
(d) we have received accurate in a draft form, that it has been or obligations and the contracts have
notification by email from the will be executed in the form of that not been terminated or varied;
Leviathan Group when a draft;
document or information has been except to the extent expressly identified in
(c) that all documents are within the this Report.
added to the Legal Data;
capacity and power and for the
(e) where we have submitted corporate benefit of, and have In respect of any meetings of the Boards
requests for information, the been or will be validly authorised, of Directors or Commissioners, or
responses to those requests executed and delivered by, each shareholders of the Companies (as the
either by the Leviathan Group or party to them, and constitute legal, case may be):
its advisers are reliable, accurate valid and binding obligations of
and complete; those parties, enforceable in (a) every meeting was properly
accordance with their terms under convened;
(f) the Master List for each Company all applicable laws;
is an accurate record of the Legal (b) all directors who attended and
Data (electronically or otherwise); (d) that in respect of any documents voted at a meeting were entitled
and containing conditions precedent to to do so;
(c) the resolutions of any meeting (c) we conducted searches of certain collate such information and will
were properly passed; government records (as expressly not be taken to be aware of such
stated in the body of this Report). information for the purposes of
(d) all provisions relating to the The information contained in this Report;
declaration of directors' interests those government records is not
or the power of interested necessarily accurate or up to date. (f) the statements made and the
directors to vote were duly We have not independently opinions expressed in this Report
observed; and verified that information. A are given only to the extent that a
number of the searches were law firm, having the role described
(e) the minutes of a meeting conducted through third party in this Report and more
constitute a true and correct searching services and we have specifically in the Scope of Work,
record of the matters dealt with at relied on the accuracy and could reasonably be expected to
that meeting, competence of those search have become aware of relevant
services. Searches were facts and to have identified
except to the extent expressly identified in implications of those facts;
conducted at the dates indicated
this Report.
in the body of this Report and we
have not obtained updated (g) we specifically disclaim any
6. Qualifications special knowledge, skills or
searches;
expertise in any capacity other
This Report is subject to the following
(d) Any of the Companies may have than that of legal advisers,
qualifications:
signed an agreement or including any of a financial,
(a) as there is no readily accessible, agreements referring the business, statistical, information
publicly available register of resolution of disputes to technology, insurance, accounting,
company information in Indonesia, arbitration or another form of taxation or valuation nature or
our comments in relation to the private dispute resolution. Where otherwise;
corporate status of the private dispute resolution
processes have been agreed to, a (h) in preparing this report, we have
Companies are based solely on
search of court records will not not:
the Legal Data and will only
highlight issues arising from the reveal the existence of any such
(i) reviewed any financial
Legal Data; disputes;
statements of any of the
(e) information concerning The Companies;
(b) we have not made any
investigations, enquiries or Companies may be known by
(ii) interviewed the
searches other than those partners or employees of
Companies' management;
specifically referred to in this Oentoeng Suria & Partners who
Report. We have not conducted have not been directly involved in (iii) considered in detail
any searches outside of Indonesia; the preparation of this Report – whether all procedural
we have not made any attempt to
steps have been in force as at the date of this Report. For

complied with prior to the the avoidance of doubt, Oentoeng Suria &
grant of any licences, Partners is under no obligation to update
permits, consents, this Report or advise any recipient of this
registrations and Report about any changes in law after the
approvals. Our date of this Report.
assumption has been that
if a licence, permit, 8. Date
consent, registration or
approval has been This Report is given on 22 June 2011.
granted, it is valid;
(iv) carried out any financial,

accounting, taxation,
operational or geo-
technical analysis in
relation to the Companies
or their activities;
(v) reviewed any

environmental report or
environmental study;
(vi) undertaken any

commercial analysis of
the Proposed Transaction;
(vii) conducted any licence

related searches; or
(viii) undertaken any physical

examination of any of the
Companies' KPs or IUPs.
7. Applicable laws
This Report has been prepared having

regard to the laws of Indonesia which are
Annexure A
SCOPE OF WORK
Conducting Indonesian legal due diligence on the Companies.
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Annexure A Scope of Work 96
Schedule 3 Directors Sumadi (President Director)

Andrianus David Sim
CORPORATE DETAILS
Alwi Sutedjo Kumala
Saman Tedja
1. PT AEGA PRIMA Tony Siswoyudho
1.1 General corporate details
Commissioners Bunawan Muslim (President
Comissioner)
Registration Number 31051100062
Sulaiman Tarigan
Former Name (if any) - Heri Bernadus Susanto
Fong Jau Seng
Incorporation Date 22 July 2008
1.2 Shareholders
Company Type Company limited by shares
PMA or Ordinary Company PMA Shareholder Number of shares
Authorised Capital Amount IDR 10,000,000,000

PT Havilah Abadi Sejahtera 160,000
Number of Shares 200,000

PT Mulia Andalan Persada 40,000
Share Type Ordinary
Total 200,000
Paid Up Capital Amount IDR 10,000,000,000
Domicile Bangka Tengah Regency
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 3 Corporate Details 97
Project Awesome –Due Diligence Report
1.3 Articles of Association – Summary
Restrictions on Any shareholder wishing to transfer its shares

transfer must first obtain approval at a General
Meeting of Shareholders or from the relevant
authority.
Security over No restriction.

shares
Pre-emptive rights Any shareholder wishing to transfer its shares

must first offer the shares to existing
shareholders by specifying the price and
terms and conditions of the sale. The
shareholder must notify the Board of Directors
in writing of the offer.
Change of control No change of control provisions.
Other A resolution at a General Meeting of

Shareholders must be passed by
shareholders holding a minimum of 80% of
the total issued shares.
2. PT ALAM LESTARI KENCANA Commissioners Chang Eng Thing (President

Commissioner)
Sulaiman Tarigan
Registration Number 310215100564

2.2 Shareholders
Former Name (if any) -

Shareholder Number of shares
Incorporation Date 7 April 2008
PT Havilah Abadi Sejahtera 9,900
PT Havilah Sukses Bersama 100
PMA or Ordinary Company PMA Company
Total 10,000
Share Type Ordinary
Domicile Pangkalpinang City, Bangka

Belitung Island Province
Directors Saman Tedja (President Director)
Alwi Sutedjo Kumala
Heri Bernadus Susanto
Restrictions on Shares can only be held by Indonesian

transfer nationals or legal entities. If, due to inheritance,
marriage or other reasons, the shares are no
longer held by Indonesian nationals or legal
entities, the shares must be transferred to
Indonesian nationals or legal entities within one
year of the inheritance, marriage or otherwise.
Security over No restrictions.

shares

shareholders by specifying the price and terms
and conditions of the sale.
3.2 Shareholders
3. PT MITRA SUKSES GLOBALINDO
PT Leviathan Mining Ekaprima 8,000
Registration Number 09.01.1.51.27210
PT Mulia Andalan Persada 2,000

Total 10,000
Incorporation Date 21 November 2008
Company Type Company limited by shares 3.3 Articles of Association – Summary
PMA or Ordinary Company PMA Restrictions on Shares can only be held by Indonesian
transfer nationals or legal entities. If, due to
inheritance, marriage or other reasons, the
shares are no longer held by Indonesian
nationals or legal entities, the shares must be
Number of Shares 10,000 transferred to Indonesian nationals or legal
entities within one year of the inheritance,
Share Type Ordinary Shares marriage or otherwise.
Paid Up Capital Amount IDR 10,000,000,000 Security over shares No restrictions.
Domicile North Jakarta

Directors Kadrik (President Director) shareholders by specifying the price and terms
Toni Siswoyudho and conditions of the sale. The shareholder
must notify the Board of Directors in writing of
Resno Artanto the offer.
Commissioners Bunawan Muslim (President Change of control No change of control provisions.

Comissioner)
Singgih
Other A resolution at a General Meeting of
Rudy Wijaya Liong Shareholders must be passed by shareholders
holding a minimum of 80% of the total issued

shares.
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 3 - Corporate Status 102
4. PT HAVILAH ABADI SEJAHTERA Commissioners Mustakim

4.2 Shareholders
Registration Number 09.01.1.51.28807


Top Yield Holdings Limited 9,900
Incorporation Date 5 March 2008

Pt Andalan Persada Globalindo 100
Company Type Company with limited by shares

Total 10,000
PMA or Ordinary Company PMA

Restrictions on No restrictions.
Number of Shares 25,000 transfer
Share Type Ordinary Security over No restrictions.

shares
Domicile North Jakarta must first offer such shares to existing
Directors Aripin Bunarwan (President shareholder must notify the Board of Directors
Director) in writing of the offer.
Rudy Wijaya Liong

5.2 Shareholders
5. PT MULIA ANDALAN PERSADA (MAP)
5.1 General corporate details Shareholder Number of shares
Registration Number 09.01.1.46.30546 Hadi Wiratama Legawa 300
Former Name (if any) - Tsjiam Gunawan 300
Incorporation Date 3 December 2010 Total 600
PMA or Ordinary Company Ordinary Company

Authorised Capital Amount IDR 1,000,000,000 inheritance, marriage or other reasons, the
Number of Shares 1,000 nationals or legal entities, the shares must
be transferred to Indonesian nationals or
legal entities within one year of the
Share Type Ordinary Shares inheritance, marriage or otherwise.
Paid Up Capital Amount IDR 600,000,000 Security over shares No restrictions.
Domicile North Jakarta Pre-emptive rights Any shareholder wishing to transfer its
shares must first offer the shares to existing
Directors Hadi Wiratama Legawa shareholders by specifying the price and
terms and conditions of the sale.
Commissioners Tsjiam Gunawan

Other To sell, assign, release rights or put as

security for a debt all or the majority of the
assets of MAP in one financial year
(whether in one or more stand-alone or
related transactions), approval must be
obtained at a General Meeting of
Shareholders. The General Meeting of
Shareholders must be attended by
shareholders or representatives of
shareholders who hold at least ¾ of the
issued shares with valid voting rights and
the resolution must be passed by at least ¾
of the votes validly cast.
6.2 Shareholders
6. PT HAVILAH SUKSES BERSAMA
Registration Number 09.01.1.51.28992 Aurelia Supardi 1,250
Former Name (if any) - Rudy Wijaya Liong 1,250
Incorporation Date 5 March 2008 Total 2,500
PMA or Ordinary Company Ordinary Company

Authorised Capital Amount IDR 1,000,000,000 inheritance, marriage or other reasons, the
Number of Shares 10,000 nationals or legal entities, the shares must
be transferred to Indonesian nationals or
legal entities within one year of the
Share Type Ordinary Shares inheritance, marriage or otherwise.
Paid Up Capital Amount IDR 250,000,000 Security over shares No restrictions.
Domicile North Jakarta Pre-emptive rights Any shareholder wishing to transfer its
shares must first offer the shares to existing
Directors Aurelia Supardi shareholders by specifying the price and
shareholder must notify the Board of
Commissioners Rudy Wijaya Liong Directors in writing of the offer.
7.2 Shareholders
7. PT LEVIATHAN MINING EKAPRIMA
Registration Number 09.01.1.51.25962 Grand Succeed Investments 2,970

Limited

PT Hamparan Mineral Persada 30
Incorporation Date 26 August 2008

Total 3,000

PMA or Ordinary Company PMA
Restrictions on No restrictions.
Authorised Capital Amount IDR 1,500,000,000 transfer
Number of Shares 3,000 Security over No restrictions.

shares
Share Type Ordinary Shares
Paid Up Capital Amount IDR 1,500,000,000 must first offer such shares to existing
Domicile North Jakarta shareholder must notify the Board of Directors
in writing of the offer.
Directors Arif (President Director)
Muliawarman
Other Not applicable.

Commissioners Mustakim
8.2 Shareholders
8. PT ANDALAN PERSADA GLOBALINDO
Registration Number AHU-0025425.AH.01.09.Tahun Suwandi Sukarti 250

2010
Toni Siswoyudho 250
Total 500
Incorporation Date 6 April 2010
PMA or Ordinary Company Ordinary Company Restrictions on Shares can only be held by Indonesian
inheritance, marriage or other reasons, the
Authorised Capital Amount IDR 1,000,000,000 shares are no longer held by Indonesian
Number of Shares 2,000 transferred to Indonesian nationals or legal
marriage or otherwise.
Share Type Ordinary
Security over No restriction.

Paid Up Capital Amount IDR 250,000,000 shares
Domicile East Jakarta Pre-emptive rights Any shareholder wishing to transfer its shares
Directors Suwandi Sukarti shareholders by specifying the price and
Commissioners Toni Siswoyudho

9.2 Shareholders
9. PT HAMPARAN MINERAL PERSADA
Registration Number AHU-0025278.AH.01.09 (based Ricky Ferlanico 125

on the company register
maintained by the MOLHR) Tong Pin 125
Former Name (if any) - Total 250
Incorporation Date 6 April 2010 9.3 Articles of Association – Summary
Company Type Company limited by shares Restrictions on Shares can only be held by Indonesian
PMA or Ordinary Company Ordinary Company inheritance, marriage or other reasons, the
Authorised Capital Amount IDR 1,000,000,000 transferred to Indonesian nationals or legal
marriage or otherwise.
Security over No restrictions.

Share Type Ordinary
shares
Paid Up Capital Amount IDR 250,000,000 Pre-emptive rights Any shareholder wishing to transfer its shares
Domicile North Jakarta shareholders by specifying the price and
Directors Tong Pin

Commissioners Ricky Ferlanico
Schedule 4
CORPORATE STATUS
1. PT AEGA PRIMA (c) all of AP's shares are ordinary shares.
1.1 Legal nature AP's issued and paid up capital is IDR 10,000,000,000.
AP is a private Indonesian company limited by shares and governed 1.4 Shareholders

by the Company Law. This is the standard form of private company in
Indonesia. Based on Deed No 02/2011, AP's shareholders are:
AP is also a PMA Company governed by the Investment Law. Name of No of Nominal Value Percentage of
Shareholder Shares (IDR) Issued Share
1.2 Incorporation status Capital (%)
AP was validly incorporated under Deed of Establishment No 05 PT Havilah 160,000 8,000,000,000 80
dated 6 June 2008 (DOE) (Document No. AP.1.1.1(a)). The DOE Abadi
was ratified by the MOLHR on 22 July 2008. Sejahtera
Since incorporation, AP's Articles of Association has been amended PT Mulia 40,000 2,000,000,000 20
several times. The most recent amendments were made by Deed of Andalan
Statement of Shareholders Resolution No 02 dated 10 February 2011 Perkasa
(Deed No 02/2011) (Document No. AP.1.1.2 (cc) which was approved
by MOLHR on 26 May 2011. 200,000 10,000,000,000 100
Recommendation:
1.3 Capital structure (a) Pursuant to Deed No 12 dated 21 September 2008

(Document No. AP.1.1.2(a)), the newspaper announcement
Based on Deed No 02/2011, AP's capital structure is as follows: regarding the acquisition of shares by PT Cirindo Utama
should be sighted.
(a) AP has an authorised capital of IDR 10,000,000,000;
(b) Pursuant to Deed No 8 dated 10 February 2010 (Document
(b) the authorised capital is divided into 200,000 shares, with No. AP.1.1.2(s)), the newspaper announcement regarding the
each share having a nominal value of IDR 50,000; and acquisition of shares by PT Havilah Abadi Sejahtera should
be sighted.
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 4 Corporate Status 110
(a) AP's purposes and objectives are to undertake business in tin

mining;
1.5 Rights and restrictions relating to shares
(b) to achieve its purposes and objectives, AP may conduct the
AP's shares carry normal voting and dividend rights. following business activities:
(i) to undertake business in tin mining;

AP's Articles of Association state that any shareholder wishing to (ii) to undertake the above mining business activity, the
transfer its shares must first offer the shares to existing shareholders Company must comply with requirements under Law
by notifying them in writing of the price and terms and conditions of No. 4 of 2009 regarding Mineral and Coal Mining and
the sale. The shareholder must notify the Board of Directors in its implementing regulations.
writing of the offer.
1.8 Other features of the constituent documents
AP's Articles of Association also state that any shareholder wishing to
transfer its shares must first obtain approval at a General Meeting of AP is established for an indefinite period of time.
Shareholders.
The domicile of AP is Bangka Tengah Regency. Branch offices can
For any proposed transfer of shares, the MOLHR must be notified and be located in other domiciles.
BKPM approval is required.The transfer of shares must be by notarial
deed of share transfer, signed by the transferor or the transferee or Under Indonesian procedural law, as a general rule, a claim is filed in
their respective representatives. There are no restrictions on the District Court having jurisdiction over the domicile of the defendant.
shareholders pledging their shares. Any existing pledge of shares Accordingly, any claim brought against a company will be dealt with in
must be recorded in AP's Register of Shareholders. the District Court having jurisdiction over that company.
1.6 Minority Shareholders 1.9 Annual General Meeting of Shareholders
Minority (or equal) shareholders have certain rights under Indonesian Under Article 78(2) of the Company Law, a company is obliged to
law (leaving aside additional rights granted in shareholders hold an Annual General Meeting of Shareholders within six months of
agreements). An overview of these rights is given in Schedule 11. its financial year end. AP's financial year runs from 1 January to 31
December.
1.7 Business Scope
The Legal Data did not contain any documents showing that AP has
The Directorate General has given a directive to the MOLHR which complied with this obligation.
states that the Articles of Association of a mining company can only
have mining as its sole business scope. The Directorate General has 1.10 Licences and Approvals
also stated that the Articles of Association of a mining company can
only specify one mining commodity. It is usual for Indonesian companies to obtain various licences and
approvals. We have reviewed the following licences and approvals of
AP's Articles of Association state that: AP:
(a) Large Scale Trading Business Licence (SIUP Besar) No

517/20/DINDAGKOPPEM/VI/2008 dated 25 June 2008.
(b) Company Registration Certificate No 31051100062 dated 25

June 2008 (before it obtains the status as a legal entity) valid
until 25 June 2013;
(c) Statement Letter of Registration (Surat Keterangan Terdaftar

– SKT) No PEM-938/WPJ.03/KP.0603/2008 dated 18 June
2008;
(d) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –

NPWP) No 02.762.429.5-304.000 registered on 18 June 2008;
Note: We have sighted two NPWP cards stipulating different

NPWP (the other one is No 02.762.429.5-315.000). AP
should confirm the applicable NPWP.
(e) 2009 Annual Tax Notification (Surat Pemberitahuan Tahunan

– SPT) for Company Income Tax;
(f) Taxable Entrepreneur Affirmation Letter (Surat Pengukuhan

Pengusaha Kena Pajak – SPKP) No PEM-
633/WPJ.03/KP.0603/2008 dated 18 June 2008; and
(g) Capital Investment Principle Licence No 17/1/IP/I/PMA/2011

dated 13 January 2011.
Recommendation: AP should provide the Letter of Domicile.
2.4 Shareholders
2. PT ALAM LESTARI KENCANA
Based on Deed No 3/2011, ALK's shareholders are:
2.1 Legal nature
ALK is a private Indonesian company limited by shares and governed Name of No of Nominal Value Percentage of
by the Company Law. This is the standard form of private company in Shareholder Shares (IDR) Issued Share
Indonesia. Capital (%)
PT Havilah 9,900 9,900,000,000 99

ALK is also a PMA Company governed by the Investment Law.
Abadi
2.2 Incorporation status Sejahtera
ALK was validly incorporated under Deed of Establishment No 12 PT Havilah 100 100,000,000 1
dated 12 March 2008 (DOE) (Document No. ALK.1.1.1(a)). The DOE Sukses
Bersama
was ratified by the MOLHR on 7 April 2008.
10,000 10,000,000,000 100
Since incorporation, ALK's Articles of Association has been amended
several times. The most recent amendments were made by Deed of Recommendation:
Statement of Shareholders Resolution No 3 dated 17 February 2011
(Deed No 3/2011) (Document No. ALK.1.1.2(i) which was approved (a) Pursuant to Deed No 5 dated 7 April 2010 (Document No.
by MOLHR on 23 May 2011. ALK.1.1.2(a)), the newspaper announcement regarding the
acquisition of shares by PT Havilah Sukses Bersama and PT
2.3 Capital structure
Havilah Abadi Sejahtera should be sighted.
Based on Deed No 3/2011, ALK's capital structure is as follows:
(a) ALK has an authorised capital of IDR 10,000,000,000;
ALK's shares carry normal voting and dividend rights.
(b) the authorised capital is divided into 10,000 shares, with each
ALK's Articles of Association state that any shareholder wishing to
share having a nominal value of IDR 1,000,000; and
transfer its shares must first offer the shares to existing shareholders
(c) all of ALK's shares are ordinary shares. by notifying them in writing of the price and terms and conditions of
the sale. The shareholder must notify the Board of Directors in writing
ALK's issued and paid up capital is IDR 10,000,000,000. of the offer.
ALK's Articles of Association also state that any shareholder wishing

to transfer its shares must first obtain approval at a General Meeting
of Shareholders.
For any proposed transfer of shares, the MOLHR must be notified and ALK is established for an indefinite period of time.
BKPM approval is required.
The domicile of ALK is Pangkalpinang City, Bangka Belitung Island
The transfer of shares must be by notarial deed of share transfer, Province. Branch offices can be located in other domiciles.
signed by the transferor or the transferee or their respective
representatives. There are no restrictions on shareholders pledging Under Indonesian procedural law, as a general rule, a claim is filed in
their shares. Any existing pledge of shares must be recorded in the the District Court having jurisdiction over the domicile of the defendant.
Register of Shareholders of ALK. Accordingly, any claim brought against a company will be dealt with in
the District Court having jurisdiction over that company.
2.6 Minority Shareholders
2.9 Annual General Meeting of Shareholders
Minority (or equal) shareholders have certain rights under Indonesian
law (leaving aside additional rights granted in shareholders Under Article 78(2) of the Company Law, a company is obliged to
agreements). An overview of these rights is given in Schedule 11. hold an Annual General Meeting of Shareholders within six months of
its financial year end. ALK's financial year runs from 1 January to 31
2.7 Business Scope December.
The Directorate General has given a directive to MOLHR which states The Legal Data did not contain any documents showing that ALK has
that the Articles of Association of a mining company can only have complied with this obligation.
mining as its sole business scope. The Directorate General has also
stated that the Articles of Association of a mining company can only 2.10 Licences and Approvals
specify one mining commodity.
It is usual for Indonesian companies to obtain various licences and
ALK's Articles of Association state that: approvals. We have reviewed the following licences and approvals of
ALK:
(a) ALK's purposes and objectives are to undertake business in
tin mining; (a) Company Registration Certificate (Tanda Daftar Perusahaan
– TDP) No 310215100564 dated 26 March 2008 and valid
(b) to achieve its purposes and objectives, ALK may conduct the until 26 March 2013;
following business activities:
(b) Large-Scale Trade Business Licence (Surat Izin Usaha
(i) to undertake business in tin mining; Perdagangan – SIUP) No 503/139-PB/PERINDAGVES/2008
dated 19 March 2008;
(ii) to undertake the above mining business activity, the
Company must comply with requirements under Law (c) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –
No. 4 of 2009 regarding Mineral and Coal Mining and NPWP) No 02.391.210.8-304.000 registered 15 September
its implementing regulations. 2004;
(d) Taxable Entrepreneur Confirmation Letter (Surat Pengukuhan (vi) Export Report for January 2010
Pengusaha Kena Pajak) No [not clear] dated 25 March 2008
issued by Tax Office of Pangkal PInang; (vii) Export Report for February 2010
(e) Capital Investment Principle Licence No 51/1/IP/I/PMA/2011 (viii) Export Report for March 2010
dated 26 January 2011; and
(c) Industry and Trade Service Office of the Bangka Belitung
(f) Acknowledgment as a Registered Tin Bar Exporter Province
(Pengakuan Sebagai Eksportir Timah Batangan – ET Timah)
No 14/DAGLU/ET-TIMAH/11/2008 dated 21 November 2008 (i) Export Report for Tin Ingot of 2009.
valid for a period of 3 years.
Recommendation: ALK should provide the Letter of Domicile and

the Taxable Entrepreneur Confirmation Letter.
2.11 Acknowledgment as a Registered Tin Bar Exporter Licence
The Legal Data contain the following documents:
(a) Department of Trade of the Republic of Indonesia
(i) Export Realisation Report for August to September

