Media Release SEBUKU WESTERN LEASES SCOPING STUDY
Study confirms the viability of mining the Western Leases
Singapore 18 December 2008: Straits Asia Resources Limited ( Straits Asia , SGX: SAR) is pleased to announce that it has completed a detailed scoping study for the potential extraction of coal resources between Sebuku and Laut Islands in South Kalimantan. The results of this scoping study are extremely positive with the project showing an excellent return on capital invested. SAR has over the last few years conducted an ongoing exploration program on its Western Leases the concession areas west of Sebuku Island - which has resulted to date in a JORCcompliant resource of 296 million tonnes (as reported previously on 13 February 2008). As announced on 12 December 2008, the Western Leases have recently been extended by the addition of a new, undrilled area, off the north west of Sebuku Island. The current drilling program, which has not included the new area, will be completed in early 2009 and is expected to bring resources to indicated status based on a minimum seam thickness of 0.3m and the ability to mine by open cut methods. Further additions to the resource and reserve base are anticipated as the exploration program continues and when drilling starts in the new extended area. Initial mine studies indicate the stripping ratio will be 7:1 and the product will be similar quality to current Sebuku coal. While the average thickness of the main 197 seam over the entire resource area is 8 metres the total coal sequence averages 18 metres. The scoping study has been conducted whilst the drilling programme has been undertaken and has been reviewing the potential engineering problems and mining methods for this area. The study envisages a significant stand alone mining operation with a build up in coal production to a capacity of 20 million tonnes per annum and a 20 year total mine life. Mining the Western Leases presents technical challenges as it lies in shallow water in the Sebuku Strait. Mining would take place in mining cells behind a series of constructed bunds. Engineered bunds to enable the extraction of submarine resources are technically well understood, not unique and are widely implemented globally. Bund construction time is expected to be less than twelve months for each mining cell, with material for bund construction sourced from existing mining operations. Support infrastructure would include a coal wash facility (over and above the current two washplants that will provide Straits Asia with 8Mt of capacity in 2009); a coal fired thermal power station to reduce costs; overland conveyors; and a marine conveyor to a dedicated offshore ship loading facility. Several approaches to the facility configuration are being considered. The estimated capital cost is USD 860 million over the mine life. Site cash operating costs are forecast at USD 25/tonne (excluding royalties). Using a long term sales price of USD 80/tonne the Net Present Value of the cash flow (pre-tax) is USD 2.7 billion. Given the resource size the capital cost is considered to be very competitive relative to Indonesian and international benchmarks. The study includes a general contingency of USD 97 million and has identified areas for consideration that might result in reductions in capital costs.
STRAITS ASIA RESOURCES LIMITED #26-01, Tower 15, 15 Hoe Chiang Road, Singapore 089316 Tel : (65) 6327 4111 www.straitsasia.com
Media Release
Accordingly, the project is considered to be technically feasible and very robust in financial terms. Subject to board approval the project will now progress to the pre-feasibility stage when detailed mining, engineering, social and environmental studies will be completed. Richard Ong, Chief Executive Officer of Straits Asia said Sebuku continues to show its increasing value to Straits Asia and its longer term potential. This study, which follows hard on the heels of our announcement of extension of the Western Leases, shows that our team is fully capable of unlocking real value from the Western Leases, value that will be passed to shareholders once mining begins.
For further information please contact: Investors and Shareholders: Jeremy Figgins Group Manager, Corporate Affairs tel: +65 9616 7062 jeremy.figgins@straitsasia.com Media Enquiries: Ho See Kim August Consulting Tel: +65 9631 3602 ; seekim@august.com.sg
STRAITS ASIA RESOURCES LIMITED #26-01, Tower 15, 15 Hoe Chiang Road, Singapore 089316 Tel : (65) 6327 4111 www.straitsasia.com