2009
(ii) Export Realisation Report for October to December

2009
(iii) Export Realisation Report for January to March 2010
(b) Industry, Trade, Cooperative and Micro Business Service

Office of Pangkalpinang
(i) Export Report for August 2009
(ii) Export Report for September 2009
(iii) Export Report for October 2009
(iv) Export Report for November 2009
(v) Export Report for December 2009
Name of No of Nominal Value Percentage of

3. PT MITRA SUKSES GLOBALINDO Capital (%)
3.1 Legal nature PT Leviathan 8,000 IDR 8,000,000,000 80%

Mining
MSG is private Indonesian company limited by shares and governed Ekaprima
Indonesia. PT Mulia 2,000 IDR 2,000,000,000 20%
Andalan
MSG is also a PMA Company governed by the Investment Law. Persada
3.2 Incorporation status 10,000 IDR10,000,0010,000 100.00%
MSG was validly incorporated under Deed of Establishment No 2 Recommendation:

dated 8 September 2008 (DOE) (Document No. MSG.1.1.1(a)). The
DOE was ratified by the MOLHR on 21 November 2008. (a) Pursuant to Deed No. 5 dated 30 September 2009
(Document No. MSG.1.1.2(c)) the newspaper announcement
Since incorporation, MSG's Articles of Association has been amended regarding the acquisition of shares by Bunawam Muslim and
several times. The most recent amendments were made by Deed of Rudy Wijaya Liong should be sighted.
Minutes of Meeting No 04 on 17 February 2011 (Deed No 04/2011)
(Document No. MSG.1.1.2 (k)) which was agreed on 10 June 2011 . 3.5 Rights and restrictions relating to shares
3.3 Capital structure MSG's shares carry normal voting and dividend rights.
Based on Deed No 04/2011, MSG's capital structure is as follows: MSG's Articles of Association of state that any shareholder wishing to
(a) MSG has an authorised capital of IDR 10,000,000,000 by notifying them in writing of the price and terms and conditions of
(b) the authorised capital is divided into 10,000 shares, with each of the offer.
share having a nominal value of IDR 1,000,000; and
MSG's Articles of Association also state that any shareholder wishing
(c) all of MSG shares are ordinary shares. to transfer its shares must first obtain approval at a General Meeting
of Shareholders.
MSG's issued and paid up capital is IDR 10,000,000,000.
For any proposed transfer of shares, the MOLHR must be notified and
3.4 Shareholders BKPM approval is required.
Based on Deed No 04/2011, MSG's shareholders are:
The transfer of shares must be by notarial deed of share transfer, The domicile of MSG is North Jakarta. Branch offices can be located
signed by the transferor or the transferee or their respective in other domiciles.
representatives. There are no restrictions on shareholders pledging
their shares. Any existing pledge of shares must be recorded in Under Indonesian procedural law, as a general rule, a claim is filed in
MSG's Register of Shareholders. the District Court having jurisdiction over the domicile of the defendant.
Accordingly, any claim brought against a company will be dealt with in
3.6 Minority Shareholders the District Court having jurisdiction over that company.
Minority (or equal) shareholders have certain rights under Indonesian 3.9 Annual General Meeting of Shareholders
law (leaving aside additional rights granted in shareholders
agreements). An overview of these rights is given in Schedule 11. Under Article 78(2) of the Company Law, a company is obliged to
3.7 Business Scope its financial year end. MSG's financial year runs from 1 January to 31
December.
The Directorate General has given a directive to the MOLHR which
states that the Articles of Association of a mining company can only The Legal Data did not contain any documents showing that MSG
have mining as its sole business scope. The Directorate General has has complied with this obligation.
also stated that the Articles of Association of a mining company can
only specify one mining commodity. 3.10 Licences and Approvals
MSG's Articles of Association state that: It is usual for Indonesian companies to obtain various licences and
(a) MSG's purposes and objectives are to undertake business in MSG:
tin mining;
(a) Company Registration Certificate (Tanda Daftar Perusahaan
(b) to achieve its purposes and objectives, MSG may conduct the – TDP) No 09.01.1.51.27210 dated 18 June 2009 and valid
following business activities: until 18 June 2014;
(i) to undertake business in tin mining; (b) Large-Scale Trade Business Licence (Surat Izin Usaha
Perdagangan – SIUP) No 01644 /1.824.271 dated 4 June
(ii) to undertake the above mining business activity, the 2009;
Company must comply with requirements under Law
No. 4 of 2009 regarding Mineral and Coal Mining and (c) Letter of Domicile No 1199/1.751.21/09 dated 22 October
its implementing regulations. 2009 and valid until 22 October 2010;
3.8 Other features of the constituent documents (d) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –
NPWP) No 02.846.000.4-043.000 dated issued by Tax Office
MSG is established for an indefinite period of time. of North Jakarta; and
(e) Capital Investment Principle Licence No 74/1/IP/I/PMA/2011

dated 10 February 2011.
Recommendation: MSG should provide the renewed Letter of

Domicile and the Taxable Entrepreneur Confirmation Letter.
4. PT HAVILAH ABADI SEJAHTERA Name of No of Nominal Value Percentage of

4.1 Legal nature Capital (%)
HAS is a private Indonesian company limited by shares and governed Top Yield 9,900 990,000,000 99
by the Company Law. This is the standard form of private company in Holdings
Indonesia. Limited
HAS is also a PMA Company governed by the Investment Law. Pt Andalan 100 10,000,000 1
Persada
4.2 Incorporation status Globalindo
HAS was validly incorporated under Deed of Establishment No 09 10,000 1,000,000,000 100
dated 22 January 2008 (DOE) (Document No. HAS.1.1.1(a)). The
DOE was ratified by the MOLHR on 5 March 2008. We have sighted HAS's Share Certificates (Document No. HAS
1.1.14(a) (i) and (v)) and Register of Shareholders (Document No.
Since incorporation, HAS's Articles of Association has been amended HAS1.1.13(a)).
several times. The most recend amendments were made by Deed of
Statement of Shareholders Resolution No 29 dated 22 March 2010 Recommendation: Pursuant to Deed No 25 dated 17 December
(Deed No 29/2010) (Document No. HAS 1.1.2(e)), which was 2008, the newspaper announcement regarding the acquisition of
approved by the MOLHR on 7 April 2010. shares by Aurelia Supardi should be sighted.
4.3 Capital structure 4.5 Rights and restrictions relating to shares
Based on Deed No 29/2010, HAS's capital structure is as follows: HAS's shares carry normal voting and dividend rights.
(a) HAS has an authorised capital of IDR 2,500,000,000; HAS's Articles of Association state that any shareholder wishing to
(b) the authorised capital is divided into 25,000 shares, with each by notifying them in writing of the price and terms and conditions of
share having a nominal value of IDR 100,000; and the sale. The shareholder must notify the Board of Directors in writing
of the offer.
(c) all of HAS's shares are ordinary shares.
HAS's Articles of Association also state that any shareholder wishing
HAS's issued and paid up capital ois IDR 1,000,000,000. to transfer its shares must first obtain approval at a General Meeting
of Shareholders.
4.4 Shareholders
For any proposed transfer of shares, the MOLHR must be notified and
Based on Deed of Statement of Shareholders Resolution No 19 dated BKPM approval is required.
16 April 2010 (Deed No 19/2010) (Document No. HAS 1.1.2(k)),
HAS's shareholders are:
The transfer of shares must be by notarial deed of share transfer, 4.9 Annual General Meeting of Shareholders
representatives. There are no restrictions on shareholders pledging Under Article 78(2) of the Company Law, a company is obliged to
their shares. Any existing pledge of shares must be recorded in hold an Annual General Meeting of Shareholders within six months of
HAS's Register of Shareholders. its financial year end. The financial year of HAS runs from 1 January
to 31 December.
The Legal Data did not contain any documents showing that HAS has
Minority (or equal) shareholders have certain rights under Indonesian complied with this obligation.
agreements). An overview of these rights is given in Schedule 11. 4.10 Licences and Approvals
4.7 Business Scope It is usual for Indonesian companies to obtain various licences and
HAS's Articles of Association state that: HAS:
(a) HAS's purposes and objectives are to undertake business in (a) Company Registration Certificate (Tanda Daftar Perusahaan
the large scale trading of export; – TDP) No 09.01.1.51.28807 dated 19 March 2010 and valid
until 19 March 2015;
(b) to achieve its purposes and objectives, HAS may conduct the
following business activities: (b) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –
NPWP) No 02.682.017.5-041.000 registered 4 March 2008;
(i) commodities export trading of mining products (coal,
nickel, iron ore). (c) Statement Letter of Registration (Surat Keterangan Terdaftar
– SKT) No PEM-71/WPJ.21/KP.0103/2008 dated 4 March
4.8 Other features of the constituent documents 2008;
HAS is established for an indefinite period of time. (d) BKPM Approval on Trading Business Licence No
93/1/IU/I/PMA/PERDAGANGAN/2010 dated 12 March 2010;
The domicile of HAS is North Jakarta. Branch offices can be located
in other domiciles. (e) BKPM Approval on Amendment of Project Plan No
407/A.8/2010 dated 26 April 2010; and
Under Indonesian procedural law, as a general rule, a claim is filed in
the District Court having jurisdiction over the domicile of the defendant. (f) Letter of Domicile No 251/1.824 dated 30 March 2011 and
Accordingly, any claim brought against a company will be dealt with in valid until 30 March 2012.
5. PT MULIA ANDALAN PERSADA Name of No of Nominal Value Percentage of

MAP is a private Indonesian company limited by shares and governed Hadi Wiratama 300 300,000,000 50
by the Company Law. This is the standard form of private company in Legawa
Indonesia.
Tsjiam Gunawan 300 300,000,000 50
5.2 Incorporation status
600 600,000,000 100
MAP was validly incorporated under Deed of Establishment No 39
dated 16 November 2010 (DOE) (Document No. MAP.1.1.1(a)). The Recommendation:
DOE was ratified by the MOLHR on 3 December 2010.
(a) Pursuant to Deed No 17/2010, the newspaper announcement
Since incorporation, MAP's Articles of Association has been amended regarding the acquisition of shares by Hadi Wiratama and
once, by Deed of Minutes of Meeting No 17 dated 8 December 2010 Tsjiam Gunawan should be sighted.
(Deed No 17/2010) (Document No. MAP.1.1.2(a)), which has 5.5 Rights and restrictions relating to shares
received a receipt of notification letter from the MOLHR on 17
December 2010 (Document No. MAP.1.1.2(b)). MAP's shares carry normal voting and dividend rights.
5.3 Capital structure Article 5(2) of the DOE restricts the ownership of MAP's shares to
Indonesian citizens and/or Indonesian legal entities.
Based on Deed No 17/2010, MAP's capital structure is as follows:
Article 7(9) of the DOE provides that if, due to inheritance, marriage
(a) MAP has an authorised capital of IDR 1,000,000,000;
or other reasons, the shares are no longer held by Indonesian
(b) the authorised capital is divided into 1,000 shares, with each nationals or legal entities, the shares must be transferred to
share having a nominal value of IDR 1,000,000; and Indonesian nationals or legal entities within one year of the
inheritance, marriage or otherwise.
(c) all of MAP's shares are ordinary shares.
MAP's Articles of Association state that any shareholder wishing to
MAP's issued and paid up capital is IDR 600,000,000. transfer its shares must first offer the shares to existing shareholders
by notifying them in writing of the price and terms and conditions of
5.4 Shareholders the sale. The shareholder must notify the Board of Directors in writing
of the offer.
Based on Deed No 17/2010, MAP's shareholders are:
MAP's Articles of Association also state that any shareholder wishing
of Shareholders.
The MOLHR must be notified of any proposed transfer of shares. (v) workshop covering the heavy equipment leasing
business;
The transfer of shares must be by notarial deed of share transfer,
signed by the transferor or the transferee or their respective (vi) processing of brass, copper, zinc and tin, black tin
representatives. There are no restrictions on shareholders pledging industry;
their shares. Any existing pledge of shares must be recorded in
MAP's Register of Shareholders. (vii) service, covering consulting business in the sector of
mining, including exploration and mining technology
Recommendation: Article 5(2) and Article 7(9) of the DOE should be whether general as well as special as well as for
amended to allow for foreign ownership of MAP's shares. mining of mineral, natural gas, mineral, coal, oil and
power generator, as well as exploration products
5.6 Minority Shareholders commodity and the economics of its marketing
including the subsector of other mining as well as
Minority (or equal) shareholders have certain rights under Indonesian mining supporting facilities and related business
law (leaving aside additional rights granted in shareholders activity.
agreements). An overview of these rights is given in Schedule 11.
5.7 Business Scope
MAP is established for an indefinite period of time.
MAP's Articles of Association state that:
The domicile of MAP is North Jakarta. Branch offices can be located
(a) MAP's purposes and objectives are to undertake business in other domiciles.
activity in the sector of mining, construction, trading, land
transportation, workshop, industry, service and consulting; Under Indonesian procedural law, as a general rule, a claim is filed in
the District Court having jurisdiction over the domicile of the defendant.
(b) to achieve its purposes and objectives, MAP may conduct the Accordingly, any claim brought against a company will be dealt with in
following business activities: the District Court having jurisdiction over that company.
(i) mining of coal, covering solid bitumen, asphalt rocks, 5.9 Annual General Meeting of Shareholders
coal and turf;
(ii) construction, among others act as a constructor for hold an Annual General Meeting of Shareholders within six months of
the coal mining sector; its financial year end. The financial year of MAP runs from 1 January
to 31 December.
(iii) trading, among others export-import and trade of
black tin; The Legal Data did not contain any documents showing that MAP has
complied with this obligation.
(iv) land transportation, covering management and
maintenance of transportation facilities in the mining 5.10 Licences and Approvals
and coal sector as well as related business activity;

MAP:

– TDP) No 09.01.1.46.30546 dated 21 December 2010 and
valid until 21 December 2015;
(b) Middle-Scale Trade Business Licence (Surat Izin Usaha

Perdagangan – SIUP) No 00731-02/PM/1.824.271 dated 27
December 2010;
(c) Letter of Domicile No 01574/1.751.21/10 dated 13 December

2010 and valid until 13 December 2011; and

NPWP) No 03.088.893.7-043.000 dated 16 December 2010.
Recommendation: MAP should provide the Taxable Entrepreneur

Confirmation Letter.
6. PT HAVILAH SUKSES BERSAMA Name of No of Nominal Value Percentage of

HSB is a private Indonesian company limited by shares and governed Aurelia Supardi 1,250 125,000,000 50
Rudy Wijaya 1,250 125,000,000 50
Indonesia.
Liong
6.2 Incorporation status
2,500 250,000,000 100
HSB was validly incorporated under Deed of Establishment No 10
dated 22 January 2008 (DOE) (Document No. HSB.1.1.1.(a)). The We have sighted HSB's Share Certificates (Document No. HSB
DOE was ratified by the MOLHR on 5 March 2008. 1.1.14(a) till (c).
Since incorporation, HSB's Articles of Association has not been Recommendation:

amended.
(a) Pursuant to Deed No. 27 dated 17 December 2008
6.3 Capital structure (Document No. HSB.1.1.2(a)) the newspaper announcement
regarding the acquisition of shares by Aurelia Supardi should
Based on the DOE, HSB's capital structure is as follows: be sighted.
(a) HSB has an authorised capital of IDR 1,000,000,000; (b) Pursuant to Deed No. 39 dated 29 November 2010
(Document No. HSB.1.1.2(d)) the newspaper announcement
(b) the authorised capital is divided into 10,000 shares, with each regarding the acquisition of shares by Rudy Wijaya Liong
share having a nominal value of IDR 100,000; and should be sighted.
(c) all of HSB shares are ordinary shares. 6.5 Rights and restrictions relating to shares
HSB's issued and paid up capital is IDR 250,000,000. HSB shares carry normal voting and dividend rights.
6.4 Shareholders HSB's Articles of Association restricts the ownership of HSB's shares
to Indonesian citizens and/or Indonesian legal entities.
Based on Deed of Statement of Shareholders No 39 dated 29
November 2010, HSB's shareholders are: HSB's Articles of Association also state that any shareholder wishing
to transfer its shares must first offer the shares to existing
shareholders by notifying them in writing of the price and terms and
conditions of the sale. The shareholder must notify the Board of
Directors in writing of the offer.
HSB's Articles of Association does not state that any shareholder (ii) conduct contractor scope of work, which covers
wishing to transfer its shares must first obtain approval at a General architect field, interior, planning, surveillance and
Meeting of Shareholders. building development, roads, bridge, base, irrigation,
quay, civil engineering, electricity network
The MOLHR must be notified of any proposed transfer of shares. installement, telecommunication, information
technology and general contractor work;
The transfer of shares must be by notarial deed of share transfer,
signed by the transferor or the transferee or their respective (iii) conduct business in the field of general mining,
representatives. There are no restrictions on shareholders pledging among others gold mining, coal, sand, nickel, rock,
their shares. Any existing pledge of shares must be recorded in lime, including excavation, processing and selling of
HSB's Register of Shareholders. its products, except natural oil and gas;
Recommendation: HSB's Articles of Association should be amended (iv) conduct business in the field of industry which covers
to allow for foreign ownership of HSB's shares. electronics, foods and drinks, textile, building
materials, furniture, household goods, clothes;
(v) conduct job which related with the field of, plantation,
Minority (or equal) shareholders have certain rights under Indonesian farming, livestock, fishery, forestry and the use of its
law (leaving aside additional rights granted in shareholders products;
(vi) conduct business of land transportation by bus, truck,
6.7 Business Scope including passenger and goods transportation;
HSB's Articles of Association state that: (vii) conduct business in the field of printing, publishing,
bindery and advertising;
(a) HSB's purposes and objectives are to conduct general trading,
contractor/wholesale, mining, industrial, plantation, agriculture, (viii) conduct business in the field of general services
general transportation, printing, services, real except in the field of law and tax but not limited to
estate/developer; management consultation services, human resources
and labour including related services;
(b) to achieve its purposes and objectives, HSB may conduct the
following business activities: (ix) conduct real estate development, apartment,
condominium including land acquisition without
(i) conduct general trading, which covers trading of all
prejudice government institution.
kind of goods locally include interinsulair, export,
import, either for own account include on other party 6.8 Other features of the constituent documents
calculation by commission act as commissioner,
supplier, agent, wholesaler amd distributor; HSB is established for an indefinite period of time.
The domicile of HSB is North Jakarta. Branch offices can be located Recommendation: HSB should provide Taxable Entrepreneur
in other domiciles. Confirmation Letter.


its financial year end. The financial year of HSB runs from 1 January
to 31 December.
The Legal Data did not contain any documents showing that HSB has
6.10 Licences and Approvals

HSB:

– TDP) No 09.01.1.51.28992 dated 14 April 2010 and valid
until 14 April 2015;
(b) Middle-Scale Trade Business Licence (Surat Izin Usaha

Perdagangan – SIUP) No 2061/1.824.271 dated 30 March
2010 valid for 5 years;
(d) Letter of Domicile No 250/1.824 dated 30 March 2011 and

valid until 30 March 2012; and
(e) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –

NPWP) No 02 682 018 3 041 000 dated 4 March 2008
issued by Tax Office of North Jakarta;
7. PT LEVIATHAN MINING EKAPRIMA Name of No of Nominal Value Percentage of

LME is private Indonesian company limited by shares and governed Grand Succeed 2,970 1,485,000,000 99%
by the Company Law. This is the standard form of private company in Investments
Indonesia. LME is also a PMA Company governed by the Investment Limited (BVI)
Law.
PT Hamparan 30 15,000,000 1%
7.2 Incorporation status Mineral
Persada
LME was validly incorporated under Deed of Establishment No 52
dated 13 August 2008 (DOE) (Document no. LME.1.1.1.(a)). The 3,000 1,500,000,000 100.00%
DOE was ratified by the MOLHR on 26 August 2008.
We have sighted LME's Share Certificates (Document No. LME
Since incorporation, LME's Articles of Association has been amended 1.1.13(b) till (e)) and Register of Shareholders (Document No.
several times. The most recent amendments were made by Deed of LME1.1.13(a)).
Minutes of Meeting No 31 on 22 March 2010 (Document No.
LME.1.1.2.(e)) (Deed No 31/2010), which was approved by the Recommendation: Pursuant to Deed No. 19 dated 6 March 2010
MOLHR on 7 April 2010. (Document No. LME.1.1.2(a)), the newspaper announcement
regarding the acquisition of shares by Mustakim should be sighted.
Based on Deed No 31/2010, LME's capital structure of is as follows:
LME's shares carry normal voting and dividend rights
(a) LME has an authorised capital of IDR 1,500,000,000 ;
LME's Articles of Association state that any shareholder wishing to
(b) the authorised capital is divided into 3,000 shares, with each transfer its shares must first offer the shares to existing shareholders
share having a nominal value of IDR 500,000; and by notifying them in writing of the price and terms and conditions of
(c) all of LME's shares are ordinary shares. of the offer.
LME's issued and paid up capital is IDR 1,500,000,000. LME's Articles of Association also state that any shareholder wishing
7.4 Shareholders of Shareholders.
Based on Deed of Statement of Shareholders No 33 dated 22 April For any proposed transfer of shares, the MOLHR must be notified and
2010 (Deed No 33/2010) (Document No. LME.1.1.2.(i)), LME's BKPM approval is required.
shareholders are:
The transfer of shares must be by notarial deed of share transfer, 7.9 Annual General Meeting of Shareholders
representatives. There are no restrictions on shareholders pledging Under Article 78(2) of the Company Law, a company is obliged to
their shares. Any existing pledge of shares must be recorded in hold an Annual General Meeting of Shareholders within six months of
LME's Register of Shareholders. its financial year end. The financial year of LME runs from 1 January
to 31 December.
The Legal Data did not contain any documents showing that LME has
Minority (or equal) shareholders have certain rights under Indonesian complied with this obligation.
agreements). An overview of these rights is given in Schedule 11. 7.10 Licences and Approvals
7.7 Business Scope It is usual for Indonesian companies to obtain various licences and
LME's Articles of Association state that: LME:
(a) LME's purposes and objectives are to undertake business (a) Company Registration Certificate (Tanda Daftar Perusahaan
activity in large scale trading (main distributor), export and – TDP) No 09.01.1.51.25962 dated 17 September 2008 and
import. valid until 17 September 2013;
(b) to achieve its purposes and objectives, LME may conduct the (b) Middle-Scale Trade Business Licence (Surat Izin Usaha
following business activities: Perdagangan – SIUP) No 673/1.824.271 dated 11 September
2008;
(i) as a main distributor (amongst others nickel and coal),
to run products export (amongst others nickel and (c) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –
coal), to run products import (amongst others NPWP) No PEM-299/WPJ.21/KP.0103/2008 dated 27 August
manganese and iron ore) 2008 issued by Tax Office of North Jakarta;
7.8 Other features of the constituent documents (d) Letter of Domicile No 252/1.824 dated 25 March 2011 and
valid until 30 March 2012;
LME is established for an indefinite period of time.
(e) Capital Investment Registration Letter No
The domicile of MSG is North Jakarta. Branch offices can be located 00320/1/PPM/PMA/2010 dated 11 March 2010;
in other“domiciles.
(f) Capital Investment Letter No. 405/A-8/2010 dated 26 April
Under Indonesian procedural law, as a general rule, a claim is filed in 2010; and
Accordingly, any claim brought against a company will be dealt with in (g) Capital Investment Activity Report of 2010 dated 31 March
the District Court having jurisdiction over that company. 2011 accepted by Indonesian Investment Coordinating Board
on 1 April 2011.
Recommendation: LME should provide the Taxable Entrepreneur

Confirmation Letter.
8. PT ANDALAN PERSADA GLOBALINDO Name of No of Nominal Value Percentage of

APG is a private Indonesian company limited by shares and governed Suwandi 250 125,000,000 50
by the Company Law. This is the standard form of private company in Sukarti
Indonesia.
Toni 250 125,000,000 50
8.2 Incorporation status Siswoyudho
500 250,000,000 100
APG was validly incorporated under Deed of Establishment No 32
dated 25 March 2010 (DOE) (Document No. APG.1.1.1(a)). The DOE
was ratified by the MOLHR on 6 April 2010. We have sighted APG's Share Certificates (Document No APG.
1.1.14(a)(i) till (iii)) and Register of Shareholders (Document No
Since its incorporation, APG's Articles of Association has not been APG1.1.13(a)) confirming the above.
amended.
APG's shares carry normal voting and dividend rights.
Based on the DOE, APG's capital structure is as follows:
Article 5(2) of the DOE, restricts the ownership of APG's shares to
(a) APG has an authorised capital of IDR 1,000,000,000; Indonesian citizens and/or Indonesian legal entities.
(b) the authorised capital is divided into 2,000 shares, with each Article 7(5) of the DOE provides that if, due to inheritance, marriage or
share having a nominal value of IDR 500,000; and other reasons, the shares are no longer held by Indonesian nationals
or legal entities, the shares must be transferred to Indonesian
(c) all of APG's shares are ordinary shares. nationals or legal entities within one year of the inheritance, marriage
or otherwise.
APG's issued and paid up capital is IDR 250,000,000.
APG's Articles of Association state that any shareholder wishing to
8.4 Shareholders transfer its shares must first offer the shares to existing shareholders
by notifying them in writing of the price and terms and conditions of
Based on Deed of Statement of Shareholders Resolution No 01 dated the sale. The shareholder must notify the Board of Directors in writing
1 December 2010 (Deed No 01/2010) (Document No. APG.1.1.2(a)), of the offer.
APG's shareholders are:
APG's Articles of Association also state that any shareholder wishing
of Shareholders.
The MOLHR must be notified of any proposed transfer of shares. installation of pipes, to conduct contracting
business in oil, gas & geo thermal, which
The transfer of shares must be by notarial deed of share transfer, include field production, drilling and well
signed by the transferor or the transferee or their respective cementing, underground layer testing, facility
representatives. There are no restrictions on shareholders pledging maintenance, hydraulic and seismic drilling,
their shares. Any existing pledge of shares must be recorded in fishing, mudwell lodging and perforating,
APG's Register of Shareholders. casing and tubing services, safety
engineering and other relevant business
Recommendation: Article 5(2) and Article 7(5) of the DOE should be activities and also to conduct business in
amended to allow for foreign ownership of APG shares. The mining equipments and to facilitate support of
amendment will need to be approved by the BKPM. mining companies;
8.6 Minority Shareholders (ii) to undertake business activities in trading, which
include trading of nickel and its derivate minerals,
coal, supplier of kerosene, solar and gas, export,
import, supplier, distributor, acting as
agent/representative of other companies, within
8.7 Business Scope Indonesia or overseas, and other relevant business
activities;
APG's Articles of Association state that:
(iii) to undertake business of land transportation by
(a) APG's purposes and objectives are to undertake business in transporting goods from one place to another by
mining, trading, transportation and services; using bus and truck including transporting products
from mining exploration and exploitation;
(b) to achieve its purposes and objectives, APG may conduct the
following business activities: (iv) to undertake business in consultancy service in
mining, oil, gas and geo thermal and also activity
(i) to undertake business activities in mining, which supporting services in mining;
include:
(v) mining constructions and mining activity support
(A) drilling; nickel, coal, tin, gold, silver, copper, services which include supporting services in oil, gas
uranium ore, thorium, iron sand, iron ore and and geo thermal industry, among other testing and
other mineral mining; examining layers, provide construction services fro
mining industry, development planning, development
(B) on shore oil and gas drilling, offshore drilling for general mining industry and other relevant
installation, oil & gas mining, whether for own business activity.
purpose or contractual/fee based such as:
drilling, well production pumping, production
testing, dismantling, repair, cementing and
8.8 Other features of the constituent documents (d) Taxpayer Registration Number (Nomor Pokok Wajib Pajak –
NPWP) No 31.182.179.7-003.000 registered on 14 April
APG is established for an indefinite period of time. 2010.
The domicile of APG is East Jakarta. Branch offices can be located in (e) Small-Scale Trade Business Licence (Surat Izin Usaha
other domiciles. Perdagangan – SIUP) No 02120-05/PK/1.824.271 dated 12
April 2011 valid for 5 years;
Under Indonesian procedural law, as a general rule, t a claim is filed
in the District Court having jurisdiction over the domicile of the Recommendation:
defendant. Accordingly, any claim brought against a company will be
dealt with in the District Court having jurisdiction over that company. APG should provide the renewed Letter of Domicile.

its financial year end. APG's financial year runs from 1 January to 31
December.
The Legal Data did not contain any documents showing that APG has

APG:
(a) Letter of Domicile No 155/1.824/IV/2010 dated 8 April 2010

and valid until 8 April 2011;
(b) Company Registration Certificate (Tanda Daftar Perusahaan

until 20 April 2016;
(c) Statement Letter of Registration (Surat Keterangan Terdaftar

– SKT) No PEM-0000760ER/WPJ.20/KP.0303/2010 dated 14
April 2010; and
9. PT HAMPARAN MINERAL PERSADA Name of No of Nominal Value Percentage of

HMP is a private Indonesian company limited by shares and governed Ricky Ferlanico 125 125,000,000 50
250 250,000,000 100
Indonesia.
9.2 Incorporation status We have sighted HMP's Share Certificates (Document No. HMP
1.1.14(a) and (b)) and Register of Shareholders (Document No.
HMP was validly incorporated under Deed of Establishment No 35 HMP1.1.13(a)).
dated 25 March 2010 (DOE) (Document No. HMP.1.1.1(a)). The
DOE was ratified by the MOLHR on 6 April 2010. 9.5 Rights and restrictions relating to shares
9.3 Capital structure HMP's shares carry normal voting and dividend rights.
Based on the DOE, HMP's capital structure is as follows: Article 5(2) of the DOE restricts the ownership of HMP's shares to
Indonesian citizens and/or Indonesian legal entities.
(a) HMP has an authorised capital of IDR 1,000,000,000;
Article 7(5) of the DOE provides that if, due to inheritance, marriage
(b) the authorised capital is divided into 1,000 shares, with each or other reasons, the shares are no longer held by Indonesian
share having a nominal value of IDR 1,000,000; and nationals or legal entities, the shares must be transferred to
Indonesian nationals or legal entities within one year of the
(c) all of HMP's shares are ordinary shares. inheritance, marriage or otherwise.
HMP's issued and paid up capital is IDR 250,000,000. HMP's Articles of Association state that any shareholder wishing to
9.4 Shareholders by notifying them in writing of the price and terms and conditions of
the sale. The shareholder must notify the Board of Directors in
Based on Deed of Statement of Shareholders Resolution No 4 dated writing of the offer.
1 December 2010 (Deed No 4/2010) (Document No. HMP.1.1.2(a))
HMP's shareholders are: HMP's Articles of Association also state that any shareholder wishing
of Shareholders.
Name of No of Nominal Value Percentage of
The MOLHR must be notified of any proposed transfer of shares.
Capital (%) The transfer of shares must be by notarial deed of share transfer,
Tong Pin 125 125,000,000 50 signed by the transferor or the transferee or their respective
representatives. There are no restrictions on shareholders pledging which includes management of production
their shares. Any existing pledge of shares must be recorded in fields, drilling and cementing of wells, testing
HMP's Register of Shareholders. of underground layers, facility maintenance,
hydraulic and seismic drilling, fishing jobs,
Recommendation: Article 5(2) and Article 7(5) of the DOE should be mudwell logging and perforating, casing and
amended to allow for foreign ownership of HMP's shares. tubing works, safety engineering and other
related business activities as well as
9.6 Minority Shareholders undertake business in the sector of mining
supporting service;
law (leaving aside additional rights granted in shareholders (ii) trading, including nickel and derivative mineral trading,
agreements). An overview of these rights is given in Schedule 11. coal, supplier of kerosene fuel, solar, gas and
industry, export, import, supplier, distributor, as
9.7 Business Scope
agent/representative of other companies both
HMPs Articles of Association state that: domestic as well as foreign, as well as related
business activities and trade of other mined products;
(a) HMP's purposes and objectives are to undertake business in
the mining, trading, transportation and service sector; (iii) land transportation by receiving and transporting
goods from one place to another by using bus and
(b) to achieve its purposes and objectives, HMP may conduct the truck including transporting products of exploitation
following business activities: and exploration;
(i) mining, including: (iv) consultancy services in the sector of mining, oil, gas
and geothermal as well as supporting activity in the
(A) drilling, nickel, coal , tin, gold, silver, copper, sector of trade;
uranium ore, thorium, iron sand, clay sand,
iron ore and other mineral as well as mined (v) mining construction and mining supporting activity
rocks; service covering provision of supporting service for
the oil and gas and geothermal industry among
(B) drilling of oil and gas onshore as well as the others testing and valuation of layers, providing
placing and installation of offshore drilling construction service for the purpose of the mining
installation, mining of oil and natural gas, industry, construction planning, general mining
whether for itself as well as those conducted industry development, as well as other related
on a fee or contract basis such as: drilling, business activity.
production well pumping, closing of
production well, testing of production, 9.8 Other features of the constituent documents
dismantling, reparation, cementing and pipe
installation, undertake construction business HMP is established for an indefinite period of time.
in the sector of oil, gas and geothermal,
HMP's domicile is North Jakarta. Branch offices can be located in Recommendation:

other domiciles.
HMP should provide the Taxable Entrepreneur Confirmation Letter.

its financial year end. HMP's financial year runs from 1 January to 31
December.
The Legal Data did not contain any documents showing that HMP
has complied with this obligation.

HMP:

until 8 April 2016;
(b) Small-Scale Trade Business Licence (Surat Izin Usaha

Perdagangan – SIUP) No 01476-02/PK/1.824.271dated 30
March 2011 and valid till 30 March 2016;
(c) Letter of Domicile No 205/1/824.1/10 dated 30 March 22010

dated 30 March 2010 and valid until 30 March 2011;

NPWP) No 03.040.606.0-047.000 dated 8 April 2010; and
(e) Statement of Registration No00704/WPJ.21/KP.0703.2010

dated 8 April 2010.
Schedule 5
MANAGEMENT DETAILS
(c) (period of office) Directors are appointed for five years
(unless removed earlier at a General Meeting of
Shareholders);
1. PT AEGA PRIMA
(d) (vacancies) if one or more Director positions becomes
1.1 Board of Directors vacant, a General Meeting of Shareholders must be
convened within 30 days to fill the vacancy;
Based on Deed of Statement of Shareholders’ Resolution No 02
dated 10 December 2011 (Deed No 02/2011), AP's current Board of (e) (total vacancy) if all the Director positions become vacant,
Directors is: AP will be managed temporarily by a Commissioner
Name Position appointed by the Board of Commissioners;
(f) (resignation) a Director can resign by giving 30 days prior

Sumadi President Director
written notice to AP; and
Andrianus Director (g) (authority of the President Director) the President Director
David Sim
is entitled and authorised to represent AP on behalf of the
Board of Directors. If the President Director is absent or is
Alwi Sutedjo Director
prevented from being present (which does not have to be
Kumala
proven to any third party), another Director is entitled to act
Saman Tedja Director for and on behalf of the Board of Directors and represent AP.
1.2 Board of Commissioners

Tony Director
Siswoyudho Based on Deed No 02/2011, AP's current Board of Commissioners is:
A summary of the provisions in AP's Articles of Association relating to Name Position

its Directors is as follows:
Bunawan Muslim President Commissioner
(a) (number of Directors) AP is to be lead and managed by five
Directors. One of the Directorsmust be appointed as the Sulaiman Tarigan Commissioner
President Director;
Heri Bernadus Susanto Commissioner
(b) (appointment and dismissal) Directors are appointed at a
General Meeting of Shareholders and may be dismissed at a Fong Jau Seng Commissioner
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 5 Management Details 136
A summary of the provisions in AP's Articles of Association relating to Recommendation: Article 14(2) of Deed 02/2011 should be
its Commissioners is as follows: amended to allow for the appointment of foreign commissioners.
(a) (minimum number) there must be a minimum of one 1.3 Right of the Board of Commissioners to suspend Directors
Commissioner. If more than one Commissioner is appointed,
one of the Commissioners must be appointed as the The Company Law provides that the Board of Commissioners are
President Commissioner; entitled to temporarily suspend one or more of the Directors if the
(b) (no maximum number) the Articles of Association do not Articles of Association or prevailing laws. The suspension must be
specify a maximum number of Commissioners; notified to the Director concerned, together with the reasons for the
suspension.
(c) (restrictions) only Indonesian citizens who qualify under
Indonesian law can be appointed as Commissioners; Within 30 days of the suspension of a Director, a General Meeting of
(d) (appointment and dismissal) Commissioners are appointed permanently discharge the Director. The suspension lapses if the
at a General Meeting of Shareholders and may be dismissed General Meeting of Shareholders is not held in time. If the Board of
at a General Meeting of Shareholders at any time; Commissioners suspends all of the members of the Board of
(e) (period of office) Commissioners are appointed for five Commissioners appointed by the Board of Commissioners may
years (unless removed earlier at a General Meeting of temporarily manage AP.
Shareholders);
1.4 Approval of the Board of Commissioners
(f) (vacancies) if a Commissioner position becomes vacant, a
General Meeting of Shareholders must be convened within 30 The following actions of the Board of Directors require prior written
days to fill the vacany; approval from the Board of Commissioners:
(g) (resignation) a Commissioner can resign by giving 30 days (a) borrowing or lending money on behalf of AP (excluding
prior written notice to AP; and withdrawing AP's money from the bank); and
(h) (information gathering rights) during AP's office hours, (b) establishing a new company or investing in another company,
each Commissioner is entitled to enter the building or other inside or outside of Indonesia.
premises used or owned by AP to examine books, letters or
other evidence concerning AP. Each Commissioner is also
entitled to receive information on every action conducted by
the Board of Directors. The Board of Directors and each
member of the Board of Directors are required to provide
such information to the Commissioners as requested by the
Commissioners.
(e) (total vacancy) if all the Director positions become vacant,

2. PT ALAM LESTARI KENCANA ALK will be managed temporarily by a Commissioner
appointed by the Board of Commissioners;
2.1 Board of Directors
Based on Deed of Statement of Shareholders Resolution No 3 dated written notice to ALK; and
17 February 2011 (Deed No 3/2011) (Document No. ALK.1.1.2(i)),
ALK's current Board of Directors is: (g) (authority of the President Director) the President Director
is entitled and authorised to represent ALK on behalf of the
Name Position prevented from being present (which does not have to be
proven to any third party), then another Director is entitled to
Saman Tedja President Director act for and on behalf of the Board of Directors and represent
ALK.
Alwi Sutedjo Director
Kumala 2.2 Board of Commissioners
Based on Deed No 3/2011, ALK's current Board of Commissioners is:

Heri Bernadus Director
Susanto
Name Position
A summary of the provisions in ALK's Articles of Association relating Chang Eng Thing President Commissioner
to its Directors is as follows:
Sulaiman Tarigan Commissioner
(a) (number of Directors) ALK is to be lead and managed by
three Directors. One of the Directors must be appointed as
the President Director; A summary of the provisions in ALK's Articles of Association relating
to its Commissioners is as follows:
General Meeting of Shareholders and may be dismissed at (a) (minimum number) there must be a minimum of one
aGeneral Meeting of Shareholders at any time; Commissioner. If more than one Commissioner is appointed,
one of the Commissioners must be appointed as the
(c) (period of office) Directors are appointed for five years President Commissioner;
Shareholders); (b) (no maximum number) the Articles of Association do not
specify a maximum number of Commissioners;
vacant, a General Meeting of Shareholders must be (c) (restrictions) only Indonesian citizens who qualify under
convened within 30 days to fill the vacancy; Indonesian law can be appointed as Commissioners;
(d) (appointment and dismissal) Commissioners are appointed permanently discharge the Director. The suspension lapses if the
at a General Meeting of Shareholders and may be dismissed General Meeting of Shareholders is not held in time. If the Board of
at a General Meeting of Shareholders at any time; Commissioners suspends all of the members of the Board of
(e) (period of office) Commissioners are appointed for five Commissioners appointed by the Board of Commissioners may
years (unless removed earlier at a General Meeting of temporarily manage ALK.
Shareholders);
General Meeting of Shareholders must be convened within 30 The following actions of the Board of Directors require prior written
days to fill the vacancy; approval from the Board of Commissioners:
(g) (resignation) a Commissioner can resign by giving 30 days (a) borrowing or lending money on behalf of ALK (excluding
prior written notice to ALK; and withdrawing ALK's money from the bank); and
(h) (information gathering rights) during ALK's office hours, (b) establishing a new company or investing in another company,
each Commissioner is entitled to enter the building or other inside or outside of Indonesia.
premises used or owned by ALK to examine books, letters or
other evidence concerning ALK. Each Commissioner is also
Commissioners.
Recommendation: Article 14(2) of Deed 03/2011 should be

amended to allow for the appointment of foreign commissioners.
2.3 Right of the Board of Commissioners to suspend Directors

entitled to temporarily suspend one or more of the Directors if the
Articles of Association or prevailing laws. The suspension must be
notified to the Director concerned, together with the reasons for the
suspension.
Within 30 days of the suspension of a Director, a General Meeting of


3. PT MITRA SUKSES GLOBALINDO written notice to MSG; and
3.1 Board of Directors (g) (authority of the President Director) the President Director
is entitled and authorised to represent MSG on behalf of the
Based on Deed of Statement of Shareholders’ Resolution No 04 Board of Directors. If the President Director is absent or is
dated 17 February 2011 (Deed No 04/2011), MSG's current Board of prevented from being present (which does not have to be
Directors is: proven to any third party), then another Director is entitled to
act for and on behalf of the Board of Directors and represent
Name Position MSG.
Kadrik President Director 3.2 Board of Commissioners
Toni Siswoyudho Director Based on Deed No 04/2011, MSG's current Board of Commissioners
is:
Resno Artanto Director
Name Position
A summary of the provisions in MSG's Articles of Association relating
to its Directors is as follows: Bunawan Muslim President Commissioner
(a) (number of Directors) MSG is to be lead and managed by Singgih Commissioner

three Directors. One of the Directors must be appointed as
the President Director; Rudy Wijaya Liong Commissioner
(b) (appointment and dismissal) Directors are appointed at a A summary of the provisions in MSG's Articles of Association relating
General Meeting of Shareholders and may be dismissed at a to its Commissioners is as follows:
(a) (minimum number) there must be a minimum of one
(c) (period of office) Directors are appointed for five years Commissioner. If more than one Commissioner is appointed,
(unless removed earlier at a General Meeting of one of the Commissioners must be appointed as the
Shareholders); President Commissioner;
(d) (vacancies) if one or more Director positions becomes (b) (no maximum number) the Articles of Association do not
vacant, a General Meeting of Shareholders must be specify a maximum number of Commissioners;
convened within 30 days to fill such vacancy;
(e) (total vacancy) if all the Director positions become vacant, Indonesian law can be appointed as Commissioners;
MSG will be managed temporarily by a Commissioner
(d) (appointment and dismissal) Commissioners are appointed Within 30 days of the suspension of a Director, a General Meeting of
at a General Meeting of Shareholders and may be dismissed Shareholders must be held to determine whether to reinstate or
at a General Meeting of Shareholders at any time; permanently discharge the Director. The suspension lapses if the
General Meeting of Shareholders is not held in time. If the Board of
(e) (period of office) Commissioners are appointed for five Commissioners suspends all of the members of the Board of
years (unless removed earlier at a General Meeting of Directors, the Board of Commissioners or one or more
Shareholders); Commissioners appointed by the Board of Commissioners may
temporarily manage MSG.
(f) (vacancies)if a Commissioner position becomes vacant, a
General Meeting of Shareholders must be convened within 30 3.4 Approval of the Board of Commissioners
days to fill the vacancy;
The following actions of the Board of Directors require prior written
(g) (resignation) a Commissioner can resign by giving 30 days approval from the Board of Commissioners:
prior written notice to MSG; and
(a) borrowing or lending money on behalf of MSG (excluding
(h) (information gathering rights) during MSG's office hours, withdrawing MSG's money from the bank); and
each Commissioner is entitled to enter the building or other
premises used or owned by MSG to examine books, letters or (b) establishing a new company or investing in another company,
other evidence concerning MSG. Each Commissioner is also inside or outside of Indonesia
Commissioners.
Recommendation: Article 14(2) of Deed 04/2011 should be

amended to allow for the appointment of foreign
commissioners.

notified to the Director concerned together with the reasons for the
suspension.
4. PT HAVILAH ABADI SEJAHTERA (e) (total vacancy) if all the Director positions become vacant,
HAS will be managed temporarily by a Commissioner
4.1 Board of Directors appointed by the Board of Commissioners;
Based on Deed of Statement of Shareholders’ Resolution No 05 (f) (resignation) a Director can resign by giving 30 days prior
dated 7 February 2011 (Deed No 05/2011) (Document No. HAS.1.1.2 written notice to HAS; and
(o)), HAS's current Board of Directors is:
(g) (authority of the President Director) the President Director
Name Position is entitled and authorised to represent HAS on behalf of the
Aripin President Director prevented from being present (which does not have to be
Rudy Wijaya Director
Liong
HAS.
A summary of the provisions in HAS's Articles of Association relating 4.2 Board of Commissioners
Based on Deed No 05/2011, HAS's current Board of Commissioners
(a) (number of Directors) HAS is to be lead and managed by is:
one or more Directors. If more than more than one Director is
appointed, one of the Directors must be appointed as the Name Position
President Director;
Mustakim Commissioner
General Meeting of Shareholders and may be dismissed at a
A summary of the provisions in HAS's Articles of Association relating
(c) (period of office) Directors are appointed for five years
Commissioner. If more than one Commissioner is appointed,
Shareholders);
one of the Commissioners must be appointed as the
(d) (vacancies) if one or more Director positions becomes President Commissioner;
vacant, a General Meeting of Shareholders must be
(b) (no maximum number) the Articles of Association do not
(c) (appointment and dismissal) Commissioners are appointed Directors, the Board of Commissioners or one or more
at a General Meeting of Shareholders and may be dismissed Commissioners appointed by the Board of Commissioners may
at a General Meeting of Shareholders at any time; temporarily manage HAS.
(d) (period of office) Commissioners are appointed for five 4.4 Approval of the Board of Commissioners
years (unless removed earlier at a General Meeting of
Shareholders); The following actions of the Board of Directors require prior written
approval from the Board of Commissioners:
(e) (vacancies) if a Commissioner position becomes vacant, a
General Meeting of Shareholders must be convened within 30 (a) borrowing or lending money on behalf of HAS (excluding
days to fill the vacancy; withdrawing HAS's money from the bank); and
(f) (resignation) a Commissioner can resign by giving 30 days (b) establishing a new company or investing in another company,
prior written notice to HAS; and inside or outside of Indonesia.
(g) (information gathering rights) during HAS's office hours,

premises used or owned by HAS to examine books, letters or
other evidence concerning HAS. Each Commissioner is also
Commissioners.

suspension.

permanently discharge the Director. The suspension lapses if the
Commissioners suspends all of the members of the Board of
5. PT MULIA ANDALAN PERSADA
5.1 Board of Directors (f) (resignation) a Director can resign by giving 30 days prior
written notice to MAP; and
Based on Deed of Minutes of Meeting No 17 dated 8 December 2010
(Deed No 17/2010) (Document No. MAP.1.1.2(a)), MAP's current (g) (authority of the President Director) the President Director
Board of Directors of is: is entitled and authorised to represent MAP on behalf of the
Hadi Wiratama Director act for and on behalf of the Board of Directors and represent
Legawa MAP.

A summary of the provisions in MAP's Articles of Association relating
to its Directors is as follows: Based on Deed No 17/2010, MAP's current Board of Commissioners
is:
(a) (number of Directors) MAP is to be lead and managed by
one or more Directors. If more than one Director is appointed
to MAP, one of the Directors can be appointed as the Name Position
President Director;
Tsjiam Gunawan Commissioner
General Meeting of Shareholders and may be dismissed at a A summary of the provisions in MAP's Articles of Association relating
General Meeting of Shareholders at any time; to its Commissioners is as follows:
(c) (period of office) Directors are appointed for five years (a) (minimum number) there must be a minimum of one
(unless removed earlier at a General Meeting of Commissioner. If more than one Commissioner is appointed,
Shareholders); one of the Commissioners can be appointed as the President
Commissioner;
convened within 30 days to fill the vacancy; specify a maximum number of Commissioners;
(e) (total vacancy) if all the Director positions become vacant, (c) (restrictions) only Indonesian citizens who qualify under
MAP will be managed temporarily by a Commissioner Indonesian law can be appointed as Commissioners;
(d) (appointment and dismissal) Commissioners are appointed Directors, the Board of Commissioners or one or more
at a General Meeting of Shareholders and may be dismissed Commissioners appointed by the Board of Commissioners may
at a General Meeting of Shareholders at any time; temporarily manage MAP.
(e) (period of office) Commissioners are appointed for five 5.4 Approval of the Board of Commissioners
General Meeting of Shareholders must be convened within 30 (a) borrowing or lending money on behalf of MAP (excluding
days to fill the vacancy; withdrawing MAP's money from the bank);
(g) (resignation) a Commissioner can resign by giving 30 days (b) establishing a new company or investing in another company,
prior written notice to MAP; and inside or outside of Indonesia;
(h) (information gathering rights) during MAP's office hours, (c) purchasing immovable assets or securing assets of MAP
each Commissioner is entitled to enter the building or other which are less than 50% of the total net assets of MAP in one
premises used or owned by MAP to examine books, letters or or more transactions;
other evidence concerning MAP. Each Commissioner is also
entitled to receive information on every action conducted by (d) selling, assigning, or release rights over MAP's assets which
the Board of Directors. The Board of Directors and each are less than 50% of the total net assets of MAP in one or
member of the Board of Directors are required to provide more transactions.
5.5 Approval of the General Meeting of Shareholders
Commissioners.
Selling, assigning, release rights or put as security for a debt all or a
majority of the assets of MAP in one financial year whether in one or
The Company Law provides that the Board of Commissioners are more stand-alone or related transactions, requires approval at a
entitled to temporarily suspend one or more of the Directors if the General Meeting of Shareholders. The General Meeting of
relevant Director acts in a manner which is not in accordance with the Shareholders must be attended by shareholders or representatives of
Articles of Association or prevailing laws. The suspension must be shareholders who holds at least ¾ of the entire number of shares with
notified to the Director concerned, together with the reasons for the valid voting rights and the resolution must be passed by at least ¾ of
suspension. the votes validly cast.

6. PT HAVILAH SUKSES BERSAMA
is entitled and authorised to represent HSB on behalf of the
Based on Deed of Statement of Shareholders’ No 39 dated 29 Board of Directors. If the President Director is absent or is
November 2010 (Deed No 39/2010) (Document No. HSB.1.1.2(d)), prevented from being present (which does not have to be
HSB's current Board of Directors is: proven to any third party), then another Director is entitled to
Name Position
the HSB.
Aurelia Supardi Director 6.2 Board of Commissioners
A summary of the provisions in HSB's Articles of Association relating Based on Deed No 39/2010, HSB's current Board of Commissioners
to its Directors is as follows: is:
(a) (number of Directors) HSB is to be lead and managed by Name Position

one or more Directors. If more than one Director is appointed
to HSB, one of the Directors must be appointed as the Rudy Wijaya Liong Commissioner
President Director;
(b) (appointment and dismissal) Directors are appointed at a A summary of the provisions in HSB's Articles of Association relating
(e) (total vacancy) if all the Director positions become vacant, Indonesian law can be appointed as Commissioners;
HSB will be managed temporarily by a Commissioner
(d) (appointment and dismissal) Commissioners are appointed
at a General Meeting of Shareholders and may be dismissed
(f) (resignation) a Director can resign by giving 30 days prior at a General Meeting of Shareholders at any time;
written notice to HSB; and
(f) (vacancies) if a Commissioner position become vacant, a
General Meeting of Shareholders must be convened within 30 (a) borrowing or lending money on behalf of HSB (excluding
days to fill the vacancy; withdrawing HSB's money from the bank); and
prior written notice to HSB; and inside or outside of Indonesia.
(h) (information gathering rights) during HSB's office hours,

premises used or owned by HSB to examine books, letters or
other evidence concerning HSB. Each Commissioner is also
Commissioners.

notified to the Director concerned, together with the reasons for the
suspension.

Commissioners appointed by the Board of Commissioners may
temporarily manage HSB.
7. PT LEVIATHAN MINING EKAPRIMA (LME)
7.1 Board of Directors (f) (resignation) a Director can resign by giving 30 days prior
written notice to LME; and
Based on Deed of Statement of Shareholders No 6 dated 7 February
2011 (Deed No 06/2011) (Document No. LME1.1.2(n)) , LME's (g) (authority of the President Director) the President Director
current Board of Directors is: is entitled and authorised to represent LME on behalf of the
Arif President Director act for and on behalf of the Board of Directors and represent
LME.
Muliawarman Director
A summary of the provisions in LME's Articles of Association relating
to its Directors is as follows: Based on Deed No 06/2011, LME's current Board of Commissioners
is:
(a) (number of Directors) LME is to be lead and managed by
one or more Directors. If more than more than one Director is Name Position
appointed, one of the Directors must be appointed as the
President Director; Mustakim Commissioner
General Meeting of Shareholders and may be dismissed at a A summary of the provisions in LME's Articles of Association relating
General Meeting of Shareholders at any time; to its Commissioners is as follows:
(c) (period of office) Directors are appointed for five years (a) (minimum number) there must be a minimum of one
(unless removed earlier at a General Meeting of Commissioner. If more than one Commissioner is appointed,
Shareholders); one of the Commissioners must be appointed as the
President Commissioner;
(d) (vacancies) if one or more or Director positions becomes
convened within 30 days to fill the vacancy; specify a maximum number of Commissioners;
(e) (total vacancy) if all the Director positions become vacant, (c) (appointment and dismissal) Commissioners are appointed
LME will be managed temporarily by a Commissioner at a General Meeting of Shareholders and may be dismissed
appointed by the Board of Commissioners; at a General Meeting of Shareholders at any time;
(d) (period of office) Commissioners are appointed for five 7.4 Approval of the Board of Commissioners
(e) (vacancies)if a Commissioner position becomes vacant, a
General Meeting of Shareholders must be convened within 30 (a) borrowing or lending money on behalf of LME (excluding
days to fill the vacancy; withdrawing LME's money from the bank);
(f) (resignation) a Commissioner can resign by giving 30 days (b) buying, selling or obtaining or transfering rights on fixed
prior written notice to LME; and assets and companies or encumbering LME's assets;
(g) (information gathering rights) during LME's office hours, (c) binding LME as a guarantor;
premises used or owned by LME to examine books, letters or (d) mortgaging movable assets owned by LME; and
other evidence concerning LME. Each Comissioner is also
(e) establishing a new company or investing in another company,
inside or outside of Indonesia.
Commissioners.

suspension.

temporarily manage LME.
8. PT ANDALAN PERSADA GLOBALINDO
is entitled and authorised to represent APG on behalf of the
Based on Deed of Statement of Shareholders’ Resolution No 01 Board of Directors. If the President Director is absent or is
dated 1 December 2010 (Deed No 01/2010) (Document No. prevented from being present (which does not have to be
APG.1.1.2(a)), APG's current Board of Directors is: proven to any third party), then another Director is entitled to
Name Position
APG.
Suwandi Sukarti Director 8.2 Board of Commissioners
A summary of the provisions in APG's Articles of Association relating Based on Deed No 01/2010, APG's current Board of Commissioners
to its Directors is as follows: is:
(a) (number of Directors) APG is to be lead and managed by Name Position

one or more Directors. If more than one Director is appointed,
one of the Directors must be appointed as the President Toni Siswoyudho Commissioner
Director;
(b) (appointment and dismissal) Directors are appointed at a A summary of the provisions in APG's Articles of Association relating
(c) (appointment and dismissal) Commissioners are appointed
(e) (total vacancy) if all the Director positions become vacant, at a General Meeting of Shareholders and may be dismissed
APG will be managed temporarily by a Commissioner at a General Meeting of Shareholders at any time;
(d) (period of office) Commissioners are appointed for five
(f) (resignation) a Director can resign by giving 30 days prior years (unless removed earlier at a General Meeting of
written notice to APG; and Shareholders);
(d) (vacancies) if a Commissioner position becomes vacant, a (a) borrowing or lending money on behalf of APG (excluding
General Meeting of Shareholders must be convened within 30 withdrawing APG's money from the bank);
days to fill the vacancy;
(b) establishing a new company or investing in another company,
(e) (resignation) a Commissioner can resign by giving 30 days inside or outside of Indonesia;
prior written notice to APG; and
(c) selling, purchasing or acquiring or transferring rights over
(f) (information gathering rights) during APG's office hours, fixed assets and companies in any other way;
premises used or owned by APG to examine books, letters or (d) putting a security over APG's assets, by way of pledging,
other evidence concerning APG. Each Commisioner is also fiducia or any other way; and
the Board of Directors. The Board of Directors and each (e) binding APG as a guarantor.
Commissioners.

suspension.

temporarily manage APG.
The following actions of the Board of Directors require prior written

9. PT HAMPARAN MINERAL PERSADA
is entitled and authorised to represent HMP on behalf of the
Based on Deed of Statement of the Shareholders Resolution No 4 Board of Directors. If the President Director is absent or is
dated 1 December 2010 (Deed No 4/2010) (Document No. prevented from being present (which does not have to be
HMP.1.1.2.(a)), HMP's current Board of Directors is: proven to any third party), then another Director is entitled to
Name Position HMP.
Tong Pin Director 9.2 Board of Commissioners
Based on Deed No 4/2010, HMP's current Board of Commissioners is:

A summary of the provisions in HMP's Articles of Association relating
Name Position
(a) (number of Directors) HMP is to be lead and managed by
one or more Directors. If more than more than one Director is Ricky Ferlanico Commissioner
appointed, one of the Directors must be appointed as a
President Director; A summary of the provisions in HMP's Articles of Association relating
General Meeting of Shareholders and may be dismissed at a (a) (minimum number) there must be a minimum of one
General Meeting of Shareholders at any time; Commissioner. If more than one Commissioner is appointed,
one of the Commissioners can be appointed as the President
(c) (period of office) Directors are appointed for five years Commissioner;
Shareholders); (b) (no maximum number) the Articles of Association do not
vacant, a General Meeting of Shareholders must be (c) (restrictions) only Indonesian citizens who qualify under
convened within 30 days to fill the vacancy; Indonesian law can be appointed as Commissioners;
(e) (total vacancy) if all the Director positions become vacant, (d) (appointment and dismissal) Commissioners are appointed
HMP will be managed temporarily by a Commissioner at a General Meeting of Shareholders and may be dismissed
appointed by the Board of Commissioners; at a General Meeting of Shareholders at any time;

written notice to HMP; and
(f) (vacancies) if a Commissioner position becomes vacant a
General Meeting of Shareholders must be convened within 30 (a) borrowing or lending money on behalf of HMP (excluding
days to fill the vacancy; withdrawing HMP's money from the bank);
prior written notice to HMP; and inside or outside of Indonesia;
(h) (information gathering rights) during HMP's office hours, (c) purchasing, selling or otherwise acquiring or assigning its
each Commissioner is entitled to enter the building or other rights over fixed assets and companies;
premises used or owned by HMP to examine books, letters or
other evidence concerning HMP. Each Commissioner is also (d) securing, whether by way of fiducia or pledge, or otherwise
entitled to receive information on every action conducted by encumbering the assets of HMP; and
(e) binding HMP as a guarantor.
Commissioners.

suspension.

temporarily manage HMP.
Schedule 6
CONDITIONS OF EXPLORATION IUPS
The conditions of the Exploration IUPs are summarised below:

12. prepare AMDAL or UKL/UPL as part of feasibility study documents in
1. within 60 days of the issue of an Exploration IUP, submit a Work Plan accordance with the laws and regulations;
and Budget to the Governor of Bangka Belitung Islands;
13. prepare a reclamation document and post-mining documents based
2. within 90 days of approval of the Work Plan and Budget, commence on feasibility study documents in accordance with the laws and
activities in the field; regulations;
3. select the jurisdiction of the District Court where the WIUP is located; 14. prepare a Community Development and Empowerment Plan relating
to the local people (which is to be a standalone document prepared
4. establish a representative office where the WIUP is located; by the Company);
5. submit an Investment Plan; 15. deposit a reclamation and post-mining surety fund in accordance with
the laws and regulations;
6. by November each year, submit a Work Plan and Budget which
covers activity realization for the current year and plans for the 16. appoint a Head of Mining Engineering who will be responsible for the
following year, to the Governor of Bangka Belitung Islands (copying Exploration IUP activity, Mining Occupational Health and Safety and
the Minister); Mining Environmental Management;
7. within 30 days of the end of each quarter, submit a Quarterly Activity 17. at least 3 months before the expiry of the Exploration IUP, apply to
Report to the Governor of Bangka Belitung Islands (copying the upgrade the Exploration IUP to a Production Operation IUP, in
Minister); accordance with the laws and regulations;
8. if the time limit for submitting the Work Plan and Budget and Quarterly 18. negligence in complying withpoint 17 will cause the Exploration IUP to
Activity Report has passed, the holder of the Exploration IUP will be become legally null and void and all mining activities must be stopped.
given written notice; Within 6 months of the expiry of this decree, the holder of the
Exploration IUP must remove all of its property, except for the
9. submit a Community Development and Empowerment Plan on the properties/buildings utilized for public interest;
surrounding mining area as part of the Work Plan and Budget;
19. apply good mining norms;
10. comply with tax provisions in accordance with the laws and
regulations; 20. manage the finances in accordance with the Indonesian accounting
system;
11. pay Deadrent annually in accordance with the laws and regulations;
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 6 Conditions of Exploration IUPS 154
21. periodically report on the implementation of community development (b) a copy of the list of drilling holes (drilling log) and wells and
and empowerment of local people (based on the plans in No. 9 and the examination results of the samples taken and analyzed;
No. 14);
(c) a copy of each geology map with a scale of 1: 50.000 and
22. report and maintain the conservation and sustainability of the related geophysics as well as geochemical of the exploration activity
water resources function in accordance with the laws and regulations; area;
23. prioritize the use of local manpower and domestic goods and services (d) a topography map with a scale of 1:50.000;
in accordance with the laws and regulations;
32. submit a feasibility report, which covers:
24. to the extent possible, optimise the participation of local entrepreneurs;
(a) thorough geological research and authentication of the ore
25. prioritize the use of local and/or national mining services companies sediments in the WIUP, including the reserves of ore which
and submit data regarding the use of supporting services business are measured, shown and predicted for as long as required
periodically or as required; for the economic feasibility of the commercialization to be
considered and the testing and sample taking of the valued
26. do not involve a subsidiary and/or affiliates in the mining services sediments according to the approved working plan;
business in its WIUP that is being commercialized, except with
approval from the Minister; (b) detailed observations and information regarding the location
for the intended operation area including preparation of maps
27. submit all data of Exploration IUP activity results to the Governor of and drawings pertaining to such location;
Bangka Belitung Islands;
(c) a technical and economical feasibility study regarding the
28. compensate the holder of land title disturbed by the Exploration IUP mining, transporting, loading and shipping of ore,
activity; concentrates and results in other forms from the WIUP,
including a technical survey regarding a possible port
29. submit an application for the temporary suspension of the Exploration location, connecting roads from the mining location to the
IUP and return of WIUP; river port and other appropriate methods of transportation;
30. report on the minerals being excavated during the period of the (d) an investigation regarding every possible effect of shipping
Exploration IUPs; using barges or vessels;
31. submit a final report of Exploration IUP activity in the form of a general (e) an investigation regarding the location and design of airports,
survey final activity report, an exploration activity final report and a ports and landing facilities, if considered necessary;
feasibility study final report, including mapping reports for the entire
WIUP which, amongst other things, includes: (f) investigation and planning for the development of housing
facility and social facility, cultural and public facility to the
(a) maps showing all the places in the exploration activity area extent it is required to fulfil the needs of the local public which
where the IUP holder has commenced drilling or well digging; may be affected by the company’s activities within 5 years
after the commencement of the operation period;
(g) a study regarding future manpower needs for the secure and mining, industry, and permanent housing in relation to
efficient operation of the company, including an estimation of the commercialization;
the type and duration of training required to ensure the
replacement of foreign manpower by Indonesian manpower (iii) feasibility and cost required to construct water
and to ensure that the utilisation of local manpower is installation in accordance with commercialization
maximised; requirements;
(h) a study regarding the environmental impact of the company’s 33. implement a community development and empowerment plan to
activities, to be conducted by qualified independent support and help the Regional Government develop the area;
consultants;
34. conduct socialisation before the commencement of operation period;
(i) an investigation regarding the numbers and type of local
businesses which are required to provide the service of 35. adjust the mining area and mining technical operations, if changes to
commercialization and permanent housing which may the mining area and/or regulations occur during the period of the
develop within the period of 5 years after the commencement Exploration IUP;
of the production operation activity;
36. plan in-country processing and refining;
(j) metallurgical and marketing research to determine the
37. conduct relinquishment of the mining area in accordance with laws
feasibility of the amount of minerals that can be mined and
and regulations.
sold;
(k) a preliminary investigation regarding the feasibility of

constructing processing and refining facilities, which can
estimate the capital and operational costs as well as the
electricity source required in the future;
(l) a thorough financial analysis of the prospect of cash flow and

the rate of return from the commercialization, based on
proper criteria for a mining business;
(m) an investigation regarding the proper water supplier facility for

the mining business, industry and permanent housing;
(n) a complete study and investigation in relation to the following:
(i) feasibility and cost required to build a proper

telecommunications facility;
(ii) feasibility,construction cost and operating facility

required to provide electricity for the construction,
Schedule 7
CONDITIONS OF PRODUCTION OPERATION IUP
11. within 30 days of the end of each quarter, submit the Quarterly
Activity Report to the Governor of Bangka Belitung Islands (copying
the Minister);
The conditions of the Production Operation IUP are summarised below:
12. if the time for the submission of the Work Plan and Budget and
1. within 60 daysof the issue of the Production Operation IUP, submit a Quartertly Activity Reporthas passed, the holder of a Production
Work Plan and Budget to the Governor of Bangka Belitung Islands for Operation IUP will be given written notice;
approval;
13. submit the production and marketing report in accordance with the
2. within 90 days of the approval of the Work Plan and Budget, laws and regulations;
commence activities in the field;
14. submit the Community Development and Empowerment Plan on the
3. select the jurisdiction of the District Court where the WIUP is located; area surrounding the mining area as part of the Work Plan and
Budget;
4. within 6 months of the issue of the Production Operation IUP,
implement and submit the report on the border marking of the 15. submit the Annual Technical and Environmental Working Plan
Production Operation IUP area to the Governor of Bangka Belitung (Rencana Kerja Tahunan dan Teknik Lingkungan – RKTTL) annually
Islands; prior to the submission of Work Plan and Budget;
5. the relationship between the holder of Production Operation IUP and 16. comply with tax provisions in accordance with the laws and
third parties is the responsibility of the holder of Production Operation regulations;
IUP and must be conducted in accordance with the laws and
regulations; 17. pay annual Deadrent and royalties in accordance with the laws and
regulations;
6. submit the Investment Plan;
18. deposit the reclamation warranty prior to conduct the production
7. submit the reclamation plan; activity and Plan on the Closing of Mining (Rencana Penutupan
Tambang – RPT) in accordance with the laws and regulations;
8. submit the post-mining plan;
19. 2 years prior to the expiry of the production activity, submit Plan on
9. deposit the security for the closing of the mine (in accordance with the
the Closing of Mining (Rencana Penutupan Tambang – RPT);
mine age);
20. appoint a Head of Mining Engineering who will be responsible for the
10. by November each year, submit a Work Plan and Budget which
Production Operation IUP activity (construction, production,
covers activity realization for the current year and the plans for the
processing and refining and transportation and selling), Mining
following year to the Governor of Bangka Belitung Islands (copying
Occupational Health and Safety and Mining Environmental
the Minister);
Management;
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 7 Conditions of Production Operation IUP 157
21. production activity must commence if the installed production capacity 33. do not involve its subsidiaries and/or affiliates in the mining services
has reached 70% from the targeted capacity; business in its WIUP that being commercialized, except with the
approval from the Minister;
22. 2 years prior to the expiry of the Production Operation IUP, apply for
an extension of the Production Operation IUP, enclosing 34. report data regarding the utilisation of supporting services;
documentsevidencing the fulfilment of all requirements;
35. submit all data obtained from the results of the Production Operation
23. negligence in complying with point 22, will cause the Production IUP activities to the Governor of Bangka Belitung Islands;
Operation IUP to become legally null and void, and all mining
activities must be stopped. Within 6 months of the expiry of the 36. in applying for an extension of the Production Operation IUP, submit a
Production Operation IUP, the holder of the Production Operation IUP proposal which at the very least describes the technical, financial,
must remove its property, except for the properties/buildings which production and marketing and environmental aspects of the IUP;
are utilized for public interest;
37. compensate the holder of land title disturbed by the Production
24. if within the time specified in point 23, the holder of the Production Operation IUP activities;
Operation IUP does not remove its property from the IUP area, the
property/assets will become property/assets of the government; 38. prioritise domestic market requirements in accordance with the laws
and regulations;
25. the holder of a Production Operation IUP must provide data and
information at any time, if requested by the government; 39. implement a community development and empowerment plan to
support and help the Regional Government develop the area;
26. the holder of a Production Operation IUP must allow the government
to conduct an examination of its activities at any time; 40. conduct socialisation before the commencement of production
operation;
27. apply good mining norms;
41. adjust the mining area and mining technical, if changes to spatial and
28. manage the finances in accordance with the Indonesian accounting regulations occur during the period of the Production Operation IUP;
system;
42. the sale of production results to an affiliate must be at market price;
29. periodically report on the implementation of community development
and empowerment of local people (based on the plan in No. 14); 43. long term sales contracts (minimum 3 years) require prior approval
from the Minister;
30. prioritize the use of local manpower and domestic goods and services
in accordance with the laws and regulations; 44. the Company is obliged to process its production results domestically;
31. prioritize domestic purchases from local companies in the 45. the construction of facilities and infrastructure in the construction
surrounding area in accordance with the laws and regulations; phase shall cover, amongst other things:
32. prioritize the use of local and/or national mining services companies; (a) facilities and equipment for mining;
(b) installation and equipment for the enhancement of

mineral/coal quality;
(c) port facilities (which covers docks, harbours, piers, bridges,

barges, water breakers, terminal facilities, repair shops,
stockpiling areas, storages, and loading facilities);
(d) transportation and communication facilities (which covers

roads, bridges, ships, ferries, airports, railways, airplane
landing facilities, hangars, garages, gas stations, radio and
telecommunications facilities as well as the telegraph and
telephone networking facilities);
(e) housing and living facilities (which covers houses, stores,

schools, hospitals, theatres and other buildings, facilities and
the equipment of the contractor’s employee including the
dependants of the employee);
(f) electricity, water and waste water facilities and possibly

power plants (which may take the form of hydro, steam, gas
or diesel powered), electricity lines, dams, waterways, water
supply systems, and waste tailing systems, factory water
waste and household water waste;
(g) other facilities, including but not limited to machineries

workshops, foundry workshops and repair shops;
(h) all other facilities, factory and other equipment considered

necessary or proper for the company’s operation in relation
with the WIUP or to provide the services or to implement the
supporting activities or incidental activities.
Schedule 8
PROCESSING AND REFINING KP
8. at least 3 months before the expiry of the Processing and Refining KP,
an application for extension of the Processing and Refining KP must
be submitted.
The conditions of the Processing and Refining KP are summarised as follows:
1. submit quarterly and annual reports in writing in respect of the

implementation/development of activities to the Mayor of
Pangkalpinang;
2. prevent any environmental damage and pollution;
3. implement occupational health and safety procedures;
4. implement environmental management and monitoring procedures to

prevent environmental damage;
5. comply with all prevailing laws and regulations and directions given by
the government;
6. the processing and refining KP will automatically be cancelled if:
(a) there is any violation of the prevailing laws and regulations;
(b) there is change/mobilisation on the subject and object without

approval from the Mayor of Pangkalpinang;
(c) there is a technical violation which is deemed to endanger the

environment;
(d) the KP is assigned/transferred to other parties without

approval from the Mayor of Pangkalpinang;
(e) there has been no realisation in the field within 1year of the
enactment of the Processing and Refining KP;
7. expansion or addition to the capacity of processing and refining of tin

sand and/or tin ore must be submitted to the Mayor of Pangkalpinang
for approval;
Schedule 8 Processing and refining KP 160

Schedule 9
DETAILS OF IUPS / KPS
PT AEGA PRIMA (a) 2010 and 2011 Work Plan and Budget;
1. Overview (b) 2010 Annual Report of Exploitation of Tin Sediments in

Kelabat Sea, North Bangka Regency, Bangka Belitung
AP holds 3 Production Operation IUPs and 16 Exploration IUPs. 1 Islands Province (submission evidenced by a receipt dated 21
Production Operation IUP and 16 Exploration IUPs were granted to April 2011);
AP by the Governor of Bangka Belitung Province on 15 March 2010.
The remaining 2 Production Operation IUPs were granted to AP by (c) Annual Technical and Environmental Working Plan (Rencana
the Governor of Bangka Belitung Province on 3 May 2010 and 30 Kerja Tahunan dan Teknik Lingkungan – RKTTL for 2010 and
April 2010 respectively. 2011;
The Production Operation IUPs will expire on 13 November 2016, 2 (d) Letter dated 1 January 2010 on the Appointment of Head
May 2025 and 29 April 2025 respectively. They can be extended Mining Engineering who is responsible for Production
twice, for 10 years on each extension. Operation IUP activity (construction, production, processing
and refining and transportation and selling), Mining
All of AP's Exploration IUPs will expire on 4 September 2012. Occupational Health and Safety and Mining Environmental
Management.
The Production Operation IUPs was granted for the mining operations
and production of tin and its associated minerals. Pursuant to Letters Nos 540/326/DPE/2011 dated 1 April 2011 and
540/539/DPE/2011 dated 31 May 2011, the Energy and Mining
The Exploration IUPs were granted for the exploration of tin and its Resources Government Service of the Bangka Belitung Islands
associated minerals. Province has confirmed that AP has no outstanding obligations in
respect of its Production Operation IUPs.
Details of the Production Operation IUPs and each of the Exploration
IUPs are set out in the table below. However, the documents are also required to confirm AP's
compliance with its Production Operation IUPs:
The conditions of the IUPS are set out in Schedule 6 and Schedule 7
above. (a) Evidence of submission of periodic reports on the
implementation of the community development and
2. Compliance with the IUPs
empowerment of local people to the Governor of Bangka
2.1 Compliance with the Production Operation IUP Belitung Province.
We have been provided the following compliance documents:
Schedule 9 Details of IUPs / KPS 161

2.2 Compliance with the Exploration IUPs Article 110 of Government Regulation No 23 of 2010 provides that
violations to the conditions of an IUP can result in an administrative
We have been provided the following compliance documents: sanction in the form of:
(a) 2010 and 2011 Work Plan and Budget; (a) written warnings;
(b) 2010 Annual Report of Exploration of Tin Sediments in North (b) temporary suspension of the IUP; and/or
Bangka Sea, Bangka Belitung Islands Province;
(c) revocation of IUP or IUPK.
(c) 2010 First, Second, Third and Fourth Quarter Report of
Exploration of Tin Sediments in Offshore Bangka Regency, AP's compliance with its Exploration IUPs is material for the purposes
Bangka Belitung Province; of upgrading the Explorations IUPs to Production Operation IUPs.
(d) Decree of the Governor of Bangka Belitung Islands Provice 2.3 Verification Searches and Overlapping interests
No. 188.44/316/BLHD/2010 dated 31 March 2010 stipulating
Environmental Feasibility of AP's exploration activities under Pursuant to its Letter No. 540/326/DPE/2011 dated 1 April 2011 and
the Exploration IUPs. Letter No. 540/539/DPE/2011 dated 31 May 2011, the Energy and
Mineral Resources Service Office of Bangka Belitung Islands
Pursuant to Letter No. 540/326/DPE/2011 dated 1 April 2011, the Province has confirmed the validity of all of the IUPs granted to AP. It
Energy and Mining Resources Government Service of the Bangka has also confirmed that:
Belitung Islands Province has confirmed that AP has no outstanding
obligations in respect of its Exploration IUPs. (a) AP has no outstanding obligations in respect of its IUPs; and
However, the following documents are also required to confirm AP's (b) the Energy and Mineral Resources Service Office of Bangka
compliance with its Exploration IUPs: Belitung Islands Province has never imposed any
penalties/sanctions on AP in respect of the mining operations
(a) Evidence of submission of the First and Second Quarterly carried out under its IUPs.
Activity Report submitted within 30 (thirty) days after the end
of the First and Second Quarter of 2011 to the Governor of (c) the mining area granted under AP's IUPs do not overlap with
Bangka Belitung Islands Province (copied to the Minister). other mining areas.
Recommendation: AP should provide all of the outstanding The Department of Energy and Mineral Resources of the Republic of
documents above as mentioned in items 2.1 and 2.2 above. Indonesia has confirmed that there are no overlapping issues in
relation to the IUPs granted to AP.
The absence of these documents raises concerns as to whether AP On 6 May 2011, OSP has been provided with 2 additional Production
has complied with the conditions of its Exploration IUPs. Failure to Operation IUPs registered under AP (No. 409 and No. 418).
comply with any of these conditions may put the good standing of AP
into question and may constitute a breach of the Exploration IUPs, OSP has conducted overlapping searches at the Energy and Mineral
which can lead to suspension or revocation of the Exploration IUPs. Resources Service Office of Bangka Belitung Islands Province in
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 9 Details of IUPs / KPS 162
respect of these 2 new IUPs. The results were that there are no (c) the Cooperation Agrement is valid and in force continuously
overlapping issues in relation to these 2 new IUPs. until the completion of AP's smelter; and
The Department of Energy and Mineral Resources of the Republic of (d) each party is responsible for its own income tax, royalties,
Indonesia is currently not performing overlapping searches and has deadrent and any other taxies/levies applicable under the
not specified when these searches will resume. This currently only prevailing laws.
affects the 2 new IUPs.
We note that the period of the Cooperation Agreement is not clearly
As the Directorate General of Oil and Gas of the Department of defined in the Cooperation Agreement. As such, the period of the
Energy and Mineral Resources of the Republic of Indonesia is not Cooperation Agreement may be deemed to be perpetual.
issuing official responses to applications for overlapping searches,
OSP has obtained an unofficial response from it that there are no According to one of the conditions stipulated under the AP's
overlapping issues in relation to these 2 additional IUPs.Updating Production Operation IUPs, any contract of sale of tin ore exceeding
Corporate Information in AP's Production Operation IUP and three years will need to be approved by MEMR.
Exploration IUPs
If AP is selling tin ore to ALK for an indefinite period under the
We note that the information on AP's shareholders, Directors and Cooperation Agreement, AP may be required to obtain approval from
Commissioners in the Production Operation IUP and the Exploration MEMR. We note that AP has confirmed that such approval is
IUPs does not reflect the most up to date information. unavailable.
Recommendation: AP should submit a report to the Governor of AP should confirm whether the Cooperation Agreement also covers
Bangka Belitung Islands Province, providing the latest information on supply of tin ore produced from AP's Production Operation IUPs No.
its shareholders, Directors and Commissioners. 188.44/409/DPE/2010 dated 30 April 2011 and No.
188.44/418/DPE/2010 dated 3 May 2011.
3. Supply of Tin Ore by AP to ALK
Recommendation: The Cooperation Agreement should be amended
We have been provided with Cooperation Agreement on Supply of Tin
to reflect a validity period of less than 3 years (i.e. annually).
Ore dated 3 May 2010 between AP and ALK.
4. Lease of Vessel for AP's Mining Operations
The key terms of the Cooperation Agreement are:
We have sighted Leasing of Mining Equipment Agreement dated 2
(a) AP is supplying ALK with tin ores produced from AP's 310 Ha November 2009 between AP and PT Manggala Gita Karya (PT MGK).
mining area located in the territory of Teluk Kelabat sea in The key terms of the agreement are:
Bangka Belitung Islands Province granted under the
Production OperationIUP No. 188.44/102/DPE/2010 dated 15 (a) AP has agreed to lease a vessel and hire personnel from PT
March 2010; MGK for conducting tin mining operations at AP's mining area
as stipulated in AP's mining licence;
(b) the calculation of purchase price of the tin ore is based on the
prevailing market price at the time AP sells the tin ore to ALK; (b) the Leasing Agreement serves as an approval for PT MGK to
conduct mining operations in AP's mining area;
(c) AP is required to pay a lease incentive to PT MGK in The cutter suction dredger has the length of 68 meters, a
accordance with the following calculation: width/breadth of 15 meters and a depth of 2,35 meters. The gross
tonnage of the cutter suction dredger is 336 GT, while the net tonnage
(i) The lease incentive is based on a formula of 85% x is 101 GT. The cutter suction dredger is described as being built in
Price, where Price is based on the purchase price of Thailand in 2007, and as being made from steel with a Mitsubishi
tin by PT Timah (Harga KIP PT Timah) on the day main engine.
that delivery of tin is accepted by AP from PT MGK at
the port, calculated on a pro rata basis in accordance We received a Provisional Certificate of Nationality and Provisional
with grade of the tin. The formula of lease incentive is: International Tonnage Certificate for Aega I, both dated 11 July 2008
and which expired on 11 October 2008 and 11 September 2008
85% x (KIP Price PT Timah + Market Price) x Sn respectively.
2
On 11 May 2011, we received the following documents in respect of
(d) PT MGK is responsible for all costs arising from operating ownership of Aega I:
and licensing the Leased Vessel and all costs of Corporate
Social Responsibility (CSR) in respect of the mining areas in (a) Certificate of Nationality No. PK.674/1247/SL-PM/DK-08
the amount of IDR 3,000/kg, calculated based on the dated 11 September 2008 issued by the Directorate General
unloading of the tin mined; and of Sea Transportation of the Department of Transportation of
the Republic of Indonesia which declared Aega 1 as an
(e) all other expenses, except for costs in respect of CSR and Indonesian vessel in accordance with the prevailing laws and
costs arising from operating and licensing the Leased Vessel, therefore is authorised to sail under the Flag of the Republic
are to be borne by AP. of Indonesia; and
We note that the Lease Agreement does not stipulate validity period. (b) International Tonnage Certificate No. 4175/Bc dated 29 July
2008 issued by the Sunda Kelapa Port Administrator on
However, based on the Amendment Agreement dated 19 May 2011, behalf of Minister of Transportation of the Republic of
parties specifically agree that AP shall lease vessel and hires Indonesia.
personnel from PT MGK to operate the vessel.
Therefore, AP has obtained the complete documentation required in
5. AP's ownership of Cutter Section Dredger respect of the registration of ownership of Aega I.
AP owns a cutter suction dredger named Aega 1. Ownership of Indonesian flagged vessels are restricted to a company
which is majority owned by Indonesians. Based on the Legal Data, at
The Legal Data contains a Registration Deed for the cutter suction the time AP registered Aega 1, the shareholding of AP was 100%
dredger, Aega I. The Registration Deed is numbered 5310, dated 12 owned by Indonesians. Therefore, it can be concluded that
August 2008 and was issued by the Registrant Official for the registration was valid under the law. The Indonesian Shipping Law
Transfer of Title of Vessel of the Directorate General of Sea does not regulate on matters dealing with effect of the change of
Transportation – Department of Transportation. status into a PT PMA to the registration of an Indonesian flagged
vessel.
Nonetheless, as AP is currently a foreign investment company and

majority owned by foreign party, should AP requires to purchase new
vessels in the future, AP will have difficulties in registration of its new
vessel as the Shipping Law does not permit any registration of
vessels which are not majority owned by Indonesian parties.
Recommendation:
Short Term solution:
AP to obtain SIOPSUS for Aega 1.
Long term solution:
AP to transfer Aega 1 to a third party shipping company having

SIUPAL which will then charter Aega 1 to AP. The third party
shipping company shall also procure the new vessels and charter
them to AP.
6. AP's operation of Cutter Section Dredger
AP is currently operating Aega 1 without the necessary license from

the Department of Transportation.
For operating a vessel, a company should either have SIUPAL or

SIOPSUS. Different requirements apply for the relevant licenses. For
SIUPAL, the line of business of the company should only be shipping.
This is not suitable for mining companies.
However, for mining companies operating vessels, the mining

companies may apply for SIOPSUS. AP may apply the SIOPSUS for
operating the Aega 1. Further, as discussed above, AP will not be
able to register its new vessels as an Indonesian flag vessel as
currently AP is not majority owned by the Indonesian parties.
Recommendation: Please see recommendation in section 6.1.
Indonesian Shipping Law stipulates that any party that operates a

vessel without SIUPAL or SIUPSUS may be subjected to a maximum
1 year imprisonment or a maximum fine of IDR 200,000,000.
7. Details of the IUPs

The table below sets out the details of IUPs held by AP:
Production Previous KP Type Location Shareholders Province Area Area Total Construction Production Extension Date of Date of Date of
Operation IUP and Number Code Period Period Period issuance effectiveness Expiry
Number
DECREE OF DECREE OF THE 4 - 12 FONG JAU KEPUL BLOK 312,4 HA 8 YEARS 1 YEAR 7 YEARS TERM CAN 15 14 13
THE GOVERNOR OF MILES SENG (40%) KELABAT (MAP & (AND BE MARCH NOVEMBER NOVE
AUAN
GOVERNOR BANGKA FROM A.1 KP: 310 POSSIBIL EXTENDED 2010 2009 MBER
PT TRIMETA BANGKA
OF BANGKA BELITUNG THE HA) ITY FOR BY A 2016
UTAMA BELITUNG
BELITUNG ISLANDS SHORE EXTENSI MAXIMUM
GEMILANG (LAUT
ISLANDS NO.188.44/713/D (NO.1) ON) OF 20
(40%) TELUK
NO.188.44/102 PE/2008 DATED YEARS
KELABAT)
/DPE/2010 14 NOVEMBER PT HAVILAH (TWO 10
2008 ABADI YEAR
SEJAHTERA EXTENSIO
(20%) NS).
APPLICATI
ON TO
EXTEND TO
BE MADE 2
YEARS
BEFORE
EXPIRY.
DECREE OF Not available 4 - 12 AURELIA KEPUL BLOK 178,1 HA 15 1 YEAR 14 YEARS TERM CAN 30 APRIL 30 APRIL 2010 29
THE MILES SUPARDI KELABAT (MAP: YEARS BE 2010 APRIL
AUAN
GOVERNOR FROM (10%) A.2 178,1 HA) (AND EXTENDED 2025
BANGKA
OF BANGKA THE POSSIBIL BY A
HAS (50%) BELITUNG
BELITUNG SHORE ITY FOR MAXIMUM
(LAUT
ISLANDS (NO.2) HSB (20%) EXTENSI OF 20
TELUK
NO.188.44/409 PT ANT ON) YEARS
KELABAT)
/DPE/2010 INTERNASION (TWO 10
AL (20%) YEAR
EXTENSIO
NS).
APPLICATI
ON TO
EXTEND TO
BE MADE 2
YEARS
BEFORE
EXPIRY.
DECREE OF Not available 4 - 12 AURELIA KEPUL BLOK 293 HA 15 1 YEAR 14 YEARS TERM CAN 3 MAY 3 MAY 2010 2 MAY
THE MILES SUPARDI KELABAT (MAP: YEARS BE 2010 2025
AUAN
GOVERNOR FROM (10%) A.3 293 HA) (AND EXTENDED
BANGKA
OF BANGKA THE POSSIBIL BY A
HAS (50%) BELITUNG
BELITUNG SHORE ITY FOR MAXIMUM
(LAUT
ISLANDS (NO.3) HSB (20%) EXTENSI OF 20
TELUK

Number
NO.188.44/418 PT ANT KELABAT) ON) YEARS
/DPE/2010 INTERNASION (TWO 10
AL (20%) YEAR
EXTENSIO
NS).
APPLICATI
ON TO
EXTEND TO
BE MADE 2
YEARS
BEFORE
EXPIRY.
Exploration IUP Previous KPs Location Shareholders Province Area Area Total General Survey Exploration Feasibility Date of Date of Date of
Number Type and Number Code Period Period Period Study Period issuance effectiveness expiry
DECREE OF DECREE OF THE 4 - 12 FONG JAU KEPULAUA BLOK 1.503 HA 5 YEARS 1 YEAR 3 YEARS (1 1 YEAR 15 5 4
THE GOVERNOR OF MILES SENG (40%); N BANGKA SANGAU (MAP (ALREADY YEAR MARCH SEPTEMBER SEPTE
GOVERNOR BANGKA FROM PT TRIMETA BELITUNG 01 1.503 HA) DONE) ALREADY 2010 2009 MBER
OF BANGKA BELITUNG THE UTAMA (LAUT (KP: DONE) 2012
BELITUNG ISLANDS SHORE GEMILANG TANJUNG 1.520 HA)
ISLANDS NO.188.44/535/D (NO.1) (40%); PT SANGAU)
NO.188.44/155 PE/2008 DATED HAVILAH
/DPE/2010 5 SEPTEMBER ABADI
2008 SEJAHTERA
(20%)
188.44/156/DP 188.44/536/DPE/ 4 - 12 IDEM IDEM BLOK 1.749 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
E/2010 2008 DATED 5 MILES SANGAU (MAP
SEPTEMBER FROM 02 1.749 HA)
2008 THE (KP:
SHORE 1.776 HA)
(NO.2)
188.44/157/DP 188.44/537/DPE/ 4 - 12 IDEM KEPULAUA BLOK 1.825 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
E/2010 2008 DATED 5 MILES N BANGKA GENTING (MAP:
SEPTEMBER FROM BELITUNG 01 1.825 HA)
2008 THE (LAUT (KP:
SHORE TANJUNG 1.826 HA)
(NO.3) GENTING)
E/2010 2008 DATED 5 MILES GENTING (MAP:
2008 THE & (KP:
SHORE 1.884 HA)
(NO.4)
E/2010 2008 DATED 5 MILES GENTING (MAP:
SEPTEMBER FROM 1.810 HA)
Number
2008 THE 03 & (KP:
SHORE 1.824 HA)
(NO.5)
E/2010 2008 DATED 5 MILES N BANGKA BUBUS (MAP:
SEPTEMBER FROM BELITUNG 01 1.954 HA)
2008 THE (LAUT & (KP:
SHORE BUBUS) 1.962 HA)
(NO.6)
E/2010 2008 DATED 5 MILES BUBUS (MAP:
SEPTEMBER FROM 02 3,912ha)
2008 THE & (KP:
SHORE 1.980 HA)
(NO.7)
E/2010 2008 DATED 5 MILES BUBUS (MAP:
2008 THE &( KP:
SHORE 1.967 HA)
(NO.8)
E/2010 2008 DATED 5 MILES N BANGKA MENGKU (MAP:
SEPTEMBER FROM BELITUNG DU 01 1.892 HA)
2008 THE (LAUT & (KP:
SHORE TANJUNG 1.917 HA)
(NO.9) MENGKUD
U)
E/2010 2008 DATED 5 MILES MENGKU (MAP:
SEPTEMBER FROM DU 02 1.954 HA)
2008 THE & (KP:
SHORE 1.982 HA)
(NO.10)
2008 THE & (KP:
SHORE 1.997 HA)
(NO.11)
2008 THE & (KP:
Number
SHORE 1.917 HA)
(NO.12)
2008 THE & (KP:
SHORE 1.917 HA)
(NO.13)
2008 THE & (KP:
SHORE 1.912 HA)
(NO.14)
2008 THE & (KP:
SHORE 1.867 HA)
(NO.15)
188.44/170/DP 188.44/550/DPE/ 4 - 12 IDEM IDEM BLOK 1,294 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
E/2010 2008 DATED 5 MILES KELABAT (MAP:
SEPTEMBER FROM A 1,294 HA)
2008 THE & (KP:
SHORE 1,643 HA)
(NO.16)
Mining Business Licence to PT Alam Lestari Kencana

PT ALAM LESTARI KENCANA (Production Operation IUP 077);
1. Overview (d) Decree of the Regent of Bangka No. 188.4/078/Tamben/2010
dated 11 January 2010 Regarding the Production Operation
ALK was granted a Processing and Refining KP under the Decree of Mining Business Licence to PT Alam Lestari Kencana
the Mayor of Pangkalpinang No. 212 of 2006 dated 31 October 2006 (Production Operation IUP 078);
regarding the Granting of Processing and Refining Mining
Authorisation in the Municipality of Pangkalpinang, Province of (e) Decree of the Regent of Bangka No.
Bangka Belitung, as amended by the Decree of the Mayor of 188.45/189/Tamben/2010 dated 11 January 2010 Regarding
Pangkalpinang No.94 of 2008 dated 17 April 2008 (the Processing the Production Operation Mining Business Licence to PT
and Refining KP). Alam Lestari Kencana (Production Operation IUP 189); and
The Processing and Refining KP was granted to conduct processing (f) Decree of the Regent of Bangka No.
and refining of tin sand and/or tin ore for the period of 20 years with a 188.45/190/Tamben/2010 dated 11 January 2010 Regarding
production capacity of 6,000MT/year. the Production Operation Mining Business Licence to PT
Alam Lestari Kencana (Production Operation IUP 190).
The conditions of the Processing and Refining KP are set out in
Schedule 8 above. Details of each of the Production Operation IUPs are set out in the
table below.
ALK also holds a Transportation and Selling KP issued on 17 April
2008 which has expired on 17 April 2011. We have not seen The conditions of the Production Operation IUPs are set out in
conversion of this license into a Transportation and Selling IUP under Schedule 7 above.
the current Mining Law.
2. Compliance with the Processing and Refining KP
ALK was also granted with the following 6 Production Operation IUPs:
We have seen the following evidence in respect of ALK's compliance
(a) Decree of the Regent of Bangka No. 188.4/075/Tamben/2010 with the terms and conditions of its Processing and Refining KP:
Mining Business Licence to PT Alam Lestari Kencana (a) the Production and Royalty Payment Report from ALK to the
(Production Operation IUP 075); Mayor of Pangkal Pinang for the period of April to December
2009;
(b) Decree of the Regent of Bangka No. 188.4/076/Tamben/2010
dated 11 January 2010 Regarding the Production Operation (b) Production and Marketing Report for Fourth Quarter of 2009;
Mining Business Licence to PT Alam Lestari Kencana
(Production Operation IUP 076); (c) Production and Marketing Report for First Quarter of 2010;
(c) Decree of the Regent of Bangka No. 188.4/077/Tamben/2010 (d) Production and Marketing Report for Third Quarter of 2010;
(e) Pursuant to Decrees of the Head of Social and Manpower (c) Quarterly Report for the period of July 2009 to June 2010 in
Service Office of Pangkalpinang No. respect of Production Operation IUPs No. 076, 077, 078, 189
18/P2K3/Dinsosnaker/V/2011 both dated 25 May 2011, the and 190;
Social and Manpower Service Office of Pangkalpinang has
validated the Supervising Committee for Occupational Health (d) Quarterly Report for the period of January 2010 to June 2010
and Safety which will supervise the implementation of of all of ALK's Production Operation IUPs;
occupational health and safety procedures in tin mining
exploration or exploitation. (e) Quarterly Report for the period of July 2010 to December
2010 in respect of Production Operation IUPs No. 076, 077,
(f) the Export Realization Report from ALK to the Energy and 078, 189 and 190;
Mining Service Office of Bangka Regency for the period of
August to December 2009 and January 2010 to December (f) Letter dated 1 January 2010 on the Appointment of Head
2010. Mining Engineering;
We have not seen the following documents evidencing ALK's (g) Annual Technical and Environmental Working Plan (Rencana
compliance with the conditions of its Processing and Refining KP: Kerja Tahunan dan Teknik Lingkungan – RKTTL) (including
the report on the implementation of community development
(a) Production and Marketing Report for: (i) the First, Second and and empowerment of local people) submitted to the Bangka
Third Quarters of 2009 and (ii) Second and Fourth Quarter Regent for 2010 and 2011;
2010 and (iii) First Quarter of 2011;
(h) Post-mining plan in respect of all of ALK's Production
Pursuant to Letter No. 540/328/DPE/2011 dated 1 April 2011 issued Operation IUPs (we have not seen evidence of submission to
by the Energy and Mining Resources Government Service of the the Governor of Bangka Belitung Province); and
Bangka Belitung Islands Province, ALK currently does not have any
outstanding obligations in respect of its Processing and Refining KP. (i) Reclamation Plan (we have not seen evidence of submission
to the Governor of Bangka Belitung Province).
3. Compliance with the Production Operation IUPs
We have not seen the following documents evidencing ALK's
We have seen the following evidence in respect of ALK's compliance compliance with the conditions of its Production Operation IUPs:
with the conditions of its Production Operation IUPs:
(a) Report on the border marking of Production Operation IUP
(a) Work Plan for Production Operation IUPs No. 075, 076, 077, area submitted to the Governor of Bangka Belitung Province;
078, 189 and 190
(b) Evidence of payment of the security deposit for the closing of
(b) Budget Plan (including the investment plan) for Production the mine (in accordance with the mine age);
Operation IUPs No. 075, 076, 077, 078, 189 and 190 dated
December 2009 for 2010; (c) Quarterly Report for the period of July 2009 to June 2010 and
the period of July 2010 to December 2010 for IUP No. 075;
(d) Evidence of compensation for the holder of land title disturbed (b) the Energy and Mineral Resources Service Office of Bangka
by the Production Operation IUP activities. Belitung Islands Province has never imposed any
penalties/sanctions on ALK in respect of the mining
Recommendation: ALK should provide all of the outstanding operations carried out under its KP; and
documents above.
(c) the mining area granted under ALK's Processing and Refining
The absence of these documents raises concerns as to whether ALK KP does not overlap with any other mining area.
has complied with the conditions of its Operation and Production IUPs
and Processing and Refining KP. Failure to comply with any of these The Energy and Mineral Resources Service Office of Bangka
conditions will put ALK's good standing in question and may Regency pursuant to its Letter No. 540/0222/Tamben/2011 dated 8
constitute a breach of the Operation and Production IUPs and the April 2011 has confimed that:
Processing and Refining KP, which can lead to suspension or
revocation of the Operation and Production IUPs and the Processing (a) ALK's 6 Production Operation IUPs have been validly issued
and Refining KP. and registered at the Energy and Mineral Resources Service
Office of Bangka Regency; and
Article 110 of Government Regulation No 23 of 2010 provides that
violations to the conditions of an IUP can result in an administrative (b) there are no overlapping issues in relation to ALK's 6
sanction in the form of: Production Operation IUPs.
(a) written warnings; The Department of Energy and Mineral Resources of the Republic of
Indonesia has confirmed that there are no overlapping issues in
(b) temporary suspension of the IUP; and/or relation to the IUPs and KP granted to ALK.
(c) revocation of IUP or IUPK. The Forestry Service Office of Bangka Regency pursuant to its Letter
No. 522/770/HUTBUN/2011 dated 23 April 2011 has confirmed that
ALK's compliance with the conditions of its Production Operation IUPs the mining areas pursuant to ALK's 6 Production Operation IUPs are
and the Processing and Refining KP is material for the purposes of all located outside forest area. However, we have received
extending the Production Operation IUPs and the Processing and confirmation from the Forestry Planology Agency of the Department of
Refining KP. Forestry of the Republic of Indonesia that, while five of the mining
areas under the Production Operation IUPs of ALK are located in a
4. Verification Searches and Overlapping Interest Non Forestry Area (Area Penggunaan Lain), the mining area under
ALK's Production Operation IUP No. 188.4/075/Tamben/2010 dated
The Energy and Mining Resources Government Service of the
11 January 2010 (area width approximately 3 hectares) is located in a
Bangka Belitung Islands Province pursuant to Letter No.
Permanent Production Forest (Areal Hutan Produksi Tetap). This
540/328/DPE/2011 dated 1 April 2011 has confirmed the validity of
directly contradicts the confirmation received regionally.
ALK's Processing and Refining KP. It has also confirmed that:
5. Conversion of Processing and Refining KP into a Special
(a) ALK has no outstanding obligations in respect of its KP;
Production Operation IUP for Processing and Refining
Pursuant to Letter No.010/ALK-IUP/IV/2010 dated 18 April 2010 enable ALK to process AP's ore in Pangkalpinang and obtain
issued by ALK and addressed to the Mayor of the City of a Special Tranportation and Selling IUP from MEMR;
Pangkalpinang which has been received by the Regional Government
of Pangkalpinang on 21 April 2010 pursuant to Receipt dated 21 April • ALK Option 2: MEMR suggested ALK converts its existing
2010 issued by Environmental Agency of the Regional Government of Processing and Refining KP and its 6 Production Operation
Pangkal Pinang, ALK has applied for conversion of its Processing and IUPs into 6 Production Operation IUPs issued by the
Refining KP into a Special Production Operation IUP for Processing Governor of Bangka Belitung Islands Province. As the
and Refining (Izin Usaha Pertambangan Operasi Produksi Khusus license would be issued at provincial, not regency, level, and
Pengolahan Pemurnian - IUPOPKPP). a Production Operation IUP allows the holder to process the
ore mined, MEMR's view is that it would enable ALK to carry
ALK has confirmed that the Mayor of the City of Pangkalpinang has out cross-regency mining activities (including processing and
not yet issued the Special Production Operation IUP for Processing refining in Pangkalpinang).
and Refining.
• ALK Option 3: Alternatively ALK could:
We have received Letter No. 60 Tahun 2011 dated 9 May 2011
o maintain the 6 Production Operation IUPs and
issued by the Mayor of Pangkalpinang concerning a recommendation
relinquish the Processing and Refining KP (together
by the Mayor of Pangkalpinang to the Governor of Bangka Belitung
with the expired ALK Selling KP); and
Islands Province to grant ALK a Special Production Operation IUP for
Processing and Refining. o AP could purchase/lease the smelter from ALK and
conduct the smelting itself (AP's Production
We also understand that ALK has filed an application to the Governor Operation IUPs allow AP to smelt its own tin, within
of Bangka Belitung Islands Province for obtaining a (province the area in which the IUPs were issued. AP's IUPs
wide/cross regencies) Special Production Operation IUP for were issued by the Governor of Bangka Belitung
Processing and Refining. Islands Province and therefore enable AP to conduct
smelting on its own tin anywhere in the province,
Given that ALK already has 6 Production OperationIUPs issued by including Pangkalpinang); and
the Bangka Regent (as discussed further below), MEMR has informed
us that the conversion of ALK's Processing and Refining KP to a o For ALK's tin in Bangka Regecy, AP can smelt it for
Special Production Operation IUP for Processing and Refining (either ALK (tolling arrangement) OR ALK could build a
issued by the Pangkalpinang Mayor or the Governor of Bangka smelter in Bangka for its 6 Operation Production IUPs.
Belitung Islands Province) may be deemed to be contrary to the 6. Location and Ownership of Smelter
Mining Law and its Implementing Regulations.
The Legal Data contains a Land Title Certificate of Right to Build (Hak
Recommendation:
Guna Bangunan – HGB) No.679 dated 19 May 2005 for a plot of land
• ALK Option 1: relinquish ALK's 6 Production Operation IUPs with area width of 3,840 m2 registered under the name of ALK (the
and upgrade ALK's Processing and Refining KP into Special plot of land was acquired by ALK pursuant to Deed of Sale and
Production Operation IUP for Processing and Refining issued Purchase of Land No. 62/2010 dated 19 August 2010 executed by
by the Governor or MEMR (for tin from overseas) which will ALK and En Fuk as the original owner of the plot of land).
ALK has confirmed that its smelter is located on this plot of land. were issued. Accordingly, the IUPs require the processing of tin
mined from the mining areas to be conducted in Bangka Regency.
ALK has obtained the following approvals/permits for establishing and
operating its smelter: However, ALK has informed us that the tin is currently being
processed in ALK's existing smelter located in the city of
(a) Building Construction Permit (Izin Mendirikan Bangunan – Pangkalpinang under ALK's Processing and Refining KP. This is
IMB) by the Mayor of Pangkalpinang under Decree outside Bangka Regency.
No.169/SK/TKLHP/2007 dated 16 July 2007 for the
construction of the smelter; This applies even though ALK's processing and refining license was
(subject to being validly converted) issued by the mayor of
(b) Nuisance Permit (Surat Izin Gangguan) pursuant to the Pangkalpinang.
Decree of Head of Pangkal Pinang Intergrated Licensing
Services Office No.01234/KEP-IZIN/KPPT/XI/2010 dated 22 Recommendation:
November 2010, allowing the use of the plot of land for
warehouse and tin smelter and valid till 22 November 2015; MEMR suggested that ALK opt for Option 2 (as discussed above) as
and it would enable ALK to conduct cross regency mining activities
(including processing and refining of tin mined from Bangka in
(c) Industrial Business Licence (Izin Usaha Industri) pursuant to Pangkalpinang).
the Decree of Head of Pangkal Pinang Intergrated Licensing
Services Office No. 01236/KEP-IZIN/KPPT/XI/2010 dated 22 The other solutions listed in Point 5 above also apply here.
November 2010, for the production of tin ingot and valid for
as long as ALK continues its business. 9. Processing of tin sourced from AP by ALK
7. Updating Corporate Information in ALK's 6 Production Operation Under the Mining Law and its implementing regulations, as the holder
IUPs of a Processing and Refining KP issued by the Mayor of
Pangkalpinang, ALK is only allowed to process tin sourced from
We note that the information on ALK's shareholders, Directors and Pangkalpinang area (even if it did not have the six Operation
Commissioners in the 6 Production Operation IUPs does not reflect Production IUPs). Currently, tin being mined by AP (and processed
the most up to date information. by ALK) is not sourced from the Pangkalpinang area.
Recommendation: ALK shoud submit a report to the Bangka Recommendation: MEMR suggested that ALK opt for Option 2 (as
Regency, providing the latest information on its shareholders, discussed above) as it would enable ALK to conduct cross regency
Directors and Commissioners. mining activities (including processing and refining of tin mined from
Bangka in Pangkalpinang).
8. Processing of Tin Mined Pursuant to ALK's 6 Production
Operation IUPs The other solutions listed in ALK Point 5 also apply here.
ALK's 6 Production Operation IUPs were issued by Bangka Regency 10. ALK as the Seller/Exporter of Tin Ingots
and allow ALK to smelt its own tin within the area in which the IUPs
ALK must have a Transportation and Selling IUP to buy tin from AP to the relevant IUP. Further, a Location Permit is required to
and subsequently sell tin. commence the acquisition of the mining areas from the original
landowners.
We have been provided with a selling license in KP form (under the
previous mining law) issued on 17 April 2008 which expired on 17 Recommendation: ALK should provide us with a valid Location
April 2011. We have not seen evidence of theconversion of this Permit granted over the Bangka Regency Mining Areas, and
license into a Transportation and Selling IUP under the current Mining documents in respect of land settlement of the Bangka Regency
Law. ALK therefore has no current selling license. Mining Areas.
In any event, because ALK already has 6 Production Operation IUPs 12. Supply of Tin Ore by AP to ALK
issued by the Bangka Regent (as discussed further above), MEMR's
view is that ALK is not allowed to have a standalone Transportation We have been provided with Cooperation Agreement on Supply of Tin
and Selling IUP under the Mining Law. Ore dated 3 May 2010 between AP and ALK. The key terms of the
Cooperation Agreement are:
This issue only applies to AP's tin. ALK is permitted, under its six
Operation Production IUPs, to transport and sell the ore mined from (a) AP is supplying ALK with tin ores produced from AP's 310 Ha
those IUPs. mining area located in the territory of Teluk Kelabat sea in
Bangka Belitung Islands Province granted under the
Recommendation: If ALK intends to sell AP's tin, then Option 1 as Production Operation IUP No. 188.44/102/DPE/2010 dated
discussed above will be relevant whereby ALK needs to relinquish its 15 March 2010;
6 Production Operation IUPs and apply for a Transportation and
Selling IUP issued by the Governor or MEMR (if ALK will be exporting (b) the calculation of the purchase price of the tin ore is based on
tin ingots). It would be permitted to hold this together with a the prevailing market price at the time AP sells the tin ore to
Processing and Refining IUP issued by the Governor. ALK;
Alternatively ALK could convert the sale contract from AP into a tolling (c) the Cooperation Agrement is valid and in force continuously
arrangement in which AP keeps title to the ore and ALK just until the completion of AP's smelter; and
processes it (assuming the 6 Operation Production IUPs have been
converted as stated in Option 2). (d) each party is responsible for its own income tax, royalties,
deadrent and any other taxies/levies applicable under the
11. Land Settlement in respect of ALK's 6 Production Operation IUPs prevailing laws.
We have not yet been provided with documents in relation to land 13. Sale of Tin Ingots By ALK
settlements for the mining areas in Bangka Regency granted under
ALK's Production Operation IUPs (the Bangka Regency Mining We have been provided with 5 contracts governing the sale/supply of
Areas). tin ingots to various overseas parties. ALK has confirmed that these
contracts are the only contracts regarding the sale/supply of tin ingots
Mining operations generally require that the IUP holding company by ALK for 2011.
obtain a right to use the land from the original landowners, in addition
The following is summary of the sale/supply of tin ingots contracts:
BUYER PERIOD MATERIAL QUANTITY TREATMENT CHARGE PRICE DELIVERY SITE
• Metatrade 1st January Refined Tin Metal Approximately US$ 140 per dry metric Standard Pricing: CIF Phuket,
Enterprise 2011 – 31st Specification LME BS EN 1,200 – 1,400 ton for each percent Basis lowest of the four LME Cash official bid and Thailand
January 2012 610:1996 containing metric tons per below 99.75% Sn, plus
• Tri-metal offer prices and LME 3 months official bid and
per B/L date 99.85% Sn min, 0.01% Fe, year. US$ 50 per dry metric ton offer prices in the period from the date arrival of
Trading
0.03% As, 0.03% Bi, for each percent below
Materials at Phuket to the 14th day after Materials
• Juzmetal 0.05% Pb, 0.05% Sb, 99.85% Sn, fraction pro-
arrival at Phuket. There shall be hedging fee for
Marketing 0.05% Cu, ZN/Cd/Al each rata.For large ingots, pricing in this period at Broker charge 1/16% x 2 x
0.001%, 0.01% S, 0.001% extra re-melting cost US$
• Lotus SG PTE actual tin price + manpower cost USD 10 per mt.
Ag, 001% Ni+Co, 0.005 In, 10 per dry metric ton of
LTD i.e. at tin price $31,500/mt, hedging fee = $
total all impurities 0.01% clean large ingots. 31,500 x 1/16%x2 (=USD 393.4/mt)+10=USD
• Cempaka 49.40/mt.
Trading
Seller shall notify Buyer the pricing quantity and
pricing day(s) at least 24 hours prior to the official
next unknown pricing time.
Late Pricing:
If the Seller does not declare the pricing during
pricing period as specified in the agreement, the
Seller shall notify the Buyer to extend the pricing
period up to the 30th day after the materials
arrival at Phuket subject to a hedging fee at a
Brokerage Charge 1/16% x 2 x actual tin price +
manpower cost USD10/mt plus Spread of $2 per
metric ton tin per day i.e. at tin price $31,500/mt,
Hedging Fee =$31,500 x 1/16% x 2 (=USD
39.40/mt)+10=USD49.4/mt Plus spread of $2 per
metric ton tin per day.
If the Seller does not complete the pricing after
extension of pricing period up to the 30th day, the
Buyer and the Seller mutually agree to schedule
the pricing of materials on the basis that the
lowest LME Official Cash and 3 months price on
the next 4 market days. The Buyer shall give
written notice to the Seller before/after the end of
the Original pricing period.
Early Pricing Option:
Early pricing before materials leave Singapore
basis lowest of the four LME Cash Official Bid and
offer prices and LME 3 months official bid and
offer prices (either on the basis of spot LME
prices or the unknown official prices shall be
available to the Seller as follows:

BUYER PERIOD MATERIAL QUANTITY TREATMENT CHARGE PRICE DELIVERY SITE
Pricing before shipment: the Seller may fix the

price against the Seller's provisional price before
shipment from Bangka. This pricing before
shipment is subject to the limit of 500 mt of tin
contained at the Buyer's discretion.
Pricing after shipment: the Seller may fix the price
against the Seller's provisional invoice and copy
of B/L after shipment from Bangka.
This pricing before shipment and after shipment

ex-Bangka is subject to the aggregate limit of
1,000 mt of tin contained. Any additional early
pricing quantity is at the Buyer's discretion.
Refined Tin Metal Approximately US$ 110 per dry metric ton
Specification LME BS EN 1,200 – 1,400 at 99.90% Sn and other
610:1996 containing metric tons per impurities complying to
99.90% Sn min, 0.01% Fe, year. LME BS EN 610:1995
0.03% As, 0.03% Bi, Specification.
0.05% Pb, 0.05% Sb, US$ 140 per dry metric ton
0.05% Cu, ZN/Cd/Al each
at 99.90% but other
0.001%, 0.01% S, 0.001% impurities not complying to
Ag, 001% Ni+Co, 0.005 In,
LME BS EN 619:1996
total all impurities 0.01%
Specification plus US$ 50
per dry metric ton for each
percent below 99.90% Sn,
fraction to be calculated
pro-rata.
14. ALK as the Seller/Exporter of Tin Ingots

We understand that the majority of tin ingots sold by ALK are sourced
from tin concentrate bought from AP.
Under the Mining Law and its Implementing Regulations, ALK is
required to have a Special Mining License for Transportation and
Selling to buy tin from AP and subsequently sell tin.
We have been provided with Transportation and Selling KP issued by
the Mayor of Pangkalpinang pursuant to its Decree No. 95 of 2008
dated 17 April 2008 which has expired on 17 April 2011. We have not
been provided with the Special Mining License for Transportation and
Selling resulting from the conversion of the KP.
Given that ALK already has 6 Production Operation IUPs issued by

the Bangka Regent (as discussed further below), ALK is not allowed
to have a standalone Special Mining License for Transportation and
Selling, as it may be deemed to be contrary to the Mining Law and its
Implementing Regulations (this has been confirmed by MEMR).
Recommendation: AP could purchase/lease the smelter from ALK

and conduct the smelting by itself (AP's Production Operation IUPs
are issued by Governor of Bangka Belitung Islands Regency and
therefore enable AP to perform cross regency mining activities).
15. Details of the Production Operation IUPs
Production Operation Previous KPs Type Location Shareholders Province Area Code Area Total Period Date of Date of Date of expiry
IUP Number and Number issuance effectiveness
DECREE OF THE DECREE OF THE BANGKA EN FUK (88%) BANGKA 190101100P1 3,00 HA 1 YEARS 9 11 JANUARY 11 JANUARY 30
REGENT OF REGENT OF REGENCY, BELITUNG 48 (MAP 3 HA) MONTHS AND 2010 2010 OCTOBER
BANGKA NO.188.4/ BANGKA NO.540.K/ SUNGAILIAT EN KIAT (12%) ISLANDS 20 DAYS 2011
075/TAMBEN/2010 248/TAMBEN/2008 DISTRICT,
DATED 5 APRIL 2008 SINARBARU SUB-
DISTRICT
188.4/076/TAMBEN/ 540.K/247/TAMBEN/ BANGKA IDEM IDEM 190101100P1 4,00 HA IDEM IDEM IDEM IDEM
2010 2008 DATED 5 APRIL REGENCY, 49 (MAP 4 HA)
2008 SUNGAILIAT
DISTRICT, PARIT
PADANG SUB-
DISTRICT
188.4/077/TAMBEN/ 540.K/178/TAMBEN/ BANGKA IDEM IDEM 190101100P1 4,98 HA 2 YEARS 2 IDEM IDEM 14 MARCH
2010 2008 DATED 14 REGENCY, 50 (MAP 4,98 MONTHS AND 2012
MARCH 2008 SUNGAILIAT HA) 2 DAYS
DISTRICT, PARIT
REBO VILLAGE
188.4/078/TAMBEN/ 540.K/177/TAMBEN/ IDEM IDEM IDEM 190101100P1 4,00 HA IDEM IDEM IDEM IDEM
2010 2008 DATED 14 51 (MAP 4 HA)
MARCH 2008
188.45/189/TAMBEN 188.45/176/TAMBEN/ BANGKA IDEM IDEM 190101100P1 20,00 HA 3 YEARS 2 IDEM IDEM 15 MARCH
/2010 2008 DATED 15 REGENCY, RIAU 66 (MAP 20 HA) MONTHS AND 2013
MARCH 2008 SILIP DISTRICT, 3 DAYS
MAPUR VILLAGE
188.45/190/TAMBEN 188.45/172/TAMBEN/ BANGKA IDEM IDEM 190101100P1 10,00 HA 3 YEARS 2 IDEM IDEM IDEM
/2010 2008 DATED 15 REGENCY, RIAU 67 (MAP 10 HA) MONTHS AND
MARCH 2008 SILIP DISTRICT, CIT 3 DAYS
VILLAGE
PT MITRA SUKSES GLOBALINDO
1. Overview Pursuant to Letter No. 540/327/DPE/2011 dated 1 April 2011, the

Energy and Mining Resources Government Service of the Bangka
MSG was granted 35 Exploration IUPs by the Governor of Bangka Belitung Islands Province has confirmed that MSG has no outstanding
Belitung Islands on 26 March 2010 (the Exploration IUPs). obligations in respect of its Exploration IUPs.
The Exploration IUPs were granted for the exploration of tin and its However, the following documents are required to confirm MSG's
associated minerals. compliance with its Exploration IUPs:
Details of each of the Exploration IUPs are set out in the table below. (a) Evidence of submission of the Quarterly Activity Report
submitted within 30 days after the end of each quarter to the
The terms and conditions of the Exploration IUPs are set out in Governor of Bangka Belitung Islands Province (copied to the
Schedule 6 above. Minister) of the First Quarter of 2011 for the Raya, Langka
and Sangau Blocks and the Quarterly Activity Reports for the
2. Compliance with the Exploration IUPs
other blocks (other than the Raya, Langka and Sangau
We have seen the following evidence in respect of MSG's compliance Blocks).
with the conditions of its Exploration IUPs:
Recommendation: MSG should provide all of the outstanding
(a) Report on Tin Sediment Exploration Quarterly I, II, III, IV of documents above.
2010 North - South Bangka Sea, Province of Bangka Belitung
The absence of these documents raises concerns as to whether MSG
Island for the Raya, Langka and Sangau Blocks;
has complied with the conditions of its Exploration IUPs. Failure to
(b) Work Plan and Budget for 2010 and 2011 (including comply with any of these conditions will put MSG's good standing in
Community Development and Empowerment Plan); question and may constitute a breach of the Exploration IUPs, which
can lead to suspension or revocation of the Exploration IUPs.
(c) Annual Report of 2010 on Tin Sediment Exploration North -
South Bangka Sea, Province of Bangka Belitung Island; and Article 110 of Government Regulation No 23 of 2010 provides that
violations to the conditions of IUP can result in an administrative
(d) Letter dated 1 January 2010 on the appointment of Head of sanction in the form of:
Mining Engineering who is responsible over the Exploration
IUP activity, Mining Occupational Health and Safety and (a) written warnings;
Mining Environmental Management.
(b) temporary suspension of the IUP; and/or
Recommendation: MSG should confirm the exact amount of the
(c) revocation of IUP or IUPK.
deposit and surety fund paid by MSG. MSG should also provide a
statement letter executed by its President Director attesting to the
amount paid.

MSG's compliance with the conditions of its Exploration IUPs is

material for the purposes of upgrading the Explorations IUPs to
3. Updating Corporate Information in MSG's Exploration IUPs
We note that the information on MSG's shareholders, Directors and

Commissioners in the Exploration IUPs does not reflect the most up
to date information.
Recommendation: MSG should submit a report to the Governor of

Bangka Belitung Islands Province, providing updated information on
its shareholders, Directors and Commissioners.
4. Overlapping interest
The Energy and Mineral Resources Service Office of Bangka Belitung

Islands Province pursuant to its Letter No. 540/327/DPE/2011 dated 1
April 2011 has confirmed the validity of all of the IUPs granted to MSG.
It has also confirmed that:
(a) MSG has no outstanding obligations in respect of its IUPs;
(b) the Energy and Mineral Resources Service Office of Bangka

Belitung Islands Province has never imposed any
penalties/sanctions on MSG in respect of the mining
operations carried out under its IUPs; and
(c) the mining area granted under MSG's IUPs do not overlap
with other mining areas.

Indonesia has confirmed that there are no overlapping issues in
relation to the IUPs granted to MSG.
5. Details of the Exploration IUPs
Exploration IUP Previous KPs Type Location Shareholders Province Area Code Area Total General Exploratio Feasibil Date of Date of Date of
Number and Number Period Survey n Period ity issuanc effectivene expiry
Period Study e ss
Period
DECREE OF THE DECREE OF THE 4 - 12 MILES BUNAWAN KEPULAUA BLOK 1.831 HA 5 1 YEAR 3 YEARS 1 YEAR 26 19 18
GOVERNOR OF GOVERNOR OF FROM THE MUSLIM: N BANGKA CEBIA A (MAP & KP: YEARS (ALREAD (ALREAD MARC DECEMB DECEMB
BANGKA BANGKA BELITUNG SHORE (50%); BELITUNG 1.843 HA) Y DONE) Y DONE 1 H 2010 ER 2009 ER 2012
BELITUNG ISLANDS (NO.1) RUDY (LAUT YEAR)
ISLANDS NO.188.44/790.A/DP WIJAYA TANJUNG
NO.188.44/272/DP E/2008 DATED 19 LIONG (50%) CEBIA)
E/2010 DECEMBER 2008
188.44/273/DPE/20 188.44/790.B/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.907 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE CEBIA B (MAP & KP:
DECEMBER 2008 SHORE 1.916 HA)
(NO.2)
188.44/274/DPE/20 188.44/790.C/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.934 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE CEBIA C (MAP & KP:
(NO.3)
188.44/275/DPE/20 188.44/790.D/DPE/20 4 - 12 MILES IDEM KEPULAUA BLOK 1.570 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE N BANGKA SANGAU (MAP & KP:
DECEMBER 2008 SHORE BELITUNG A.1 1.601 HA)
(NO.4) (LAUT
TANJUNG
SANGAU)
188.44/276/DPE/20 188.44/790.E/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.667 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE SANGAU (MAP & KP:
DECEMBER 2008 SHORE A.2 1.692 HA)
(NO.5)
188.44/277/DPE/20 188.44/790.F/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.393 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.6)
188.44/278/DPE/20 188.44/790.G/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.647 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
DECEMBER 2008 SHORE B.1 1.658 HA)
(NO.7)
188.44/279/DPE/20 188.44/790.H/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.552 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.8)
Period Study e ss
Period
188.44/280/DPE/20 188.44/790.I/DPE/200 4 - 12 MILES IDEM IDEM BLOK 1.471 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.9)
188.44/281/DPE/20 188.44/790.J/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.515 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
DECEMBER 2008 SHORE C.1 1.551 HA)
(NO.10)
188.44/282/DPE/20 188.44/790.K/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.451 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.11)
188.44/283/DPE/20 188.44/790.L/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.624 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.12)
188.44/284/DPE/20 188.44/790.M/DPE/20 4 - 12 MILES IDEM KEPULAUA BLOK 1.674 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE N BANGKA RAYA A.1 (MAP & KP:
DECEMBER 2008 SHORE BELITUNG 1.680 HA)
(NO.13) (LAUT
TANJUNG
RAYA)
188.44/285/DPE/20 188.44/790.N/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.496 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE RAYA A.2 (MAP & KP:
(NO.14)
188.44/286/DPE/20 188.44/790.O/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.567 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE RAYA A.3 (MAP & KP:
(NO.15)
188.44/287/DPE/20 188.44/790.P/DPE/20 4 - 12 MILES IDEM KEPULAUA BLOK 1.726 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE N BANGKA LANGKA (MAP & KP:
(NO.16) (LAUT
TANJUNG
LANGKA)
188.44/288/DPE/20 188.44/790.Q/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.484 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE LANGKA (MAP & KP:
(NO.17)
188.44/289/DPE/20 188.44/790.R/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.512 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE LANGKA (MAP & KP:
(NO.18)
Period Study e ss
Period
188.44/290/DPE/20 188.44/791.A/DPE/20 4 - 12 MILES IDEM KEPULAUA BLOK 1.972 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE N BANGKA SUMEDAN (MAP & KP:
DECEMBER 2008 SHORE BELITUNG G1 1.984 HA)
(NO.19) (LAUT
PULAU
SUMEDANG
)
188.44/291/DPE/20 188.44/791.B/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.934 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE SUMEDAN (MAP & KP:
DECEMBER 2008 SHORE G2 1.963 HA)
(NO.20)
188.44/292/DPE/20 188.44/791.C/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.906 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.21)
188.44/293/DPE/20 188.44/791.D/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.931 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.22)
188.44/294/DPE/20 188.44/791.E/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.968 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.23)
188.44/295/DPE/20 188.44/791.F/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.920 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.24)
188.44/296/DPE/20 188.44/791.G/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.850 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.25)
188.44/297/DPE/20 188.44/791.H/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.944 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.26)
188.44/298/DPE/20 188.44/791.I/DPE/200 4 - 12 MILES IDEM KEPULAUA BLOK 1.530 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 8 DATED 19 FROM THE N BANGKA NANGKA (MAP & KP:
(NO.27) (LAUT
TANJUNG
NANGKA)
188.44/299/DPE/20 188.44/791.J/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.546 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE NANGKA (MAP & KP:
Period Study e ss
Period
(NO.28)
188.44/300/DPE/20 188.44/791.K/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.730 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.29)
188.44/301/DPE/20 188.44/791.L/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.548 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.30)
188.44/302/DPE/20 188.44/791.M/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.586 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
(NO.31)
188.44/303/DPE/20 188.44/791.N/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.644 HA IDEM IDEM IDEM IDEM UNDAT IDEM IDEM
10 08 DATED 19 FROM THE NANGKA (MAP & KP: ED
(NO.32)
188.44/304/DPE/20 188.44/791.O/DPE/20 4 - 12 MILES IDEM KEPULAUA BLOK 1.397 HA IDEM IDEM IDEM IDEM 26 IDEM IDEM
10 08 DATED 19 FROM THE N BANGKA RAMBAT (MAP & KP: MARC
DECEMBER 2008 SHORE BELITUNG A.1 1.410 HA) H 2010
(NO.33) (LAUT
TANJUNG
RAMBAT)
188.44/305/DPE/20 188.44/791.P/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.389 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE RAMBAT (MAP & KP:
(NO.34)
188.44/306/DPE/20 188.44/791.Q/DPE/20 4 - 12 MILES IDEM IDEM BLOK 1.396 HA IDEM IDEM IDEM IDEM IDEM IDEM IDEM
10 08 DATED 19 FROM THE RAMBAT (MAP & KP:
(NO.35)
2. ALK
Schedule 10
COURT SEARCHES AND SUMMARY OF LITIGATION Documents Result
Letter No. W10.U1/1270/Pdt.02/IV/2011/03. Not registered since 2008

dated 18 April 2011 from the Commercial Court until 18 April 2011
1. AP of Jakarta
Documents Result Letter No. 11.395/SKB/IV/BANI/WD dated 1 Not registered

April 2011 from Indonesian National Board of
Letter No. W1-TUN2-035 PAN/HK.06/III/2011 Not registered Arbitration
dated 30 March 2011 from the State
Letter No. S-481/SP.5/2011 dated 12 April 2011 Not registered since 12
Administrative Court of Palembang
from the Tax Court April 2002 until 7 April
Letter No. W7.U1/785/At.02.388/IV/2011 dated 1 Not registered 2011
April 2011 from District Court of Pangkalpinang
Letter No. W7.u1/784/At.02.388/IV/2011 dated 1 Not registered
Letter No. W7.U1/777/PHI/IV/2011 dated 1 April Not registered since April 2011 from District Court of Pangkalpinang
2011 from the Industrial Relationship Court of March 2010
Pangkalpinang Letter No. W7.U1/778/PHI/IV/2011 dated 1 April Not registered since
2011 from the Industrial Relationship Court of March 2010 until 1 April
Letter No. W7.U2/03/HK.02/III/2011 dated 31 Not registered Pangkalpinang 2011
March 2011 from District Court of Sungailiat
Letter No. W1-TUN2-036 PAN/HK.06/III/2011 Not registered
Letter No. 11.389/SKB/IV/BANI/WD dated 1 Not registered since 2009 dated 30 March 2011 from the State
April 2011 from National Board of Arbitration until issuance of letter Administrative Court of Palembang
3. MSG
Letter No. S-461/SP.5/2011 dated 11 April 2011 Not registered from 12
from Tax Court Jakarta April 2002 until 7 April
2011 Documents Result
Letter No. W10.I1/1292/Pdt.02/IV/2011/03 dated Not registered since 2008 Letter No 11.396/SKB/IV/BANI/WD from National Not registered since 2009
18 April 2011 from Commercial Court Jakarta until issuance of letter Board Of Arbitration until 1 April 2010
Letter No W7.U1/776/PHI/IV/2011 dated 1 April Not registered since

2011 from the Industrial Relationship Court of March 2010 until 1 April
Pangkalpinang 2011
Schedule 10 Court searches and Summary of Litigation 186

Letter No. W1-TUN2-037 PAN/HK.06/III/2011 Not registered Letter No. 60 SKTR/HK/2011/PN.JKT.UT dated Not registered since 1
dated 30 March 2011 from the State 11 April 2011 from District Court of North Jakarta January 2008 until
Administration Court of Palembang issuance of letter
Letter No. 64 SKTR/HK/2011/PN.JKT.UT dated Not registered Letter No. W10.I1/1268/Pdt.02/IV/2011/03 dated Not registered since 2008
11 April 2011 from the North Jakarta District 18 April 2011 from Commercial Court Jakarta until issuance of letter
Court
5. MAP
Letter No. S- 466/SP.5/2011 dated 11 April 2011 Not registered since 12
2011
Documents Result
Letter No. W10.U1/1269/Pdt.02/IV/2011/03 Not registered since 2008
dated 18 April 2011 from Commercial Court until 18 April 2011 Letter No. W10.U1/1272/Pdt.02/IV/2011/03 Not registered from 2008
Letter No. W7.DC.PHI/317/IV/2011/03 dated 6 Not registered since 14 of Jakarta
April 2011 from Industrial Relationship Court January 2006 until 6 April
2011 Letter No. 11.390/SKB/IV/BANI/WD dated 1 Not registered
4. HAS Arbitration
Documents Result Letter No. S-460/SP.5/2011 dated 11 April 2011 Not registered from 12
Letter No. 11.388/SKB/IV/BANI/WD dated 1 Not registered since 2009 2011
April 2011 from National Board of Arbitration until the issuance of letter
Letter No. 59 SKTR/HK/2011/PN.JKT.UT dated Not registered since 1
Letter No. W7.DC.PHI/320/IV/2011/03 dated 6 Not registered since 14 11 April 2011 from the District Court of North January 2008 until 11
April 2011 from Industrial Relationship Court of January 2006 until Jakarta April 2011
Jakarta issuance of letter
Letter No. W2-TUN1.109/HK.06/III/2011 dated Not registered since 1
Letter No. W2-TUN1.111/HK.06/III/2011 dated Not registered since 1 29 March 2011 from the State Administrative January 2008 until 29
29 March 2011 from State Administrative Court January 2008 until Court of Jakarta March 2011
of Jakarta issuance of letter
Letter No. W7.DC.PHI/319/IV/2011/03 dated 6 Not registered from 14
Letter No. S-467/SP.5/2011 dated 11 April 2011 Not registered from 12 April 2011 from the Industrial Relationship Court January 2006 until 6 April
from Tax Court Jakarta April 2002 until 7 April of Jakarta 2011
2011
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 10 Court searches and Summary of Litigation 187
6. HSB from the Tax Court April 2002 until 7 April

2011
Documents Result
Letter No W10.U1/1162/Pdt.02/IV/2011/03 dated Not registered since 2008
Letter No 11.393/SKB/IV/BANI/WD from National Not registered since 2009 11 April 2011 from Commercial Court until 11 April 2011
Board Of Arbitration until 1 April 2010
Letter No W7.DC.PHI/321/IV/2011 dated 6 April Not registered since 14
Letter No 62 SKTR/HK/2011/PN.JKT.UT. dated Not registered 2011 from the Industrial Relationship Court January 2006 until 6 April
11 April 2011 from the North Jakarta District 2011
Court
Letter No W2 -TUN1.113/HK.06/III/2011 dated Not registered since 1
Letter No S-465/SP.5/2011 dated 11 April 2011 Not registered since 12 29 March 2011 from the State Adiministration January 2008 until 29
from the Tax Court April 2002 until 7 April Court Maret 2011
2011
Letter No W10.U1/1291/Pdt.02/IV/2011/03 dated Not registered since 2008

18 April 2011 from Commercial Court until 18 April 2011 8. APG
Letter No W7.DC.PHI/318/IV/2011/03 dated 6 Not registered since 14 Documents Result

April 2011 from the Industrial Relationship Court January 2006 until 6 April
2011 Letter No. 11.394/SKB/IV/BANI/WD dated 1 Not registered since 2009
April 2011 from National Board of Arbitration until issuance of letter
Letter No W2 -TUN1.112/HK.06/III/2011 dated Not registered since 1
29 March 2011 from the State Administration January 2008 until 29 Letter No. 109/Ket/2011/PN.Jkt.Tim dated 4 April Not registered since 2
Court March 2011 2011 from District Court of East Jakarta January 2007
Letter No. W7.DC.PHI/320/IV/2011/03 dated 6 Not registered since 14

April 2011 from Industrial Relationship Court of January 2006 until
7. LME Jakarta issuance of letter
Documents Result Letter No. W2-TUN1.110/HK.06/III/2011 dated Not registered since 1

29 March 2011 from State Administrative Court January 2008 until
Letter No 11.392/SKB/IV/BANI/WD from the Not registered since 2009, of Jakarta issuance of letter
National Board of Arbitration 2010 until 1 April 2011
Letter No 63 SKTR/HK/2011/PN.JKT.UT. dated Not registered from Tax Court Jakarta April 2002 until 7 April
11 April 2011 from the North Jakarta District 2011
Court
Letter No. W10.I1/1271/Pdt.02/IV/2011/03 dated Not registered since 2008
Letter No S-463/SP.5/2011 dated 11 April 2011 Not registered since 12
18 April 2011 from Commercial Court Jakarta until issuance of letter
9. HMP
Documents Result
Letter No. W.10.U1/1163/Pdt.02/IV/2011/03. Not registered from 2008

of Jakarta
Letter No. 11.391/SKB/IV/BANI/WD dated 1 Not registered

Arbitration

2011
Letter No. 61 SKTR/HK/2011/PN.JKT.UT dated Not registered from 1

11 April 2011 from the District Court of North January 2008 until 11
Jakarta April 2011
Letter No. W2-TUN1.108/HK.06/III/2011 dated Not registered from 1

29 March 2011 from the State Administrative January 2008 until 29
Court of Jakarta March 2011
Letter No. W7.DC.PHI/323/IV/2011/03 dated 6 Not registered from 17

April 2011 from the Industrial Relationship Court March 2011 until 6 April
of Jakarta 2011
Schedule 11
OVERVIEW OF MINORITY SHAREHOLDER RIGHTS
(ii) where the issue is to holders of bonds or other
securities convertible into shares which securities
were issued with the approval at a General Meeting
This Schedule outlines the protections available to minority of Shareholders;
shareholders under the Company Law.
(iii) where the issue is undertaken in relation to a
1. General comments reorganisation or restructuring which has been
approved at a General Meeting of Shareholders.
Many of the provisions in the Company Law are expressed in broad
terms, however, Indonesia's relatively non-litigious culture reduces 3. Transfer of existing shares
the risk that minority shareholders will seek to enforce their rights
through the courts. The Company Law does not impose compulsory pre-emptive rights in
favour of other shareholders on a transfer of shares.
2. Increase in capital
4. Annual Report
(a) Provisions in the Company Law protect all shareholders
(including minority shareholders) from dilution upon an All shareholders have the right to receive a copy of the Annual Report
increase in capital. (including financial report) of the company. The Annual Report must
be submitted at a General Meeting of Shareholders for approval
(b) If a company wishes to issue new shares, it must first offer within 6 months of a company's financial year end.
the shares to existing shareholders in proportion to their
existing holdings in the same class of shares. Where a class 5. Information in a General Meeting of Shareholders
of shares is to be issued which has never been issued before,
all shareholders have a priority right of purchase in proportion Shareholders are entitled to obtain "all information relating to the
to their existing shareholdings. company" from the Board of Directors and Board of Commissioners at
the Annual General Meeting of the Company, to the extent that the
(c) A shareholder has 14 days from the date of the offer to take request for information relates to the agenda of the meeting and there
up and pay for their proportional entitlement to the shares to is no conflict with the interests of the company in giving the
be issued. After this time any shares which have not been information.
taken up may be offered to third parties.
6. Inspection of registers
(d) A proportional offer to existing shareholders does not need to
be made in the following exceptional circumstances: The Board of Directors must permit a shareholder who requests in
writing to inspect the register of shareholders, the special register (of
(i) where the issue is to the company's employees; Director and Commissioner interests), the minutes of each General
Meeting of Shareholders and the annual reports, and must allow the
Schedule 11 Overview of minority shareholder rights 190

shareholder to obtain copies of the minutes of each General Meeting Shareholders holding at least 10 percent of the total voting shares of
of Shareholders and copies of the Annual Reports. the company may file a lawsuit through the District Court against a
member of the Board of Directors or Board of Commissioners who
7. Investigation of the company through fault or negligence has caused loss to the company.
One or more shareholders representing at least one tenth of the total 11. Special majorities
voting shares may submit a request to the District Court for
investigation of the company if they have a suspicion that: A special majority of shareholders is required to pass certain
resolutions, including:
(a) the company has committed an unlawful act which harms the
shareholders or third parties; or (a) Share buy-backs
(b) a member of the Board of Directors or the Board of A company can repurchase its shares provided that certain
Commissioners has committed an unlawful act which harms capital adequacy rules are complied with. The Board of
the company or the shareholders or third parties. Directors are jointly and severally liable for all losses suffered
by shareholders arising from a repurchase of the company's
8. Right to request a General Meeting of Shareholders shares which does not comply with these rules.
One or more shareholders jointly representing one tenth of the total (b) Amendment of the Articles of Association
voting shares may request that a General Meeting of Shareholders be
held (the Articles of Association specify a smaller threshold). The Amendment of the Articles of Association requires a majority
Board of Directors is required to convene the General Meeting of comprising at least two thirds of the shares represented at a
Shareholders within 15 days of the date of the request. If the Directors meeting attended by shareholders holding at least two thirds
fail to do so, the request can be resubmitted to the Board of of the issued voting shares.
Commissioners. The Board of Commissioners must convene the
meeting within 15 days of the date of the request. If both the Board of (c) Merger, amalgamation, takeover, demerger, bankruptcy,
Directors and Board of Commissioners fail to convene the meeting, extension of duration or dissolution
an application can be made to the district court for the applicant
shareholder(s) to be granted leave to convene the meeting A merger, amalgamation, takeover, demerger, application for
themselves. declaration of bankruptcy, extension of the company's
duration or winding up of the company requires a majority
9. Unfair or unreasonable acts comprising at least three quarters of the shares represented
at a meeting attended by shareholders holding at least three
Each shareholder is entitled to file a lawsuit against the company in quarters of the issued voting shares;
the District Court if that shareholder suffers losses by way of the
company's actions which are considered unfair or without reasonable (d) Transfer or encumbrance of assets
ground resulting from a decision at a General Meeting of
Shareholders, the Board of Directors or the Board of Commissioners. Transfer or encumbrance as loan security of assets
constituting more than 50% of a company's net total assets in
10. Negligence or mistakes by management 1 or more transactions over a period of 1 year (or such longer
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 11 Overview of minority shareholder rights 191
period provided in the Articles of Association) requires

approval of a majority comprising at least three quarters of
the shares represented at a meeting attended by
shareholders holding at least three quarters of the issued
voting shares.
12. Exit rights
Each shareholder is entitled to demand that the company repurchase

its shares at a reasonable price if the shareholder does not approve
an action of the company which is detrimental to the shareholder or
the company being:
(a) an amendment to the articles of association;
(b) transfer, or a charge of the company's assets that has a value

of more than 50% of the company's net assets; or
(c) a merger, amalgamation, acquisition or demerger.
(d) Where the repurchase would exceed the capital adequacy

requirements in the Company Law, the Company must make
an effort to ensure that the remaining shares are purchased
by a third party.
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 11 Overview of minority shareholder rights 192
Schedule 12
DETAILS ON PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF AP
The following table is made on the basis of the confirmations received from AP and the payment evidence documents available in the Legal Data. Payment of
royalties is also based on the assumption that no incidental selling of tin ore was made during the exploration phase of the 16 tenements, and therefore do not
attract the obligation of payment of an exploration royalty. Pursuant to AP's confirmation, payment of royalties of AP is conducted by ALK. Prior to 2010,
Reclamation and Post Mining Guarantees were only required to be paid prior to entering exploitation (production operation phase) annually. From 2010,
Reclamation and Post Mining Guarantees are required to be paid for the exploration as well as the production operation phase (formerly exploitation phase).
Deadrents are paid annually based on the prevailing regulations.
1. PT Aega Prima (AP)
1.1 Production Operation 188.44/102/DPE/2010
2008 2009 2010 2011
Surety Deposit (Jaminan Kesungguhan) Not applicable Not applicable Not applicable ü
Reclamation Guarantee (Jaminan Reklamasi) Paid as part of Paid as part of ü Paid as part of
the payment the payment the payment
made in 2010 made in 2010 made in 2010
Post Mining Guarantee (Jaminan Pasca Tambang) Not applicable Not applicable Not applicable Will be paid once
the invoice from
the Government
has been sent to
AP
Deadrent (Iuran Tetap) ü ü ü Will be paid once

the invoice from
the Government
has been sent to
AP
Royalty (Iuran Eksplorasi/Iuran Eksploitasi) Not applicable Not applicable Not applicable Not applicable
Schedule 12 - Details on Payment Obligations Compliance in Respect of Mining Licences of AP 193

1.2 Production Operation No 188.44/409/DPE/2010
2008 2009 2010 2011
the invoice from
the Government
has been sent to
AP
Deadrent (Iuran Tetap) Not available Not available ü Will be paid once
the invoice from
the Government
has been sent to
AP
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 12 - Details on Payment Obligations Compliance in Respect of Mining Licences of AP 194
1.3 Production Operation No 188.44/418/DPE/2010
2008 2009 2010 2011
the invoice from
the Government
has been sent to
AP
Deadrent (Iuran Tetap) Not available Not available ü Will be paid once
the invoice from
the Government
has been sent to
AP
1.4 Exploration IUP 188.44/155/DPE/2010
2008 2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) Will be paid as Will be paid as Will be paid as Will be paid once
part of the part of the part of the the invoice from
payment payment payment the Government
pursuant to the pursuant to the pursuant to the has been sent to
invoice from invoice from invoice from the AP
the government the government government (see
(see 2011) (see 2011) 2011)
Post Mining Guarantee (Jaminan Pasca Tambang) Not applicable Not applicable Not applicable Not applicable

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
(see 2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
invoice from the invoice from invoice from the AP
government (see the government government (see
2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
2008 2009 2010 2011
2011) (see 2011) 2011)

the invoice from
the Government
has been sent to
AP
Schedule 13
DETAILS ON PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF ALK
The following table is made on the basis of the confirmations received from ALK and the payment evidence documents available in the Legal Data. Prior to 2010,
Reclamation and Post Mining Guarantees were only required to be paid prior to entering exploitation (production operation phase) annually. From 2010,
Reclamation and Post Mining Guarantees are required to be paid for the exploration as well as the production operation phase (formerly exploitation phase).
Deadrents are paid annually based on the prevailing regulations. No production operation (exploitation) activities have occurred within ALK's six production
operation IUPs therefore it has not sold any tin excavated from its six production operation IUPs. ALK paid royalties for the sale of tin-bar which is produced from
the tin it purchases from AP.
1. PT Alam Lestari Kencana (ALK)
1.1 Production Operation IUP 188.4/075/Tamben/2010
2007 2008 2009 2010 2011
Surety Deposit (Jaminan Kesungguhan) ü Not applicable Not applicable Not applicable Not applicable
Reclamation Guarantee (Jaminan Reklamasi) ü Paid as part of ü Paid as part of the Paid as part of the
the payment payment made in payment made in
made in 2007 2007 and 2009 2007 and 2009
and 2009
Post Mining Guarantee (Jaminan Pasca Tambang) Not applicable Not applicable Not applicable Will be paid as part of Will be paid once
the payment pursuant ALK received invoice
to the invoice from from the Government
the government (see
2011)
Deadrent (Iuran Tetap) Not available ü ü ü Will be paid once

ALK received invoice
from the Government
Royalty (Iuran Eksplorasi/Iuran Eksploitasi) Not applicable Not applicable Not applicable Not applicable Not applicable
Schedule 13 - Details on Payment Obligations Compliance in Respect of Mining Licences of ALK 212
2007 2008 2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) ü Paid as part of ü Paid as part of Paid as part of
and 2009 and 2009 and 2009
Post Mining Guarantee (Jaminan Pasca Tambang) Not applicable Not applicable Not applicable Will be paid as Will be paid once
part of the ALK received
payment invoice from the
pursuant to the Government
invoice from the
government (see
2011)
Deadrent (Iuran Tetap) Not available ü ü ü Will be paid once

ALK received
invoice from the
Government
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Details on Payment Obligations Compliance in Respect of Mining Licences of ALK 213
2007 2008 2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) Paid as part of ü ü Paid as part of Paid as part of
and 2009 and 2009 and 2009
invoice from the
government (see
2011)
Deadrent (Iuran Tetap) Not applicable ü ü ü Will be paid once

ALK received
invoice from the
Government
2007 2008 2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) Paid as part of ü ü Paid as part of Paid as part of
and 2009 and 2009 and 2009
invoice from the
government (see
2011)

ALK received
invoice from the
Government
2007 2008 2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) Paid as part of ü Paid as part of Paid as part of Paid as part of
the payment the payment the payment the payment
made in 2008 made in 2008 made in 2008 made in 2008
invoice from the
government (see
2011)

ALK received
invoice from the
Government
2007 2008 2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) Paid as part of ü Paid as part of Paid as part of Paid as part of
the payment the payment the payment the payment
made in 2008 made in 2008 made in 2008 made in 2008
invoice from the
government (see
2011)

ALK received
invoice from the
Government
1.7 Processing and Refining KP No. 212 of 2006 & Transportation and Selling KP No. 95 of 2008
2007 2008 2009 2010 2011
Royalty (Iuran Eksplorasi/Iuran Eksploitasi) Not applicable Not applicable - 04 May 2009 - 22 Jan. 2010 - 04 Jan 2011
- 04 May 2009 - 25 Feb. 2010 - 21 Jan 2011
- 04 May 2009 - 23 March 2010 - 14 Feb 2011
- 28 May 2009 - 22 Apr 2010 - 02 Mar 2011
- 28 May 2009 - 18 May 2010 - 18 Mar 2011
- 17 June 2009 - 9 June 2010 - 01 Apr 2011
- 17 June 2009 - 6 July 2010 - 15 Apr 2011
- 29 June 2009 - 25 Aug. 2010 - 29 Apr 2011
- 21 July 2009 - 22 Sep. 2010
- 05 Aug 2009 - 7 Oct. 2010
- 05 Aug 2009 - 24 Nov. 2010
- 05 Aug 2009 - 8 Dec. 2010
- 26 Aug 2009
- 26 Aug 2009
- 04 Sep 2009
- 06 Oct 2009
- 23 Oct 2009
- 23 Oct 2009
- 04 Nov 2009
- 20 Nov 2009
- 20 Nov 2009
- 08 Dec 2009
- 23 Dec 2009
Schedule 14
DETAILS OF PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF MSG
The following table is made on the basis of the confirmations received from MSG and the payment evidence documents available in the Legal Data. Payment of
royalties are also based on the assumption that no incidental selling of tin ore was made during exploration phase of the 35 tenements, and therefore does not
attract the obligation to pay an exploration royalty. Prior to 2010, Reclamation and Post Mining Guarantees were only required to be paid prior to entering
exploitation (production operation phase) annually. From 2010, Reclamation and Post Mining Guarantees are required to be paid for the exploration as well as
the production operation phase (formerly exploitation phase). Deadrents are paid annually based on the prevailing regulations.
1.1 Exploration IUP No. 188.44/272/DPE/2010
2009 2010 2011
Surety Deposit (Jaminan Kesungguhan) Not applicable Not applicable ü
Reclamation Guarantee (Jaminan Reklamasi) Will be paid as part of Will be paid as part of Will be paid once MSG
the payment pursuant the payment pursuant received the invoice
to the invoice from the to the invoice from the from the Government
government (see 2011) government (see 2011)
Post Mining Guarantee (Jaminan Pasca Tambang) Not applicable Not applicable Not applicable
Deadrent (Iuran Tetap) ü ü ü
Royalty (Iuran Eksplorasi/Iuran Eksploitasi) Not applicable Not applicable Not applicable
Project Awesome Final Due Diligence Report (22-06-11) (FINAL) OSP.DOC Schedule 14 - Details on Payment Obligations Compliance in Respect of Mining Licences of MSG 220
2009 2010 2011
Reclamation Guarantee (Jaminan Reklamasi) Will be paid as Will be paid as Will be paid once
part of the part of the MSG received
payment payment the invoice from
pursuant to the pursuant to the the Government
invoice from invoice from the
the government government (see
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)
2009 2010 2011
(see 2011) 2011)

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Project Awesome

LEGAL DUE DILIGENCE REPORT

Warning – this document is strictly confidential

In association with BLAKE DAWSON

(a) PT Aega Prima (AP);

(b) PT Alam Lestari Kencana (ALK);

(c) PT Mitra Sukses Globalindo (MSG);

(d) PT Havilah Abadi Sejahtera (HAS);

(e) PT Mulia Andalan Persada (MAP);

(f) PT Havilah Sukses Bersama (HSB);

(g) PT Leviathan Mining Ekaprima (LME);

(h) PT Andalan Persada Globalindo (APG); and

(i) PT Hamparan Mineral Persada (HMP),

(the Companies), (the Proposed Transaction).

In association with BLAKE DAWSON

Structure This Report is divided into two principal parts:

Glossary Schedule 1 is a glossary of terms used in this Report.

In association with BLAKE DAWSON

2.1 Corporate structure provided by the Leviathan Group 42

3. MANAGEMENT OF THE COMPANIES 49

3.1 Corporate governance 49

In association with BLAKE DAWSON

4.1 Overview of the Mining Law 53

5.1 Mining Services Arrangements 66

In association with BLAKE DAWSON

5.13 Transitional provisions 71

6.1 Ownership of Cutter Section Dredger by AP 72

7.1 Supply of Tin Ore by AP to ALK 74

8.1 Overview of regulatory requirements 75

9. PROPERTY AND LAND SETTLEMENT 78

9.1 Location and ownership of ALK's smelter 78

10.1 Overview of environmental regulatory requirements 80

In association with BLAKE DAWSON

10.6 Storage and Use of Dangerous Goods and Hazardous Substances 83

11.1 Overview of forestry regulatory requirements 85

12. LITIGATION AND ARBITRATION 88

12.1 Conducting searches 88

13. TAX, FINANCIAL AND TECHNICAL DUE DILIGENCE 89

2 SCOPE OF WORK, ASSUMPTIONS AND QUALIFICATIONS 92

4 CORPORATE STATUS 110

5 MANAGEMENT DETAILS 136

6 CONDITIONS OF EXPLORATION IUPS 154

7 CONDITIONS OF PRODUCTION OPERATION IUP 157

8 PROCESSING AND REFINING KP 160

9 DETAILS OF IUPS / KPS 161

In association with BLAKE DAWSON

10 COURT SEARCHES AND SUMMARY OF LITIGATION 186

11 OVERVIEW OF MINORITY SHAREHOLDER RIGHTS 190

12 DETAILS ON PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF AP 193

13 DETAILS ON PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF ALK 212

14 DETAILS OF PAYMENT OBLIGATIONS COMPLIANCE IN RESPECT OF MINING LICENCES OF MSG 220

In association with BLAKE DAWSON

Part A – Executive Summary

Part A – Executive Summary 1

In association with BLAKE DAWSON

Subject Issue/Description Recommendation Risks / Consequences Timeline /

Limitations on due diligence

Incorporation status The Companies are validly incorporated under Indonesian

Capitalisation The Indonesian Company Law uses the concept of

In association with BLAKE DAWSON

Subject Issue/Description Recommendation Risks / Consequences Timeline /

(approximately IDR 10,000,000,000) and paid-up capital